<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 23, 1997
REGISTRATION NO. 333-39577
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PREMIERE TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
GEORGIA 59-3074176
<S> <C>
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
ORGANIZATION)
</TABLE>
3399 PEACHTREE ROAD, N.E.
LENOX BUILDING, SUITE 400
ATLANTA, GEORGIA 30326
(404) 262-8400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
BOLAND T. JONES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PREMIERE TECHNOLOGIES, INC.
3399 PEACHTREE ROAD, N.E.
LENOX BUILDING, SUITE 400
ATLANTA, GEORGIA 30326
(404) 262-8400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
JOEL J. HUGHEY PATRICK G. JONES GLENN W. STURM
ALSTON & BIRD LLP SENIOR VICE JAMES WALKER IV
ONE ATLANTIC CENTER PRESIDENT FINANCE NELSON MULLINS
1201 WEST PEACHTREE AND LEGAL PREMIERE RILEY &
STREET ATLANTA, TECHNOLOGIES, INC. SCARBOROUGH, L.L.P.
GEORGIA 30309-3424 3399 PEACHTREE FIRST UNION PLAZA,
(404) 881-7000 ROAD, N.E. LENOX SUITE 1400 999
BUILDING, SUITE 400 PEACHTREE STREET,
ATLANTA, GEORGIA N.E. ATLANTA,
30326 (404) 262- GEORGIA 30309 (404)
8400 817-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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- -------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 23, 1997
PROSPECTUS
, 1997
921,551 SHARES
[LOGO OF PREMIERE TECHNOLOGIES APPEARS HERE]
COMMON STOCK
All of the 921,551 shares (the "Shares") of common stock, $0.01 par value per
share (the "Common Stock"), of Premiere Technologies, Inc., a Georgia
corporation ("Premiere" or the "Company"), offered hereby (the "Offering") are
being sold by certain selling shareholders of the Company (the "Selling
Shareholders"). See "Principal and Selling Shareholders." The Company will not
receive any of the proceeds from the sale of Shares by the Selling
Shareholders.
The Common Stock is traded on the Nasdaq National Market under the symbol
"PTEK." On December 19, 1997, the last reported sales price on the Nasdaq
National Market was $26 1/2 per share. See "Price Range of Common Stock and
Dividend Policy."
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER
"RISK FACTORS" BEGINNING ON PAGE 10.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Donaldson, Lufkin & Jenrette Securities Corporation (the "Underwriter") has
agreed to purchase from the Selling Shareholders 921,551 shares of Common Stock
for a purchase price of $ per share, resulting in aggregate proceeds of $
(before expenses) to the Selling Shareholders.
The Underwriter proposes to offer the 921,551 shares of Common Stock
purchased by it from time to time for sale in one or more transactions (which
may involve block transactions) on the Nasdaq National Market or otherwise, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices, subject to prior sale when, as and if
delivered to and accepted by the Underwriter. See "Underwriting."
The Company and the Selling Shareholders have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
----------
The shares of Common Stock are being offered by the Underwriter, subject to
prior sale, when, as and if delivered to and accepted by the Underwriter
against payment therefor and subject to various prior conditions, including the
right of the Underwriter to reject orders in whole or in part. It is expected
that the delivery of shares will be made in New York, New York on or about
, 1997.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITER MAY OVERALLOT IN CONNECTION WITH THE OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
----------------
THIS PROSPECTUS INCLUDES PRODUCT NAMES, TRADE NAMES, SERVICE MARKS AND
TRADEMARKS OF PREMIERE AND ITS SUBSIDIARIES AND OTHER COMPANIES INCLUDING,
WITHOUT LIMITATION, PREMIERE WORLDLINK, ORCHESTRATESM, VOICE-TEL(TM),
VOICECOM(TM) AND VOICECOM ACCESS ONESM.
2
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information, including
"Risk Factors" and financial statements and notes thereto, appearing elsewhere
or incorporated by reference in this Prospectus. This Prospectus contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results may differ significantly from the results discussed in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed in "Risk Factors." Unless otherwise
indicated, the terms "Premiere" and the "Company" refer collectively to
Premiere Technologies, Inc. and its subsidiaries.
THE COMPANY
Premiere designs, develops, markets and provides enhanced personal
communications services. The Company's network-based computer telephony
technology links together two or more stand-alone communications services, such
as calling card long distance, voice mail, e-mail, fax mail and paging, and
allows access to these services through telephones or computers. The Company
bundles these stand-alone services to allow users to store, manage, prioritize,
deliver and distribute incoming and outgoing information in an easy, efficient
and economical manner. Although Premiere offers stand-alone communications
services, it primarily targets users who have multiple communications devices
and a need to integrate them for greater functionality and convenience.
Today, many stand-alone communications services are provided through landline
telephone systems, messaging devices and local area networks ("LANs"), that
reside in whole or in part at a customer's location. The architecture of the
customer premises equipment, or "CPE," that comprises such systems is often
closed in nature, which makes integration with other systems and networks
difficult and expensive. However, users are increasingly demanding that their
existing CPE be integrated with more open and intelligent worldwide
communications networks such as the Internet. The Company believes that, due to
the complexity of such integration, users will increasingly outsource their
communications requirements to third parties such as Premiere. Premiere
believes that customers will prefer the Company's network-based service
solution for personal communications to traditional CPE-based product solutions
because the Company's solution reduces customers' costs of equipment ownership
and exposure to technology obsolescence.
The core of the Premiere solution is its "intelligent network" which links,
or integrates, stand-alone communications services using technology developed
by the Company's research and development team. The intelligent network
consists of (i) a state-of-the-art proprietary platform that integrates digital
switching technology with enhanced personal communications features and (ii)
the Company's private telecommunications network which transmits voice and data
utilizing the frame relay packet switching protocol, the "private frame relay
network." The Company's modular and scaleable intelligent network incorporates
an open-system design, which allows the Company to easily expand capacity and
provides the Company with the flexibility to develop and customize its service
offerings. Premiere offers bundled services in a variety of packages and
tailors these packages to meet the requirements of strategic marketing and co-
brand partners. Premiere's private frame relay network, with approximately 210
locations where the Company has voice messaging equipment ("points of presence"
or "POPs"), is accessible via local access in metropolitan and other geographic
areas which include approximately 90% of the United States, Canadian and
Australian populations, and approximately 50% of the New Zealand population.
Premiere anticipates that its private frame relay network will be accessible
via local access by a significant portion of the United Kingdom population via
local access in the near future. The Company plans to invest $40-$50 million in
capital expenditures over the next 12 months as part of its effort to integrate
its proprietary platform with its recently acquired private frame relay
network. Once integration is completed, the Company believes that its
intelligent network will allow the Company to offer its customers enhanced
personal communications services through either local or 800 access via
telephone or computer.
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<PAGE>
The Company currently markets its services: (i) directly under the Premiere
WorldLink, Voice-Tel, VoiceCom and VoiceCom Access One names; (ii) indirectly
through strategic partners such as American Express Travel Related Services,
Inc. ("American Express") and CompuServe Incorporated ("CompuServe");
(iii) indirectly through co-brand relationships with companies such as First
Union National Bank of Georgia ("First Union") and Discover Card Services, Inc.
("Discover Card") and others; and (iv) indirectly through licensing or
wholesale arrangements with companies including WorldCom, Inc. ("WorldCom"),
NationsBanc Services, Inc. ("NationsBank"), an affiliate of NationsBank
Corporation, UniDial Communications, Inc. ("UniDial") and Cincinnati Bell Long
Distance. Although Premiere has historically focused its direct marketing
efforts on print advertising and direct mailings targeted at mobile
professionals, the Company recently acquired a nationwide direct sales force
with a national accounts program.
CUSTOMER CASE STUDIES
Some examples of Premiere's enhanced personal communications services, which
illustrate the convenience of and benefits provided by Premiere's technology
innovations and intelligent network, include the following:
E-mail Over the Phone. A consultant calls in to hear her voice mail messages.
During the same call, she can have her e-mail messages read to her over the
phone via Premiere's text-to-speech technology and save, delete, forward or
return all of her e-mail messages using one of a list of preprogrammed
responses.
Personal Assistant Services. A field salesperson presents a bid to a project
approval committee. After submitting her proposal, she leaves for her next
meeting. Upon review of the proposal, the committee notices several issues that
need immediate clarification. Rather than trying to track down the salesperson
at multiple locations, the committee calls her personal assistant number, which
automatically locates her by pager, which she had designated as her preferred
method of contact on that day. If she has selected the "call connect" feature,
she can call the Premiere platform and automatically be connected to the
committee's incoming call.
The Company's Orchestrate product, which the Company intends to begin
marketing during the first quarter of 1998, is expected to offer the following
additional features:
Universal Inbox. A busy executive can go to any Internet browser-enabled
computer to check all of his messages -- voice mail, e-mail and fax mail. After
looking at a list of incoming voice and text messages, he can choose which
messages to hear or read. He can then choose to save, delete, forward or return
his messages.
Click 'n' Call Conference Calling. A manager with employees in eight
different offices holds weekly staff meetings by conference call. Rather than
going through the time and expense of arranging for a conference bridge with an
outside supplier, he is able to go to his computer, click on his contact
database list with his mouse and initiate the conference call without ever
picking up a telephone. After initiating the conference call, the manager
simply answers the call that the Premiere platform places to his telephone,
enters his account and PIN numbers and presses the "star" key to command the
Premiere platform to add additional parties sequentially. In the future,
features are expected to include muting and addition and deletion of selected
callers.
STRATEGY
Premiere's goal is to become the world's leading provider of network-based
enhanced personal communications services. The Company's strategy to achieve
this goal is to:
Increase Service Offerings and Cross-Media Functionality. The Company
believes that changes in technology continually create new business
opportunities for providers of enhanced personal communications services. The
Company continually strives to make its interfaces more user friendly and its
services functionally equivalent regardless of the customer's chosen access
device or message transport medium. For example, the Company has introduced
such features as text-to-speech e-mail delivery, a unified messaging interface
utilizing the World Wide Web ("Web") and an integrated Web-based contact
database manager. Possible future service features include, among others,
speech recognition.
4
<PAGE>
Leverage Network Facilities. To date, the majority of the Company's services
have been accessed by 800 toll free service. The Company recently acquired an
international private frame relay network. Once this network is fully
integrated with the Company's proprietary platform, the Company plans to use
the private frame relay network and local messaging systems to provide users
local access to certain of its enhanced personal communications services, which
access the Company believes will make these services more attractive to a
broader market. In addition, through transitioning more of its subscribers to
local access, Premiere expects to realize a reduction in transmission costs.
Expand Customer Base and Distribution Channels. The Company believes that an
increasing number of businesses will transition their communications systems
from CPE-based products to network-based services. Premiere believes that a
substantial opportunity exists to meet the outsourcing needs of these
companies. The Company intends to use its direct sales force and national
accounts program as part of its effort to expand its customer base and to
improve cross-selling of its services. Premiere also plans to continue to enter
into strategic alliances and wholesale and licensing relationships in order to
reach additional customers that the Company believes are likely to be extensive
users of its services.
Pursue Strategic Acquisitions. Historically, the Company has engaged in
acquisitions in order to obtain new technology, build its infrastructure and
increase its sales force and customer base. The Company intends to continue to
examine acquisition and joint venture opportunities which may accelerate its
growth, add new customers, develop new technologies or penetrate new geographic
markets. See "-- Recent Developments."
Expand International Presence. Premiere intends to deliver its services to
more international users through strategic partnerships, third-party
distribution agreements, direct sales efforts and relationships with existing
customers that have international operations. To accommodate these prospective
users, Premiere has opened a data and switching center in London and has also
begun development of a similar center in Toronto. Targeting the Pacific Rim,
Premiere expects to begin installation of a data and switching center in New
Zealand during 1998. These international centers are designed to reduce
transmission costs associated with system access from international locations
and to allow Premiere to more effectively pursue opportunities with
international customers and strategic partners. Additionally, the Company
expects to increase the international scope of its private frame relay network
by installing POPs in additional overseas locations, specifically targeting the
United Kingdom for local messaging in the near future.
RECENT DEVELOPMENTS
VOICE-TEL ACQUISITIONS
On June 12, 1997, the Company announced the completion of the acquisitions of
Voice-Tel Enterprises, Inc. ("VTE"), its affiliate Voice-Tel Network Limited
Partnership ("VTN") and substantially all of VTE's franchisees (the
"Franchisees") (VTE, VTN and such Franchisees are collectively referred to as
the "Voice-Tel Entities" or "Voice-Tel," and such acquisitions are referred to
collectively as the "Voice-Tel Acquisitions"). The Voice-Tel Entities provide
interactive digital voice messaging products on a service bureau basis through
approximately 210 POPs in the United States, Puerto Rico, Canada, Australia and
New Zealand. In connection with the Voice-Tel Acquisitions, Premiere acquired
various components of, and now operates, VoiceTel's digital private frame relay
network and POPs.
Premiere believes that the Voice-Tel Acquisitions will broaden the Company's
customer base by allowing the Company to offer local access to certain of its
enhanced personal communications services. While the Company's measured 800
access products have appealed primarily to a mobile customer base, Premiere
believes that a local access product will appeal to a broader base of
customers. In addition to the anticipated advantages
5
<PAGE>
of interconnected local access, the Voice-Tel Acquisitions provide the Company
with a direct sales force of approximately 300 persons in four countries, an
expanded subscriber base and the potential for greater cross-selling
opportunities. The Company is currently consolidating these separate businesses
by eliminating duplicative and unnecessary costs, merging them under common
management and integrating Voice-Tel's service offerings, operations and
systems with those of the Company. In connection with the Voice-Tel
Acquisitions, the Company took a pre-tax charge in the second quarter of 1997
of approximately $45.4 million, consisting of transaction expenses and
restructuring and related costs attributable to the Voice-Tel Acquisitions. See
"Risk Factors -- Integration of Voice-Tel Acquisitions" and " -- Ability to
Manage Growth; Acquisition Risks."
VOICECOM ACQUISITION
During the third quarter of 1997, Premiere acquired approximately 97.5% of
the outstanding capital stock of VoiceCom Holdings, Inc. ("VoiceCom") in
exchange for approximately 445,737 shares of Premiere Common Stock. In
addition, Premiere converted existing VoiceCom options into options to acquire
approximately 76,054 shares of Premiere Common Stock. VoiceCom, based in
Atlanta, Georgia, is a provider of personal communications management services
and telecommunication outsourcing solutions to large corporations, government
entities and mobile professionals. Its service offerings include voice
messaging, mobile communications, full-service conference calling and voice
response programming.
VoiceCom, which is an operating subsidiary of Premiere as a result of the
acquisition, has a customer base that includes several Fortune 500 companies,
including, among others, Abbott Laboratories ("Abbott Labs"), Beverly
Enterprises, Inc. ("Beverly Enterprises") and ConAgra, Inc. ("ConAgra"). The
Fortune 500 companies in VoiceCom's customer base account for a significant
portion of VoiceCom's revenue. The Company plans to cross-sell its product
offerings to VoiceCom's customer base. In connection with the VoiceCom
acquisition, the Company took a pre-tax charge in the third quarter of 1997 of
approximately $28.2 million, consisting of transaction expenses and
restructuring and related costs attributable to the VoiceCom acquisition. See
"Risk Factors -- Ability to Manage Growth; Acquisition Risks."
XPEDITE SYSTEMS, INC.
On November 13, 1997, Premiere entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Xpedite Systems, Inc. ("Xpedite") and Nets
Acquisition Corp., a wholly-owned subsidiary of Premiere ("Acquisition Sub").
Subject to the terms and conditions of the Merger Agreement, Acquisition Sub
will merge with and into Xpedite (the "Xpedite Merger"), which will be the
surviving corporation in the Merger and, as a result thereof, will become a
wholly-owned subsidiary of Premiere. Under the terms of the Merger Agreement,
shares of Xpedite common stock, par value $.01 per share (the "Xpedite Common
Stock"), will be exchanged for a number of shares of Premiere Common Stock
based on an exchange ratio equal to $34 divided by the average trading price of
Premiere Common Stock prior to closing. The maximum exchange ratio under the
Merger Agreement is 1.25 shares of Premiere Common Stock for each share of
Xpedite Common Stock, and the minimum exchange ratio is 0.867 shares of
Premiere Common Stock for each share of Xpedite Common Stock. The Merger
Agreement may be terminated under certain circumstances by the board of
directors of Xpedite if the actual average trading price of Premiere Common
Stock is less than $24 per share, unless Premiere elects to increase the
exchange ratio as provided in the Merger Agreement. Assuming no adjustment to
the exchange ratio and the exercise of all outstanding Xpedite options, the
maximum number of shares of Premiere Common Stock to be issued in the Xpedite
Merger is approximately 12,380,000 shares, and the minimum number of shares is
approximately 8,590,000. Consummation of the Xpedite Merger is conditioned on,
among other things, approval of the shareholders of both Xpedite and Premiere
and compliance with applicable anti-trust notification requirements. See "Risk
Factors -- Risk That Xpedite Merger Will Not Close."
6
<PAGE>
During December 1997, Xpedite consummated the acquisition of Xpedite Systems
Limited, an English corporation ("XSL"), pursuant to a Share Purchase Agreement
(the "XSL Purchase Agreement"), among Xpedite, Xpedite Systems Holdings (UK)
Limited, a newly formed and wholly owned subsidiary of Xpedite ("XSL
Acquisition Corp."), and the shareholders of XSL, pursuant to which XSL
Acquisition Corp. purchased all the share capital of XSL for a purchase price
of approximately $87.0 million (the "XSL Acquisition"). The closing of the XSL
Acquisition was a condition to the closing of the Xpedite Merger.
Additional information with respect to the Xpedite Merger and the XSL
Acquisition is set forth in Premiere's Current Report on Form 8-K dated
November 13, 1997, filed with the Securities and Exchange Commission (the
"Commission") on December 5, 1997, including: the (i) Merger Agreement; (ii)
XSL Purchase Agreement; (iii) consolidated financial statements of Xpedite and
XSL required by Rule 3-05 of Regulation S-X promulgated by the Commission; and
(iv) pro forma financial information required by Article 11 of Regulation S-X
promulgated by the Commission.
ADDITIONS AND CHANGES TO MANAGEMENT
To support its growth, the Company has recently added new management
personnel. These additions have included Jeffrey A. Allred, Executive Vice
President of Strategic Development; Curtis L. Garner, Jr., President of
Premiere Communications, Inc., a subsidiary of the Company ("PCI"); William E.
Welsh, President of VTE; and Randolph W. Salisbury, Senior Vice President of
Marketing of PCI. See "Management." In addition, D. Gregory Smith, a co-founder
of the Company, recently resigned as director, Executive Vice President and
Assistant Secretary of the Company and as a director and officer of PCI and
certain other subsidiaries of the Company, and Leonard A. DeNittis recently
resigned as the Vice President of Engineering and Operations of PCI. See "Risk
Factors -- Dependence on Key Management and Personnel."
THE OFFERING
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Common Stock offered by the
Selling
Shareholders................. 921,551 shares
Common Stock outstanding after
the
Offering(1).................. 33,960,277 shares
Use of proceeds............... The Company will not receive any of the proceeds
from the sale of Shares by the Selling
Shareholders.
See "Use of Proceeds."
Nasdaq National Market symbol. PTEK
</TABLE>
- --------------------
(1) Includes 402,748 shares of Exchangeable Non-Voting Shares of Voice-Tel
Canada Limited, a subsidiary of the Company (the "Exchangeable Shares"),
issued to the former shareholders of the Canadian Voice-Tel Entities, which
are convertible at any time into a like number of shares of Common Stock,
and of which 72,908 are being converted and sold in this Offering.
Excludes: (i) 7,153,902 shares of Common Stock issuable upon exercise of
options and warrants outstanding as of December 15, 1997 with a weighted
average exercise price of $13.58; (ii) approximately 5,227,000 shares of
Common Stock issuable upon conversion of the Company's 5 3/4% Convertible
Subordinated Notes due 2004 (the "Convertible Notes").
7
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth certain consolidated financial and other
operating data of the Company. This information should be read in conjunction
with "Selected Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements of the Company, including the notes thereto, which are incorporated
herein by reference in this Prospectus. See "Available Information" and
"Incorporation of Certain Documents By Reference."
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------- -----------------------
1994 1995 1996 1996 1997
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................... $119,136 $147,543 $197,474 $143,537 $167,364
Gross margin............... 85,229 103,675 141,873 101,523 122,344
Operating income (loss)(1). (13,232) 7,003 6,865 1,538 (43,942)
Net income (loss)(1)....... (15,519) 4,171 3,458 2,553 (34,544)
Net income (loss)
attributable to common
shareholders for net
income (loss) per
share -- primary(2)....... (15,839) 4,222 3,429 2,553 (34,544)
-- fully diluted(2)..... -- 4,541 -- -- --
Net income (loss) per
common and common
equivalent shares --
primary(1)(2)............. $ (1.18) $ 0.15 $ 0.12 $ 0.09 $ (1.10)
-- fully
diluted(3)........ $ -- $ 0.14 $ -- $ -- $ --
Shares used in computing
net income (loss) per
common and common
equivalent
shares -- primary......... 13,468 28,718 29,213 28,490 31,518
-- fully diluted....... -- 31,814 -- -- --
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
-------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA (AT PERIOD END):
Cash, cash equivalents and investments.......................... $ 183,838
Working capital................................................. 130,915
Total assets.................................................... 350,895
Total debt...................................................... 179,851
Total shareholders' equity...................................... 78,160
</TABLE>
- --------
(1) Excluding charges for purchased research and development, accrued
settlement costs and restructuring and other special charges incurred by
the Company in the amounts of approximately $0, $0 and $6.7 million,
respectively, in 1994, and approximately $0, $2.5 and $0 million,
respectively, in fiscal 1995, and approximately $11.0, $1.3 and $0 million,
respectively, in fiscal 1996, operating income (loss), net income (loss)
and net income (loss) per share (on a fully diluted basis when applicable)
would have been approximately $(6.5) million, $(11.4) million and $(0.87),
respectively, for 1994 and approximately $9.5 million, $5.7 million and
$0.22, respectively, for 1995 and approximately $19.2 million, $11.0
million and $0.37, respectively, for 1996. Excluding charges for
restructuring and other special charges attributable to the Voice-Tel
Acquisitions and the VoiceCom acquisition and accrued settlement costs of
$73.6 million and $1.5 million, respectively, operating income, net income
and net income per share would have been approximately $31.2 million, $19.0
million and $0.55, respectively, for the nine months ended September 30,
1997.
(2) Net income (loss) per share is computed using the weighted average number
of shares of common stock and dilutive common stock equivalents from
convertible preferred stock (using the if-converted method) and from stock
options (using the modified treasury stock method). Further, for the nine
months ended September 30, 1997, net income (loss) per share was not
calculated under the modified treasury stock method as the results were
antidilutive. Accordingly, basic net income (loss) per share calculations
were used for the nine months ended September 30, 1997.
(3) Fully diluted net income (loss) per share is not presented where the effect
is antidilutive.
8
<PAGE>
SUMMARY PRO FORMA FINANCIAL DATA OF PREMIERE AND XPEDITE
The following table sets forth selected pro forma combined financial
information for the years ended December 31, 1994, 1995 and 1996 and the nine
months ended September 30, 1997 giving effect to the Xpedite Merger using the
pooling-of-interests method of accounting assuming a 1.25 exchange ratio and
consummation of the Xpedite Merger as of the beginning of each period and the
XSL Acquisition using the purchase method of accounting assuming consummation
thereof as of January 1, 1996. The pro forma information is provided for
informational purposes only and is not necessarily indicative of actual results
that would have been achieved had the Xpedite Merger or the XSL Acquisition
been consummated at the beginning of the periods presented or of future
results. The selected pro forma combined financial information is derived from
the pro forma condensed combined financial information incorporated by
reference herein. This information should be read in conjunction with "Selected
Pro Forma Financial Data of Premiere and Xpedite" and the historical financial
statements of Premiere, Xpedite and XSL, including the respective notes
thereto, incorporated by reference herein and the unaudited pro forma financial
information incorporated by reference herein. See "Available Information" and
"Incorporation of Certain Documents by Reference." There can be no assurance
that the Xpedite Merger will be consummated on the terms currently contemplated
or at all. See "Risk Factors -- Risk That Xpedite Merger Will Not Close."
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
----------------------------------- SEPTEMBER 30,
1994 1995 1996 1997
----------- ----------- ----------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................... $160,565 $203,227 $348,508 $311,298
Gross margin................. 114,273 143,949 240,913 214,901
Operating income (loss)(1)... (6,988) (37,076) 41,743 (17,556)
Net income (loss)(1)......... (11,736) (42,391) 18,831 (22,932)
Pro forma net income (loss)
attributable to common
shareholders for primary net
income (loss) per share(2).. (12,056) (42,699) 18,802 (22,932)
Pro forma net income (loss)
per common and common
equivalent shares --
primary(3)................. $ (0.49) $ (1.37) $ 0.48 $ (0.54)
Shares used in computing net
income (loss) per common and
common equivalent shares --
primary.................... 24,804 31,814 39,006 42,854
BALANCE SHEET DATA (AT PERIOD
END):
Cash, cash equivalents and
investments................. $ 23,988 $ 20,835 $ 89,950 $187,886
Working capital.............. 3,938 (18,361) 49,493 111,231
Total assets................. 94,403 151,014 289,932 542,808
Total debt................... 49,247 99,932 82,907 300,538
Total shareholders' equity
(deficit)................... 12,164 (12,755) 129,670 77,511
</TABLE>
- --------
(1) Excluding charges for purchased research and development, accrued
settlement costs and restructuring and other special charges incurred by
Premiere and Xpedite in the amounts of approximately $0, $0 and $6.7
million, respectively, in 1994, and approximately $53.0, $2.5 and $0
million, respectively, in 1995 and approximately $0, $1.3 and $0.0 million,
respectively, in 1996, operating income, net income and pro forma net
income (loss) per share would have been $(0.3) million, $(7.6) million and
$(0.32), respectively, for 1994, approximately $18.4 million, $13.1 million
and $0.42, respectively, for 1995, approximately $43.0 million, $19.6
million and $0.50, respectively, for 1996. Excluding charges for
restructuring and other special charges attributable to the Voice-Tel
Acquisitions and the VoiceCom acquisition and accrued settlement costs of
$73.6 million and $1.5 million, respectively, operating income, net income
and pro forma net income per share would have been approximately $57.5
million, $30.6 million and $0.71, respectively, including applicable tax
effects for the nine months ended September 30, 1997.
(2) Supplementary pro forma net income per share assuming the conversion of
Premiere preferred stock and the retirement of notes payable for the year
ended December 31, 1995 are not presented because the effect of the pro
forma adjustments is immaterial.
(3) Pro forma net income (loss) per share is computed using the weighted
average number of shares of common stock and dilutive common stock
equivalents from convertible preferred stock (using the if-converted
method) and from stock options (using the modified treasury stock method).
Fully diluted data is not presented as the effect is anti-dilutive or
immaterial for all periods presented. Further, for the years ended December
31, 1994, 1995 and 1996 and the nine months ended September 30, 1997, net
income per share was not calculated under the modified treasury stock
method as the results were antidilutive. Accordingly, basic net income
(loss) per share calculations were used for the years ended December 31,
1994, 1995 and 1996 and the nine months ended September 30, 1997.
9
<PAGE>
RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should carefully
consider the risk factors set forth below, as well as the other information
contained in this Prospectus, in evaluating an investment in the Common Stock.
This Prospectus and the documents incorporated herein contain certain forward-
looking statements which are inherently uncertain. The Company's actual
results could differ materially from those anticipated in these forward-
looking statements as a result of certain factors, including those set forth
below and elsewhere in this Prospectus.
INTEGRATION OF VOICE-TEL ACQUISITIONS
In June 1997, the Company completed the acquisitions of the Voice-Tel
Entities. Prior to the acquisitions, the Voice-Tel Entities operated
approximately 210 POPs in five countries. VTE operated as a franchisor, and
each of the approximately 100 Franchisees was independently owned and
operated. The Company is in the process of consolidating these separate
businesses by eliminating duplicative and unnecessary costs and merging them
under common management. Potential challenges to the successful consolidation
of the Voice-Tel Entities include, but are not limited to: (i) centralization
and consolidation of financial, operational and administrative functions; (ii)
consolidation of the service centers, network and work force; (iii)
elimination of unnecessary costs; and (iv) realization of economies of scale.
The Company is in the process of integrating Voice-Tel's service offerings,
operations and systems with those of the Company, and therefore, the Voice-Tel
integration plans may materially change in the future. Challenges to the
successful integration of the Voice-Tel Entities include, but are not limited
to: (i) localization of Premiere products; (ii) integration of the Premiere
platform with the Voice-Tel network; (iii) cross-selling of products and
services to the combined Company's customer base; (iv) integration of new
personnel; and (v) compliance with regulatory requirements.
Because of the size and fragmented nature of the facilities and businesses
of the Voice-Tel Entities and the technical complexity of integrating the
Company's products with those of Voice-Tel, the integration process is
particularly complex and will place significant demands on the Company's
management, engineering, financial and other resources. There can be no
assurance that the Voice-Tel Entities will be successfully consolidated or
integrated with the Company's operations on schedule or at all, that the
Voice-Tel Acquisitions will result in sufficient net sales or earnings to
justify the Company's investment therein or the expenses related thereto, or
that operational synergies will develop. The successful consolidation of the
Voice-Tel Entities and their integration into the Company's operations are
critical to the Company's future performance, especially because the combined
revenues for the Voice-Tel Entities approximated 45.0% and 42.0% of the
Company's revenues in fiscal year 1996 and the nine months ended September 30,
1997, respectively. Failure to successfully consolidate and integrate the
Voice-Tel Entities or to achieve operating synergies would have a material
adverse effect on the Company's business, financial condition and results of
operations.
In connection with the Voice-Tel Acquisitions, the Company took a pre-tax
charge in the second quarter of 1997 of approximately $45.4 million,
consisting of transaction expenses and restructuring and related costs
attributable to the Voice-Tel Acquisitions. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Restructuring and
Other Special Charges." The amount of the charge is based on the Company's
current estimate as to the amount of the costs and expenses that will be
incurred. There can be no assurance that the actual amount of the costs and
expenses incurred will not exceed such estimate. If the actual amount of the
costs and expenses exceeds the Company's estimate, the Company may take
additional charges in the future. In addition, the Company has recorded
approximately $14.8 million of goodwill and other intangible assets in
connection with the Voice-Tel Acquisitions. The Company is amortizing the
goodwill on a straight-line basis over 40 years, and the Company believes the
useful life of the Voice-Tel Entities to be at least 40 years. If the
amortization period is accelerated due to a reevaluation of the useful life of
the Voice-Tel Entities or otherwise, amortization expense may initially
increase on a quarterly basis or require a write-down of the goodwill. An
increase in the rate of amortization of goodwill or future write-downs and
restructuring charges could have a material adverse effect on the Company's
business, financial condition and results of operations.
10
<PAGE>
COMPETITION
The market for the Company's services is intensely competitive, rapidly
evolving and subject to rapid technological change. The Company expects
competition to increase in the future. Many of the Company's current and
potential competitors have longer operating histories, greater name
recognition, larger customer bases and substantially greater financial,
personnel, marketing, engineering, technical and other resources than the
Company. The Company believes that existing competitors are likely to expand
their service offerings and that new competitors are likely to enter the
personal communications market and to attempt to integrate such services,
resulting in greater competition for the Company. Such competition could have
a material adverse effect on the Company's business, financial condition and
results of operations.
The Company attempts to differentiate itself from its competitors by
offering an integrated suite of enhanced personal communications services.
Other providers currently offer each of the individual services and certain
combinations of the services offered by the Company. The Company's worldwide
mobile communications services and features compete with services provided by
companies such as AT&T Corp. ("AT&T"), MCI Communications Corp. ("MCI") and
Sprint Corp. ("Sprint") as well as smaller interexchange long distance
providers. The Company's voice mail services, including those acquired in the
Voice-Tel Acquisitions and the VoiceCom acquisition, compete with voice mail
services provided by AT&T, certain regional Bell Operating Companies ("RBOCs")
and other service bureaus as well as by equipment manufacturers, such as Octel
Communications Corporation ("Octel"), Northern Telecom, Inc. ("Northern
Telecom"), Siemens Business Communications Systems, Inc. ("Siemens"),
Centigram Communications Corporation ("Centigram"), Boston Technology, Inc.
("Boston Technology") and Digital Sound Corporation ("Digital Sound"). The
Company's enhanced travel, concierge, news and e-mail services compete with
services provided by America Online, Inc. ("America Online"), Prodigy Services
Co. ("Prodigy") and numerous Internet service providers. The Company's paging
services compete with paging services offered by companies such as AT&T and
MCI.
The Company's Orchestrate service, which the Company intends to begin
marketing during the first quarter of 1998, is expected to compete with
products offered by companies such as Octel, Microsoft Corp. ("Microsoft"),
Novell, Inc. ("Novell"), Lucent Technologies, Inc. ("Lucent") and numerous
other entities. For example, Octel and Microsoft recently announced a service,
called "Unified Messenger," which places all voice mail, e-mail and fax
messages in a single mailbox accessible by computer or telephone. In addition,
the number of companies offering call center technology, including AT&T, MCI
and Lucent, has grown dramatically over the past few years, primarily in
response to major outsource initiatives and significantly lower technology
costs. The Company expects that other parties will develop and implement
information and telecommunications service platforms similar to its platform,
thereby increasing competition for the Company's services.
Premiere recently entered into the Merger Agreement with Xpedite and
Acquisition Sub. Through the proposed Xpedite Merger, Premiere plans to offer
enhanced fax and message delivery services ("Enhanced Fax Services"). See
"Prospectus Summary -- Recent Developments -- Xpedite Systems, Inc.,"
"Business -- Premiere Platform and Network -- The Xpedite Network," " -- Risks
That Xpedite Merger Will Not Close" and " -- Risks Associated with Expansion
of Enhanced Fax Services." Xpedite's fax communication services currently
compete with services provided by each of AT&T, MCI and Sprint, and many of
the national postal, telephone and telegraph companies ("PTTs") around the
world. Neither Premiere nor Xpedite can predict whether AT&T, MCI, Sprint, any
Internet service provider or PTT or any other competitor will expand its fax
communications services business, and there can be no assurance that these or
other competitors will not commence or expand their businesses. Moreover,
Xpedite's receiving, queuing, routing and other systems logic and architecture
are not proprietary to Xpedite, and as a result, there can be no assurance
that such information will not be acquired or duplicated by Xpedite's existing
and potential competitors. Xpedite does not typically have long-term
contractual agreements with its customers, and there can be no assurance that
its customers will continue to transact business with Premiere in the future.
In addition, even if there is continued growth in the use of electronic
document distribution services, there can be no assurance that potential
customers will not elect to use their own equipment to fulfill their needs for
electronic document distribution services. There also can be no assurance that
customers will not elect to use alternatives to Xpedite's electronic document
distribution
11
<PAGE>
services, including the Internet, to carry such customers' communications or
that companies offering such alternatives will not develop product features or
pricing which are more attractive to customers than those currently offered by
Xpedite.
Furthermore, on February 8, 1996, President Clinton signed into law the
Telecommunications Act of 1996, as amended (the "1996 Act"), which allows
local exchange carriers ("LECs"), including the RBOCs, to provide long
distance telephone service between Local Access and Transport Areas ("LATAs"),
which will likely significantly increase competition for long distance
services. The new legislation also grants the Federal Communications
Commission (the "FCC") the authority to deregulate other aspects of the
telecommunications industry, which in the future may, if authorized by the
FCC, facilitate the offering of an integrated suite of information and
telecommunications services by regulated entities, including the RBOCs, in
competition with the Company. Such increased competition could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Telecommunications companies compete for consumers based on price, with
major long distance carriers conducting extensive advertising campaigns to
capture market share. There can be no assurance that a decrease in the rates
charged for communications services by the major long distance carriers or
other competitors, whether caused by general competitive pressures or the
entry of the RBOCs and other LECs into the long distance market, would not
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company expects that the information and telecommunications services
markets will continue to attract new competitors and new technologies,
possibly including alternative technologies that are more sophisticated and
cost effective than the technology of the Company. The Company does not have
the contractual right to prevent its Premiere WorldLink subscribers from
changing to a competing network, and the Company's subscribers may generally
terminate their service with the Company at will. See "Business --
Competition."
DEPENDENCE ON KEY MANAGEMENT AND PERSONNEL
The Company's success is largely dependent upon its executive officers and
other key personnel, the loss of one or more of whom could have a material
adverse effect on the Company. The Company believes that its continued success
will depend to a significant extent upon the efforts and abilities of Boland
T. Jones, Chairman and President, and certain other key executives. Mr. Jones
has entered into an employment agreement with the Company which expires in
December 1999, and the Company maintains key man life insurance on Mr. Jones
in the amount of $3.0 million. See "Management." D. Gregory Smith, a co-
founder of the Company, recently resigned as director, Executive Vice
President and Assistant Secretary of the Company and as a director and officer
of PCI and certain other subsidiaries of the Company, and Leonard A. DeNittis
recently resigned as the Vice President of Engineering and Operations of PCI.
See "Prospectus Summary -- Recent Developments -- Additions and Changes to
Management."
The Company also believes that to be successful it must hire and retain
highly qualified engineering and product development personnel. Competition in
the recruitment of highly qualified personnel in the information and
telecommunications services industry is intense. The inability of the Company
to locate, hire and retain such personnel may have a material adverse effect
on the Company. No assurance can be given that the Company will be able to
retain its key employees or that it will be able to attract qualified
personnel in the future.
ABILITY TO MANAGE GROWTH; ACQUISITION RISKS
The Company continually evaluates acquisition opportunities and, as a
result, frequently engages in acquisition discussions, conducts due diligence
activities in connection with possible acquisitions, and, where appropriate,
engages in acquisition negotiations. The Company has experienced substantial
growth in revenue and personnel in recent years, particularly in 1997. A
substantial portion of such growth has been accomplished through acquisitions,
including the Voice-Tel Acquisitions and the VoiceCom acquisition. The
Company's growth has placed significant demands on all aspects of the
Company's business, including its administrative, technical and financial
personnel and systems. Additional expansion by the Company, including the
proposed
12
<PAGE>
Xpedite Merger, may further strain the Company's management, financial and
other resources. There can be no assurance that the Company's systems,
procedures, controls and existing space will be adequate to support expansion
of the Company's operations. The Company's future operating results will
substantially depend on the ability of its officers and key employees to
manage changing business conditions and to implement and improve its
technical, administrative, financial control and reporting systems. If the
Company is unable to respond to and manage changing business conditions, then
the quality of the Company's services, its ability to retain key personnel and
its results of operations could be materially adversely affected. At certain
stages of growth in network usage, the Company is required to add capacity to
its computer telephony platform and its digital central office switches and
will need to continually add capacity to its private frame relay network, thus
requiring the Company continuously to attempt to predict growth in its network
usage and add capacity accordingly. Difficulties in managing continued growth,
including difficulties in predicting the growth in network usage, could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Acquisitions, including the proposed Xpedite Merger, also involve numerous
additional risks, including difficulties in the assimilation of the
operations, services, products and personnel of the acquired company, the
diversion of management's attention from other business concerns, entry into
markets in which Premiere has little or no direct prior experience and the
potential loss of key employees of the acquired company. Premiere is unable to
predict whether or when any prospective acquisition candidate will become
available or the likelihood that any acquisition will be completed.
Future acquisitions may result in potentially dilutive issuances of equity
securities, the incurrence of additional debt, the assumption of known and
unknown liabilities, the write-off of software development costs and the
amortization of expenses related to goodwill and other intangible assets, all
of which could have a material adverse effect on the Company's business,
financial condition and results of operations. For example, the Voice-Tel
Entities and VoiceCom established reserves for certain potential tax
liabilities that management believes to be adequate based on certain
assumptions which management believes are reasonable. If, however, such
assumptions prove to be incorrect and the potential liabilities ultimately
exceed established reserves, the Company's business, financial condition and
results of operations could be materially adversely affected. The Company has
taken, and in the future may take, charges in connection with acquisitions. In
connection with the Voice-Tel Acquisitions and the VoiceCom acquisition, the
Company took pre-tax charges of approximately $45.4 million during the second
quarter of 1997 and $28.2 million during the third quarter of 1997,
respectively. The Company may take additional charges in connection with
future acquisitions, including the Xpedite Merger. There can be no assurance
that the costs and expenses incurred will not exceed the estimates upon which
such charges are based.
RISK THAT XPEDITE MERGER WILL NOT CLOSE
The Company recently entered into the Merger Agreement with Xpedite and
Acquisition Sub. Subject to the terms and conditions of the Merger Agreement,
Acquisition Sub will merge with and into Xpedite, which will be the surviving
corporation in the Merger and, as a result thereof, will become a wholly-owned
subsidiary of Premiere. Under the terms of the Merger Agreement, shares of
Xpedite Common Stock will be exchanged for a number of shares of Premiere
Common Stock based on an exchange ratio equal to $34 divided by the average
trading price of Premiere Common Stock prior to closing. The maximum exchange
ratio under the Merger Agreement is 1.25 shares of Premiere Common Stock for
each share of Xpedite Common Stock and the minimum exchange ratio is 0.867
shares of Premiere Common Stock for each share of Xpedite Common Stock. The
closing of the Xpedite Merger is not scheduled to occur until after this
Offering is completed and consummation of the Xpedite Merger is subject to
various conditions, including, among others: (i) adoption of the Merger
Agreement by the requisite vote of the holders of Xpedite Common Stock; (ii)
approval of the issuance of shares of Premiere Common Stock pursuant to the
Merger Agreement by the requisite vote of the holders of Premiere Common Stock
and Premiere Preferred Stock, voting as a single class; (iii) satisfaction of
applicable antitrust requirements; (iv) receipt by Premiere and Xpedite of an
opinion of Alston & Bird dated as of the effective time of the Xpedite Merger
relating to certain tax matters; and (v) satisfaction of certain other
13
<PAGE>
usual and customary closing conditions. In addition, the Merger Agreement may
be terminated under certain circumstances by the board of directors of Xpedite
if the actual average trading price of Premiere Common Stock is less than $24
per share, unless Premiere elects to increase the exchange ratio as provided
in the Merger Agreement. Premiere cannot predict whether the Merger Agreement
will be acceptable to Xpedite's or Premiere's shareholders, whether it will be
necessary to renegotiate or amend the terms of the Xpedite Merger or whether
necessary approvals will be obtained or any other condition precedent to such
transaction will be satisfied. There can be no assurance that the conditions
to closing the Xpedite Merger will be fulfilled or that the Company will
complete the Xpedite Merger on the terms currently contemplated or at all. See
"Prospectus Summary -- Recent Developments -- Xpedite Systems, Inc."
RELIANCE ON AMWAY AND CERTAIN OTHER RELATIONSHIPS
Historically, the Voice-Tel Entities have relied on sales through Amway
Corporation ("Amway") for a substantial portion of their revenue. Such sales
accounted for approximately 27.5%, 23.7% and 21.9% of the Company's revenue
for 1995, 1996 and the nine months ended September 30, 1997, respectively.
Amway's relationship with VTE commenced in 1990 when VTE began managing the
voice messaging operations previously conducted by Amway's subsidiary, Amvox,
Inc. ("Amvox"). VTE subsequently acquired and franchised the former Amvox
service centers from Amway in exchange for an equity interest in VTE. Amway
later invested in the development of the private frame relay digital messaging
network through VTN. As a result of these transactions, Amway also became the
single largest equity holder in VTE and VTN. VTE and Amway have entered into a
service and reseller agreement (the "Amway Agreement") providing, among other
things, for the sale by VTE of voice messaging and network transmission
services on an exclusive basis to Amway in the United States, Canada, New
Zealand and Australia for resale by Amway to its independent distributors
under the "Amvox" tradename. The Amway Agreement does not bind the Amway
distributors, who are free to acquire messaging services from alternative
vendors. The Amway Agreement may be canceled by either party upon 180 days
prior written notice or upon shorter notice in the event of a breach. The
Amway Agreement does not prohibit VTE from continuing to provide voice
messaging and network transmission services to Amway's distributors following
termination of the Amway Agreement. However, in the event that Amway
recommended a voice messaging and network transmission services provider other
than the Company, there can be no assurance that Amway's distributors would
not follow such recommendation. Amway intends to sell a significant portion of
the Common Stock that it acquired in the Voice-Tel Acquisitions in this
Offering. See "Principal and Selling Shareholders." Such sale will decrease
Amway's interest in the Company and may increase the possibility that Amway
will recommend a voice messaging and network transmission services provider
other than the Company. There can be no assurance that the Company's
relationship with Amway and the Amway distributors will continue at historical
levels or at all, nor can there be any assurance of long-term price protection
for services provided to Amway. Loss or diminution in the Amway relationship,
or a decrease in average sales price without an offsetting increase in volume,
could have a material adverse effect on the Company's business, financial
condition and results of operations.
In September 1997, Premiere entered into an agreement with Digitec 2000,
Inc. ("Digitec") pursuant to which Digitec will act as a distributor to market
and sell prepaid telephone cards. Under the terms of such agreement, Digitec
agreed, starting January 1, 1998, to sell cards with a retail value of at
least $4 million each month. In the event that Digitec has not sold all of the
cards by August 31, 1998, Digitec will be obligated to pay Premiere an amount
equal to the retail value of the unsold cards less commissions that would have
been payable on such cards. No assurance can be given that Digitec will be
able to sell the amount of cards that it is obligated to sell under the terms
of such agreement or, in the event that Digitec is unable to do so, that
Digitec will have the financial resources available to it to make the payment
required on August 31, 1998 under such agreement.
14
<PAGE>
TECHNOLOGICAL CHANGE; RISK OF OBSOLESCENCE; DEPENDENCE ON NEW SERVICES
The market for the Company's services is characterized by rapid
technological change, frequent new product introductions and evolving industry
standards. The Company's future success will depend in significant part on its
ability to anticipate industry standards, continue to apply advances in
technologies, enhance its current services, develop and introduce new services
in a timely fashion, enhance its software and its computer telephony platform
and compete successfully with products and services based on evolving or new
technologies. The Company expects new products and services, and enhancements
to existing products and services, to be developed and introduced which will
compete with the services offered by the Company. Among the new and evolving
technologies with which the Company expects to compete are notebook computers
equipped with sound cards, fax modems and cellular modems, portable Internet
appliances which would allow connection to the Internet over wireless networks
and personal digital assistants with enhanced communications features. In
addition, aspects of the Company's Orchestrate product line, which will be
marketed to customers during the first quarter of 1998, is expected to compete
within markets where larger companies are working to provide a unified
messaging solution. The Company is also aware that products currently exist
which provide text-to-voice e-mail conversion and "call connect/call
screening" services.
Premiere recently entered into the Merger Agreement with Xpedite and
Acquisition Sub. Through the proposed Xpedite Merger, Premiere plans to offer
Enhanced Fax Services. See "Prospectus Summary -- Recent Developments --
Xpedite Systems, Inc.," "Business -- Premiere Platform and Network -- The
Xpedite Network," "-- Risk that Xpedite Merger Will Not Close" and "-- Risks
Associated with Expansion of Enhanced Fax Services." Technological advances
may result in the availability of new services, products or methods of
electronic document delivery that could compete with the electronic document
distribution services currently provided by Premiere and Xpedite or decrease
the cost of existing products or services which could enable Premiere's and/or
Xpedite's established or potential customers to meet their own needs for
electronic document distribution services more cost efficiently than through
the use of Premiere or Xpedite or in the future through the use of the
combined company's services. In addition, Premiere may experience difficulty
integrating incompatible systems of acquired businesses into its network.
There can be no assurance that Premiere will not be materially adversely
affected in the event of such technological change or difficulty, or that
changes in technology will not enable additional companies to offer services
which could replace, or be more cost-effective than, some or all of the
services offered now by Premiere or Xpedite or in the future by the combined
company.
The Voice-Tel Acquisitions constitute a significant investment by the
Company in a private frame relay network architecture. Alternative
architectures currently exist, and technological advances may result in the
development of additional network architectures. There can be no assurance
that the telecommunications industry will not standardize on a protocol other
than frame relay or that the Company's frame relay architecture will not
become obsolete. Such events would require the Company to invest significant
capital in upgrading or replacing its private frame relay network and could
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company must continually introduce new products in response to evolving
industry standards and customer demands for enhancements to the Company's
existing products. One such new product is Orchestrate, which is operational
and has been available in limited release. The Company intends to begin
marketing Orchestrate to customers through certain of the Company's strategic
partners such as CompuServe and USA.NET, Inc. ("USA.NET") in the first quarter
of 1998. The Company anticipates commencing direct marketing of the
Orchestrate product through print advertising and other channels during the
second quarter of 1998. The Company believes that its competitors have not yet
developed a publicly available network-based product which incorporates all of
the functionalities of Orchestrate, although the Company's competitors have
developed products which the Company believes offer some, but not all, of the
bundled services offered through Orchestrate . There can be no assurance that:
(i) the Company will be successful in developing and marketing service
enhancements or new services that respond to these or other technological
changes or evolving industry standards; (ii) the Company will not experience
difficulties that could delay or prevent the successful development,
introduction and marketing of its services, including Orchestrate; or
(iii) its new services and the enhancements thereto, including Orchestrate,
will adequately meet the requirements of the marketplace and
15
<PAGE>
achieve market acceptance. Delays in the introduction of new services, the
inability of the Company to develop such new services or the failure of such
services to achieve market acceptance could have a material adverse effect on
the Company's business, financial condition and results of operations.
UNCERTAINTY OF MARKET ACCEPTANCE OF COMPUTER TELEPHONY
The Company's future success depends upon the market acceptance of its
existing and future computer telephony product lines and services. Computer
telephony integrates the functionality of telephones and computers and thus
represents a departure from standards for information and telecommunications
services. Market acceptance of computer telephony products and services
generally requires that individuals and enterprises accept a new way of
exchanging information. The Company believes that broad market acceptance of
its computer telephony product lines and services will depend on several
factors, including ease of use, price, reliability, access and quality of
service, system security, product functionality and the effectiveness of
strategic marketing and distribution relationships. There can be no assurance
that the Company's computer telephony products and services will achieve broad
market acceptance or that such market acceptance will occur at the rate which
the Company currently anticipates. A decline in the demand for, or the failure
to achieve broad market acceptance of, the Company's computer telephony
product lines and services would have a material adverse effect on the
Company's business, financial condition and results of operations.
LIMITED PROTECTION OF PROPRIETARY RIGHTS AND TECHNOLOGY
The Company relies primarily on a combination of intellectual property laws
and contractual provisions to protect its proprietary rights and technology.
These laws and contractual provisions provide only limited protection of the
Company's proprietary rights and technology. The Company's proprietary rights
and technology include confidential information and trade secrets which the
Company attempts to protect through confidentiality and nondisclosure
provisions in its licensing, services, reseller and distribution agreements.
The Company typically attempts to protect its confidential information and
trade secrets through these contractual provisions for the term of the
applicable agreement and, to the extent permitted by applicable law, for some
negotiated period of time following termination of the agreement, typically
one to two years at a minimum. In addition, Premiere has three patent
applications pending and nine trademark or service mark registrations pending.
Premiere has two registered service marks. Voice-Tel has been issued two U.S.
patents and has one U.S. patent application pending. Voice-Tel also has five
registered U.S. trademarks or service marks and approximately 40 foreign
trademark or service mark registrations or pending applications. VoiceCom has
two registered U.S. trademarks and one registered foreign trademark. Despite
the Company's efforts to protect its proprietary rights and technology through
intellectual property laws and contractual provisions, unauthorized parties
may attempt to copy aspects of the Company's software or services or to obtain
and use information that the Company regards as proprietary. Although the
Company is not aware of any current or previous infringement of its
proprietary rights and technology, there can be no assurance that the
Company's means of protecting its proprietary rights and technology will be
adequate or that the Company's competitors will not independently develop
similar technology. In addition, the laws of some foreign countries do not
protect the Company's proprietary rights to as great an extent as the laws of
the U.S. See "Business -- Proprietary Rights and Technology."
RISKS OF INFRINGEMENT CLAIMS
Many patents, copyrights and trademarks have been issued in the general
areas of information and telecommunications services and computer telephony.
The Company believes that in the ordinary course of its business third parties
will claim that the Company's current or future products or services infringe
the patent, copyright or trademark rights of such third parties. No assurance
can be given that actions or claims alleging patent, copyright or trademark
infringement will not be brought against the Company with respect to current
or future products or services, or that, if such actions or claims are
brought, the Company will ultimately prevail. Any such claiming parties may
have significantly greater resources than the Company to pursue litigation of
such claims. Any such claims, whether with or without merit, could be time
consuming, result in costly litigation, cause delays in introducing new or
improved products and services, require the Company to enter into royalty or
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licensing agreements, or cause the Company to discontinue use of the
challenged technology, tradename or service mark at potentially significant
expense to the Company associated with the marketing of a new name or the
development or purchase of replacement technology, all of which could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Proprietary Rights and Technology."
In February 1997, the Company entered into a long-term nonexclusive license
agreement with AudioFAX IP LLC ("AudioFAX") settling a patent infringement
suit filed by AudioFAX in June 1996. In the third quarter of 1996, the Company
took a one-time charge for the estimated legal fees and other costs that the
Company expected to incur to resolve this matter. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations." In September
1997, VoiceCom also entered into a long-term nonexclusive license agreement
with AudioFAX.
In July 1996, Xpedite received a letter from counsel for AudioFAX, which
informed Xpedite that AudioFAX is the owner of certain U.S. and Canadian
patents relevant to the fax processing business entitled "Facsimile
Telecommunications Systems and Methods" (the "Patents") and inquired as to
Xpedite's interest in obtaining a license to use the Patents. Xpedite has
reviewed the Patents, obtained certain legal opinions with respect to the
Patents and concluded that it is not necessary to obtain a license to the
Patents. AudioFAX has continued to pursue the licensing of the Patents by
Xpedite. Xpedite's management cannot predict the outcome of this matter,
including but not limited to whether or not AudioFAX will commence a lawsuit
against Xpedite in order to induce Xpedite to enter into a license to use the
Patents. There can be no assurance that the resolution of such matter will not
have a material adverse effect on Xpedite's or Premiere's business, financial
condition and results of operations.
UNCERTAINTY OF STRATEGIC RELATIONSHIPS
A principal element of the Company's strategy is the creation and
maintenance of strategic relationships that will enable the Company to offer
its services to a larger customer base than the Company could otherwise reach
through its direct marketing efforts. The Company has experienced growth in
its existing strategic relationships during 1996 and 1997 and has entered into
or initiated new strategic relationships with several companies, including
WorldCom, American Express and CompuServe. Although the Company intends to
continue to expand its direct marketing channels, the Company believes that
strategic partner relationships may offer a potentially more effective and
efficient marketing channel. Consequently, the Company's success depends in
part on the ultimate success of these relationships and on the ability of
these strategic partners to market the Company's services effectively. Failure
of one or more of the Company's strategic partners to successfully develop and
sustain a market for the Company's services, or the termination of one or more
of the Company's relationships with a strategic partner, could have a material
adverse effect on the Company's overall performance. The telecommunications
industry is experiencing rapid consolidation. Recently WorldCom, which is a
strategic partner of the Company, entered into an agreement to acquire MCI,
which competes with the Company with respect to certain services.
Consolidation in the communications industry, including consolidations
involving the Company's customers and strategic partners, could have a
material adverse effect on the Company's business, financial condition and
results of operations.
In November 1996, the Company entered into a strategic alliance agreement
with WorldCom, the fourth largest long distance carrier in the United States,
whereby WorldCom is required, among other things, to provide the Company with
the right of first opportunity to provide certain enhanced computer telephony
services for a period of at least 25 years. In connection with this agreement,
the Company issued to WorldCom 2,050,000 shares of Common Stock valued at
approximately $25.2 million (based on an independent appraisal) and paid
WorldCom $4.7 million in cash. The Company recorded the value of this
agreement as an intangible asset. While the Company believes that the
intangible asset will be recovered over the life of the agreement, this
recoverability is dependent upon the success of the strategic relationship.
The Company will continually evaluate the realizability of the intangible
asset recorded, and there can be no assurance that future evaluations will not
require a write-down of this asset.
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Although the Company views its strategic relationships as a key factor in
its overall business strategy and in the development and commercialization of
its services, there can be no assurance that its strategic partners view their
relationships with the Company as significant for their own businesses or that
they will not reassess their commitment to the Company in the future. The
Company's arrangements with its strategic partners do not always establish
minimum performance requirements for the Company's strategic partners, but
instead rely on the voluntary efforts of these partners in pursuing joint
goals. Certain of these arrangements prevent the Company from entering into
strategic relationships with other companies in the same industry as the
Company's strategic partners, either for specified periods of time or while
the arrangements remain in force. In addition, even when the Company is
without contractual restriction, it may be restrained by business
considerations from pursuing alternative arrangements. The ability of the
Company's strategic partners to incorporate the Company's services into
successful commercial ventures will require the Company, among other things,
to continue to successfully enhance its existing services and develop new
services. The Company's inability to meet the requirements of its strategic
partners or to comply with the terms of its strategic partner arrangements
could result in its strategic partners failing to market the Company's
services, seeking alternative providers of communications and information
services or canceling their contracts with the Company, any of which could
have a material adverse impact on the Company's business, financial condition
and results of operations. See "Business -- Sales, Marketing and
Distribution."
DEPENDENCE ON LICENSING AND STRATEGIC RELATIONSHIPS
The Company has licensing relationships with companies that have chosen to
outsource part or all of their communications card services to Premiere.
License fees accounted for approximately 7.0% of Premiere's revenues in 1996
and 11.6% of Premiere's revenues during the nine months ended September 30,
1997. One licensee, Communications Network Corporation ("CNC"), accounted for
approximately 19.6% of Premiere's 1996 license fees and approximately 1.4% of
the Company's total 1996 revenues. On August 6, 1996, CNC was placed into
bankruptcy under Chapter 11 of the United States Bankruptcy Code. CNC owed the
Company approximately $627,000 as of December 31, 1996. However, CNC's
transmission provider, WorldCom Network Services, Inc., d/b/a WilTel, is also
obligated to pay this amount to the Company. In addition, WorldCom accounted
for approximately 43.5% of the Company's 1996 license fees and approximately
3.0% of the Company's total 1996 revenues, and approximately 69.5% of the
Company's license fees and 8.1% of the Company's total revenues for the nine
months ended September 30, 1997. The Company believes that through a
combination of new licensing agreements, the strategic alliance agreement with
WorldCom and increased revenues from existing licensees, the Company has
replaced all of the anticipated CNC revenue.
The Company intends to increase its number of licensees and its licensee
transaction volume in the future. The Company's success depends in part upon
the ultimate success or failure of its licensees. The telecommunications
industry is intensely competitive and rapidly consolidating. The majority of
companies that have chosen to outsource communications card services to
Premiere are small or medium-sized telecommunications companies that may be
unable to withstand the intense competition in the telecommunications
industry. Licensees that ceased doing business with Premiere due to financial
difficulties contributed in the aggregate approximately $2.9 million of
Premiere's 1996 revenues. Although the Company was able to add new licensees
in 1996 and the first three quarters of 1997, there can be no assurance that
the failure of one or more of the Company's licensees to develop and sustain a
market for the Company's services, or termination of one or more of the
Company's licensing relationships, will not have a material adverse effect on
the Company's business, financial condition and results of operations.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Upon completion of this Offering, the Company will have outstanding
33,960,277 shares of Common Stock (including 402,748 of Exchangeable Shares,
which are convertible at any time into a like number of shares of Common
Stock, and of which 72,908 are being converted and sold in this Offering). Of
these shares, approximately 20,049,000 shares of Common Stock are freely
transferable without restriction or limitation under the Securities Act.
The remaining shares (approximately 13,912,000 shares) are "restricted
securities"
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("the Restricted Shares") within the meaning of Rule 144 ("Rule 144") adopted
under the Securities Act. Approximately 7,032,000 Restricted Shares are
immediately eligible for sale in the public market pursuant to Rule 144.
Beginning on April 30, 1998 and September 30, 1998, approximately 6,434,000
additional shares and approximately 446,000 additional shares, respectively,
will be eligible for sale pursuant to Rule 144, subject to the volume, manner
of sale and notice requirements of Rule 144.
As of December 15, 1997, options and warrants to purchase an aggregate of
approximately 7,154,000 shares of Common Stock are outstanding, of which
options and warrants to purchase approximately 3,389,000 shares of Common
Stock are vested and immediately exercisable. Substantially all of the shares
issuable upon the exercise of outstanding options and warrants will be
eligible for immediate resale, if and when issued, under Rule 701 adopted
under the Securities Act or pursuant to Registration Statements on Form S-8.
On September 26, 1997, the Company filed a shelf registration statement on
Form S-3 with respect to its 5 3/4% Convertible Subordinated Notes due 2004
(the "Convertible Notes"), which may convert into a maximum of approximately
5,227,000 shares of Common Stock at any time prior to final maturity at a
conversion price of $33.00 per share, subject to adjustment. The Company
expects that the shelf registration statement relating to the Convertible
Notes will be effective shortly after the date of this Prospectus. The Common
Stock issuable upon conversion of the Convertible Notes will be registered
under the Securities Act and will be, if and when issued, freely tradeable.
The holders of approximately 10,641,494 shares of Common Stock and their
permitted transferees are entitled to certain rights with respect to the
registration of such shares under the Securities Act.
Prior to the Company's initial public offering in March 1996, the Company
granted certain registration rights to holders of convertible preferred stock
and warrants. Although these contractual rights remain in force, the shares
subject to such registration rights may be freely disposed of pursuant to Rule
144 under the Securities Act.
Subsequent to the Company's initial public offering, the Company has granted
registration rights in connection with the Company's execution of a strategic
alliance agreement with WorldCom and the Company's acquisitions of TeleT
Communications, LLC ("TeleT"), the Voice-Tel Entities and VoiceCom. In each of
these instances, the Company is required to notify the holders of the
Company's intent to register any of its Common Stock under the Securities Act
and allow such holders an opportunity to include their shares of Common Stock
in the Company's registration; provided, however, that: (i) with respect to
WorldCom and VoiceCom, such notice must be given only if the Company intends
to register and sell newly issued shares; (ii) with respect to CMG@Ventures,
L.P. ("CMG"), such notice must be given only if 20% of the shares held by CMG
remain outstanding; and (iii) with respect to the former owners of the Voice-
Tel Entities, such notice must be given only until April 30, 1998. These
registration rights are subject to certain limitations and restrictions,
including the right of the underwriters of an underwritten offering to limit
the number of shares offered in such registration if such underwriter
determines that the number of shares requested to be registered cannot be
underwritten.
WorldCom has a one-time right to require the Company to file a registration
statement under the Securities Act, provided that such request is made: (i)
between November 13, 1998 and November 13, 1999; or (ii) within 60 days from
the date of a change in control of Premiere, the termination of either Boland
T. Jones or D. Gregory Smith as executive officers or the termination of the
strategic alliance agreement with WorldCom if the events described in clause
(ii) occur prior to November 13, 1999. WorldCom currently has the right to
require the Company to file a registration statement under the Securities Act
as a result of Mr. Smith's resignation. See "Prospectus Summary -- Recent
Developments -- Additions and Changes to Management." In addition, the
registration must be with respect to such minimum number of shares of Common
Stock having an aggregate proposed offering price equal to $10.0 million.
With respect to the former owners of the Voice-Tel Entities, such persons
collectively have the one-time demand right to require the Company to use all
reasonable efforts to file a registration statement under the Securities Act,
provided that (i) such request must be initiated by an Amway entity or holders
of 10% or more of the Registrable Securities (as defined) and (ii) such one-
time demand must be made after July 15, 1997 and
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before the nine-month anniversary of the closing of the VTE Acquisitions. The
registration statement which includes this Prospectus was filed pursuant to
the exercise of such rights by the Voice-Tel holders. In addition, the Company
has agreed to file a shelf registration statement (the "Voice-Tel Shelf") as
soon as practicable following December 15, 1997 to include any shares of
Common Stock then held by the former owners of the Voice-Tel Entities. These
shareholders may include up to approximately 6.4 million shares in the Voice-
Tel Shelf. The Company has exercised certain contractual rights to postpone
this requirement for up to 90 days.
The shares of Premiere Common Stock to be issued in connection with the
Xpedite Merger will be registered under the Securities Act and, unless issued
to affiliates of Xpedite as of the date of the Xpedite stockholders meeting to
consider the Xpedite Merger, will be freely transferable without restriction
or limitation under the Securities Act.
For a period of three months commencing 30 days after financial results
covering at least 30 days of combined operations of Premiere and Xpedite have
been published, each person who is precluded by the Securities Act from
selling or disposing of all of their shares of Premiere Common Stock received
in the Xpedite Merger within one calendar quarter (a "Large Stockholder") will
have a one-time right to require Premiere to file a registration statement
under the Securities Act relating to all or part of their registrable
securities (an "Xpedite Demand Registration"). Premiere is obligated to use
its commercially reasonable efforts to effect an Xpedite Demand Registration
as soon as reasonably practical after the request is made, except that
Premiere has the right, under certain circumstances, to delay the effective
date of a registration statement or any sales thereunder for a period not to
exceed 120 days from the date of the request for registration. In addition,
Premiere is not obligated to effect an Xpedite Demand Registration (i) for
less than 1,000,000 shares or (ii) within three months of a Large Stockholder
selling any registrable securities pursuant to an Xpedite Piggyback
Registration (defined below). Unless Premiere shall otherwise consent, any
offering pursuant to an Xpedite Demand Registration shall be underwritten, and
Premiere shall select the underwriters and any additional investment bankers
to be used.
If Premiere proposes to file a registration statement under the Securities
Act with respect to an offering for Premiere's own account or for the account
of any holders of Premiere Common Stock other than the Large Stockholders, any
Large Stockholder may request registration under the Securities Act of all or
part of its Registrable Securities on the same terms and conditions as
Premiere or such other holders of Premiere Common Stock (an "Xpedite Piggyback
Registration"). In the case of an Xpedite Piggyback Registration, Premiere has
the right to terminate or withdraw any registration undertaken by it prior to
the effectiveness of such registration whether or not any Large Stockholder
has elected to include registrable securities in such registration.
No prediction can be made as to the effect, if any, that the availability of
additional shares for sale will have on the market prices of the Common Stock
prevailing from time to time. Nevertheless, sales of substantial amounts of
the Common Stock in the public market could adversely affect prevailing market
prices of the Common Stock and the ability of the Company to raise equity
capital in the future. See "Shares Eligible for Future Sale."
POTENTIAL ADVERSE IMPACT OF PENDING LITIGATION
In the ordinary course of its business, the Company is subject to claims and
litigation from third parties alleging that the Company's products and
services infringe the patents, trademarks and copyrights of such third
parties. See "Business -- Proprietary Rights and Technology." The Company has
several litigation matters pending not involving infringement claims,
described under "Business -- Legal Proceedings," which the Company is
defending vigorously. Due to the inherent uncertainties of the litigation
process and the judicial system, the Company is unable to predict the outcome
of such litigation matters. If the outcome of one or more of such matters is
adverse to the Company, it could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Proprietary Rights and Technology" and "-- Legal Proceedings."
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DEPENDENCE ON SWITCHING FACILITIES AND COMPUTER TELEPHONY PLATFORMS; DAMAGE,
FAILURE AND DOWNTIME
The Company currently maintains switching facilities and computer telephony
platforms in Atlanta, Georgia, Dallas, Texas and London, England. The
Company's network service operations are dependent upon its ability to protect
the equipment and data at its switching facilities against damage that may be
caused by fire, power loss, technical failures, unauthorized intrusion,
natural disasters, sabotage and other similar events. The Company has taken
precautions to protect itself and its subscribers from events that could
interrupt delivery of the Company's services. These precautions include
physical security systems, uninterruptible power supplies, on-site power
generators, upgraded backup hardware and fire protection systems. The
Company's network is further designed such that the data on each network
server is duplicated on a separate network server. Notwithstanding such
precautions, and although the Company has not experienced any significant
downtime of its network in the last three years due to technical failures,
natural disasters or similar events, there can be no assurance that a fire,
act of sabotage, technical failure, natural disaster or a similar event would
not cause the failure of a network server and its backup server, other
portions of the Company's network or one of the switching facilities as a
whole, thereby resulting in an interruption of the Company's services. Such an
interruption could have a material adverse effect on the Company's business,
financial condition and results of operations. Although the Company maintains
business interruption insurance providing for aggregate coverage of
approximately $10.8 million per policy year, there can be no assurance that
the Company will be able to maintain its business interruption insurance, that
such insurance will continue to be available at reasonable prices or that such
insurance will be sufficient to compensate the Company for losses it
experiences due to the Company's inability to provide services to its
subscribers.
FACTORS AFFECTING OPERATING RESULTS; POTENTIAL FLUCTUATIONS IN QUARTERLY
RESULTS
The Company's operating results have varied significantly in the past and
may vary significantly in the future. Special factors that may cause the
Company's future operating results to vary include: (i) the unique nature of
strategic relationships into which the Company may enter in the future; (ii)
changes in operating expenses resulting from such strategic relationships and
other factors; (iii) the continued acceptance of the Company's licensing
program; (iv) the financial performance of the Company's licensees; (v) the
timing of new service announcements; (vi) market acceptance of new and
enhanced versions of the Company's services; (vii) potential acquisitions;
(viii) changes in legislation and regulation that may affect the competitive
environment for the Company's communications services; and (ix) general
economic and seasonal factors.
In the future, revenues from the Company's strategic relationships may
become an increasingly significant portion of the Company's total revenues.
Due to the unique nature of each strategic relationship, these relationships
may change the Company's mix of expenses relative to revenues.
Quarterly revenues are difficult to forecast because the market for the
Company's services is rapidly evolving. The Company's expense levels are
based, in part, on its expectations as to future revenues. If revenue levels
are below expectations, the Company may be unable or unwilling to reduce
expenses proportionately and operating results would likely be adversely
affected. As a result, the Company believes that period-to-period comparisons
of its results of operations are not necessarily meaningful and should not be
relied upon as indications of future performance. Due to all of the foregoing
factors, it is likely that in some future quarter the Company's operating
results will be below the expectations of public market analysts and
investors. In such event, the market price of the Company's Common Stock will
likely be materially adversely affected.
RISK OF SOFTWARE FAILURES OR ERRORS
The software developed and utilized by the Company in providing its
services, including the Orchestrate software, may contain undetected errors.
Although the Company generally engages in extensive testing of its software
prior to introducing the software onto its network, there can be no assurance
that errors will not be found in the software after the software goes into
use. Any such error may result in partial or total failure of the Company's
network, additional and unexpected expenses to fund further product
development or to add programming personnel to complete a development project,
and loss of revenue because of the inability of subscribers to use Premiere's
network or the cancellation by subscribers of their service with Premiere, any
of
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which could have a material adverse effect on the Company. The Company
maintains technology errors and omissions insurance coverage of $10.0 million
per policy aggregate. However, there can be no assurance that the Company will
be able to maintain its technology errors and omissions insurance, that such
insurance will continue to be available at reasonable prices or will be
sufficient to compensate the Company for losses it experiences due to the
Company's inability to provide services to its subscribers.
DEPENDENCE UPON TELECOMMUNICATION PROVIDERS; NO GUARANTEED SUPPLY
The Company does not own a transmission network and, accordingly, depends on
WorldCom, LCI International Telecom Corp. ("LCI"), MCI, Sprint and other
facilities-based and non-facilities based carriers for transmission of its
subscribers' long distance calls. These long distance telecommunications
services generally are procured pursuant to supply agreements for terms of
three to five years, subject to earlier termination in certain events. Certain
of these agreements provide for minimum purchase requirements. Further, the
Company is dependent upon LECs for call origination and termination. If there
is an outage affecting one of the Company's terminating carriers, the
Company's platform automatically switches calls to another terminating carrier
if capacity is available. The Company has not experienced significant losses
in the past due to interruptions of service at terminating carriers, but no
assurance can be made in this regard in the future. The Company's ability to
maintain and expand its business depends, in part, on its ability to continue
to obtain telecommunication services on favorable terms from long distance
carriers and the cooperation of both interexchange and LECs in originating and
terminating service for its subscribers in a timely manner. The partial or
total loss of the ability to receive or terminate calls would result in a loss
of revenues by the Company and could lead to a loss of subscribers, which
could have a material adverse effect on the Company.
The Company leases capacity on the WorldCom backbone to provide connectivity
and data transmission within the Company's private frame relay network. The
lease agreement expires in September 2000. The Company's hub equipment is
collocated at various WorldCom sites pursuant to co-location agreements that
are terminable by either party upon 30 days written notice. The Company's
ability to maintain network connectivity is dependent upon its access to
transmission facilities provided by WorldCom or an alternative provider. The
Company has no assurance that it will be able to continue such relationship
with WorldCom beyond the terms of its current agreements with WorldCom or that
it will be able to find an alternative provider on terms as favorable as those
offered by WorldCom or on any other terms. If the Company were required to
relocate its hub equipment or change its network transmission provider, it
could experience shutdowns in its service and increase costs which could have
a material adverse effect on its customer relationships and customer retention
and, therefore, its business, financial condition and results of operations.
RELIANCE ON SUPPLIER OF VOICE MESSAGING EQUIPMENT
The Company does not manufacture voice messaging equipment used at its voice
messaging service centers, and such equipment is currently available from a
limited number of sources. Although the Company has not historically
experienced any significant difficulty in obtaining equipment required for its
operations and believes that viable alternative suppliers exist, no assurance
can be given that shortages will not arise in the future or that alternative
suppliers will be available. The inability of the Company to obtain this
equipment could result in delays or reduced delivery of messages which would
materially and adversely affect the Company's business, financial condition
and results of operations.
REGULATION
Various regulatory factors affect the Company's financial performance and
its ability to compete. The Company's operating subsidiaries that provide
regulated long distance telecommunications services ("Operating Subsidiaries")
are subject to regulation by the FCC and by various state public service and
public utility commissions ("PUCs"), and are otherwise affected by regulatory
decisions, trends and policies made by these agencies. FCC rules currently
require interexchange carriers to permit resale of their transmission
services. FCC rules also require LECs to provide all interexchange carriers
with equal access to local exchange facilities for purposes of origination and
termination of long distance calls. If either or both of these requirements
were eliminated, the Company could be adversely affected. Moreover, the
underlying carriers that provide services to the Operating Subsidiaries or
that originate or terminate the Operating Subsidiaries' traffic may increase
rates or
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experience disruptions in service due to factors outside the Company's
control, which could cause the Operating Subsidiaries to experience increases
in rates for telecommunications services or disruptions in transmitting their
subscribers' long distance calls.
PCI, one of the Operating Subsidiaries, has made the requisite filings with
the FCC to provide interstate and international long distance services.
VoiceCom Systems, Inc. ("VCOM"), another Operating Subsidiary, is in the
process of making the requisite filings with the FCC to provide interstate and
international long distance services. There can be no assurance that the FCC
will approve VCOM's filings. Failure by VCOM to comply with FCC requirements
in connection with its provision of interstate and international long distance
services could have a material adverse effect on the Company's or on VCOM's
business, financial condition and results of operation.
In order to provide intrastate long distance service, the Operating
Subsidiaries generally are required to obtain certification from state PUCs,
to register with such state PUCs or to be found exempt from registration by
such state PUCs. Each of PCI and VCOM has either filed the applications
necessary to provide intrastate long distance telecommunications services
throughout the United States or is in the process of filing such applications.
To date, PCI is authorized to provide long distance telecommunications
services in 46 states and in the District of Columbia and is seeking
authorization to provide long distance telecommunications services in four
states. With the exception of three states, Colorado, Michigan and Arizona, in
which PCI's applications to provide operator service (i.e., "0+") are pending,
PCI is authorized to provide operator service in each state where PCI provides
long distance telecommunications service. VCOM, on the other hand, is
authorized to provide long distance telecommunications services in 13 states
and in the District of Columbia and is in the process of filing applications
for certificates to provide long distance telecommunications services in 37
states. The Operating Subsidiaries' facilities do not prevent subscribers from
using the facilities to make long distance calls in any state, including
states in which the Operating Subsidiaries currently are not authorized to
provide intrastate telecommunications services and operator services. There
can be no assurance that the Operating Subsidiaries' provision of long
distance telecommunications and operator services in states where the
Operating Subsidiaries are not authorized to provide such services will not
have a material adverse effect on the Company's or on the Operating
Subsidiaries' business, financial condition and results of operations.
The 1996 Act is intended to increase competition in the long distance and
local telecommunications markets. The 1996 Act opens competition in the local
services market and, at the same time, contains provisions intended to protect
consumers and businesses from unfair competition by incumbent LECs, including
the RBOCs. The 1996 Act allows RBOCs to provide long distance service outside
of their local service territories but bars them from immediately offering in-
region interLATA long distance services until certain conditions are
satisfied. An RBOC must apply to the FCC to provide in-region interLATA long
distance services and must satisfy a set of pro-competitive criteria intended
to ensure that RBOCs open their own local markets to competition before the
FCC will approve such application. The Company is unable to determine how the
FCC will rule on any such application. Moreover, as a result of the 1996 Act,
the Company may experience increased competition from others, including the
RBOCs. In addition, the Operating Subsidiaries may be subject to additional
regulatory requirements and fees, including universal service assessments and
payphone compensation surcharges resulting from the implementation of the 1996
Act.
In conducting its business, the Company is subject to various laws and
regulations relating to commercial transactions generally, such as the Uniform
Commercial Code and is also subject to the electronic funds transfer rules
embodied in Regulation E promulgated by the Board of Governors of the Federal
Reserve System (the "Federal Reserve"). Congress has held hearings regarding,
and various agencies are considering, whether to regulate providers of
services and transactions in the electronic commerce market. For example, the
Federal Reserve recently completed a study, directed by Congress, regarding
the propriety of applying Regulation E to stored value cards. The Department
of Treasury recently promulgated proposed rules applying record keeping,
reporting and other requirements to a wide variety of entities involved in
electronic commerce. It is possible that Congress, the states or various
government agencies could impose new or additional requirements on the
electronic commerce market or entities operating therein. If enacted, such
laws, rules and regulations could be imposed on the Company's business and
industry and could have a material adverse effect on the Company's
23
<PAGE>
business, financial condition and results of operations. The Company's
proposed international activities also will be subject to regulation by
various international authorities and the inherent risk of unexpected changes
in such regulation.
RISKS OF LEVERAGE
In connection with the issuance of the Convertible Notes, the Company
incurred $172.5 million in indebtedness. As a result of this increased
leverage, the Company's principal and interest obligations have increased
substantially. The degree to which the Company is leveraged could adversely
affect the Company's ability to obtain additional financing for working
capital, acquisitions or other purposes and could make it more vulnerable to
economic downturns and competitive pressures. The Company's increased leverage
could also adversely affect its liquidity, as a substantial portion of
available cash from operations may have to be applied to meet debt service
requirements, and in the event of a cash shortfall, the Company could be
forced to reduce other expenditures and forego potential acquisitions to be
able to meet such requirements. The indenture related to the Convertible Notes
does not contain any financial covenants or any other agreements restricting
the payment of dividends, the repurchase of securities of the Company, the
issuance of additional equity or the incurrence of additional indebtedness.
See "Capitalization," "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and
"Selected Consolidated Financial Information."
RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION
A key component of the Premiere strategy is its planned expansion into
international markets. In 1996, the Company opened a POP site in London,
England which is currently being upgraded to a full switching facility and
computer telephony platform. In addition, the Company intends to pursue long
term strategic relationships with European partners. Premiere also intends to
establish high speed client/server networks of personal computers (called
"Telnodes") and PCs utilizing the Company's proprietary software (called
"Network Managers") in Canada, New Zealand and potentially other countries in
1998. The Company currently has voice messaging service centers in Canada,
Australia, New Zealand and Puerto Rico. If international revenues are not
adequate to offset the expense of establishing and maintaining these
international operations, Premiere's business, financial condition and results
of operations could be materially adversely affected. To date, Premiere has
only limited experience in marketing and distributing its services
internationally. There can be no assurance that Premiere will be able to
successfully establish the proposed international Telnodes and Network
Managers or to market, sell and deliver its services in international markets.
In addition to the uncertainty as to Premiere's ability to expand its
international presence, there are certain difficulties and risks inherent in
doing business on an international level, such as burdensome regulatory
requirements and unexpected changes in these requirements, export
restrictions, export controls relating to technology, tariffs and other trade
barriers, difficulties in staffing and managing international operations,
longer payment cycles, problems in collecting accounts receivable, political
instability, fluctuations in currency exchange rates, seasonal reductions in
business activity during the summer months in Europe and certain other parts
of the world and potentially adverse tax consequences. The Company denominates
foreign transactions in foreign currency and does not engage in hedging
transactions. The Company has not experienced any material losses from
fluctuations in currency exchange rates, but there can be no assurance that
the Company will not incur material losses due to currency exchange rate
fluctuations in the future.
Premiere recently entered into the Merger Agreement with Xpedite and
Acquisition Sub. See "Prospectus Summary -- Recent Developments -- Xpedite
Systems, Inc." and "-- Risk That Xpedite Merger Will Not Close." A significant
portion of Xpedite's business is conducted outside the United States, and a
significant portion of its revenues and expenses are derived in foreign
currencies. Accordingly, Xpedite's results of operations may be materially
affected by fluctuations in foreign currencies. Many aspects of Xpedite's
international operations and business expansion plans are subject to foreign
government regulations, currency fluctuations, political uncertainties and
differences in business practices. There can be no assurance that foreign
governments will not adopt regulations or take other actions that would have a
direct or indirect adverse impact
24
<PAGE>
on the business or market opportunities of Xpedite within such governments'
countries, including increased tariffs. Furthermore, there can be no assurance
that the political, cultural and economic climate outside the United States
will be favorable to Xpedite's operations and growth strategy. As a result of
the XSL Acquisition, a higher proportion of Xpedite's business will be
conducted outside the United States and, accordingly, Xpedite may be subject,
to a greater degree, to the foregoing risks.
RISKS ASSOCIATED WITH EXPANSION OF ENHANCED FAX SERVICES
In the event the Xpedite Merger is consummated, Premiere intends to
accelerate growth of Enhanced Fax Services throughout the world by expansion
of Xpedite's proprietary private world-wide document distribution network (the
"Xpedite Network"), the integration of the Xpedite Network with Premiere's
private frame relay network and computer telephony platform and the
acquisition of entities engaged in the business of Enhanced Fax Services.
There can be no assurance that Premiere will be able to expand its ability to
provide services at a rate or in a manner satisfactory to meet the demands of
existing or future customers, including, but not limited to, increasing the
capacity of the Xpedite Network to process increasing amounts of document
traffic, integrating and increasing the capability of the Xpedite Network to
perform tasks required by Premiere's customers or identifying and establishing
alliances with new partners in order to enable Premiere to expand its network
in new geographic regions. Such inability may adversely affect customer
relationships and perceptions of Premiere in the markets in which it provides
services, which could have a material adverse effect on Premiere's business,
financial condition or results of operations. In addition, such growth will
involve substantial investments of capital, management and other resources.
There can be no assurance that Premiere will generate sufficient cash for
future growth of the Enhanced Fax Services business through earnings or
external financings, or that such external financings will be available on
terms acceptable to Premiere or that Premiere will be able to employ any such
resources in a manner that will result in accelerated growth.
RISK OF LOSS FROM RETURNED TRANSACTIONS; FRAUD; BAD DEBT; THEFT OF SERVICES
The Company uses two principal financial payment clearance systems: the
Federal Reserve's Automated Clearing House for electronic fund transfers; and
the national credit card systems for electronic credit card settlement. In its
use of these established payment clearance systems, the Company generally
bears credit risks similar to those normally assumed by other users of these
systems arising from returned transactions caused by insufficient funds, stop
payment orders, closed accounts, frozen accounts, unauthorized use, disputes,
theft or fraud. From time to time, persons have gained unauthorized access to
the Company's network and obtained services without rendering payment to the
Company by unlawfully using the access numbers and PINs of authorized users.
No assurance can be given that future losses due to unauthorized use of access
numbers and PINs will not be material. The Company attempts to manage these
risks through its internal controls and proprietary billing system. The
Company's computer telephony platform is designed to prohibit a single access
number and PIN from establishing multiple simultaneous connections to the
platform, and the Company establishes preset spending limits for each
subscriber. Although the Company believes that its risk management and bad
debt reserve practices are adequate, there can be no assurance that the
Company's risk management practices or reserves will be sufficient to protect
the Company from unauthorized or returned transactions or thefts of services
which could have a material adverse effect on the Company's business,
financial condition and results of operations.
VOLATILITY OF STOCK PRICE
There may be significant volatility in the market price for the Common
Stock. The Company believes factors such as actual or anticipated quarterly
fluctuations in financial results, changes in earnings estimates by securities
analysts and announcements of material events by the Company, its major
strategic partners or licensees or its competitors may cause the market price
for the Common Stock to fluctuate, perhaps substantially. These fluctuations,
as well as general economic conditions, may have a material adverse effect on
the market price of the Common Stock. In addition, in recent years the stock
market in general, and technology-related stocks in particular, have
experienced price and volume fluctuations that often have been unrelated or
disproportionate to the operating performance of companies.
25
<PAGE>
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE ARTICLES, BYLAWS AND THE
GEORGIA CODE
The Board of Directors of the Company is empowered to issue preferred stock
without shareholder action. The existence of this "blank-check" preferred
could render more difficult or discourage an attempt to obtain control of the
Company by means of a tender offer, merger, proxy contest or otherwise. The
Company's Amended and Restated Bylaws (the "Bylaws") divide the Board of
Directors into three classes, as nearly equal in size as possible, with
staggered three-year terms. One class is elected each year. The classification
of the Board of Directors could have the effect of making it more difficult
for a third party to acquire control of the Company. The Company is also
subject to certain provisions of the Georgia Business Corporation Code, as
amended (the "Georgia Code"), which relate to business combinations with
interested shareholders. In addition to considering the effects of any action
on the Company and its shareholders, the Articles of Incorporation, as amended
(the "Articles"), permit the Board of Directors and the committees and
individual members thereof to consider the interests of various
constituencies, including employees, customers, suppliers, and creditors of
the Company, communities in which the Company maintains offices or operations
and other factors which such directors deem pertinent, in carrying out and
discharging the duties and responsibilities of such positions and in
determining what is believed to be in the best interests of the Company. See
"Description of Capital Stock -- Certain Provisions of the Articles, Bylaws
and the Georgia Code."
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
When used in this Prospectus and elsewhere by management or the Company from
time to time, the words "believes," "anticipates," "expects," "will" and
similar expressions are intended to identify forward-looking statements
concerning the Company's operations, economic performance and financial
condition, including in particular, the Company's business strategy and means
to implement the strategy, the Company's goals, the amount of capital
expenditures and the likelihood of the Company's success in developing and
expanding its business. These statements are based on a number of assumptions
and estimates which are inherently subject to significant risks and
uncertainties, many of which are beyond the control of the Company and reflect
future business decisions which are subject to change. A variety of factors,
some of which are set forth under "Risk Factors" in this Prospectus, could
cause actual results to differ materially from those anticipated in the
Company's forward-looking statements. These factors include, without
limitation, the Company's ability to successfully complete and integrate
acquisitions in existing and new markets (including, without limitation, the
integration of VTE and certain VTE affiliates and independent franchisees, the
integration of VoiceCom and the completion of the Xpedite Merger and the
integration of Xpedite), to manage the Company's growth and to respond to
rapid technological change and risk of obsolescence of the Company's products,
services and technology. Consequently, all of the forward-looking statements
made in this Prospectus are qualified by these cautionary statements, and
readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to publicly release the results of any revisions to such forward-
looking statements that may be made to reflect events or circumstances after
the date hereof, or thereof, as the case may be, or to reflect the occurrence
of unanticipated events.
26
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
offered by the Selling Shareholders. See "Prinicipal and Selling
Shareholders."
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock has traded on the Nasdaq National Market under the symbol
"PTEK" since the Company's initial public offering on March 5, 1996. The
following table sets forth the range of high and low sales prices of the
Common Stock as reported on the Nasdaq National Market for the periods
indicated:
<TABLE>
<CAPTION>
HIGH LOW
<S> <C> <C>
1996
First Quarter (from March 5, 1996)....................... $27 3/4 $23
Second Quarter........................................... 50 23 5/8
Third Quarter............................................ 35 3/4 16
Fourth Quarter........................................... 31 1/4 14 1/2
1997
First Quarter............................................ 27 1/2 16 1/2
Second Quarter........................................... 30 1/2 19 1/4
Third Quarter............................................ 34 1/2 22 7/8
Fourth Quarter (through December 15, 1997)............... 38 1/2 22 7/8
</TABLE>
On December 19, 1997, the last reported sales price of the Common Stock as
reported by the Nasdaq National Market was $26 1/2 per share. As of December
19, 1997, there were approximately 450 record holders of the Common Stock.
The Company has never paid cash dividends on its Common Stock, and the
current policy of the Company's Board of Directors is to retain any available
earnings for use in the operation and expansion of the Company's business.
Therefore, the payment of cash dividends on the Common Stock is unlikely in
the foreseeable future. Any future determination to pay cash dividends will be
at the discretion of the Board of Directors and will depend upon the Company's
earnings, capital requirements, financial condition and any other factors
deemed relevant by the Board of Directors.
27
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following consolidated statement of operations data for the years ended
December 31, 1994, 1995 and 1996, and the consolidated balance sheet data as
of December 31, 1995 and 1996, have been derived from the consolidated
financial statements of the Company incorporated by reference in this
Prospectus, which have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report incorporated by reference in this
Prospectus, and are qualified by reference to such consolidated financial
statements including the related notes thereto. The unaudited consolidated
statement of operations data for the years ended December 31, 1992 and 1993
and the nine month periods ended September 30, 1996 and 1997 and the unaudited
consolidated balance sheet data at December 31, 1992, 1993 and 1994 and
September 30, 1996 and 1997 are derived from unaudited consolidated financial
statements of the Company incorporated by reference in this Prospectus and
include all adjustments, consisting only of normal recurring accruals, which
the Company considers necessary for a fair presentation thereof. The selected
consolidated financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's consolidated financial statements and the notes thereto
incorporated by reference in this Prospectus. See "Available Information" and
"Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------- -----------------------
1992(1) 1993(1) 1994 1995 1996 1996 1997
----------- ----------- -------- -------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $57,324 $100,055 $119,136 $147,543 $197,474 $143,537 $167,364
Gross margin............ 31,996 59,111 85,229 103,675 141,873 101,523 122,344
Operating income
(loss)(2).............. (2,136) (754) (13,232) 7,003 6,865 1,538 (43,942)
Net income (loss)(2).... (5,023) (5,116) (15,519) 4,171 3,458 2,553 (34,544)
Net income (loss)
attributable to
common shareholders for
net income (loss) per
share
-- primary(3).......... (5,023) (5,116) (15,839) 4,222 3,429 2,553 (34,544)
-- fully diluted(3).... -- -- -- 4,541 -- -- --
Net income (loss) per
common and common
equivalent shares
--primary(2)(3)........ $ (0.50) $ (0.51) $ (1.18) $ 0.15 $ 0.12 $ 0.09 $ (1.10)
--fully diluted(4)..... $ -- $ -- $ -- $ 0.14 $ -- $ -- $ --
Shares used in computing
net income (loss) per
common and common
equivalent shares
--primary.............. 9,947 9,947 13,468 28,718 29,213 28,490 31,518
--fully diluted........ -- -- -- 31,814 -- -- --
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
AS OF
AS OF DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------- -----------------------
1992(1) 1993(1) 1994 1995 1996 1996 1997
----------- ----------- ----------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents
and investments........ $5,213 $ 5,663 $ 7,849 $11,759 $83,270 $88,280 $183,838
Working capital......... (8,527) (17,742) (12,521) (16,093) 45,020 63,520 130,915
Total assets............ 53,507 54,953 60,051 78,131 201,541 171,238 350,895
Total debt.............. 34,817 35,112 49,203 52,650 47,429 48,448 179,851
Total shareholders'
equity (deficit)....... (147) (1,711) (14,921) (11,639) 104,533 74,058 78,160
</TABLE>
- --------
(1) Financial data for the years ended December 31, 1992 and 1993 was derived
from Premiere's financial data for the nine months ended December 31, 1992
and 1993 and from Premiere's interim data for the three months ended March
31, 1992 and 1993 consolidated with the Voice-Tel Entities and VoiceCom
for the years ended December 31, 1992 and 1993.
(2) Excluding charges for purchased research and development, accrued
settlement costs and restructuring and other special charges incurred by
Premiere in the amounts of approximately $0, $0 and $6.7 million,
respectively, in 1994, and approximately $0, $2.5 and $0 million,
respectively, in 1995, and approximately $11.0, $1.3 and $0
million, respectively, in 1996, operating income (loss), net income (loss)
and net income (loss) per share (on a fully diluted basis when applicable)
would have been approximately $(6.5) million, $(11.4) million and $(0.87),
respectively, for 1994 and approximately $9.5 million, $5.7 million and
$0.22, respectively, for 1995 and approximately $19.2 million, $11.0
million and $0.37, respectively, for 1996. Excluding charges for
restructuring and other special charges attributable to the Voice-Tel
Acquisitions and the VoiceCom acquisition and accrued litigation and
settlement costs of $73.6 million and $1.5 million, respectively,
operating income, net income and net income per share would have been
approximately $31.2 million, $19.0 million and $0.55, respectively, for
the nine months ended September 30, 1997.
(3) Net income (loss) per share is computed using the weighted average number
of shares of common stock and dilutive common stock equivalents from
convertible preferred stock (using the if-converted method) and from stock
options (using the modified treasury stock method). Further, for the years
ended December 31, 1992, 1993, and 1994 and the nine months ended
September 30, 1997, net income (loss) per share was not calculated under
the modified treasury stock method as the results were antidilutive.
Accordingly, basic net income (loss) per share calculations were used for
the years ended December 31, 1992, 1993 and 1994 and the nine months ended
September 30, 1997.
(4) Fully diluted net income (loss) per share is not presented where the
effect is antidilutive.
29
<PAGE>
SELECTED PRO FORMA FINANCIAL DATA OF PREMIERE AND XPEDITE
The following table sets forth selected pro forma combined financial
information for the years ended December 31, 1994, 1995 and 1996 and the nine
months ended September 30, 1997 giving effect to the Xpedite Merger using the
pooling-of-interests method of accounting assuming a 1.25 exchange ratio and
consummation of the Xpedite Merger as of the beginning of each period and the
XSL Acquisition using the purchase method of accounting assuming consummation
thereof as of January 1, 1996. The pro forma information is provided for
informational purposes only and is not necessarily indicative of actual
results that would have been achieved had the Xpedite Merger or the XSL
Acquisition been consummated at the beginning of the periods presented or of
future results. The selected pro forma combined financial information is
derived from the pro forma condensed combined financial information
incorporated by reference herein. This information should be read in
conjunction with the historical financial statements of Premiere, Xpedite and
XSL, including the respective notes thereto, incorporated by reference herein
and the unaudited pro forma financial information incorporated by reference
herein. See "Available Information" and "Incorporation of Certain Information
by Reference." There can be no assurance that the Xpedite Merger will be
consummated on the terms currently contemplated or at all. See "Risks Factors
- -- Risk that the Xpedite Merger Will Not Close."
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
----------------------------------- SEPTEMBER 30,
1994 1995 1996 1997
----------- ----------- ----------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................... $160,565 $203,227 $348,508 $311,298
Gross margin................. 114,273 143,949 240,913 214,901
Operating income (loss)(1)... (6,988) (37,076) 41,743 (17,556)
Net income (loss)(1)......... (11,736) (42,391) 18,831 (22,932)
Pro forma net income (loss)
attributable to common
shareholders for primary net
income (loss) per share(2).. (12,056) (42,699) 18,802 (22,932)
Pro forma net income (loss)
per common and common
equivalent shares --
primary(3)................. $ (0.49) $ (1.37) $ 0.48 $ (0.54)
Shares used in computing net
income (loss) per common and
common equivalent shares --
primary.................... 24,804 31,814 39,006 42,854
BALANCE SHEET DATA (AT PERIOD
END):
Cash, cash equivalents and
investments................. $ 23,988 $ 20,835 $ 89,950 $187,886
Working capital.............. 3,938 (18,361) 49,493 111,231
Total assets................. 94,403 151,014 289,932 542,808
Total debt................... 49,247 99,932 82,907 300,538
Total shareholders' equity
(deficit)................... 12,164 (12,755) 129,670 77,511
</TABLE>
- --------
(1) Excluding charges for purchased research and development, accrued
settlement costs and restructuring and other special charges incurred by
Premiere and Xpedite in the amounts of approximately $0, $0 and $6.7
million, respectively, in 1994, and approximately $53.0, $2.5 and $0
million, respectively, in 1995 and approximately $0, $1.3 and $0.0
million, respectively, in 1996, operating income, net income and pro forma
net income (loss) per share would have been $(0.3) million, $(7.6) million
and $(0.32), respectively, for 1994, approximately $18.4 million, $13.1
million and $0.42, respectively, for 1995, approximately $43.0 million,
$19.6 million and $0.50, respectively, for 1996. Excluding charges for
restructuring and other special charges attributable to the Voice-Tel
Acquisitions and the VoiceCom acquisition and accrued settlement costs of
$73.6 million and $1.5 million, respectively, operating income, net income
and pro forma net income per share would have been approximately $57.5
million, $30.6 million and $0.71, respectively, including applicable tax
effects for the nine months ended September 30, 1997.
(2) Supplementary pro forma net income per share assuming the conversion of
Premiere preferred stock and the retirement of notes payable for the year
ended December 31, 1995 are not presented because the effect of the pro
forma adjustments is immaterial.
(3) Pro forma net income (loss) per share is computed using the weighted
average number of shares of common stock and dilutive common stock
equivalents from convertible preferred stock (using the if-converted
method) and from stock options (using the modified treasury stock method).
Fully diluted data is not presented as the effect is anti-dilutive or
immaterial for all periods presented. Further, for the years ended
December 31, 1994, 1995 and 1996 and the nine months ended September 30,
1997, net income per share was not calculated under the modified treasury
stock method as the results were antidilutive. Accordingly, basic net
income (loss) per share calculations were used for the years ended
December 31, 1994, 1995 and 1996 and the nine months ended September 30,
1997.
30
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
consolidated financial statements and the related notes thereto incorporated
by reference in this Prospectus. Effective December 31, 1994, the Company
changed its fiscal year-end from March 31 to December 31. The Company has
changed the fiscal year ended December 31, 1994 to include 12 months of
operations.
OVERVIEW
Premiere designs, develops, markets and provides enhanced personal
communications services. The Company delivers its services through its
proprietary platform and an international private frame relay network that
integrates digital switching technology with enhanced personal communications
features such as calling card long distance, e-mail, voice mail, fax mail,
conference calling and call forwarding. The Company's platform is modular and
scaleable, with an open-systems design and an advanced electronic billing and
information system ("EBIS"), which allows the Company to quickly customize its
services to meet the needs of its subscribers and business partners and to
easily expand system capacity.
Premiere's revenues consist of (i) subscriber services from information,
telecommunications and voice messaging services; (ii) license fees from use of
its computer telephony platform by customers of companies that have licensing
relationships with Premiere; and, to a lesser extent; (iii) other revenues,
primarily long-distance charges from hospitality services. Subscriber services
revenues from information and telecommunications services, including Premiere
WorldLink, AFCOM and co-branded services, are based primarily on a per minute
charge. Subscriber services revenues from voice messaging services include
service initiation fees, monthly voice mailbox fees and usage fees. License
fees are contracted on a long-term basis and are generally based on a per
minute charge and, in certain circumstances, a per usage charge. Other revenue
charges are based on long-distance rates established by the Company, depending
upon the originating location of the call, and other various methods.
Cost of services consists primarily of transmission costs. Licensees
generally arrange for, and directly bear the cost of, transmission.
Consequently, while the per minute fees for licensee platform usage are lower
than those for the subscriber services, the gross margin from license
arrangements is considerably higher than for subscriber services.
Selling, general and administrative expenses include direct and indirect
commissions, the cost of print advertisements, salaries and benefits, travel
and entertainment expenses, bad debt expense, rent and facility expense,
accounting and audit fees, legal fees, property taxes and other administrative
expenses.
Depreciation and amortization include depreciation of computer and network
operations equipment and amortization of intangible assets. The Company
provides for depreciation using the straight-line method of depreciation over
the estimated useful lives of the assets, which range from five to ten years,
with the exception of leasehold improvements which are depreciated on a
straight-line basis over the shorter of the term of the lease or the estimated
useful life of the assets. Amortization of intangible assets includes deferred
software development costs and the WorldCom strategic alliance contract
intangible, which are amortized over 5 and 25 years, respectively.
Premiere electronically bills most subscriber services revenue from
information and telecommunications services directly to the subscriber's
credit card or bank account using the EBIS. The Company bills subscribers at
least monthly and in certain instances more frequently if a particular
subscriber exceeds pre set spending limits. Because substantially all of the
Company's information and telecommunication services are billed electronically
through the EBIS, the Company believes it has shortened the collection cycle
compared to a traditional 30-day non electronic billing arrangement. License
fees are generally billed and invoiced on a 30-day basis. Voice messaging
services revenue and license fees are billed and invoiced on a 30-day basis.
The preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") requires management to make estimates
and assumptions that affect the reported amounts of assets
31
<PAGE>
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from the estimates.
The Company periodically reviews the values assigned to long-lived assets,
such as property and equipment and software costs, to determine whether any
impairments are other than temporary. Management believes that the long-lived
assets in the accompanying balance sheets are appropriately valued.
In connection with the VoiceCom acquisition, the Company took a pre-tax
charge in the third quarter of 1997 of approximately $28.2 million consisting
of transaction expenses and restructuring and related costs attributable to
the VoiceCom acquisition. In connection with the Voice-Tel Acquisitions, the
Company took a pre-tax charge in the second quarter of 1997 of approximately
$45.4 million consisting of transaction expenses and restructuring and related
costs attributable to the Voice-Tel Acquisitions. In addition, in connection
with the CNC litigation discussed under "Business -- Legal Proceedings," the
Company established a reserve in the second quarter of 1997 for anticipated
legal expenses and settlement costs in an amount of $1.5 million.
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the percentage
relationship of certain statements of operations items to total revenues.
<TABLE>
<CAPTION>
YEARS NINE MONTHS ENDED
ENDED DECEMBER 31, SEPTEMBER 30,
----------------------- -----------------------
1994 1995 1996 1996 1997
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues...................... 100.0% 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ===== =====
Cost of services.............. 28.5% 29.7% 28.2% 29.3% 26.9%
------ ------ ------ ----- -----
Gross margin.................. 71.5 70.3 71.8 70.7 73.1
------ ------ ------ ----- -----
Operating expenses:
Selling, general and adminis-
trative..................... 69.0 56.7 55.0 54.3 46.8
Depreciation and amortiza-
tion........................ 8.1 7.1 7.2 6.8 7.7
Charge for purchased research
and
development................. -- -- 5.6 7.7 --
Restructuring and other spe-
cial charges................ 5.6 -- -- -- 44.0
Accrued settlement costs..... -- 1.7 0.6 0.9 0.9
------ ------ ------ ----- -----
Total operating expenses.... 82.7 65.5 68.4 69.7 99.4
------ ------ ------ ----- -----
Operating income (loss)....... (11.2) 4.8 3.4 1.0 (26.3)
------ ------ ------ ----- -----
Other income (expense):
Interest income.............. 0.2 0.3 1.4 1.7 2.0
Interest expense............. (3.9) (3.3) (2.3) (2.7) (2.0)
Other, net................... 0.2 1.0 (0.1) -- 0.1
------ ------ ------ ----- -----
Total other income (ex-
pense)..................... (3.5) (2.0) (1.0) (1.0) 0.1
------ ------ ------ ----- -----
Net income (loss) before
income taxes and
extraordinary gain........... (14.7) 2.8 2.4 (0.0) (26.2)
Provision for (benefit from)
income taxes................. (0.8) 0.0 0.7 ( 1.8) (5.5)
------ ------ ------ ----- -----
Net income (loss) before ex-
traordinary gain............. (13.9) 2.8 1.7 1.8 (20.7)
Extraordinary gain on early
extinguishment of debt, net
of tax effect................ 0.8 -- 0.0 0.0 --
------ ------ ------ ----- -----
Net income (loss)............. (13.1)% 2.8% 1.7% 1.8 % (20.7)%
====== ====== ====== ===== =====
</TABLE>
32
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1997
Revenues. Total revenues increased $23.9 million or 16.7%, from $143.5
million in the nine months ended September 30, 1996 to $167.4 million in the
nine months ended September 30, 1997. The increase in revenues is due
primarily to increased demand for mobile communication services, additional
licensee relationships and increased revenue from existing licensees.
Cost of Services. Cost of services increased from $42.0 million in the nine
months ended September 30, 1996 to $45.0 million in the nine months ended
September 30, 1997. These expenses decreased as a percentage of revenues from
29.3% in the nine months ended September 30, 1996 to 26.9% in the nine months
ended September 30, 1997. The decrease in the percentage of revenue is
primarily due to the increase in higher margin license revenues and cost
reductions as a result of the Company's restructuring initiatives related to
the Voice-Tel Entities.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from $78.0 million in the nine months ended
September 30, 1996 to $78.4 million in the nine months ended September 30,
1997. These expenses decreased as a percentage of revenues from 54.3% in the
nine months ended September 30, 1996 to 46.8% in the nine months ended
September 30, 1997. This decrease resulted from improved operating leverage
related to increased revenues and cost reductions made in connection with the
Company's restructuring initiatives.
Depreciation and Amortization Expenses. Depreciation and amortization
expenses increased $3.1 million, or 32.0% from $9.7 million in the nine months
ended September 30, 1996 to $12.8 million in the nine months ended
September 30, 1997. This increase was due primarily to increased capital
expenditures and amortization of goodwill acquired in the Voice-Tel
Acquisitions.
Restructuring and Other Special Charges. Restructuring and other special
charges incurred during the nine months ended September 30, 1997 were $73.6
million compared to $11.0 million in the nine months ended September 30, 1996.
Accrued Settlement Cost. Accrued settlement costs during the nine months
ended September 30, 1997, were $1.5 million compared to $1.3 million in the
nine months ended September 30, 1996. See "Business -- Legal Proceedings".
Operating Income (Loss). Operating income decreased $45.4 million from $1.5
million in the nine months ended September 30, 1996 to a deficit of $43.9
million in the nine months ended September 30, 1997. Excluding the $1.5
million accrued settlement charge and the $73.6 million effect of the
restructuring and other special charges, operating income increased $17.4
million from $13.8 million in the nine months ended September 30, 1996 to
$31.2 million in the nine months ended September 30, 1997.
Interest, Net. Interest, net in the nine months period ended September 30,
1996 resulted primarily from amounts due under various borrowing arrangements
of the Voice-Tel Entities. A substantial amount of such borrowings were repaid
in connection with the Voice-Tel Acquisitions in 1997. Interest, net in the
nine months period ended September 30, 1997 results from investment earnings
on the Company's cash and short-term investments, which was approximately
$183.8 million at September 30, 1997, offset in part by interest expense on
the Company's convertible subordinated notes and other borrowings.
Income Taxes. Income tax benefit was $2.6 million in the nine months ended
September 30, 1996 and $9.3 million in the nine months ended September 30,
1997. The Company's effective tax rate varied from the statutory rate during
these periods as a result of certain non-taxable investment income, income of
Voice-Tel Entities which had elected to be treated as S-corporations under
U.S. tax law prior to their acquisition by the Company, non-deductible
acquisition costs and net operating losses of foreign subsidiaries.
33
<PAGE>
Net Income (Loss). As a result of the foregoing, net income decreased $37.1
million from net income of $2.6 million in the nine months ended September 30,
1996 to a net loss of $34.5 million in the nine months ended September 30,
1997. As a percentage of revenues, net income decreased from 1.8% in the nine
months ended September 30, 1996 to a net loss of 20.7% in the nine months
ended September 30, 1997.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Revenues. Total revenues increased 33.9% from $147.5 million in the year
ended December 31, 1995 to $197.5 million in the year ended December 31, 1996.
The increase in revenues is due primarily to increased demand for mobile
communication services, voice messaging services and additional licensee
relationships.
On August 6, 1996, CNC, a licensing customer of the Company, was placed into
bankruptcy under Chapter 11 of the Bankruptcy Code. CNC accounted for 19.6%
and 1.4% of the Company's licensing revenues and total revenues, respectively,
during the year ended December 31, 1996. CNC owed the Company approximately
$627,000 as of December 31, 1996. However, CNC's transmission provider,
WorldCom Network Services, Inc. d/b/a/ WilTel, is also obligated to pay this
amount to the Company. The Company believes that through a combination of new
licensing agreements, the strategic alliance agreement with WorldCom and
increased revenues from existing licensees, the Company has replaced all of
the anticipated CNC revenue.
Cost of Services. Cost of services increased from $43.9 million in the year
ended December 31, 1995 to $55.6 million in the year ended December 31, 1996
and decreased as a percentage of revenues from 29.7% in the year ended
December 31, 1995 to 28.2% for the same period of 1996. The decrease in the
percentage of revenues is primarily due to an increase in higher margin
licenses and certain subscriber service products revenue as a percentage of
total revenue in 1996 as compared with 1995.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from $83.7 million in the year ended
December 31, 1995 to $108.5 million in the year ended December 31, 1996 and
decreased as a percentage of revenues from 56.7% for the year ended December
31, 1995 to 55.0% for the year ended December 31, 1996. The increase in
selling, general and administrative expenses was due primarily to greater
expenditures on print advertising and other selling and marketing costs
related to the increase in subscribers and revenues, including commissions.
Depreciation and Amortization Expenses. Depreciation and amortization
expense increased from $10.5 million in the year ended December 31, 1995 to
$14.2 million in the year ended December 31, 1996. This increase was due
primarily to increased capital expenditures and the amortization of the
strategic alliance contract intangible.
Charge for Purchased Research and Development. This charge represents the
estimated value of in-process research and development projects acquired in
the acquisition of TeleT.
Accured Litigation and Settlement Costs. Accrued settlement costs in 1996
represent estimated legal fees and other costs associated with a patent
infringement suit filed by AudioFAX against the Company. On February 11, 1997,
the Company entered into a long-term non-exclusive license agreement with
AudioFAX settling the litigation. The charge was adequate to cover the actual
costs of litigation, and the cost of the license agreement is not expected to
have a material effect on the Company's earnings.
Income Taxes. In the years ended December 31, 1996 and 1995 the Company's
effective income tax rate was less than the statutory rate due to certain non-
taxable investment income and income of Voice-Tel Entities which had elected
to be treated as S-corporations under U.S. tax law prior to their acquisition
by the Company.
34
<PAGE>
Net Income (Loss). As a result of the foregoing, the Company recognized net
income of $4.2 million in the year ended December 31, 1995 and $3.5 million in
the year ended December 31, 1996. Excluding the charges for in-process
research and development and accrued litigation costs and the related tax
effect, net income would have increased 93.0% from $5.7 million in the year
ended December 31, 1995 to $11.0 million in the year ended December 31, 1996.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Revenues. Total revenues increased from $119.1 million in the year ended
December 31, 1994 to $147.5 million in the year ended December 31, 1995. This
increase in revenues is due primarily to increased demand for mobile
communication services, voice messaging services and additional licensee
relationships.
Cost of Services. Cost of services increased from $33.9 million in the year
ended December 31, 1994 to $43.9 million in the year ended December 31, 1995
and increased as a percentage of revenues from 28.5% in the year ended
December 31, 1994 to 29.7% for the same period of 1995. The increase in the
percentage of revenue is primarily due to an increase in revenues from certain
lower margin mobile communications services products as a percent of total
revenues.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from $82.2 million in the year ended
December 31, 1994 to $83.7 million in the year ended December 31, 1995 and
decreased as a percentage of revenues from 69.0% for the year ended December
31, 1994 to 56.7% for the year ended December 31, 1995. The increase in
selling, general and administrative expenses was due primarily to greater
expenditures on print advertising and other selling and marketing costs
related to the increase in subscribers and revenues.
Depreciation and Amortization Expense. Depreciation and amortization expense
increased from $9.6 million in the year ended December 31, 1994 to $10.5
million in the year ended December 31, 1995. This increase was due primarily
to increased capital expenditures.
Restructuring and Other Special Charges. Restructuring and other special
charges in the year ended December 31, 1994 reflect the write-off by the
Company's VoiceCom subsidiary of certain intangible assets acquired by
VoiceCom in connection with a purchase business combination in 1992. These
assets were determined to be impaired by VoiceCom's management on the basis
that the carrying value of these assets could not be realized.
INCOME TAXES
In the years ended December 31, 1995 and 1994, the Company's effective
income tax rate was less than the statutory rate due to the income of the
Voice-Tel Entities which had elected to be treated as S-corporations under
U.S. tax law prior to their acquisition by the Company.
NET INCOME (LOSS) BEFORE EXTRAORDINARY GAIN
As a result of the foregoing the Company recognized a net loss before
extraordinary gain of $16.5 million in the year ended December 31, 1994 and
net income of $4.2 million in the year ended December 31, 1995. Excluding the
charge for restructuring and other special charges and accrued settlement
costs and related tax effects, net income would have increased from a net loss
of $12.5 million in the year ended December 31, 1994 to net income of $5.7
million in the year ended December 31, 1995.
EXTRAORDINARY GAIN
An extraordinary gain of approximately $945,000, net of applicable income
taxes, was recognized in connection with a refinancing by the Company's
VoiceCom subsidiary. VoiceCom replaced a term note with a revolving credit
facility and other subordinated debt instruments. The extraordinary gain
resulted from early extinguishment of VoiceCom's term note.
35
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds are from cash and cash equivalents,
investments (including the net proceeds of the Company's initial public
offering and the sale of the Convertible Notes) and operations. The Company's
principal uses of cash are for working capital and capital expenditures and to
fund acquisitions.
The Company's investing activities used cash of $91.5 million and $155.7
million for the nine months ended September 30, 1996 and 1997, respectively.
The Company's financing activities provided cash of $71.4 million and $134.8
million for the nine months ended September 30, 1996 and 1997, respectively.
Cash provided by financing activities for the nine months ended September 30,
1997 consisted primarily of net proceeds from the Company's sale of the
Convertible Notes.
In June and July 1997, the Company issued the Convertible Notes, which may
convert into a maximum of approximately 5,227,000 shares of Common Stock at
any time prior to final maturity at a conversion price of $33.00 per share,
subject to adjustment. The principal amount of the Convertible Notes matures
on July 1, 2004. The Convertible Notes are not redeemable at the option of the
Company prior to July 6, 2000. Interest at 5 3/4% on the principal amount
outstanding is payable on January 1 and July 1 beginning January 1, 1998 until
maturity. The Company received net proceeds of $166.8 million after paying the
underwriting discounts and commissions and the related expenses of the
Convertible Notes offering.
The Company's operating activities provided cash of $7.1 million in the year
ended December 31, 1994, $13.6 million in the year ended December 31, 1995 and
$36.9 million in the year ended December 31, 1996. The increase in cash
provided by operating activities in each of these years reflects the
acceleration of growth in the Company's subscriber and revenue base and
improved operating cash flow margins created by such growth.
The Company's investing activities used cash of $18.2 million for the year
ended December 31, 1994, $13.2 million for the year ended December 31, 1995
and $96.1 million for the year ended December 31, 1996. The Company's
investing activities for the year ended December 31, 1994 consisted primarily
of purchases of investments for $4.9 million financed by the Company's sale of
Series 1994 Preferred Stock (which was converted into Series A Preferred Stock
in December 1995), and purchases of property and equipment of $13.3 million
funded primarily through the issuance of debt. Cash used in investing
activities for the year ended December 31, 1995 consisted primarily of
purchases of property and equipment of $12.2 million funded primarily through
the issuance of debt. The Company's investing activities for the year ended
December 31, 1996 consisted primarily of purchases of investments in the
amount of $67.2 million. Additionally, the Company purchased property and
equipment of $21.9 million. The Company also used cash to partially fund
certain acquisitions and strategic alliances during the year ended December
31, 1996. Net proceeds from the Company's initial public offering in 1996 of
$74.6 million were used in part to fund investing activities in 1996.
The Company's financing activities provided cash of $9.9 million in the year
ended December 31, 1994, $3.5 million for the year ended December 31, 1995 and
$66.9 million for the year ended December 31, 1996. Cash provided by financing
activities for the year ended December 31, 1994 reflects proceeds from the
issuance of debt to finance purchases of property and equipment and from
proceeds from issuance of preferred stock. Cash provided by financing
activities for the year ended December 31, 1995 reflects proceeds from the
issuance of debt to finance purchases of property and equipment. The Company
received net proceeds of $74.6 million from its initial public offering in
March 1996. These sources of cash were partially offset in 1996 by the
repayment of notes payable outstanding at December 31, 1995 as well as payment
of dividends on preferred stock.
At December 31, 1996, the Company had working capital of $45.0 million. At
December 31, 1995, the Company had a working capital deficit of $16.1 million.
The Company has financed its cash requirements through a combination of equity
and debt financing and through cash flows from operating activities. In May
36
<PAGE>
1992, the Company borrowed $1.0 million (the "First Sirrom Note") from Sirrom
Capital Corporation ("Sirrom"), an independent lender unaffiliated with the
Company, which was used to fund the Company's operations and for capital
expenditures. In December 1993, the Company borrowed an additional $1.0
million from Sirrom (the "Second Sirrom Note") (the First Sirrom Note and
Second Sirrom Note are referred to as the "Notes"). In connection with
entering into the Notes, the Company granted Sirrom warrants to purchase an
aggregate of 568,392 shares of common stock at $0.042 per share, the terms of
which do not require the cancellation or exercise of the warrants upon
repayment of the Notes. The Company used $2.0 million of the net proceeds of
its initial public offering to retire the Notes in March 1996. In January
1994, the Company issued 8% cumulative Series A Preferred Stock to NationsBanc
Capital Corporation ("NationsBanc"), from which it realized net proceeds of
$3.9 million. In connection with the issuance of the Company's Series A
Preferred Stock, all of the Company's outstanding 1993 Preferred Stock and
Debentures were converted into common stock. A portion of the net proceeds of
the Second Sirrom Note and the issuance of the Series A Preferred Stock was
used to fund operations. The Company invested the remainder of the proceeds of
the Second Sirrom Note and the Series A Preferred Stock, amounting to $3.5
million, in short-term interest-bearing securities. On January 19, 1996, the
Company exercised its right to redeem the Series A Preferred Stock from
NationsBanc. On February 1, 1996, NationsBanc elected to convert all of the
Series A Preferred Stock into common stock. Thus, effective February 1, 1996,
all outstanding shares of Series A Preferred Stock were converted into
3,095,592 shares of common stock. In connection with the conversion, the
Company paid NationsBanc $677,000 in accrued but unpaid dividends and interest
on the Series A Preferred Stock during the year ended December 31, 1996. In
connection with the Company's initial public offering, the Company issued
4,570,000 shares of its $0.01 par value common stock in March 1996. The
Company received net proceeds of $74.6 million after the underwriting discount
and expenses of the offering.
The Company's principal commitments consist of various notes due to
shareholders and banks. These notes are primarily used to fund investments in
switching and voice messaging equipment needed to accomodate the increase in
calling card and voice messaging subscribers and licensees. The Company
believes that cash on hand, cash from operations and other working capital
will be sufficient to fund the Company's capital requirements. The Company
may, depending upon conditions in the capital markets and other factors,
consider other capital transactions to increase the Company's financial
flexibility.
NEW ACCOUNTING PRONOUNCEMENTS
In March 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting ("SFAS") No. 128 ("SFAS 128"), Earnings Per
Share, which is effective for fiscal years ending after December 15, 1997. See
Note 2 of Notes to Consolidated Financial Statements.
In addition, during 1997 the FASB has issued SFAS No. 130, "Reporting
Comprehensive Income" and SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." The Company does not believe that these
statements will significantly change its financial statement disclosures.
37
<PAGE>
BUSINESS
OVERVIEW
Premiere designs, develops, markets and provides enhanced personal
communications services. The Company's network-based computer telephony
technology links together two or more stand-alone communications services,
such as calling card long distance, voice mail, e-mail, fax mail and paging,
and allows access to these services through telephones or computers. The
Company bundles these stand-alone services to allow users to store, manage,
prioritize, deliver and distribute incoming and outgoing information in an
efficient and economical manner. Although Premiere offers stand-alone
communications services, it primarily targets users who have multiple
communications devices and a need to integrate them for greater functionality
and convenience.
INDUSTRY BACKGROUND
Managing the evolving enhanced personal communications environment has
become more complex as a result of increased service and device options,
rapidly changing technology standards and shortened product life cycles. The
proliferation of communications devices and the advent of multiple messaging
platforms have dramatically increased the average employee's accessibility and
the number of messages he or she manages. Employees today face a demanding
communications environment in which they must utilize a number of
communications systems and convert information from one medium to another. A
study by the Institute for the Future, the Gallup Organization, Pitney-Bowes
and San Jose State University, based on responses from more than 1000
employees of Fortune 1000 companies, found that workers send and receive an
average of 178 messages each day.
Today, many stand-alone communications services are provided through legacy
systems, including landline telephone systems, messaging devices and local
area networks ("LANs"), that reside in whole or in part at a customer's
location. The architecture of the customer premise equipment, or "CPE," that
comprises such systems is often closed in nature, which makes integration with
other systems and networks difficult and expensive. However, users are
increasingly demanding that their existing CPE be integrated with more open
and intelligent worldwide communications networks such as the Internet. The
Company believes that, due to the complexity of such integration, users will
increasingly outsource their personal communications requirements to third
parties such as Premiere. Premiere believes that customers will prefer the
Company's network-based service solution for personal communications to
traditional CPE-based product solutions because the Company's solution reduces
customer costs of equipment ownership and exposure to technology obsolescence.
THE PREMIERE SOLUTION
The core of the Premiere solution is its "intelligent network" which links,
or integrates, stand-alone communications services using technology developed
by the Company's research and development team. The intelligent network
consists of (i) a state-of-the-art proprietary platform that integrates
digital switching technology with enhanced personal communications features
and (ii) the Company's recently acquired private telecommunications network
which transmits voice and data utilizing the frame relay packet switching
protocol, the "private frame relay network." The Company's modular and
scaleable intelligent network incorporates an open-system design, which allows
the Company to easily expand capacity and provides the Company with the
flexibility to develop and customize its service offerings. Premiere offers
bundled services in a variety of packages and tailors these packages to meet
the requirements of strategic, marketing and co-brand partners. Premiere's
private frame relay network, with approximately 210 locations where the
Company has voice messaging equipment ("points of presence" or "POPs"), is
accessible via local access in metropolitan and other geographic areas which
include approximately 90% of the United States, Canadian and Australian
populations, and approximately 50% of the New Zealand population. Premiere
anticipates that its private frame relay network will be accessible via local
access by a significant portion of the United Kingdom population in the near
future. The Company plans to invest $40-$50 million in capital expenditures
over the next 12 months as part of its effort to integrate its proprietary
platform with its recently acquired private frame relay network. Once
integration is completed, the Company believes that its intelligent network
will allow the Company to offer its customers enhanced personal communications
services through either local or 800 access via telephone or computer.
38
<PAGE>
STRATEGY
Premiere's goal is to become the world's leading provider of network-based
enhanced personal communications services. The Company's strategy to achieve
this goal is to:
Increase Service Offerings and Cross-Media Functionality. The Company
believes that changes in technology continually create new business
opportunities for providers of enhanced personal communications services. The
Company continually strives to make its interfaces more user friendly and its
services functionally equivalent regardless of the customer's chosen access
device or message transport medium. For example, the Company has introduced
such features as text-to-speech e-mail delivery, a unified messaging interface
utilizing the Web and an integrated Web-based contact database manager.
Possible future service features include, among others, speech recognition.
Leverage Network Facilities. To date, the majority of the Company's services
have been accessed by 800 toll free service. The Company recently acquired an
international private frame relay network. Once this network is fully
integrated with the Company's proprietary platform, the Company plans to use
the private frame relay network and local messaging systems to provide users
local access to certain of its enhanced services, which access the Company
believes will make these services more attractive to a broader market. In
addition, through transitioning more of its subscribers to local access,
Premiere expects to realize a reduction in transmission costs.
Expand Customer Base and Distribution Channels. The Company believes that an
increasing number of businesses will transition their communications systems
from CPE-based products to network-based services. Premiere believes that a
substantial opportunity exists to meet the outsourcing needs of these
companies. The Company intends to use its direct sales force and national
accounts program as part of its effort to expand its customer base and to
improve cross-selling of its services. Premiere also plans to continue to
enter into strategic alliances and wholesale and licensing relationships in
order to reach additional customers that the Company believes are likely to be
extensive users of its services.
Pursue Strategic Acquisitions. Historically, the Company has engaged in
acquisitions in order to obtain new technology, build its infrastructure and
increase its sales force and customer base. The Company intends to continue to
examine acquisition and joint venture opportunities which may accelerate its
growth, add new customers, develop new technologies or penetrate new
geographic markets. There can be no assurance, however, that suitable
acquisition candidates will be identified or that any acquisition will be
consummated. See "Prospectus Summary -- Recent Developments."
Expand International Presence. Premiere intends to deliver its services to
more international users through strategic partnerships, third-party
distribution agreements, direct sales efforts and relationships with existing
customers that have international operations. To accommodate these prospective
users, Premiere has opened a data and switching center in London and has also
begun development of a similar center in Toronto. Targeting the Pacific Rim,
Premiere expects to begin installation of a data and switching center in New
Zealand during 1998. These international centers are designed to reduce
transmission costs associated with system access from international locations
and to allow Premiere to more effectively pursue opportunities with
international customers and strategic partners. Additionally, the Company
expects to increase the international scope of its private frame relay network
by installing POPs in additional overseas locations, specifically targeting
the United Kingdom for local messaging in the near future.
SERVICES
Premiere's intelligent network supports four categories of services: mobile
communications; integrated messaging; Internet-based communications services;
and call center management and other services. Generally, customers may
subscribe to one or more of these categories within which they may select
certain desired features and functionality. Most customers choose one of
Premiere's bundled service offerings that are marketed directly under many
names including Premiere WorldLink, Voice-Tel, VoiceCom and VoiceCom Access
One. Premiere continually strives to develop new services and enhance the
functionality of current services through its internal research and
development staff and joint development efforts with leading hardware and
software vendors.
39
<PAGE>
Mobile Communications Services. Mobile communications services are
communications services which (i) route incoming calls to predefined locations
and (ii) allow users to make outbound calls while away from their home or
office. The Company offers its mobile communications services on a direct or a
wholesale basis to its customers. The following table describes available
mobile communications features.
MOBILE COMMUNICATIONS SERVICES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
FEATURE DESCRIPTION
<S> <C>
Calling Card Long Distance Subscribers can place worldwide long distance calls at
attractive rates.
- ----------------------------------------------------------------------------------------
Call Connect/Call Inbound callers are routed by Premiere's platform to a
Screening predetermined phone number that is programmed by the
subscriber. The platform records an announcement of the
inbound caller and plays this announcement for the
subscriber. The subscriber can then either accept the call
or send it to voice mail. If the programmed phone number is
a subscriber's pager, he or she is able to call into the
platform and connect with the inbound caller upon receiving
notification of the call.
- -------------------------------------------------------------------------------------------------
Message Notification Subscribers can instruct the platform to notify them of
receipt of messages in their mailboxes by means of a message
sent to their pagers or by a call to a predesignated number.
Special pager codes are used to identify the type of message
(voice, fax or e-mail) that has been received.
- -------------------------------------------------------------------------------------------------
Personal 800 Numbers Premiere can provide subscribers a personal 800 number that
serves as a single point of access for callers to select
various messaging options or attempt to locate the
subscriber at predetermined phone numbers.
- -------------------------------------------------------------------------------------------------
Conference Calling Subscribers can initiate conference calls by commands
delivered through a telephone key pad.
- -------------------------------------------------------------------------------------------------
Information Services Subscribers can access news, weather, sports and financial
and other information updates provided by CNN or the Chicago
Tribune.
- -------------------------------------------------------------------------------------------------
Speed Dial Subscribers can create their own personal speed dial
directory which they can access each time they use the
platform.
- -------------------------------------------------------------------------------------------------
Electronic Bill Payment In connection with a relationship with CheckFree
Corporation, subscribers can pay bills electronically
through the platform.
- -------------------------------------------------------------------------------------------------
Travel & Concierge Subscribers can make lodging, airline, rental car, dining
and golf reservations and can obtain theater, concert and
sporting event tickets without leaving the platform or
dialing additional phone numbers. In addition, the platform
offers travel assistance services, including emergency
medical referrals, legal referrals and pre-trip destination
information.
</TABLE>
40
<PAGE>
Integrated Messaging. Premiere's integrated messaging services support all
three major forms of messaging: voice mail; fax mail; and e-mail. Premiere
offers integrated messaging services such as those described below.
INTEGRATED MESSAGING SERVICES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
FEATURE DESCRIPTION
<S> <C>
Voice Mail Subscribers are provided with traditional voice mail
features allowing them to customize their mailbox greetings
and to receive, save and delete voice mail messages.
- -------------------------------------------------------------------------------------------
Enhanced Voice Messaging Subscribers can obtain a locally accessed voice mail box
that provides the subscriber with network messaging to any
mailbox on the system in the United States, Canada,
Australia and New Zealand. Enhanced features include, among
others, distribution lists, return receipt and confidential
and urgent tagging.
- -------------------------------------------------------------------------------------------
Fax Mail Subscribers can receive and store fax transmissions and
later instruct the platform to forward the faxes to a
specified location. Callers may also attach a voice
introduction.
- -------------------------------------------------------------------------------------------
E-mail Subscribers are provided with an e-mail address by Premiere
or one of its partners. Messages can be read over the
telephone using proprietary text-to-speech functionality or
sent to a fax machine. Subscribers can also respond to an e-
mail over the telephone by choosing from a variety of
standard responses.
- -------------------------------------------------------------------------------------------
Cross-Media Messaging Subscribers can convert messages from one format to another.
Premiere currently offers the following conversion options:
voice mail to an e-mail attachment; fax to an e-mail
attachment; e-mail to fax; and e-mail to voice.
</TABLE>
Internet-Based Communications Services. Premiere's primary Internet-based
service is Orchestrate, a Web-based interface into the Company's computer
telephony platform. Orchestrate is designed to allow subscribers to view and
interact with a universal inbox and contact manager that support the Company's
integrated messaging services, fax broadcast and conference call initiation
services. Orchestrate is also designed to provide its subscribers with a
virtual receptionist, a Web page that contains the user's contact information
(e-mail address, home/work phone number, pager number, text or audio greeting)
and subscriber defined links to other Web sites. Subscribers' Web pages are
automatically generated by the Premiere platform from input provided by
subscribers. Orchestrate operates using an Internet browser in connection with
any PC connected to the Internet and does not require subscribers to purchase
any additional specialized hardware or software. Orchestrate is operational
and has been available in limited release. The Company intends to begin
marketing Orchestrate to customers through certain of the Company's strategic
partners such as CompuServe and USA.NET in the first quarter of 1998. The
Company anticipates commencing direct marketing of the Orchestrate product
through print advertising and other channels in the second quarter of 1998.
The Company believes that its competitors have not yet developed a publicly
available network-based product which incorporates all of the functionalities
of Orchestrate, although the Company's competitors have developed products
which the Company believes offer some, but not all, of the bundled services
offered through Orchestrate.
In addition, the Company is developing additional Internet-based
communications services and features, including:
. Third-Party PIM Compatibility. Subscribers would be able to transfer
contact information from popular Personal Information Managers
("PIMs") into Orchestrate. Currently, the Company is
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testing the integration of Orchestrate with the Symantec ACT PIM and
intends to integrate Orchestrate with other popular PIMs in the
future.
. Enhanced Conference Call Control. Similar to features available to a
conference call bridge operator, subscribers would be able to control
conference calls in session from their PCs. Features are expected to
include muting and addition and deletion of selected callers.
Call Center Management and Other Services. Premiere streamlines and enhances
call processing and call routing for financial institutions and other large
corporations. In a typical financial services application, such as the one
currently being implemented for NationsBank, Premiere's platform is used to
enhance call processing for checking, savings and other account information
available through toll free telephone access.
Through its recent acquisition of VoiceCom, Premiere also offers full
service conference calling and voice response programming. Conference calling
is currently resold under the VoiceCom name and is provided by a third-party
service bureau. Voice response programming consists of a variety of
applications that use custom voice prompts and commands input by the
subscriber from the subscriber's telephone key pad to retrieve certain
information by phone or fax and to respond to automatic messages or reminders
sent by the voice response platform. Through the proposed Xpedite Merger,
Premiere plans to offer enhanced electronic document distribution services.
See "Prospectus Summary -- Recent Developments -- Xpedite Systems, Inc." and
"Risk Factors -- Risk That Xpedite Merger Will Not Close" and "-- Risks
Associated with Expansion of Enhanced Fax Services."
PREMIERE PLATFORM AND NETWORK
Premiere has designed its platform and network to provide its subscribers
with efficient and reliable service and to be easily expandable as network
usage increases. The modular and scaleable design of the platform and related
software allows expansion of network capacity without requiring replacement of
existing hardware or software or interrupting service. Premiere's open systems
design approach enables Premiere to utilize readily available third party
hardware and software in constructing its platform and facilitates the
integration of services and information provided by third parties into the
system. The platform delivers and distributes its services to users through
its voice and data switching centers and is currently being integrated with
the private frame relay network and locally deployed voice messaging POPs
acquired by the Company in the Voice-Tel Acquisitions. This delivery
infrastructure incorporates both third party and proprietary equipment as well
as leased transmission facilities.
Computer Telephony Platform. The computer telephony platform consists of
digital telecommunications switches which interface with high speed
client/server networks of personal computers, database servers, application
servers and Web servers. Telnodes, clients on the network, are controlled by
PCs which act as Network Managers. Servers on the network are responsible for
performing functions requested by the Telnodes and Network Managers and are
also responsible for storing and providing access to data. Web servers
connected to the network firewall interface with the Internet and allow
Premiere to offer access to certain of its services from any PC connected to
the Internet. The network architecture is designed to be modular and
scaleable. To increase the capacity of the platform, the Company adds
additional Network Managers, Telnodes and servers and, at certain points, must
add additional modules to the digital switch, but is not required to replace
existing Network Managers, Telnodes and servers. This modular systems approach
also allows Premiere, at the request of licensees and strategic partners, to
provide custom applications for subscribers. The client/server network
utilizes a fault tolerant network operating system, and the network
configuration provides for data on each server to be mirrored on a separate
server, thereby providing redundancy for improved system reliability. Premiere
maintains the ability to generate power in the event of a prolonged power
outage, or if its uninterruptible power supply fails.
The platform is controlled by proprietary application and database access
software that was developed by the Company and is designed to be versatile and
adaptable to meet the demands of strategic partners, licensees
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or individual subscribers. Applications written for custom or specific
functions can be quickly developed and implemented across the network and
offered to all of the Company's subscribers. Premiere maintains an internal
development program in order to continually enhance its software.
Switching and Transmission Facilities. Incoming and outgoing communications
to the platform are transmitted via fiber optic trunk lines, which are
provided by interexchange long distance service providers pursuant to
contractual relationships with the Company. Premiere obtains transmission
services from multiple carriers, thus enhancing Premiere's ability to avoid
service interruptions caused by technical problems at a single carrier.
Because each carrier's trunk lines physically terminate at Premiere's
facility, Premiere can readily alter the routing of its transmission traffic
in the event of technical difficulties.
The Company opened an additional domestic switching facility in Dallas,
Texas in September 1996. This facility is designed to provide geographical
redundancy and increased capacity. The Dallas center is capable of handling
300 million transaction minutes per month, which is the same capacity as
Premiere's core hub in Atlanta, Georgia. In addition, the Company established
a data and switching center in London, England during 1996 and has begun
development of a similar center in Toronto, Canada during 1997. These
international centers are designed to reduce transmission costs associated
with system access from international locations and allow Premiere to more
effectively pursue opportunities with international customers and partners.
Private Frame Relay Network and Local Messaging POPs. Premiere's private
frame relay network connects messaging customers in dispersed locations
through a secure private wide area network which is accessible via local
access in metropolitan and other geographic areas which include approximately
90% of the United States, Canadian and Australian populations, and
approximately 50% of the New Zealand population. Messages are captured and
digitized at one of approximately 210 local POPs using a Centigram voice
processing system. Users access these POPs through local direct inward dial
numbers that are purchased from the appropriate LEC. Network interface boxes
located at the POP then convert the digitized data from DDCMP protocol (the
data processing protocol standard of Centigram's system) to the TCP/IP
protocol. Once converted to TCP/IP format, the message's path is determined by
a router, which directs the data to one of the 13 network hubs. These network
hubs are co-located in sites utilized by WorldCom. The Company's Cascade frame
relay switches, placed in the network hubs, then route the message data over
leased frame relay connections to other hub sites or POPs within a hub region
for delivery to the end user. The Company plans to integrate its private frame
relay network and local messaging POPs with its computer telephony platforms
in order to offer certain of its enhanced personal communications services on
a local access basis.
The Xpedite Network. Through the proposed Xpedite Merger, the Company plans
to acquire the Xpedite Network, which the Company believes will allow it to
offer Enhanced Fax Services and discounted international messaging services
("Discounted International Services") in a cost efficient manner. See
"Prospectus Summary -- Recent Developments -- Xpedite Systems, Inc.," "Risk
Factors -- Risk That Xpedite Merger Will Not Close" and " -- Risks Associated
with Expansion of Enhanced Fax Services." The Xpedite Network is able to serve
the electronic messaging needs of its customers through the use of software
and a document distribution system network of over 13,500 leased
telecommunications lines and its "Nodal Partners." "Nodal Partners" are
independent entities that have purchased an electronic document distribution
system from Xpedite and which sell Discounted International Services. A "Node"
is an element of the Xpedite Network located at a geographically distinct POP
that allows access to or egress from the Xpedite Network via a local call.
The proprietary network software that has been developed by Xpedite allows
its Enhanced Fax Services customers access to the Xpedite Network via several
communications options including fax machines, the Internet, mainframe or mini
computers and LANs. Customers who use fax machines to access the Xpedite
Network for Enhanced Fax Services or Discounted International Services are
connected to the Xpedite Network through an "autodialer," which routes the
document over a lower-cost telecommunications line leased by Xpedite.
The low-cost structure of the Xpedite Network is achieved through the use of
leased telecommunications lines and Nodal Partners which allow Xpedite to
transmit a greater number of faxes through inexpensive local
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<PAGE>
calls rather than high priced long distance or international calls. The
Xpedite Network is intended to provide customers with a reliable alternative
for long distance and international document distribution at significant price
discounts and cost savings, particularly in overseas telecommunications
markets that are highly regulated and have limited competition. As it
increases fax messaging traffic over the Xpedite Network, Xpedite is able to
exploit economies of scale which result in lower costs per minute or per page
and then pass a portion of these cost savings on to customers, further
stimulating demand for Xpedite's services. Premiere plans to integrate the
Xpedite Network with its private frame relay network and computer telephony
platform to accelerate growth of enhanced fax and message delivery services
worldwide.
Xpedite charges for its fax services both on a per minute and a per page
basis, with the bulk of its sales occurring on a per minute basis. A
substantial portion of Xpedite's fax traffic terminates in cities where
Xpedite or its affiliates have Nodes. Xpedite estimates that approximately 40%
of its domestic fax deliveries in 1996 were routed over the Xpedite Network.
Xpedite purchases long-distance services from MCI, Cable & Wireless PLC, LDDS
(WorldCom) and a number of PTTs around the world, among others, to carry fax
traffic that is routed to destinations where Xpedite does not have Nodes. In
the future, Xpedite expects its total telecommunications costs per minute of
fax traffic to decrease as an increasing amount of traffic is routed over the
Xpedite Network.
Billing. Depending on the services to which the customer subscribes,
Premiere bills the customer either by its real-time EBIS or through an
invoice. The Company bills customers at least monthly and in certain instances
more frequently if the customer exceeds certain preset spending limits.
Premiere's EBIS is designed to allow instant activation of subscribers'
accounts, monitor subscribers' activity in real time and, while operating in
the background without interrupting subscribers' service, interface with
multiple financial institutions and electronically bill subscribers' credit
cards or bank accounts. Customers also receive a monthly statement that
provides a detailed accounting of their calling activity. The EBIS is
configurable for the billing requirements of various financial institutions
and currently interfaces electronically with approximately 3,000 banks and
other financial institutions.
Invoices are created by extracting call record data from either the platform
or local voice messaging equipment. This data is collected, consolidated and
processed to produce a customer invoice that can then be billed to either a
business, corporate department or an individual.
SALES, MARKETING AND DISTRIBUTION
Premiere markets its services through multiple distribution channels that
encompass: (i) direct marketing efforts where Premiere is responsible for lead
generation and sales; (ii) co-brand relationships in which Premiere offers its
services to the customers of other companies, such as financial institutions,
that are seeking to increase their revenue from and their goodwill with their
customer base by offering value-added services; (iii) strategic relationships
where Premiere may develop custom applications for its platform and market its
services jointly with its strategic partners; and (iv) licensing arrangements
where other companies market and sell Premiere's services under their names
without significant assistance from Premiere. In all distribution channels,
except licensing arrangements, Premiere enters into agreements pursuant to
which it agrees to pay commissions to or share revenues with the parties who
assist Premiere in marketing its services. The Premiere marketing staff is
primarily responsible for providing marketing support to the four channels
described above at varying levels of involvement, depending on the channel.
The marketing staff is also responsible for promoting the Premiere corporate
image in the marketplace.
Direct Channels. Premiere markets its services directly under the Premiere
WorldLink, Voice-Tel, VoiceCom, VoiceCom Access One and AFCOM names. Direct
marketing and sales efforts have traditionally focused on print advertising
and direct mailings targeted at mobile professionals or, with respect to
AFCOM, direct marketing done in conjunction with financial institutions
located on military bases. However, with its recent acquisitions, the Company
acquired a nationwide direct sales force with a national accounts program. The
Company believes that the direct sales force will enable it to broaden its
base of business customers.
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<PAGE>
The direct sales force has been recently organized by the Company into a
regional reporting structure and a centrally managed national accounts
program. Regional sales managers and their direct sales people have the
ability to generate sales leads for all of Premiere's products and services
within their defined geographic territories. These sales people target
primarily single location small to medium-sized businesses. Other types of
leads generated may be passed on to the appropriate group or channel (e.g.
national accounts program or wholesale channel). The centrally managed
national accounts program focuses on multi-location businesses that are better
served by dedicated representatives with ultimate responsibility across
different geographic regions. If appropriate, these national accounts sales
people form account teams that include regional sales people when greater
geographic coverage is needed or that include wholesale channel
representatives when necessary. The direct sales organization also has
traditionally marketed and continues to market to multilevel marketing
organizations, such as Amway, and their independent representatives and
distributors.
Co-brand Relationships. Premiere has relationships with a number of other
companies, including First Union, Discover Card and the Royal Bank of Scotland
PLC, under which Premiere provides its services to customers of those
companies. The other company generally offers its customers access to
Premiere's services, and Premiere pays subscriber and usage based fees to the
other company with respect to each subscriber who subscribes to a co-branded
service. Premiere believes that companies which enter into co-brand
relationships with Premiere are motivated by the ability to offer additional
value to their customers, reinforce brand equity through custom voice prompts
that their customers hear each time they access the service, communicate with
their customers by broadcasting voice, fax or e-mail messages, and derive
additional revenue. Marketing and fulfillment materials are generally issued
under the Premiere WorldLink name, with the other company also placing its
logo on the materials.
Strategic Partners. The Company also markets its services by establishing
strategic relationships with parties including American Express and CompuServe
whose customers have an anticipated need for enhanced communications services
provided by Premiere. Strategic relationships are intended to provide the
Company's strategic partners with: (i) an efficient means of communicating
with their customers through Premiere's voice mail, e-mail and fax mail
features; (ii) increased visibility to their customers through customized
greetings and a private branded communications card; (iii) the ability to
provide customized services to their customers over Premiere's platform; and
(iv) an additional source of revenue. These relationships provide the Company
with the opportunity to develop specialized services for the strategic
partner's customers which, in certain circumstances, the Company can later
offer to its subscribers. In connection with these strategic relationships,
services are generally issued in the name of Premiere's strategic partner and
bear a logo and design of the strategic partner's choosing. The fulfillment
materials generally state that services are provided by Premiere.
Licensing and Wholesale Relationships. Companies such as WorldCom,
NationsBank, UniDial and Touch 1 Communications, Inc. ("Touch 1
Communications") have chosen to outsource part or all of their personal
communications services to Premiere. Premiere licenses use of its platform,
voice messaging network and call center technology to these companies. Such
relationships enable these companies to: (i) provide enhanced services to
their customers; (ii) generate additional revenue without developing or
investing in their own infrastructure; and (iii) reduce costs and improve
operational efficiencies through the use of more advanced technologies than
are internally available. The platform's and network's open architecture
allows customization of services for the licensee or wholesale customer.
Premiere generally provides its licensee or wholesale customers with access to
customer and billing records for marketing and billing purposes. Licensee and
wholesale customers generally are responsible for billing the end user and
generally provide their own transmission facilities for use with Premiere's
services. Services are private labeled by the licensee or wholesale customer
with Premiere's contribution transparent to the end user. Services are also
generally provided under agreements with 24- to 48-month terms which require
the payment of a minimum monthly fee if specified minimum targets are not met.
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<PAGE>
RESEARCH AND DEVELOPMENT
Premiere's research and development and engineering personnel are
responsible for developing, testing and supporting proprietary software
applications, as well as creating and improving enhanced system features and
services. Premiere's research and development strategy is to focus its efforts
on enhancing its proprietary software and integrating its software with
readily available software and hardware when feasible. Premiere maintains an
internal software development program pursuant to which the Company introduces
major and minor enhancements of its software.
As of September 30, 1997, Premiere employed 60 people in research and
development and engineering positions. Premiere's research and development
team continuously monitors and performs necessary improvements to the
operation of the computer telephony platform, the EBIS and other billing
systems and messaging systems and network connections to determine if software
or hardware modifications are necessary. Premiere's research and development
and engineering personnel also engage in joint development efforts with
Premiere's strategic partners and vendors.
CUSTOMER SERVICE AND TECHNICAL SUPPORT
Premiere believes that effective customer service is essential to attracting
and retaining subscribers. Premiere's customer service department is
responsible for educating and assisting subscribers in using Premiere's
services, for resolving billing related issues and, in consultation with
Premiere's technical support personnel, for resolving technical problems
subscribers may have in using Premiere's services. As of September 30, 1997,
Premiere employed a staff of approximately 262 people in customer service
positions. Premiere provides customer service through either Atlanta-based
call centers or regionally located representatives. Regionally located
representatives are primarily responsible for supporting Voice-Tel voice
messaging customers while Premiere's call centers provide 24 hours per day,
seven days per week coverage to assist customers using all other services.
Premiere employs separate personnel who are responsible for technical
support functions. These employees are responsible for performing more
technically demanding support activities, such as voice messaging and certain
other types of account provisioning and administration, consulting with
Premiere's strategic partners and licensees regarding technical issues and
resolving technical issues brought to their attention by the customer service
department. As of September 30, 1997, Premiere employed 65 people in technical
support positions, the majority of which were located in Atlanta.
COMPETITION
Premiere's competitive strategy is to seek to gain a competitive advantage
by being among the first companies to offer an integrated personal
communications solution, being an innovator in the integrated personal
communications services market and offering unique and innovative services to
its subscribers. The Company intends to capitalize on strategic relationships
with WorldCom, American Express and others in order to build its subscriber
base and to maintain and increase subscriber loyalty. The Company believes
that the principal competitive factors affecting the market for personal
communications services are price, quality of service, reliability of service,
degree of service integration, ease of use, service features and name
recognition. The Company believes that it competes effectively in these areas.
The market for the Company's services is intensely competitive, rapidly
evolving and subject to rapid technological change. The Company expects
competition to increase in the future. Many of the Company's current and
potential competitors have longer operating histories, greater name
recognition, larger customer bases and substantially greater financial,
personnel, marketing, engineering, technical and other resources than the
Company. Although the Company is aware of several companies that are marketing
enhanced calling cards, it is not aware of any major competitor that is
marketing an integrated personal communications service identical to the
service marketed by the Company. Many of the Company's competitors have
substantial resources and
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<PAGE>
technical expertise and could likely develop such a service if they chose to
expend sufficient resources. The Company believes that existing competitors
are likely to expand their service offerings and that new competitors are
likely to enter the personal communications market and to attempt to integrate
such services, resulting in greater competition for the Company. Such
competition could materially adversely affect the Company's business,
financial condition and results of operations.
The Company attempts to differentiate itself from its competitors in part by
offering an integrated suite of enhanced personal communications services.
Other providers currently offer each of the individual services and certain
combinations of the services offered by the Company. The Company's worldwide
long distance services and features, including those acquired pursuant to the
Voice-Tel Acquisitions, compete directly with services provided by companies
such as AT&T, MCI and Sprint as well as smaller interexchange long distance
providers. The Company's voice mail services, including those acquired in the
Voice-Tel Acquisitions and the VoiceCom acquisition, compete with voice mail
services provided by AT&T, certain RBOCs and other service bureaus as well as
by equipment manufacturers, such as Octel, Northern Telecom, Siemens,
Centigram, Boston Technology and Digital Sound. The Company's enhanced travel,
concierge, news and e-mail services compete with services provided by America
Online, Prodigy and numerous Internet service providers. The Company's paging
services compete with paging services offered by companies such as AT&T and
MCI.
The Company's Orchestrate service, which the Company intends to begin
marketing during the first quarter of 1998, is expected to compete with
products offered by companies such as Octel, Microsoft, Novell, Lucent and
numerous smaller entities. For example, Octel and Microsoft recently announced
a service, called "Unified Messenger," which places all voice mail, e-mail and
fax messages in a single mailbox accessible by computer or telephone. These
competing products incorporate some, but not all, of the bundled services
offered through Orchestrate. In addition, over the past few years, the number
of companies offering call center technology, including AT&T, MCI and Lucent,
has grown dramatically, primarily in response to major outsource initiatives
as well as significantly lower technology costs. The Company expects that
other parties will develop and implement information and telecommunications
service platforms similar to its platform, thereby increasing competition for
the Company's services.
Premiere recently entered into the Merger Agreement with Xpedite and
Acquisition Sub. Through the proposed Xpedite Merger, Premiere plans to offer
Enhanced Fax Services. See "Prospectus Summary -- Recent Developments --
Xpedite Systems, Inc.," " -- Premiere Platform and Network -- The Xpedite
Merger," "Risk Factors -- Risk That Xpedite Merger Will Not Close" and "--
Risks Associated with Expansion of Enhanced Fax Services." Xpedite's fax
communication services currently compete with services provided by each of
AT&T, MCI and Sprint, and many of the PTTs around the world. Neither Premiere
nor Xpedite can predict whether AT&T, MCI, Sprint, any Internet service
provider or PTT or any other competitor will expand its fax communications
services business, and there can be no assurance that these or other
competitors will not commence or expand their businesses. Moreover, Xpedite's
receiving, queuing, routing and other systems logic and architecture are not
proprietary to Xpedite, and as a result, there can be no assurance that such
information will not be acquired or duplicated by Xpedite's existing and
potential competitors. Generally, Xpedite does not typically have long-term
contractual agreements with its customers, and there can be no assurance that
its customers will continue to transact business with Premiere in the future.
In addition, even if there is continued growth in the use of electronic
document distribution services, there can be no assurance that potential
customers will not elect to use their own equipment to fulfill their needs for
electronic document distribution services. There also can be no assurance that
customers will not elect to use alternatives to Xpedite's electronic document
distribution services, including the Internet, to carry such customers'
communications or that companies offering such alternatives will not develop
product features or pricing which are more attractive to customers than those
currently offered by Xpedite.
In addition, the 1996 Act allows LECs, including the RBOCs, to provide
inter-LATA long distance telephone service, which will likely significantly
increase competition for long distance services. The new legislation also
grants the FCC the authority to deregulate other aspects of the
telecommunications industry, which in the future may, if authorized by the
FCC, facilitate the offering of an integrated suite of personal communications
services by regulated entities, including the RBOCs, in competition with the
Company. Such
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<PAGE>
increased competition could have a material adverse effect on the Company's
business, financial condition and results of operations.
Telecommunications companies compete for consumers based on price, with
major long distance carriers conducting extensive advertising campaigns to
capture market share. There can be no assurance that a decrease in the rates
charged for communications services by the major long distance carriers or
other competitors, whether caused by general competitive pressures or the
entry of the RBOCs and other LECs into the long distance market, would not
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company expects that information and telecommunications services markets
will continue to attract new competitors and new technologies, possibly
including alternative technologies that are more sophisticated and cost
effective than the Company's technology. The Company does not have the
contractual right to prevent its subscribers from changing to a competing
network, and the Company's subscribers may generally terminate their service
with the Company at will. See "Risk Factors -- Competition."
LEGISLATIVE MATTERS
The 1996 Act was intended to increase competition in the long distance and
local telecommunications markets. The 1996 Act opens competition in the local
services market and, at the same time, contains provisions intended to protect
consumers and businesses from unfair competition by incumbent LECs, including
the RBOCs. The 1996 Act allows RBOCs to provide long distance service outside
of their local service territories but bars them from immediately offering in-
region inter-LATA long distance services until certain conditions are
satisfied. An RBOC must apply to the FCC to provide in-region inter-LATA long
distance services and must satisfy a set of pro-competitive criteria intended
to ensure that RBOCs open their own local markets to competition before the
FCC will approve such application. Further, while the FCC has final authority
to determine whether an RBOC application is granted, the FCC must consult with
the Department of Justice to determine if, among other things, the entry of
the RBOC would be in the public interest, and with the relevant state to
determine that the pro-competitive criteria have been satisfied. The Company
is unable to determine how the FCC will rule on any such applications.
The 1996 Act provides a framework for the Company's Operating Subsidiaries
and other long distance carriers to compete with LECs by reselling local
telephone service, by interconnecting to LEC network facilities at various
points in the network, or by building new local service facilities. In the
future, the Operating Subsidiaries may decide to lease unbundled network
elements, which could also be used as a platform to provide access to the
Company's services, or to build local service facilities. The Operating
Subsidiaries' decision to enter the local services market is dependent on the
economic viability of the options and on the regulatory environment, which
will likely vary by state.
GOVERNMENT REGULATION
The Operating Subsidiaries provide both telecommunications and information
services. Consequently, the Operating Subsidiaries are subject to extensive
federal and state regulation in the United States. Various international
authorities may also seek to regulate the services provided by the Operating
Subsidiaries.
Tariffs and Detariffing. The Operating Subsidiaries are classified by the
FCC as non-dominant carriers for their domestic interstate and international
common carrier telecommunications services. Common carriers that provide
domestic interstate and international telecommunications services must
maintain tariffs on file with the FCC describing rates, terms and conditions
of service. While the tariffs of non-dominant carriers, such as the Operating
Subsidiaries, are subject to FCC review, they are presumed to be lawful upon
filing with the FCC. Currently, the Operating Subsidiaries either have applied
for and received, or are in the process of applying for and receiving, all
necessary authority from the FCC to provide domestic interstate and
international telecommunications services. However, at this time, only PCI has
been granted authority by the FCC to provide domestic interstate and
international telecommunications services.
In October 1996, the FCC issued an order detariffing long distance services
which prohibited non-dominant long distance carriers from filing tariffs for
domestic, interstate, long distance services in the future. The FCC's
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scheduled detariffing rules were to become effective September 22, 1997. The
detariffing rules were appealed by several parties, and in February 1997, the
U.S. Court of Appeals for the District of Columbia Circuit issued a temporary
stay preventing the rules from taking effect pending judicial review. The
Company and the Operating Subsidiaries are currently unable to predict what
impact the outcome of the FCC's detariffing proceeding will have on the
Company or the Operating Subsidiaries.
Local Interconnection and Resale. In August 1996, the FCC adopted an order
(the "Interconnection Order") which established a minimum set of rules
relating to the manner in which all telecommunications carriers would be able
to interconnect with the LECs' networks. The Interconnection Order addressed
several important interconnection issues, including unbundled network element
purchase, resale discounts, and negotiation and arbitration procedures between
LECs and long distance carriers.
Several states, companies, associations and other entities appealed the
Interconnection Order. On July 18, 1997, the U.S. Court of Appeals for the
Eighth Circuit overturned many of the rules established by the FCC's
Interconnection Order governing, among other things, the pricing of
interconnection, resale and unbundled network elements. The Court's decision
substantially limits the FCC's jurisdiction and expands the state regulators'
jurisdiction to set and enforce rules governing the development of local
competition. The Company is currently considering entering the local exchange
market as a so-called competitive local exchange carrier ("CLEC"). If the
Company becomes a CLEC, it will face rules that are likely to vary
substantially from state to state. A patchwork of state regulations could make
competitive entry by the Operating Subsidiaries in some markets more difficult
and expensive than in others and could increase the costs of regulatory
compliance associated with local entry.
The FCC has announced its intent to appeal the Court's ruling to the U.S.
Supreme Court and other parties are also expected to appeal the Court's
decision. Due to this uncertainty, the Company and the Operating Subsidiaries
are unable to predict what impact the Court's decision will have on the
Operating Subsidiaries' ability to offer competitive local service, and no
assurance can be given that the Court's decision will not have a material
adverse effect on the Company's business, financial condition and results of
operations.
Universal Service Reform. On May 8, 1997, the FCC released an order
establishing a significantly expanded federal telecommunications subsidy
regime. For example, the FCC established new subsidies for schools and
libraries with an annual cap of $2.25 billion and for rural health care
providers with an annual cap of $400 million. Providers of interstate
telecommunications service, such as the Operating Subsidiaries, as well as
certain other entities, must pay for the federal programs. The Operating
Subsidiaries' share of the schools, libraries and rural health care funds will
be based on their share of the total industry for telecommunications services
and on certain defined telecommunications end user revenues. The Operating
Subsidiaries' share of all other federal subsidy funds will be based on their
share of total interstate (including certain international) telecommunications
services and on certain defined telecommunications end user revenues. Several
parties have appealed the May 8, 1997 order, and those appeals have been
consolidated in the U.S. Court of Appeals for the Fifth Circuit. No assurance
can be given that the FCC's universal service order will not have a material
adverse effect on the Company's business, financial condition and results of
operations.
Access Charge Reform. On May 16, 1997, the FCC released an Access Charge
Reform Order, which revised rules governing the interstate switched access
charge rate structure. The new rules are intended to eliminate implicit
subsidies and to establish rate structures that better reflect the manner in
which costs are incurred. The new rules substantially increase the costs that
price cap LECs recover through monthly, non-traffic sensitive access charges
and substantially decrease the costs that price cap LECs recover through
traffic sensitive access charges. The manner in which the FCC implements its
approach to lowering access charge levels will have an effect on the prices
the Operating Subsidiaries pay for originating and terminating interstate
traffic. Portions of the Access Charge Reform Order have been appealed. In
light of the uncertainty regarding ultimate disposition of the Access Charge
Reform proceeding by the FCC and the courts, the Company is unable to predict
what impact the FCC's revised access charge scheme will have on the Operating
Subsidiaries' access charge cost structure.
49
<PAGE>
Payphone Compensation. In September 1996, the FCC issued an order adopting
rules to implement the 1996 Act's requirements establishing "a per call
compensation plan to ensure all payphone service providers are fairly
compensated for each and every completed call using their payphone." This
order included a specific fee to be paid to each payphone service provider by
long distance carriers and intra-LATA toll providers (including LECs) on all
"dial around" calls, including debit card and calling card calls. On July 1,
1997, the U.S. Court of Appeals for the D.C. Circuit overturned some of the
FCC rules for the implementation plan.
On October 7, 1997, the FCC issued a second order, revising the per-call,
compensation amount to be paid to payphone service providers. Specifically,
the FCC decreased the compensation amount to $0.284 per call. The Operating
Subsidiaries began paying this per-call amount on October 7, 1997. This
compensation amount will remain in effect until October 6, 1999, when a
market-based rate will become effective. Although the Operating Subsidiaries
expect to incur additional costs to receive "dial around" calls that originate
from payphones, the FCC has permitted long distance carriers, such as the
Operating Subsidiaries, to pass such costs through to their customers.
State Regulation. Most PUCs require carriers that wish to provide intrastate
common carrier services to be authorized to provide such services. The
Operating Subsidiaries either have applied for and received, or are in the
process of applying for and receiving, all necessary authorizations to provide
intrastate long distance services.
The Operating Subsidiaries are generally not subject to price regulation or
to rate of return regulation for their intrastate services. In most states,
however, the Operating Subsidiaries are required to file tariffs setting forth
the terms, conditions and prices for their intrastate services. In some state
jurisdictions, the tariff can list a rate range for intrastate services. The
Operating Subsidiaries may be subject to additional regulatory burdens in some
states, such as compliance with quality of service requirements or remittance
of contributions to support state sponsored universal service. The Operating
Subsidiaries' ability to incur long-term indebtedness is subject to prior PUC
approval in some state jurisdictions. In addition, some state PUCs regulate
the issuance of securities and the transfer of control of entities subject to
their jurisdiction. These state regulations may have attached to the Company's
recent acquisitions of one or more of the Operating Subsidiaries. Currently,
the Company is reviewing whether and to what extent additional regulatory
compliance is required in this regard.
Other. In conducting its business, the Company is subject to various laws
and regulations relating to commercial transactions generally, such as the
Uniform Commercial Code and is also subject to the electronic funds transfer
rules embodied in Regulation E promulgated by the Federal Reserve. Congress
has held hearings regarding, and various agencies are considering, whether to
regulate providers of services and transactions in the electronic commerce
market. For example, the Federal Reserve recently completed a study, directed
by Congress, regarding the propriety of applying Regulation E to stored value
cards. The Department of Treasury recently promulgated proposed rules applying
record keeping, reporting and other requirements to a wide variety of entities
involved in electronic commerce. It is possible that Congress, the states or
various government agencies could impose new or additional requirements on the
electronic commerce market or entities operating therein. If enacted, such
laws, rules and regulations could be imposed on the Company's business and
industry and could have a material adverse effect on the Company's business,
financial condition or results of operations. The Company's proposed
international activities also will be subject to regulation by various
international authorities and the inherent risk of unexpected changes in such
regulation.
PROPRIETARY RIGHTS AND TECHNOLOGY
The Company's ability to compete is dependent in part upon its proprietary
technology. The Company relies primarily on a combination of intellectual
property laws and contractual provisions to protect its proprietary rights and
technology. These laws and contractual provisions provide only limited
protection of the Company's proprietary rights and technology. The Company's
proprietary rights and technology include confidential information and trade
secrets which the Company attempts to protect through confidentiality and
nondisclosure provisions in its licensing, services, reseller and distribution
agreements. The Company typically attempts to protect its confidential
information and trade secrets through these contractual provisions for the
term of the applicable agreement and, to the extent permitted by applicable
law, for some negotiated period of time following
50
<PAGE>
termination of the agreement, typically one to two years at a minimum. In
addition, Premiere has three patent applications pending and nine trademark or
service mark registrations pending. Premiere has two registered service marks.
Voice-Tel has been issued two U.S. patents and has one U.S. patent application
pending. Voice-Tel also has five registered U.S. trademarks or service marks
and approximately 40 foreign trademark or service mark registrations or
pending applications. VoiceCom has two registered U.S. trademarks and one
registered foreign trademark. Despite the Company's efforts to protect its
proprietary rights and technology through intellectual property laws and
contractual provisions, there can be no assurance that others will not be able
to copy or otherwise obtain and use the Company's proprietary technology
without authorization, or independently develop technologies that are similar
or superior to the Company's technology. However, the Company believes that,
due to the rapid pace of technological change in the information and
telecommunications service industry, factors such as the technological and
creative skills of its personnel, new product developments, frequent product
enhancements and the timeliness and quality of support services are more
important to establishing and maintaining a competitive advantage in the
industry. See "Risk Factors -- Limited Protection of Proprietary Rights and
Technology."
Many patents, copyrights and trademarks have been issued in the general
areas of information and telecommunications services and computer telephony.
The Company believes that in the ordinary course of its business third parties
will claim that the Company's current or future products or services infringe
the patent, copyright or trademark rights of such third parties. The Company
is aware of other companies that use the terms "WorldLink" or "Premiere" in
describing their products and services, including telecommunications products
and services. Certain of those companies hold registered trademarks which
incorporate the names "WorldLink" or "Premiere." The Company has received
correspondence from a provider of prepaid calling cards which claims that the
Company's use of the term "WorldLink" infringes upon its trademark rights. In
addition, the Company has received correspondence from a major bank, which is
among the holders of registered trademarks incorporating the term "WorldLink,"
inquiring as to the nature of the Company's use of the term "WorldLink" as
part of its mark "Premiere WorldLink." Based on, among other things, the types
of businesses in which the other companies are engaged and the low likelihood
of confusion, the Company believes these claims to be without merit.
In October 1996, VTE received a letter from a third party claiming that
certain aspects of VTE's products and services may be infringing upon one or
more of the third party's patents. The Company has reviewed the patent claims
of the third party and does not believe that the Company's products or
services infringe on the claims of the third party. No patent infringement
claims against the Company have been filed by the third party at this time.
Should the third party file patent infringement claims against the Company,
the Company believes that it would have meritorious defenses to any such
claims. However, due to the inherent uncertainties of litigation, the Company
is unable to predict the outcome of any potential litigation with the third
party, and any adverse outcome could have a material adverse effect on the
Company's business, results of operations or financial condition. Even if the
Company were to ultimately prevail, the Company's business could be adversely
affected by the diversion of management attention and litigation costs.
Because of this risk, the Company withheld in escrow approximately 176,000
shares of Common Stock from the purchase price of VTE and VTN. This escrow
arrangement terminates in April 2000. There can be no assurance that such
escrow will be sufficient to fully cover the Company's exposure in the event
of litigation or an adverse outcome to the potential infringement claims.
In February 1997, the Company entered into a long-term nonexclusive license
agreement with AudioFAX settling a patent infringement suit filed by AudioFAX
in June 1996. In the third quarter of 1996, the Company took a one-time charge
for the estimated legal fees and other costs that the Company expected to
incur to resolve this matter. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations." In September 1997, VoiceCom
also entered into a long-term non-exclusive license agreement with AudioFAX.
In May 1997, Premiere received a letter from a manufacturer and marketer of
certain telecommunications equipment asserting that Premiere is offering
certain "calling card and related enhanced services," "single number service"
and "call connecting services" covered by three patents held by that company
and inviting Premiere to obtain a license. Premiere has preliminarily reviewed
the subject patents and, based on that review,
51
<PAGE>
presently believes that its products and services currently being marketed do
not infringe two of the patents. Premiere intends, however, to conduct a
further review of these two patents in order to determine whether it would be
helpful to its future products and services to license the patents. The third
patent relates to certain call reorigination technology. Premiere is
conducting a further review of this patent to determine if its call
reorigination system would infringe any valid rights under this patent. If
Premiere ultimately determines that it is infringing this patent, it could
seek to license the technology or discontinue using it and employ an alternate
technology. There can be no assurance that Premiere would be able to license
the technology on commercially reasonable terms or that it could easily and
inexpensively migrate to a new call reorigination technology. Premiere's call
reorigination service is only one service that it offers, and management does
not believe that this service is critical to the marketing of Premiere's
overall suite of services. Consequently, Premiere does not believe that its
inability to license the technology or migrate to a new technology would have
a material adverse effect on its business, financial condition and results of
operations. No claim has been asserted beyond this letter, but no assurance
can be given that the third party will not commence an infringement action
against Premiere. If a patent infringement claim is brought against Premiere,
there can be no assurance that Premiere would prevail and any adverse outcome
could have a material adverse effect on Premiere's business, financial
condition and results of operations.
In May 1997, the Company received a letter from counsel for a provider of
goods and services in the telecommunications field objecting to the Company's
use of the phrase "personal assistant" based on that company's federally
registered "personal assistant" service mark. On June 18, 1997, counsel for
the Company responded to the objections, noting that the Company did not
intend to use, nor would it use in the future, the words "personal assistant"
as a trademark or service mark, but instead would merely use these words to
describe the nature of its product. The Company has not heard anything further
from the potential claimant and believes that the matter has been resolved.
In July 1997, the Company received a letter from counsel for a French
publishing company objecting to the Company's use of the "Premiere" trademark.
Based on, among other things, the type of business in which the French company
is engaged and the low likelihood of confusion, the Company believes that
these claims are without merit. Due to the inherent uncertainties of
litigation, however, the Company is unable to predict the outcome of any
potential litigation with the French company, and any adverse outcome could
have a material effect on the Company's business, financial condition and
results of operations. Even if the Company were to prevail in such a
challenge, the Company's business could be adversely affected by the diversion
of management attention and litigation costs.
No assurance can be given that actions or claims alleging patent, copyright
or trademark infringement will not be brought against the Company with respect
to current or future products or services, or that, if such actions or claims
are brought, the Company will ultimately prevail. Any such claiming parties
may have significantly greater resources than the Company to pursue litigation
of such claims. Any such claims, whether with or without merit, could be time
consuming, result in costly litigation, cause delays in introducing new or
improved products and services, require the Company to enter into royalty or
licensing agreements, or cause the Company to discontinue use of the
challenged technology, tradename or service mark at potentially significant
expense to the Company associated with the marketing of a new name or the
development or purchase of replacement technology, all of which could have a
material adverse effect on the Company's business, financial condition and
results of operation. See "Risk Factors -- Risk of Infringement Claims" and
"-- Legal Proceedings."
EMPLOYEES
As of December 1, 1997, the Company employed 922 persons on a full-time
basis and 29 persons on a part-time basis. None of the Company's employees are
members of a labor union or are covered by a collective bargaining agreement.
PROPERTIES
Premiere's corporate headquarters occupy approximately 103,400 square feet
of office space in Atlanta, Georgia under a lease expiring August 31, 2007.
Voice-Tel's headquarters occupy approximately 30,000 square feet of office
space in Cleveland, Ohio under a lease expiring in October 1999. VoiceCom's
headquarters occupy
52
<PAGE>
approximately 26,400 square feet of office space in Atlanta, Georgia under a
lease expiring April 30, 2001. The Company also has data and switching centers
in Atlanta, Georgia, Dallas, Texas, London, England and has begun development
of a similar center in Toronto, Canada. The Company believes that its current
office space is sufficient to meet its present needs and does not anticipate
any difficulty securing additional space, as needed, on terms acceptable to
the Company.
LEGAL PROCEEDINGS
On January 21, 1997, Eric Bott, E.B. Elliott and Cost Recovery Systems, Inc.
("CRS") filed a complaint against the Company, PCI and the Company's
president, Boland T. Jones, in the Superior Court of Fulton County, Georgia
("Civil Action"). As of December 2, 1997, the Company, PCI and Mr. Jones
entered into a settlement agreement with Mr. Bott which settled and disposed
of Mr. Bott's claims in connection with this litigation. On December 12, 1997,
Mr. Elliott and CRS filed a Second Amended Complaint against Premiere and
Boland T. Jones in the Civil Action. The first count seeks an accounting of
commissions that Mr. Elliott and CRS allege may be due to them under a sales
commission agreement between CRS and Premiere. The second count seeks options
for 72,000 shares of Premiere Common Stock that Mr. Elliott and CRS claim are
due to them, or damages in the alternative. The third count seeks to recover
the Plaintiffs' reasonable attorneys' fees. In the Second Amended Complaint,
the remaining plaintiffs have dropped their prior request for punitive
damages. The Company believes it has meritorious defenses to Mr. Elliott's and
CRS' remaining allegations, but due to the inherent uncertainties of the
litigation process, the Company is unable to predict the outcome of this
litigation. If the outcome of this litigation is adverse to the Company, it
could have a material adverse effect on the Company's business, financial
condition and results of operations. The settlement with Mr. Bott will not
have a material adverse effect on the Company's business, financial condition
and results of operations.
On August 6, 1996, CNC, a licensing customer of the Company, was placed into
bankruptcy under Chapter 11 of the United States Bankruptcy Code (the
"Bankruptcy Code"). On August 23, 1996, CNC filed a motion to intervene in a
separate lawsuit brought by a CNC creditor in the United States District Court
for the Southern District of New York against certain guarantors of CNC's
obligations and to file a third-party action against numerous entities,
including such CNC creditor and PCI for alleged negligent misrepresentations
of fact in connection with an alleged fraudulent scheme designed to damage
CNC. The court has not ruled on CNC's request. Based upon the bankruptcy
examiner's findings and the subsequently appointed bankruptcy trustee's
investigation of potential actions directed at PCI, including an avoidable
preference claim under the Bankruptcy Code of an amount up to approximately
$950,000, the trustee and PCI have reached a tentative agreement on all issues
between the parties, including dismissal of the above referenced lawsuit,
subject to Bankruptcy Court approval. The terms of the proposed settlement
have been incorporated into a proposed plan of reorganization filed by the
trustee with the Bankruptcy Court. Based upon hearings before the Bankruptcy
Court, the trustee filed a motion requesting approval of the settlement on
November 18, 1997. Due to the inherent uncertainties of the judicial system,
the Company is not able to predict with certainty whether the above-described
settlement will be approved by the Bankruptcy Court. If the settlement is not
approved and the trustee successfully pursues possible litigation against the
Company, it could have a material adverse effect on the Company's business,
financial condition and results of operations.
On November 26, 1997, Wael Al-Khatib ("Al-Khatib"), the sole shareholder and
former president of CNC, and his company, Platinum Network, Corp. ("Platinum")
(Al-Khatib and Platinum are collectively referred to herein as "Plaintiffs"),
filed a complaint against PCI, WorldCom Network Services, Inc. f/k/a WilTel,
Inc., Bernard J. Ebbers, David F. Meyers, Robert Vetera, Joseph Cusick,
William Trower, Don Wilmouth, Digital Communications of America, Inc., Boland
Jones, Patrick Jones, and John Does I-XX (the "Defendants") in the Eastern
District of New York, United States District Court (the "Al-Khatib lawsuit").
In their complaint, Plaintiffs contend that, during 1996, PCI, certain
officers of PCI and the other Defendants engaged in a fraudulent scheme to
restrain trade in the debit card market nationally and in the New York debit
card sub-market. The Plaintiffs' complaint alleges that by engaging in the
aforementioned scheme and by making misrepresentations of fact in connection
with the scheme, PCI and the other Defendants caused the Plaintiffs to suffer
harm. The
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<PAGE>
Plaintiffs are seeking at least $250 million in compensatory damages and $500
million in punitive damages from PCI and the other Defendants. PCI has not yet
filed its response to the complaint in the Al-Khatib lawsuit. PCI believes
that it has meritorious defenses to the Plaintiffs' allegations and will
vigorously defend the same. Due to the inherent uncertainties of the judicial
system, the Company is not able to predict the outcome of the Al-Khatib
lawsuit. If the Al-Khatib lawsuit is not resolved in the Company's favor, it
could have a material adverse effect on the Company's business, financial
condition and results of operations.
On September 20, 1996, Peter Lucina ("Lucina") filed a complaint against the
Company, Donald B. Gasgarth ("Gasgarth") and Patrick G. Jones ("Jones") in the
United States District Court for the Eastern District of Illinois. As of
December 3, 1997, the Company, Gasgarth and Jones entered into a settlement
agreement with Lucina which settled and disposed of Lucina's claims in
connection with this litigation, and this settlement was approved by the Court
on December 15, 1997. This settlement will not have a material adverse effect
on the Company's business, financial condition and results of operations.
Due to the inherent uncertainties of the litigation process and the judicial
system, the Company is unable to predict the outcome of the foregoing
litigation matters. If the outcome of one or more of such matters is adverse
to the Company, it could have a natural adverse effect on the Company's
business, financial condition and results of operations. See "Risk Factors --
Potential Adverse Impact on Pending Litigation."
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<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS
The Board of Directors (the "Board") currently consists of four directors,
divided into three classes of directors serving staggered three-year terms.
Directors and executive officers of the Company are elected to serve until
they resign or are removed, or are otherwise disqualified to serve, or until
their successors are elected and qualified. Directors of the Company are
elected at the annual meeting of stockholders. Executive officers of the
Company generally are appointed at the Board's first meeting after each annual
meeting of stockholders. The executive officers, key employees and directors
of the Company and their ages as of December 1, 1997 are as follows:
<TABLE>
<CAPTION>
TERM AS
DIRECTOR
NAME AGE POSITION EXPIRES
<S> <C> <C> <C>
Boland T. Jones(1)(5)... 37 Chairman of the Board of Directors and President 2000
of the Company
Jeffrey A. Allred....... 44 Executive Vice President of Strategic --
Development of the Company
Patrick G. Jones........ 46 Senior Vice President of Finance and Legal --
and Secretary of the Company
Julianne F. Vaio........ 33 Treasurer of the Company --
Curtis L. Garner, Jr.... 50 President of PCI --
William E. Welsh........ 55 President of VTE --
Randolph W. Salisbury... 43 Senior Vice President of Marketing of PCI --
Thomas E. Houlihan...... 42 Vice President of Engineering and Operations of PCI --
Raja Rajaraman.......... 54 Vice President of Operations and Development of VTE --
George W. Baker, 61 Director 2000
Sr.(3)(5)(6)...........
Eduard J. May- 44 Director 1998
er(2)(4)(6)............
Raymond H. Pirtle, 56 Director 1999
Jr.(2)(3)(4)...........
</TABLE>
- --------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Member of the Strategic Planning Committee.
(5) Member of the 1994 Stock Option Plan Committee.
(6) Member of the 1995 Stock Plan Committee.
Boland T. Jones, a founder of the Company, has served as a Director and
Chief Executive Officer or President of the Company since its inception in
July 1991. Since September 1993, Mr. Jones has served as the Chairman of the
Board of Directors. From 1986 until founding the Company, Mr. Jones served as
Chairman, Chief Executive Officer and President of American Network Exchange,
Inc., a diversified transmission provider specializing in niche markets.
Jeffrey A. Allred has served as Executive Vice President of Strategic
Development of the Company since August 1997. From June 1996 until August
1997, Mr. Allred was a partner in the Atlanta, Georgia office of the law firm
of Alston & Bird LLP. From February 1992 until June 1996, Mr. Allred was a
partner in the Atlanta, Georgia office of the law firm of Nelson Mullins Riley
& Scarborough, L.L.P.
Patrick G. Jones has served as Senior Vice President of Finance and Legal of
the Company since November 1995. Since December 1995, Mr. Jones has also
served as the Company's Secretary. From February 1993 until November 1995, Mr.
Jones was a partner in the Atlanta, Georgia office of the law firm of Nelson
Mullins Riley
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<PAGE>
& Scarborough, L.L.P. From February 1989 until February 1993, Mr. Jones was a
partner in the Atlanta, Georgia law firm of Long, Aldridge & Norman.
Julianne F. Vaio has served as Treasurer of the Company since September
1996. From January 1995 until September 1997, Ms. Vaio served as Senior
Director of Finance/Controller of PCI. From 1992 through 1994 Ms. Vaio served
as Controller of Novato National Bank and Accounting Manager of Pillar
Corporation (now Hyperion Software Corp.), and from 1987 until 1992 she was
with Arthur Andersen.
Curtis L. Garner, Jr. has served as President of PCI since November 1, 1997.
From 1981 until October 1997, Mr. Garner served in various senior management
positions with AT&T, most recently as Chief Financial Officer,
Southern/Southwest Regions, AT&T Consumer Markets Division.
William E. Welsh has served as President of VTE since April 1997. From 1993
to April 1997, Mr. Welsh served as the Executive Director to the VTE National
Accounts Program, an unincorporated association of Voice-Tel franchisees. From
1986 to April 1997, Mr. Welsh served as the President and Chief Executive
Officer of William E. Welsh and Associates, Inc., a consultant to
manufacturing and distribution companies. From 1989 to April 1997, Mr. Welsh
also served as the President and Chief Executive Officer of Steel Products
Corp. of Akron.
Randolph W. Salisbury has served as Senior Vice President of Marketing of
PCI since September 1997. From 1985 to 1997, Mr. Salisbury served as Senior
Vice President and Partner of Fitzgerald & Company, an independent advertising
agency in Atlanta, Georgia, which has assisted the Company since January 1996
in the development and implementation of its marketing programs.
Thomas E. Houlihan has served as Vice President of Engineering and
Operations of PCI since September 1997, and from May 1996 to September 1997 he
served as Director of Network Operations of PCI. From 1992 to 1996, Mr.
Houlihan served as Vice President of Network for Corporate Telemanagement
Group, Inc.
Raja Rajaraman has served as Vice President of Operations and Development of
VTE since July 1994. From 1989 to 1994, Mr. Rajaraman held the positions of
Vice President, Corporate Strategy and Business Development, and Vice
President, Technology and Architecture for British Telecom North America.
Mr. Rajaraman has an MBA and Ph.D. in Management Science from the State
University of New York in Buffalo.
George W. Baker, Sr. has been a Director of the Company since the Company's
inception in July 1991. Since July 1988, Mr. Baker has served as a Director,
President and Chief Executive Officer of Taco Tico, Inc., a Wichita, Kansas
based franchisor of Mexican restaurants. Mr. Baker's prior experience also
includes service on the Board of Directors of Kentucky Fried Chicken
Corporation, as President of Kentucky Fried Chicken Operating Company and as
President, Chief Executive Officer and shareholder of Mr. Gatti's, Inc., a
pizza restaurant chain.
Eduard J. Mayer has been a Director of the Company since August 1992. Since
December 1988, Mr. Mayer has been President and owner of Acorn Ventures Inc.,
a venture capital management company. Acorn Ventures Inc. is the manager of
two Canadian venture capital companies, BG Acorn Capital Fund (since December
1988) and FESA Enterprise Venture Capital Fund of Canada Ltd. (since July
1995). Mr. Mayer is a director of International UNP Holdings Ltd., an
investment company, Mosaid Technologies, Incorporated, a semiconductor design
company, and Trojan Technologies Inc., an environmental services company, as
well as several private companies.
Raymond H. Pirtle, Jr. has been a managing director and a member of the
Board of Directors of Equitable Securities Corporation since February 1989.
Prior to that date, Mr. Pirtle was a general partner of J.C. Bradford & Co.
Mr. Pirtle is a member of the Board of Directors of Sirrom Capital
Corporation, a publicly traded small business investment company.
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<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information known to the Company with
respect to the beneficial ownership of the Company's Common Stock as of
December 19, 1997, and as adjusted to reflect the sale of the Common Stock
offered hereby, by: (i) all persons known by the Company to own beneficially
more than 5% of the outstanding shares of Common Stock; (ii) each of the
Company's directors and executive officers; (iii) the Selling Shareholders;
and (iv) all directors and executive officers as group. Except as set forth in
the footnotes to the table, the Company believes that each person named below
has sole voting and investment power with respect to all shares beneficially
owned, subject to community property laws where applicable.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING (1) NUMBER AFTER OFFERING (1)
----------------------- OF ----------------------
NUMBER OF SHARES NUMBER OF
NAME OF BENEFICIAL OWNER SHARES PERCENT OFFERED SHARES PERCENT
<S> <C> <C> <C> <C> <C>
WorldCom, Inc. (2)...... 2,050,000 6.2% -- 2,050,000 6.2%
Boland T. Jones (3)..... 3,901,098 11.2 -- 3,901,098 11.2
D. Gregory Smith (4).... 1,763,814 5.2 -- 1,763,814 5.2
George W. Baker, Sr.
(5).................... 130,832 * -- 130,832 *
Eduard J. Mayer (6)..... 164,400 * -- 164,400 *
Raymond H. Pirtle, Jr.
(7).................... 60,000 * -- 60,000 *
Patrick G. Jones (8).... 507,728 1.5 -- 507,728 1.5
Jeffrey A. Allred (9)... 150,000 * -- 150,000 *
Barbara Jane Allan (10)
....................... 36,456 * 32,811 3,645 *
Barbara Joan Allan (11)
....................... 16,523 * 7,153 9,370 *
Karin Allan (12) ....... 36,604 * 32,944 3,660 *
Amway Corporation (13).. 331,062 1.0 254,919 76,143 *
Fran Andresen (14)...... 98,965 * 60,000 38,965 *
Automated Messaging,
Inc.................... 39,453 * 20,000 19,453 *
Preston G. and James R.
Averette .............. 10,417 * 10,417 -- *
Major Bashinsky (15).... 79,394 * 12,000 67,394 *
Michael C. Chacho (14).. 64,500 * 6,000 58,500 *
George G. Clark (16).... 30,930 * 3,000 27,930 *
Frederick W. Clarke IV
(17)................... 28,874 * 3,000 25,874 *
Kitty C. Dally (18)..... 44,504 * 30,000 14,504 *
John and Eileen Dodson
(14)................... 45,100 * 12,000 33,100 *
Barney Edwards (14)..... 32,549 * 7,323 25,226 *
Mitchell E. Eil (14).... 28,734 * 2,500 26,234 *
David A. Ellsworth (14). 54,593 * 7,000 47,593 *
Estate of Robert McDon-
ald (14)............... 111,705 * 34,400 77,305 *
David Feldstein (14).... 7,962 * 1,700 6,262 *
Eugene Gertler (14)..... 82,350 * 74,115 8,235 *
Mark Ginella (14)....... 37,273 * 5,000 32,273 *
Neal E. Gold (14)....... 64,500 * 6,000 58,500 *
Alan D. Hebert (14)..... 8,366 * 3,000 5,336 *
John A. Hughes (19)..... 102,763 * 32,500 70,263 *
James R. and Betty M.
Humphrey (20).......... 26,936 * 5,000 21,936 *
Henry C. and Mary E.
Johnson (14)........... 55,849 * 10,000 45,849 *
</TABLE>
57
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<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING (1) NUMBER AFTER OFFERING (1)
----------------------- OF ----------------------
NUMBER OF SHARES NUMBER OF
NAME OF BENEFICIAL OWNER SHARES PERCENT OFFERED SHARES PERCENT
<S> <C> <C> <C> <C> <C>
Jewish Home of Cincin-
nati.................... 500 * 500 -- *
Jewish Federation of Cin-
cinnati................. 500 * 500 -- *
Edward P. Kalankiewicz
(14).................... 7,245 * 2,800 4,445 *
Marvin Kasoff Revocable
Trust (14).............. 68,897 * 20,000 48,897 *
David Kasoff (14)........ 31,589 * 8,000 23,589 *
Robert A. Larson (14).... 20,401 * 11,000 9,401 *
Lee Smith Family Trust
(21).................... 26,654 * 21,989 4,665 *
Lee Smith Charitable Re-
mainder Unitrust ....... 20,000 * 20,000 -- *
David M. Lewis (22)...... 12,310 * 3,700 8,610 *
Kenneth Lile (14)........ 82,168 * 41,755 40,413 *
Doug McMillan (14)....... 51,756 * 6,000 45,756 *
Thomas E. Nemic (14)..... 42,762 * 5,486 37,276 *
Robert B. Nesmith (14)... 32,212 * 13,645 18,567 *
Barbara Page (14)........ 6,705 * 3,000 3,705 *
Alex Papagan (23)........ 17,811 * 4,000 13,811 *
Irene Pasarew (14)....... 130,878 * 15,312 115,566 *
Edward P. Pearsall (24).. 50,409 * 9,341 41,068 *
Linda C. Roaseau Trust
(14).................... 89,907 * 7,500 82,407 *
Mary L. Schwartz (25).... 7,963 * 7,000 963 *
W. David Sweatt (26)..... 49,174 * 7,569 41,605 *
Barbara Vaughan (14)..... 15,720 * 3,000 12,720 *
Chris J. Washko (14)..... 46,654 * 10,000 36,654 *
Widdoes Enterprises (27). 159,899 * 16,695 143,204 *
Michael E. Williams (14). 22,304 * 1,000 21,304 *
Thomas D. Woltjer (14)... 41,085 * 6,977 34,108 *
Zee Corp (14)............ 26,806 * 2,000 24,806 *
All executive officers
and directors as a group
(6 persons) (28)........ 4,914,058 13.9 -- 4,914,058 13.9
</TABLE>
- --------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission that deem shares to be beneficially
owned by any person who has or shares voting or investment power with
respect to such shares. Shares of Common Stock subject to warrants or
options that are currently exercisable or exercisable within 60 days of
December 19, 1997 are deemed to be outstanding and to be beneficially
owned by the person holding such warrants or options for the purpose of
computing the percentage ownership of such person but are not treated as
outstanding for the purpose of computing the percentage ownership of any
other person.
(2) Based upon shares owned as of December 31, 1996 and information the
Company has obtained from WorldCom, Inc.'s Schedule 13D. The address of
WorldCom, Inc. is 515 East Amite Street, Jackson, Mississippi 39201-2702.
(3) Includes 2,132,594 shares held of record by Mr. Jones, 1,623,624 shares
subject to warrants or options exercisable immediately or which become
exercisable within 60 days, 590 shares held of record by Mr. Jones' wife
for which Mr. Jones holds the right to vote pursuant to an irrevocable
proxy granted by Mrs. Jones to Mr. Jones, and 144,290 shares held of
record by 22 shareholders for which Mr. Jones holds the right to vote
pursuant to irrevocable proxies granted by such shareholders to Mr. Jones.
The address of Mr. Jones is 3399 Peachtree Road, N.E., The Lenox Building,
Suite 400, Atlanta, Georgia 30326.
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<PAGE>
(4) Includes 1,403,814 shares held of record by Mr. Smith and 360,000 shares
subject to warrants or options exercisable immediately. The address of Mr.
Smith is 1907 Oakmont Avenue, Tampa, Florida 33629.
(5) Includes 110,832 shares held of record by Mr. Baker and 20,000 shares
subject to warrants or options exercisable immediately or which become
exercisable within 60 days. Does not include 44,000 shares held of record
by Mr. Baker's wife for which Mr. Baker disclaims beneficial ownership.
(6) Includes 94,400 shares held of record by Mr. Mayer and 70,000 shares
subject to warrants or options exercisable immediately or which become
exercisable within 60 days.
(7) Includes 50,000 shares held in a 401(k) plan for the benefit of Mr. Pirtle
and 10,000 shares subject to warrants or options exercisable immediately
or which become exercisable within 60 days.
(8) Includes 10,028 shares held of record by Mr. Jones, 225,000 shares subject
to warrants or options exercisable immediately or which become exercisable
within 60 days and 272,700 shares owned by six trusts of which Mr. Jones
is the sole trustee.
(9) Includes 150,000 shares subject to warrants or options exercisable
immediately or which become exercisable within 60 days.
(10) Includes 32,811 Exchangeable Shares, which are convertible at any time
into a like number of shares of Premiere Common Stock, and which will be
converted to Common Stock and sold in this Offering. Also includes 3,645
Exchangeable Shares held in escrow by SunTrust Bank, Atlanta.
(11) Includes 14,871 Exchangeable Shares, which are convertible at any time
into a like number of shares of Premiere Common Stock, and of which 7,153
will be converted to Common Stock and sold in this Offering. Also
includes 1,652 Exchangeable Shares held in escrow by SunTrust Bank,
Atlanta.
(12) Includes 32,944 Exchangeable Shares, which are convertible at any time
into a like number of shares of Premiere Common Stock, and which will be
converted to Common Stock and sold in this Offering. Also includes 3,660
Exchangeable Shares held in escrow by SunTrust Bank, Atlanta.
(13) Includes 76,143 shares of Common Stock held in escrow by SunTrust Bank,
Atlanta, as escrow agent, for which the Selling Shareholder retains the
right to vote. Historically, the Voice-Tel entities have relied on sales
through Amway for a substantial portion of their revenue. Such sales
accounted for approximately 27.5%, 23.7% and 21.9% of the Company's
revenue for the years ended December 31, 1995 and 1996 and the nine
months ended September 30, 1997, respectively. Amway's relationship with
VTE commenced in 1990 when VTE began managing the voice messaging
operations previously conducted by Amway's subsidiary, Amvox. VTE
subsequently acquired and franchised the former Amvox service centers
from Amway in exchange for an equity interest in VTE. Amway later
invested in the development of the private frame relay digital messaging
network through VTN. As a result of these transactions, Amway also became
the single largest equity holder in VTE and VTN. See "Risk Factors --
Reliance on Amway and Certain Other Relationships."
(14) Ten percent of the shares beneficially owned by each Selling Shareholder
are held in escrow by SunTrust Bank, Atlanta, as escrow agent. Each
Selling Shareholder retains the right to vote such shares.
(15) Includes 7,878 shares held in escrow by SunTrust Bank, Atlanta, as escrow
agent. Mr. Bashinsky retains the right to vote such shares.
(16) Includes 2,731 shares held in escrow by SunTrust Bank, Atlanta, as escrow
agent. Mr. Clark retains the right to vote such shares.
(17) Includes 2,468 shares held in escrow by SunTrust Bank, Atlanta, as escrow
agent. Mr. Clarke retains the right to vote such shares.
(18) Includes 4,123 shares held in escrow by SunTrust Bank, Atlanta, as escrow
agent. Ms. Dally retains the right to vote such shares.
(19) Includes 10,212 shares held in escrow by SunTrust Bank, Atlanta, as
escrow agent. Mr. Hughes retains the right to vote such shares.
(20) Includes 2,569 shares held in escrow by SunTrust Bank, Atlanta, as escrow
agent. Mr. and Mrs. Humphrey retain the right to vote such shares.
(21) Includes 4,665 shares held in escrow by SunTrust Bank, Atlanta, as escrow
agent. The trust retains the right to vote such shares.
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<PAGE>
(22) Includes 1,155 shares held in escrow by SunTrust Bank, Atlanta, as escrow
agent. Mr. Lewis retains the right to vote such shares.
(23) Includes 742 shares held in escrow by SunTrust Bank, Atlanta, as escrow
agent. Mr. Papagan retains the right to vote such shares.
(24) Includes 4,815 shares held in escrow by SunTrust Bank, Atlanta, as escrow
agent. Mr. Pearsall retains the right to vote such shares.
(25) Includes 504 shares held in escrow by SunTrust Bank, Atlanta, as escrow
agent. Ms. Schwartz retains the right to vote such shares.
(26) Includes 1,952 shares held in escrow by SunTrust Bank, Atlanta, as escrow
agent. Mr. Sweatt retains the right to vote such shares.
(27) Includes 27,579 shares held in escrow by SunTrust Bank, Atlanta, as escrow
agent. Widdoes Enterprises retains the right to vote such shares.
(28) Includes 2,098,624 shares subject to warrants or options exercisable
immediately or which become exercisable within 60 days.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 150,000,000 shares
of Common Stock, par value $0.01 per share, and 5,000,000 shares of Preferred
Stock, par value $0.01 per share. The following summary does not purport to be
complete and is subject to and qualified in its entirety by the provisions of
the Company's Articles and the Bylaws, and by the provisions of applicable
law.
COMMON STOCK
As of December 15, 1997, there were 33,960,277 shares of Common Stock
outstanding (including 402,748 Exchangeable Shares which are convertible at
any time into a like number of shares of Common Stock, and of which 72,908
will be converted and sold in this Offering), held of record by approximately
450 shareholders. The holders of Common Stock are entitled to one vote for
each share held of record for matters on which Common Stock shareholders are
entitled to vote. There are neither sinking fund provisions nor cumulative
voting, preemptive, redemption, or conversion rights applicable to the Common
Stock. The rights, preferences and privileges of holders of Common Stock are
subject to, and may be adversely affected by, the rights of holders of any
shares of any series of Preferred Stock which may be issued by the Company's
Board of Directors from time to time in the future. Subject to the preference
rights of the holders of any outstanding shares of Preferred Stock, holders of
Common Stock are entitled to receive ratably such dividends, if any, as may be
declared by the Board of Directors out of funds legally available therefor
and, upon the liquidation, dissolution or winding up of the Company, are
entitled to share ratably in all assets of the Company after the payment of
its debts and other liabilities. The outstanding shares of Common Stock are,
and the shares issuable upon conversion of the Notes will be, when issued and
paid for, fully paid and non-assessable.
PREFERRED STOCK
The Board of Directors has the authority pursuant to the Articles, without
the approval of or any action by the shareholders, to issue up to 5,000,000
shares of Preferred Stock in such series and with such preferences, powers,
limitations and relative rights as may be determined by the Board from time to
time. The terms of the voting, conversion, dividend, liquidation, preemptive
and redemption rights and preferences, and other qualifications, powers and
privileges conferred upon the holders of any such Preferred Stock, may be more
favorable than those, if any, granted to holders of Common Stock. The
designation of any Preferred Stock with greater rights, privileges and
preferences than those applicable to the Common Stock may adversely affect the
voting power, market price and other rights and privileges of the Common
Stock, and may hinder or delay the removal of directors, attempted tender
offers, proxy contests or takeovers, or other attempts to change control of
the Company, some or all of which may be desired by holders of the Common
Stock.
Of the 5,000,000 authorized shares of Preferred Stock, one share has been
designated "Series B Voting Preferred Stock," par value $0.01 per share (the
"Series B Preferred"). The one share of the Company's Series B Preferred was
issued for the benefit of the former shareholders of the Canadian Voice-Tel
Entities that the Company acquired on April 30, 1997. Pursuant to the terms of
the acquisition agreements, the former shareholders of the Canadian Voice-Tel
Entities were issued 402,748 Exchangeable Shares, which may be converted at
any time into a like number of shares of the Company's Common Stock, and of
which 72,908 will be converted and sold in this Offering. Upon conversion,
such shares of Common Stock are subject to the same registration rights that
are applicable to the other shares of Common Stock issued in connection with
the Voice-Tel Acquisitions.
For voting purposes, the holder of record of the Series B Preferred is
entitled to have a number of votes equal to the number of votes that the
holders of the outstanding Exchangeable Shares (other than those held by the
Company or its affiliates) would be entitled if all such Exchangeable Shares
were exchanged by the holders thereof for shares of the Company's Common
Stock. The Series B Preferred and the Common Stock of the
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<PAGE>
Company vote as a single class. The Company's transfer agent, Sun Trust Bank,
Atlanta, serves as the voting trustee for the Series B Preferred.
In the event of the liquidation, dissolution or winding up of the Company,
and subject to any prior rights of holders of preferred stock ranking senior
to the Series B Preferred, the holder of the share of Series B Preferred will
be paid in an amount equal to $1.00, together with payment to any class of
stock ranking equally with the Series B Preferred. At such time as the Series
B Preferred has no votes attached to it because there are no Exchangeable
Shares outstanding which are not owned, directly or indirectly, by the Company
and no options or other agreements which could give rise to the issuance of
Exchangeable Shares to any person other than the Company, the Series B
Preferred will be canceled without any action required by the holder thereof
or the Company.
CERTAIN PROVISIONS OF THE ARTICLES, BYLAWS AND THE GEORGIA CODE
Certain provisions of the Georgia Code and the Company's Articles and
Bylaws, summarized in the following paragraphs, may be considered to have
anti-takeover effects and may hinder, delay, deter or prevent a tender offer,
proxy contest or other attempted takeover that a shareholder may deem to be in
such shareholder's best interest, including such an attempted transaction as
might result in payment of a premium over the market price for shares held by
such shareholder.
Number, Term and Removal of Directors. The Company's Bylaws provide that the
size of the Company's Board of Directors shall be comprised of three to seven
members as determined from time to time by resolution of the Board (provided
that the term of an incumbent director may not be shortened by a reduction in
the number of directors constituting the Board). The Board is divided into
three classes of directors, each serving for staggered three year terms.
Directors may be removed from the Board only for cause and only upon the
affirmative vote of at least 75% of the shareholders entitled to vote thereon
taken at a duly held shareholders' meeting for which notice of the removal
action was properly given. Unless at the same meeting the shareholders vote to
appoint a successor director for the remainder of the removed director's term,
upon a vacancy created in the Board of Directors pursuant to such removal
action or for any other reason (including an increase in the size of the Board
pursuant to resolution of the Board), a successor or new director may be
appointed only by the affirmative vote of a majority of the directors then in
office.
Call of and Notices Relating to Shareholder Meetings; Actions by Written
Consent of Shareholders. The Company's Bylaws provide that special meetings of
shareholders or a class or series of shareholders may be called at any time by
the Board of Directors, the Chairman of the Board or the President of the
Company, and that such meetings shall be called upon the written request of
the holders of shares representing at least 75% of the votes entitled to be
cast on each issue presented at such meeting (25% at any time the Company has
fewer than 100 shareholders of record). The Bylaws also provide that
shareholders seeking to bring business before a meeting of shareholders or to
nominate candidates for election as directors at a meeting of shareholders,
must provide notice thereof not less than 60 nor more than 90 days prior to
the meeting, and, in such notice, provide to the Company certain information
concerning the proposal or nominee. Actions required to be taken at a
shareholder meeting may be taken without a meeting only if the unanimous
written consent of the shareholders entitled to vote at such meeting is
obtained and delivered to the Company for inclusion in its minute book or
other corporate records.
Georgia Business Combination Statute. Pursuant to its Bylaws, the Company is
subject to the provisions of the Georgia Code, including provisions
prohibiting various "business combinations" involving "interested
shareholders" for a period of five years after the shareholder becomes an
interested shareholder of the Company. Such provisions prohibit any business
combination with an interested shareholder unless either (i) prior to such
time, the Board of Directors approves either the business combination or the
transaction by which such shareholder became an interested shareholder, (ii)
in the transaction that resulted in the shareholder becoming an interested
shareholder, the interested shareholder became the beneficial owner of at
least 90% of the outstanding voting stock of the Company which was not held by
directors, officers, affiliates thereof, subsidiaries or certain
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<PAGE>
employee stock option plans of the Company, or (iii) subsequent to becoming an
interested shareholder, such shareholder acquired additional shares resulting
in such shareholder owning at least 90% of the outstanding voting stock of the
Company and the business combination is approved by a majority of the
disinterested shareholders' shares not held by directors, officers, affiliates
thereof, subsidiaries or certain employee stock option plans of the Company.
Under the relevant provisions of the Georgia Code, a "business combination" is
defined to include, among other things, (i) any merger, consolidation, share
exchange or any sale, transfer or other disposition (or series of related
sales or transfers) of assets of the Company having an aggregate book value of
10% or more of the Company's net assets (measured as of the end of the most
recent fiscal quarter), with an interested shareholder of the Company or any
other corporation which is or, after giving effect to such business
combination, becomes an affiliate of any such interested shareholder, (ii) the
liquidation or dissolution of the Company, (iii) the receipt by an interested
shareholder of any benefit from any loan, advance, guarantee, pledge, tax
credit or other financial benefit from the Company, other than in the ordinary
course of business and (iv) certain other transactions involving the issuance
or reclassification of securities of the Company which produce the result that
5% or more of the total equity shares of the Company, or of any class or
series thereof, is owned by an interested shareholder. An "interested
shareholder" is defined by the Georgia Code to include any person or entity
that, together with its affiliates, beneficially owns or has the right to own
10% or more of the outstanding voting shares of the Company, or any person
that is an affiliate of the Company and has, at any time within the preceding
two-year period, been the beneficial owner of 10% or more of the outstanding
voting shares of the Company. The restrictions on business combinations shall
not apply to any person who was an interested shareholder before the adoption
of the Bylaw which made the provisions applicable to the Company nor to any
persons who subsequently become interested shareholders inadvertently,
subsequently divest sufficient shares so that the shareholder ceases to be an
interested shareholder and would not, at any time within the five-year period
immediately before a business combination involving the shareholder have been
an interested shareholder but for the inadvertent acquisition.
Constituency Provisions. In addition to considering the effects of any
action on the Company and its shareholders, the Company's Articles permit the
Board of Directors and the committees and individual members thereof to
consider the interests of various constituencies, including employees,
customers, suppliers, and creditors of the Company, communities in which the
Company maintains offices or operations, and other factors which such
directors deem pertinent, in carrying out and discharging the duties and
responsibilities of such positions and in determining what is believed to be
in the best interests of the Company.
Supermajority Provisions. The Board of Directors or the holders of 75% or
more of the outstanding shares may alter, amend or repeal the Company's Bylaws
and adopt new Bylaws. The shareholders also have the power to specify that any
Bylaw adopted by the shareholders may not be altered, amended or repealed by
the Board of Directors.
DIRECTOR EXCULPATION AND INDEMNIFICATION
The Company's Articles provide that no director shall be personally liable
to the Company or any of its shareholders for any breach of the duties of such
position, except that such elimination of liability does not apply to (i)
appropriations of business opportunities from the Company in violation of such
director's duties, (ii) knowing or intentional misconduct or violation of law,
(iii) liability for assent to distributions which are illegal or improper
under the Georgia Code or the Company's Articles and (iv) liability for any
transaction in which an improper personal benefit is derived. In addition, the
Articles state that if the Georgia Code is ever amended to allow for greater
exculpation of directors than presently permitted, the directors shall be
relieved from liabilities to the fullest extent provided by the Georgia Code,
as so amended, without further action by the Board or the shareholders of the
Company, unless the Georgia Code provides otherwise. No modification or repeal
of this provision will adversely affect the elimination or reduction in
liability provided thereby with respect to any alleged act occurring before
the effective date of such modification or repeal. The Company has entered
into indemnification agreements with each of the directors that provide the
directors similar rights to indemnification and contribution.
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<PAGE>
TRANSFER AGENT
The transfer agent and registrar for the Company's Common Stock is SunTrust
Bank in Atlanta, Georgia.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, the Company will have outstanding
33,960,277 shares of Common Stock (including 402,748 Exchangeable Shares,
which are convertible at any time into a like number of shares of Common
Stock, and of which 72,908 are being converted and sold in this Offering). Of
these shares, approximately 20,041,000 shares of Common Stock are freely
transferable without restriction or limitation under the Securities Act. The
remaining shares (approximately 13,912,000 shares) are Restricted Shares under
Rule 144. The Restricted Shares were issued and sold by the Company in private
transactions in reliance upon exemptions from registration under the
Securities Act and may not be sold except in compliance with the registration
requirements of the Securities Act or pursuant to an exemption from
registration, such as the exemption provided by Rule 144.
Upon completion of this Offering, approximately 7,032,000 Restricted Shares
will be eligible for sale in the public market pursuant to Rule 144. Beginning
on April 30, 1998 and September 30, 1998, approximately 6,434,000 shares and
approximately 446,000 shares, respectively, will be eligible for sale pursuant
to Rule 144, subject to the volume, manner of sale and notice requirements of
Rule 144. In general, under Rule 144 as currently in effect, any person (or
persons whose shares are aggregated), including an affiliate of the Company,
who has held shares for at least a one-year period (as computed under Rule
144) is entitled to sell within any three-month period a number of shares that
does not exceed the greater of (i) 1.0% of the then outstanding shares of the
Company's Common Stock (approximately 339,602 shares after giving effect to
this Offering) and (ii) the average weekly trading volume in the Company's
Common Stock during the four calendar weeks immediately preceding the date on
which the notice of sale is filed with the Securities and Exchange Commission.
Sales under Rule 144 are also subject to certain provisions relating to the
manner of sale, the filing of a notice of sale and the availability of current
public information about the Company. A person (or persons whose shares are
aggregated) who is not deemed an affiliate of the Company at any time during
the 90 days immediately preceding a sale, and who has held shares for at least
a two-year period (as computed under Rule 144), would be entitled to sell such
shares under Rule 144(k) without regard to the volume limitation and other
conditions described above. Rule 144A under the Securities Act permits the
immediate sale by the current holders of Restricted Shares of all or a portion
of their shares to certain qualified institutional buyers as defined in Rule
144A.
As of December 15, 1997, options and warrants to purchase an aggregate of
approximately 7,154,000 shares of Common Stock are outstanding, of which
options and warrants to purchase 3,389,000 shares of Common Stock are vested
and immediately exercisable. Substantially all of the shares issuable upon the
exercise of outstanding options and warrants will be eligible for immediate
resale, if and when issued, under Rule 701 adopted under the Securities Act or
pursuant to Registration Statements on Form S-8. In general, under Rule 701 as
currently in effect, an employee, officer, director, consultant or advisor of
the Company who purchased shares from the Company pursuant to a written
compensatory benefit plan or written contract relating to compensation is
eligible to resell such shares without compliance with restrictions contained
in Rule 144. Shares obtained pursuant to Rule 701 may be sold by non-
affiliates without regard to the holding period, volume limitations,
information or notice requirements of Rule 144, and by affiliates without
regard to the holding period requirements.
On September 26, 1997, the Company filed a shelf registration statement on
Form S-3 with respect to the Convertible Notes, which may convert into a
maximum of approximately 5,227,000 shares of Common Stock at any time prior to
final maturity at a conversion price of $33.00 per share, subject to
adjustment. The Company expects that the shelf registration statement relating
to the Convertible Notes will be effective shortly after the date of this
Prospectus. This Common Stock issuable upon conversion of the Convertible
Notes will be registered under the Securities Act and will be, if and when
issued, freely tradeable.
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<PAGE>
No prediction can be made as to the effect, if any, that market sales of
shares or the availability of such shares for sale will have on the market
price of the Common Stock. Nevertheless, sales of substantial amounts of
Common Stock in the public market may have an adverse impact on such market
price.
The Company has agreed not to offer, sell, sell short or otherwise dispose
of any shares of Common Stock (other than the shares offered by the Company in
this Offering) in the public market for a period of 90 days from the date of
this Prospectus without the prior consent of the Underwriter. Directors,
executive officers and certain shareholders of the Company have agreed not to
offer, sell, sell short or otherwise dispose of any such shares of Common
Stock beneficially owned by them or any shares issuable upon exercise of stock
options for a period of 90 days from the date of this Prospectus without the
prior written consent of the Underwriter. See "Underwriting."
REGISTRATION RIGHTS
The holders of approximately 10,641,494 shares of Common Stock and their
permitted transferees are entitled to certain rights with respect to the
registration of such shares under the Securities Act.
Registration Rights Granted Prior to IPO. Prior to the Company's initial
public offering in March 1996, the Company granted registration rights to
holders of convertible preferred stock and warrants. Pursuant to these
registration rights agreements, the Company is required to notify these
holders of the Company's intent to register any of its Common Stock under the
Securities Act and allow such holders an opportunity to include their shares
of Common Stock in the Company's registration. These registration rights are
subject to certain limitations and restrictions, including the right of the
underwriters of an underwritten offering to limit the number of shares offered
in such registration if such underwriter determines that the number of shares
requested to be registered cannot be underwritten.
Certain of the holders have the right to require the Company, no more than
two times, and with respect to a minimum percentage of the shares of Common
Stock held by such holders at such times, to file a registration statement
under the Securities Act (other than on Form S-3). In addition, these same
holders are entitled to require the Company, no more than one time after the
Company becomes eligible to effect a registration thereunder and provided such
offering is for not less than $1.0 million, to use all reasonable efforts to
register such holders' shares on Form S-3 (or a successor form). Subject to
certain limitations and conditions, including provisions granting such holders
preferences over the rights of other parties, both of such registrations may
include other securities of the Company with respect to which registration
rights have been granted, and may include securities sold for the account of
the Company.
Although these contractual rights remain in force, the shares subject to
such registration rights may be freely disposed of pursuant to Rule 144 under
the Securities Act.
Registration Rights Granted Subsequent to IPO. Subsequent to the Company's
initial public offering, the Company granted registration rights in connection
with the Company's execution of a strategic alliance with WorldCom and the
Company's acquisitions of TeleT, the Voice-Tel Entities and VoiceCom. In each
of these instances, the Company is required to notify the holders of the
Company's intent to register any of its Common Stock under the Securities Act
and allow such holders an opportunity to include their shares of Common Stock
in the Company's registration; provided, however, that: (i) with respect to
WorldCom and VoiceCom such notice must be given only if the Company intends to
register and sell newly issued shares; (ii) with respect to CMG, such notice
must be given only if 20% of the shares held by CMG remain outstanding; and
(iii) with respect to the former owners of the Voice-Tel Entities, such notice
must be given only until April 30, 1998. These registration rights are subject
to certain limitations and restrictions, including the right of the
underwriters of an underwritten offering to limit the number of shares offered
in such registration if such underwriter determines that the number of shares
requested to be registered cannot be underwritten.
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<PAGE>
WorldCom has a one-time right to require the Company to file a registration
statement under the Securities Act, provided that such request is made: (i)
between November 13, 1998 and November 13, 1999; or (ii) within 60 days from
the date of a change in control of Premiere, the termination of either Boland
T. Jones or D. Gregory Smith as executive officers or the termination of the
strategic alliance with WorldCom if the events described in clause (ii) occur
prior to November 13, 1999. WorldCom currently has the right to require the
Company to file a registration statement under the Securities Act as a result
of Mr. Smith's resignation. See "Prospectus Summary -- Recent Developments --
Additions and Changes to Management." In addition, the registration must be
with respect to such minimum number of shares of Common Stock having an
aggregate proposed offering price equal to $10.0 million.
With respect to the former owners of the Voice-Tel Entities, such persons
collectively have the one-time demand right to require the Company to use all
reasonable efforts to file a registration statement under the Securities Act,
provided that (i) such request must be initiated by an Amway entity or holders
of 10% or more of the Registrable Securities (as defined) and (ii) such one-
time demand must be made after July 15, 1997 and before the nine-month
anniversary of the closing of the VTE Acquisitions. The registration statement
which includes this Prospectus was filed pursuant to the exercise of such
rights by the Voice-Tel holders. In addition, the Company has agreed to file a
shelf registration statement (the "Voice-Tel Shelf") as soon as practicable
following December 15, 1997 to include any shares of Common Stock then held by
the former owners of the Voice-Tel Entities. These shareholders may include up
to approximately 6.4 million shares in the Voice-Tel Shelf. The Company has
exercised certain contractual rights to postpone this requirement for up to 90
days.
The shares of Premiere Common Stock to be issued in connection with the
Xpedite Merger will be registered under the Securities Act and, unless issued
to affiliates of Xpedite as of the date of the Xpedite stockholders meeting to
consider the Xpedite Merger, will be freely transferable without restriction
or limitation under the Securities Act.
For a period of three months commencing 30 days after financial results
covering at least 30 days of combined operations of Premiere and Xpedite have
been published, each person who is precluded by the Securities Act from
selling or disposing of all of their shares of Premiere Common Stock received
in the Xpedite Merger within one calendar quarter (a "Large Stockholder") will
have a one-time right to require Premiere to file a registration statement
under the Securities Act relating to all or part of their registrable
securities (an "Xpedite Demand Registration"). Premiere is obligated to use
its commercially reasonable efforts to effect an Xpedite Demand Registration
as soon as reasonably practical after the request is made, except that
Premiere has the right, under certain circumstances, to delay the effective
date of a registration statement or any sales thereunder for a period not to
exceed 120 days from the date of the request for registration. In addition,
Premiere is not obligated to effect an Xpedite Demand Registration (i) for
less than one million shares or (ii) within three months of a Large
Stockholder selling any registrable securities pursuant to an Xpedite
Piggyback Registration (defined below). Unless Premiere shall otherwise
consent, any offering pursuant to an Xpedite Demand Registration shall be
underwritten and Premiere shall select the underwriters and any additional
investment bankers to be used.
If Premiere proposes to file a registration statement under the Securities
Act with respect to an offering for Premiere's own account or for the account
of any holders of Premiere Common Stock other than the Large Stockholders, any
Large Stockholder may request registration under the Securities Act of all or
part of its Registrable Securities on the same terms and conditions as
Premiere or such other holders of Premiere Common Stock (an "Xpedite Piggyback
Registration"). In the case of an Xpedite Piggyback Registration, Premiere has
the right to terminate or withdraw any registration undertaken by it prior to
the effectiveness of such registration whether or not any Large Stockholder
has elected to include registrable securities in such registration.
In each of the above instances, subject to certain limitations and
conditions, including provisions granting certain preferences, such
registrations may include securities sold for the account of the Company or
other shareholders, or both.
With a few exceptions, the Company generally is required to bear the expense
relating to the sale of the holders' securities under registrations, except
for underwriting discounts and commissions, and in certain cases
66
<PAGE>
the fees and expenses of the holders' counsel and filing fees related to the
registration statement. The Company also is obligated to indemnify the holders
whose shares are included in any of the Company's registrations against
certain losses and liabilities, including liabilities under the Securities Act
and state securities laws.
COSALE RIGHTS
Pursuant to contractual agreement, some of the registration rights holders
and their transferees have a right to participate in any sale of Common Stock
by certain other shareholders (other than sales to certain related parties of
such shareholders). The percentage of shares of Common Stock owned by such
registration rights holder which can be put by such holder as its
participation interest in such sale is obtained by dividing the number of
shares of Common Stock owned or obtainable by such holder by the number of
shares of all Common Stock owned or obtainable by both the holder and the
selling shareholder.
UNDERWRITING
Subject to the terms and conditions contained in the Underwriting Agreement,
dated , 1997 (the "Underwriting Agreement"), Donaldson Lufkin & Jenrette
Securities Corporation (the "Underwriter") has agreed to purchase from the
Selling Shareholders an aggregate of 921,551 shares of Common Stock.
The Underwriting Agreement provides that the obligations of the Underwriter
to purchase and accept delivery of the shares of Common Stock offered hereby
are subject to approval of certain legal matters by counsel to the Underwriter
and to certain other conditions. The Underwriter is obligated to take and pay
for all of the shares of Common Stock offered hereby if any are taken.
The Underwriter proposes to offer the 921,551 shares of Common Stock
purchased by it from time to time for sale in one or more transactions (which
may include block transactions) on the Nasdaq National Market or otherwise, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices, subject to prior sale when, as and if
delivered to and accepted by the Underwriter. In connection with the sale of
shares of Common Stock, the Underwriter may be deemed to have received
compensation from the Selling Shareholders in the form of underwriting
discounts. The Underwriter may effect such transactions by selling Common
Stock to or through dealers, and such dealers may receive compensation in the
form of discounts, concessions or commissions from the Underwriter and/or the
purchasers of such Common Stock for whom they may act as agents or to whom
they may sell as principal.
The Company and the Selling Shareholders have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriter may be
required to make in respect thereof.
Each of the Company, its executive officers and directors and certain
shareholders of the Company (including the Selling Shareholders) will agree,
subject to certain exceptions, not to (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
(ii) enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or such other securities, in
cash or otherwise) for a period of 90 days after the date of this Prospectus
without the prior written consent of the Underwriter. In addition, during such
period, except for the VoiceTel Shelf, the Company has also agreed not to file
any registration statement with respect to, and each of its executive
officers, directors and certain shareholders of the Company will agree not to
make any demand for, or exercise any right with respect to, the registration
of any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock without the Underwriter's prior
written consent. In addition, each of the Selling Shareholders will agree not
to make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock without the Underwriter's
prior written consent, except that Selling Shareholders may exercise
preexisting registration rights with respect to the VoiceTel Shelf and with
respect to registration statements that are filed with the prior written
consent of the Underwriter.
67
<PAGE>
The Underwriter and dealers may engage in passive market making transactions
in the Common Stock in accordance with Rule 103 of Regulation M promulgated by
the Commission. In general, a passive market maker may not bid for or purchase
shares of Common Stock at a price that exceeds the highest independent bid. In
addition, the net daily purchases made by any passive market maker generally
may not exceed 30% of its average daily trading volume in the Common Stock
during a specified two-month prior period, or 200 shares, whichever is
greater. A passive market maker must identify passive market making bids as
such on the Nasdaq electronic inter-dealer reporting system. Passive market
making may stabilize or maintain the market price of the Common Stock above
independent market levels. The Underwriter and dealers are not required to
engage in passive market making and may end passive market making activities
at any time.
The Underwriter may engage in transactions that stabilize, maintain or
otherwise affect the price of the Common Stock. Specifically, the Underwriter
may overallot the Offering, creating a syndicate short position. The
Underwriter may bid for and purchase shares of Common Stock in the open market
to cover such syndicate short position or to stabilize the price of the Common
Stock. These activities may stabilize or maintain the market price of the
Common Stock above independent market levels. The Underwriter is not required
to engage in these activities and may end any of these activities at any time.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Alston & Bird LLP, Atlanta, Georgia. Certain legal
matters will be passed upon for the Underwriter by Nelson Mullins Riley &
Scarborough, L.L.P., Atlanta, Georgia.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1995
and 1996, and for the years ended December 31, 1994, 1995 and 1996 as
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 and the Company's Current Report on Form 8-K dated November
13, 1997 and the financial statements of VTE, VTN and the Significant
Franchisees as contained in the Company's Current Report on Form 8-K dated
April 30, 1997 as amended by the Company's Current Report on Form 8-K/A filed
with the Commission on June 16, 1997 and the Company's Current Report on Form
8-K dated May 16, 1997 as amended by the Company's Current Report on Form 8-
K/A filed with the Commission on June 26, 1997 for the periods included
therein, incorporated by reference in this prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
The consolidated financial statements of Xpedite as of December 31, 1995 and
1996, and for the years ended December 31, 1994, 1995 and 1996 included in the
Company's Current Report on Form 8-K dated November 13, 1997, incorporated by
reference in this prospectus, have been audited by Ernst & Young LLP,
independent auditors, as indicated in their report with respect thereto, and
is incorporated herein in reliance upon the authority of said firm as experts
in accounting and auditing.
The consolidated financial statements of XSL as of December 31, 1995 and
1996, and for the years ended December 31, 1994, 1995 and 1996 included in the
Company's Current Report on Form 8-K dated November 13, 1997, have been so
incorporated by reference in this prospectus in reliance on the report of
Price Waterhouse, independent accountants, given on the authority of said firm
as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form S-3 under the
Securities Act with the Commission with respect to the shares of Common Stock
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits thereto. For further
information with respect
68
<PAGE>
to the Company and the Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits thereto. Statements contained in this
Prospectus regarding the contents of any contract or other document to which
reference is made are not necessarily complete, and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in all
respects by such reference. A copy of the Registration Statement and the
exhibits thereto may be inspected without charge at the offices of the
Commission at Judiciary Plaza, 450 Fifth Street, Washington, D.C. 20549, and
copies of all or any part of the Registration Statement may be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549 upon
the payment of the fees prescribed by the Commission.
The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices
located at 7 World Trade Center, Suite 1300, New York, New York 10048 and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also makes electronic filings publicly available on the
Internet within 24 hours of acceptance. The Commission's Internet address is
http://www.sec.gov. The Commission Web site also contains reports, proxy and
information statements, and other information regarding registrants that file
electronically with the Commission. The Common Stock of the Company is quoted
on the Nasdaq National Market under the symbol "PTEK." Reports, proxy and
information statements and other information concerning the Company may be
inspected at the National Association of Securities Dealers, Inc. at 1735 K
Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission (the "Commission") are hereby incorporated by reference in
this Prospectus and made a part hereof:
(a)the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (including those portions of the Company's definitive
proxy statement for the Annual Meeting of Shareholders held on June 11,
1997 incorporated by reference therein);
(b)the Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997;
(c)the Company's Current Reports on Form 8-K dated April 2, 1997, June
12, 1997, June 16, 1997, June 25, 1997, July 25, 1997, September 26, 1997
and November 13, 1997, respectively;
(d)the Company's Current Report on Form 8-K dated April 30, 1997, as
amended by the Company's Current Report on Form 8-K/A filed with the
Commission on June 16, 1997;
(e)the Company's Current Report on Form 8-K dated November 13, 1996, as
amended by the Company's Current Report on Form 8-K/A filed with the
Commission on February 25, 1997; and
(f)the Company's Current Report on Form 8-K, dated May 16, 1997, as
amended by the Company's Current Report on Form 8-K/A filed with the
Commission on June 26, 1997.
All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), subsequent to the date of this Prospectus and prior to
the termination of this Offering shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
reports and documents. Any statement incorporated or deemed to be
69
<PAGE>
incorporated herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus. The Company will not
update this Prospectus for events occurring subsequent to the date of this
Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus has been delivered, upon
written or oral request of such person, a copy of any or all of the foregoing
documents incorporated herein by reference (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference
into such documents). Requests for such documents should be made orally or in
writing to the attention of Director of Corporate Communications, Premiere
Technologies, Inc., 3399 Peachtree Road, N.E., The Lenox Building, Suite 400,
Atlanta, Georgia 30326, Telephone: (404) 262-8400.
70
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY OF THE SELLING SHAREHOLDERS
OR BY ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO,
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................................... 3
Risk Factors................................................................ 10
Use of Proceeds............................................................. 27
Price Range of Common Stock and Dividend Policy............................. 27
Selected Consolidated Financial Data........................................ 28
Selected Pro Forma Financial Data of Premiere and Xpedite................... 30
Management's Discussion and
Analysis of Financial Condition
and Results of Operations.................................................. 31
Business.................................................................... 38
Management.................................................................. 55
Principal and Selling Shareholders.......................................... 57
Description of Capital Stock................................................ 61
Shares Eligible for Future Sale............................................. 64
Underwriting................................................................ 67
Legal Matters............................................................... 68
Experts..................................................................... 68
Additional Information...................................................... 68
Incorporation of Certain Documents by Reference............................. 69
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
921,551 SHARES
LOGO
[LOGO OF PREMIERE TECHNOLOGIES APPEARS HERE]
COMMON STOCK
----------------
PROSPECTUS
----------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the distribution of the Common Stock, other
than underwriting discounts, are set forth in the following table. All amounts
except the Securities and Exchange Commission registration fee and the NASD
filing fee are estimated.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee................... $ 34,506
NASD Filing Fee....................................................... 11,887
Printing and Engraving Expenses ...................................... 50,000
Accountants' Fees and Expenses ....................................... 150,000
Legal Fees and Expenses .............................................. 200,000
Blue Sky Fees and Expenses ........................................... 2,500
Transfer Agent and Registrar Fees .................................... 5,000
Miscellaneous ........................................................ 146,107
--------
Total................................................................ $600,000
========
</TABLE>
ITEM 15. Indemnification of Directors and Officers.
The Georgia Business Corporation Code permits a corporation to eliminate or
limit the personal liability of a director to the corporation or its
shareholders for monetary damages for breach of duty of care or other duty as
a director, provided that no provision shall eliminate or limit the liability
of a director: (i) for an appropriation, in violation of his duties, of any
business opportunity of the corporation; (ii) for acts or omissions which
involve intentional misconduct or a knowing violation of law; (iii) for
unlawful corporate distributions; or (iv) for any transaction from which the
director received an improper personal benefit. This provision relates only to
breaches of duty by directors in their capacity as directors (and not in any
other corporate capacity, such as officers) and limits liability only for
breaches of fiduciary duties under Georgia corporate law (and not for
violation of other laws, such as the federal securities laws). The Company's
Articles of Incorporation, as amended, exonerate the Company's directors from
monetary liability to the extent described above.
In addition to such rights as may be provided by law, the Company's Bylaws
provide broad indemnification rights to the Company's directors and such
officers, employees and agents as may be selected by such directors, with
respect to various civil and criminal liabilities and losses which may be
incurred by such director, officer, agent or employee pursuant to any pending
or threatened litigation or other proceedings, except that such
indemnification does not apply in the same situations described above with
respect to the exculpation from liability of the Company's directors. The
Company is also obligated to reimburse such directors and other parties for
expenses, including legal fees, court costs and expert witness fees, incurred
by such person in defending against any such liabilities and losses, as long
as such person in good faith believes that he or she acted in accordance with
the applicable standard of conduct with respect to the underlying accusations
giving rise to such liabilities or losses and agrees to repay to the Company
any advances made under the Bylaws. Any amendment or other modification to the
Bylaws which limits or otherwise adversely affects the rights to
indemnification currently provided therein shall apply only to proceedings
based upon actions and events occurring after such amendment and delivery of
notice thereof to the indemnified parties. Such amendments can only be made
upon the affirmative vote of (i) the holders of at least 75% of the shares
entitled to vote to alter, amend or repeal the provisions of the Bylaws or
(ii) a majority of the Board of Directors present at the meeting at which the
votes is are taken.
The Company has entered into separate indemnification agreements with each
of its directors and certain of its officers and employees, whereby the
Company agreed, among other things, to provide for indemnification
II-1
<PAGE>
and advancement of expenses in a manner and subject to terms and conditions
similar to those set forth in the Bylaws. These agreements may not be
abrogated by action of the shareholders. In addition, the Company holds an
insurance policy covering directors and officers under which the insurer
agrees to pay, subject to certain exclusions, for any claim made against the
directors and officers of the Company for a wrongful act that they may become
legally obligated to pay or for which the Company is required to indemnify the
directors or officers.
The Company believes that the above protections are necessary in order to
attract and retain qualified persons as directors and officers.
Reference is hereby made to Section 6 of the Underwriting Agreement, the
form of which is filed as Exhibit 1.1 hereto, in which the Underwriters agree
to indemnify the directors and officers of the Company and certain other
persons against certain civil liabilities.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
ITEM 16. Exhibits and Financial Statement Schedules.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Articles of Incorporation of the Registrant (Incorporated herein by
reference to Exhibit 3.1 to the Registrant's Registration Statement on
Form S-1 (No. 33-80547)).
3.2 Articles of Amendment to Articles of Incorporation (Incorporated
herein by reference to Exhibit 3.2 to the Registrant's Registration
Statement on Form S-8 (No. 333-29787)).
3.3 Amended and Restated Bylaws of the Registrant (Incorporated herein by
reference to Exhibit 3.02 to Registration Statement on Form S-1 (No.
33-80547)).
4.1 See Exhibits 3.1-3.3 for provisions of the Articles of Incorporation,
as amended, and Amended and Restated Bylaws defining the rights of the
holders of Common Stock of the Registrant.
5.1 Opinion of Alston & Bird.
23.1 Consent of Alston & Bird (Included in Exhibit 5.1 above).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Ernst & Young, LLP.
23.4 Consent of Price Waterhouse.
24.1 Powers of Attorney (see Page II-4).*
</TABLE>
- --------
* Previously filed.
ITEM 17. Undertakings.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2
to Registration Statement (No. 333-39577) to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Atlanta, and State of
Georgia, on December 22, 1997.
PREMIERE TECHNOLOGIES, INC.
By: /s/ Boland T. Jones
-------------------------------
Boland T. Jones
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to Registration Statement (No. 333-39577) has been signed below by the
following persons in the capacities indicated on December 22, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Boland T. Jones Chairman of the Board of Directors and
- ------------------------------------------- Chief Executive Officer (Principal
BOLAND T. JONES Executive Officer)
/s/ Patrick G. Jones Senior Vice President of Finance and Legal
- ------------------------------------------- and Secretary (Principal Financial and
PATRICK G. JONES Accounting Officer)
/s/ George W. Baker, Sr.* Director
- -------------------------------------------
GEORGE W. BAKER, SR.
/s/ Eduard J. Mayer* Director
- -------------------------------------------
EDUARD J. MAYER
/s/ Raymond H. Pirtle, Jr.* Director
- -------------------------------------------
RAYMOND H. PIRTLE, JR.
* By: /s/ Patrick G. Jones
- -------------------------------------------
PATRICK G. JONES, ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE NO.
------- ------------------- --------
<C> <S> <C>
1.1 Form of Underwriting Agreement.
<CAPTION>
3.1 Articles of Incorporation of
the Registrant (Incorporated
herein by reference to Exhibit
3.1 to the Registrant's
Registration Statement on Form
S-1 (No. 33-80547)).
3.2 Articles of Amendment to
Articles of Incorporation
(Incorporated herein by
reference to Exhibit 3.2 to the
Registrant's Registration
Statement on Form S-8 (No. 333-
29787)).
3.3 Amended and Restated Bylaws of
the Registrant (Incorporated
herein by reference to Exhibit
3.02 to Registration Statement
on Form S-1 (No. 33-80547)).
4.1 See Exhibits 3.1-3.3 for
provisions of the Articles of
Incorporation, as amended, and
Amended and Restated Bylaws
defining the rights of the
holders of Common Stock of the
Registrant.
5.1 Opinion of Alston & Bird.
23.1 Consent of Alston & Bird
(Included in Exhibit 5.1
above).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Ernst & Young, LLP.
23.4 Consent of Price Waterhouse.
24.1 Powers of Attorney (see Page
II-4).*
</TABLE>
- --------
* Previously filed.
<PAGE>
EXHIBIT 1.1
SHARES
----------
PREMIERE TECHNOLOGIES, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
December , 1997
---
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Dear Sirs:
Certain stockholders of Premiere Technologies, Inc., a Georgia corporation
(the "COMPANY"), named in Schedule I hereto (the "SELLING STOCKHOLDERS")
severally propose to sell to you an aggregate of _______________ shares of the
$0.01 par value Common Stock of the Company (the "SHARES"), each Selling
Stockholder selling the amount set forth opposite such Selling Stockholder's
name in Schedule I hereto. The shares of common stock of the Company to be
outstanding after giving effect to the sales contemplated hereby are hereinafter
referred to as the "COMMON STOCK."
Section 1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"COMMISSION") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "ACT"), a registration statement on Form S-3, including a
prospectus, relating to the Shares. The registration statement, as amended at
the time it became effective, including the information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to Rule
430A under the Act, is hereinafter referred to as the "REGISTRATION STATEMENT";
and the prospectus in the form first used to confirm sales of Shares is
hereinafter referred to as the "PROSPECTUS" (including, in the case of all
references to the Registration Statement or the Prospectus, documents
incorporated therein by reference). If the Company has filed or is required
pursuant to the terms hereof to file a registration statement pursuant to Rule
462(b) under the Act registering additional shares of Common Stock (a "RULE
462(B) REGISTRATION STATEMENT"), then, unless otherwise specified, any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462(b) Registration Statement. The terms "SUPPLEMENT" and "AMENDMENT" or "AMEND"
as used in this Underwriting Agreement (the "AGREEMENT") with respect to the
Registration Statement or the Prospectus shall include all documents
subsequently filed by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "EXCHANGE ACT") that are deemed to be
incorporated by reference in the Prospectus.
<PAGE>
Section 2. Agreements to Sell and Purchase and Lock-Up Agreements. On the
basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, each Selling Stockholder agrees, severally
and not jointly, to sell the number of Shares set forth opposite such Selling
Stockholder's name in Schedule I hereto, and you agree to purchase from each
Selling Stockholder at a price per Share of $______ (the "PURCHASE PRICE") the
number of Shares set forth opposite each Selling Shareholder's name in Schedule
I hereto.
The Company and each Selling Stockholder hereby agrees not to (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into, or exercisable or
exchangeable for, Common Stock (including, without limitation, shares of Common
Stock or securities convertible into, or exercisable or exchangeable for, Common
Stock which may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission) or (ii) enter into any swap or other arrangement that transfers all
or a portion of the economic consequences associated with the ownership of any
Common Stock (regardless of whether any of the transactions described in clause
(i) or (ii) is to be settled by the delivery of Common Stock, or such other
securities, in cash or otherwise) for a period of 90 days after the date of the
Prospectus without your prior written consent. Notwithstanding the foregoing,
during such period, (i) the Selling Stockholders may make sales of Shares to you
pursuant to this Agreement, (ii) the Company may grant stock options pursuant to
the Company's existing stock option plans, including pursuant to the Company's
existing stock option plans as they are contemplated to be amended as described
in the Xpedite S-4 (as hereinafter defined), (iii) the Company may issue shares
of Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof, and (iv) the Company may issue shares
of its Common Stock, and securities convertible or exchangeable into shares of
its Common Stock, pursuant to that certain registration statement on Form S-4
that was filed by the Company on November 5, 1997 (the "XPEDITE S-4") in
connection with the Company's proposed acquisition of Xpedite Systems, Inc. The
Company also agrees not to file any registration statement with respect to any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock for a period of 90 days after the date of the
Prospectus without your prior written consent (any such registration that is
undertaken with your prior written consent being hereinafter called a "Permitted
Registration"). In addition, each Selling Stockholder agrees that, for a period
of 90 days after the date of the Prospectus without your prior written consent,
it will not make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any securities convertible into,
or exercisable or exchangeable for, Common Stock, except that if the Company
undertakes a Permitted Registration during such period, and the Selling
Stockholder has the right to include securities in the registration statement
filed in connection with such Permitted Registration pursuant to agreements that
were in force prior to the date of the lock-up letter executed by such Selling
Stockholder in connection with this offering and that remain in force as of the
date of the filing of such registration statement, then the Selling Stockholder
shall be permitted to exercise any such registration right with respect to such
Permitted Registration; and, provided, that registration statements filed by the
--------
Company pursuant to that certain Registration Rights Agreement dated June 15,
1997 with respect to the resale by certain securityholders of the Company's
5-3/4% Convertible Subordinated Notes due 2004 and pursuant to paragraph (B) of
that certain letter agreement dated
2
<PAGE>
October 2, 1997 between certain Selling Stockholders and the Company to
effectuate the "VOICE-TEL SHELF" (as such term is defined therein) shall be
deemed a Permitted Registration.
The Company shall, prior to or concurrently with the execution of this
Agreement, deliver an agreement executed by (i) each Selling Stockholder, (ii)
each of the directors and executive officers of the Company who is not a Selling
Stockholder and (iii) each stockholder listed on Annex I hereto to the effect
that such person will not, during the period commencing on the date such person
signs such agreement and ending 90 days after the date of the Prospectus,
without your prior written consent, (A) engage in any of the transactions
described in the first sentence of the foregoing paragraph or (B) except
pursuant to a Permitted Registration as described in the preceding paragraph,
make any demand for, or exercise any right with respect to, the registration of
any shares of Common Stock or any securities convertible into, or exercisable or
exchangeable for, Common Stock. Notwithstanding the foregoing restrictions on
transfer, the undersigned shall be permitted to make the following transfers:
(i) transfers made to you pursuant to this Agreement; (ii) transfers made by
gift, provided the donee thereof agrees in writing to be bound by the terms
hereof; (iii) transfers to the transferor's affiliates, as such term is defined
by Rule 405 promulgated under the Act, provided that each transferee agrees in
writing to be bound by the terms hereof; (iv) transfers made pursuant to a
Permitted Registration; and (v) transfers made with your prior written consent.
Section 3. Terms of Public Offering. The Selling Stockholders are advised
by you that you propose (i) to make a public offering of the Shares as soon
after the execution and delivery of this Agreement as in your judgment is
advisable and (ii) initially to offer the Shares upon the terms set forth in the
Prospectus at a price as may be determined by you in your sole discretion.
Section 4. Delivery and Payment. Delivery to you of and payment for the
Shares shall be made at 9:00 A.M., New York City time (the "CLOSING TIME"), on
__________________ , 199__ (the "CLOSING DATE") at such place as you shall
designate. The Closing Date and the location of delivery of and payment for
the Shares may be varied by agreement between you and the Company.
Certificates for the Shares shall be registered in such names and issued in
such denominations as you shall request in writing not later than two full
business days prior to the Closing Date. Such certificates shall be made
available to you for inspection not later than 9:30 A.M., New York City time, on
the business day prior to the Closing Date. Certificates in definitive form
evidencing the Shares shall be delivered to you on the Closing Date, with any
transfer taxes thereon duly paid by the respective Selling Stockholders, for
your account, against payment to the Selling Stockholders of the Purchase Price
therefor by wire transfer of Federal or other funds immediately available in New
York City.
Section 5. Agreements of the Company. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, (iii) when any amendment to the
Registration Statement becomes effective,
3
<PAGE>
(iv) if the Company is required to file a Rule 462(b) Registration Statement
after the effectiveness of this Agreement, when the Rule 462(b) Registration
Statement has become effective and (v) of the happening of any event during the
period referred to in Section 5(d) below which makes any statement of a material
fact made in the Registration Statement or the Prospectus untrue or which
requires any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading. If at any
time the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, the Company will use its best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.
(b) To furnish you five signed copies of the Registration Statement as
first filed with the Commission and of each amendment to it, including all
exhibits and documents incorporated therein by reference, and to furnish to you
such number of conformed copies of the Registration Statement as so filed and of
each amendment to it, without exhibits but including documents incorporated
therein by reference, as you may reasonably request.
(c) To prepare the Prospectus, the form and substance of which shall be
satisfactory to you, and to file the Prospectus in such form with the
Commission within the applicable period specified in Rule 424(b) under the Act;
during the period specified in Section 5(d) below, not to file any further
amendment to the Registration Statement and not to make any amendment or
supplement to the Prospectus of which you shall not previously have been advised
or to which you shall reasonably object after being so advised; and, during such
period, to prepare and file with the Commission, promptly upon your reasonable
request, any amendment to the Registration Statement or amendment or supplement
to the Prospectus which may be necessary or advisable in connection with the
distribution of the Shares by you, and to use its best efforts to cause any such
amendment to the Registration Statement to become promptly effective.
(d) Prior to 10:00 A.M., New York City time, on the first business day
after the date of this Agreement and from time to time thereafter for such
period as in the opinion of your counsel a prospectus is required by law to be
delivered in connection with sales by you or a dealer, to furnish in New York
City to you and any dealer as many copies of the Prospectus (and of any
amendment or supplement to the Prospectus) and any documents incorporated
therein by reference as you or such dealer may reasonably request.
(e) If during the period specified in Section 5(d), any event shall
occur or condition shall exist as a result of which, in the opinion of your
counsel, it becomes necessary to amend or supplement the Prospectus in order to
make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of
your counsel, it is necessary to amend or supplement the Prospectus to comply
with applicable law, forthwith to prepare and file with the Commission an
appropriate amendment or supplement to the Prospectus so that the statements in
the Prospectus, as so amended or supplemented, will not in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with applicable law, and to furnish to you and to any dealer as many
copies thereof as you or such dealer may reasonably request.
4
<PAGE>
(f) Prior to any public offering of the Shares, to cooperate with you
and your counsel in connection with the registration or qualification of the
Shares for offer and sale by you and by dealers under the state securities or
Blue Sky laws of such jurisdictions as you may reasonably request, to continue
such registration or qualification in effect so long as required for
distribution of the Shares and to file such consents to service of process or
other documents as may be necessary in order to effect such registration or
qualification; provided, however, that the Company shall not be required in
-------- -------
connection therewith to register or qualify as a foreign corporation in any
jurisdiction in which it is not now so registered or qualified or to take any
action that would subject it to general consent to service of process or
taxation other than as to matters and transactions relating to the Prospectus,
the Registration Statement, any preliminary prospectus or the offering or sale
of the Shares, in any jurisdiction in which it is not now so subject.
(g) To mail and make generally available to its stockholders as soon as
practicable an earnings statement covering the twelve-month period ending
December 31, 1998 that shall satisfy the provisions of Section 11(a) of the Act,
and to advise you in writing when such statement has been so made available.
(h) During the period of three years after the date of this Agreement,
to furnish to you as soon as available copies of all reports or other
communications furnished to the record holders of Common Stock or furnished to
or filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed and such other publicly available
information concerning the Company and its subsidiaries as you may reasonably
request.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the Company's obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the Company's
counsel and accountants in connection with the registration and delivery of the
Shares under the Act and all other fees and expenses in connection with the
preparation, printing, filing and distribution of the Registration Statement
(including financial statements and exhibits), any preliminary prospectus, the
Prospectus and all amendments and supplements to any of the foregoing, including
the mailing and delivering of copies thereof to you and dealers in the
quantities specified herein, (ii) all costs of printing or producing this
Agreement and any other agreements or documents in connection with the offering,
purchase, sale or delivery of the Shares, (iii) all expenses in connection with
the registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states and all costs of printing or
producing any Preliminary and Supplemental Blue Sky Memoranda in connection
therewith (including the filing fees and fees and disbursements of your counsel
in connection with such registration or qualification and memoranda relating
thereto), (iv) the filing fees and disbursements of your counsel in connection
with the review and clearance of the offering of the Shares by the National
Association of Securities Dealers, Inc., (v) all costs and expenses incident to
the listing of the Shares on the Nasdaq National Market, (vi) the costs and
charges of any transfer agent, registrar and/or depositary, and (vii) all other
costs and expenses incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section. The
provisions of this Section shall not supersede or otherwise affect any agreement
that the Company and the Selling Stockholders may otherwise have for allocation
of such expenses among themselves.
5
<PAGE>
(j) To use its best efforts to maintain the listing for quotation of the
Shares on the Nasdaq National Market and to maintain the listing of the Shares
on the Nasdaq National Market for a period of three years after the date of this
Agreement.
(k) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Closing Date and to satisfy all conditions precedent to the delivery of the
Shares.
(l) Not to rescind, revoke, modify or otherwise amend its election to
postpone the filing of the registration statement for the Voice-Tel Shelf until
March 15, 1998.
(m) If the Registration Statement at the time of the effectiveness of
this Agreement does not cover all of the Shares, to file a Rule 462(b)
Registration Statement with the Commission registering the Shares not so covered
in compliance with Rule 462(b) by 10:00 P.M., New York City time, on the date of
this Agreement and to pay to the Commission the filing fee for such Rule 462(b)
Registration Statement at the time of the filing thereof or to give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act.
Section 6. Representations and Warranties of the Company. The Company
represents and warrants to you that:
(a) The Registration Statement has become effective (other than any Rule
462(b) Registration Statement to be filed by the Company after the effectiveness
of this Agreement); any Rule 462(b) Registration Statement filed after the
effectiveness of this Agreement will become effective no later than 10:00 P.M.,
New York City time, on the date of this Agreement; and no stop order suspending
the effectiveness of the Registration Statement is in effect, and no proceedings
for such purpose are pending before or, to the Company's knowledge, threatened
by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or will
comply when so filed in all material respects with the Exchange Act, (ii) the
Registration Statement (other than any Rule 462(b) Registration Statement to be
filed by the Company after the effectiveness of this Agreement), when it became
effective, did not contain and, as amended, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(iii) the Registration Statement (other than any Rule 462(b) Registration
Statement to be filed by the Company after the effectiveness of this Agreement)
and the Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the requirements of the Act, (iv) if the
Company is required to file a Rule 462(b) Registration Statement after the
effectiveness of this Agreement, such Rule 462(b) Registration Statement and any
amendments thereto, when they become effective (A) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(B) will comply in all material respects with the requirements of the Act and
(v) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
6
<PAGE>
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this paragraph (b) do not
apply to statements or omissions in the Registration Statement or the Prospectus
based upon information relating to you furnished to the Company in writing by
you expressly for use therein.
(c) Each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act, complied when so filed in all material
respects with the requirements of the Act, and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in any preliminary prospectus based upon information
relating to you furnished to the Company in writing by you expressly for use
therein or relating to any Selling Stockholder furnished to the Company in
writing by such Selling Stockholder expressly for use therein.
(d) Each of the Company and its subsidiaries has been duly incorporated,
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to carry
on its business as described in or the Prospectus and to own, lease and operate
its properties, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole or
on the Company's ability or right to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby. Except for the
subsidiaries listed on Annex III hereto (the "SIGNIFICANT SUBSIDIARIES"), the
Company does not have any subsidiary which is individually a "significant
subsidiary" (as defined in Item 1-02 of Regulation S-X). For purposes of this
Agreement, the term "subsidiary" includes any corporation, partnership,
association or other entity in which the Company or any subsidiary, directly or
indirectly, has a controlling ownership interest.
(e) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens granted or issued by
the Company or any of its subsidiaries relating to or entitling any person to
purchase or otherwise to acquire any shares of the capital stock of the Company
or any of its subsidiaries, except as otherwise disclosed in the Registration
Statement.
(f) All the outstanding shares of capital stock of the Company
(including the Shares to be sold by the Selling Stockholders) have been duly
authorized and validly issued and are fully paid, non-assessable and not subject
to any preemptive or similar rights.
(g) All of the outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned
7
<PAGE>
by the Company, directly or indirectly through one or more subsidiaries, free
and clear of any security interest, claim, lien, encumbrance or adverse interest
of any nature.
(h) The authorized capital stock of the Company conforms as to legal
matters in all material respects to the description thereof contained in the
Prospectus.
(i) Neither the Company nor any of its subsidiaries is in violation of
its respective charter or by-laws or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound except for such violations or
defaults which would not individually or in the aggregate have a material
adverse effect on the business, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole, or on the Company's ability
or right to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby.
(j) The execution, delivery and performance of this Agreement by the
Company, the compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not (i) require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as may be required in order to
register the sale of the Shares pursuant to the Act or as may be required under
the securities or Blue Sky laws of the various states), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of the Company or any of its subsidiaries or any
indenture, loan agreement, mortgage, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or their respective property is bound except for such
conflicts, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on the business, financial condition
or results of operations of the Company and its subsidiaries taken as a whole,
or on the Company's ability or right to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby, (iii) violate
or conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
the Company, any of its subsidiaries or their respective property, except for
such violations or conflicts which would not, individually or in the aggregate,
have a material adverse effect on the business, financial condition or results
of operations of the Company and its subsidiaries, taken as a whole, or on the
Company's ability or right to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby, or (iv) result in the
suspension, termination or revocation of any Authorization (as defined below) of
the Company or any of its subsidiaries or any other impairment of the rights of
the holder of any such Authorization.
(k) Except as disclosed in the Prospectus (or incorporated by reference
therein), there are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its subsidiaries
is or could reasonably be expected to be a party or to which any of their
respective property is or could reasonably be expected to be subject that are
required to be described in the Registration Statement or the Prospectus and are
not so described; nor are there
8
<PAGE>
any statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not so described or filed as
required.
(l) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS") or any provisions of
the Employee Retirement Income Security Act of 1974, as amended, or the rules
and regulations promulgated thereunder, except for such violations which, singly
or in the aggregate, would not have a material adverse effect on the business,
prospects, financial condition or results of operation of the Company and its
subsidiaries, taken as a whole.
(m) Each of the Company and its subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each, an
"AUTHORIZATION") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole. Each such Authorization is valid and in full
force and effect and each of the Company and its subsidiaries is in compliance
with all the terms and conditions thereof and with the rules and regulations of
the authorities and governing bodies having jurisdiction with respect thereto;
and no event has occurred (including, without limitation, the receipt of any
notice from any authority or governing body) which allows or, after notice or
lapse of time or both, would allow, revocation, suspension or termination of any
such Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of its subsidiaries; except where such failure
to be valid and in full force and effect or to be in compliance, the occurrence
of any such event or the presence of any such restriction would not, singly or
in the aggregate, have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(n) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names ("intellectual property") currently
employed by them in connection with the business now operated by them except
where the failure to own or possess or otherwise be able to acquire such
intellectual property would not, singly or in the aggregate, have a material
adverse effect on the business, prospects, financial condition or results of
operation of the Company and its subsidiaries, taken as a whole; and except as
disclosed in the Prospectus neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of such intellectual property which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have
9
<PAGE>
a material adverse effect on the business, prospects, financial condition
or results of operations of the Company and its subsidiaries, taken as a whole.
(o) The Company and each of its Significant Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; and neither the Company nor any of its Significant Subsidiaries (i)
has received notice from any insurer or agent of such insurer that substantial
capital improvements or other material expenditures will have to be made in
order to continue such insurance or (ii) has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers at a cost that would
not have a material adverse effect on the business, prospects, financial
conditions or results of operations of the Company and its subsidiaries, taken
as a whole.
(p) There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
Authorization, any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate, have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(q) This Agreement has been duly authorized, executed and delivered by the
Company.
(r) Arthur Andersen LLP are independent public accountants with respect to
the Company and its subsidiaries as required by the Act.
(s) The consolidated financial statements included or incorporated by
reference in the Registration Statement and the Prospectus (and any amendment or
supplement thereto), together with related schedules and notes, present fairly
the consolidated financial position, results of operations and changes in
financial position of the Company and its subsidiaries on the basis stated
therein at the respective dates or for the respective periods to which they
apply; such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; the supporting
schedules, if any, included or incorporated by reference in the Registration
Statement present fairly in accordance with generally accepted accounting
principles the information required to be stated therein; and the other
financial and statistical information and data set forth or incorporated by
reference in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company.
(t) The pro forma financial statements of the Company and its subsidiaries
--- -----
and the related notes thereto set forth or incorporated by reference in the
Registration Statement and the Prospectus (and any supplement or amendment
thereto) have been prepared on a basis consistent with the historical financial
statements of the Company and its subsidiaries, give effect to the assumptions
used in the preparation thereof on a reasonable basis and in good faith and
present fairly the historical and proposed transactions described in or
contemplated by the Registration Statement and
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the Prospectus. Such pro forma financial statements have been prepared in
--- -----
accordance with the applicable requirements of Rule 11-02 of Regulation S-X
promulgated by the Commission. The other pro forma financial and statistical
--- -----
information and data set forth in the Registration Statement and the Prospectus
(and any supplement or amendment thereto) are, in all material respects,
accurately presented and prepared on a basis consistent with the pro forma
--- -----
financial statements.
(u) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(v) All material tax returns required to be filed by the Company and each
of its subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by the
Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
(w) The Company is not an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(x) Except as specifically disclosed in the Registration Statement, there
are no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company or to require the Company to include such securities with the Shares
registered pursuant to the Registration Statement.
(y) Since the respective dates as of which information is given in the
Prospectus, other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change or any development involving
a prospective material adverse change in the condition, financial or otherwise,
or the earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there has not been any material adverse
change or any development involving a prospective material adverse change in the
capital stock or in the long-term debt of the Company or any of its
subsidiaries, taken as a whole and (iii) neither the Company nor any of its
subsidiaries has incurred any material liability or obligation, direct or
contingent.
(z) Each certificate signed by any officer of the Company and delivered to
you or your counsel shall be deemed to be a representation and warranty by the
Company to you as to the matters covered thereby.
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Section 7. Representations and Warranties of the Selling Stockholders.
Each Selling Stockholder represents and warrants to you that:
(a) Such Selling Stockholder is the lawful owner of the Shares to be
sold by such Selling Stockholder pursuant to this Agreement (or, in the case of
Selling Stockholders who hold convertible securities (the "HOLDERS OF
CONVERTIBLE SECURITIES"), is the holder of securities that are immediately
convertible into the Shares to be sold by such Selling Stockholders) and each
Selling Stockholder (excluding the Holders of Convertible Securities) has, and
on the Closing Date each Selling Stockholder (including the Holders of
Convertible Securities) will have, good and clear title to such Shares, free of
all restrictions on transfer, liens, encumbrances, security interests and claims
whatsoever.
(b) Such Selling Stockholder has, and on the Closing Date will have, full
legal right, power and authority, and all authorization and approval required by
law, to enter into this Agreement, the Custody Agreement signed by such
Selling Stockholder and SunTrust Bank, as Custodian, relating to the deposit of
the Shares to be sold by such Selling Stockholder (the "CUSTODY AGREEMENT") and
the Power of Attorney of such Selling Stockholder appointing certain individuals
as such Selling Stockholder's attorneys-in-fact (the "ATTORNEYS") to the extent
set forth therein, relating to the transactions contemplated hereby and by the
Registration Statement and the Custody Agreement (the "POWER OF ATTORNEY") and
to sell, assign, transfer and deliver the Shares to be sold by such Selling
Stockholder in the manner provided herein and therein.
(c) This Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Stockholder.
(d) The Custody Agreement of such Selling Stockholder has been duly
authorized, executed and delivered by such Selling Stockholder and is a valid
and binding agreement of such Selling Stockholder, enforceable in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance and other similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles, including, without limitation, the possible unavailability
of specific performance and injunctive relief, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and except
that rights to indemnification and contribution thereunder may be limited under
applicable securities laws.
(e) The Power of Attorney of such Selling Stockholder has been duly
authorized, executed and delivered by such Selling Stockholder and is a valid
and binding instrument of such Selling Stockholder, enforceable in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance and other similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles, including, without limitation, the possible unavailability
of specific performance and injunctive relief, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and except
that rights to indemnification and contribution thereunder may be limited under
applicable securities laws; and, pursuant to such Power of Attorney, such
Selling Stockholder has,
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among other things, authorized the Attorneys, or any one of them, to execute and
deliver on such Selling Stockholder's behalf this Agreement and any other
document that they, or any one of them, may deem necessary or desirable in
connection with the transactions contemplated hereby and thereby and to deliver
the Shares to be sold by such Selling Stockholder pursuant to this Agreement.
(f) Upon delivery of and payment for the Shares to be sold by such
Selling Stockholder pursuant to this Agreement, good and clear title to such
Shares will pass to you, free of all restrictions on transfer, liens,
encumbrances, security interests and claims whatsoever.
(g) The execution, delivery and performance of this Agreement and the
Custody Agreement and Power of Attorney of such Selling Stockholder by or on
behalf of such Selling Stockholder, the compliance by such Selling Stockholder
with all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (i) require such Selling
Stockholder to obtain any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such as
may be required in order to register the sale of the Shares pursuant to the Act
or as may be required under the securities or Blue Sky laws of the various
states), (ii) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the organizational documents of such Selling
Stockholder, if such Selling Stockholder is not an individual, or any indenture,
loan agreement, mortgage, lease or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder or any
property of such Selling Stockholder is bound or (iii) violate or conflict with
any applicable law or any rule, regulation, judgment, order or decree of any
court or any governmental body or agency having jurisdiction over such Selling
Stockholder or any property of such Selling Stockholder.
(h) The information in the Registration Statement under the caption
"Principal and Selling Stockholders" which relates specifically to such Selling
Stockholder and has been provided in writing to the Company for use in the
Registration Statement does not, and will not on the Closing Date, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(i) At any time during the period described in Section 5(d), if there is
any change in the information referred to in Section 7(h), such Selling
Stockholder will immediately notify you of such change.
(j) Each certificate signed by or on behalf of such Selling Stockholder
and delivered to you or your counsel shall be deemed to be a representation and
warranty by such Selling Stockholder to you as to the matters covered thereby.
(k) Such Selling Stockholder has not taken, and will not take, directly or
indirectly, any action designed to, or which might reasonably be expected to,
cause or result in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares pursuant to the
distribution contemplated by the Underwriting Agreement, and other than as
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permitted by the Act, such Selling Stockholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares.
Section 8. Indemnification. (a) The Company and Premiere Communications,
Inc., Voice-Tel Enterprises, Inc. and VoiceCom Systems Inc., each a subsidiary
of the Company, jointly and severally, agree to indemnify and hold harmless each
Selling Stockholder, its directors, its officers and each person, if any, who
controls such Selling Stockholder within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and you, your directors, your officers and each
person, if any, who controls you within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments (including, without limitation, any legal or
other expenses incurred in connection with investigating or defending any
matter, including any action, that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), the Prospectus (or any amendment or supplement thereto)
or any preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading or caused by any violation by the Company
of the Act or the Exchange Act or any rule or regulation thereunder applicable
to the Company and relating to any action or inaction required of the Company in
connection with the transactions contemplated hereunder, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to you or any Selling Stockholder furnished in writing to
the Company by you or such Selling Stockholder, respectively, expressly for use
therein. Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors and officers,
you, your directors, your officers, each person, if any, who controls you,
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
each of the other Selling Stockholders and each of their officers, directors,
members, partners or control persons to the same extent as the indemnity set
forth in the first sentence of Section 8(a) but only with reference to
information relating specifically to such Selling Stockholder furnished in
writing to the Company by such Selling Stockholder expressly for use in the
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus. Notwithstanding
the foregoing, the aggregate liability of any Selling Stockholder pursuant to
this Section 8(a) shall be limited to an amount equal to the total proceeds
(after deducting discounts and commissions payable to you but before deducting
any other expenses) received by such Selling Stockholder from you for the sale
of the Shares sold by such Selling Stockholder hereunder.
(b) You agree to indemnify and hold harmless the Company, its directors,
its officers who sign the Registration Statement, each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, each Selling Stockholder and each person, if any, who
controls such Selling Stockholder within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act to the same extent as the indemnity set forth in
the first sentence of Section 8(a) but only with reference to information
relating to you furnished in writing to the Company by you expressly for use in
the Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus.
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<PAGE>
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), you shall not be required to assume the defense
of such action pursuant to this Section 8(c), but may employ separate counsel
and participate in the defense thereof, but the fees and expenses of such
separate counsel, except as provided below, shall be at your expense). Any
indemnified party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
separate counsel shall be at the expense of the indemnified party unless (i) the
employment of such separate counsel shall have been specifically authorized in
writing by the indemnifying party, (ii) the indemnifying party shall have failed
to assume the defense of such action or employ counsel reasonably satisfactory
to the indemnified party or (iii) the named parties to any such action
(including any impleaded parties) include both the indemnified party and the
indemnifying party, and the indemnified party shall have been advised by such
separate counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to the indemnifying
party (in which case the indemnifying party shall not have the right to assume
the defense of such action on behalf of the indemnified party). In any such
case, the indemnifying party shall not, in connection with any one action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for (i)
the fees and expenses of more than one separate firm of attorneys (in addition
to any local counsel) for you, your officers and directors and all persons, if
any, who control you within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act, (ii) the fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) for the Company,
its directors, its officers who sign the Registration Statement and all persons,
if any, who control the Company within the meaning of either such Section and
(iii) the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all Selling Stockholders and all persons, if
any, who control any Selling Stockholder within the meaning of either such
Section, and all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate firm for you, your officers and
directors and such control persons of you, such firm shall be designated in
writing by you. In the case of any such separate firm for the Company and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm
for the Selling Stockholders and such control persons of any Selling
Stockholders, such firm shall be designated by the written consent of Selling
Stockholders representing a majority of the Shares sold pursuant to the
transactions contemplated hereunder. The indemnifying party shall indemnify and
hold harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. No indemnifying party shall,
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<PAGE>
without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified party or
parties on the other hand from the offering of the Shares or (ii) if the
allocation provided by clause 8(d)(i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 8(d)(i) above but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party or
parties on the other hand in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative benefits received by
the Selling Stockholders on the one hand and you on the other hand shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Selling Stockholders on the one hand
and the total underwriting discounts and commissions received by you, on the
other hand, bear to the total price to the public of the Shares, in each case as
set forth in the table on the cover page of the Prospectus. Notwithstanding the
immediately preceding sentence, if the losses, claims, damages or liabilities in
respect of which contribution is being sought are caused by any untrue statement
or alleged untrue statement of a material fact other than any such statements or
omissions made in reliance upon and in conformity with information furnished to
the Company in writing by (i) you expressly for use in the Registration
Statement (or any amendment thereto), the Prospectus (or any amendment or
supplement thereto) or any preliminary prospectus or (ii) any Selling
Stockholder expressly for use in the Registration Statement (or any amendment
thereto), the Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus, then the relative benefits received by the Company on
the one hand and you on the other hand in connection with the offering of the
Shares shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the Shares (before deducting expenses) received by
the Selling Stockholders (notwithstanding that the Company receives none of such
proceeds) and the total underwriting discounts and commissions received by you,
in each case as set forth in the table on the cover of the Prospectus, bear to
the total price to the public of the Shares; and in such case, the parties
hereto agree that for purposes of this sentence only, the Selling Stockholder
would be deemed to receive no benefits from the offering of the Shares. The
relative faults, if any, of the Company, the Selling Stockholders and you shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, the Selling
Stockholders or you and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
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The Company, the Selling Stockholders and you agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any reasonable legal or other expenses incurred by
such indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, you shall not be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which you have otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(f) Each Selling Stockholder hereby designates CT Corporation System,
1633 Broadway, New York, New York, 10019, as its authorized agent, upon which
process may be served in any action which may be instituted in any state or
federal court in the State of New York by you, any of your directors or officers
or any person controlling you asserting a claim for indemnification or
contribution under or pursuant to this Section 8, and each Selling Stockholder
will accept the jurisdiction of such court in such action, and waives, to the
fullest extent permitted by applicable law, any defense based upon lack of
personal jurisdiction or venue. A copy of any such process shall be sent or
given to such Selling Stockholder, at the address for notices specified in
Section 12 hereof.
Section 9. Conditions of Your Obligations. Your obligation to purchase
the Shares under this Agreement are subject to the satisfaction of each of the
following conditions:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date with the same force
and effect as if made on and as of the Closing Date.
(b) If the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., New York City
time, on the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or contemplated by the Commission.
(c) You shall have received on the Closing Date a certificate dated the
Closing Date, signed by Boland T. Jones and Patrick G. Jones, in their
capacities as the Chairman of the Board and Chief
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Executive Officer and Senior Vice President Finance and Legal of the Company,
confirming the matters set forth in Sections 6(t), 9(a) and 9(b) and that the
Company has complied with all of the agreements and satisfied all of the
conditions herein contained and required to be complied with or satisfied by the
Company on or prior to the Closing Date.
(d) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries, taken as
a whole, (ii) there shall not have been any change or any development involving
a prospective change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(d)(i),
9(d)(ii) or 9(d)(iii), in your judgment, is material and adverse to the Company
and its subsidiaries, taken as a whole, and, in your judgment, makes it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
(e) All the representations and warranties of each Selling Stockholder
contained in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date, and you
shall have received on the Closing Date a certificate executed by the Attorneys
on behalf of each Selling Stockholder dated the Closing Date from each Selling
Stockholder to such effect and to the effect that such Selling Stockholder has
complied with all of the agreements and satisfied all of the conditions herein
contained and required to be complied with or satisfied by such Selling
Stockholder on or prior to the Closing Date.
(f) You shall have received on the Closing Date an opinion (satisfactory
to you and your counsel, dated the Closing Date, of Alston & Bird LLP, counsel
for the Company, to the effect that:
(i) each of the Company and its Significant Subsidiaries has been
duly incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the corporate
power and authority to carry on its business as described in the Prospectus
and to own, lease and operate its properties;
(ii) each of the Company and its Significant Subsidiaries is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction listed on a schedule to be attached to such
opinion, which schedule shall be reasonably acceptable to you and your
counsel;
(iii) to such counsel's knowledge, the Company does not own or
control, directly or indirectly, any corporation, association or other
entity other than the subsidiaries listed on Annex II hereto;
(iv) all the outstanding shares of capital stock of the Company
(including the Shares to be sold by the Selling Stockholders) have been
duly authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights under the
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Company's Articles of Incorporation, under Georgia law or under any
agreement known to such counsel;
(v) all of the outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned by the Company, directly or
indirectly through one or more subsidiaries, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof contained
in the Prospectus;
(viii) the Registration Statement has become effective under the
Act and, to the knowledge of such counsel, after due inquiry, no stop order
suspending its effectiveness has been issued and no proceedings for that
purpose are pending before or contemplated by the Commission;
(ix) the statements under the captions "Description of Capital
Stock," "Business Legal Proceedings," "Price Range of Common Stock and
Dividend Policy" and "Business Government Regulation", insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings;
(x) the descriptions in the Prospectus of the Articles of
Incorporation and Bylaws of the Company and of statutes and contracts are
accurate in all material respects;
(xi) neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws and, to such counsel's
knowledge, neither the Company nor any of its subsidiaries is in default in
the performance of any obligation, agreement, covenant or condition
contained in any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Company and its
subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
or their respective property is bound;
(xii) the execution, delivery and performance of this Agreement by
the Company, will not (A) require any consent, approval, authorization or
other order of, or qualification with, any court or governmental body or
agency (except such as may be required under the Act or the securities or
Blue Sky laws of the various states), (B) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the
charter or by-laws of the Company or any of its subsidiaries or any
agreement described in the Registration Statement or previously filed (or
incorporated by reference) as an exhibit to the Company's filings under the
Securities Exchange Act of 1934 (collectively, "MATERIAL CONTRACTS"), (C)
violate
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or conflict with any applicable law or any rule, regulation, judgment or,
to such counsel's knowledge, any order, writ or decree of any court or any
governmental body or agency having jurisdiction over the Company, any of
its subsidiaries or their respective property;
(xiii) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of their respective property is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described, or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not so described or filed as required;
provided, however, that such counsel need express no opinion with respect
to any federal or state law or regulation involving the regulation of
telecommunications or licensure thereunder;
(xiv) the Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(xv) to such counsel's knowledge, except as described in the
Registration Statement or with respect to rights that have been waived,
there are no contracts, agreements or understandings between the Company
and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities
of the Company or to require the Company to include such securities with
the Shares registered pursuant to the Registration Statement; and
(xvi) (A) each document, if any, filed pursuant to the Exchange Act
and incorporated by reference in the Prospectus (except for financial
statements and other financial and statistical data included therein as to
which no opinion need be expressed) complied when so filed as to form in
all material respects with the Exchange Act, (B) the Registration Statement
and the Prospectus and any supplement or amendment thereto (except for the
financial statements and other financial data included therein as to which
no opinion need be expressed) comply as to form with the Act.
In addition, such counsel shall state that such counsel has participated in
conferences with officials and other representatives of the Company, you, your
counsel and the independent certified public accountants of the Company, at
which such conferences the contents of the Registration Statement and related
matters were discussed, and although they have not verified the accuracy or
completeness of the statements contained in the Registration Statement and the
Prospectus included therein (except for the financial statements, supporting
schedules and other financial and statistical data as to which such counsel need
not express any belief), nothing has come to the attention of such counsel which
leads them to believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or the Prospectus (except for the financial
statements, supporting schedules and other financial and statistical data as to
which such counsel need not express any belief), as of its date and as of the
Closing Date, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary
20
<PAGE>
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
In giving its opinion, such counsel may rely, (A) as to all matters of
fact, upon certificates and written statements of officers and employees of the
Company and its subsidiaries, and (B) as to the qualification and good standing
of the Company and any subsidiaries to do business in any jurisdiction, upon
certificates of appropriate government officials in such jurisdictions. Counsel
rendering the foregoing opinion may rely as to questions of law not involving
the laws of the United States or the State or Georgia upon opinions of local
counsel.
The opinion of Alston & Bird LLP described in Section 9(f) above shall be
rendered to you at the request of the Company and shall so state therein.
(g) With respect to each Selling Stockholder, you shall have received on
the Closing Date an opinion (satisfactory to you and your counsel), dated the
Closing Date, from counsel for each of the Selling Stockholders, to the effect
that:
(i) this Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Stockholder;
(ii) such Selling Stockholder has full legal right, power and
authority, and all authorization and approval required by law, to enter
into this Agreement and the Custody Agreement and the Power of Attorney of
such Selling Stockholder and to sell, assign, transfer and deliver the
Shares to be sold by such Selling Stockholder in the manner provided herein
and therein;
(iii) the Custody Agreement of such Selling Stockholder has been
duly authorized, executed and delivered by such Selling Stockholder and is
a valid and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance
and other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles, including, without
limitation, the possible unavailability of specific performance and
injunctive relief, regardless of whether such enforceability is considered
in a proceeding in equity or at law, and except that rights to
indemnification and contribution thereunder may be limited under applicable
securities laws;
(iv) the Power of Attorney of such Selling Stockholder has been
duly authorized, executed and delivered by such Selling Stockholder and is
a valid and binding instrument of such Selling Stockholder, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance
and other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles, including, without
limitation, the possible unavailability of specific performance and
injunctive relief, regardless of whether such enforceability is considered
in a proceeding in equity or at law, and except that rights to
21
<PAGE>
indemnification and contribution thereunder may be limited under applicable
securities laws, and, pursuant to such Power of Attorney, such Selling
Stockholder has, among other things, authorized the Attorneys, or any one
of them, to execute and deliver on such Selling Stockholder's behalf this
Agreement and any other document they, or any one of them, may deem
necessary or desirable in connection with the transactions contemplated
hereby and thereby and to deliver the Shares to be sold by such Selling
Stockholder pursuant to this Agreement;
(v) upon delivery of and payment for the Shares to be sold by such
Selling Stockholder pursuant to this Agreement and assuming you take the
Shares without notice of any adverse claim, good and valid title to such
Shares will pass to you, free of all restrictions on transfer, liens,
encumbrances, security interests and adverse claims whatsoever; and
(vi) the execution, delivery and performance of this Agreement and
the Custody Agreement and Power of Attorney of such Selling Stockholder by
such Selling Stockholder, the compliance by such Selling Stockholder with
all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (A) require such
Selling Stockholder to obtain any consent, approval, authorization or other
order of, or qualification with, any court or governmental body or agency
(except such as may be required under the securities or Blue Sky laws of
the various states), (B) conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the organizational documents of
such Selling Stockholder, if such Selling Stockholder is not an individual,
or any indenture, loan agreement, mortgage, lease or other agreement or
instrument to which such Selling Stockholder is a party or by which any
property of such Selling Stockholder is bound or (C) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree
of any court or any governmental body or agency having jurisdiction over
such Selling Stockholder or any property of such Selling Stockholder.
The opinions of counsel for the Selling Stockholders described in Section
9(g) above shall be rendered to you at the request of each respective Selling
Stockholder and shall so state therein.
(h) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Nelson Mullins Riley & Scarborough, L.L.P., your counsel, as to
the matters referred to in Sections 9(f)(ix) (but only with respect to the
statements under the caption "Underwriting") and clause 9(f)(xvi)(B).
In addition, such counsel shall state that such counsel has participated in
conferences with officials and other representatives of the Company, you,
counsel for the Company and the independent certified public accountants of the
Company, at which such conferences the contents of the Registration Statement
and related matters were discussed, and although they have not verified the
accuracy or completeness of the statements contained in the Registration
Statement and the Prospectus included therein (except for the financial
statements, supporting schedules and other financial and statistical data as to
which such counsel need not express any belief), nothing has come to the
attention of such counsel which leads them to believe that the Registration
Statement, at the time it became effective, contained an untrue statement of a
material fact or omitted to state a
22
<PAGE>
material fact required to be stated therein or necessary to make the statements
therein not misleading, or the Prospectus (except for the financial statements,
supporting schedules and other financial and statistical data as to which such
counsel need not express any belief), as of its date and as of the Closing Date,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(i) You shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you, from (A) Arthur Andersen LLP,
independent public accountants with respect to the Company and its subsidiaries,
(B) Ernst & Young LLP, independent public accountants with respect to Xpedite
Systems, Inc., and (C) Price Waterhouse, independent public accountants with
respect to Xpedite Systems Limited, containing the information and statements of
the type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in or incorporated by reference into the Registration Statement and
the Prospectus.
(j) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Gerry, Friend & Spronov LLP, special Federal Communications
Commission counsel for the Company, in the form attached hereto as Exhibit A.
(k) The Company shall have delivered to you the agreements specified in
Section 2 hereof which agreements shall be in full force and effect on the
Closing Date.
(l) The Shares shall have been duly listed for quotation on the Nasdaq
National Market.
(m) The Company and the Selling Stockholders shall not have failed on or
prior to the Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company or the
Selling Stockholders, as the case may be, on or prior to the Closing Date.
(n) You shall have received on the Closing Date, a certificate of each
Selling Stockholder who is not a U.S. Person (as defined under applicable U.S.
federal tax legislation) to the effect that such Selling Stockholder is not a
U.S. Person, which certificate may be in the form of a properly completed and
executed United States Treasury Department Form W-8 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
Section 10. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Company and the Selling Stockholders if any
of the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in your judgment, is material and adverse and, in your judgment, makes it
impracticable to market the
23
<PAGE>
Shares on the terms and in the manner contemplated in the Prospectus; (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market; (iii) the
suspension of trading of any securities of the Company on any exchange or in the
over-the-counter market; (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole; (v) the declaration of a banking moratorium by
either federal or New York State authorities; or (vi) the taking of any action
by any federal, state or local government or agency in respect of its monetary
or fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.
Section 11. Agreements of the Selling Stockholders. Each Selling
Stockholder agrees with you and the Company:
(a) To pay or to cause to be paid all transfer taxes payable in connection
with the transfer of the Shares to be sold by such Selling Stockholder to you.
(g) To do and perform all things to be done and performed by such Selling
Stockholder under this Agreement prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Shares to be sold by such Selling
Stockholder pursuant to this Agreement.
Section 12. Miscellaneous.
(a) Notices given pursuant to any provision of this Agreement shall be
addressed as follows: (i) if to the Company, to Premiere Technologies, Inc.,
Attn: President, 3399 Peachtree Road, N.E., Lenox Building, Suite 400, Atlanta,
Georgia 30326, (ii) if to the Selling Stockholders, to Mr. Lee Smith and Mr.
Marvin Kasoff c/o Mr. Lee Smith, Margolis Duckworth & Funt, P.C., 2045 Westgate
Drive, Suite 404, Bethlehem, PA 18017 and Tom Edwards, Amway Corporation, 7575
Fulton Street East, Ada, Michigan 49355, (iii) if to you, Donaldson, Lufkin &
Jenrette Securities Corporation, 277 Park Avenue, New York, New York 10172,
Attention: Syndicate Department, or in any case to such other address as the
person to be notified may have requested in writing.
(b) In the event of a default by a Selling Stockholder as referred to in
this Section, you and the non-defaulting Selling Stockholders shall have the
right to postpone the Closing Date for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or
Prospectuses or in any other documents or arrangements.
No action taken pursuant to this Section shall relieve any Selling
Stockholder or Selling Stockholders so defaulting from liability, if any, in
respect of such default.
(c) The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Selling Stockholders and you
set forth in or made pursuant to
24
<PAGE>
this Agreement shall remain operative and in full force and effect, and will
survive delivery of and payment for the Shares, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
you, your officers or directors, any person controlling you, the Company, its
officers or directors, any person controlling the Company, any Selling
Stockholder or any person controlling such Selling Stockholder, (ii) acceptance
of the Shares and payment for them hereunder and (iii) termination of this
Agreement.
(d) Notwithstanding any termination of this Agreement, the Company shall be
liable for all expenses which it has agreed to pay pursuant to Section 5(i)
hereof. The Company also agrees to reimburse you, your directors and officers
and any persons controlling you for any and all fees and expenses (including,
without limitation, the fees disbursements of counsel) incurred by them in
connection with enforcing their rights hereunder (including, without limitation,
pursuant to Section 8 hereof).
(e) Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Selling
Stockholders, you, your directors and officers, any controlling persons referred
to herein, the Company's directors and the Company's officers who sign the
Registration Statement and their respective successors and assigns, all as and
to the extent provided in this Agreement, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Shares from you merely
because of such purchase.
(f) The parties hereto acknowledge that: (i) each person who is executing
this Agreement as Attorney on behalf of a Selling Stockholder other than himself
is executing this Agreement pursuant to the authority granted to him in the
Powers of Attorney; (ii) no Attorney has made any inquiry or investigation with
respect to any Selling Stockholder other than himself (if such Attorney is also
a Selling Stockholder), and shall not be deemed to be personally making any
representations or warranties with respect to any Selling Stockholder other than
himself (if such Attorney is also a Selling Stockholder); and (iii) the
restrictions set forth in the third paragraph of Section 2 of this Agreement
shall only be applicable to any Attorney to the extent of such Attorney's
ownership of the Company's securities.
(g) This Agreement shall be governed and construed in accordance with the
laws of the State of New York, without giving effect to principles of conflicts
of laws.
(h) This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
25
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Selling Stockholders and you.
Very truly yours,
PREMIERE TECHNOLOGIES, INC.
By:
--------------------------------------
Title:
AS TO SECTION 8 OF THE AGREEMENT:
PREMIERE COMMUNICATIONS, INC.
By:
--------------------------------------
Title:
VOICE-TEL ENTERPRISES, INC.
By:
--------------------------------------
Title:
VOICECOM SYSTEMS, INC.
By:
--------------------------------------
Title:
26
<PAGE>
THE SELLING STOCKHOLDERS NAMED IN
SCHEDULE I HERETO, EXCLUDING AMWAY
CORPORATION, ACTING SEVERALLY
By:
--------------------------------------
Attorney-in-fact
AMWAY CORPORATION
By:
--------------------------------------
Attorney-in-Fact
By:
--------------------------------------
Attorney-in-Fact
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
------------------------
Title:
-----------------
27
<PAGE>
SCHEDULE I
----------
Selling Stockholders
--------------------
NUMBER OF
NAME SHARES BEING SOLD
---- -----------------
Allan, Barbara Jane 32,811
Allan, Barbara Joan 7,153
Allan, Karin 32,944
[Amway Corporation] [254,919]
Automated Messaging, Inc. 20,000
Averette, Preston G. and James R. 10,417
Bashinsky, Major 12,000
Chacho, Michael C. 6,000
Clarke, George G. 3,000
Clarke IV, Frederick W. 3,000
Dally, Kitty C. 30,000
Dodson, John & Eileen 12,000
Edwards, Barney 7,323
[Eil, Mitchell E.] [2,500]
Ellsworth, David A. 7,000
[Estate of Robert C. McDonald] [34,400]
Feldstein, David 1,700
[Field Jr., Marshall] [31,825]
Gertler, Eugene 74,115
Ginella, Mark 5,000
Gold, Neal E. 6,000
Hebert, Alan D. 3,000
Hughes, John A. 32,500
Humphrey, James R. and Betty M. 5,000
Johnson, Henry C. and Mary E. Jt.Ten. 10,000
Jewish, Home of Cincinnati 500
Jewish Federation of Cincinnati 500
Kalankiewicz, Edward P. 2,800
Kasoff, Marvin (trust) 20,000
Kasoff, David 8,000
Larson, Robert A. 11,000
Lee Smith Family 21,989
Lee Smith Charitable Remainder Unitrust 20,000
Lewis, David M. 3,700
[Lile, Kenneth and Ruth Jt.Ten.] [32,197]
McMillan, Doug 6,000
Nemic, Thomas E. 5,486
Nesmith, Robert B. 13,645
<PAGE>
NUMBER OF
NAME SHARES BEING SOLD
---- -----------------
Page, Barbara 3,000
Papagan, Alex 4,000
Pasarew, Irene 15,312
Pearsall, Edward P. 9,341
Roaseau, Linda C. (trust) 7,500
[Skiba, David] [5,000]
Sweatt, W. David 7,569
Vaughan, Barbara 3,000
Vincent, Paul J. 40,000
Washko, Chris J. 10,000
Widdoes Enterprises 16,695
Williams, Michael E. 1,000
Woltjer, Thomas D. 6,977
Zee Corp. 2,000
---------
Total
=========
<PAGE>
Annex I
D. Gregory Smith
Leonard A. DeNittis
Worldcom, Inc.
<PAGE>
Annex II
Premiere Communications, Inc. (FL)
Voice-Tel Enterprises, Inc. (DE)
VTN, Inc. (OH)
Premiere Acquisition Corporation (GA)
Voice-Tel Network Limited Partnership (DE General Partnership)
EBIS Communications, Inc. (GA)
Voice-Tel Canada Limited (Canada)
Voice-Tel Pty Ltd. (Australia & New Zealand)
In-Touch Technologies, Inc. (CA)
Car Zee, Inc. (CA)
VT of Long Island Inc. (NY)
Voice-Net Communications Systems, Inc. (NY)
Brooks-Sloan, Inc. (AL)
AudioInfo, Inc. (TX)
John & Eileen Dodson, Inc. (CA)
MMP Communications, Inc. (CA)
Taft Communications, Inc. (CA)
Voice Partners Company (OH Limited Partnership)
Emjay Enterprises, Inc. (SC)
Program Marketing, Inc. (NC)
Voice Systems of Greater Dayton, Inc. (OH)
BV Communications, Inc. (NC)
Tel-Tek, Inc. (MI)
Service Communications, Inc. (GA)
Voice Mail Services, Inc. (CT)
Houston Telecommunications, Inc. (TX)
Indiana Communicator Incorporated (IN)
Lar-Lin Enterprises, Inc. (KS)
Lar-Lin Investments, Inc. (KS)
Voice-Mail Solutions, Inc. (KS)
Voice-Tel, Inc. (TN)
Inter-Net, Inc. (AK)
Voice Link, Inc. (LA)
Allagash Communications, Inc. (ME)
Stay-In-Touch Technologies, Inc. (CA)
Lauger International, Inc. (MD)
Voice Technology, Inc. (MA)
Gulf States Communications Corporation (AL)
New West Communications, Inc. (NV)
Charp-Tel Enterprises, Inc. (RI)
Rambl Corporation (NH)
Voice-Tel of Northern New Jersey, Inc. (NJ)
<PAGE>
DARP, Inc. (NJ)
Voice Telecommunications, Inc. (NY)
Tri-C Communications Corp. (NY)
RGB Enterprises, Inc. (OK)
Voice Message of Northeastern OK, Inc. (OK)
Voice Communications, Inc. (FL)
Interactive Communications Corp. (PA)
Tri-State VMS, Inc. (PA)
Simmoor Corp. (CA)
The Hennig Company (GA)
Voice Management, Inc. (MO)
B & AH of Northwest Florida, Inc. (FL)
E & BH, Inc. (FL)
Voice Tel of South Texas, Inc. (TX)
Caldwell, Inc. (WV)
J.B. Enterprises-Wisconsin, Inc. (WI)
SKRAWKCAB Corporation (PA)
Mitchell E. Eil, Inc. (NY)
G. D. Enterprises, Inc. (MI)
Digicall Cellular Corporation (CA)
Digitele Corporation (CA)
Advanced Resource Technologies, Inc. (NY)
Voice-Tel of Oregon, Inc. (OR)
CommTel/USA, Inc. (FL)
WN Communication Systems, Inc. (TN)
<PAGE>
Annex III
Significant Subsidiaries
Premiere Communications, Inc. (FL)
Voice-Tel Enterprises, Inc. (DE)
VTN, Inc. (OH)
Premiere Acquisition Corporation (GA)
<PAGE>
EXHIBIT A
[FORM OF OPINION OF FCC COUNSEL]
1. The Company has obtained all authorizations, consents and approvals from the
FCC and from state public utility commissions ("PUCs") necessary for the
conduct of its business as described in the Registration Statement. All such
authorizations, consents and approvals have been duly and validly issued and
are in full force and effect and neither the Company, nor any of its
subsidiaries, are in violation of any of the terms an conditions of any such
authorizations, consents or approvals.
2. There is no outstanding adverse judgment, decree or order that has been
issued by the FCC or any state PUC against the Company or any of its
subsidiaries or any action, proceeding or investigation pending or
threatened by the FCC or any state PUC against the Company or its
subsidiaries that would materially and adversely affect the operation of the
Company's business as described in the Registration Statement.
3. The statements in the Registration Statement under the captions "Risk
Factors--_______________" and "Business--_____________," insofar as such
statements purport to describe certain provisions of the Communications Act
and rules and regulations of the FCC promulgated thereunder, have been
reviewed by us and are correct in all material respects.
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF ALSTON & BIRD LLP APPEARS HERE]
December 22, 1997
Premiere Technologies, Inc.
The Lenox Building, Suite 400
3399 Peachtree Road, N.E.
Atlanta, Georgia 30326
Ladies and Gentlemen:
This opinion is given in connection with the filing of a Registration
Statement on Form S-3 (No. 333-39577) (the "Registration Statement") with the
Securities and Exchange Commission, by Premiere Technologies, Inc., a
corporation organized and existing under the laws of the State of Georgia (the
"Company"), with respect to the registration under the Securities Act of 1933,
as amended, of 921,551 shares (the "Shares") of the $.01 par value common
stock of the Company (the "Common Stock").
In rendering this opinion, we have examined such corporate records and
documents as we have deemed relevant and necessary as the basis for the opinion
set forth herein.
Based upon the foregoing, it is our opinion that the Shares of Common Stock
to be offered and sold in accordance with the Registration Statement are duly
authorized, validly issued, fully paid, and non-assessable under the Georgia
Business Corporation Code.
We consent to the use of this opinion and to the reference made to the firm
under the caption "Legal Matters" in the Prospectus constituting part of the
Registration Statement.
ALSTON & BIRD LLP
By: /s/ Janine Brown
------------------------------------
Janine Brown
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports included in Premiere
Technologies, Inc.'s Annual Report on Form 10-K dated February 11, 1997;
Current Report on Form 8-K dated April 30, 1997 as amended by the Company's
Current Report on Form 8-K/A filed with the Commission on June 16, 1997;
Current Report on Form 8-K dated May 16, 1997 as amended by the Company's
Current Report on Form 8-K/A filed with the Commission on June 26, 1997;
Current Report on Form 8-K dated September 26, 1997; Current Report on Form 8-
K dated November 13, 1997 and to all references to our Firm included in this
registration statement.
Arthur Andersen LLP
Atlanta, GA
December 16, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-39577) and related Prospectus of
Premiere Technologies, Inc. for the registration of its common stock and to
the incorporation by reference therein of our report dated February 27, 1997,
with respect to the consolidated financial statements of Xpedite
Systems, Inc. included in the Current Report on Form 8-K dated December 4,
1997 of Premiere Technologies, Inc., filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
MetroPark, New Jersey
December 16, 1997
<PAGE>
EXHIBIT 23.4
XPEDITE SYSTEMS LIMITED
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Premiere
Technologies, Inc of our report dated 16 September 1997 on the consolidated
financial statements of Xpedite Systems Limited as of 31 December 1996 and for
the 3 years then ended, which appears in the Current Report on Form 8-K of
Premiere Technologies, Inc dated 4 December 1997.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ PRICE WATERHOUSE
Leeds, England
22 December 1997
