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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1998
Commission file number: 0-27778
PREMIERE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
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Georgia 59-3074176
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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3399 Peachtree Road, N.E., The Lenox Building, Suite 600, Atlanta, Georgia
30326
(address of principal executive office)
(Registrant's telephone number, including area code): (404) 262-8400
Securities registered pursuant to Section 12(b) of the Act:
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None None
(Title of each class) (Name of each exchange on which registered)
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.01 Per Share
(Title of class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((S)229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [_]
The aggregate market value of voting stock held by non-affiliates of the
registrant, based upon the closing sale price of common stock on March 29,
1999 as reported by The Nasdaq Stock Market's National Market, was
approximately $455,478,924.
As of March 30, 1999 there were 46,067,323 shares of the registrant's common
stock outstanding.
List hereunder the documents incorporated by reference and the part of the
Form 10-K (e.g., Part I. Part II, etc.) into which the document is
incorporated: Portions of the registrant's Proxy Statement for its 1998
meeting of shareholders are incorporated by reference in Part III.
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Index
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Part I
Item 1. Business........................................................
Item 2. Properties......................................................
Item 3. Legal Proceedings...............................................
Item 4. Submission of Matters to a Vote of Security Holders.............
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.................................................................
Item 6. Selected Financial Data.........................................
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................................
Item 8. Financial Statements and Supplementary Data.....................
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure....................................................
Part III
Item 10. Directors and Executive Officers of the Registrant..............
Item 11. Executive Compensation..........................................
Item 12. Security Ownership of Certain Beneficial Owners and Management..
Item 13. Certain Relationships and Related Transactions..................
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-
K.......................................................................
Signatures...............................................................
Exhibits.................................................................
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FORWARD LOOKING STATEMENTS
When used in this Form 10-K and elsewhere by management or Premiere
Technologies, Inc. ("Premiere" or the "Company") from time to time, the words
"believes," "anticipates," "expects," "will" and similar expressions are
intended to identify forward-looking statements concerning Premiere's
operations, economic performance and financial condition. These include, but
are not limited to, forward-looking statements about Premiere's business
strategy and means to implement the strategy, Premiere's objectives, the
amount of future capital expenditures, the likelihood of Premiere's success in
developing and introducing new products and services and expanding its
business, and the timing of the introduction of new and modified products and
services. For those statements, Premiere claims the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. 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 Premiere, and
reflect future business decisions which are subject to change. A variety of
factors could cause actual results to differ materially from those anticipated
in Premiere's forward-looking statements, including the following factors:
. factors described under the caption "Factors Affecting Future
Performance" in this Form 10K;
. factors described from time to time in the Company's press releases,
reports and other filings made with the Securities and Exchange
Commission;
. Premiere's ability to manage its growth and to respond to rapid
technological change and risk of obsolescence of its products, services
and technology;
. market acceptance of new products and services, including
Orchestrate(R);
. development of effective marketing, pricing and distribution strategies
for new products and services, including Orchestrate(R);
. competitive pressures among communications services providers may
increase significantly;
. costs or difficulties related to the integration of businesses, if any,
acquired or that may be acquired by Premiere may be greater than
expected;
. expected cost savings from past or future mergers and acquisitions may
not be fully realized or realized within the expected time frame;
. revenues following past or future mergers and acquisitions may be lower
than expected;
. operating costs or customer loss and business disruption following past
or future mergers and acquisitions may be greater than expected;
. the success of Premiere's strategic relationships, including the amount
of business generated and the viability of the strategic partners, may
not meet expectations;
. possible adverse results of pending or future litigation;
. risks associated with interruption in Premiere's services due to the
failure of the platforms and network infrastructure utilized in
providing its services;
. risks associated with the Year 2000 issue, including Year 2000 problems
that may arise on the part of third parties which may effect Premiere's
operations;
. risks associated with expansion of Premiere's international operations;
. general economic or business conditions, internationally, nationally or
in the local jurisdiction in which Premiere is doing business, may be
less favorable than expected;
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. legislative or regulatory changes may adversely affect the business in
which Premiere is engaged; and
. changes in the securities markets may negatively impact Premiere.
Premiere cautions that these factors are not exclusive. Consequently, all of
the forward-looking statements made in this Form 10-K and in documents
incorporated in this Form 10-K are qualified by these cautionary statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this Form 10-K. Premiere takes
on no obligation to publicly release the results of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date of this Form 10-K, or the date of the statement, if a different
date.
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PART I
ITEM 1. BUSINESS
Overview
Premiere Technologies, Inc. ("Premiere" or the "Company") began in 1991 with
the vision to enhance telephone-based communications. The telephony solutions
offered by Premiere in effect became a virtual office for thousands of mobile
professionals worldwide. In 1996, the Company saw the opportunity to integrate
the Internet into everyday business and personal communications solutions.
Through its Orchestrate(R) suite of Internet-based communications products,
the Company is Web-enabling its traditional network-based solutions, including
Premiere Document Distribution, Premiere Interactive Voice Response, Premiere
Conferencing, Premiere Voice and Data Messaging and Premiere Enhanced Calling
Services. Combining the power of the Internet with the reach of the telephone,
the Company offers an impressive array of innovative solutions to simplify the
communications people rely on everyday, at work and at home.
Premiere, a Georgia corporation, was incorporated in 1991, and its principal
executive offices are located at 3399 Peachtree Road, N.E., Lenox Building,
Suite 600, Atlanta, Georgia 30326, telephone number (404) 262-8400.
Industry Background
Managing the evolving 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 multiple messaging platforms has dramatically
increased the average person's accessibility and, accordingly, the number of
messages and means of communications he or she must manage. A study by the
Institute for the Future, the Gallup Organization, Pitney-Bowes and San Jose
State University, based on responses from more than 1,000 employees of Fortune
1000 companies, found that workers send and receive an average of 178 messages
each day. Both businesses and individuals face a demanding communications
environment today in which they must utilize a number of communications
systems, convert information from one medium to another and deal with multiple
vendors for each of these services.
Today, many stand-alone communications services are provided through
hardware-based legacy systems, including landline telephone systems, messaging
devices and local area networks, or "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.
Increasingly, users are 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 growth of Internet
communications and the complexity of the integration of current
telecommunications with Internet communications, users will increasingly
outsource their communications requirements to third parties such as Premiere.
Management believes that its single source, network-based solutions for
simplifying communications uniquely positions the Company to capitalize on
these trends.
The Premiere Solution
Premiere believes that customers will prefer the Company's network-based
solutions to help them manage their communications needs more effectively and
efficiently, because the Company's solutions reduce its customers' costs of
equipment ownership, exposure to technology obsolescence and dependence on
scarce internal technical resources. The core of the Premiere solution is its
"intelligent network" or "Network Premiere," which integrates stand-alone
communications services and provides customers with access to a suite of
advanced Internet and telephony-based communications services for the
management of their communications needs. The Company's modular and scaleable
network infrastructure incorporates an open-system design, which
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allows the Company to easily expand capacity and provides the Company with the
flexibility to develop and customize its service offerings. Premiere's network
infrastructure consists of several platforms, including:
. platforms connected to the public switched telephone network via large
tandem switches;
. platforms which transmit voice and data utilizing Internet protocol
("IP"), frame relay switching protocol, and other packet and call based
technologies;
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. platforms which are Internet accessible;
. a platform for document distribution services using servers from Sun
MicroSystems to perform all primary processing and switching functions;
and
. commercially available conferencing bridges.
The Company plans to continue to make investments in its network
infrastructure in 1999 and may, from time to time, outsource certain of its
network infrastructure requirements. Notwithstanding this continued investment
in its network infrastructure, the Company considers itself primarily an
integrator of innovative communications solutions and a sales and marketing
organization.
The Premiere Strategy
Premiere's goal is to become the world's leading provider and integrator of
innovative communications solutions. Premiere's principal strategies to
achieve this goal are as follows:
Leverage the Company's Existing Customer Base. The Company's corporate
customer base includes 40% of the Fortune 500 companies. While certain of
these enterprises are customers of more than one service offered by Premiere,
the Company believes that the cross-selling opportunities within its customer
base have only begun to be exploited. To enhance these cross-selling
opportunities, the Company recently reorganized by combining Premiere Document
Distribution, Premiere Corporate Messaging, Premiere Worldlink Corporate Card,
Premiere Interactive Voice Response and Premiere Conferencing (the Company's
most complementary offerings to large corporations) into a single strategic
business unit known as "Corporate Enterprise Solutions." As part of that
reorganization the Company also combined Premiere Internet-Based
Communications Services, Premiere Voice and Data Messaging and Premiere
Enhanced Calling Services into a single strategic business unit known as
Emerging Enterprise Solutions. Premiere's 1999 sales plan is designed to
reward the cross-selling efforts of the Corporate Enterprise group's direct
sales force, and to capitalize on the Emerging Enterprise group's
opportunities to migration-sell its existing customers to Internet-based
services.
Continue to Offer Innovative Applications and Solutions. The Company plans
to continue to enhance the Orchestrate line of services and introduce
additional Internet-based services in 1999 and beyond. Consistent with
Premiere's strategy of Web-enabling the everyday communications needs and
business strategies of its partners and customers, the Company has
commercially released Orchestrate(R) office, a robust unified messaging tool,
and Orchestrate(R) personal assistant, which provides customers with their own
single electronic address that serves as the customer's phone number, fax
number and e-mail address.
Build Brand Recognition and Leadership. The Company believes that a
consistent and focused branding message will differentiate the Company's
products and services in the minds of its customers and enhance the Company's
reputation for delivering innovative communications solutions to the
marketplace. The Company recently consolidated its entire suite of products
and services under the Premiere brand and intends to commit significant
resources to establishing and strengthening recognition of the Premiere brand.
Create Revenue-Generating Partnerships and Strategic Alliances. The Company
believes that its ability to create and maintain effective alliances that
generate revenues and produce new technologies is an important aspect of its
long-term strategy. The Company's strategic marketing partners include leading
companies such as American Express Travel Related Services, Inc. ("American
Express"), British Airways PLC and Mastercard International Incorporated
("Mastercard International"). The Company's strategic relationships with and
investments in several companies offering Internet-based information and
communications products and services were recently consolidated under the name
PTEKVentures.com. PTEKVentures.com is responsible for maximizing the Company's
technical, commercial and financial investments in these relationships by,
among other things, establishing new sales channels that will drive
utilization of Premiere's Internet-based service offerings. The Company has
made investments in, and created meaningful sales channel and technology
development arrangements with, a series of companies that provide
communications and information services through the Internet, including WebMD,
Inc. ("WebMD"), a leading full service healthcare portal, and USA.NET, Inc.
("USA.NET"), a leading electronic messaging company.
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Continue International Expansion. The Company presently maintains
international points-of-presence ("POPs") in over 60 cities in 25 countries,
including POPs owned by the Company and those maintained by contractual
partners who license document distribution systems from the Company. The
Company expects to expand its geographic presence in 1999, either by
acquisition or through internal growth. For example, the Company believes that
it can increase international revenues by porting Premiere Conferencing and
Premiere Voice and Data Messaging solutions to Europe and Asia, and then
selling those services to existing multinational customers who are presently
served by Premiere only in the United States.
Premiere Services
The Company provides its innovative solutions for simplifying communications
through two strategic business units: Corporate Enterprise Solutions,
targeting Fortune 500 and other large companies, and Emerging Enterprise
Solutions, targeting smaller fast-track companies and individuals.
Corporate Enterprise Solutions includes Premiere Document Distribution
(formerly Xpedite); Premiere Corporate Messaging (formerly VoiceCom); Premiere
Worldlink Corporate Card (formerly VoiceCom AccessOne); Premiere Interactive
Voice Response; and Premiere Conferencing (formerly American Teleconferencing
Services). Emerging Enterprise Solutions includes Internet-Based
Communications Services; Premiere Voice and Data Messaging (formerly Voice-
Tel); and Premiere Enhanced Calling Services (formerly Premiere
Communications).
Premiere Corporate Enterprise Solutions
Premiere Document Distribution. Premiere's Document Distribution services
provide customers with a lower cost, more reliable, more timely and effective
information delivery method than most other document distribution
alternatives. These services are described below.
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Feature Description
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Fax Broadcast............... Customers rapidly distribute a document to
multiple recipients by a single transmission
through Premiere's document distribution system
to a list of multiple fax addresses.
Robust Access Options....... Premiere's proprietary "PC Xpedite" software
enables a customer to transmit a document to
Premiere from a PC or local area network for
distribution across the Premiere network and
enables a customer to maintain lists of
addresses by computer access to the Premiere
system. Customers may also access Premiere's
document distribution system from fax machines,
e-mail or main frame computer.
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Feature Description
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Gateway Messaging........... Customers can send information from the
customer's computer through Premiere's document
distribution system to a recipient's fax or
telex machine, or to a recipient via the
Internet or X.400 electronic mail networks. This
service allows a customer to send a large volume
of individual communications (i.e., a single
document to a single recipient or from a single
sender), each of which may require similar
processing but contains different information
such as confirmations of reservations and
delivery of invoices.
Fax on Demand............... Callers can select information using a touch
tone phone and have such information sent
directly to a fax machine.
Enhanced Fax Merging........ Senders may personalize information which can be
inserted into original text at any point in a
standard multi-address document.
Toll-Free Fax Response...... Senders may receive responses by fax to a toll-
free 800 number.
X-Web....................... Provides Internet access to Premiere's Document
Distribution services, including access to job
status information.
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In addition, Premiere offers discounted international services. These
services allow a customer to use an automatic dialing device attached to the
customer's fax machine to direct international faxes to the Premiere network
for delivery to the recipient at a discount from standard international
prices. Premiere's discounted international service includes "store-and-
forward" service, in which a fax is transmitted and stored for subsequent
delivery and "real-time" service in which the sender's fax machine is
connected directly to the recipient's fax machine thereby best emulating
"normal" fax transmission.
Premiere Corporate Messaging. Premiere offers centralized 800-based voice
messaging services to large corporate clients through four operations centers.
Premiere also offers local access voice messaging services to large corporate
clients through its worldwide private data network. Both services offer
customers functionality similar to e-mail and the ability to easily
communicate with the touch of a button. Premiere Corporate Messaging services
allow customers to record and send messages to hundreds of recipients by
entering their mailbox numbers or sending to a pre-established distribution
list; answer messages simply by pressing a number on the telephone keypad; and
copy and route received messages to anyone else on the system or network.
Premiere Corporate Messaging also includes facilities management services
where the voice messaging equipment is located on the customer's premises and
Premiere provides all voice messaging services to that customer, including
equipment maintenance and end-user service and support. All of the Premiere
Corporate Messaging services include important end-user support services, such
as the development and distribution of voice mail directories, the generation
and maintenance of large voice mail distribution lists, all administration
services (adds, deletes and changes) and customer or end-user training.
Premiere WorldLink Corporate Card. Premiere offers an 800-based enhanced
calling card that allows customers to make domestic and international long
distance calls, access voice mail and fax mail, set up conference calls,
speed-dial frequently called corporate and personal numbers, and easily
connect to travel services (travel agents, airlines, hotels and rental cars),
information services (news, weather, sports and financial information), and
help desk services. In addition, the Premiere Worldlink Corporate Card
provides project code accounting functionality, which allows the customer to
set up project or account codes for easy billing of calls to a particular
client matter or account.
Premiere Interactive Voice Response. Premiere provides various interactive
voice response ("IVR") applications using custom voice prompts and commands
from a caller's telephone keypad to retrieve, process or route certain
information or telephone calls. This IVR service is used by, among others,
financial institutions (such as Bank of America), where Premiere's platform is
used to enhance call processing for checking, savings and other account
information.
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Premiere Conferencing. Premiere offers a full range of conferencing services
for successful business communications worldwide. Premiere Conferencing
specialists assist customers in customizing services to best meet their needs.
The three basic levels of conferencing services are as follows:
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Service Level Description
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Dialog Services............. This automated conferencing service allows users
to begin and conduct their conference without
the assistance of a Premiere Conferencing
support specialist. Security features include
passcodes and tones to introduce the arrival and
departure of participants. Ideal for routine
meetings with 48 or fewer participants.
Legend Services............. These group communications services includes
assistance from Premiere Conferencing support
specialists and other Premiere Conferencing team
members. The Legend Plus service includes a
dedicated conference support specialist to fully
monitor the conference call. Ideal for sales
meetings, company announcements, strategic
planning sessions, staff meetings and Board
meetings.
Paragon Services............ This collection of event management services are
customized for each client through consultation
with Premiere Conferencing team members. These
services are for high profile events such as
press conferences, training programs, client
seminars and quarterly earnings releases.
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In addition, Premiere Conferencing offers Web enhancements that allow real-
time sharing of presentations over the Internet during the course of a
conference call (Web-based data collaboration). Premiere Conferencing also
offers enhancements such as taping and replay services, translation services,
transcription services, consulting services, fulfillment services to assemble
and mail conference materials, invitation design, RSVP and reminder services
and electronic question and answer and polling services. Future plans include
international expansion and Web-enabled conferencing services, including Click
'N Conference(TM), reservations and scheduling.
Premiere Emerging Enterprise Solutions
Premiere Internet-Based Communications Services. Premiere's primary
Internet-based service is Orchestrate(R) by Premiere, a Web-based
communications platform. Orchestrate(R) integrates the Company's service
offerings by allowing customers to access the Company's services through a
computer or telephone. The Orchestrate(R) product line includes:
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Service Level Description
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Orchestrate(R) office A Web-based communications tool kit that
combines voice mail, e-mail, fax mail and
conference calling into one easy to use service.
Orchestrate(R) office includes an embedded
contact manager to manage a customer's
communications needs: a universal inbox for all
of the customer's messages; a personal Web page
that functions as a virtual receptionist; Click
'N Conference(TM), which allows the customer to
initiate conference calls from a computer; and a
personal 800 number. A customer's personal Web
page is automatically generated by the Premiere
platform from input provided by the customer.
Orchestrate(R) office operates using an Internet
browser in connection with any device connected
to the Internet and does not require customers
to purchase additional specialized hardware or
software.
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Orchestrate(R) personal Provides customers with a single electronic
assistant address that serves as their telephone number,
fax number and e-mail address. Customers dial
the same number to access all their messages
voice, fax and e-mail messages and to place
long-distance or conference calls and use
enhanced services such as travel and news
services.
Orchestrate(R) unified Allows customer to listen and respond to their
messaging e-mail and voice mail messages from virtually
any touch-tone phone using advanced text-to-
speech technology. The service also allows
customersto access their voice mail and e-mail
messages from their computer.
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In addition, the Orchestrate(R) platform is used by other companies to power
Internet communications in their product offerings. For example, WebMD, the
Atlanta-based Internet healthcare Web site that offers a comprehensive suite
of Internet-based products and services for healthcare professionals, utilizes
a co-branded version of Orchestrate(R) that allows healthcare professionals to
manage their critical flow of communications. Premiere recently announced
WebMD's agreement to purchase a minimum of 50,000 Orchestrate(R) accounts. The
agreement provides for Web-based communications elements of WebMD's commercial
offering to be branded as "Virtual Receptionist Powered by Orchestrate(R)".
The strategic alliance provides that Premiere will serve as WebMD's exclusive
provider of enhanced and unified telecommunications services offered to
WebMD's community of healthcare professionals. In addition, under a licensing
and co-marketing arrangement, WebMD will be Premiere's exclusive reseller of
Orchestrate(R) services through medical portals for the next four years.
The Company recently introduced the tagline "Powered by Orchestrate(R)" as
its branding approach in circumstances in which its service is an important
ingredient of another party's offering. The Company intends to continue to
deploy this branding strategy in 1999.
Premiere Voice and Data Messaging. Premiere's private data network allows
customers of Voice and Data Messaging services access to one of the largest
"voice intranets" in the world. The Company's intelligent data network offers
voice mail customers functionality similar to e-mail and the ability to easily
communicate inside the voice intranet with a touch of a button. Customers to
the Company's voice intranet can record and send messages to hundreds of
recipients by entering their mailbox numbers or sending to a pre-established
distribution list; answer messages simply by pressing a number on the
telephone keypad; and copy and route received messages to anyone else on the
network.
Premiere Enhanced Calling Services. Premiere Enhanced Calling Services
include long distance and enhanced 800-based communications services, which
are offered on a direct and a wholesale basis. The following table describes
available products and features.
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Feature Description
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Long Distance Calling Card.. Customers can place worldwide long distance
calls at attractive rates.
Message Notification........ Customers can instruct platform to notify them
upon receipt of messages by page or call to a
predesignated number. Special pager codes
identify type of message (voice, fax or e-mail)
received.
Personal 800 Numbers........ Customers receive personal 800 number serving as
single point of access for callers to select
various messaging options or attempt to locate
customer through call connect feature.
E-mail ..................... Customers are provided with an e-mail address.
Messages can be read over a telephone using
proprietary text-to-speech functionality or sent
to a fax machine.
Fax Mail.................... Customers can receive and store fax
transmissions and later instruct the platform to
forward faxes to a specified location. Callers
may also attach a voice introduction.
Conference Calling.......... Customers can initiate conference calls by
commands delivered through a telephone key pad.
Information Services........ Customers can access news, weather, sports and
financial and other information updates.
Other Services.............. Customers can program speed dial and access
travel and concierge services including lodging,
airline, rental car, dining and other events.
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Premiere Platforms and Network Infrastructure
The Company operates, and is continuing to develop, a global network
("Network Premiere") that provides customers with a way to simplify their
everyday communications. Network Premiere has been designed to facilitate the
"one to many" communications requirements of large corporations. Through
Network Premiere, customers have access to a suite of advanced Internet and
telephony-based communications services for the management of all of their
daily communications. This includes messages, documents, contact information,
and incoming and outgoing calls. The network is designed to take full
advantage of the latest telephony and Internet technologies.
Network Premiere is being developed using an open standards approach, which
makes it simple for Premiere to use the hardware and software of external
vendors and for other service providers to interconnect their networks with
Network Premiere. Customers can access Premiere's various services through the
Internet and through local and/or 800 telephone numbers.
Premiere Document Distribution services are provided primarily through a
document distribution platform that uses servers to perform all primary
processing and switching functions. This platform supports multiple input
methods including, but not limited to, fax-to-fax, priority PC based software,
e-mail gateways and high speed IP based interconnects. Outgoing faxes are
delivered through line group controllers ("LGCs"), which are deployed in a
decentralized fashion to exploit local delivery costs. The remote LCGs are
connected to the servers over a wide area network via either private lines or
Premiere's global TCP/IP based network. Messages are transported in bulk from
one location domain to another using MCP to MCP protocol. The current domains
include Sydney, Australia; Hong Kong; Tokyo, Japan; Seoul, Korea; Singapore;
Basel, Switzerland; York, UK; Leeds, UK; Eatontown, New Jersey; Munich,
Germany; and Paris, France. Remote nodes on the network are located in
Belgium, Canada, Denmark, Italy, Malaysia, Netherlands, New Zealand and
Taiwan. Premiere Document Distribution operates real time fax and real time
telex nodes in many additional countries.
Premiere Corporate Messaging offers centralized voice messaging services to
large corporate clients via 800 access through multiple voice messaging
platforms located in Atlanta, Georgia; Reno, Nevada; Arlington, Virginia; and
Oakbrook, Illinois. Premiere also offers local access voice messaging services
to large corporate clients through the Voice and Data Messaging platforms and
network described below.
Premiere WorldLink Corporate Card services are provided through a platform
located in Atlanta, Georgia that consists of Unix-based industrial grade PC
front-ends connected by a local area network to a tandem computer database
server.
Premiere Conferencing services are provided from centers in Colorado
Springs, Colorado and Overland Park, Kansas on commercially available
conferencing bridges. Complex, operator-assisted calls are supported on these
bridges. Internally developed Dialog conference bridges utilizing Dialogic
hardware and Premiere software are used to support unattended (no operator
assistance) conference calls. Customers access the conferencing platform
through DID, 800, Internet and virtual network access.
The e-mail to voice mail exchange functionality which is the basis of
Orchestrate(R) unified messaging and Orchestrate(R) personal assistant
services is provided through unified servers that are connected to Premiere's
frame relay network infrastructure. Acting as mail gateways, the unified
messaging servers facilitate the transfer of messages between voice and e-mail
message stores but do not store messages. The unified messaging platform can
be configured either to send e-mail to a customer's local voice mail account,
to send voice mail messages to the customer's e-mail account, or both,
depending on the customer's needs. Customers access their messages using the
familiar interface of the existing Premiere voice mail servers or their
favorite e-mail client.
Premiere Voice and Data Messaging services are currently provided through
platforms installed in more than 200 sites in the US, Canada, Australia, New
Zealand, UK, Hong Kong, Korea and Japan. Each system is connected to
Premiere's global frame relay network infrastructure, which is used for
transport of messages from one system to another.
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Most of Premiere's Enhanced Calling services and Interactive Voice Response
services are provisioned on platforms located in Atlanta, Georgia and Dallas,
Texas that include Dialogic-based telephony nodes, fax nodes and conference
nodes. These platforms are connected to the public switched telephone network
via large tandem switches that are used primarily for least-cost routing
functions. Premiere has also installed more advanced telephony platforms in
Atlanta and London, England. These platforms will be used to support new
calling card and voice mail/messaging applications as well as the telephony
features for many of Premiere's Orchestrate(R) services.
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Sales, Marketing And Distribution
Premiere markets its services through multiple distribution channels that
encompass: (i) direct sales through the Company's own dedicated sales force;
(ii) direct marketing efforts where Premiere is responsible for lead
generation and sales; (iii) 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 goodwill
with, their customer base by offering value-added services; (iv) private-label
relationships where Premiere may develop custom applications for its platforms
and market its services jointly with its strategic partners; and (v) licensing
and wholesale relationships 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 pays
commissions to, in the case of employees and agents, or shares revenues with
the parties who assist Premiere in marketing its services. The Premiere
marketing staff is primarily responsible for providing marketing support to
the five channels described above at varying levels of involvement, depending
on the channel. The marketing staff is also responsible for promoting the
Premiere brand and corporate image in the marketplace.
Direct Sales. The direct sales force is organized by the Company into the
two key strategic business units mentioned earlier, Corporate Enterprise
Solutions and Emerging Enterprise Solutions. The direct sales force for the
Corporate Enterprise Solutions group has a regional reporting structure and a
centrally managed national and international 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. The Corporate Enterprise
Solutions group sales staff targets primarily larger businesses with respect
to Document Distribution, Conferencing and Interactive Voice Response
services. 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 Corporate Enterprise
Solutions group markets its services through a full-time direct sales force
operating from 50 sales offices in 16 countries and a significant network of
third-party distributors.
The direct sales force for the Emerging Enterprise Solutions group targets
primarily single location, small to medium sized businesses, emphasizing
Orchestrate(R) Web-based communications, Voice and Data Messaging and Enhanced
Calling Services. This group also sells directly to hundreds of thousands of
multilevel marketing representatives in organizations such as Amway, Mary Kay
and Excel Communications.
Direct Marketing. Premiere markets its Enhanced Calling Services directly
under the Premiere WorldLink 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.
Co-Brand Relationships. Premiere has relationships with a number of other
companies, including the Royal Bank of Scotland PLC, Shared Technologies, and
Cellular, Inc. under which Premiere provides its services to customers of
those companies. These companies generally offer their customers access to
Premiere's services, and Premiere pays a commission to the other company with
respect to each customer who uses 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 through unique product offerings 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 name, with the co-brand customers also placing their logo on the
materials.
Private-Label Relationships. The Company also markets its services by
establishing strategic relationships with companies such as American Express,
British Airways PLC and Mastercard International. Through these relationships,
Premiere provides enhanced services to the customers of the other company to
help their customers better manage their communications. Private-label
relationships are intended to provide these
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other companies with: (i) a unique product or service which will be viewed as
providing a value-add to their customers, thereby building brand loyalty and
greater affinity; (ii) the ability to provide customized services to their
customers over Premiere's platforms; and (iii) an incremental source of
revenue. In connection with these private-label relationships, services are
generally issued in the name of the other company and bear a logo and design
of the other company's choosing. The fulfillment materials generally state
that communications services are provided by Premiere.
Licensing and Wholesale Relationships. A number of telecommunications
companies have chosen to outsource part or all of their enhanced
communications services to Premiere. Premiere licenses use of its platforms
and voice messaging network 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 open architecture of Premiere's platforms 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.
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Strategic Alliances
PTEKVentures.com is the Company's Internet strategic alliance initiative
designed to extend Premiere's Orchestrate(R) Web-based communications
technology to emerging Internet companies. PTEKVentures.com's strategy is to
identify Internet partners that create solutions that will drive utilization
of the Company's Web-based services and provide long-term sales and marketing
opportunities. In connection with these strategic alliances, PTEKVentures.com
typically makes early round investments in these companies to promote partner
loyalty, fund technological co-development opportunities, create distribution
channels and provide a potential return on investment.
PTEKVentures.com's Internet-related alliances are summarized below.
WebMD. Based in Atlanta, Georgia, WebMD is a leading full service Internet
healthcare Web site that offers a comprehensive suite of Internet-based
content and services for healthcare professionals, as well as trusted
healthcare information and online support communities for consumers. Through
its relationship with WebMD, WebMD's healthcare professional customers receive
the Virtual Receptionist, powered by Orchestrate(R)--a marriage of WebMD's
Virtual Receptionist product and Premiere's Orchestrate platform, which
integrates the full range of Internet-based communications services necessary
for healthcare professionals. These services include voice mail, e-mail, fax
mail, paging, worldwide long distance and active message notification.
WebMD utilizes a co-branded version of Orchestrate(R) that allows healthcare
professionals to manage their critical flow of communications. Premiere
recently announced WebMD's agreement to purchase a minimum of 50,000
Orchestrate(R) accounts. The agreement provides for Web-based communications
elements of WebMD's commercial offering to be branded as "Virtual Receptionist
Powered by Orchestrate(R)". The strategic alliance provides that Premiere will
serve as WebMD's exclusive provider of enhanced and unified telecommunications
services offered to WebMD's community of healthcare professionals. In
addition, under a licensing and co-marketing arrangement, WebMD will be
Premiere's exclusive reseller of Orchestrate(R) services through medical
portals for the next four years.
USA.NET. Based in Colorado Springs, Colorado, USA.NET is a leading
electronic messaging company dedicated to setting the global standard in
advanced messaging services. USA.NET's mail architecture leverages the
advantages of the Web to offer premium e-mail services to businesses and
customers.
Webforia. Based in Seattle, Washington, Webforia provides Web services,
tools and communities that guide people through the process of researching,
organizing and presenting high quality information from the Internet. Through
its partnership with Webforia, Premiere plans to provide Orchestrate(R) users
with access to Webforia's Organizer product for storing and organizing
Internet content. In addition, Webforia plans to provide its users access to
Orchestrate(R) for their personal communications needs.
VerticalOne. Based in Atlanta, Georgia, VerticalOne provides network-based
services that are designed to increase the frequency, duration and quality of
visits to its customers' Web sites. VerticalOne represents the next generation
of Internet portal--an "infomediary" that aggregates "personal content"
available on the Web (for example, a user's bank balance, securities accounts,
and voice mails, fax mails and e-mails) into a single, easy-to-use interface.
Through its partnership with VerticalOne, Premiere intends to offer
Orchestrate(R) users with the choice of having personal information and
content "pushed" to them in addition to receiving all their messages, giving
them access to all their personal communications in one central place.
Intellivoice Communications. Based in Atlanta, Georgia, Intellivoice
Communications develops and sells voice activation and other speech
technologies for both land-based and wireless telephone users. Through its
partnership with Intellivoice, Premiere intends to provide Orchestrate(R)
users with speech recognition technology tools. Intellivoice also provides
out-sourced engineering services to Premiere to develop next-generation
Orchestrate services.
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Acquisitions
Premiere has historically engaged in acquisitions in order to obtain new
technology, build its infrastructure, expand its suite of products and
services and increase its sales force and customer base. As part of this
strategy, Premiere acquired Xpedite Systems, Inc. ("Xpedite") and American
Teleconferencing Services, Ltd. ("American Teleconferencing Services") during
1998.
Xpedite Systems. In February 1998, Premiere acquired Xpedite, a worldwide
leader and innovator in the enhanced document distribution business, including
fax, e-mail, telex, Internet and mailgram services. The merger with Xpedite
resulted in the issuance of approximately 11.0 million shares of Premiere
common stock to the stockholders of Xpedite. In addition, Premiere converted
existing Xpedite options and warrants into options and warrants to acquire
approximately 543,000 shares of Premiere common stock. In February 1999,
Premiere
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announced that as a result of discussions with the Office of the Chief
Accountant of the Securities and Exchange Commission, Premiere is required to
discontinue accounting for its acquisition of Xpedite as a pooling-of-
interests and to account for such acquisition under the purchase method of
accounting. The Office of the Chief Accountant determined that Premiere's
post-merger share repurchase program, completed in September 1998, was not
implemented in accordance with pooling requirements, although no questions
were raised regarding the propriety of the original accounting of the merger
with Xpedite.
American Teleconferencing Services. In April 1998, Premiere acquired all of
the issued and outstanding shares of the common stock of American
Teleconferencing Services, a provider of conference call and group
communications services. In this acquisition, the shareholders of American
Teleconferencing Services received an aggregate of approximately 678,500
shares of Premiere common stock and cash consideration of approximately $21.0
million, subject to adjustment. Approximately 33,500 additional shares of
Premiere common stock and cash consideration of approximately $1.04 million
were placed in escrow to secure any indemnification claims that Premiere may
have. Indebtedness, transaction expenses and other obligations equal to
approximately $13.02 million were assumed pursuant to the acquisition. The
acquisition of American Teleconferencing Services has been accounted for using
the purchase method of accounting.
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 both
internal and outsourced software development programs pursuant to which the
Company introduces new products and enhances existing ones. Premiere's
research and development and engineering personnel also engage in joint
development efforts with Premiere's strategic partners and vendors.
Customer Care And Technical Support
Premiere believes that effective customer care is essential to attracting
and retaining its customers. Premiere's customer care groups are responsible
for educating and assisting customers in using Premiere's services, for
resolving billing and related issues and, in consultation with Premiere's
technical support associates, for resolving technical problems customers may
have in using Premiere's services. Premiere provides customer care through
call centers in Atlanta, Georgia, Colorado Springs, Colorado, Overland Park,
Kansas and Eatontown, New Jersey, as well as regionally deployed
representatives. In the United States, most services are provided 24 hours per
day, seven days per week. In addition, customers are supported in eight
centers in Europe, Asia, Canada and Australia during their business hours.
Premiere employs separate associates who are responsible for technical
support functions. These employees are responsible for performing more
technically demanding support activities, such as list and feature management,
consulting with Premiere's strategic partners and licensees regarding
technical issues and resolving technical issues brought to their attention by
the customer service department.
Competition
Premiere's strategy is to seek to gain a competitive advantage by being
among the first companies to offer network-based integrated communications
solutions, being an innovator in this market and offering unique services to
its customers. The Company intends to continue to exploit cross-selling and
migration-selling opportunities within its customer base. The Company also
intends to seek to capitalize on strategic relationships with key technology
development and distribution partners such as American Express, WebMD, USA.NET
and Webforia, in order to build its customer base and to maintain and increase
customer loyalty. The Company believes that the principal competitive factors
affecting the market for communications services are features and functions,
reliability, ease of use, brand name recognition and price. The Company
believes that it competes effectively in these areas.
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The markets for the Company's services are intensely competitive, quickly
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 other companies that are marketing
one or more of its services, the Company 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 technical expertise and could likely develop such a
service if those competitors chose to expend sufficient resources. The Company
believes that existing competitors are likely to expand their product and
service offerings and that new competitors are likely to enter the Company's
markets. Such competitors may attempt to integrate their products and
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 innovative personal communications solutions
that are network-based. Many competitors currently offer each of the
individual services and certain combinations of the services offered by the
Company.
Premiere's Document Distribution services compete with services provided by
AT&T, MCI Worldcom and Sprint, and many of the international postal, telephone
and telegraph ("PTT") companies located around the world, as well as numerous
smaller regional companies.
Premiere's Corporate Messaging and Voice and Data Messaging services 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 (which is owned by Lucent
Technologies), Northern Telecom, Siemens Business Communications Systems,
Centigram Communications, 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.
Premiere Interactive Voice Response services compete with IVR services
provided by AT&T, MCI WorldCom, Lucent, West Teleservices, Call Interactive
and Syntellect.
Premiere Conferencing competes with conference calling services provided by
AT&T, MCI Worldcom, Sprint, as well as numerous smaller regional competitors.
The Company's Orchestrate(R) service competes with products offered by
companies such as Octel/Lucent, Microsoft, Novell, Sun Microsystems, Motorola,
and numerous smaller entities, such as Jfax, General Magic and Webley Systems.
These competing products incorporate some, but not all, of the bundled
services offered through Orchestrate(R). The Company expects that other
parties will develop and implement information and telecommunications services
similar to Orchestrate(R), thereby increasing competition for the Company's
services.
Premiere's Worldlink Corporate Card and Enhanced Calling Services compete
directly with services provided by companies such as AT&T, MCI Worldcom and
Sprint, as well as smaller interexchange long distance providers.
Global Operations
For financial information about the Company's geographic areas for the years
ended December 31, 1998, 1997 and 1996, see Note 18 to the Consolidated
Financial Statements.
Legislative Matters
The Telecommunications Act of 1996 (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 local exchange carriers ("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 Federal
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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 grant or deny such RBOC application, 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
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Communications Commission ("FCC"). FCC to interest, and with the relevant
state to determine if the pro-competitive criteria have been satisfied. While
the FCC has yet to grant any RBOC inter-LATA application, the Company is
unable to determine how the FCC will rule on any such applications in the
future.
In response to a constitutional challenge filed by SBC Communications Inc.,
the United States District Court for the Northern District of Texas found the
1996 Act's restrictions on RBOC interLATA services to be an unconstitutional
bill of attainder, but stayed the effect of its decision pending further
appeal. If the interLATA restrictions are ultimately struck down, the Company
may experience increased competition from RBOCs in the long distance industry.
The 1996 Act provides a framework for the Company's operating subsidiary,
Premiere Communications, Inc. ("PCI"), 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, PCI 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. PCI's decision
to enter the local services market in one or more states depends on the
economic viability of the options and on the regulatory environment, which
will likely vary by state.
Government Regulation
Certain of the Company's subsidiaries provide both telecommunications and
information services. Consequently, PCI is, and certain other Premiere
subsidiaries may be, subject to extensive federal and state regulation in the
United States. Various international authorities may also seek to regulate the
services provided by PCI and possibly other Premiere subsidiaries. The Company
is currently reviewing whether and to what extent additional regulatory
compliance may be required in connection with the Company's subsidiaries.
Tariffs and Detariffing. PCI is classified by the FCC as a non-dominant
carrier for its 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 PCI, are subject to FCC review, they
are presumed to be lawful upon filing with the FCC. Currently, PCI has been
granted authority by, or has filed tariffs with, 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. The FCC's 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 PCI are
currently unable to predict what impact the outcome of the FCC's detariffing
proceeding will have on the Company or PCI.
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 the purchase of unbundled
network elements, resale of local services at wholesale discounts,
interconnection negotiation and arbitration procedures, and mutual
compensation arrangements for transporting and terminating local calls between
competing carriers.
The RBOCs, several states, various carriers, 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. On October 14, 1997,
the court further overturned FCC rules requiring that LECs provide unbundled
network elements on a combined basis. In January 1999, the Supreme Court
reversed the Eighth Circuit's decisions, finding that the FCC had jurisdiction
to implement the pricing provisions of the 1996 Act. The Eighth Circuit,
however, is expected on remand to rule on the merits of the FCC's pricing
methodology. The Supreme Court also upheld the
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FCC's rule requiring LECs to provide unbundled network elements on a combined
basis. Competitors using such combined network elements may conceivably be
able to provide retail local services entirely through the use of the LEC's
facilities at lower discounts than those available through local resale.
However, the Supreme Court reversed in part the FCC's decision which
specifically identified the particular unbundled network elements that LECs
must provide. The FCC is expected to release a new list of unbundled network
elements sometime in the summer or fall of 1999. The Company has at times
considered 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 Company in some markets
more difficult and expensive than in others and could increase the costs of
regulatory compliance associated with local entry. Moreover, the Company
cannot predict at this time the ultimate outcome of the FCC's remand
proceeding on pricing or the effect the FCC's new list of unbundled network
elements may have on any future CLEC 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 PCI, as well as certain other entities,
must pay for the federal programs. PCI's contributions to the federal subsidy
funds will be based on its share of total interstate (including certain
international) telecommunications services and on certain defined
telecommunications end user revenues. 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. Switched access charges are assessed by the LECs on
long distance carriers and others for use of the local loop and local access
facilities to originate and terminate long distance calls. 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 that PCI pays 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 PCI's access charge cost structure.
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. In decisions
released on July 1, 1997, and September 16, 1997, the U.S. Court of Appeals
for the D.C. Circuit vacated and remanded some of the FCC rules for the
implementation plan.
In response to these decisions, 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. PCI began paying this per-call amount in 1997. This
compensation amount was to remain in effect until October 6, 1999, when a
market-based rate would have become effective. On May 15, 1998, the U.S. Court
of Appeals for the D.C. Circuit again remanded certain issues to the FCC for
further consideration.
In response, on January 28, 1999, the FCC issued a third order in its
payphone compensation proceeding, revising the per-call compensation amount to
be paid to payphone service providers. Specifically, the FCC decreased the
compensation amount to $0.24 per call. In addition, the FCC extended the time
period that this compensation amount will be in effect until January 31, 2001.
Portions of the FCC's third order have been appealed to the U.S. Court of
Appeals for the D.C. Circuit.
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Although PCI expects to incur additional costs to receive "dial around"
calls that originate from payphones, the FCC has permitted long distance
carriers, such as PCI, to pass such costs through to its customers. However,
the Company is unable to predict what impact the payphone rules will have on
PCI's costs for such calls until the ultimate outcome of the FCC's and the
court's rulings with respect to these payphone compensation obligations.
Additional Requirements. The FCC imposes additional obligations on all
telecommunications carriers, such as PCI, including obligations to: (i)
interconnect with other carriers and not to install equipment that cannot be
connected with the facilities of other carriers; (ii) ensure that their
services are accessible and usable by persons with disabilities; (iii) provide
telecommunications relay service, either directly or through arrangements with
other carriers; (iv) comply with verification procedures in connection with
changing a customer's carrier so as to prevent "slamming", a practice by which
a customer's chosen telecommunications service provider is switched without
the customer's consent; (v) protect the confidentiality of proprietary
information obtained from other carriers, manufacturers and customers; (vi)
pay annual regulatory fees; and (vii) contribute to the Telecommunications
Relay Services Fund.
State Regulation. Most state public service and public utility commissions
("PUCs") require carriers that provide intrastate, common carrier services to
be authorized to provide such services. PCI either has applied for and
received, or is in the process of applying for and receiving, all necessary
authorizations to provide intrastate, long distance services.
PCI is generally not subject to price regulation or to rate of return
regulation for its intrastate services. In most states, however, PCI is
required to file tariffs setting forth the terms, conditions and prices of its
intrastate services. In some state jurisdictions, the tariff can list a range
of rates for intrastate services. PCI 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. PCI's 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. 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 completed a study, directed by
Congress, regarding the propriety of applying Regulation E to stored value
cards. The Department of Treasury 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 other
agreements. The Company typically attempts to protect its confidential
information and trade secrets through these contractual provisions for the
terms of the
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applicable agreement and, to the extent permitted by applicable law, for some
negotiated period of time following termination of the agreement. Premiere
currently has two patents, four patent applications pending, numerous
worldwide registrations of trademarks and service marks, and numerous
worldwide trademark and service mark registrations pending. Despite the
Company's efforts to protect its proprietary rights and technology, 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 of equal or greater importance
to establishing and maintaining a competitive advantage in the industry.
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, one of Premiere's subsidiaries received a letter from a
third party claiming that certain aspects of that subsidiary's voice messaging
products and services may be infringing upon one or more of the third party's
patents. The Company has reviewed the patent claims of such third party and
does not believe that any of the subsidiary's products or services infringe on
the claims of the third party. No patent infringement claims against the
Company or any of its subsidiaries have been filed by the third party at this
time. Should the third party file patent infringement claims against the
Company or any of its subsidiaries, 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 and 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 123,000 shares of Common Stock from
the purchase price paid to acquire one of the Company's voice messaging
subsidiaries. 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 (the "License Agreement") with AudioFAX IP LLC ("AudioFax") settling
a patent infringement suit filed by AudioFAX in June 1996. Effective April 1,
1998, the License Agreement was amended to include Xpedite within the coverage
of the license. In September 1997, a subsidiary of the Company also entered
into a long-term non-exclusive license agreement with AudioFAX.
Prior to acquisition by the Company, Xpedite received a letter from Cable &
Wireless, Inc. informing Xpedite that Cable & Wireless had received a demand
letter from AudioFAX claiming that certain Cable & Wireless products and
services infringed AudioFAX's patent rights and seeking indemnification from
Xpedite under a supply agreement that Xpedite and Cable & Wireless had
previously entered into. Subsequent to the acquisition of Xpedite by the
Company, Cable & Wireless notified the Company directly of the AudioFAX claim
15
<PAGE>
and sought indemnification from the Company. The Company does not have
sufficient information to evaluate the merits of this claim and is unable at
this time to predict the outcome of this matter. An adverse outcome could have
a material adverse effect on the Company's business, financial condition and
results of operations.
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 four patents held by that company
and inviting Premiere to obtain a license. Premiere has reviewed the subject
patents and, based on that review, believes that its products and services
currently being marketed do not infringe these patents. In March 1999, Aspect
Telecommunications, Inc. ("Aspect"), the purported current owner of the
patents, filed suit against Premiere and
<PAGE>
PCI alleging that they have violated claims in the patents and requesting
damages and injunctive relief. On March 29, 1999 the Company filed an answer
denying the allegations and a counterclaim seeking to invalidate the patents.
The Company believes that it has meritorious defenses to the plaintiff's
allegations. In addition, the Company believes that certain licenses it has
from third-party vendors may insulate the Company from some or all of any
damages in the event of an adverse outcome in this litigation. However, due to
the uncertainty of litigation, there can be no assurance that the Company will
prevail, and an 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. In June 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.
The Company is in discussions with the French company that may result in a
mutually acceptable resolution. 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.
In January 1999 the Company received a letter from Ronald A. Katz Technology
Licensing, L.P. informing it of the existence of the Katz patent portfolio and
its potential applicability to the services of the Company. This matter is
presently being reviewed by the Company, but the Company currently lacks
sufficient information to assess the outcome of this matter. An adverse
outcome could have a material adverse effect on the Company's business,
financial condition and results of operations.
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 claim alleging patent, copyright or trademark
infringement, 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, trade
name 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.
Employees
As of December 31, 1998, the Company employed approximately 2,301 persons,
substantially all of whom were employed on a full-time basis. Of these
employees, 836 were engaged in sales and marketing; 444 in engineering and
research and development; 679 in customer service and technical support; and
342 were in general and administrative activities. None of the Company's
employees are members of a labor union or are covered by a collective
bargaining agreement.
ITEM 2. PROPERTIES
Premiere's corporate headquarters occupy approximately 103,400 square feet
of office space in Atlanta, Georgia under a lease expiring August 31, 2007,
and approximately 10,800 square feet of office space in the same building
under a lease expiring August 31, 2006. The headquarters of the Company's
Voice and Data Messaging business unit occupies approximately 28,300 square
feet of office space in Cleveland, Ohio under a lease expiring October 31,
1999. The headquarters of the Company's Document Distribution business unit
16
<PAGE>
occupies approximately 54,900 square feet of office space in Eatontown, New
Jersey under three separate leases expiring on September 30, 1999, December
31, 2000 and September 30, 2001, respectively. The Company's Conferencing
business unit occupies approximately 54,500 square feet of office space in
Colorado Springs, Colorado under a lease expiring August 31, 2006, and
approximately 24,400 square feet of office space in Overland Park, Kansas
under a lease expiring February 29, 2000.
The Company also has data and switching centers and sales offices within and
outside the United States. The Company believes that its current facilities
and 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.
ITEM 3. LEGAL PROCEEDINGS
The Company has several litigation matters pending, as described below,
which it 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.
The Company and certain of its officers and directors have been named as
defendants in multiple shareholder class action lawsuits filed in the United
States District Court for the Northern District of Georgia. Plaintiffs seek to
represent a class of individuals who purchased or otherwise acquired the
Company's common stock from as early as February 11, 1997 through June 10,
1998. Class members allegedly include those who purchased the Company's common
stock as well as those who acquired stock through the Company's acquisitions
of Voice-Tel Enterprises, Inc. ("Voice-Tel"), Voice-Tel's franchisees and
Xpedite. Plaintiffs allege the defendants made positive public statements
concerning the Company's growth and acquisitions. In particular, plaintiffs
allege the defendants spoke positively about the Company's acquisitions of
Voice-Tel, Xpedite, American Teleconferencing Services, TeleT
Telecommunications, LLC ("TeleT") and VoiceCom Holdings, Inc. ("VoiceCom"), as
well as its venture with UniDial Communications, its investment in USA.NET and
the commercial release of Orchestrate(R). Plaintiffs allege these public
statements were fraudulent because the defendants knowingly failed to disclose
that the Company allegedly was not successfully consolidating and integrating
these acquisitions. Alleged evidence of scienter include sales by certain
individual defendants during the class period and the desire to keep the
common stock price high so that future acquisitions could be made using the
Company's common stock. Plaintiffs allege the truth was purportedly revealed
on June 10, 1998, when the Company announced it would not meet analysts'
estimates of second quarter 1998 earnings because, in part, of the financial
difficulties experienced by a licensing customer and by a strategic partner
with respect to the Company's Enhanced Calling Services, revenue shortfalls
from its Voice and Data Messaging services, as well as other unanticipated
costs and one-time charges totaling approximately $17.1 million on a pre-tax
basis. Plaintiffs allege the Company admitted it had experienced difficulty in
achieving its anticipated revenue and earnings from voice messaging services
due to difficulties in consolidating and integrating its sales function.
Plaintiffs allege violation of Sections 10(b), 14(a) and 20(a) of the
Securities Exchange Act of 1934 and Sections 11, 12 and 15 of the Securities
Act of 1933.
A lawsuit was filed on November 4, 1998 against the Company, as well as
individual defendants Boland T. Jones, Patrick G. Jones, George W. Baker, Sr.,
Eduard J. Mayer and Raymond H. Pirtle, Jr. in the Southern District of New
York. Plaintiffs were shareholders of Xpedite who acquired common stock of the
Company as a result of the merger between the Company and Xpedite in February
1998. Plaintiffs' allegations are based on the representations and warranties
made by the Company in the prospectus and the registration statement related
to the merger, the merger agreement and other documents incorporated by
reference, regarding the Company's acquisitions of Voice-Tel and VoiceCom, the
Company's roll-out of Orchestrate(R), the Company's relationship with
customers Amway Corporation and DigiTEC, 2000, Inc., and the Company's 800-
based calling card service. Based on these factual allegations, plaintiffs
allege causes of action against the Company for breach of contract against all
defendants for negligent misrepresentation, violations of Sections 11 and
12(a)(2) of the Securities Act of 1933 ("Securities Act"), and against the
individual Defendants for violation of
17
<PAGE>
Section 15 of the Securities Act. Plaintiffs seek undisclosed damages together
with pre- and post-judgment interest, recission or recissory damages as to
violation of Section 12(a)(2) of the Securities Act, punitive damages, costs
and attorneys' fees. A motion to dismiss and a motion to transfer venue to
Georgia are presently pending.
On August 6, 1996, Communications Network Corporation ("CNC"), a licensing
customer of the Company, was placed into bankruptcy (the "Bankruptcy Case")
under Chapter 11 of the United States 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 Premiere
Communications, Inc. ("PCI") for alleged negligent misrepresentations of fact
in connection with an alleged fraudulent scheme designed to damage CNC (the
"Intervention Suit"). The District Court denied CNC's requests to intervene
and to file a third party action and transferred the remainder of the
Intervention Suit to the bankruptcy case. On June 23, 1998, the Bankruptcy
Court approved a settlement whereby PCI obtained a release from the trustee
and the trustee dismissed the Intervention Suit in consideration of PCI making
a cash payment of $1.2 million to the trustee. The Plan was subsequently
approved by the Bankruptcy Court on December 8, 1998 and PCI made an
additional cash payment of $300,000 to the trustee in January 1999 in
consideration of PCI obtaining certain allowed subordinated claims and the
Court granting an injunction in PCI's favor against possible nuisance suits
relating to the CNC business.
On November 26, 1997, Wael Al-Khatib ("Al-Khatib"), the sole shareholder and
former president of CNC, and his company, Platinum NetworkCorp. ("Platinum"),
filed a complaint against PCI, WorldCom Network Services, Inc. f/k/a WilTel,
Inc, ("WorldCom"), 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 in the United States District
Court for the Eastern District of New York. Plaintiffs contend that 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 and made misrepresentations of fact in connection
with the scheme. The plaintiffs are seeking at least $250 million in
compensatory damages and $500 million in punitive damages from PCI and the
other defendants. This matter has been settled, pending payment of $250,000 by
Khatib to WorldCom. The settlement does not require PCI or Premiere to make
any payments.
On February 23, 1998, Rudolf R. Nobis and Constance Nobis filed a complaint
in the Superior Court of Union County, New Jersey against 15 named defendants
including Xpedite and certain of its alleged current and former officers,
directors, agents and representatives. The plaintiffs allege that the 15 named
defendants and certain unidentified "John Doe defendants" engaged in wrongful
activities in connection with the management of the plaintiffs' investments
with Equitable Life Assurance Society of the United States and/or Equico
18
<PAGE>
Securities, Inc. (collectively "Equitable"). More specifically, the complaint
asserts wrongdoing in connection with the plaintiffs' investment in securities
of Xpedite and in unrelated investments involving insurance-related products.
The defendants include Equitable and certain of its current or former
representatives. The allegations in the complaint against Xpedite are limited
to plaintiffs' investment in Xpedite. The plaintiffs have alleged that two of
the named defendants, allegedly acting as officers, directors, agents or
representatives of Xpedite, induced the plaintiffs to make certain investments
in Xpedite but that the plaintiffs failed to receive the benefits that they
were promised. Plaintiffs allege that Xpedite knew or should have known of
alleged wrongdoing on the part of other defendants. Plaintiffs seek an
accounting of the corporate stock in Xpedite, compensatory damages of
approximately $4.85 million, plus $200,000 in "lost investments," interest
and/or dividends that have accrued and have not been paid, punitive damages in
an unspecified amount, and for certain equitable relief, including a request
for Xpedite to issue 139,430 shares of common stock in the plaintiffs' names,
attorneys' fees and costs and such other and further relief as the Court deems
just and equitable. On November 16, 1998 the court entered an order
transferring all disputes between plaintiffs and certain defendants to
arbitration and dismissing without prejudice plaintiff's complaint against
those defendants. On or about December 23, 1998, Xpedite filed a motion to
stay the action pending the resolution of the arbitration or in the
alternative to compel plaintiffs to provide discovery. On January 22, 1999,
the court granted Xpedite's motion to stay further proceedings pending the
arbitration. On March 11, 1999, plaintiffs filed a motion for reconsideration
of the court's decision. The parties are awaiting a decision on this motion.
On or about May 27, 1998, Telephone Company of Central Florida ("TCCF"), a
user of the Company's network management system, filed for protection under
Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for
the Middle District of Florida. WorldCom and PCI are two of the largest
creditors in this bankruptcy case. In August 1998, WorldCom filed a separate
lawsuit in the Federal District Court for the Middle District of Florida
against certain insiders of TCCF alleging payment of improper distributions to
the insiders in excess of $1.0 million and asserting a constructive trust
claim against the amounts received by the insiders. On August 10, 1998, TCCF
filed a motion with the Bankruptcy Court requesting authority to hire counsel
for the purpose of pursuing certain alleged claims against WorldCom and PCI,
alleging service problems with WorldCom and PCI. PCI and TCCF reached an
agreement, approved by the Bankruptcy Court in November 1998, which provides
for mutual releases to be executed between the parties and certain affiliates
and insiders. The mutual releases are being circulated for execution, in
accordance with the terms of the settlement. The settlement does not require
PCI or Premiere to make any payments.
19
<PAGE>
On December 22, 1998 Shelly D. Swift filed a complain against First USA
Bank, First Credit Card Services USA, and PCI in the United States District
Court for the Northern District of Illinois. Swift alleges that the defendants
sent her an unsolicited "credit card" in violation of the Truth in Lending Act
and state law. Swift seeks an injunction and monetary damages on behalf of a
putative class of persons who received the alleged credit card. On February
19, 1999, the defendants moved to dismiss the complaint for failure to state a
claim upon which relief can be granted.
In March 1999, Aspect Telecommunications, Inc. ("Aspect"), the purported
current owner of certain patents, filed suit against Premiere and PCI alleging
that they had violated claims in these patents and requesting damages and
injunctive relief. The suit asserts that Premiere is offering certain "calling
card and related enhanced services," "single number service" and "call
connecting services" covered by four patents owned by Aspect. Premiere has
reviewed the subject patents and, based on that review, believes that its
products and services currently being marketed do not infringe them. On March
29, 1999 the Company filed an answer denying the allegations and a
counterclaim seeking to invalidate the patents. Additionally, the Company
believes that certain licenses it has from third-party vendors may insulate
the Company from some or all of any damages in the event of an adverse outcome
in this litigation.
The Company is also involved in various other legal proceedings which the
Company does not believe will have a material adverse effect upon the
Company's business, financial condition or results of operations, although no
assurance can be given as to the ultimate outcome of any such proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Company's security holders during
the fourth quarter of the fiscal year covered by this report.
20
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock, $.01 par value per share (the "Common Stock"),
has traded on the Nasdaq National Market under the symbol "PTEK" since its
initial public offering on March 5, 1996. The following table sets forth the
high and low sales prices of the Common Stock as reported on the Nasdaq
National Market for the periods indicated. Such prices are based on inter-
dealer bid and asked prices without markup, markdown, commissions or
adjustments and may not represent actual transactions.
<TABLE>
<CAPTION>
1998 High Low
---- ------- -------
<S> <C> <C>
First Quarter............................................... $34.625 $20.875
Second Quarter.............................................. 35.000 7.688
Third Quarter............................................... 11.313 3.625
Fourth Quarter.............................................. 8.250 2.500
<CAPTION>
1997 High Low
---- ------- -------
<S> <C> <C>
First Quarter............................................... $27.750 $16.500
Second Quarter.............................................. 30.500 19.250
Third Quarter............................................... 34.500 22.875
Fourth Quarter.............................................. 38.500 22.875
</TABLE>
The closing price of the Common Stock as reported on the Nasdaq National
Market on March 29, 1999 was $10.9375. As of March 29, 1999 there were
approximately 715 record holders of the Company's 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. In
addition, the Company's credit agreement contains a negative covenant which
restricts the payment of dividends. 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.
During the year ended December 31, 1998, certain current and former
employees, directors and investors exercised options to purchase an aggregate
of 242,452 shares of Common Stock at prices ranging from $0.417 to $1.61 per
share in transactions exempt from registration pursuant to Section 4(2) and
Rule 701 of the Securities Act.
ITEM 6. SELECTED FINANCIAL DATA
The following selected consolidated statement of operations data for the
years ended December 31, 1998, 1997 and 1996, and the consolidated balance
sheet data as of December 31, 1998 and 1997, have been derived
21
<PAGE>
from the audited consolidated financial statements of the Company included in
this Annual Report on Form 10-K, which give retroactive effect to the mergers
with Voice-Tel and VoiceCom, both of which were accounted for as poolings-of-
interests, and are qualified by reference to such consolidated financial
statements including the related notes thereto. The unaudited consolidated
statement of operation data for the year ended December 31, 1994 and the
unaudited consolidated balance sheet data at December 31, 1994 are derived
from unaudited consolidated financial statements of the Company which give
retroactive effect to the mergers with Voice-Tel and VoiceCom, both of which
were accounted for as poolings-of-interests, and include all adjustments,
consisting only of normal recurring adjustments, 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.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
--------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- -----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues................... $444,818 $229,352 $197,474 $147,543 $119,136
Gross margin............... 309,782 165,378 141,873 103,675 85,229
Operating income
(loss)(1)................. (74,582) (28,101) 6,806 7,003 (13,232)
Net income (loss)(1)....... (74,206) (25,375) 3,458 4,171 (15,519)
Net income (loss)
attributable to common and
common equivalent shares
for shareholders for:
--basic net income (loss)
per share................ $(74,206) $(25,375) $ 3,429 $ 3,863 $(15,839)
--diluted net income
(loss) per share......... (74,206) (25,375) 3,429 3,863 (15,839)
Net income (loss) per
common and common
equivalent shares for:
--basic(1)(2)............. $ (1.67) $ (0.78) $ 0.12 $ 0.19 $ (1.18)
--diluted(1)(2)........... $ (1.67) $ (0.78) $ 0.11 $ 0.17 $ (1.18)
Shares used in computing
net income (loss) per
common and common
equivalent shares for
--basic................... 44,325 32,443 27,670 19,868 13,468
--diluted................. 44,325 32,443 31,288 24,312 13,468
Balance Sheet Data (at
period end):
Cash, cash equivalents and
investments............... $ 39,995 $176,339 $ 83,836 $ 11,759 $ 7,849
Working capital............ (91,180) 136,182 45,377 (16,093) (12,521)
Total assets............... 802,751 381,108 201,541 78,131 60,051
Total debt................. 299,673 181,698 47,975 52,650 49,203
Total shareholders' equity
(deficit)................. 400,894 100,814 104,533 (11,639) (14,921)
</TABLE>
- - --------
(1) Excluding charges for restructuring, merger costs and other special
charges of approximately $15.6 million in 1998 and $73.6 million in 1997,
charges for acquired research and development of approximately $15.5
million in 1998 and $11.0 million in 1996, and accrued settlement costs of
approximately $1.5 million in 1998 and 1997 and $1.3 million in 1996,
operating income (loss) would have been approximately $(42.0) million in
1998, $47.0 million in 1997 and $19.1 million in 1996, EBITDA would have
been $68.1 million in 1998, $64.1 million in 1997, and $33.3 million in
1996.
(2) Basic net income (loss) per share is computed using the weighted average
number of shares of common stock outstanding during the period. Diluted
net income (loss) per share is computed using the weighted average number
of shares of common stock and dilutive common stock equivalents
outstanding during the period from convertible preferred stock,
convertible subordinated notes (using the if-converted method) and from
stock options (using the treasury stock method).
22
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
Premiere is a leading provider of enhanced communications services designed
to simplify everyday communications of both businesses and individuals.
Premiere provides its innovative solutions for simplifying communications
through two strategic business units: Corporate Enterprise Solutions, which
targets Fortune 1,000 and other large companies; and Emerging Enterprise
Solutions, which targets smaller fast-track companies and individuals.
Corporate Enterprise Solutions' services include Premiere Document
Distribution, which provides enhanced electronic document distribution
services; Premiere Corporate Messaging, which provides 800-based and local
access voice messaging services; Premiere WorldLink Corporate Card, which
provides 800-based enhanced calling card services; Premiere Interactive Voice
Response, which provides various IVR applications; and Premiere Conferencing,
which provides a full range of conferencing services. Emerging Enterprise
Solutions' Services include Premiere Internet-Based Communications Services,
featuring Orchestrate(R) by Premiere, which integrates the Company's service
offerings by allowing customers to access such services through a computer or
telephone; Premiere Voice and Data Messaging, which provides customers access
to one of the largest "voice internets" in the world; and Premiere Enhanced
Calling Services, which provides long distance and enhanced 800-based
services.
Premiere's revenues are generally based on usage. In addition, local access
Voice and Data Messaging services, certain of Premiere's Enhanced Calling
Services and the Orchestrate(R) suite of products contain fixed monthly fees
in addition to usage fees.
Cost of services consists primarily of the cost of long distance
transmission and other telecommunications related charges incurred in
providing Premiere's services.
Selling, general and administrative expenses include salaries and wages
associated with customer service, operations, research and development, direct
sales, marketing and administrative functions, sales commissions, direct
marketing and advertising costs, travel and entertainment expenses, bad debt
expense, rent and facility expense, professional and consulting fees, property
taxes and other operating and administrative expenses.
Depreciation and amortization includes depreciation of computer and
telecommunications 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, 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. Intangible assets being amortized include capitalized software
development costs, goodwill, customer lists, assembled work force, and the MCI
WorldCom strategic alliance agreement.
"EBITDA" as set forth below is defined as the sum of net income or loss and,
to the extent deducted in determining net income or loss for such period, net
interest expense, income taxes, depreciation and amortization.
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 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 following
discussion and analysis provides information which management believes is
relevant to an assessment and understanding of the Company's consolidated
results of operations and financial condition. This discussion should be read
in conjunction with the consolidated financial statements and notes thereto.
23
<PAGE>
Results Of Operations
The following table presents the percentage relationship of certain
statements of operations items to total revenues for Premiere's consolidated
operating results for the periods indicated:
<TABLE>
<CAPTION>
Year Ended
December 31, 1998
---------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
REVENUES................................................. 100.0% 100.0% 100.0%
COST OF SERVICES......................................... 30.4 27.9 28.2
----- ----- -----
GROSS MARGIN............................................. 69.6 72.1 71.8
OPERATING EXPENSES
Selling, general and administrative..................... 54.3 44.2 55.0
Depreciation and amortization........................... 24.7 7.4 7.2
Restructuring, merger costs and other special charges... 3.5 32.1 --
Acquired research and development....................... 3.5 -- 5.6
Accrued settlement costs................................ .3 0.7 0.6
----- ----- -----
Total operating expenses............................... 86.3 84.4 68.4
OPERATING INCOME (LOSS).................................. (16.7) (12.3) 3.4
OTHER INCOME (EXPENSE)
Interest, net........................................... (3.3) (0.4) (0.9)
Other, net.............................................. 0.1 0.1 (0.1)
----- ----- -----
Total other income (expense)........................... (3.2) (0.3) (1.0)
INCOME (LOSS) BEFORE INCOME TAXES........................ (19.9) (12.6) 2.4
INCOME TAX PROVISION (BENEFIT)........................... (3.3) (1.5) 0.7
----- ----- -----
NET INCOME (LOSS)........................................ (16.6)% (11.1)% 1.7%
===== ===== =====
</TABLE>
The following table presents certain financial information about the
Company's operating segments for the periods presented (amounts in millions):
<TABLE>
<CAPTION>
Year Ended December
31, 1998
----------------------
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
REVENUES:
Corporate Enterprise
Solutions.............. $275.7 $ 55.0 $ 60.0
Emerging Enterprise
Solutions.............. 169.4 174.4 137.5
Corporate and
eliminations........... (.3) -- --
------ ------ ------
Totals.................. $444.8 $229.4 $197.5
====== ====== ======
OPERATING PROFIT (LOSS):
Corporate Enterprise
Solutions.............. $ (6.0) $ 10.6 $ 2.0
Emerging Enterprise
Solutions.............. (9.5) 36.4 17.1
Corporate and
eliminations........... (26.5) -- --
Restructuring, merger
costs and other special
charges................ (15.6) (73.6) --
Acquired research and
development............ (15.5) -- (11.0)
Accrued settlement
costs.................. (1.5) (1.5) (1.3)
------ ------ ------
Totals.................. $(74.6) $(28.1) $ 6.8
====== ====== ======
EBITDA:
Corporate Enterprise
Solutions ............. $ 75.8 $ 13.5 $ 5.0
Emerging Enterprise
Solutions.............. 18.7 50.6 28.3
Corporate and
eliminations........... (26.4) -- --
Restructuring, merger
costs and other special
charges................ (15.6) (73.6) --
Acquired research and
development............ (15.5) -- (11.0)
Accrued settlement
costs.................. (1.5) (1.5) (1.3)
------ ------ ------
Totals.................. $ 35.5 $(11.0) $ 21.0
====== ====== ======
</TABLE>
24
<PAGE>
Overview
The Company has achieved substantial growth since its initial public
offering during the first quarter of 1996. Revenues grew from $147.5 million
for the year ended December 31, 1995 to $444.8 million in 1998, a compounded
annual growth rate of 44.5% for such period. Similarly, EBITDA, before
restructuring, merger costs and other special charges, acquired research and
development and accrued settlement costs, grew from $20.0 million to $68.1
million over the same period, a 50.4% compounded annual growth.
Premiere has achieved growth in revenues and EBITDA, before restructuring,
merger costs and other special charges, acquired research and development and
accrued settlement costs, by pursuing its mission to become the world's
leading provider of innovative solutions to simplify everyday communications
of both businesses and individuals. During 1996, 1997 and 1998 the Company
pursued an aggressive acquisition strategy to expand its service offerings and
means of distribution. Significant acquisitions in 1998 included Xpedite, a
leading provider of electronic document distribution services, and ATS, a
full-service provider of conferencing services. In 1997, the Company acquired
Voice-Tel and VoiceCom. The acquisition of Voice-Tel provided Premiere with
the ability to offer voice messaging services on a local access basis over an
international private network utilizing frame relay and Internet protocols. In
connection with the acquisition of VoiceCom, Premiere assumed a significant
base of large corporate customers. During 1996, the Company acquired TeleT, an
enterprise engaged in computer telephony software development. TeleT provided
Premiere with the foundation of its Orchestrate suite of product offerings.
Analysis
Premiere's financial statements reflect the results of operations of Xpedite
and ATS from the date of their respective acquisition. These acquisitions have
been accounted under the purchase method of accounting. Premiere's financial
statements have been restated for all periods presented to reflect the Voice-
Tel and VoiceCom acquisitions which have been accounted for as poolings-of-
interests. The following discussion and analysis is prepared on that basis.
Consolidated revenues increased 94.0% to $444.8 million in 1998 and 16.1% to
$229.4 million in 1997. Revenues in the Company's Corporate Enterprises
Solutions ("CES") group increased from $60.0 million in 1996 to $275.7 million
in 1998, a compounded annual growth rate of 114.4%. Revenue growth in this
segment resulted principally from the acquisition of Xpedite in February 1998
and ATS in April 1998 and increases in the call center IVR services provided
to Bank of America (formerly NationsBank). Revenue grew from $137.5 million to
$169.4 million in the Emerging Enterprise Solutions ("EES") group over the
same period, a compounded annual growth rate of 11.0%. Revenue growth in this
segment resulted mainly from strategic partner programs, including Premiere's
strategic alliance with MCI WorldCom and private label calling card programs
with American Express, DeltaTel and MBNA, which experienced significant
increases in new subscribers. The Company also experienced revenue increases
from expanded Enhanced Calling Services, including prepaid calling cards.
Revenue growth in these EES group's programs were offset in part by revenues
losses resulting from the bankruptcy of two wholesale Enhanced Calling
Services customers in the second quarter of 1998, management's decision to
discontinue certain unprofitable prepaid calling card programs and the
expiration of revenue commitments provided under the Company's strategic
alliance agreement with MCI WorldCom. Revenues from the lost customers and
discontinued programs set forth above contributed revenues of $33.1 million,
$39.6 million and $5.5 million in 1998, 1997 and 1996, respectively.
Consolidated gross profit margins were 69.6%, 72.1% and 71.8% in 1998, 1997
and 1996, respectively. Gross profit margin declined in 1998 due to revenue
mix resulting from the acquisition of Xpedite in February 1998. Gross profit
margins for Premiere's Document Distribution services are generally lower than
that of Premiere's other services. Gross profit margin improvement in 1997 was
caused by revenue mix, as revenues from higher margin wholesale arrangements
for certain Enhanced Calling Services and local access Voice and Data
Messaging services constituted a greater proportion of revenues in 1997 as
compared with 1996. Generally, Premiere has experienced favorable trends in
per unit telecommunications costs in the three year period ended December 31,
1998 by aggressively leveraging increasing minute volumes to negotiate
quantity discounts with
25
<PAGE>
telecommunications carriers. Such costs have also been favorably affected by
general industry trends in which long distance transport and the cost of local
access services have decreased as a result of increased capacity and
competition among long distance and local exchange carriers.
Selling, general and administrative costs as a percent of revenues were
54.3%, 44.2% and 55.0% in 1998, 1997 and 1996, respectively. Contributing to
the increase in selling, general and administrative costs as a percent of
revenues in 1998 as compared with 1997, was approximately $16.1 million of
costs recorded in the second quarter of 1998. Such costs consist of
approximately $8.4 million of bad debt expense recorded in response to the
bankruptcies of two customers, $1.8 million of asset write-offs and other
costs. The acquisition of ATS in 1998 also contributed to an increase in
selling, general and administrative costs in proportion to revenues because
the service delivery processes of ATS include relatively higher labor costs as
compared with Premiere's other services. In addition, Premiere aggressively
expanded its management infrastructure in 1998 to more effectively support
continued growth in its business. These actions included hiring additional
senior level managers and expanding its corporate headquarters facilities.
Selling, general and administrative costs decreased in 1997 as compared with
1996 as Premiere aggressively restructured the operations of its acquired
businesses Voice-Tel and VoiceCom subsequent to their acquisitions in 1997.
These activities included substantially reducing the workforce, exiting
duplicative facilities, eliminating redundant business activities and general
spending reductions.
Depreciation and amortization was $110.0 million or 24.7% of revenues in
1998, $17.1 million or 7.4% of revenues in 1997 and $14.2 million or 7.2% of
revenues in 1996. Increases in depreciation and amortization in 1998 result
mainly from depreciation and amortization of assets acquired in the purchases
of Xpedite and ATS in 1998 and the acceleration of depreciation and
amortization of certain other operating and intangible assets. Identifiable
intangible assets and goodwill acquired in the Xpedite and ATS acquisitions of
approximately $517.3 million is being amortized over 3 to 7 years. In
addition, amortization and depreciation of certain operating and intangible
assets with a carrying value of approximately $80.1 million at December 31,
1998 was accelerated effective in the fourth quarter of 1998 following a
reduction in the estimated useful lives of such assets. This action was based
on a reassessment of the utility of such assets by Premiere's management. The
affected assets consist of goodwill and other intangible assets and computer
and telecommunications equipment associated with certain legacy technology
systems the use of which will be discontinued in the forseeable future. Such
assets will be amortized over lives ranging from 1 to 7 years effective in the
fourth quarter of 1998 as compared with lives ranging from 5 to 40 years prior
to the change. In 1998, management also evaluated the useful economic life of
a strategic alliance intangible asset based on current facts and circumstances
including the current level of revenues being generated by the strategic
alliance. In connection with this evaluation, the carrying value of this asset
was reduced by a charge of approximately $13.9 million in the fourth quarter
of 1998. The amortization period of the remaining carrying value of this asset
was reduced to 3 years effective in the fourth quarter of 1998 which compares
with an estimated remaining useful life of 23 years prior to the change.
Incremental depreciation and amortization expense recorded in 1998 as compared
with 1997 resulting from assets acquired in the Xpedite and ATS acquisitions
and acceleration of depreciation and amortization of the operating and
intangible assets set forth above approximates $92.0 million. Increased
depreciation and amortization expense in 1997 as compared with 1996 results
mainly from depreciation associated with increased purchases of computer
telephony equipment to support new business growth, amortization of goodwill
and other intangibles acquired in connection with the Voice-Tel acquisitions
in 1997 and amortization of the strategic alliance asset recorded in 1996. See
Not 6 -- Strategic Alliances and Investments.
Net interest expense increased to $14.7 million in 1998, from $.9 million in
1997 and $1.7 million in 1996. Net interest expense increased in 1998 mainly
due to interest associated with $132.3 million of debt assumed in the
acquisition of Xpedite in February 1998 and $5.9 million of debt assumed in
the acquisition of ATS in April 1998. Substantially all of the debt assumed in
the acquisition of Xpedite was associated with a short-term revolving loan
facility maintained by Xpedite. In December 1998, Premiere amended and
restated this facility for a one year period. The amount outstanding under
this loan facility at December 31, 1998 was $118.1 million. Borrowings assumed
in the acquisition of ATS consisted principally of term notes secured by
operating
26
<PAGE>
equipment purchased with the proceeds of the loans. These terms loans were
repaid in full by Premiere in 1998. Also contributing to the increase in net
interest expense in 1998 was the reduction in cash and marketable securities
balances to fund operations and other strategic initiatives thereby lowering
interest income. Net interest expense in 1996 resulted mainly from
indebtedness assumed in the Voice-Tel acquisitions in 1997 and the VoiceCom
acquisition in September 1997. The majority of these obligations were repaid
subsequent to the acquisitions.
26--!
<PAGE>
Restructuring, merger costs and other special charges incurred in 1998 were
$15.6 million compared to $73.6 million in 1997. See Note 3--Restructuring,
Merger Costs and other Special Charges and Note 4 Acquisitions in the Notes to
Consolidated Financial Statements and "Restructuring, Merger Costs and Other
Special Charges" which follows for a description of these costs.
Accrued settlement costs were $15.5 million in 1998 and 1997 and $1.3
million in 1996. See Note 15--Commitments and Contingencies of the Notes to
the Consolidated Financial Statements and "Legal Proceedings" under Item 1 of
Part II of this document for further information about the matters giving rise
to these accruals.
Acquired research and development costs of $15.5 million expensed in 1998
are associated with the acquisition of Xpedite. Approximately $11.0 million of
acquired research and development costs were expensed in connection with the
TeleT acquisition in 1996. These costs represent the value assigned to
research and development projects in the developmental stage which had not
reached technological feasibility at the date of the acquisition or had no
alternative future use. The valuation of these costs was based on independent
appraisals. See Note 4--Acquisitions in the Notes to Consolidated Financial
Statements for additional information.
In 1998, Premiere's effective income tax rate varied from the statutory rate
primarily as a result of nondeductible goodwill amortization associated with
Premiere's acquisitions which have been accounted for under the purchase
method of accounting. In 1997 and 1996, Premiere's effective tax rate varied
from 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. See Note 16--
Income Taxes in the Notes to Consolidated Financial Statements for additional
information.
Liquidity And Capital Resources
The Company has funded its growth through cash generated by operations, by
issuing subordinated convertible indebtedness in July 1997 and from the
proceeds of its initial public offering in March 1996. Cash provided by
operations was $22.2 million in 1998, $27.2 million in 1997 and $36.9 million
in 1996. Excluding payments made for restructuring, merger costs, accrued
settlement costs and other special charges, cash provided by operations was
$44.7 million in 1998, $57.7 million in 1997 and $36.9 million in 1996.
Operating cash flow declined on higher revenues in 1998 primarily as a result
of revenue losses in Premiere's EES group and continued investment by the
Company to expand its management infrastructure to support continued growth.
Improvement in operating cash flows in 1997 as compared with 1996 results
principally from Premiere's integration and cost reduction initiatives
associated with the Voice-Tel and VoiceCom acquisitions in 1997 which reduced
the operating costs of these businesses. Premiere's working capital ratio was
.6 to 1 at December 31, 1998 as compared with 2.5 to 1 at December 31, 1997.
Decline in working capital resulted principally from borrowings of
approximately $118.1 million outstanding at December 31, 1998 under the
revolving loan facility assumed by Premiere in the Xpedite acquisition. In
addition, Premiere liquidated approximately $133.8 million of short-term
investment balances in 1998 to fund operating and strategic initiatives.
Xpedite's revolving loan facility was extended under a one-year arrangement
effective December 16, 1998. Accordingly, such borrowings are classified as a
current liability. If borrowings under this facility were excluded from
current liabilities, Premiere's current ratio would have been 1.3 to 1 at
December 31, 1998.
Investing activities provided cash of approximately $21.3 million in 1998
and used cash of approximately $160.1 million and $96.1 in 1997 and 1996,
respectively. The principal source of cash from investing activities in 1998
was the liquidation of approximately $133.8 million of short-term investments
to fund various operating and strategic initiatives. Premiere made capital
expenditures of $61.3 million in 1998. Significant capital programs in 1998
included construction costs and equipment purchases associated with the
Company's network expansion program, development costs incurred in connection
with the Company's introduction of Internet-enabled communications services
and operating infrastructure expansion in support of new business growth.
Premiere paid approximately $43.6 million to fund acquisition activity in
1998. Premiere paid cash of approximately $22.1 million to acquire ATS in
April 1998.
27
<PAGE>
Shareholders of ATS also received approximately 712,000 shares of Premiere
common stock in connection with the acquisition. Remaining cash paid for
acquisitions in 1998 is associated with payment of transaction related costs
incurred in acquiring Xpedite and three individually insignificant
acquisitions including two Document Distribution businesses located in Germany
and Singapore and a company engaged in marketing long distance calling cards
to college students in the United States. The Company made investments of
approximately $8.3 million in 1998 to acquire initial or increase existing
equity interests in various companies engaged in emerging technologies, such
as the Internet. Premiere's investments include minority equity investments in
WebMD, a leading full service Internet healthcare Web site, USA.NET, a leading
electronic messaging company, Intellivoice, an entity engaged in developing
voice activation and other technologies, VerticalOne, a network-based services
provider that increases frequency, duration, and quality of visits to
customers' Web sites, and Webforia, a provider of Web services, tools and
communities that assist individuals in the process of researching, organizing
and presenting high quality information from the Internet. Management intends
to continue to make such investments in the future in complementary businesses
and other initiatives that further its strategic business plan. Significant
investing activities in 1997 and 1996 included investment of proceeds
associated with Premiere's $172.5 million convertible subordinated debt
issuance in 1997 and its initial public offering which raised net proceeds of
approximately $74.6 million in 1996. Premiere made capital expenditures to
purchase property and equipment, mainly computer and telecommunications
equipment, of approximately $33.4 million in 1997 and $21.9 million in 1996.
These expenditures were made primarily to expand operational infrastructure to
support new business growth. Management anticipates that these expenditures
will continue to increase in the future as the Company upgrades and expands
the operational infrastructure of both its existing computer telephony network
and integrates the networks of its acquired companies. In addition, the
Company paid approximately $16.2 million of cash in connection with the Voice-
Tel acquisitions in 1997 and $2.9 million in the acquisition of TeleT in 1996.
See also Note 4 -- Acquisitions in Notes to Consolidated Financial Statements.
Effective December 16, 1998, Premiere amended and restated the revolving
loan facility it assumed in connection with the Xpedite acquisition for a
period of one year. This arrangement provides for borrowings of up to $150
million and contains certain covenants which require the Company to maintain
minimum earnings and interest coverage ratios and achieve certain revenue
levels, in addition to other covenants. The Company was in compliance with all
such covenants at December 31, 1998. Continued compliance under these loan
covenants will require that Premiere attain certain revenue and earnings
growth rates or reduce indebtedness in order to satisfy the minimum ratio
requirements required under this arrangement. At December 31, 1998, the
Company had unused borrowing capacity of approximately $31.9 million under
this arrangement. Premiere used cash of approximately $46.1 million in 1998 in
financing activities. Significant cash outflows for financing activities
included repayment of approximately $29.8 million of indebtedness mainly in
connection with the Company's revolving loan facility extension. In addition,
Premiere executed a stock repurchase program in 1998 under which the Company
repurchased approximately 1.1 million shares of its common stock for
approximately $9.1 million. The Company's principal financing activities in
1997 and 1996 consisted of the issuance of convertible subordinated notes of
$172.5 million in 1997 and its initial public offering which yielded net
proceeds of $74.6 million in 1996. Premiere also repaid approximately $29.5
million of indebtedness in 1997 assumed in connection with the Voice-Tel and
VoiceCom acquisitions. Cash distributions to shareholders of VoiceCom and
certain Voice-Tel companies, primarily S Corporations, used $9.4 million and
$3.6 million in 1997 and 1996, respectively. Such distributions were made in
periods prior to the Voice-Tel and VoiceCom acquisitions and were made
primarily to reimburse S Corporation shareholders for taxes paid on the
proportionate share of taxable income of such companies they were required to
report in their individual income tax returns.
At December 31, 1998, the Company's principal commitments involve
indebtedness under its revolving loan facility which matures December 15,
1999, lease obligations and minimum purchase requirements under supply
agreements with telecommunications providers. The Company is in compliance
under all such agreements at this date. See also Note 8--Indebtedness and Note
15--Contingencies and Commitments in Notes to Consolidated Financial
Statements.
28
<PAGE>
Management believes that cash and marketable securities on hand, cash flows
from operations and borrowing capacity under the Company's revolving loan
facility should be sufficient to fund growth in the Company's businesses in
1999. Premiere's revolving loan arrangement matures on December 15, 1999 and
the Company will be required to repay or refinance this indebtedness at that
time. Management regularly reviews the Company's capital structure and
evaluates potential alternatives in light of current conditions in the capital
markets. Depending upon conditions in these markets and other factors, the
Company may, from time to time, engage in capital transactions, including debt
or equity issuances, in order to increase the Company's financial flexibility
and meet other capital needs.
Restructuring, Merger Costs And Other Special Charges
Premiere recorded restructuring, merger costs and other special charges of
approximately $15.6 million in 1998. Such amount is comprised of approximately
$7.5 million of costs recorded in the first quarter of 1998 representing the
estimated costs to restructure certain operating activities of Premiere and
Xpedite subsequent to their merger. Such costs consist of severance associated
with workforce reduction, lease termination costs, costs to terminate certain
contractual obligations and asset impairments. In the fourth quarter of 1998,
Premiere recorded a $13.9 million charge to write-down the value of its MCI
WorldCom strategic alliance intangible asset. This charge was required based
upon management's assessment of current facts and circumstances within
guidelines mandated by SFAS No. 121 "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of." In addition,
Premiere recorded a charge of approximately $3.9 million to reduce the
carrying value of its investment in certain equity securities of Digitec 2000
to fair market value. This charge was necessitated based upon management's
assessment that the decline in value of these securities was not temporary.
These charges were offset in part by a reduction in restructuring reserves of
approximately $9.7 million. The reduction in reserves was necessary to
eliminate remaining accruals associated with programs that have been completed
and to reflect subsequent changes to management's restructuring plans
rendering the accrual of certain costs unnecessary.
In connection with the VoiceCom Acquisition, the Company recorded
restructuring, merger costs and other special charges of approximately $28.2
million in the third quarter of 1997. Such amounts consisted of transaction
costs, asset impairments, costs to terminate or restructure certain
contractual obligations and other costs.
Transaction costs associated with the VoiceCom acquisition were expensed as
required by the pooling-of-interests method of accounting. Other restructuring
and special charges recorded in the third quarter result principally from
management's plan to restructure VoiceCom's operations by reducing its
workforce, exiting certain facilities, discontinuing duplicative product
offerings and terminating or restructuring certain contractual obligations.
The Company recorded approximately $45.4 million of restructuring, merger
costs and other special charges in the second quarter of 1997 in connection
with the Voice-Tel Acquisitions. Those charges result from management's plan
to restructure the operations of the Voice-Tel businesses under a consolidated
business group model and discontinue its franchise operations. This initiative
involves substantial reduction in the administrative workforce, abandoning
duplicative facilities and assets and other costs necessary to discontinue
redundant business activities. See Note 3--Restructuring, Merger Costs and
Other Special Charges of Notes to Consolidated Financial Statements.
Other Matters
It is possible that a significant portion of the Company's currently
installed computer systems, software products, billing systems, telephony
platforms, networks, database or other business systems (hereinafter referred
to collectively as "Systems"), or those of the Company's customers, vendors or
resellers, working either alone or in conjunction with other software or
systems, will not accept input of, store, manipulate and output dates for the
years 1999, 2000 or thereafter without error or interruption (commonly known
as the "Year 2000" problem). The Company is currently in the process of
evaluating its Systems to determine whether or not modifications
29
<PAGE>
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting and
reporting standards for derivatives and hedging. It requires that all
derivatives be recognized as either assets or liabilities at fair value and
establishes specific criteria for the use of hedge accounting. The Company's
required adoption date is January 1, 2000. SFAs No. 133 is not to be applied
retroactively to financial statements of prior periods. The Company expects no
material adverse effect to its financial position upon adoption of SFAS No.
133.
"Statement of Position "SOP" 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," provides guidance on
accounting for the costs of computer software developed or obtained for
internal use and is required to be adopted no later than Premiere's 1999
fiscal year. Also, in June 1998, the American Institute of Certified Public
Accountants issued SOP 98-5, "Reporting on the Costs of Start-up Activities."
SOP 98-5 requires costs of start-up activities and organizational costs, as
defined to be expensed as incurred. The Company expects no material adverse
effect to its financial position upon adoption of SOP 98-1 or SOP 98-5.
FACTORS AFFECTING FUTURE PERFORMANCE
The Successful Integration and Consolidation of Acquired Businesses, Products
and Services Into Our Operations are Essential to Our Future Performance.
We are in the process of continuing to integrate several businesses acquired
in 1997 and 1998 by attempting to eliminate duplicative and unnecessary costs
and to operate them under common management. There can be no assurance that
the acquired businesses will be successfully integrated with our operations on
schedule or at all, that the acquisitions of these businesses will result in
sufficient net sales or earnings to justify our investment in these
acquisitions or the expenses related thereto, or that operational synergies
will develop. The successful integration of the acquired businesses into our
operations is critical to our future performance. Failure to successfully
integrate the acquired businesses or to achieve operating synergies would have
a material adverse effect on our business, financial condition and results of
operations. Potential challenges to the successful integration of acquired
businesses include, but are not limited to:
. centralization and consolidation of financial, operational and
administrative functions;
. consolidation of service centers, networks and work forces;
. elimination of unnecessary costs; and
. realization of economies of scale.
We are continuing to integrate and consolidate previously acquired service
offerings, operations and systems with ours, and therefore, our integration
plans may materially change in the future. Challenges to the successful
integration of acquired service offerings, operations and systems include, but
are not limited to:
. localization of our products and services;
. integration of platforms and networks;
. cross-selling of products and services to our customer base and customer
bases of acquired businesses;
. integration and retention of new personnel; and
. compliance with regulatory requirements.
30
<PAGE>
We May Not Be Able to Continue to Compete Successfully Due to Increased
Competition and the Development of Alternatives to Our Services.
The markets for our products and services are intensely competitive, quickly
evolving and subject to rapid technological change. Competitive pressures
could have a material adverse effect on our business, financial condition and
results of operations. We expect competition to increase in the future. Many
of our 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 we do. We believe that our current competitors are likely to expand their
product and service offerings and that new competitors are likely to enter the
Company's markets, and such competitors may to attempt to integrate their
products and services, resulting in greater competition.
Our Corporate Messaging and Voice and Data Messaging services 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 (which is owned by
Lucent Technologies), Northern Telecom, Siemens Business Communications
Systems, Centigram Communications, Boston Technology, and Digital Sound.
Our Interactive Voice Response Services compete with IVR Services provided
by AT&T, MCI, WorldCom, Lucent, West Teleservices, Call Interactive and
Syntellect.
Our Conferencing services compete with conference calling services provided by
AT&T, MCI WorldCom, Sprint, as well as numerous smaller regional competitors.
Our enhanced travel, concierge, news and e-mail services compete with services
provided by America Online, Prodigy and numerous Internet service providers.
Our Orchestrate(R) service competes with unified communications products
offered by companies such as Octel/Lucent, Microsoft, Novell, Sun
Microsystems, Motorola, and numerous smaller entities, such as Jfax General
Magic and Webley Systems. For example, Octel and Microsoft have 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. Sun
MicroSystems and Lucent have announced an alliance to build products that tie
together voice mail, e-mail, telephone and fax communications. Motorola and
General Magic have announced similar products.
Our Enhanced Calling services and Premiere WorldLink Corporate Card compete
with services provided by companies such as AT&T, MCI WorldCom and Sprint, as
well as smaller interexchange long distance providers.
Our Document Distribution services compete with services provided by AT&T,
MCI WorldCom and Sprint, and many of the international postal, telephone and
telegraph ("PTT") companies located around the world, as well as numerous
smaller regional competitors. We cannot predict whether AT&T, MCI WorldCom,
Sprint, any Internet service provider or PTT or any other competitor will
expand its electronic document distribution business, and there can be no
assurance that these or other competitors will not commence or expand their
businesses. Moreover, our receiving, queuing, routing and other systems logic
and architecture are not proprietary, and as a result, there can be no
assurance that such information will not be acquired or duplicated by existing
and potential competitors. We do not typically have long-term contractual
agreements with our customers, and there can be no assurance that our
customers will continue to transact business with us 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 our Document Distribution services,
including the Internet, to carry their 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 us.
31
<PAGE>
The Degree to Which We Are Leveraged Could Adversely Effect Our Business.
In connection with the issuance of our convertible notes to the public on
June 30 and July 30, 1997, we incurred $172.5 million in indebtedness.
Effective December 16, 1998, we amended and restated the revolving loan
facility we assumed in connection with the Xpedite acquisition for a period of
one year. This arrangement provides for borrowings of up to $150 million and
contains certain covenants which require us to maintain minimum earnings and
interest coverage ratios and achieve certain revenue levels, in addition to
other covenants. We were in compliance with all such covenants at December 31,
1998. We will have to attain certain revenue and earnings growth rates or
reduce indebtedness in order to satisfy the minimum ratio requirements
required under this arrangement in the future. At December 31, 1998 the
Company had unused borrowing capacity of approximately $31.9 million under
this arrangement. Our loan facility limits our ability to incur additional
indebtedness, grant liens, pay dividends or distributions, make certain
acquisitions for cash, sell assets and repurchase our securities. As a result
of this increased leverage, our principal and interest obligations increased
substantially. The degree to which we are leveraged and the restrictions
contained in the loan facility could adversely affect our ability to obtain
additional financing for working capital, acquisitions or other purposes and
could make us more vulnerable to economic downturns and competitive pressures.
Our increased leverage could also adversely affect our 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, we
could be forced to reduce other expenditures and forego potential acquisitions
to be able to meet such requirements. The indenture related to our convertible
notes does not contain any financial covenants or any other agreements
restricting the payments of dividends, the repurchase of our securities, the
issuance of additional equity or the incurrence of additional indebtedness.
The Telecommunications Act of 1996 May Increase Competition.
Furthermore, on February 8, 1996, President Clinton signed into law the
Telecommunications Act of 1996 (the "1996 Act"), which allows local exchange
carriers ("LECs"), including the RBOCs, to immediately provide long distance
telephone service between Local Access and Transport Areas ("LATAs") outside
of their local service territories. The 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 the RBOCs in competition with
us. This increased competition could have a material adverse effect on our
business, financial condition and results of operations.
Our Future Success Will Depend On Our Ability to Anticipate Advances In
Technologies.
The market for our products and services is characterized by rapid
technological change, frequent new product introductions and evolving industry
standards. Our future success will depend in significant part on our ability
to anticipate industry standards, continue to apply advances in technologies,
enhance our current services, develop and introduce new products and services
in a timely fashion, enhance our software and our platforms and compete
successfully with products and services based on evolving or new technologies.
We expect new products and services, and enhancements to existing products and
services, to be developed and introduced which will compete with our products
and services. Our Orchestrate(R) product line is expected to compete within
markets where larger companies are working to provide a unified communications
solution.
Technological advances may result in the availability of new services,
products or methods of electronic document distribution that could compete
with the electronic document distribution services currently provided by us or
decrease the cost of existing products or services which could enable our
established or potential customers to meet their own needs for electronic
document distribution services more cost efficiently than through the use of
our services.
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The acquisitions of the Voice-Tel entities in 1997 constituted a significant
investment by us 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 our frame relay architecture will not become
obsolete. Such events would require us to invest significant capital in
upgrading or replacing our private frame relay network and could have a
material adverse effect on our business, financial condition and results of
operations.
In addition, we may experience difficulty integrating incompatible systems
of acquired businesses into our networks. There can be no assurance that we
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 we now offer.
Our Future Success Will Depend on Market Acceptance of New Products and
Services That We Develop.
We must continually introduce new products and services in response to
technological changes, evolving industry standards and customer demands for
enhancements to our existing products and services. One such product is
Orchestrate(R).
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Delays in the introduction of new products and services, our inability to
develop such new products and services or the failure of such products and
services to achieve market acceptance could have a material adverse effect on
our business, financial condition and results of operations. There can be no
assurance that:
. we will successfully develop and market new products and services or
product and service enhancements that respond to these or other
technological changes, evolving industry standards or customer demands;
. we will develop effective marketing, pricing and distribution strategies
for new products and services, including Orchestrate;
. we will not experience difficulties that could delay or prevent the
successful development, introduction and marketing of new products and
services; or
. our new products and services, including Orchestrate(R), and
enhancements to our existing products and services, will adequately meet
the requirements of the marketplace and achieve market acceptance.
Managing Our Growth Through Acquisitions May Strain Our Administrative,
Technical and Financial Resources.
We regularly evaluate acquisition opportunities and, as a result, frequently
engage in acquisition discussions, conduct due diligence activities in
connection with possible acquisitions, and, where appropriate, engage in
acquisition negotiations. There can be no assurance that we will be able to
successfully identify suitable acquisition candidates, complete acquisitions,
integrate acquired operations into our existing operations or expand into new
markets. In addition, we compete for acquisitions and expansion opportunities
with companies that have substantially greater resources.
We have experienced substantial growth in revenue and personnel in recent
years, particularly in 1997 and early 1998. A substantial portion of such
growth has been accomplished through acquisitions, including the acquisitions
of Voice-Tel and its affiliate Voice-Tel Network Limited Partnership ("VTN")
and substantially all of Voice-Tel's franchisees (the "Franchisees") (Voice-
Tel, VTN and the Franchisees are collectively referred to as the "Voice-Tel
Entities" and such acquisitions are referred to collectively as the "Voice-Tel
Acquisitions"), the acquisition of VoiceCom, the merger with Xpedite and the
acquisition of American Teleconferencing Services. Our growth has placed
significant demands on all aspects of our business, including our
administrative, technical and financial personnel and systems. Additional
expansion may further strain our management, financial and other resources.
There can be no assurance that our systems, procedures, controls and existing
space are or will be adequate to support expansion of our operations.
Our future operating results will substantially depend on the ability of our
officers and key employees to manage changing business conditions and to
implement and improve our administrative, technical and financial control and
reporting systems. If we are unable to respond to and manage changing business
conditions, then the quality of our services, our ability to attract and
retain key personnel and our results of operations could be materially
adversely affected.
At certain stages of growth in network usage, we will be required to add
capacity to our platforms and our digital central office switches and we will
need to continually add capacity to our private frame relay network, thus
requiring that we continuously attempt to predict growth in its network usage
and add capacity accordingly. Difficulties in managing continued growth,
including difficulties in predicting the growth in our network usage, could
have a material adverse effect on our business, financial condition and
results of operations.
Acquisitions also involve numerous additional risks, including difficulties
in the assimilation of the operations, services, products and personnel of the
acquired company, the diversion of our management's attention from other
business concerns, entry into markets in which we have little or no direct
prior experience and the potential loss of key employees of the acquired
company. Assimilation and retention of the key employees of an acquired
company are generally important to the success of an acquisition and the
failure to assimilate and retain any such key employees could have a material
adverse effect on our business, financial condition and results of operations.
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Acquisitions May Decrease Our Shareholders' Percentage Ownership and Require
Us to Incur Additional Debt.
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 our business, financial
condition and results of operations. As of December 31, 1998, we had
approximately $492.2 million of goodwill and other intangible assets reflected
on our financial statements as a result of acquisitions. We are amortizing the
goodwill and other intangibles over a range of periods we believe appropriate
for the assets. If the amortization period is accelerated due to a
reevaluation of the useful life of these assets or otherwise, amortization
expense may initially increase on a quarterly basis or require a write-down of
the goodwill or other intangible assets. An increase in the rate of
amortization of goodwill or future write-downs and restructuring charges could
have a material adverse effect on our business, financial condition and
results of operations.
Acquisitions May Involve Restructuring and Other Special Charges.
We have taken, and in the future may take, charges in connection with
acquisitions. There can be no assurance that the costs and expenses incurred
will not exceed the estimates upon which such charges are based. During the
second quarter of 1997, we took a pre-tax charge of approximately $45.4
million in connection with the acquisitions of the Voice-Tel entities. During
the third quarter of 1997, we took a pre-tax charge of approximately $28.2
million in connection with the acquisition of VoiceCom. We also recorded
restructuring and other special charges before income taxes of approximately
$7.5 million in connection with the merger with Xpedite.
Long Distance Pricing Pressures Could Adversely Effect Our Business.
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 our business, financial condition and
results of operations.
We Need to Retain the Services of Our Key Management and Personnel.
Our 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 our performance. We believe that our continued success will depend
to a significant extent upon the efforts and abilities of Boland T. Jones,
Chairman and Chief Executive Officer, and certain other key executives. Mr.
Jones has entered into an employment agreement which expires in December 1999,
and we maintain key man life insurance on Mr. Jones in the amount of $3.0
million.
We Need to Attract and Retain Highly Qualified Technical Personnel.
We also believe that to be successful we must hire and retain highly
qualified engineering and product development personnel. Competition in the
recruitment of highly qualified personnel in the information and
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telecommunications services industry is intense. If we are not able to locate,
hire and retain such personnel it may have a material adverse effect on our
business, financial condition and results of operations. No assurance can be
given that we will be able to retain our key employees or that we will be able
to attract qualified personnel in the future.
We Do Not Typically Have LongTerm Contractual Agreements With Our Customers.
We expect 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
our technologies. We do not typically have long-term contractual agreements
with our customers, and there can be no assurance that our customers will
continue to transact business with us in the future.
We Rely on Amway and Certain Other Clients for Significant Revenues.
We have historically relied on sales through Amway Corporation for a
substantial portion of our revenue. Such sales accounted for approximately
23.7%, 21.8% and 9.4% of our revenue for 1996, 1997 and 1998, respectively.
Total revenues from Amway have decreased significantly over the last two
fiscal years but Amway remains a significant customer. There can be no
assurance that our 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. Continued loss in
total revenues from Amway 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 our business, financial condition and
results of operations. We have entered into a service and reseller agreement
with Amway (the "Amway Agreement") providing, among other things, for the sale
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. 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 us 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 ours, there can be no assurance that Amway's distributors would not
follow such recommendation. Amway has sold substantially all of the Common
Stock of Premiere that it acquired in the Voice-Tel acquisitions. The sale of
such stock may increase the possibility that Amway will recommend a voice
messaging and network transmission services provider other than us.
Financial Difficulties of Licensees or Strategic Partners Could Adversely
Impact Our Earnings.
The telecommunications industry is intensely competitive and rapidly
consolidating. The majority of companies that have chosen to outsource
communications card services to us are small or medium-sized
telecommunications companies that may be unable to withstand the intense
competition in the telecommunications industry. During the second quarter of
1998, a licensing customer and a strategic partner in our Enhanced Calling
Services group initiated proceedings under Chapter 11 of the United States
Bankruptcy Code. We recorded approximately $8.4 million of charges in the
second quarter of 1998 associated with uncollectible accounts receivable,
primarily related to these financially distressed customers. The financial
difficulties of these two customers, as well as revenue shortfalls in the
Voice and Data Messaging group and other unanticipated costs and one-time
charges, contributed to an after tax loss for the second quarter of 1998.
There can be no assurance that one or more additional failures will not occur,
and any such additional failures could have a material adverse effect on our
business, financial condition and results of operations.
Our Future Success Depends On the Success of Our Strategic Relationships.
A principal element of our strategy is the creation and maintenance of
strategic relationships that will enable us to offer our services to a larger
customer base than we could otherwise reach through our direct marketing
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efforts. Failure of one or more of our strategic partners to successfully
develop and sustain a market for our services, or the termination of one or
more of our relationships with a strategic partner, could have a material
adverse effect on our overall performance. We experienced growth in our
existing strategic relationships during 1996, 1997 and 1998 and entered into
or initiated new strategic relationships with several companies, including MCI
WorldCom, WebMD, USA.NET, Intellivoice, and Webforia. Although we intend to
continue to expand our direct marketing channels, we believe that strategic
partner relationships may offer a potentially more effective and efficient
marketing channel. Consequently, our success depends in part on the ultimate
success of these relationships and on the ability of these strategic partners
to market our services effectively.
In connection with our strategic plan, we make investments and form
alliances with companies involved in emerging technologies, such as the
Internet, as well as marketing alliances and outsourcing programs designed to
reduce costs and develop new markets and distribution channels for our
products. In 1998, the Company made investments of approximately $8.3 million
to acquire initial or increase existing equity interests in companies engaged
in emerging technologies. Since many of the companies in which we make
investments are small, early-stage companies, our investments are subject to
the significant risks faced by these companies which could result in the loss
of our investment. In 1998, the Company took a net charge of $3.9 million
reflecting the write-down of an equity investment in a telecommunications
distribution partner, DigiTEC.
In November 1996, we entered into a strategic alliance agreement with
WorldCom, now known as MCI WorldCom, whereby MCI WorldCom is required, among
other things, to provide us 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, we issued to MCI WorldCom 2,050,000
shares of common stock valued at approximately $25.2 million (based on an
independent appraisal) and paid MCI WorldCom $4.7 million in cash. We recorded
the value of this agreement as an intangible asset. Subsequent to entering
into this strategic alliance agreement WorldCom completed a merger with MCI to
form MCI WorldCom. MCI was a competitor of ours with respect to certain
services and the total impact of the merger between MCI and WorldCom on our
strategic alliance with MCI WorldCom cannot be determined at this time.
Current activity levels under the strategic alliance agreement are
significantly below the specified minimum payment levels in the agreement and
the minimum payments ceased at the end of September 1998. We periodically
review this intangible asset for impairment and in 1998 we wrote down the
carrying value of the MCI WorldCom strategic alliance intangible asset by
approximately $13.9 million. In addition, we accelerated amortization of the
remaining carrying value of the asset starting in the fourth quarter of 1998
by shortening its estimated remaining useful life to three years from 23
years.
Although we view our strategic relationships as a key factor in our overall
business strategy and in the development and commercialization of our
services, there can be no assurance that our strategic partners view their
relationships with us as significant for their own businesses or that they
will not reassess their commitment to us in the future. Our arrangements with
our strategic partners do not always establish minimum performance
requirements for our strategic partners, but instead rely on the voluntary
efforts of these partners in pursuing joint goals. Certain of these
arrangements prevent us from entering into strategic relationships with other
companies in the same industry as our strategic partners, either for specified
periods of time or while the arrangements remain in force. In addition, even
when we are without contractual restriction, we may be restrained by business
considerations from pursuing alternative arrangements. The ability of our
strategic partners to incorporate our services into successful commercial
ventures will require us, among other things, to continue to successfully
enhance our existing products and services and develop new products and
services. Our inability to meet the requirements of our strategic partners or
to comply with the terms of our strategic partner arrangements could result in
our strategic partners failing to market our services, seeking alternative
providers of communications and information services or canceling their
contracts with us, any of which could have a material adverse impact on our
business, financial condition and results of operations.
Our Success Depends on Our Ability to Establish and Maintain Licensing and
Wholesale Relationships.
We have licensing and wholesale relationships with companies that have
chosen to outsource part or all of their communications card services. License
fees accounted for approximately 11.7% and 5.8% of our revenues
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in 1997 and 1998, respectively. MCI WorldCom accounted for approximately 66.9%
of our 1997 license fees and 7.0% of our total 1997 revenues, and
approximately 53.3% of our license fees and 3.1% of our total revenues in
1998. Although we intend to increase our number of licensees and our licensee
transaction volume in the future, our success depends in part upon the
ultimate success or failure of our licensees and our ability to establish and
maintain licensing and strategic relationships. The telecommunications
industry is intensely competitive and rapidly consolidating. The majority of
companies that have chosen to outsource communications card services to us are
small or medium-sized telecommunications companies that may be unable to
withstand the intense competition in the telecommunications industry.
During the second quarter of 1998, a licensing customer and a strategic
partner in our Enhanced Calling Services group initiated proceedings under
Chapter 11 of the United States Bankruptcy Code. We recorded approximately
$8.4 million of charges in the second quarter of 1998 associated with
uncollectible accounts receivable, primarily related to these financially
distressed customers. There can be no assurance that one or more additional
failures will not occur or that the failure of one or more of our licensees to
develop and sustain a market for our services, or termination of one or more
of our licensing or strategic relationships, will not have a material adverse
effect on our business, financial condition and results of operations.
Consolidation in the Telecommunications Industry Could Adversely Effect Our
Business.
The telecommunications industry is experiencing rapid consolidation. For
example, in 1998 WorldCom, a strategic partner of the Company, completed a
merger with MCI Communications Corp., a competitor of ours with respect to
certain services, to form MCI WorldCom. Consolidation in the communications
industry, including consolidations involving the Company's customers,
competitors and strategic partners, could have a material adverse effect on
the Company's business, financial condition and results of operations.
Our Future Success Depends on Market Acceptance of Computer Telephony.
Our future success depends upon the market acceptance of our 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. A decline in the demand for, or the failure to achieve broad
market acceptance of, our computer telephony product lines and services would
have a material adverse effect on our business, financial condition and
results of operations. We believe that broad market acceptance of our 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 our computer
telephony products and services will achieve broad market acceptance or that
such market acceptance will occur at the rate which we currently anticipate.
Downtime in Our Platforms Networks Could Result in the Loss of Significant
Customers.
We currently maintain switching facilities and computer telephony platforms
in approximately 300 locations. Our network service operations are dependent
upon our ability to protect the equipment and data at our switching facilities
against damage that may be caused by fire, power loss, technical failures,
unauthorized intrusion, natural disasters, sabotage and other similar events.
We have taken precautions to protect ourselves and our customers from events
that could interrupt delivery of our services. These precautions include
physical security systems, uninterruptible power supplies, on-site power
generators, upgraded backup hardware, fire protection systems and other
contingency plans. In addition, certain of our networks are designed such that
the data on each network server is duplicated on a separate network server.
Notwithstanding such precautions, we have experienced downtime in our networks
from time to time and there can be no assurance that downtime will not occur
in the future. In addition, 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
our networks or one of the switching facilities as a whole, thereby resulting
in an interruption of the our services. Such interruptions could result in the
loss of significant customers and could have a material adverse effect on our
business, financial condition and results of operations. Although we maintain
business interruption
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insurance providing for aggregate coverage of approximately $86.1 million per
policy year, there can be no assurance that we will be able to maintain our
business interruption insurance, that such insurance will continue to be
available at reasonable prices or that such insurance will be sufficient to
compensate us for losses we experience due to our inability to provide
services to our customers.
We May Be Unable to Protect and Maintain the Competitive Advantage of Our
Proprietary Technology and Intellectual Property Rights.
We rely primarily on a combination of intellectual property laws and
contractual provisions to protect our proprietary rights and technology. These
laws and contractual provisions provide only limited protection of our
proprietary rights and technology. Our proprietary rights and technology
include confidential information and trade secrets which we attempt to protect
through confidentiality and nondisclosure provisions in our licensing,
services, reseller and other agreements. We typically attempt to protect our
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. There
can be no assurance that our means of protecting our proprietary rights and
technology will be adequate or that our competitors will not independently
develop similar technology. In addition, the laws of some foreign countries do
not protect our proprietary rights to as great an extent as the laws of the
United States.
No Assurance Can Be Given That Claims Alleging Patent, Copyright or Trademark
Infringement Will Not Be Brought.
Many patents, copyrights and trademarks have been issued in the general
areas of information and telecommunications services and computer telephony.
We believe that in the ordinary course of our business third parties will
claim that our 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 us with respect to current or future products or
services, or that, if such actions or claims are brought, we will ultimately
prevail. Any such claiming parties may have significantly greater resources
than we have 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 us
to enter into royalty or licensing agreements, or cause us to discontinue use
of the challenged technology, tradename or service mark at potentially
significant expense 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 our business, financial condition and results of
operations. For a description of the Company's material infringement claims,
see Part I--"Business--Proprietary Rights and Technology" of this Form 10-K.
We May Lose Revenue or Incur Additional Costs Because of Failure to Adequately
Address the Year 2000 Issue.
It is possible that a significant portion of our currently installed
computer systems, software products, billing systems, telephony platforms,
networks, database or other business systems (hereinafter referred to
collectively as "Systems"), or those of our customers, vendors or resellers,
working either alone or in conjunction with other software or systems, will
not accept input of, store, manipulate and output dates for the years 1999,
2000 or thereafter without error or interruption (commonly known as the "Year
2000" problem). We are currently in the process of evaluating our Systems to
determine whether or not modifications will be required to prevent problems
related to the Year 2000. Although we have not completed our evaluation, we
have identified certain of our Systems that will require modification or
upgrades to remedy Year 2000 problems. There can be no assurance that we will
identify all such Year 2000 problems in our Systems or those of our customers
or vendors, including network transmission providers, in advance of their
occurrence or that we will be able to successfully remedy any problems that
have been or may subsequently be discovered. In addition, we are dependent
upon third parties for transmission of its calls and other communications.
There can be no assurance that these third party providers will identify and
remedy any Year 2000 problems in their transmission facilities. The expenses
of our efforts to
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identify and address such problems, the expenses or liabilities to which we
may be subject as a result of such problems, or the failure of third party
providers of transmission facilities, could have a material adverse effect on
our business, financial condition and results of operations. The financial
stability of existing customers may be adversely impacted by Year 2000
problems which could have a material adverse impact on our revenues. In
addition, any failure by us to identify and remedy Year 2000 problems could
put us at a competitive disadvantage relative to companies that have corrected
Year 2000 problems. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--The Year 2000 Issue."
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One or More Adverse Outcomes in Our Pending Litigation Could Have a Material
Effect on Our Business.
In the ordinary course of our business, we are subject to claims and
litigation from third parties alleging that our products and services infringe
the patents, trademarks and copyrights of such third parties. See "--Risk of
Infringement Claims." We have several litigation matters pending not involving
infringement claims which we are defending vigorously. Due to the inherent
uncertainties of the litigation process and the judicial system, we are unable
to predict the outcome of such litigation matters. If the outcome of one or
more of such matters is adverse to us, it could have a material adverse effect
on our business, financial condition and results of operations. For a
description of the Company's pending material litigation, see "Item 3--Legal
Proceedings" of this Form 10-K.
The Company is also involved in various other legal proceedings which the
Company does not believe will have a material adverse effect upon the
Company's business, financial condition or results of operations, although no
assurance can be given as to the ultimate outcome of any such proceedings.
Our Quarterly Results May Not Always Meet the Expectations of Public Market
Analysts and Investors.
Quarterly revenues are difficult to forecast because the market for our
services is rapidly evolving. Our expense levels are based, in part, on our
expectations as to future revenues. If revenue levels are below expectations,
we may be unable or unwilling to reduce expenses proportionately and operating
results would likely be adversely affected. As a result, we believe 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
our operating results will be below the expectations of public market analysts
and investors. In such event, the market price of our common stock will likely
be materially adversely affected.
Our operating results have varied significantly in the past and may vary
significantly in the future. Specific factors that may cause our future
operating results to vary include:
. the unique nature of strategic relationships into which we may enter in
the future;
. changes in operating expenses resulting from such strategic
relationships and other factors;
. the continued acceptance of our licensing program;
. the financial performance of our licensees and strategic partners;
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. the timing of new service announcements;
. market acceptance of new and enhanced versions of our products and
services, including Orchestrate(R);
. acquisitions;
. performance of strategic investments;
. changes in legislation and regulations that may affect the competitive
environment for our communications services; and
. general economic and seasonal factors.
In the future, revenues from our strategic relationships may become an
increasingly significant portion of our total revenues. Due to the unique
nature of each strategic relationship, these relationships may change the mix
of our expenses relative to our revenues.
Software Failures or Errors May Result in Failure of Our Networks and/or
Platforms or Loss of Significant Customers.
The software that we have developed and utilized in providing our services,
including the Orchestrate software, may contain undetected errors. Although we
generally engage in extensive testing of our software prior to introducing the
software onto any of our networks and/or platforms, 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 our networks,
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 customers to use our networks or the
cancellation by significant customers of their service with us, any of which
could have a material adverse effect on our business. We maintain technology
errors and omissions insurance coverage of $35.0 million per policy aggregate.
However, there can be no assurance that we will be able to maintain our
technology errors and omissions insurance, that such insurance will continue
to be available at reasonable prices or will be sufficient to compensate us
for losses we experience due to our inability to provide services to our
customers.
Interruption in Long Distance Service Could Result in a Loss of Significant
Customers and Revenue.
We do not own a transmission network and, accordingly, depend on MCI
WorldCom, AT&T and other facilities-based and non-facilities based carriers
for transmission of our customers' 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, we are dependent upon LECs or CLECs for call
origination and termination. If there is an outage affecting one of our
terminating carriers, our platform automatically switches calls to another
terminating carrier if capacity is available. We have 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. Our
ability to maintain and expand our business depends, in part, on our ability
to continue to obtain telecommunication services on favorable terms from long
distance carriers and the cooperation of both interexchange and LECs or CLECs
in originating and terminating service for our customers in a timely manner.
The partial or total loss of the ability to receive or terminate calls would
result in a loss of revenues and could lead to a loss of significant
customers, which could have a material adverse effect on our business,
financial condition or results of operations.
We lease capacity on the MCI WorldCom backbone to provide connectivity and
data transmission within our private data network. The telecommunication
agreement expires in September 2000. Our hub equipment is co-located at
various MCI WorldCom sites pursuant to co-location agreements that are
terminable by either party upon 30 days written notice. Our ability to
maintain network connectivity is dependent upon our access to transmission
facilities provided by MCI WorldCom or an alternative provider. We have no
assurance that we will be able to continue our relationship with MCI WorldCom
beyond the terms of our current agreements with MCI WorldCom or that we will
be able to find an alternative provider on terms as favorable as those offered
by MCI WorldCom or on any other terms. If we were required to relocate our hub
equipment or change our network
42
<PAGE>
transmission provider, we could experience shutdowns in our service and
increase costs which could have a material adverse effect on our customer
relationships and customer retention and, therefore, our business, financial
condition and results of operations.
Any Significant Difficulty Obtaining Voice Messaging Equipment From Suppliers
Could Adversely Effect Our Business.
We do not manufacture voice messaging equipment used at our voice messaging
service centers, and such equipment is currently available from a limited
number of sources. Although we have not historically experienced any
significant difficulty in obtaining equipment required for our operations and
believe 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. Our inability to obtain voice messaging equipment could result
in delays or reduced delivery of messages which would materially and adversely
affect our business, financial condition and results of operations. In
addition, technological advances may result in the development of new voice
messaging equipment and changing industry standards and there can be no
assurance that our voice messaging equipment will not become obsolete. Such
events would require us to invest significant capital in upgrading or
replacing our voice messaging equipment and could have a material adverse
effect on our business, financial condition and results of operations.
Various Regulatory Factors Affect Our Financial Performance and Our Ability to
Compete.
Our operating subsidiaries that provide regulated long distance
telecommunications services 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, we could be adversely affected.
Moreover, the underlying carriers that provide services to our operating
subsidiaries or that originate or terminate the operating subsidiaries'
traffic may increase rates or experience disruptions in service due to factors
outside our 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 has made the requisite filings with the FCC to provide interstate and
international long distance services.
In order to provide intrastate long distance service, PCI generally is
required to obtain certification from state PUCs, to register with such state
PUCs or to be found exempt from registration by such state PUCs. PCI 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. In addition, as a condition of providing
intrastate long distance services, PCI generally is required to comply with
PUC tariffing requirements, reporting obligations and regulatory assessments,
and to submit to PUC jurisdiction over complaints, transfers of control and
certain financing transactions. PCI uses reasonable efforts to ensure that its
operations comply with these regulatory requirements. However, there can be no
assurance that PCI is currently in compliance with all PUC regulatory
requirements. Further PCI's facilities do not prevent subscribers from using
the facilities to make long distance calls in any state, including states in
which PCI currently is not authorized to provide intrastate telecommunications
services and operator services. There can be no assurance that PCI's provision
of long distance telecommunications and operator services in states where it
is not in compliance with PUC requirements will not have a material adverse
effect on our business, financial condition and results of operations.
43
<PAGE>
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. Further, while the FCC has final authority
to grant or deny such RBOC application, 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
if the pro-competitive criteria have been satisfied. While the FCC has yet to
grant any RBOC interLATA application, we are unable to determine how the FCC
will rule on any such applications in the future.
In response to a constitutional challenge filed by SBC Communications Inc.,
the United States District Court for the Northern District of Texas found the
1996 Act's restrictions on RBOC interLATA services to be an unconstitutional
bill of attainder, but stayed the effect of its decision pending further
appeal. As a result of the 1996 Act and if the in-region interLATA
restrictions are ultimately struck down, we may experience increased
competition from others, including the RBOCs. In addition, our 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, we are 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 completed a study, directed by Congress, regarding the propriety of
applying Regulation E to stored value cards. The Department of Treasury has
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 our business and industry and could have a material adverse
effect on our business, financial condition and results of operations. Our
proposed international activities also will be subject to regulation by
various international authorities and the inherent risk of unexpected changes
in such regulation.
Our Expansion Into International Markets May Not Be Successful
A key component of our strategy is our planned expansion into international
markets. If international revenues are not adequate to offset the expense of
establishing and maintaining these international operations, it could have a
material adverse effect on our business, financial condition and results of
operations.
We operate Voice and Data Messaging service centers in Canada, Australia,
New Zealand and Puerto Rico. New Voice and Data Messaging service centers have
recently been established in the United Kingdom, Germany, Italy, Japan, Hong
Kong and South Korea. In addition, Conferencing operations were recently
established in Canada. We also plan to establish Conferencing operations or
capability in the United Kingdom, Germany, France, Singapore, Australia and
Hong Kong.
While our Document Distribution subsidiary has significant international
experience, we only have limited experience in marketing and distributing our
Voice and Data Messaging and Conferencing services internationally. There can
be no assurance that we will be able to successfully:
. establish the proposed Conferencing operations or capabilities, or
. market, sell and deliver our Voice and Data Messaging and Conferencing
services in the new international markets.
44
<PAGE>
There Are Certain Risks Inherent to International Operations.
In addition to the uncertainty as to our ability to expand our 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.
We typically denominate foreign transactions in foreign currency and have
not regularly engaged in hedging transactions, although we may engage in
hedging transactions from time to time in the future. In connection with one
acquisition we borrowed funds denominated in the local currency. We have not
experienced any material losses from fluctuations in currency exchange rates,
but there can be no assurance that we will not incur material losses due to
currency exchange rate fluctuations in the future.
We Rely on International Operations for Significant Revenues From Enhanced
Document Distribution Services
A significant portion of our Document Distribution business is conducted
outside the United States and a significant portion of our revenues and
expenses from that business are derived in foreign currencies. Accordingly,
the results of operations from our Document Distribution business may be
materially affected by fluctuations in foreign currencies. Many aspects of our
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 on the business or market opportunities of
our Document Distribution business 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 our operations and growth strategy.
We May Not Be Able to Expand Our Document Distribution Services.
We intend to accelerate growth of our Document Distribution services
throughout the world by expansion of our proprietary private world-wide
document distribution network (the "Document Distribution Network"), the
integration of that network with our private frame relay network and computer
telephony platforms and the acquisition of entities engaged in the business of
electronic document distribution services. There can be no assurance that we
will be able to expand our ability to provide electronic document 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
Document Distribution Network to process increasing amounts of document
traffic, integrating and increasing the capability of
45
<PAGE>
the Document Distribution network to perform tasks required by our customers
or identifying and establishing alliances with new partners in order to enable
us to expand our network in new geographic regions. Such inability may
adversely affect customer relationships and perceptions of our business in the
markets in which we provide services, which could have a material adverse
effect on our business, financial condition and results of operations. In
addition, such growth will involve substantial investments of capital,
management and other resources. There can be no assurance that we will
generate sufficient cash for future growth of our Document Distribution
business through earnings or external financings, or that such external
financings will be available on terms acceptable to us or that we will be able
to employ any such resources in a manner that will result in accelerated
growth.
Returned Transactions or Thefts of Services Could Adversely Effect Our
Business.
Although we believe that our risk management and bad debt reserve practices
are adequate, there can be no assurance that our risk management practices,
including our internal controls, or reserves will be sufficient to protect us
from unauthorized or returned transactions or thefts of services which could
have a material adverse effect on our business, financial condition and
results of operations. We use two principal financial payment clearance
systems in connection with our Enhanced Calling Services: the Federal
Reserve's Automated Clearing House for electronic fund transfers; and the
national credit card systems for electronic credit card settlement. In our use
of these established payment clearance systems, we generally bear 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 our network and
obtained services without rendering payment to us by unlawfully using the
access numbers and Personal Identification Numbers ("PINs") of authorized
users. In addition, in connection with our wholesale prepaid telephone card
relationships, we have experienced unauthorized activation of prepaid
telephone cards. No assurance can be given that losses due to unauthorized use
of access numbers and PINs, unauthorized activation of prepaid calling cards
or activation of prepaid calling cards in excess of the prepaid amount, or
theft of prepaid calling cards will not be material. We attempt to manage
these risks through our internal controls and proprietary billing systems. Our
computer telephony platform is designed to prohibit a single access number and
PIN from establishing multiple simultaneous connections to the platform, and
generally we establish preset spending limits for each subscriber. We also
maintain reserves for such risks. Past experience in estimating and
establishing reserves and our historical losses are not necessarily accurate
indicators of future losses or the adequacy of the reserves we may establish
in the future.
Our Articles of Incorporation and Bylaws and Georgia Law May Inhibit a
Takeover.
Our Board of Directors 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. Our Articles of
Incorporation, as
46
<PAGE>
amended, divide the Board of Directors into three classes, as nearly equal in
size as possible, with staggered three-year terms. One class will be 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 us. We are
also subject to certain provisions of the Georgia Business Corporation Code
which relate to business combinations with interested shareholders. In
addition to considering the effects of any action on us and our shareholders,
our Articles of Incorporation permit our Board of Directors and the committees
and individual members thereof to consider the interests of various
constituencies, including employees, customers, suppliers, and creditors,
communities in which we maintain 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 our best interests.
On June 23, 1998, our Board of Directors declared a dividend of one
preferred stock purchase right (a "Right") for each outstanding share of
common stock. The dividend was paid on July 6, 1998, to the shareholders of
record on that date. Each Right entitles the registered holder to purchase one
one-thousandth of a share of Series C Junior Participating Preferred Stock,
par value $0.01 per share (the "Preferred Shares"), at a price of sixty
dollars ($60.00) per one-thousandth of a Preferred Share, subject to
adjustment. The description and terms of the Rights are set forth in the
Shareholder Protection Rights Agreement, as the same may be amended from time
to time, dated as of June 23, 1998, between us and SunTrust Bank, Atlanta, as
rights agent. The Rights may have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that attempts to acquire
us on terms not approved by our Board of Directors. However, the Rights should
not interfere with any merger, statutory share exchange or other business
combination approved by the Board of Directors since the Rights may be
terminated by the Board of Directors at any time on or prior to the close of
business ten business days after announcement by us that a person has become
an acquiring person, as such term is defined in the Shareholder Protection
Rights Agreement. Thus, the Rights are intended to encourage persons who may
seek to acquire control of us to initiate such an acquisition through
negotiations with the Board of Directors. However, the effect of the Rights
may be to discourage a third party from making a partial tender offer or
otherwise attempting to obtain a substantial equity position in the equity
securities of, or seeking to obtain control of, us.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk form changes in interest rates and
foreign currency exchange rates. The Company manages it exposure to these
market risks through its regular operating and financing activities.
Derivative instruments are not currently used and, if utilized, are employed
as risk management tools and not for trading purposes.
At December 31, 1998, no derivative financial instruments were outstanding
to hedge interest rate risk. The interest rates on the Company's borrowings
under its credit facility are based on either the lender's Prime Rate or
LIBOR. Any changes in these rates would affect the rate at which the Company
could borrow funds under the Bank Credit Facility. A hypothetical immediate
10% increase in interest rates would decrease the fair value of the Company's
fixed rate convertible subordinated notes outstanding at December 31, 1998,
fixed rate convertible subordinated notes outstanding at December 31, 1998, by
$7.2 million. A hypothetical 10% increase in interest rates on the Company's
variable rate long-term debt for a duration of one year would increase
interest expense by $1.1 million in 1999.
Approximately 22.2% of the Company's sales and 15.2% of its operating costs
and expenses were transacted in foreign currencies in 1998. As a result,
fluctuations in exchange rates impact the amount of the Company's reported
sales and operating income. Historically, the Company's principal exposure
have been related to local currency operating costs and expenses in the United
Kingdom and local currency sales in Europe (principally the United Kingdom and
Germany). The company has not used derivative to manage foreign currency
exchange risk and no foreign currency exchange derivatives were outstanding at
December 31, 1998. To minimize the impact of changes in exchange rates, the
Company borrows from time to time in British Pounds under its credit facility.
47
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Premiere Technologies, Inc. and Subsidiaries Index to Consolidated Financial
Statements
<TABLE>
<S> <C>
Report of Independent Public Accountants.................................. 48
Consolidated Balance Sheets, December 31, 1998 and 1997................... 49
Consolidated Statements of Operations, Three Years Ended December 31,
1998..................................................................... 50
Consolidated Statements of Shareholders' Equity (Deficit), Three Years
Ended December 31, 1998.................................................. 51
Consolidated Statements of Cash Flows, Three Years Ended December 31,
1998..................................................................... 52
Notes to Consolidated Financial Statements................................ 53
</TABLE>
47--1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Premiere Technologies, Inc.
We have audited the accompanying consolidated balance sheets of PREMIERE
TECHNOLOGIES, INC. (a Georgia corporation) AND SUBSIDIARIES as of December 31,
1998 and 1997 and the related consolidated statements of operations,
shareholders' equity (deficit) and cash flows for the years ended December 31,
1998, 1997 and 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Premiere Technologies,
Inc. and subsidiaries as of December 31, 1998 and 1997 and the results of
their operations and their cash flows for the years ended December 31, 1998,
1997 and 1996 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 15, 1999
48
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1998 AND 1997
(in thousands, except share data)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents..................................... $ 19,226 $ 21,770
Marketable securities.................................... 20,769 154,569
Accounts receivable (less allowances of $9,437 and
$3,303, respectively)................................... 55,660 20,719
Prepaid expenses and other............................... 10,551 6,941
Deferred income taxes, net............................... 20,977 25,715
-------- --------
Total current assets.................................... 127,183 229,714
PROPERTY AND EQUIPMENT, NET................................ 134,700 63,577
OTHER ASSETS
Deferred income taxes, net............................... -- 3,963
Strategic alliances and investments, net................. 28,510 51,895
Intangibles, net......................................... 492,185 20,756
Other assets............................................. 20,173 11,203
-------- --------
$802,751 $381,108
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable......................................... $ 24,270 $ 30,704
Deferred revenue......................................... 1,877 7,139
Accrued taxes............................................ 16,279 9,745
Accrued liabilities...................................... 46,940 20,192
Revolving loan........................................... 118,082 --
Current maturities of long-term debt..................... 1,412 2,849
Current portion of capital lease obligations............. 1,958 3,058
Accrued restructuring and other special charges.......... 7,545 19,845
-------- --------
Total current liabilities............................... 218,363 93,532
-------- --------
LONG-TERM LIABILITIES
Convertible subordinated notes........................... 172,500 172,500
Long-term debt........................................... 4,191 854
Obligations under capital lease.......................... 1,530 2,437
Other accrued liabilities................................ 1,111 10,971
Deferred income taxes, net............................... 4,162 --
-------- --------
Total long-term liabilities............................. 183,494 186,762
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 15)
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; 150,000,000 shares
authorized, 46,894,148 and 34,100,018 shares issued in
1998 and 1997, respectively, and 45,797,148 and
34,100,018 shares outstanding in 1998 and 1997,
respectively............................................ 469 341
Additional paid-in capital............................... 562,106 180,084
Treasury stock, at cost.................................. (9,133) --
Note receivable, shareholder............................. (973) (973)
Cumulative translation adjustment........................ 1,269 --
Accumulated deficit...................................... (152,844) (78,638)
-------- --------
Total shareholders' equity.............................. 400,894 100,814
-------- --------
$802,751 $381,108
======== ========
</TABLE>
Accompanying notes are integral to these consolidated financial statements.
49
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 1998, 1997 and 1996
(in thousands, except per share data)
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Revenues......................................... $444,818 $229,352 $197,474
Cost Of Services................................. 135,036 63,974 55,601
-------- -------- --------
Gross Profit..................................... 309,782 165,378 141,873
-------- -------- --------
Operating Expenses
Selling, general and administrative............. 241,699 101,308 108,603
Depreciation and amortization................... 110,049 17,074 14,184
Restructuring, merger costs and other special
charges........................................ 15,616 73,597 --
Acquired research and development............... 15,500 -- 11,030
Accrued settlement costs........................ 1,500 1,500 1,250
-------- -------- --------
Total operating expenses....................... 384,364 193,479 135,067
-------- -------- --------
Operating Income (Loss).......................... (74,582) (28,101) 6,806
Other Income (Expense)
Interest, net................................... (14,664) (912) (1,690)
Other, net...................................... 286 226 (286)
-------- -------- --------
Total other expense............................ (14,378) (686) (1,976)
-------- -------- --------
Income (Loss) Before Income Taxes................ (88,960) (28,787) 4,830
Income Tax Provision (Benefit)................... (14,754) (3,412) 1,372
-------- -------- --------
Net Income (Loss)................................ $(74,206) $(25,375) $ 3,458
======== ======== ========
Basic Net Income (Loss) Per Share................ $ (1.67) $ (0.78) $ 0.12
======== ======== ========
Diluted Net Income (Loss) Per Share.............. $ (1.67) $ (0.78) $ 0.11
======== ======== ========
</TABLE>
Accompanying notes are integral to these consolidated financial statements.
50
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
Years Ended December 31, 1998, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
Series A
(Formerly
Series
1994) Common Additional Stock Note Stock Cumulative
Preferred Stock Paid-In Subscriptions Receivable Treasury Warrants Accumulated Translation
Stock Issued Capital Receivable Shareholder Stock Outstanding Deficit Adjustment
--------- ------ ---------- ------------- ----------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
December 31,
1995............ $ 3,907 $198 $ 29,146 $(2,437) $ -- $ -- $ 244 $ (42,697) $ --
Comprehensive
Income:
Net income...... -- -- -- -- -- -- -- 3,458 --
-------- ---- -------- ------- ----- ------- ----- --------- ------
Comprehensive
income.......... -- -- -- -- -- -- -- -- --
-------- ---- -------- ------- ----- ------- ----- --------- ------
Conversion of
Series A
Preferred
Stock........... (3,907) 31 3,876 -- -- -- -- -- --
Conversion of
stock
warrants....... -- 6 238 -- -- -- (244) -- --
Payment of
subscriptions
receivable...... -- -- -- 2,437 -- -- -- -- --
Issuance of
common stock:
Initial public
offering........ -- 46 74,571 -- -- -- -- -- --
Acquisition
(TeleT)......... -- 5 7,495 -- -- -- -- -- --
Strategic
investment (MCI
WorldCom)....... -- 21 25,174 -- -- -- -- -- --
Exercise of
stock options... -- 9 308 -- -- -- -- -- --
Income tax
benefit from
exercise of
stock options... -- -- 6,886 -- -- -- -- -- --
Other equity
transactions,
primarily
S-corporation
distributions... -- -- (665) -- -- -- -- (3,573) --
-------- ---- -------- ------- ----- ------- ----- --------- ------
BALANCE,
December 31,
1996............ $ -- $316 $147,029 $ -- $ -- $ -- $ -- $ (42,812) $ --
Comprehensive
Loss:
Net loss........ -- -- -- -- -- -- -- (25,375) --
-------- ---- -------- ------- ----- ------- ----- --------- ------
Comprehensive
income.......... -- -- -- -- -- -- -- -- --
-------- ---- -------- ------- ----- ------- ----- --------- ------
Payment of debt
in common stock
(Voice-Tel
Acquisitions)... -- 5 11,577 -- -- -- -- -- --
Issuance of
common stock:
Voice-Tel
Acquisitions.... -- 2 789 -- -- -- -- -- --
Exercise of
stock options... -- 18 4,692 -- -- -- -- -- --
Income tax
benefit from
exercise of
stock options... -- -- 15,262 -- -- -- -- -- --
Issuance of
shareholder note
receivable...... -- -- -- -- (973) -- -- -- --
Recapitalization
of S-corporation
accumulated
earnings........ -- -- 735 -- -- -- -- (735) --
Other equity
transactions,
primarily
S-corporation
distributions... -- -- -- -- -- -- -- (9,716) --
-------- ---- -------- ------- ----- ------- ----- --------- ------
BALANCE,
December 31,
1997............ $ -- $341 $180,084 $ -- $(973) $ -- $ -- $ (78,638) $ --
Comprehensive
Loss:
Net loss........ -- -- -- -- -- -- -- (74,206) --
Translation
adjustments.... -- -- -- -- -- -- -- -- 1,269
Comprehensive
loss........... -- -- -- -- -- -- -- -- --
Treasury stock
purchase....... -- -- -- -- -- (9,133) -- -- --
Issuance of
common stock:
Xpedite
Acquisition.... -- 110 345,009 -- -- -- -- -- --
ATS
Acquisition.... -- 7 23,527 -- -- -- -- -- --
Exercise of
stock
options........ -- 11 7,318 -- -- -- -- -- --
Income tax
benefit from
exercise of
stock options... -- -- 6,168 -- -- -- -- -- --
-------- ---- -------- ------- ----- ------- ----- --------- ------
BALANCE,
December 31,
1998........... $ -- $469 $562,106 $ -- $(973) $(9,133) $ -- $(152,884) $1,269
======== ==== ======== ======= ===== ======= ===== ========= ======
<CAPTION>
Total
Shareholders'
Equity
(Deficit)
-------------
<S> <C>
BALANCE,
December 31,
1995............ $(11,639)
Comprehensive
Income:
Net income...... 3,458
-------------
Comprehensive
income.......... 3,458
-------------
Conversion of
Series A
Preferred
Stock........... --
Conversion of
stock
warrants....... --
Payment of
subscriptions
receivable...... 2,437
Issuance of
common stock:
Initial public
offering........ 74,617
Acquisition
(TeleT)......... 7,500
Strategic
investment (MCI
WorldCom)....... 25,195
Exercise of
stock options... 317
Income tax
benefit from
exercise of
stock options... 6,886
Other equity
transactions,
primarily
S-corporation
distributions... (4,238)
-------------
BALANCE,
December 31,
1996............ $104,533
Comprehensive
Loss:
Net loss........ (25,375)
-------------
Comprehensive
income.......... (25,375)
-------------
Payment of debt
in common stock
(Voice-Tel
Acquisitions)... 11,582
Issuance of
common stock:
Voice-Tel
Acquisitions.... 791
Exercise of
stock options... 4,710
Income tax
benefit from
exercise of
stock options... 15,262
Issuance of
shareholder note
receivable...... (973)
Recapitalization
of S-corporation
accumulated
earnings........
Other equity
transactions,
primarily
S-corporation
distributions... (9,716)
-------------
BALANCE,
December 31,
1997............ $100,814
Comprehensive
Loss:
Net loss........ (74,206)
Translation
adjustments.... 1,269
Comprehensive
loss........... (72,937)
Treasury stock
purchase....... (9,133)
Issuance of
common stock:
Xpedite
Acquisition.... 345,119
ATS
Acquisition.... 23,534
Exercise of
stock
options........ 7,329
Income tax
benefit from
exercise of
stock options... 6,168
-------------
BALANCE,
December 31,
1998........... $400,894
=============
</TABLE>
Accompanying notes are integral to these consolidated financial statements.
51
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1998, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).............................. $(74,206) $(25,375) $ 3,458
Adjustments to reconcile net income (loss) to
net cash provided by operating activities
(excluding effects of acquisitions):
Depreciation and amortization................. 110,049 17,074 14,184
Gain on disposal of property and equipment.... 13 -- --
Deferred income taxes......................... (20,044) (4,902) (2,515)
Restructuring, merger costs and other special
charges...................................... 15,616 73,597 --
Acquired research and development............. 15,500 -- 11,030
Accrued settlement costs...................... 1,500 1,500 1,250
Payments for restructuring, merger costs and
other special charges........................ (21,200) (30,586) --
Payments for accrued settlement costs......... (1,291) -- --
Changes in assets and liabilities:
Accounts receivable, net..................... 4,281 (6,467) (1,668)
Prepaid expenses and other................... 6,067 (433) (2,525)
Accounts payable and accrued expenses........ (14,037) 2,751 13,675
-------- -------- --------
Total adjustments........................... 96,454 52,534 33,431
-------- -------- --------
Net cash provided by operating activities... 22,248 27,159 36,889
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures........................... (61,335) (33,387) (21,905)
Proceeds from disposal of property and
equipment..................................... 569 -- --
Redemption (purchase) of marketable securities,
net........................................... 133,796 (86,669) (67,182)
Acquisitions................................... (43,644) (16,198) (2,870)
Strategic alliances and investments............ (8,259) (23,801) (4,777)
Other.......................................... 165 -- 622
-------- -------- --------
Net cash provided by (used in) investing
activities................................. 21,292 (160,055) (96,112)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under borrowing
arrangements, net............................. (29,848) (29,469) (9,547)
Purchase of common stock....................... (9,133) -- --
Proceeds from convertible subordinated notes... -- 172,500 --
Debt issue costs............................... (1,285) (6,028) --
Shareholder distributions, primarily S-
corporation distributions..................... -- (9,360) (3,550)
Exercise of stock options, net of tax
withholding payments.......................... (5,530) 13,823 317
Issuance of shareholder note receivable........ -- (973) --
Net proceeds from initial public offering...... -- -- 74,617
Payment of stock subscriptions receivable...... -- -- 2,437
Issuance of debt............................... -- -- 3,985
Other.......................................... (319) (1,763) (1,343)
-------- -------- --------
Net cash (used in) provided by financing
activities..................................... (46,115) 138,730 66,916
-------- -------- --------
Effect of exchange rate changes on cash......... 31 -- --
-------- -------- --------
NET (DECREASE) INCREASE IN CASH AND
EQUIVALENTS.................................... (2,544) 5,834 7,693
CASH AND EQUIVALENTS, beginning of period....... 21,770 15,936 8,243
-------- -------- --------
CASH AND EQUIVALENTS, end of period............. $ 19,226 $ 21,770 $ 15,936
======== ======== ========
</TABLE>
Accompanying notes are integral to these consolidated financial statements.
52
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY AND ITS BUSINESS
Premiere Technologies, Inc. and subsidiaries ("Premiere" or the "Company"),
a Georgia corporation, began operations in 1991 and went public in March 1996.
The Company provides an array of innovative solutions designed to simplify
everyday communications of business and individuals. Premiere's services
include voice and data messaging, electronic document distribution, full
service conference calling services, enhanced calling services and Internet-
based communications services. Through a series of acquisitions that began in
September 1996, Premiere has assembled a suite of communications solutions, an
international private data network, a global direct sales force and an
international facilities presence consisting of points of presence in North
America, Australia, Asia and Europe. These acquisitions are more fully
described under Note 4 "Acquisitions", which follows.
2. SIGNIFICANT ACCOUNTING POLICIES
Restatement
In February 1999, Premiere announced that as a result of discussions with
the Office of the Chief Accountant of the Securities and Exchange Commission,
Premiere is required to discontinue accounting for its acquisition of Xpedite
as a pooling-of-interests and to account for such acquisition under the
purchase method of accounting. The Office of the Chief Accountant determined
that Premiere's post merger share repurchase program, completed in September
1998, was not implemented in accordance with pooling requirements. No
questions were raised regarding the propriety of the original accounting of
the merger with Xpedite.
Accounting Estimates
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures 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 those estimates.
Principles of Consolidation
The financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany balances and transactions have been
eliminated.
Cash and Equivalents
Cash and equivalents include cash on hand and highly liquid investments with
a maturity at date of purchase of three months or less.
Marketable Securities
The Company follows Financial Accounting Standards Board ("FASB") Statement
of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115 mandates that a
determination be made of the appropriate classification for equity securities
with a readily determinable fair value and all debt securities at the time of
purchase and a reevaluation of such designation as of each balance sheet date.
At December 31, 1998 and 1997, investments consisted of commercial paper,
United States Treasury bills, municipal bonds, coupon municipals, auction rate
preferred investments with various maturities and equity instruments.
Management considers all debt instruments as "held to maturity" and all equity
instruments as "available for sale." Debt instruments are carried at cost, and
equity instruments are carried at the lower of cost or market. As cost
approximates market, there were no unrealized gains or losses at December 31,
1998 or 1997.
53
<PAGE>
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided under
the straight-line method over the estimated useful lives of the assets,
commencing when the assets are placed in service. The estimated useful lives
are ten years for furniture and fixtures, seven years for office equipment and
one to ten years for computer and telecommunications equipment. The cost of
installed equipment includes expenditures for installation. Assets recorded
under capital leases and leasehold improvements are depreciated over the
shorter of their useful lives or the term of the related lease. The Company
has capitalized costs related to the development of proprietary software
utilized to provide enhanced communications services. All costs in the
software development process that are classified as research and development
are expensed as incurred until technological feasibility has been established.
Once technological feasibility has been established, such costs are considered
for capitalization. The
53--1
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Company's policy is to amortize these costs by the greater of (a) the ratio
that current gross revenues for a service offering bear to the total of
current and anticipated future gross revenues for that service offering or (b)
the straight-line method over the remaining estimated life of the service
offering.
Goodwill
Goodwill represents excess of the cost of businesses acquired over fair
value of net identifiable assets at the date of acquisition and has
historically been amortized using the straight line method over various lives
up to 40 years. In the fourth quarter of 1998 the Company shortened the life
of all remaining goodwill to seven years to better reflect rapidly changing
technology and increased competition in the enhanced telecommunications
marketplace.
Valuation of Long-Lived Assets
Management periodically evaluates carrying values of long-lived assets,
including property and equipment, strategic investments, goodwill and other
intangible assets, to determine whether events and circumstances indicate that
these assets have been impaired. An asset is considered impaired when
undiscounted cash flows to be realized from such asset are less than its
carrying value. In that event, a loss is determined based on the amount the
carrying value exceeds the fair market value of such asset.
Strategic Alliances and Investments
The Company has entered into alliances with and made investments in various
companies that are engaged in telecommunications and emerging technologies
that are complementary with the Company's core businesses and which further
the Company's strategic plan. These alliances and investments involve
outsourcing initiatives, equity investments and innovative marketing programs.
Each of the equity investments represent less than a twenty percent ownership
interest and are carried at cost. Intangible assets representing strategic
alliances are amortized over the term of the arrangement and such investments
are carried net of accumulated amortization. See Note 6--"Strategic Alliances
and Investments."
Stock-Based Compensation Plans
The Company recognizes stock based compensation using the intrinsic value
method as permitted by SFAS No. 123. Accordingly, no compensation expense is
recorded for stock based awards issued at market value at the date such awards
are granted. The Company makes pro forma disclosures of net income and net
income per share as if the market value method was followed. See Note 12--
"Stock Based Compensation Plans."
Revenue Recognition
The Company recognizes revenues when services are provided. Revenues consist
of fixed monthly fees, usage fees generally based on per minute rates and
service initiation fees as well as license fees earned from companies which
have license arrangements for the use of the Company's computer telephony
platform. Deferred revenue consists of billings made to customers in advance
of the time services are rendered.
Income Taxes
Deferred income taxes are recorded using enacted tax laws and rates for the
years in which income taxes are expected to be paid. Deferred income taxes are
provided when there is a temporary difference between the recognition of items
in income for financial reporting and income tax purposes.
Net Income (Loss) Per Share
The Company follows SFAS No. 128, "Earnings per Share." That statement
requires the disclosure of basic net income (loss) per share and diluted net
income (loss) per share. Basic net income (loss) per share is computed by
dividing net income (loss) available to common shareholders by the weighted-
average number of common
54
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
shares outstanding during the period and does not include any other
potentially dilutive securities. Diluted net income (loss) per share gives
effect to all potentially dilutive securities. The Company's convertible
subordinated notes and stock options are potentially dilutive securities. In
1998 and 1997, both potentially dilutive securities were antidilutive and
therefore are not included in diluted net income (loss) per share. A
reconciliation of basic net income (loss) per share to diluted net income
(loss) per share follows:
<TABLE>
<CAPTION>
For the Years Ended December 31
-----------------------------------------------------------------------------------
1998 1997 1996
---------------------------- ---------------------------- -------------------------
Weighted Weighted Net Weighted Net
Average Net Loss Average Income Net Average Income
Net Loss Shares Per Share Net Loss Shares Per Share Income Shares Per Share
-------- -------- --------- -------- -------- --------- ------ -------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income (loss)....... $(74,206) -- $ -- $(25,375) -- $ -- $3,458 -- $ --
Less: Preferred stock
dividends.............. -- -- -- -- -- -- 29 -- --
-------- ------ ------ -------- ------ ------ ------ ------ -----
Basic net income
(loss)................. $(74,206) 44,325 $(1.67) $(25,375) 32,443 $(0.78) $3,429 27,670 $0.12
Dilutive Securities
Stock options.......... -- -- -- -- -- -- -- 3,618 0.01
Series A convertible
redeemable 8%
cumulative preferred
stock.................. -- -- -- -- -- -- -- -- --
-------- ------ ------ -------- ------ ------ ------ ------ -----
Diluted net income
(loss)................. $(74,206) 44,325 $(1.67) $(25,375) 32,443 $(0.78) $3,429 31,288 $0.11
======== ====== ====== ======== ====== ====== ====== ====== =====
</TABLE>
Concentration of Credit Risk
Revenues from one customer in the Emerging Enterprise Solutions segment of
the Company represented approximately $41.9 million, $49.9 million and $46.8
million of the Company's consolidated revenues for 1998, 1997 and 1996,
respectively.
Foreign Currency Translation
The assets and liabilities of subsidiaries domiciled outside the United
States are translated at rates of exchange existing at the balance sheet date.
Revenues and expenses are translated at average rates of exchange prevailing
during the year. The resulting translation adjustments are recorded as a
separate component of stockholders equity.
Treasury Stock
Treasury stock transactions are recorded at cost. When treasury shares are
reissued, the company uses a first-in, first-out method and the excess of
purchase cost over reissuance price, if any, is recorded in retained earnings.
Comprehensive Income
In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income."
Comprehensive income represents the change in equity of a business during a
period, except for investments by owners and distributions to owners. Foreign
currency translation adjustments represent the Company's only component of
other comprehensive income. For the year ended December 31, 1998, total
comprehensive loss was approximately $(72.9) million. For the years ended
December 31, 1997 and 1996, total comprehensive income (loss) approximates net
income (loss).
55
<PAGE>
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities".
SFAS No. 133 establishes accounting and reporting standards for derivatives
and hedging. It requires that all derivatives be recognized as either assets
or liabilities at fair value and establishes specific criteria for the use of
hedge accounting. The Company's required adoption date is January 1, 2000.
SFAS No. 133 is not to be applied retroactively to financial statements of
prior periods. The Company expects no material impact to its financial
position upon adoption of SFAS No. 133.
"Statement of Position "SOP" 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," provides guidance on
accounting for the costs of computer software developed or obtained for
internal use and is required to be adopted no later than Premiere's 1999
fiscal year. Also, in June 1998, the American Institute of Certified Public
Accountants issued SOP 98-5, "Reporting on the Costs of Start-up Activities."
SOP 98-5 requires costs of start-up activities and organizational costs, as
defined to be expensed as incurred. The Company expects no material impact to
its financial position upon adoption of SOP 98-1 or SOP 98-5.
Reclassifications
Certain prior year amounts in the Company's financial statements have been
reclassified to conform to the 1998 presentation.
55--1
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. RESTRUCTURING, MERGER COSTS AND OTHER SPECIAL CHARGES
In 1998, Premiere recorded restructuring, merger costs and other special
charges of approximately $15.6 million. Such costs consist of write-downs of
two strategic investments associated with its Emerging Enterprise Solution
group in 1998 totaling approximately $17.8 million offset in part by a net
reduction in accrued restructuring, merger costs and other special charges of
approximately $2.2 million discussed below. Approximately $13.9 million of the
$17.8 million writedown relates to a write-down in the carrying value of the
MCI WorldCom strategic alliance intangible asset. This charge was required
based upon management's assessment regarding recoverability of this asset
given current events and circumstances and guidelines mandated by SFAS No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of." The fair market value of this asset was computed using the
estimated future cash flows expected to be derived under this arrangement
discounted at an appropriate rate. The Company reevalulated the carrying value
and remaining life of the MCI WorldCom strategic alliance in light of the
level of revenues expected to be achieved from the alliance following the
merger of WorldCom and MCI in the third quarter of 1998. The remaining write-
down reflects a charge of approximately $3.9 million to reduce the carrying
value of Premiere's investment in certain equity securities of DigiTEC 2000 to
their fair market value. This charge resulted from management's assessment
that the decline in value of these securities was not temporary. The fair
market value of this investment used to determine the impairment charge was
based on quoted market prices.
The $2.2 million net reduction of accrued restructuring, merger costs and
other special charges includes a charge of approximately $7.5 million in the
first quarter of 1998 to restructure the operations of Premiere and Xpedite
subsequent to their merger. Such costs consist of severance associated with
workforce reduction, lease termination costs, costs to terminate certain
contractual obligations and asset impairments. Severance benefits have been
provided for termination of approximately 122 employees. These actions result
from management's plans to reduce sales, operations and administrative
headcount by exiting duplicative and underperforming operations. Premiere has
also provided for lease termination and clean-up costs associated with these
facilities and operations. In addition, the Company provided for costs
associated with commitments under certain advertising contracts from which the
Company is currently generating no incremental revenue and for costs to
terminate certain unfavorable reseller agreements. Although certain
restructuring actions were being contemplated at the acquisition date,
definitive plans for such actions were not formalized until after such date.
Accordingly, there were no exit costs included in the purchase allocation of
Xpedite. These costs were offset by adjustments in the reserve balance in the
fourth quarter of 1998 which reduced such reserves by approximately $9.7
million. The net reduction in reserves was necessary to eliminate remaining
accruals for programs that have been completed at lower cost than anticipated
and to reflect subsequent changes to management's restructuring plans.
In 1997, Premiere recorded restructuring, merger costs and other special
charges of approximately $73.6 million in connection with its mergers of
VoiceCom and Voice-Tel. In connection with the VoiceCom acquisition, the
Company recorded restructuring, merger costs and other special charges of
approximately $28.2 million in the third quarter of 1997. Such amounts consist
of transaction costs, asset impairments, costs to terminate or restructure
certain contractual obligations and other costs. Transaction costs associated
with the VoiceCom acquisition were expensed as required by the pooling-of-
interests method of accounting. Other restructuring and special charges
recorded in the third quarter result principally from management's plan to
restructure VoiceCom's operations by reducing its workforce, exiting certain
facilities, discontinuing duplicative product offerings and terminating or
restructuring certain contractual obligations. The Company recorded
56
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
approximately $45.4 million of restructuring, merger costs and other special
charges in the second quarter of 1997 in connection with the Voice-Tel
Acquisitions. Those charges result from management's plan to restructure the
operations of the Voice-Tel Entities under a consolidated business group model
and discontinue its franchise operations. This initiative involves substantial
reduction in the administrative workforce, abandoning duplicate facilities and
assets and other costs necessary to discontinue redundant business activities.
Reserves for restructuring, merger costs and other special costs and charges
against operations for the year ended December 31, 1998 are as follows (in
thousands):
<TABLE>
<CAPTION>
Charges (Credits) to
Operations
-----------------------------
Accrued Costs First Net Accrued Costs
December 31, Quarter reduction Costs December 31,
1997 Charge in reserves Incurred 1998
------------- ------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C>
Severance............... $ 6,201 $1,778 $ 1,567 $ (4,709) $ 4,837
Asset impairments....... 10,831 707 (3,668) (3,148) 4,722
Restructure or terminate
contractual
obligations............ 13,354 390 (8,718) (4,609) 417
Transaction costs....... 4,940 833 (864) (4,909) --
Other costs, primarily
to exit facilities and
certain activities..... 3,788 3,837 1,976 (7,310) 2,291
------- ------ ------- --------- -------
$39,114 $7,545 $(9,707) $(24,685) $12,267
======= ====== ======= ========= =======
</TABLE>
4. ACQUISITIONS
American Teleconferencing Services, Ltd. Acquisition
In April 1998, the Company purchased all of the issued and outstanding
common stock of American Teleconferencing Services ("ATS"), a provider of full
service conference calling and group communication services. The shareholders
of ATS received an aggregate of approximately 678,500 shares of Premiere
common stock and cash consideration of approximately $21 million. Excess
purchase price over fair value of net assets acquired of approximately $47
million has been recorded as goodwill and is being amortized on a straight-
line basis over seven years. This transaction has been accounted for as a
purchase. Approximately 33,500 shares of Premiere common stock and cash
consideration of $1.04 million were placed in escrow to secure indemnification
claims.
Xpedite Systems, Inc. Acquisition
On February 27, 1998, Premiere acquired Xpedite Systems, Inc. ("Xpedite") ,
a worldwide leader in the enhanced document distribution business including
fax, e-mail, telex and mailgram services. Premiere issued
57
<PAGE>
approximately 11.0 million shares of its common stock in connection with this
acquisition. This transaction has been accounted for as a purchase. The
purchase price of Xpedite has been allocated based on an independent appraisal
as follows:
<TABLE>
<CAPTION>
<S> <C>
Operating and other tangible assets................................ $ 90,035
Customer lists..................................................... 35,700
Developed technology............................................... 34,300
Acquired research and development.................................. 15,500
Assembled workforce................................................ 7,500
Goodwill........................................................... 384,701
Assets acquired.................................................... 567,736
--------
Less liabilities assumed........................................... 203,487
--------
$364,249
========
</TABLE>
The valuation of intangible assets and acquired research ad development were
based upon an independent appraisal. Acquired research and development costs
represents the value assigned to research and development projects in the
development stage which had not reached technological feasibility at the date
of acquisition or had no alternative future use. These costs were expensed at
the date of acquisition.
The acquired research and development related to a project to develop a new
job monitor. This project was 50% complete as of the acquisition date and had
not yet completed a successful beta test. The primary high risk at valuation
date involved identifying and correcting the design flaws that would typically
arise during beta testing. Fair value was determined using an income approach.
Revenues from this new job monitor are anticipated beginning in 1999 and
discount rate of 25% was used.
International Acquisitions
During the second quarter of 1998, the Company acquired two electronic
document distribution companies located in Germany and Singapore. The
aggregate purchase price of these acquisitions approximates $18 million in
cash and liabilities assumed. Both of the acquisitions were accounted for as
purchases. Excess purchase price over fair value of net assets acquired of
approximately $13 million has been recorded as goodwill and is being amortized
on a straight-line basis over seven years.
57--1
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
VoiceCom Acquisition
During the third quarter of 1997, the Company acquired VoiceCom, a provider
of 800-based enhanced calling and voice messaging services, through the
issuance of approximately 446,000 shares of its common stock. This transaction
was accounted for as a pooling-of-interests, and the Company's financial
statements present for all periods the operations of VoiceCom.
Voice-Tel Acquisitions
In June 1997, the Company completed the Voice-Tel Acquisitions. The Company
issued approximately 7.4 million shares of its common stock, paid
approximately $16.2 million in cash and assumed approximately $21.3 million in
indebtedness, net of cash acquired to complete the Voice-Tel acquisitions.
Most of the transactions were structured as tax-free mergers or share
exchanges and were accounted for under the pooling-of-interests method of
accounting. Accordingly, the financial statements of the Company present for
all periods the operations of the Voice-Tel Acquisitions that were accounted
for as pooling-of-interests.
The Company purchased 15 of the Franchisees and the limited partner interest
in VTNLP for an aggregate of approximately $15.5 million in cash and
approximately 94,000 shares of its common stock. The excess of the purchase
price over the fair value of the net assets acquired is recorded as an
intangible asset.
A reconciliation of previously reported operating results to those restated
for pooling-of-interests transactions is as follows:
<TABLE>
<CAPTION>
1996
--------------
(in thousands,
except per
share data)
<S> <C>
Revenue:
Premiere, as previously reported............................. $ 52,079
Voice-Tel Acquisitions....................................... 90,075
VoiceCom..................................................... 55,320
--------
Premiere, as restated......................................... $197,474
--------
Net income (loss):
Premiere, as previously reported............................. $ (956)
Voice-Tel Acquisitions....................................... 3,972
VoiceCom..................................................... 442
--------
Premiere, as restated......................................... $ 3,458
--------
Net income (loss) per share:
Premiere, as previously reported
Basic........................................................ $ (0.05)
========
Diluted...................................................... $ (0.05)
========
Premiere, as restated
Basic........................................................ $ 0.12
========
Diluted...................................................... $ 0.11
========
</TABLE>
58
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
TeleT Acquisition
On September 18, 1996, the Company purchased substantially all of the assets
and business operations of TeleT Communications LLC ("TeleT") for 498,187
shares of the Company's common stock and approximately $2,9 million in cash.
TeleT was an Internet-based technology development company focused on the
integration of computers and telephones.
In connection with this acquisition, the Company allocated approximately
$11.0 million of the purchase price to research and development projects which
had not yet reached technological feasibility and had no alternate future use.
This allocation was based on values determined by an independent appraisal.
The following unaudited pro forma consolidated results of operations for the
years ended December 31, 1998 and 1997 assume acquisitions completed during
1998 and 1997 which were accounted for as purchases occurred as of January 1,
1997, (in thousands, except per share data).
<TABLE>
<CAPTION>
1998 1997
-------- ---------
<S> <C> <C>
Revenues............................................... $494,982 $ 441,797
Net loss............................................... $(96,023) $(112,822)
Basic net loss per share............................... $ (2.03) $ (2.59)
Diluted net loss per shares............................ $ (2.03) $ (2.59)
</TABLE>
5. PROPERTY AND EQUIPMENT
Property and equipment at December 31 is as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Computer and telecommunications equipment.................. $187,602 $92,137
Furniture and fixtures..................................... 11,700 2,123
Office equipment........................................... 10,931 5,476
Leasehold improvements..................................... 23,064 7,199
Construction in progress................................... 11,712 13,926
-------- -------
245,009 120,861
Less accumulated depreciation.............................. 110,309 57,284
-------- -------
Property and equipment, net................................ $134,700 $63,577
======== =======
</TABLE>
Assets under capital leases included in property and equipment at December
31 are as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
------ -------
<S> <C> <C>
Telecommunications equipment................................. $7,000 $18,345
Less accumulated depreciation................................ 4,973 10,867
------ -------
Property and equipment, net.................................. $2,027 $ 7,478
====== =======
</TABLE>
Management continually reevaluates the Company's assets with respect to
estimated remaining useful lives and whether current events and circumstances
indicate an impairment condition exists. Effective in the fourth quarter of
1998, management accelerated depreciation of certain assets by shortening
their estimated useful lives. These assets consist of computers and
telecommunications equipment associated with certain legacy technology systems
which management intends to remove from service in the foreseeable future. The
carrying value of such assets approximated $41.0 million at December 31, 1998.
Effective in the fourth quarter of 1998, these assets will be amortized over
periods ranging from nine months to one year, the anticipated remaining
service period. The remaining estimated useful lives of these assets prior to
this change ranged from two to five years.
59
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. STRATEGIC ALLIANCES AND INVESTMENTS
Strategic alliances and investments at December 31 is as follows (in
thousands):
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
MCI WorldCom, net........................................... $16,072 $29,972
Intangible assets........................................... -- 18,500
Less accumulated amortization............................... 3,445 1,878
------- -------
12,627 46,594
Equity investments.......................................... 15,883 5,301
------- -------
$28,510 $51,895
======= =======
</TABLE>
In November 1996, the Company entered into a strategic alliance agreement
with WorldCom, Inc. (predecessor to MCI WorldCom), the second largest long-
distance carrier in the United States. Under the agreement, MCI WorldCom is
required, among other things, to provide the Company with the right of first
opportunity to provide enhanced computer telephony products for a period of at
least 25 years. In connection with this agreement, the Company issued to MCI
WorldCom 2,050,000 shares of common stock valued at approximately $25.2
million (based on an independent appraisal), and paid MCI WorldCom
approximately $4.7 million in cash. The Company periodically reviews this
asset for impairment and in 1998 determined that a write-down was required
based upon management's assessment of revenue levels expected to be derived
from this alliance and uncertainties surrounding the merger of WorldCom and
MCI in 1998. Accordingly, Premiere recorded a write-down in the carrying value
of this investment of approximately $13.9 million in 1998. In addition, the
Company accelerated amortization of this asset effective in the fourth quarter
of 1998 by shortening its estimated useful life to 3 years as compared with a
remaining life of 23 years prior to the change. Premiere also recorded a
write-down of approximately $3.9 million in 1998 in its investment in certain
equity securities of DigiTEC 2000 Inc. This charge was necessary to reduce the
carrying value of this investment to its fair market value. The charge
resulted from management's assessment that the decline in value of these
securities below their carrying value was not temporary. See also Note 3
"Restructuring, Merger Costs and Other Special Charges."
Intangible assets and equity investments classified as strategic alliances
and investments consist of initiatives funded by the Company to further its
strategic plan. These investments and alliances involve emerging technologies,
such as the internet, as well as marketing alliances and outsourcing programs
designed to reduce costs and develop new markets and distribution channels for
the Company's products. The Company made investments of approximately $8.3
million in 1998 to acquire initial or increase existing equity interests in
various companies engaged in emerging technologies, such as the internet.
Premiere's equity investments include now holds minority equity investments in
WebMD, a provider of internet-based services to the healthcare industry,
USA.NET, a leading provider of outsourced e-mail services, Intellivoice, an
entity engaged in developing internet-enabled communications products,
VerticalOne, a network-based services provider that increases frequency,
duration, and quality of its visits to customers' Web sites and Webforia, a
provider of Web services, tools and communities that assist individuals in
presenting high quality information from the Internet. Management will
continue to make such investments in the future in complementary businesses
and other initiatives that further its strategic business plan. All equity
investments held by the Company in other organizations represent a less than
20 percent ownership and are being accounted for under the cost method.
60
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
7. INTANGIBLES ASSETS
Intangibles assets consist of the following amounts for December 31, 1998
and 1997 (in thousands):
<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Goodwill................................................... $468,720 $18,959
Customer lists............................................. 50,058 2,946
Developed technology....................................... 34,300 --
Assembled work force....................................... 7,500 --
-------- -------
560,578 21,905
Less accumulated amortization.............................. 68,393 1,149
-------- -------
$492,185 $20,756
======== =======
</TABLE>
A summary of intangible assets acquired in the Xpedite acquisitions and the
estimated useful lives over which such assets are being amortized is as
follows:
<TABLE>
<CAPTION>
Appraised Estimated Useful
Value Life (years)
--------- ----------------
<S> <C> <C>
Goodwill.......................................... $384,701 7
Customer lists.................................... 35,700 5
Developed technology.............................. 34,300 4
Assembled workforce............................... 7,500 3
--------
$462,201
========
</TABLE>
Effective in the fourth quarter of 1998 management accelerated the
amortization of all goodwill and intangible assets from its purchase
acquisitions. This action resulted from management's determination that the
period over which it anticipates deriving future cash flows from such assets
warrants a shorter estimated useful life for amortization purposes. Goodwill
is now being amortized over 7 years as compared with 10 to 40 years prior to
the change. Remaining intangible assets are being amortized over lives ranging
from 3 to 5 years as compared with 5 years prior to the change. These changes
in estimated useful lives of goodwill and other intangible assets increased
amortization expense by approximately $18.3 million in the fourth quarter of
1998.
8. INDEBTEDNESS
Long-term debt at December 31 is as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
-------- ------
<S> <C> <C>
Revolving loan to banks..................................... $118,082 $ --
Notes payable............................................... 5,122 573
Notes payable to shareholders and individuals............... 481 3,130
-------- ------
123,685 3,703
Less current portion........................................ 119,494 2,849
-------- ------
$ 4,191 $ 854
======== ======
</TABLE>
On December 16, 1998, the Company amended and restated the revolving loan
facility it assumed in the acquisition of Xpedite for a one year period. This
facility provides for borrowings of up to $150 million with two banks. At
December 31, 1998, the Company had approximately $118.1 million outstanding
under this facility. This arrangement expires in December 1999 and the Company
is currently in discussions to replace the
61
<PAGE>
facility. Interest rates for borrowings on the facility are determined at the
time of borrowings based on a choice of formulas as specified in the
agreement. In addition, certain restrictive covenants require the Company to
maintain certain leverage and interest coverage ratios.
Notes payable to shareholders and individuals consist principally of
indebtedness assumed by the Company in connection with the Voice-Tel and
VoiceCom acquisitions. Interest on borrowings under such notes range from 5%
to 16%. A majority of these obligations were repaid in 1997 in connection with
the acquisitions. The Company issued approximately 484,000 shares to redeem
approximately $11.6 million of such indebtedness in connection with the
acquisitions.
Maturities of long-term debt are as follows (in thousands):
<TABLE>
<S> <C>
1999................................................................ $119,494
2000................................................................ 1,860
2001................................................................ 1,873
2002................................................................ 433
2003................................................................ 25
--------
$123,685
========
</TABLE>
61--1
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
9. CONVERTIBLE SUBORDINATED NOTES
In July 1997, the Company issued convertible subordinated notes
("Convertible Notes") of $172,500,000 which mature in 2004 and bear interest
at 5 3/4%. The Convertible Notes are convertible at the option of the holder
into common stock at a conversion price of $33 per share, through the date of
maturity, subject to adjustment in certain events. The Convertible Notes are
redeemable by the Company beginning in July 2000 at a price of 103% of the
conversion price declining to 100% at maturity with accrued interest. Debt
issuance costs consisting of investment banking, legal and other fees of
approximately $6,028,000 incurred in connection with the Convertible Notes are
being amortized on a straight-line basis over the life of the notes and are
included in other assets in the accompanying balance sheets. Included in
interest is approximately $785,000 and $897,000 of debt issuance cost
amortization for December 31, 1998 and 1997, respectively.
10. FINANCIAL INSTRUMENTS
The estimated fair value of certain financial instruments at December 31,
1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
-------------------- ------------------
Carrying Fair Carrying Fair
(Dollar amounts in thousands) Amount Value Amount Value
- - ----------------------------- --------- --------- -------- --------
<S> <C> <C> <C> <C>
Cash and short-term investments..... $ 19,226 $ 19,226 $ 21,770 $ 21,770
Marketable securities............... 20,769 20,769 154,569 154,569
Revolving loan...................... (118,082) (118,082) -- --
Convertible subordinated notes (see
Note 9)............................ (172,500) (96,169) (172,500) (181,349)
Notes payable, long-term debt and
capital leases (see Notes 8 and
15)................................ (9,091) (9,091) (9,198) (9,198)
</TABLE>
The carrying amount of cash and short-term investments, marketable
securities, accounts receivable and payable, revolving loan and accrued
liabilities approximates fair value. The fair value of convertible
subordinated notes is estimated based on market quotes. The carrying value of
notes payable, long-term debt and capital lease obligations does not vary
materially from fair value at December 31, 1998 and 1997.
11. SHAREHOLDERS' EQUITY
During 1998, Premiere executed a stock repurchase program under which it
repurchased approximately 1.1 million shares of its common stock for
approximately $9.1 million. These shares were held in treasury at December 31,
1998.
On January 18, 1996, the holder of the Series A Preferred Stock elected to
convert all of the shares of the Series A Preferred Stock into 3,095,592
shares of the Company's common stock at $93 per share (presplit). The Series A
Preferred Stock was fully cumulative, and the holders of the shares were
entitled to receive dividends at a rate of 8%. The Company accrued $308,419
and $29,337 of dividends payable, plus accrued interest, if applicable, during
the years ended December 31, 1995 and 1996, respectively. Dividends of
$676,981 were paid during the year ended December 31, 1996 to holders of
Series A Preferred Stock.
During 1998, 1997 and 1996, stock options were exercised under the Company's
stock option plans. None of the options exercised qualified as incentive stock
options, as defined in Section 422 of the Internal Revenue Code (the "Code").
Approximately $6,168,000, $15,262,000 and $6,886,000 were recorded as
increases in additional paid-in capital reflecting tax benefits to be realized
by the Company as a result of the exercise of such options during the years
ended December 31, 1998, 1997 and 1996, respectively.
62
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company made distributions to shareholders of approximately $9.7 million
and $3.6 million in 1997 and 1996. These distributions were made to
shareholders of Voice-Tel and VoiceCom in periods prior to their acquisition
by the Company. Such distributions consisted principally of amounts paid to
shareholders of S-Corporations in connection with their responsibility to pay
income tax on the proportionate share of taxable income they were required to
include in their individual income tax return. Upon acquisition by the
Company, these S-Corporations became subject to income tax. Accumulated
earnings of S-Corporations at the date of acquisition have been reclassified
as additional paid-in capital representing the recapitalization of these
entities.
12. STOCK-BASED COMPENSATION PLANS
The Company has three stock based compensation plans, 1994 Stock Option
Plan, 1995 Stock Plan and 1998 Stock Plan, which provide for the issuance of
restricted stock, stock options, warrants or stock appreciation rights to
employees, directors, and non-employee consultants as advisors of the Company.
These plans are administered by a committee consisting of members of the board
of directors of the Company.
Options for all 960,000 shares of common stock available under the 1994
Stock Option Plan have been granted. Generally, all such options are non-
qualified, provide for an exercise price equal to fair market value at date of
grant, vest ratably over three years and expire eight years from date of
grant.
The 1995 Stock Plan provides for the issuance of stock options, stock
appreciation rights ("SARs") and restricted stock to employees. A total of
8,000,000 shares of common stock have been reserved in connection with this
Plan. Options issued under this Plan may be either incentive stock options,
which permit income tax deferral upon exercise of options, or nonqualified
options not entitled to such deferral.
Sharp declines in the market price of the Company's common stock resulted in
many outstanding employee stock options being exercisable at prices that
exceeded the current market price of the Company's common stock, thereby
substantially impairing the effectiveness of such options as performance
incentives. Consistent with the Company's philosophy of using equity
incentives to motivate and retain management and employees, the Board of
Directors determined it to be in the best interests of the Company and its
shareholders to restore the performance incentives intended to be provided by
employee stock options by repricing such options. Consequently, on July 22,
1998 the Board of Directors of the Company determined to reprice or regrant
all employee stock options which had exercise prices in excess of the closing
price on such date (other than those of Chief Executive Officer Boland T.
Jones) to $10.25, which was the closing price of Premiere's common stock on
such date. While the vesting schedules remained unchanged, the repriced and
regranted options are generally subject to a twelve-month black-out period,
during which the options may not be exercised. If an optionee's employment is
terminated during the black-out period, he or she will forfeit any repriced or
regranted options that first vested during the twelve-month period preceding
his or her termination of employment. On December 14, 1998, the Board of
Directors determined to reprice or regrant at an exercise price of $5.50, all
employee stock options which had an exercise price in excess of $5.50, which
was above the closing price of Premiere's common stock on such date. Again,
the vesting schedules remained the same, as the repriced or regranted options
are generally subject to a twelve-month black-out period during which the
option may not be exercised. If the optionee's employment is terminated during
the black-out period, he or she will forfeit any repriced or regranted options
that first vested during the twelve-month period preceding his or her
termination of employment. By imposing the black-out and forfeiture provisions
on the repriced and regranted options, the Board of Directors intends to
provide added incentive for the optionees to continue service.
On July 22, 1998, the Board of Directors approved the 1998 Stock Plan (the
"1998 Plan") that essentially mirrors the terms of the Company's existing
Second Amended and Restated 1995 Stock Plan (the "1995 Plan"), except that it
is not intended to be used for executive officers or directors. In addition,
the 1998 Plan,
63
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
because it was not approved by the shareholders, does not provided for the
grant of incentive stock options. Under the 1998 Plan, 4,000,000 shares of
Common Stock are reserved for the grant of nonqualified stock options and
other incentive awards to employees and consultants of the Company.
On June 23, 1998, the Company's Board of Directors declared a dividend of
one preferred stock purchase right (a "Right") for each outstanding share of
the Company's Common Stock. The dividend was paid on July 6, 1998, to the
shareholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one one-thousandth of a share of Series C Junior
Participating Preferred Stock, par value $0.01 per share (the "Preferred
Shares"), at a price of sixty dollars ($60.00) per one-thousandth of a
Preferred Share, subject to adjustment. The description and terms of the
Rights are set forth in the Shareholder Protection Rights Agreement, as the
same may be amended from time to time, dated as of June 23, 1998, between the
Company and SunTrust Bank, Atlanta, as rights agent. The Rights should not
interfere with any merger, statutory share exchange or other business
combination approved by the Board of Directors since the Rights may be
terminated by the Board of Directors at any time on or prior to the close of
business ten business days after announcement by the Company that a person has
become an Acquiring Person. Thus, the Rights are intended to encourage persons
who may seek to acquire control of the Company to initiate such an acquisition
through negotiations with the Board of Directors. However, the effect of the
Rights may be to discourage a third party from making a partial tender offer
or otherwise attempting to obtain control of the Company.
As permitted by SFAS No. 123, the Company recognizes stock based
compensation using the intrinsic value method. Accordingly, no compensation
expense has been recognized for awards issued under the Company's stock based
compensation plans since the exercise price of such awards is generally the
market price of the underlying common stock at date of grant. Had compensation
cost been determined under the market value method using Black-Scholes
valuation principles, net income (loss) and net income (loss) per share would
have been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
1998 1997
--------- -------
(in thousands,
except per share
data)
<S> <C> <C>
Net loss
As reported............................................. $ (74,206) (25,375)
Pro forma............................................... (100,428) (32,399)
Net loss per share
As reported
Basic.................................................. $ (1.67) $ (0.78)
Diluted................................................ (1.67) (0.78)
Pro forma
Basic.................................................. (2.27) (1.02)
Diluted................................................ (2.27) (1.02)
</TABLE>
Significant assumptions used in the Black-Scholes option pricing model
computations are as follows:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Risk-free interest rate.............................. 4.33%-5.68% 6.30%
Dividend yield....................................... 0% 0%
Volatility factor.................................... 1.05 .46
Weighed average expected life........................ 4.65 years 2.10 years
</TABLE>
64
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The pro forma amounts reflect options granted since January 1, 1996. Pro
forma compensation cost may not be representative of that expected in future
years. A summary of the status of the Company's stock plans is as follows:
<TABLE>
<CAPTION>
Weighted Average
Fixed Options Shares Exercise Price
------------- ---------- ----------------
<S> <C> <C>
Options outstanding at December 31, 1995........ 7,535,391 $ 1.07
Granted........................................ 1,332,088 18.89
Exercised...................................... (1,372,369) 0.51
Forfeited...................................... (88,778) 18.03
---------- ------
Options outstanding at December 31, 1996........ 7,406,332 $ 4.27
Granted........................................ 3,484,092 23.38
Exercised...................................... (2,221,244) 2.06
Forfeited...................................... (1,256,432) 8.81
---------- ------
Options outstanding at December 31, 1997........ 7,412,748 $13.29
Granted........................................ 9,062,589 16.44
Exercised...................................... (1,112,361) 7.06
Forfeited...................................... (1,413,120) 16.06
---------- ------
Options outstanding at December 31, 1998........ 13,949,856 $ 5.79
========== ======
</TABLE>
The following table summarizes information about stock options outstanding
at December 31, 1998:
<TABLE>
<CAPTION>
Weighted Weighted Average Weighted Average
Range of Average Exercise Exercise
Exercise Options Remaining Price of Options Options Price of Options
Prices Outstanding Life Outstanding Exercisable Exercisable
- - -------- ----------- --------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$0--$5 2,531,976 4.58 $1.33 2,531,569 $1.33
$6--$10 10,366,085 7.18 5.76 2,407,747 6.28
$11--$15 497,520 6.09 10.41 216,833 10.62
$16--$30 554,275 4.59 22.67 514,022 22.71
---------- ---- ----- --------- -----
13,949,856 6.56 $5.79 5,670,171 $5.72
========== ==== ===== ========= =====
</TABLE>
13. EMPLOYEE BENEFIT PLANS
The Company sponsors three defined contribution retirement plans covering
substantially all full-time employees. These plans allow employees to defer a
portion of their compensation and associated income taxes pursuant to Section
401(k) of the Internal Revenue Code. The Company may make discretionary
contributions for the benefit of employees under each of these plans. The
Company made contributions of $424,000 and $0 in 1998. There were no
contributions made by Premiere to defined contribution plans in 1997.
14. RELATED-PARTY TRANSACTIONS
The Company has in the past entered into agreements and arrangements with
certain officers, directors and principal shareholders of the Company
involving loans of funds, grants of options and warrants and the acquisition
of a business. Certain of these transactions may be on terms more favorable to
officers, directors and principal shareholders than they could acquire in a
transaction with an unaffiliated party. The Company follows a policy that
requires all material transactions between the Company and its officers,
directors or other affiliates (i) be approved by a majority of the
disinterested members of the board of directors of the Company and (ii) be on
terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
65
<PAGE>
In November 1995, the Company loaned $90,000 with recourse to an officer of
the Company in connection with the officer's transition from his previous
employer to the Company. This unsecured loan is evidenced by a promissory note
bearing interest at 6.11%, the interest on which is payable beginning in
November 1997 and continuing each year until November 1999. Principal is to be
repaid in five equal annual installments, with accrued interest, commencing in
November 2000. The principal and accrued interest on this note were cancelled
in January 1998.
During 1997, an officer of the Company exercised an option to purchase
100,000 shares of the Company's common stock at an exercise price of $.27 a
share. The Company loaned the officer $973,000 to pay taxes associated with
the exercise of the options. The loan is evidenced by a recourse promissory
note which bears interest at 6% and is secured by the common stock purchase by
the officer.
In may 1998, the Company loaned $100,000 with recourse to an officer of the
Company in connection with the officer's transition from his previous employer
to the Company. This unsecured loan is evidenced by a promissory note bearing
interest at 5.5%, and the principal plus accrued interest are due and payable
on the second anniversary of the note; provided, however, one-half of the
principal plus accrued interest will be cancelled on the first anniversary of
the note if the officer is employed by the Company on that date, and the
balance of the principal plus accrued interest will be cancelled on the second
anniversary of the note if the officer is employed by the Company on that
date. In addition, the unpaid principal of the note plus all accrued interest
will be cancelled if the officer's employment is terminated without cause or
if there is a change in control of the Company.
During 1998, the Company leased the use of an airplane on an hourly basis
from a limited liability company that is owned 99% by the Company's chief
executive officer and 1% by the Company. In connection with this lease
arrangement, the Company advanced approximately $270,000 to the limited
liability company to pay the expenses of maintaining and operating the
airplane. The amount due from the limited liability company is recorded in
accounts receivable at December 31, 1998.
65--1
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
15. COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company leases computer and telecommunications equipment, office space
and other equipment under noncancelable lease agreements. The leases generally
provide that the Company pay the taxes, insurance and maintenance expenses
related to the leased assets. Future minimum operating and capital lease
payments as of December 31, 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------- ---------
<S> <C> <C>
1999...................................................... $2,082 $ 9,728
2000...................................................... 986 7,357
2001...................................................... 412 5,807
2002...................................................... 224 4,757
2003...................................................... -- 4,434
Thereafter................................................ -- 14,893
------ -------
Net minimum lease payments................................ 3,704 $46,976
=======
Less amount representing interest......................... 216
------
Present value of net minimum lease payments............... 3,488
Less current portion...................................... 1,958
------
Obligations under capital lease, net of current portion... $1,530
======
</TABLE>
Rent expense under operating leases was approximately $11,199,000,
$7,516,000 and $8,275,000 for the years ended December 31, 1998, 1997 and
1996, respectively. Future minimum payments for facilities rent are reduced by
scheduled sublease income of approximately $501,000 and $700,000 for the years
ended December 31, 1998 and 1997. During 1997 and 1996, additions of computer
and telecommunications equipment resulted in an increase in capital lease
obligations of approximately $829,000 and $85,000, respectively.
Supply Agreements
The Company obtains long-distance telecommunications services pursuant to
supply agreements with suppliers of long-distance telecommunications
transmission services. These contracts generally provide fixed transmission
prices for terms of three to five years, but are subject to early termination
in certain events. No assurance can be given that the Company will be able to
obtain long-distance services in the future at favorable prices or at all, and
the unavailability of long-distance service, or a material increase in the
price at which the Company is able to obtain long-distance service, would have
a material adverse effect on the Company's business, financial condition and
results of operations. Certain of these agreements provide for minimum
purchase requirements. The Company is currently a party to five [update] long-
distance telecommunications services contracts that require the Company to
purchase a minimum amount of services each month.
Litigation and Claims
The Company has several litigation matters pending, as described below,
which it 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.
66
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company and certain of its officers and directors have been named as
defendants in multiple shareholder class action lawsuits filed in the United
States District Court for the Northern district of Georgia. Plaintiffs seek to
represent a class of individuals who purchased or otherwise acquired the
Company's common stock from as early as February 11, 1997 through June 10,
1998. Class members allegedly include those who purchased the Company's common
stock as well as those who acquired stock through the Company's acquisitions
of Voice-Tel, Voice-Tel franchises and Xpedite. Plaintiffs allege the
defendants made positive public statements concerning the Company's growth and
acquisitions. In particular, plaintiffs allege the defendants spoke positively
about the Company's acquisitions of Voice-Tel, Xpedite, ATS, TeleT and
VoiceCom, as well as its venture with UniDial Communications, its investment
in USA.NET, and the commercial release of Orchestrate. Plaintiffs allege these
public statements were fraudulent because the defendants knowingly failed to
disclose that the Company allegedly was not successfully consolidating and
integrating these acquisitions. Alleged evidence of scienter include sales by
certain individual defendants during the class period and the desire to keep
the common stock price high so that future acquisitions could be made using
the Company's common stock. Plaintiffs allege the truth was purportedly
revealed on June 10, 1998, when the Company announced it would not meet
analysts' estimates of second quarter 1998 earnings because, in part, of the
financial difficulties experienced by a licensing customer and by a strategic
partner with respect to the Company's Enhanced Calling Services, revenue
shortfalls from its Voice and Data Messaging services, as well as other
unanticipated costs and one-time charges totaling approximately $17.1 million
on a pre-tax basis. Plaintiffs allege the Company admitted it had experienced
difficulty in achieving anticipated revenue and earnings from its voice
messaging product group, due to difficulties in consolidating and integrating
its sales function. Plaintiffs allege violation of Sections 10(b), 14(a) and
20(a) of the Securities Exchange Act of 1934 and Sections 11, 12 and 15 of the
Securities Act of 1933.
A lawsuit was filed on November 4, 1998 against the Company, as well as
individual defendants Boland T. Jones, Patrick G. Jones, George W. Baker, Sr.,
Eduard J. Mayer and Raymond H. Pirtle, Jr. in the Southern District of New
York. Plaintiffs were shareholders of Xpedite who acquired common stock of the
Company as a result of the merger between the Company and Xpedite in February
1998. Plaintiffs' allegations are based on the representations and warranties
made by the Company in the prospectus and the registration statement related
to the merger, the merger agreement and other documents incorporated by
reference, regarding the Company's acquisitions of Voice-Tel and VoiceCom, the
Company's roll-out of Orchestrate(R), the Company's relationship with
customers Amway Corporation and DigiTEC, 2000, Inc., and the Company's 800-
based calling card service. Based on these factual allegations, plaintiffs
allege causes of action causes against the Company for breach of contract
against all defendants for negligent misrepresentation, violations of Sections
11 and 12(a)(2) of the Securities Act of 1933 ("Securities Act"), and against
the individual Defendants for violation of Section 15 of the Securities Act.
Plaintiffs seek undisclosed damages together with pre- and post-judgment
interest, recission or recissory damages as to violation of Section 12(a)(2)
of the Securities Act, punitive damages, costs and attorneys' fees. A motion
to dismiss and a motion to transfer venue to Georgia are presently pending.
On August 6, 1996, Communications Network Corporation ("CNC"), a licensing
customer of the Company, was placed into bankruptcy (the "Bankruptcy Case")
under Chapter 11 of the United States 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 Premiere
Communications, Inc. ("PCI") for alleged negligent misrepresentations of fact
in connection with an alleged fraudulent scheme designed to damage CNC (the
"Intervention Suit"). The District Court denied CNC's request to intervene and
has transferred the remainder of the Intervention Suit to the bankruptcy case.
On June 23, 1998, the Bankruptcy Court approved a settlement whereby PCI
obtained a release from the trustee and
67
<PAGE>
the trustee dismissed the Intervention Suit in consideration of PCI making a
cash payment of $1.2 million to the trustee. The Plan was subsequently
approved by the Bankruptcy Court on December 8, 1998 and PCI made an
additional cash payment of $300,000 to the trustee in January 1999 in
consideration of PCI obtaining certain allowed subordinated claims and the
Court granting an injunction in PCI's favor against possible nuisance suits
relating to the CNC business.
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., ("World-Com"), 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
United States District Court for Eastern District of New York., Plaintiffs
contend
67--1
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
that 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 and made misrepresentations of fact in
connection with the scheme. The plaintiffs are seeking at least $250 million
in compensatory damages and $500 million in punitive damages from PCI and the
other defendants. This matter has been settled, pending payment of $250,000 by
Khatib to WorldCom. The settlement does not require PCI or Premiere to make
any payments.
On February 23, 1998, Rudolf R. Nobis and Constance Nobis filed a complaint
in the Superior Court of Union County, New Jersey against 15 named defendants
including Xpedite and certain of its alleged current and former officers,
directors, agents and representatives. The plaintiffs allege that the 15 named
defendants and certain unidentified "John Doe defendants" engaged in wrongful
activities in connection with the management of the plaintiffs' investments
with Equitable Life Assurance Society of the United States and/or Equico
Securities, Inc. (collectively "Equitable"). More specifically, the complaint
asserts wrongdoing in connections with the plaintiffs' investment in
securities of Xpedite and in unrelated investments involving insurance-related
products. The defendants include Equitable and certain of is current or former
representatives. The allegations in the complaint against Xpedite are limited
to plaintiffs' investment in Xpedite. The plaintiffs have alleged that two of
the named defendants, allegedly acting as officers, directors, agents or
representatives of Xpedite, induced the plaintiffs to make certain investments
in Xpedite but that the plaintiffs failed to receive the benefits that they
were promised. Plaintiffs allege that Xpedite knew or should have known of
alleged wrongdoing on the part of the other defendants. Plaintiffs' claims
against Xpedite include breach of contract, breach of fiduciary duty, unjust
enrichment, conversion, fraud, conspiracy, interference with economic
advantage and liability for ultra vires acts. The plaintiffs seek an
accounting of the corporate stock in Xpedite, compensatory damages of
approximately $4.85 million, plus $200,000 in "lost investments," interest
and/or dividends that have accrued and have not been paid, punitive damages in
an unspecified amount, and for certain equitable relief, including a request
for Xpedite to issue 139,430 shares of common stock in the plaintiffs' names,
attorneys' fees and costs and such other and further relief as the Court deems
just and equitable. On November 16, 1998 the court entered an order
transferring all disputes between plaintiffs and certain defendants to
arbitration and dismissing without prejudice plaintiff's complaint against
those defendants. On or about December 23, 1998, Xpedite failed a motion to
stay the action pending the resolution of the arbitration or in the
alternative to compel plaintiffs to provide discovery. On January 22, 1999,
the court granted Xpedite's motion to stay further proceedings pending the
arbitration. On March 11, plaintiffs filed a motion for reconsideration of the
court's decision. The parties are awaiting a decision on this motion.
On or about May 27, 1998, Telephone Company of Central Florida ("TCCF"), a
user of the Company's network management system, filed for protection under
Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for
the Middle District of Florida. WorldCom and PCI are two of the largest
creditors in this bankruptcy case. In August 1998, WorldCom filed a separate
lawsuit in the Federal District Court for the Middle of Florida against
certain insiders of TCCF alleging payment of improper distributions to the
insiders in excess of $1.0 million and asserting a constructive trust claim
against the
68
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
amounts received by the insiders. On August 10, 1998, TCCF filed a motion with
the Bankruptcy Court requesting authority to hire counsel for the purpose of
pursuing certain alleged claims against WorldCom and PCI, alleging service
problems with WorldCom and PCI. PCI and TCCF reached an agreement, approved by
the Bankruptcy Court in November 1998, which provides for mutual releases to
be executed between the parties and certain affiliates and insiders. The
mutual releases are being circulated for execution, in accordance with the
terms of the settlement. The settlement does not require PCI or Premiere to
make any payments.
On December 22, 1998, Shelly D. Swift filed a complaint against First USA
Bank, First Credit Card Services USA, and PCI in the United States District
Court for the Northern District of Illinois. Swift alleges that the defendants
sent here an unsolicited "credit card" in violation of the Truth in Lending
Act and state law. Swift seeks an injunction and monetary damages on behalf of
a putative class of persons who received the alleged credit card. On February
19, 1999, the Defendants moved to dismiss the complaint for failure to state a
claim upon which relief can be granted.
In March 1999, Aspect Telecommunications, Inc. ("Aspect"), the purported
current owner of certain patents, filed suit against Premiere and PCI alleging
that they had violated claims in these patents and requesting damages and
injunctive relief. The suit asserts that Premiere is offering certain "calling
card and related enhanced services," "single number service" and "call
connecting services" covered by four patents owned by Aspect. Premiere has
reviewed the subject patents and, based on that review, believes that its
products and services currently being marketed do not infringe them. On March
29, 1999 the Company filed an answer denying the allegations and a
counterclaim seeking to invalidate the patents. Additionally, the Company
believes that certain licenses it has from third-party vendors may insulate
the Company from some or all of any damages in the event of an adverse outcome
in this litigation.
69
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Premiere is also involved in various other legal proceedings which the
Company does not believe will have a material adverse effect upon the Company's
business, financial condition or results of operations, although no assurance
can be given as the ultimate outcome of any such proceedings.
16. INCOME TAXES
Income tax provision (benefit) for 1998, 1997 and 1996 is as follows (in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
-------- ------- ------
<S> <C> <C> <C>
Current:
Federal............................................ $ -- $ -- $3,247
State.............................................. 1,200 1,000 598
International ..................................... 4,090 490 42
-------- ------- ------
5,290 1,490 3,887
-------- ------- ------
Deferred:
Federal............................................ (15,267) (4,405) (3,303)
State.............................................. (3,751) (582) (553)
International...................................... (1,026) 85 1,341
-------- ------- ------
(20,044) (4,902) (2,515)
-------- ------- ------
$(14,754) $(3,412) $1,372
======== ======= ======
</TABLE>
The difference between the statutory federal income tax rate and the
Company's effective income tax rate applied to income before income taxes for
1998, 1997 and 1996 is as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
-------- ------- ------
<S> <C> <C> <C>
Income taxes at federal statutory rate............. $(31,136) $(9,787) $1,951
State taxes, net of federal benefit................ (1,658) 276 229
Non-deductible merger costs........................ -- 8,390 --
Change in valuation allowance...................... 1,733 -- 940
S-corporation earnings not subject to corporate
level taxes....................................... -- (3,117) (1,462)
Non-taxable investment income...................... -- (1,265) (723)
Establish deferred taxes for non-taxable
predecessor entities.............................. -- 1,207 --
Non-deductible expenses, primarily goodwill
amortization...................................... 16,307 884 437
-------- ------- ------
Income taxes at the Company's effective rate ...... $(14,754) $(3,412) $1,372
======== ======= ======
</TABLE>
70
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Differences between financial accounting and tax bases of assets and
liabilities giving rise to deferred tax assets and liabilities are as follows
at December 31 (in thousands):
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards............................ $53,030 $17,715
In-process research and development......................... 3,680 4,302
Restructuring and other special charges..................... 5,425 11,489
Accrued liabilities......................................... 5,923 3,082
Other assets ............................................... -- 2,281
------- -------
68,058 38,869
Deferred tax liabilities:
Intangible assets........................................... (34,291) 3,826
Depreciation and amortization............................... (3,356) (4,242)
Other liabilities........................................... (7,060) (20)
------- -------
(44,707) (436)
Valuation allowance ........................................ (6,536) (8,755)
------- -------
Net deferred tax assets..................................... $16,815 $29,678
======= =======
</TABLE>
U.S. tax rules impose limitations on the use of net operating loss
carryforwards following certain changes in ownership. Premiere's utilization
of tax benefits associated with loss carryforwards could be limited if such a
change were to occur. Management of the Company has recorded valuation
allowances for deferred tax assets based on their estimate regarding
realization of such assets.
Most Voice-Tel Franchises acquired in transactions accounted for as pooling-
of-interests had elected to be treated as S-Corporations or partnerships for
income tax and other purposes. Income taxes were not provided on income of
these entities for any year presented because S-Corporations and partnerships
are generally not subject to income tax. Rather, shareholders or partners of
such entities are taxed on their proportionate shares of these entities'
taxable income in their individual income tax returns.
At December 31, 1997, the Company had net operating loss carryforwards for
state, federal and international income tax purposes of approximately $109
million expiring in 2008 through 2018. Deferred tax benefits of approximately
$6.2 million in 1998 are associated with nonqualified stock option exercises,
the benefit of which was credited directly to additional paid-in capital.
71
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
17. STATEMENT OF CASH FLOW INFORMATION
Supplemental Disclosure of Cash Flow Information (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
-------- ------- -------
<S> <C> <C> <C>
Cash paid during the year for:
Interest............................................ $ 15,415 $ 7,100 $ 4,516
Income taxes........................................ $ 3,554 $ 840 $ 309
Cash paid for acquisitions accounted for as purchases are as follows:
<CAPTION>
1998 1997 1996
-------- ------- -------
<S> <C> <C> <C>
Fair value of assets acquired....................... $633,671 $19,833 $11,030
Less liabilities assumed............................ 233,734 2,124 100
Less common stock issued to sellers................. 372,283 2,255 8,060
Cash paid for transaction costs..................... 15,990 -- --
-------- ------- -------
Net cash paid....................................... $ 43,644 $15,454 $ 2,870
======== ======= =======
</TABLE>
18. SEGMENT REPORTING
The Company's reportable segments are strategic business units that align
the Company in two distinct market segments: large business and small
office/home businesses and individuals. These businesses emphasize the
company's focus on target markets. Corporate Enterprise Solutions caters to
large businesses, such as Fortune 1,000 companies. Its services include those
most complementary with large organizations including electronic document
distribution, full services, such as interactive voice response and calling
card programs. Emerging Enterprise Solutions focuses in the small office/home
office and individual subscriber segment. Its services include Orchestrate, a
suite of internet based communication services, local access voice and data
messaging and enhanced calling services. Emerging Enterprise Solutions
revenues are generated by direct advertising programs through Co-brand and
strategic partner relationships and Internet enabled communication services,
including the Company's suite of products marketed under the Orchestrate(R)
brand.
72
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information concerning the operations in these reportable segments is as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Revenues
Corporate Enterprise Solutions......................... $275.7 $ 55.0 $ 60.0
Emerging Enterprise Solutions.......................... 169.4 174.4 137.5
Corporate and eliminations............................. (0.3) -- --
------ ------ ------
Total................................................. $444.8 $229.4 $197.5
====== ====== ======
Operating profit
Corporate Enterprise Solutions......................... $ (6.0) $ 10.6 $ 2.0
Emerging Enterprise Solutions.......................... (9.5) 36.4 17.1
Corporate and eliminations............................. (26.5) -- --
Restructuring, merger and other special charges........ (15.6) (73.6) --
Acquired research and development...................... (15.5) -- (11.0)
Accrued settlement costs............................... (1.5) (1.5) (1.3)
------ ------ ------
Total................................................. $(74.6) $(28.1) $ 6.8
====== ====== ======
EBITDA
Corporate Enterprise Solutions......................... $ 75.8 $ 13.5 $ 5.0
Emerging Enterprise Solutions.......................... 18.7 50.6 28.3
Corporate and eliminations............................. (26.4) -- --
Restructuring, merger and other special charges........ (15.6) (73.6) --
Acquired research and development...................... (15.5) -- (11.0)
Accrued settlement costs............................... (1.5) (1.5) (1.3)
------ ------ ------
Total................................................. $ 35.5 $(11.0) $ 21.0
====== ====== ======
Identifiable assets
Corporate Enterprise Solutions......................... $606.9 $ 13.9 $ 19.5
Emerging Enterprise Solutions.......................... 133.0 154.9 100.9
Corporate and eliminations............................. 62.9 212.3 81.1
------ ------ ------
Total................................................. $802.8 $381.1 $201.5
====== ====== ======
</TABLE>
73
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following table presents financial information based on the Company's
geographic segments for the years ended December 31, 1998, 1997 and 1996 (in
thousands):
<TABLE>
<CAPTION>
Operating
Net Income Identifiable
Revenues (Loss) Assets
-------- --------- ------------
<S> <C> <C> <C>
1998
North America................................... 351,929 (94,062) 743,809
Asia Pacific.................................... 51,438 7,609 33,736
Europe.......................................... 47,347 12,286 191,811
Eliminations.................................... (5,896) (415) (166,605)
------- ------- --------
Total.......................................... 444,818 (74,582) 802,751
======= ======= ========
1997
North America................................... 225,413 (27,970) 379,581
Asia Pacific.................................... 3,939 (131) 1,527
------- ------- --------
Total.......................................... 229,352 (28,101) 381,108
======= ======= ========
1996
North America................................... 192,916 7,939 198,403
Asia Pacific.................................... 4,558 (1,133) 3,138
------- ------- --------
Total.......................................... 197,474 6,806 201,541
======= ======= ========
</TABLE>
74
<PAGE>
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no disagreements with or change in the registrant's
independent accountant since the Company's inception.
76
<PAGE>
PART III
Certain information required by Part III is omitted from this report in that
the Registrant will file a Definitive Proxy Statement pursuant to Regulation
14A ("Proxy Statement") not later than 120 days after the end of the fiscal
year covered by this report.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is incorporated herein by reference to
the Company's Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference to
the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by reference to
the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by reference to
the Company's Proxy Statement.
77
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1.Financial Statements
The financial statements listed in the index set forth in Item 8 of this
report are filed as part of this report.
2.Financial Statement Schedules
Financial statement schedules required to be included in this report are
either shown in the financial statements and notes thereto, included in Item 8
of this report or have been omitted because they are not applicable.
3.Exhibits
2.1 Agreement and Plan of Merger, together with exhibits, dated as of
April 2, 1997 by and among Premiere Technologies, Inc., PTEK Merger
Corporation and Voice-Tel Enterprises, Inc. and the Stockholders of
Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit
2.1 to the Registrant's Current Report on Form 8-K dated April 2,
1997 and filed April 4, 1997).
2.2 Agreement and Plan of Merger, together with exhibits, dated as of
April 2, 1997 by and among Premiere Technologies, Inc., PTEK Merger
Corporation II, VTN, Inc. and the Stockholders of VTN, Inc.
(incorporated by reference to Exhibit 2.2 to the Registrant's
Current Report on Form 8-K dated April 2, 1997 and filed April 4,
1997).
2.3 Purchase and Sale Agreement dated April 2, 1997 by and between
Premiere Technologies, Inc. and Merchandising Productions, Inc.
(incorporated by reference to Exhibit 2.3 to the Registrant's
Current Report on Form 8-K dated April 2, 1997 and filed April 4,
1997).
2.4 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Continuum, Inc. and Owners of Continuum,
Inc.(incorporated by reference to Exhibit 2.4 to the Registrant's
Current Report on Form 8-K dated April 30, 1997 and filed May 14,
1997).
2.5 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., DMG, Inc. and Owners of DMG, Inc. and Transfer
Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., VTG, Inc. and Owners of VTG, Inc. (incorporated
by reference to Exhibit 2.5 to the Registrant's Current Report on
Form 8-K dated April 30, 1997 and filed May 14, 1997).
2.6 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Penta Group, Inc. and Owners of Penta Group,
Inc. and Transfer Agreement dated as of April 2, 1997 by and among
Premiere Technologies, Inc., Scepter Communications, Inc. and
Owners of Scepter Communications, Inc. (incorporated by reference
to Exhibit 2.6 to the Registrant's Current Report on Form 8-K dated
April 30, 1997 and filed May 14, 1997).
2.7 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Premiere Business Services, Inc. and Owners of
Premiere Business Services, Inc. (incorporated by reference to
Exhibit 2.7 to the Registrant's Current Report on Form 8-K dated
April 30, 1997 and filed May 14, 1997).
2.8 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Dunes Communications, Inc., Sands
Communications, Inc., Sands Comm, Inc., SandsComm, Inc., and Owner
of Dunes Communications, Inc., Sands Communications, Inc., Sands
Comm, Inc., and SandsComm, Inc. (incorporated by reference to
Exhibit 2.8 to the Registrant's Current Report on Form 8-K dated
April 30, 1997 and filed May 14, 1997).
78
<PAGE>
2.9 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Shamlin, Inc. and Owner of Shamlin, Inc.
(incorporated by reference to Exhibit 2.9 to the Registrant's
Current Report on Form 8-K dated April 30, 1997 and filed May 14,
1997).
2.10 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., VT of Ohio, Inc. and Owners of VT of Ohio,
Inc.; Transfer Agreement dated as of April 2, 1997 by and among
Premiere Technologies, Inc., Carter Voice, Inc. and Owners of
Carter Voice, Inc.; Transfer Agreement dated as of April 2, 1997
by and among Premiere Technologies, Inc., Widdoes Enterprises,
Inc. and Owners of Widdoes Enterprises, Inc.; and Transfer
Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Dowd Enterprises, Inc. and Owners of Dowd
Enterprises, Inc. (incorporated by reference to Exhibit 2.10 to
the Registrant's Current Report on Form 8-K dated April 30, 1997
and filed May 14, 1997).
2.11 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., SDVT, Inc. and Owners of SDVT, Inc.
(incorporated by reference to Exhibit 2.11 to the Registrant's
Current Report on Form 8-K dated April 30, 1997 and filed May 14,
1997).
2.12 Amended and Restated Transfer Agreement dated as of April 2, 1997
by and among Premiere Technologies, Inc., Car Zee, Inc. and Owners
of Car Zee, Inc. (incorporated by reference to Exhibit 2.12 to the
Registrant's Current Report on Form 8-K dated April 30, 1997 and
filed May 14, 1997).
2.13 Transfer Agreement dated as of March 31, 1997 by and among
Premiere Technologies, Inc. and Owners of the VTEC Franchisee:
1086236 Ontario, Inc. (incorporated by reference to Exhibit 2.13
to the Registrant's Current Report on Form 8-K dated April 30,
1997 and filed May 14, 1997).
2.14 Transfer Agreement dated as of March 31, 1997 by and among
Premiere Technologies, Inc. and Owners of the Eastern Franchisees:
1139133 Ontario Inc., 1116827 Ontario Inc., 1006089 Ontario Inc.,
and 1063940 Ontario Inc. (incorporated by reference to Exhibit
2.14 to the Registrant's Current Report on Form 8-K dated April
30, 1997 and filed May 14, 1997).
2.15 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Communications Concepts, Inc. and Owners of
Communications Concepts, Inc. (incorporated by reference to
Exhibit 2.1 to the Registrant's Current Report on Form 8-K dated
May 16, 1997 and filed June 2, 1997).
2.16 Transfer Agreement dated as of May 20, 1997 by and among Premiere
Technologies, Inc., DARP, Inc. and Owners of DARP, Inc.
(incorporated by reference to Exhibit 2.2 to the Registrant's
Current Report on Form 8-K dated May 16, 1997 and filed June 2,
1997).
2.17 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Hi-Pak Systems, Inc. and Owners of Hi-Pak
Systems, Inc. (incorporated by reference to Exhibit 2.3 to the
Registrant's Current Report on Form 8-K dated May 16, 1997 and
filed June 2. 1997).
2.18 Transfer Agreement dated as of May 29, 1997 by and among Premiere
Technologies, Inc., MMP Communications, Inc. and Owners of MMP
Communications, Inc. (incorporated by reference to Exhibit 2.4 to
the Registrant's Current Report on Form 8-K dated May 16, 1997 and
filed June 2, 1997).
2.19 Transfer Agreement dated as of May 16, 1997 by and among Premiere
Technologies, Inc., Lar-Lin Enterprises, Inc., Lar-Lin
Investments, Inc. and Voice-Mail Solutions, Inc. and Owners of
Lar-Lin Enterprises, Inc., Lar-Lin Investments, Inc. and Voice-
Mail Solutions, Inc. (incorporated by reference to Exhibit 2.5 to
the Registrant's Current Report on Form 8-K dated May 16, 1997 and
filed June 2, 1997).
2.20 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Voice-Net Communications Systems, Inc. and
Owners of Voice-Net Communications Systems, Inc. and
79
<PAGE>
Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., VT of Long Island Inc. and Owners of VT of Long
Island Inc. (incorporated by reference to Exhibit 2.6 to the
Registrant's Current Report on Form 8-K dated May 16, 1997 and filed
June 2, 1997).
2.21 Transfer Agreement dated as of May 22, 1997 by and among Premiere
Technologies, Inc. Voice Systems of Greater Dayton, Inc. and Owner
of Voice Systems of Greater Dayton, Inc. and Transfer Agreement
dated as of May 22, 1997 by and among Premiere Technologies, Inc.,
Premiere Acquisition Corporation, L'Harbot, Inc. and the Owners of
L'Harbot, Inc. (incorporated by reference to Exhibit 2.7 to the
Registrant's Current Report on Form 8-K dated May 16, 1997 and
filed June 2, 1997).
2.22 Transfer Agreement dated as of May 30, 1997 by and among Premiere
Technologies, Inc., Audioinfo Inc. and Owners of Audioinfo Inc.
(incorporated by reference to Exhibit 2.8 to the Registrant's
Current Report on Form 8-K dated May 16, 1997 and filed June 2,
1997).
2.23 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., D&K Communications Corporation and Owners of
D&K Communications Corporation (incorporated by reference to
Exhibit 2.10 to the Registrant's Current Report on Form 8-K dated
May 16, 1997 and filed June 2, 1997).
2.24 Transfer Agreement dated as of May 19, 1997 by and among Premiere
Technologies, Inc. Voice-Tel of South Texas, Inc. and Owners of
VoiceTel of South Texas, Inc. (incorporated by reference to
Exhibit 2.11 to the Registrant's Current Report on Form 8-K dated
May 16, 1997 and filed June 2, 1997).
2.25 Transfer Agreement dated as of May 31, 1997 by and among Premiere
Technologies, Inc. Indiana Communicator, Inc. and Owner of Indiana
Communicator, Inc. (incorporated by reference to Exhibit 2.12 to
the Registrant's Current Report on Form 8-K dated May 16, 1997 and
filed June 2, 1997).
2.26 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Voice Messaging Development Corporation of
Michigan and the Owners of Voice Messaging Development Corporation
of Michigan (incorporated by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K/A dated May 16, 1997 and
filed June 24, 1997).
2.27 Transfer Agreement dated as of June 13, 1997 by and among Premiere
Technologies, Inc., Voice Partners of Greater Mahoning Valley,
Ltd. and the Owners of Voice Partners of Greater Mahoning Valley,
Ltd. (incorporated by reference to Exhibit 2.2 to the Registrant's
Current Report on Form 8-K/A dated May 16, 1997 and filed June 24,
1997).
2.28 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc. In-Touch Technologies, Inc. and the Owners of
InTouch Technologies, Inc. (incorporated by reference to Exhibit
2.3 to the Registrant's Current Report on Form 8-K/A dated May 16,
1997 and filed June 24, 1997).
2.29 Transfer Agreement dated as of March 31, 1997 by and among
Premiere Technologies, Inc. and Owners of the Western Franchisees:
3325882 Manitoba Inc., 601965 Alberta Ltd., 3266622 Manitoba Inc.,
3337821 Manitoba Inc. and 3266631 Manitoba Inc. (incorporated by
reference to Exhibit 2.4 to the Registrant's Current Report on
Form 8-K/A dated May 16, 1997 and filed June 24, 1997).
2.30 Uniform Terms and Conditions, Exhibit A to Transfer Agreements by
and among Premiere Technologies, Inc., Wave One Franchisees and
Owners of Wave One Franchisees (incorporated by reference to
Exhibit A to Exhibit 2.4 to the Registrant's Current Report on
Form 8-K dated April 2, 1997 and filed April 4, 1997).
2.31 Uniform Terms and Conditions, Exhibit A to Transfer Agreements by
and among Premiere Technologies, Inc., Wave Two Franchisees and
owners of Wave Two Franchisees (incorporated
80
<PAGE>
by reference to Exhibit 2.14 to the Registrant's Current Report on
dated May 16, 1997 and filed June 2, 1997).
2.32 Stock Purchase Agreement, together with exhibits, dated as of
September 12, 1997, by and among Premiere Technologies, Inc.,
VoiceCom Holdings, Inc. and the Shareholders of VoiceCom Holdings,
Inc. (incorporated by reference to Exhibit 2.1 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended September 30,
1997).
2.33 Agreement and Plan of Merger, dated as of November 13, 1997,
together with exhibits, by and among Premiere Technologies, Inc.,
Nets Acquisition Corp. and Xpedite Systems, Inc. (incorporated by
reference to Exhibit 99.2 to the Registrant's Current Report on
Form 8-K dated November 13, 1997 and filed December 5, 1997, as
amended by Form 8-K/A filed December 23, 1997).
2.34 Agreement and Plan of Merger, dated April 22, 1998, by and among
the Company, American Teleconferencing Services, Ltd. ("ATS"),
PTEK Missouri Acquisition Corp. and the shareholders of ATS
(incorporated by reference to Exhibit 99.1 of the Company's
Current Report on Form 8-K dated April 23, 1998, and filed with
the Commission on April 28, 1998.)
3.1 Articles of Incorporation of Premiere Technologies, Inc., as
amended, (incorporated by reference to Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter Ended
June 30, 1998).
3.2 Amended and Restated Bylaws of Premiere Technologies, Inc., as
further amended on August 1, 1998 (incorporated by reference to
Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q for
the Quarter Ended June 30, 1998).
4.1 See Exhibits 3.1--3.2 for provisions of the Articles of
Incorporation and Bylaws defining the rights of the holders of
common stock of the Registrant.
4.2 Specimen Stock Certificate (incorporated by reference to Exhibit
4.2 to the Registrant's Registration Statement on Form S-1 (No. 33-
80547)).
4.3 Indenture, dated as of June 15, 1997, between Premiere
Technologies, Inc. and IBJ Schroder Bank & Trust Company, as
Trustee (incorporated by reference to Exhibit 4.1 to the
Registrant's Current Report on Form 8-K dated July 25, 1997 and
filed August 5, 1997).
4.4 Form of Global Convertible Subordinated Note due 2004 (incorporated
by reference to Exhibit 4.2 to the Registrant's Current Report on
Form 8-K dated July 25, 1997 and filed August 5, 1997).
4.5 Registration Rights Agreement, dated as of June 15, 1997, by and
among the Registrant, Robertson, Stephens & Company LLC, Alex.
Brown & Sons Incorporated and Donaldson, Lufkin & Jenrette
Securities Corporation (incorporated by reference to Exhibit 4.3 to
the Registrant's Current Report on Form 8-K dated July 25, 1997 and
filed August 5, 1997).
4.6 Registration Rights Agreement, dated as of April 30, 1997, by and
among the Registrant, those stockholders of Voice-Tel Enterprises,
Inc. ("VTE") appearing as signatories thereto, those shareholders
of VTN, Inc. appearing as signatories thereto and those
stockholders or other equity owners of franchisees of VTE that
executed adoption agreements (incorporated by reference to Exhibit
4 to Exhibit 2.1 to the Registrant's Current Report on Form 8-K
dated April 2, 1997 and filed April 4, 1997).
4.7 Stock Restriction and Registration Rights Agreement dated as of
September 30, 1997, by and among the Registrant and those
shareholders of VoiceCom Holdings, Inc. appearing as signatories
thereto (incorporated by reference to Exhibit 3 to Exhibit 2.1 to
the Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended September 30, 1997).
81
<PAGE>
4.8 Stock Restriction and Registration Rights Agreement dated as of
April 22, 1998, by and among the Registrant and those shareholders
of American Teleconferencing Services, Ltd. appearing as
signatories thereto.
4.9 Shareholder Protection Rights Agreement, dated June 23, 1998,
between the Company and SunTrust Bank, Atlanta, as Rights Agent
(incorporated by reference to Exhibit 99.1 of the Company's Current
Report on Form 8-K dated June 23, 1998, and filed with the
Commission on June 26, 1998).
10.1 Shareholder Agreement dated as of January 18, 1994 among the
Registrant, NationsBanc Capital Corporation, Boland T. Jones, D.
Gregory Smith, Leonard A. DeNittis and Andrea L. Jones
(incorporated by reference to Exhibit 10.12 to the Registrant's
Registration Statement on Form S-1 (No. 33-80547)).
10.2 Amended and Restated Executive Employment Agreement and Incentive
Option Agreement dated November 6, 1995 between the Registrant and
David Gregory Smith (incorporated by reference to Exhibit 10.15 to
the Registrant's Registration Statement on Form S-1
(No. 33-80547)).**
10.3 Amended and Restated Executive Employment Agreement dated November
6, 1995 between Premiere Communications, Inc. and David Gregory
Smith (incorporated by reference to Exhibit 10.16 to the
Registrant's Registration Statement on Form S-1 (No. 33-80547)).**
10.3 Amended and Restated Executive Employment Agreement dated November
6, 1995 between Premiere Communications, Inc. and David Gregory
Smith (incorporated by reference to Exhibit 10.16 to the
Registrant's Registration Statement on Form S-1 (No. 33-80547)).**
10.4 Mutual Release dated December 5, 1997 by and among the Registrant,
Premiere Communications, Inc. and David Gregory Smith (incorporated
by reference to Exhibit 10.6 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1997).
10.5 Amended and Restated Executive Employment and Incentive Option
Agreement dated November 6, 1995 between the Registrant and Boland
T. Jones (incorporated by reference to Exhibit 10.17 to the
Registrant's Registration Statement on Form S-1 (No. 33-80547)).**
10.6 Amended and Restated Executive Employment Agreement dated November
6, 1995 between Premiere Communications, Inc. and Boland T. Jones
(incorporated by reference to Exhibit 10.18 to the Registrant's
Registration Statement on Form S-1 (No. 33-80547)).**
10.7 Executive Employment and Incentive Option Agreement dated November
1, 1995 between the Registrant and Patrick G. Jones (incorporated
by reference to Exhibit 10.19 to the Registrant's Registration
Statement on Form S-1 (No. 33-80547)).**
10.8 Executive Employment Agreement dated November 1, 1995 between
Premiere Communications, Inc. and Patrick G. Jones (incorporated by
reference to Exhibit 10.20 to the Registrant's Registration
Statement on Form S-1 (No. 33-80547)).**
10.9 Promissory Note dated November 17, 1995 payable to the Registrant
made by Patrick G. Jones (incorporated by reference to Exhibit
10.27 to the Registrant's Registration Statement on Form S-1 (No.
33-80547)).**
10.10 Amended and Restated Employment Agreement, made as of April 30,
1997, by and between Xpedite Systems, Inc., and Roy B. Anderson,
Jr. (incorporated by reference to Exhibit 10.5 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter ended March 31,
1998.)**
10.11 Executive Employment and Incentive Option Agreement, effective as
of July 24, 1997, by and between the Company and Jeffrey A. Allred
(incorporated by reference to Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter ended June 30,
1998.).**
82
<PAGE>
10.12 Executive Employment and Incentive Option Agreement, effective as
of July 6, 1998, by and between the Company and William Porter
Payne.**
10.13 Memorandum of Understanding dated as of July 6, 1998, by and
between the Company and William Porter Payne.**
10.14 Executive Employment Agreement, effective as of May 4, 1998, by
and between the Company and Harvey A. Wagner.**
10.15 Promissory Note dated May 11, 1998 payable to the Registrant made
by Harvey A. Wagner.**
10.16 Split-Dollar Agreement dated as of November 11, 1998 by and
between the Company and Harvey A. Wagner.**
10.17 Premiere Communications, Inc. 401(k) Profit Sharing Plan
(incorporated by reference to Exhibit 10.30 to the Registrant's
Registration Statement on Form S-1 (No. 33-80547)).**
10.18 Form of Director Indemnification Agreement between the Registrant
and Non-employee Directors (incorporated by reference to Exhibit
10.31 to the Registrant's Registration Statement on Form S-1 (No.
33- 80547)).**
10.19 Park Place Office Lease dated May 31, 1993 between Premiere
Communications, Inc. and Mara-Met Venture, as amended by First
Amendment dated December 15, 1995 (incorporated by reference to
Exhibit 10.34 to the Registrant's Registration Statement on Form
S-1 (No. 33-80547)).
10.20 Second and Third Amendment to 55 Park Place Office Lease dated
November 5, 1996 between Premiere Communications, Inc. and Mara-
Met Venture (incorporated by reference to Exhibit 10.49 to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996).
10.21 Office Lease Agreement dated May 12, 1996 between Premiere
Communications, Inc. and Beverly Hills Center LLC, as amended by
the First Amendment dated August 1, 1996 (incorporated by
reference to Exhibit 10.50 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1996).
10.22 Second Amendment of Lease dated July 1, 1997, between Premiere
Communications, Inc. and Beverly Hills Center LLC (incorporated by
reference to Exhibit 10.18 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1997).
10.23 Agreement of Lease between Corporate Property Investors and
Premiere Communications, Inc., dated as of March 3, 1997, as
amended by Modification of Lease dated August 4, 1997, as amended,
by Second Modification of Lease, dated October 30, 1997
(incorporated by reference to Exhibit 10.19 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997).
10.24 Sublease Agreement dated as of December 16, 1997, by and between
Premiere Communications, Inc. and Endeavor Technologies, Inc.
(incorporated by reference to Exhibit 10.20 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997).
10.25 Form of Officer Indemnification Agreement between the Registrant
and each of the executive officers (incorporated by reference to
Exhibit 10.36 to the Registrant's Registration Statement on Form
S-1 (No. 33- 80547)).**
10.26 Telecommunications Services Agreement dated December 1, 1995
between Premiere Communications, Inc. and WorldCom Network
Services, Inc. d/b/a WilTel (incorporated by reference to Exhibit
10.40 to the Registrant's Registration Statement on Form S-1
(No. 33-80547)).
10.27 Amended and Restated Program Enrollment Terms dated September 30,
1997 by and between Premiere Communications, Inc. and WorldCom
Network Services, Inc., d/b/a WilTel, as amended by Amendment No.
1 dated November 1, 1997 (incorporated by reference to Exhibit
10.26 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997).*
83
<PAGE>
10.28 Service Agreement dated September 30, 1997, by and between
VoiceCom Systems, Inc. and AT&T Corp. (incorporated by reference
to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 1997).*
10.29 Strategic Alliance Agreement dated November 13, 1996 by and
between the Registrant and WorldCom, Inc. (incorporated by
reference to Exhibit 10.1 to the Registrant's Current Report on
Form 8-K dated November 13, 1996).*
10.30 Investment Agreement dated November 13, 1996 by and between the
Registrant and WorldCom, Inc. (incorporated by reference to
Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated
November 13, 1996).
10.31 Service and Reseller Agreement dated September 28, 1990 by and
between Amway Corporation and Voice-Tel Enterprises, Inc.
(incorporated by reference to Exhibit 2.33 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1997).*
10.32 Independent Distributor Agreement dated September 26, 1997, by and
between Registrant and Digitec 2000, Inc. (incorporated by
reference to Exhibit 10.2 to the Registrant's Quarterly Report as
Form 10-Q for the Quarter ended September 30, 1997).
10.33 Form of Stock Purchase Warrant Agreement (incorporated by
reference to Exhibit 4.3 to the Registrant's Registration
Statement on Form S-8 (No. 333-11281)).
10.34 Form of Warrant Transaction Statement (incorporated by reference
to Exhibit 4.4 to the Registrant's Registration Statement on Form
S-8 (No. 333-11281)).
10.35 Form of Director Stock Purchase Warrant (incorporated by reference
to Exhibit 4.3 to the Registrant's Registration Statement on Form
S-8 (No. 333-17593)).**
10.36 Purchase Agreement, dated June 25, 1997, by and among Premiere
Technologies, Inc., Robertson, Stephens & Company LLC, Alex. Brown
& Sons Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation (incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report on Form 8-K dated July 25, 1997 and
filed August 5, 1997).
10.37 1991 Non-Qualified and Incentive Stock Option Plan of Voice-Tel
Enterprises, Inc. (assumed by the Registrant) (incorporated by
reference to Exhibit 4.2 to the Registrant's Registration
Statement on Form S-8 (No. 333-29787)).
10.38 1991 Non-Qualified and Incentive Stock Option Plan of VTN, Inc.
(assumed by the Registrant) (incorporated by reference to Exhibit
4.3 to the Registrant's Registration Statement on Form S-8 (No.
333-29787)).
10.39 Form of Stock Option Agreement by and between the Registrant and
certain current or former employees of Voice-Tel Enterprises, Inc.
(incorporated by reference to Exhibit 4.4 to the Registrant's
Registration Statement on Form S-8 (No. 333-29787)).
10.40 Premiere Technologies, Inc. Second Amended and Restated 1995 Stock
Plan (incorporated by reference to Exhibit A to the Registrant's
Definitive Proxy Statement distributed in connection with the
Registrant's June 11, 1997 annual meeting of shareholders, filed
April 30, 1997).
10.41 First Amendment to Premiere Technologies, Inc. Second Amended and
Restated 1995 Stock Plan (incorporated by reference to Exhibit
10.43 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997).
84
<PAGE>
10.42 VoiceCom Holdings, Inc. 1995 Stock Option Plan (assumed by the
Registrant) (incorporated by reference to Exhibit 10.44 to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997).
10.43 VoiceCom Holdings, Inc. Amended and Restated 1985 Stock Option
Plan (assumed by the Registrant) (incorporated by reference to
Exhibit 10.45 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1997).
10.44 Premiere Technologies, Inc., 1998 Stock Plan (incorporated by
reference to Exhibit 10.2 to the Registrant's Quarterly Report on
Form 10-Q for the Quarter ended June 30, 1998.).
10.45 Xpedite Systems, Inc. 1992 Incentive Stock Option Plan (assumed by
the Registrant) (incorporated by reference to Exhibit to
Xpedite's Registration Statement on Form S-1 (No. 33-73258)).
10.46 Xpedite Systems, Inc. 1993 Incentive Stock Option Plan (assumed by
the Registrant) (incorporated by reference to Exhibit to
Xpedite's Registration Statement on Form S-1 (No. 33-73258)).
10.47 Xpedite Systems, Inc. 1996 Incentive Stock Option Plan (assumed by
the Registrant) (incorporated by reference to Exhibit to
Xpedite's Annual Report on Form 10-K for the year ended December
31, 1995).
10.48 Xpedite Systems, Inc. Non-Employee Directors' Warrant Plan
(assumed by the Registrant) (incorporated by reference to Exhibit
10.31 to Xpedite's Annual Report on Form 10-K for the year ended
December 31, 1996).
10.49 Xpedite Systems, Inc. Officer's Contingent Stock Option Plan
(assumed by the Registrant) (incorporated by reference to Exhibit
10.30 to Xpedite's Annual Report on Form 10-K for the year ended
December 31, 1996).
10.50 Credit Agreement dated as of December 17, 1997, as amended and
restated as of December 16, 1998, by and among Xpedite Systems,
Inc. and Xpedite Systems Holdings (UK) Limited, as Borrowers, and
the Guarantors party thereto, the banks listed on the signature
pages thereof, NationsBank, N.A., as Documentation Agent and The
Bank of New York, as Administrative Agent.
10.51 Share Purchase Agreement dated as of August 8, 1997, by and among
Xpedite Systems, Inc., Xpedite Systems Holdings (UK) Limited, and
the shareholders of Xpedite Systems Limited (incorporated by
reference to Exhibit 99.3 to the Registrant's Current Report on
Form 8-K dated November 13, 1997 and filed December 5, 1997, as
amended by Form 8-K/A filed December 23, 1997 and Form 8-K/A filed
January 27, 1998)).
10.52 Amendment to the Share Purchase Agreement, dated December 17,
1997, by and among Xpedite Systems, Inc., Xpedite Systems Holdings
(UK) Limited and the shareholders of Xpedite Systems Limited
(incorporated by reference to Exhibit 10.4 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter ended March 31,
1998.)
11.1 Statement re: Computation of Per Share Earnings.
85
<PAGE>
21.1 Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule for the year ended December 31, 1998.
- - --------
* Confidential treatment has been granted. The copy on file as an exhibit
omits the information subject to the confidentiality request. Such omitted
information has been filed separately with the Commission.
**Management contracts and compensatory plans and arrangements required to be
filed as exhibits pursuant to Item 14(c) of this report.
(b) The Registrant did not file any Current Reports on Form 8-K during the
fourth quarter of 1998.
86
<PAGE>
SIGNATURES
PREMIERE TECHNOLOGIES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Premiere Technologies, Inc.
By: _________________________________
Boland T. Jones, Chairman of the
Board and Chief Executive Officer
Date: March , 1999
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant in the capacities and on the dates
indicated.
Signature Title Date
Chairman of the March , 1999
- - ------------------------------------- Board and Chief
Boland T. Jones Executive Officer
(principal executive
officer)
Executive Vice March , 1999
- - ------------------------------------- President of Finance
Harvey A. Wagner and Administration
and Chief Financial
Officer (principal
financial and
accounting officer)
Director March , 1999
- - -------------------------------------
George W. Baker, Sr.
Director March , 1999
- - -------------------------------------
Raymond H. Pirtle, Jr.
Director March , 1999
- - -------------------------------------
Roy B. Andersen, Jr.
Director March , 1999
- - -------------------------------------
Jackie M. Ward
President and Chief March , 1999
- - ------------------------------------- Operating Officer
Jeffrey A. Allred and Director
Vice Chairman and March , 1999
- - ------------------------------------- Director
William P. Payne
87
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
2.1 Agreement and Plan of Merger, together with exhibits, dated as of
April 2, 1997 by and among Premiere Technologies, Inc., PTEK Merger
Corporation and Voice-Tel Enterprises, Inc. and the Stockholders of
Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 2.1
to the Registrant's Current Report on Form 8-K dated April 2, 1997
and filed April 4, 1997).
2.2 Agreement and Plan of Merger, together with exhibits, dated as of
April 2, 1997 by and among Premiere Technologies, Inc., PTEK Merger
Corporation II, VTN, Inc. and the Stockholders of VTN, Inc.
(incorporated by reference to Exhibit 2.2 to the Registrant's Current
Report on Form 8-K dated April 2, 1997 and filed April 4, 1997).
2.3 Purchase and Sale Agreement dated April 2, 1997 by and between
Premiere Technologies, Inc. and Merchandising Productions, Inc.
(incorporated by reference to Exhibit 2.3 to the Registrant's Current
Report on Form 8-K dated April 2, 1997 and filed April 4, 1997).
2.4 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Continuum, Inc. and Owners of Continuum, Inc.
(incorporated by reference to Exhibit 2.4 to the Registrant's Current
Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).
2.5 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., DMG, Inc. and Owners of DMG, Inc. and Transfer
Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., VTG, Inc. and Owners of VTG, Inc. (incorporated
by reference to Exhibit 2.5 to the Registrant's Current Report on
Form 8-K dated April 30, 1997 and filed May 14, 1997).
2.6 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Penta Group, Inc. and Owners of Penta Group, Inc.
and Transfer Agreement dated as of April 2, 1997 by and among
Premiere Technologies, Inc., Scepter Communications, Inc. and Owners
of Scepter Communications, Inc. (incorporated by reference to Exhibit
2.6 to the Registrant's Current Report on Form 8-K dated April 30,
1997 and filed May 14, 1997).
2.7 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Premiere Business Services, Inc. and Owners of
Premiere Business Services, Inc. (incorporated by reference to
Exhibit 2.7 to the Registrant's Current Report on Form 8-K dated
April 30, 1997 and filed May 14, 1997).
2.8 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Dunes Communications, Inc., Sands Communications,
Inc., Sands Comm, Inc., SandsComm, Inc., and Owner of Dunes
Communications, Inc., Sands Communications, Inc., Sands Comm, Inc.,
and SandsComm, Inc. (incorporated by reference to Exhibit 2.8 to the
Registrant's Current Report on Form 8-K dated April 30, 1997 and
filed May 14, 1997).
2.9 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Shamlin, Inc. and Owner of Shamlin, Inc.
(incorporated by reference to Exhibit 2.9 to the Registrant's Current
Report on Form 8-K dated April 30, 1997 and filed May 14, 1997).
2.10 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., VT of Ohio, Inc. and Owners of VT of Ohio, Inc.;
Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Carter Voice, Inc. and Owners of Carter Voice,
Inc.; Transfer Agreement dated as of April 2, 1997 by and among
Premiere Technologies, Inc., Widdoes Enterprises, Inc. and Owners of
Widdoes Enterprises, Inc.; and Transfer Agreement dated as of April
2, 1997 by and among Premiere Technologies, Inc., Dowd Enterprises,
Inc. and Owners of Dowd Enterprises, Inc. (incorporated by reference
to Exhibit 2.10 to the Registrant's Current Report on Form 8-K dated
April 30, 1997 and filed May 14, 1997).
<PAGE>
Exhibit
Number Description
2.11 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., SDVT, Inc. and Owners of SDVT, Inc. (incorporated
by reference to Exhibit 2.11 to the Registrant's Current Report on
Form 8-K dated April 30, 1997 and filed May 14, 1997).
2.12 Amended and Restated Transfer Agreement dated as of April 2, 1997 by
and among Premiere Technologies, Inc., Car Zee, Inc. and Owners of
Car Zee, Inc. (incorporated by reference to Exhibit 2.12 to the
Registrant's Current Report on Form 8-K dated April 30, 1997 and
filed May 14, 1997).
2.13 Transfer Agreement dated as of March 31, 1997 by and among Premiere
Technologies, Inc. and Owners of the VTEC Franchisee: 1086236
Ontario, Inc. (incorporated by reference to Exhibit 2.13 to the
Registrant's Current Report on Form 8-K dated April 30, 1997 and
filed May 14, 1997).
2.14 Transfer Agreement dated as of March 31, 1997 by and among Premiere
Technologies, Inc. and Owners of the Eastern Franchisees: 1139133
Ontario Inc., 1116827 Ontario Inc., 1006089 Ontario Inc., and 1063940
Ontario Inc. (incorporated by reference to Exhibit 2.14 to the
Registrant's Current Report on Form 8-K dated April 30, 1997 and
filed May 14, 1997).
2.15 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Communications Concepts, Inc. and Owners of
Communications Concepts, Inc. (incorporated by reference to Exhibit
2.1 to the Registrant's Current Report on Form 8-K dated May 16, 1997
and filed June 2, 1997).
2.16 Transfer Agreement dated as of May 20, 1997 by and among Premiere
Technologies, Inc., DARP, Inc. and Owners of DARP, Inc. (incorporated
by reference to Exhibit 2.2 to the Registrant's Current Report on
Form 8-K dated May 16, 1997 and filed June 2, 1997).
2.17 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Hi-Pak Systems, Inc. and Owners of Hi-Pak
Systems, Inc. (incorporated by reference to Exhibit 2.3 to the
Registrant's Current Report on Form 8-K dated May 16, 1997 and filed
June 2. 1997).
2.18 Transfer Agreement dated as of May 29, 1997 by and among Premiere
Technologies, Inc., MMP Communications, Inc. and Owners of MMP
Communications, Inc. (incorporated by reference to Exhibit 2.4 to the
Registrant's Current Report on Form 8-K dated May 16, 1997 and filed
June 2, 1997).
2.19 Transfer Agreement dated as of May 16, 1997 by and among Premiere
Technologies, Inc., Lar-Lin Enterprises, Inc., Lar-Lin Investments,
Inc. and Voice-Mail Solutions, Inc. and Owners of Lar-Lin
Enterprises, Inc., Lar-Lin Investments, Inc. and Voice-Mail
Solutions, Inc. (incorporated by reference to Exhibit 2.5 to the
Registrant's Current Report on Form 8-K dated May 16, 1997 and filed
June 2, 1997).
2.20 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Voice-Net Communications Systems, Inc. and Owners
of Voice-Net Communications Systems, Inc. and Transfer Agreement
dated as of April 2, 1997 by and among Premiere Technologies, Inc.,
VT of Long Island Inc. and Owners of VT of Long Island Inc.
(incorporated by reference to Exhibit 2.6 to the Registrant's Current
Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).
2.21 Transfer Agreement dated as of May 22, 1997 by and among Premiere
Technologies, Inc. Voice Systems of Greater Dayton, Inc. and Owner of
Voice Systems of Greater Dayton, Inc. and Transfer Agreement dated as
of May 22, 1997 by and among Premiere Technologies, Inc., Premiere
Acquisition Corporation, L'Harbot, Inc. and the Owners of L'Harbot,
Inc. (incorporated by reference to Exhibit 2.7 to the Registrant's
Current Report on Form 8-K dated May 16, 1997 and filed June 2,
1997).
2.22 Transfer Agreement dated as of May 30, 1997 by and among Premiere
Technologies, Inc., Audioinfo Inc. and Owners of Audioinfo Inc.
(incorporated by reference to Exhibit 2.8 to the Registrant's Current
Report on Form 8-K dated May 16, 1997 and filed June 2, 1997).
<PAGE>
Exhibit
Number Description
2.23 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., D&K Communications Corporation and Owners of D&K
Communications Corporation (incorporated by reference to Exhibit 2.10
to the Registrant's Current Report on Form 8-K dated May 16, 1997 and
filed June 2, 1997).
2.24 Transfer Agreement dated as of May 19, 1997 by and among Premiere
Technologies, Inc. Voice-Tel of South Texas, Inc. and Owners of
VoiceTel of South Texas, Inc. (incorporated by reference to Exhibit
2.11 to the Registrant's Current Report on Form 8-K dated May 16,
1997 and filed June 2, 1997).
2.25 Transfer Agreement dated as of May 31, 1997 by and among Premiere
Technologies, Inc. Indiana Communicator, Inc. and Owner of Indiana
Communicator, Inc. (incorporated by reference to Exhibit 2.12 to the
Registrant's Current Report on Form 8-K dated May 16, 1997 and filed
June 2, 1997).
2.26 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc., Voice Messaging Development Corporation of
Michigan and the Owners of Voice Messaging Development Corporation of
Michigan (incorporated by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K/A dated May 16, 1997 and
filed June 24, 1997).
2.27 Transfer Agreement dated as of June 13, 1997 by and among Premiere
Technologies, Inc., Voice Partners of Greater Mahoning Valley, Ltd.
and the Owners of Voice Partners of Greater Mahoning Valley, Ltd.
(incorporated by reference to Exhibit 2.2 to the Registrant's Current
Report on Form 8-K/A dated May 16, 1997 and filed June 24, 1997).
2.28 Transfer Agreement dated as of April 2, 1997 by and among Premiere
Technologies, Inc. In-Touch Technologies, Inc. and the Owners of
InTouch Technologies, Inc. (incorporated by reference to Exhibit 2.3
to the Registrant's Current Report on Form 8-K/A dated May 16, 1997
and filed June 24, 1997).
2.29 Transfer Agreement dated as of March 31, 1997 by and among Premiere
Technologies, Inc. and Owners of the Western Franchisees: 3325882
Manitoba Inc., 601965 Alberta Ltd., 3266622 Manitoba Inc., 3337821
Manitoba Inc. and 3266631 Manitoba Inc. (incorporated by reference to
Exhibit 2.4 to the Registrant's Current Report on Form 8-K/A dated
May 16, 1997 and filed June 24, 1997).
2.30 Uniform Terms and Conditions, Exhibit A to Transfer Agreements by and
among Premiere Technologies, Inc., Wave One Franchisees and Owners of
Wave One Franchisees (incorporated by reference to Exhibit A to
Exhibit 2.4 to the Registrant's Current Report on Form 8-K dated
April 2, 1997 and filed April 4, 1997).
2.31 Uniform Terms and Conditions, Exhibit A to Transfer Agreements by and
among Premiere Technologies, Inc., Wave Two Franchisees and owners of
Wave Two Franchisees (incorporated by reference to Exhibit 2.14 to
the Registrant's Current Report on dated May 16, 1997 and filed June
2, 1997).
2.32 Stock Purchase Agreement, together with exhibits, dated as of
September 12, 1997, by and among Premiere Technologies, Inc.,
VoiceCom Holdings, Inc. and the Shareholders of VoiceCom Holdings,
Inc. (incorporated by reference to Exhibit 2.1 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended September 30,
1997).
2.33 Agreement and Plan of Merger, dated as of November 13, 1997, together
with exhibits, by and among Premiere Technologies, Inc., Nets
Acquisition Corp. and Xpedite Systems, Inc. (incorporated by
reference to Exhibit 99.2 to the Registrant's Current Report on Form
8-K dated November 13, 1997 and filed December 5, 1997, as amended by
Form 8-K/A filed December 23, 1997).
<PAGE>
Exhibit
Number Description
2.34 Agreement and Plan of Merger, dated April 22, 1998, by and among the
Company, American Teleconferencing Services, Ltd. ("ATS"), PTEK
Missouri Acquisition Corp. and the shareholders of ATS (incorporated
by reference to Exhibit 99.1 of the Company's Current Report on Form
8-K dated April 23, 1998, and filed with the Commission on April 28,
1998.)
3.1 Articles of Incorporation of Premiere Technologies, Inc., as amended,
(incorporated by reference to Exhibit 3.1 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1998).
3.2 Amended and Restated Bylaws of Premiere Technologies, Inc., as
further amended on August 1, 1998 (incorporated by reference to
Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1998).
4.1 See Exhibits 3.1--3.2 for provisions of the Articles of Incorporation
and Bylaws defining the rights of the holders of common stock of the
Registrant.
4.2 Specimen Stock Certificate (incorporated by reference to Exhibit 4.2
to the Registrant's Registration Statement on Form S-1 (No. 33-
80547)).
4.3 Indenture, dated as of June 15, 1997, between Premiere Technologies,
Inc. and IBJ Schroder Bank & Trust Company, as Trustee (incorporated
by reference to Exhibit 4.1 to the Registrant's Current Report on
Form 8-K dated July 25, 1997 and filed August 5, 1997).
4.4 Form of Global Convertible Subordinated Note due 2004 (incorporated
by reference to Exhibit 4.2 to the Registrant's Current Report on
Form 8-K dated July 25, 1997 and filed August 5, 1997).
4.5 Registration Rights Agreement, dated as of June 15, 1997, by and
among the Registrant, Robertson, Stephens & Company LLC, Alex. Brown
& Sons Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation (incorporated by reference to Exhibit 4.3 to the
Registrant's Current Report on Form 8-K dated July 25, 1997 and filed
August 5, 1997).
4.6 Registration Rights Agreement, dated as of April 30, 1997, by and
among the Registrant, those stockholders of Voice-Tel Enterprises,
Inc. ("VTE") appearing as signatories thereto, those shareholders of
VTN, Inc. appearing as signatories thereto and those stockholders or
other equity owners of franchisees of VTE that executed adoption
agreements (incorporated by reference to Exhibit 4 to Exhibit 2.1 to
the Registrant's Current Report on Form 8-K dated April 2, 1997 and
filed April 4, 1997).
4.7 Stock Restriction and Registration Rights Agreement dated as of
September 30, 1997, by and among the Registrant and those
shareholders of VoiceCom Holdings, Inc. appearing as signatories
thereto (incorporated by reference to Exhibit 3 to Exhibit 2.1 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter Ended
September 30, 1997).
4.8 Stock Restriction and Registration Rights Agreement dated as of April
22, 1998, by and among the Registrant and those shareholders of
American Teleconferencing Services, Ltd. appearing as signatories
thereto.
4.9 Shareholder Protection Rights Agreement, dated June 23, 1998, between
the Company and SunTrust Bank, Atlanta, as Rights Agent (incorporated
by reference to Exhibit 99.1 of the Company's Current Report on Form
8-K dated June 23, 1998, and filed with the Commission on June 26,
1998).
10.1 Shareholder Agreement dated as of January 18, 1994 among the
Registrant, NationsBanc Capital Corporation, Boland T. Jones, D.
Gregory Smith, Leonard A. DeNittis and Andrea L. Jones (incorporated
by reference to Exhibit 10.12 to the Registrant's Registration
Statement on Form S-1 (No. 33-80547)).
<PAGE>
Exhibit
Number Description
10.2 Amended and Restated Executive Employment Agreement and Incentive
Option Agreement dated November 6, 1995 between the Registrant and
David Gregory Smith (incorporated by reference to Exhibit 10.15 to
the Registrant's Registration Statement on Form S-1
(No. 33-80547)).**
10.3 Amended and Restated Executive Employment Agreement dated November 6,
1995 between Premiere Communications, Inc. and David Gregory Smith
(incorporated by reference to Exhibit 10.16 to the Registrant's
Registration Statement on Form S-1 (No. 33-80547)).**
10.3 Amended and Restated Executive Employment Agreement dated November 6,
1995 between Premiere Communications, Inc. and David Gregory Smith
(incorporated by reference to Exhibit 10.16 to the Registrant's
Registration Statement on Form S-1 (No. 33-80547)).**
10.4 Mutual Release dated December 5, 1997 by and among the Registrant,
Premiere Communications, Inc. and David Gregory Smith (incorporated
by reference to Exhibit 10.6 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1997).
10.5 Amended and Restated Executive Employment and Incentive Option
Agreement dated November 6, 1995 between the Registrant and Boland T.
Jones (incorporated by reference to Exhibit 10.17 to the Registrant's
Registration Statement on Form S-1 (No. 33-80547)).**
10.6 Amended and Restated Executive Employment Agreement dated November 6,
1995 between Premiere Communications, Inc. and Boland T. Jones
(incorporated by reference to Exhibit 10.18 to the Registrant's
Registration Statement on Form S-1 (No. 33-80547)).**
10.7 Executive Employment and Incentive Option Agreement dated November 1,
1995 between the Registrant and Patrick G. Jones (incorporated by
reference to Exhibit 10.19 to the Registrant's Registration Statement
on Form S-1 (No. 33-80547)).**
10.8 Executive Employment Agreement dated November 1, 1995 between
Premiere Communications, Inc. and Patrick G. Jones (incorporated by
reference to Exhibit 10.20 to the Registrant's Registration Statement
on Form S-1 (No. 33-80547)).**
10.9 Promissory Note dated November 17, 1995 payable to the Registrant
made by Patrick G. Jones (incorporated by reference to Exhibit 10.27
to the Registrant's Registration Statement on Form S-1 (No. 33-
80547)).**
10.10 Amended and Restated Employment Agreement, made as of April 30, 1997,
by and between Xpedite Systems, Inc., and Roy B. Anderson, Jr.
(incorporated by reference to Exhibit 10.5 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter ended March 31,
1998.)**
10.11 Executive Employment and Incentive Option Agreement, effective as of
July 24, 1997, by and between the Company and Jeffrey A. Allred
(incorporated by reference to Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter ended June 30,
1998.).**
10.12 Executive Employment and Incentive Option Agreement, effective as of
July 6, 1998, by and between the Company and William Porter Payne.**
10.13 Memorandum of Understanding dated as of July 6, 1998, by and between
the Company and William Porter Payne.**
10.14 Executive Employment Agreement, effective as of May 4, 1998, by and
between the Company and Harvey A. Wagner.**
<PAGE>
Exhibit
Number Description
10.15 Promissory Note dated May 11, 1998 payable to the Registrant made by
Harvey A. Wagner.**
10.16 Split-Dollar Agreement dated as of November 11, 1998 by and between
the Company and Harvey A. Wagner.**
10.17 Premiere Communications, Inc. 401(k) Profit Sharing Plan
(incorporated by reference to Exhibit 10.30 to the Registrant's
Registration Statement on Form S-1 (No. 33-80547)).**
10.18 Form of Director Indemnification Agreement between the Registrant and
Non-employee Directors (incorporated by reference to Exhibit 10.31 to
the Registrant's Registration Statement on Form S-1 (No. 33-
80547)).**
10.19 Park Place Office Lease dated May 31, 1993 between Premiere
Communications, Inc. and Mara-Met Venture, as amended by First
Amendment dated December 15, 1995 (incorporated by reference to
Exhibit 10.34 to the Registrant's Registration Statement on Form S-1
(No. 33-80547)).
10.20 Second and Third Amendment to 55 Park Place Office Lease dated
November 5, 1996 between Premiere Communications, Inc. and Mara-Met
Venture (incorporated by reference to Exhibit 10.49 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996).
10.21 Office Lease Agreement dated May 12, 1996 between Premiere
Communications, Inc. and Beverly Hills Center LLC, as amended by the
First Amendment dated August 1, 1996 (incorporated by reference to
Exhibit 10.50 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996).
10.22 Second Amendment of Lease dated July 1, 1997, between Premiere
Communications, Inc. and Beverly Hills Center LLC (incorporated by
reference to Exhibit 10.18 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1997).
10.23 Agreement of Lease between Corporate Property Investors and Premiere
Communications, Inc., dated as of March 3, 1997, as amended by
Modification of Lease dated August 4, 1997, as amended, by Second
Modification of Lease, dated October 30, 1997 (incorporated by
reference to Exhibit 10.19 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1997).
10.24 Sublease Agreement dated as of December 16, 1997, by and between
Premiere Communications, Inc. and Endeavor Technologies, Inc.
(incorporated by reference to Exhibit 10.20 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997).
10.25 Form of Officer Indemnification Agreement between the Registrant and
each of the executive officers (incorporated by reference to Exhibit
10.36 to the Registrant's Registration Statement on Form S-1 (No. 33-
80547)).**
10.26 Telecommunications Services Agreement dated December 1, 1995 between
Premiere Communications, Inc. and WorldCom Network Services, Inc.
d/b/a WilTel (incorporated by reference to Exhibit 10.40 to the
Registrant's Registration Statement on Form S-1 (No. 33-80547)).
10.27 Amended and Restated Program Enrollment Terms dated September 30,
1997 by and between Premiere Communications, Inc. and WorldCom
Network Services, Inc., d/b/a WilTel, as amended by Amendment No. 1
dated November 1, 1997 (incorporated by reference to Exhibit 10.26 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1997).*
<PAGE>
Exhibit
Number Description
10.28 Service Agreement dated September 30, 1997, by and between VoiceCom
Systems, Inc. and AT&T Corp. (incorporated by reference to Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 1997).*
10.29 Strategic Alliance Agreement dated November 13, 1996 by and between
the Registrant and WorldCom, Inc. (incorporated by reference to
Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated
November 13, 1996).*
10.30 Investment Agreement dated November 13, 1996 by and between the
Registrant and WorldCom, Inc. (incorporated by reference to Exhibit
10.2 to the Registrant's Current Report on Form 8-K dated November
13, 1996).
10.31 Service and Reseller Agreement dated September 28, 1990 by and
between Amway Corporation and Voice-Tel Enterprises, Inc.
(incorporated by reference to Exhibit 2.33 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1997).*
10.32 Independent Distributor Agreement dated September 26, 1997, by and
between Registrant and Digitec 2000, Inc. (incorporated by reference
to Exhibit 10.2 to the Registrant's Quarterly Report as Form 10-Q for
the Quarter ended September 30, 1997).
10.33 Form of Stock Purchase Warrant Agreement (incorporated by reference
to Exhibit 4.3 to the Registrant's Registration Statement on Form S-8
(No. 333-11281)).
10.34 Form of Warrant Transaction Statement (incorporated by reference to
Exhibit 4.4 to the Registrant's Registration Statement on Form S-8
(No. 333-11281)).
10.35 Form of Director Stock Purchase Warrant (incorporated by reference to
Exhibit 4.3 to the Registrant's Registration Statement on Form S-8
(No. 333-17593)).**
10.36 Purchase Agreement, dated June 25, 1997, by and among Premiere
Technologies, Inc., Robertson, Stephens & Company LLC, Alex. Brown &
Sons Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation (incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report on Form 8-K dated July 25, 1997 and filed
August 5, 1997).
10.37 1991 Non-Qualified and Incentive Stock Option Plan of Voice-Tel
Enterprises, Inc. (assumed by the Registrant) (incorporated by
reference to Exhibit 4.2 to the Registrant's Registration Statement
on Form S-8 (No. 333-29787)).
10.38 1991 Non-Qualified and Incentive Stock Option Plan of VTN, Inc.
(assumed by the Registrant) (incorporated by reference to Exhibit 4.3
to the Registrant's Registration Statement on Form S-8 (No. 333-
29787)).
10.39 Form of Stock Option Agreement by and between the Registrant and
certain current or former employees of Voice-Tel Enterprises, Inc.
(incorporated by reference to Exhibit 4.4 to the Registrant's
Registration Statement on Form S-8 (No. 333-29787)).
10.40 Premiere Technologies, Inc. Second Amended and Restated 1995 Stock
Plan (incorporated by reference to Exhibit A to the Registrant's
Definitive Proxy Statement distributed in connection with the
Registrant's June 11, 1997 annual meeting of shareholders, filed
April 30, 1997).
10.41 First Amendment to Premiere Technologies, Inc. Second Amended and
Restated 1995 Stock Plan (incorporated by reference to Exhibit 10.43
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997).
<PAGE>
Exhibit
Number Description
10.42 VoiceCom Holdings, Inc. 1995 Stock Option Plan (assumed by the
Registrant) (incorporated by reference to Exhibit 10.44 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1997).
10.43 VoiceCom Holdings, Inc. Amended and Restated 1985 Stock Option Plan
(assumed by the Registrant) (incorporated by reference to Exhibit
10.45 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997).
10.44 Premiere Technologies, Inc., 1998 Stock Plan (incorporated by
reference to Exhibit 10.2 to the Registrant's Quarterly Report on
Form 10-Q for the Quarter ended June 30, 1998.).
10.45 Xpedite Systems, Inc. 1992 Incentive Stock Option Plan (assumed by
the Registrant) (incorporated by reference to Exhibit to
Xpedite's Registration Statement on Form S-1 (No. 33-73258)).
10.46 Xpedite Systems, Inc. 1993 Incentive Stock Option Plan (assumed by
the Registrant) (incorporated by reference to Exhibit to
Xpedite's Registration Statement on Form S-1 (No. 33-73258)).
10.47 Xpedite Systems, Inc. 1996 Incentive Stock Option Plan (assumed by
the Registrant) (incorporated by reference to Exhibit to
Xpedite's Annual Report on Form 10-K for the year ended December 31,
1995).
10.48 Xpedite Systems, Inc. Non-Employee Directors' Warrant Plan (assumed
by the Registrant) (incorporated by reference to Exhibit 10.31 to
Xpedite's Annual Report on Form 10-K for the year ended December 31,
1996).
10.49 Xpedite Systems, Inc. Officer's Contingent Stock Option Plan (assumed
by the Registrant) (incorporated by reference to Exhibit 10.30 to
Xpedite's Annual Report on Form 10-K for the year ended December 31,
1996).
10.50 Credit Agreement dated as of December 17, 1997, as amended and
restated as of December 16, 1998, by and among Xpedite Systems, Inc.
and Xpedite Systems Holdings (UK) Limited, as Borrowers, and the
Guarantors party thereto, the banks listed on the signature pages
thereof, NationsBank, N.A., as Documentation Agent and The Bank of
New York, as Administrative Agent.
10.51 Share Purchase Agreement dated as of August 8, 1997, by and among
Xpedite Systems, Inc., Xpedite Systems Holdings (UK) Limited, and the
shareholders of Xpedite Systems Limited (incorporated by reference to
Exhibit 99.3 to the Registrant's Current Report on Form 8-K dated
November 13, 1997 and filed December 5, 1997, as amended by Form 8-
K/A filed December 23, 1997 and Form 8-K/A filed January 27, 1998)).
10.52 Amendment to the Share Purchase Agreement, dated December 17, 1997,
by and among Xpedite Systems, Inc., Xpedite Systems Holdings (UK)
Limited and the shareholders of Xpedite Systems Limited (incorporated
by reference to Exhibit 10.4 to the Registrant's Quarterly Report on
Form 10-Q for the Quarter ended March 31, 1998.)
<PAGE>
Exhibit
Number Description
11.1 Statement re: Computation of Per Share Earnings.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule for the year ended December 31, 1998.
- - --------
* Confidential treatment has been granted. The copy on file as an exhibit
omits the information subject to the confidentiality request. Such omitted
information has been filed separately with the Commission.
<PAGE>
EXHIBIT 4.8
STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT
---------------------------------------------------
THIS STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT (this "Agreement")
is made and entered into as of April 22, 1998, by and among Premiere
Technologies, Inc., a corporation ("Premiere"), and those shareholders of
American Teleconferencing Services, Ltd., a Missouri corporation ("ATS"),
appearing as signatories hereto (each, an "Investor" and collectively, the
"Investors").
R E C I T A L S
---------------
WHEREAS, pursuant to the terms of an Agreement and Plan of Merger, dated as
of April 22, 1998 (as the same may be amended, the "Acquisition Agreement"), by
and between Premiere, PTEK Missouri Acquisition Corp. ("Sub") and ATS, ATS shall
be merged with and into Sub (the "Acquisition"), with the result that each of
outstanding shares of $.0125 par value common stock of ATS ("ATS Common Stock")
will be converted into the right to receive cash and shares of the $.01 par
value common stock of Premiere ("Premiere Common Stock"); and
WHEREAS, Premiere has agreed, as a condition precedent to ATS's obligations
under the Acquisition Agreement, to grant the Investors certain registration
rights; and
WHEREAS, Premiere and the Investors desire to define such registration
rights on the terms and subject to the conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the parties hereby agree as follows:
1. DEFINITIONS
-----------
As used in this Agreement, the following terms have the respective meanings
set forth below:
Commission: shall mean the Securities and Exchange Commission or any other
----------
federal agency at the time administering the Securities Act;
Cowan: shall mean Robert A. Cowan.
-----
Effective Date: shall mean the date on which the Acquisition is
--------------
consummated;
Exchange Act: shall mean the Securities Exchange Act of 1934, as amended;
------------
Holder: shall mean any holder of Registrable Securities;
------
Jaffe: shall mean Louis I. Jaffe;
-----
-1-
<PAGE>
Other Stockholders: shall mean Persons who, by virtue of an agreement with
------------------
Premiere, are entitled to include their Securities in any registration effected
under Section 3;
Person: shall mean an individual, partnership, joint stock company,
------
corporation, trust or unincorporated organization, and a government or agency or
political subdivision thereof;
register, registered and registration: shall mean a registration effected
-------- ---------- ------------
by preparing and filing a registration statement in compliance with the
Securities Act (and any post-effective amendments filed or required to be filed)
and the declaration or ordering of effectiveness of such registration statement;
Registrable Securities: shall mean (A) one-half (1/2) of the aggregate of
----------------------
the shares of Premiere Common Stock issued to Cowan under the Acquisition
Agreement, (B) the aggregate of the shares of Premiere Common Stock issued to
the Investors (other than Cowan) under the Acquisition Agreement and (C) any
securities of Premiere issued as a dividend or other distribution with respect
to, or in exchange for or in replacement of, the shares of Premiere Common Stock
referred to in clause (A) and (B); provided, that Registrable Securities shall
not include (i) securities with respect to which a registration statement with
respect to the sale of such securities has become effective under the Securities
Act and all such securities have been disposed of in accordance with such
registration statement, (ii) such securities as are actually sold pursuant to
Rule 144 (or any successor provision thereto) under the Securities Act ("Rule
144"), or are eligible for sale pursuant to Rule 144, (iii) such securities as
are acquired by Premiere or any of its subsidiaries or (iv) the shares of
Premiere Common Stock issued to the Investors under the Acquisition Agreement
that are held by the escrow agent under that certain Escrow Agreement, dated of
even date hereof, by and among Premiere, the Investors and SunTrust Bank,
Atlanta;
Registration Expenses: shall mean all expenses incurred by Premiere in
---------------------
compliance with Sections 3(a) and (b) hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for Premiere, fees and expenses of one counsel for all the Holders, blue
sky fees and expenses and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of Premiere, which shall be paid in any event by Premiere);
Restricted Securities: shall mean the shares of Premiere Common Stock
---------------------
issued to the Investors under the Acquisition Agreement;
Security, Securities: shall have the meaning set forth in Section 2(1) of
--------------------
the Securities Act;
Securities Act: shall mean the Securities Act of 1933, as amended; and
--------------
Selling Expenses: shall mean all underwriting discounts and selling
----------------
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for each of the Holders other than fees and expenses of
one counsel for all the Holders.
-2-
<PAGE>
Shareholder Representative: shall have the meaning given that term in the
--------------------------
Acquisition Agreement.
Shelf Filing Date: shall mean the date that is ninety (90) days following
-----------------
the Effective Date.
2. RESTRICTIONS ON TRANSFER
------------------------
(a) Prior to any proposed transfer of any Restricted Securities (other
than under the circumstances described in Section 3 hereof), the Holder thereof
shall give written notice to Premiere of its intention to effect such transfer.
Each such notice shall describe the manner of the proposed transfer and, if
requested by Premiere, shall be accompanied by an opinion of counsel reasonably
satisfactory to Premiere to the effect that the proposed transfer may be
effected without registration under the Securities Act, whereupon such Holder
shall be entitled to transfer the Restricted Securities in accordance with the
terms of its notice. Each certificate or instrument transferred as above
provided shall bear the legend set forth in Section 2(b), except that such
certificate or instrument shall not bear such legend if (i) such transfer is in
accordance with the provisions of Rule 144 (or any other rule permitting public
sale without registration under the Securities Act) or (ii) the opinion of
counsel referred to above is to the further effect that the transferee and any
subsequent transferee would be entitled to transfer such Restricted Securities
in a public sale without registration under the Securities Act. Notwithstanding
anything herein to the contrary, in no event shall Jaffe, during the period
commencing on the date hereof and ending on the one (1) year anniversary of the
date hereof, transfer in any three (3) month period a number of shares of
Registrable Securities in excess of twenty-five percent (25%) of the Registrable
Securities held by Jaffe as of the Effective Date except pursuant to a Premiere
Registration pursuant to Section 3(a) below; provided that the limitations
provided by this sentence shall cease to apply (a) upon the occurrence of a
"change of control" of Premiere reportable under Item 1 of Form 8-K under the
Exchange Act, (b) upon the closing of a Commission Rule 145 transaction unless
the stockholders of Premiere immediately prior to such transaction continue to
hold more than 50% of the shares of the surviving entity immediately following
such transaction, and (c) in the event that the closing stock price of Premiere
Common Stock, as reported by The Wall Street Journal, is less than 66% of the
Average Closing Price (as defined in the Acquisition Agreement) for three
consecutive trading days.
(b) Each certificate evidencing Restricted Securities issued to any Holder
in connection with the Acquisition shall bear a legend in substantially the
following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES ACTS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED
OF UNLESS THEY HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND ANY
APPLICABLE STATE SECURITIES ACTS OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
-3-
<PAGE>
(c) In the event that any Restricted Securities shall cease to be subject
to the restrictions on transfer set forth in this Agreement, Premiere shall,
upon the written request of the Holder thereof, issue to such Holder a new
certificate evidencing such Restricted Securities without the legend required by
Section 2(b) hereof endorsed thereon.
3. REGISTRATION RIGHTS
-------------------
(a) Premiere Registration.
---------------------
(i) If Premiere shall determine to register at any time prior to the
one (1) year anniversary of the date of this Agreement any of its equity
securities either for its own account or for the account of Other Stockholders,
other than a registration relating solely to benefit plans, or a registration
relating solely to a Commission Rule 145 transaction, or a registration covering
any method of distribution which is not an underwritten public offering, or a
registration on any registration form which does not permit secondary sales or
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable
Securities, Premiere will:
(A) promptly give to each of the Holders a written notice thereof
(which shall include a list of the jurisdictions in which Premiere intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws); and
(B) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made by any Holder within ten (10) business days after the giving
of the written notice from Premiere described in clause (i) above, except as
set forth in Section 3(a)(ii) below. Such written request shall specify the
amount of Registrable Securities intended to be disposed of by a Holder and
may specify all or a part of the Holders' Registrable Securities.
Notwithstanding the foregoing, if, at any time after giving such written notice
of its intention to effect such registration and prior to the effective date of
the registration statement filed in connection with such registration, Premiere
shall determine for any reason not to register such equity securities Premiere
may, at its election, give written notice of such determination to the Holders
and thereupon Premiere shall be relieved of its obligation to register such
Registrable Securities in connection with the registration of such equity
securities (but not from its obligation to pay Registration Expenses to the
extent incurred in connection therewith as provided herein).
Notwithstanding anything to the contrary set forth in this Agreement, no Holder
shall have any right to include any Registrable Securities in any registration
statement filed pursuant to any of the following: the 5-3/4% Convertible
Subordinated Notes Due 2004 Registration Rights Agreement dated as of June 15,
1997, by and among Premiere and Robertson, Stephens & Company LLC, Alex. Brown &
Sons Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation; the
Stock Restriction and Registration Rights Agreement dated April 30, 1997 by and
among Premiere, and those Stockholders of Voice-Tel Enterprises, Inc. ("VTE"),
VTN, Inc. and the
-4-
<PAGE>
stockholders of franchisees of VTE appearing as signatories thereto; or the
Stock Restriction and Registration Rights Agreement dated September 30, 1997 by
and among Premiere and those shareholders of VoiceCom Holdings, Inc. appearing
as signatories thereto.
(ii) Underwriting. The right of each of the Holders to registration
------------
pursuant to this Section 3(a) shall be conditioned upon such Holders'
participation in such underwriting and the inclusion of such Holders'
Registrable Securities in the underwriting to the extent provided herein. The
Holders whose shares are to be included in such registration shall (together
with Premiere and the Other Stockholders distributing their securities through
such underwriting) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected for the
underwriting by Premiere or such Other Stockholders, as the case may be. Such
underwriting agreement will contain such representations and warranties by
Premiere and such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including,
without limitation, indemnities and contribution to the effect and to the extent
provided in Section 3(e) hereof and the provision of opinions of counsel and
accountants' letters to the effect and to the extent provided in Section 3(f),
and the representations and warranties by, and the other agreements on the part
of, Premiere to and for the benefit of such underwriters shall also be made to
and for the benefit of the Holders whose shares are to be included in such
registration. Notwithstanding any other provision of this Section 3, if the
representative determines that marketing factors require a limitation on the
number of shares to be underwritten, Premiere shall so advise all holders of
securities requesting registration, and the number of shares of securities that
are entitled to be included in the registration and underwriting shall be
allocated by Premiere in its sole discretion, subject to agreements between
Premiere and the Other Stockholders. If any of the Holders or any officer,
director or Other Stockholder disapproves of the terms of any such underwriting,
he or she may elect to withdraw therefrom by written notice to Premiere and the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
(b) Shelf Registration.
------------------
(i) On or before the Shelf Filing Date Premiere shall file a
"shelf" registration statement pursuant to Rule 415 under the Securities Act
(the "Shelf Registration") with respect to the Registrable Securities to be
issued under the Acquisition Agreement; provided, however, Premiere shall not be
required to file or effect, or take any action to file or effect, any Shelf
Registration pursuant to this Section 3(b) if all of the Registrable Securities
are or were included in, or are or were eligible for sale under, any such
registration pursuant to Section 3(a) hereof. Premiere shall, subject to Section
3(g) hereof, use its reasonable best efforts to cause the Shelf Registration to
become effective as soon as practicable after the date of filing thereof, and
shall use its reasonable best efforts to keep the Shelf Registration
continuously effective from the date such Shelf Registration is effective until
the first anniversary of the Effective Date in order to permit the prospectus
forming a part thereof to be usable by Holders during such period. The Shelf
Registration may include securities of Premiere other than Registrable
Securities. The Registrable Securities may be included in another Shelf
Registration that otherwise meets the requirements set forth herein.
-5-
<PAGE>
(ii) Subject to Section 3(g) hereof, Premiere shall supplement or
amend the Shelf Registration, (A) as required by the registration form utilized
by Premiere or by the instructions applicable to such registration form or by
the Securities Act or the rules and regulations promulgated thereunder and (B)
to include in such Shelf Registration any additional securities that become
Registrable Securities by operation of the definition thereof.
(iii) The Holders may, at their election and upon written notice by
the Shareholder Representative to Premiere, effect offers and sales under the
Shelf Registration by means of one or more offerings (provided that Premiere
shall not be required to effect any underwritten offering); provided, however,
that Premiere shall not be obligated to effect, or take any action to effect,
any such registration:
(A) In any particular jurisdiction in which Premiere would be
required to execute a general consent to service of process in effecting
such registration, qualification or compliance, unless Premiere is already
subject to service in such jurisdiction and except as may be required by the
Securities Act or applicable rules or regulations thereunder.
(B) Other than pursuant to a registration statement on Form S-3.
If Other Stockholders request inclusion in any such registration under
Section 3(b)(iii), the Holders shall offer to include the securities of such
Other Stockholders and may condition such offer on their acceptance of the
further applicable provisions of this Section 3. Notwithstanding any other
provision of this Section 3(b)(iii), if a recognized national independent
investment banking firm advises the Holders in writing that marketing factors
require a limitation on the number of shares to be included in the registration,
the Shareholder Representative shall so advise Premiere and the securities of
Premiere held by Other Stockholders shall be excluded from such registration to
the extent so required by such limitation. No Registrable Securities or any
other securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration.
(c) Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with any registration, qualification or compliance pursuant to this
Section 3 (including all Registration Expenses incurred in connection with the
Shelf Registration and any supplements or amendments thereto, whether or not it
becomes effective, and whether all, none or some of the Registrable Securities
are sold pursuant to the Shelf Registration) shall be borne by Premiere, and all
Selling Expenses shall be borne by the Holders of the securities so registered
pro rata on the basis of the number of their shares so registered.
(d) Registration Procedures. In the case of each registration
-----------------------
effected by Premiere pursuant to this Section 3, Premiere will keep the Holders,
as applicable, advised in writing as to the initiation of each registration and
as to the completion thereof. At its expense, Premiere will:
(i) furnish to the Shareholder Representative, and to any
underwriter simultaneously with filing with the Commission, copies of any
registration statement
-6-
<PAGE>
(including all exhibits) for a registration in which the Holders have elected
to participate pursuant to Section 3(a) and any prospectus forming a part
thereof and any amendments and supplements thereto (including all documents
incorporated or deemed incorporated by reference therein prior to the
effectiveness of such registration statement and including each preliminary
prospectus, any summary prospectus or any term sheet (as such term is used in
Rule 434 under the Securities Act)) and any other prospectus filed under Rule
424 under the Securities Act;
(ii) furnish to the Shareholder Representative, and to any
underwriter before filing with the Commission, copies of any registration
statement (including all exhibits) for a Shelf Registration and any
prospectus forming a part thereof and any amendments and supplements thereto
(including all documents incorporated or deemed incorporated by reference
therein prior to the effectiveness of such registration statement and
including each preliminary prospectus, any summary prospectus or any term
sheet (as such term is used in Rule 434 under the Securities Act)), which
documents, other than documents incorporated or deemed incorporated by
reference, will be subject to the review of the Shareholder Representative
and any such underwriter for a period of at least five business days, and
Premiere shall not file any such registration statement or such prospectus or
any amendment or supplement to such registration statement or prospectus to
which the Shareholder Representative or any such underwriter shall reasonably
object within five business days after the receipt thereof; the Shareholder
Representative or such underwriters, if any, shall be deemed to have
reasonably objected to such filing only if the registration statement,
amendment, prospectus or supplement, as applicable, as proposed to be filed,
contains a material misstatement or omission;
(iii) furnish to the Shareholder Representative and to any
underwriter, such number of conformed copies of the applicable registration
statement and of each amendment and supplement thereto (in each case
including all exhibits) and such number of copies of the prospectus forming a
part of such registration statement (including each preliminary prospectus,
any summary prospectus or any term sheet (as such term is used in Rule 434
under the Securities Act)) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, including without limitation
documents incorporated or deemed to be incorporated by reference prior to the
effectiveness of such registration, as the Shareholder Representative or any
such underwriter, from time to time may reasonably request;
(iv) to the extent practicable, promptly prior to the filing of any
document that is to be incorporated by reference into any registration
statement or prospectus forming a part thereof subsequent to the
effectiveness thereof, and in any event no later than the date such document
is filed with the Commission, provide copies of such document to the
Shareholder Representative, if requested, and to any underwriter, and make
representatives of Premiere available for discussion of such document and
other customary due diligence matters, and include in such document prior to
the filing thereof such information as Shareholder Representative or any such
underwriter reasonably may request;
-7-
<PAGE>
(v) use its reasonable best efforts (x) to register or qualify all
Registrable Securities and other securities covered by such registration
under such other securities or blue sky laws of such States of the United
States of America where an exemption is not available and as the sellers of
Registrable Securities covered by such registration shall reasonably request,
(y) to keep such registration or qualification in effect for so long as the
applicable registration statement remains in effect, and (z) to take any
other action which may be reasonably necessary or advisable to enable such
sellers to consummate the disposition in such jurisdictions of the securities
to be sold by such sellers, except that Premiere shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where it is not so qualified, or to subject
itself to taxation in any such jurisdiction, or to execute a general consent
to service of process in effecting such registration, qualification or
compliance, unless Premiere is already subject to service in such
jurisdiction and except as may be required by the Securities Act or
applicable rules or regulations thereunder;
(vi) use its reasonable best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or authorities
as may be necessary in the opinion of counsel to Premiere and counsel to the
Holders of Registrable Securities to enable the Holders thereof to consummate
the disposition of such Registrable Securities;
(vii) subject to Section 3(g) hereof, promptly notify each Holder
of Registrable Securities covered by a registration statement (A) upon
discovery that, or upon the happening of any event as a result of which, the
prospectus forming a part of such registration statement, as then in effect,
includes an untrue statement of a material fact or omits 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, (B) of the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or the initiation
of proceedings for that purpose, (C) of any request by the Commission for (1)
amendments to such registration statement or any document incorporated or
deemed to be incorporated by reference in any such registration statement,
(2) supplements to the prospectus forming a part of such registration
statement or (3) additional information, or (D) of the receipt by Premiere of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation of any proceeding for such purpose, and at
the request of any such Holder promptly prepare and furnish to it a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include 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;
(viii) use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of any such registration, or the
lifting of any suspension of the
-8-
<PAGE>
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction;
(ix) if requested by the Shareholder Representative or any
underwriter, promptly incorporate in such registration statement or
prospectus, pursuant to a supplement or post effective amendment if
necessary, such information as the Shareholder Representative and any
underwriter may reasonably request to have included therein, including,
without limitation, information relating to the "plan of distribution" of the
Registrable Securities, information with respect to the principal amount or
number of shares of Registrable Securities being sold to such underwriter,
the purchase price being paid therefor and any other terms of the offering of
the Registrable Securities to be sold in such offering and make all required
filings of any such prospectus supplement or post-effective amendment as soon
as practicable after Premiere is notified of the matters to be incorporated
in such prospectus supplement or post effective amendment;
(x) in the event the offering is an underwritten offering, furnish
to the Holders, addressed to them, an opinion of counsel for Premiere, dated
the date of the closing under the underwriting agreement, if any, or the date
of effectiveness of the registration statement if such registration is not an
underwritten offering, and use its reasonable best efforts to furnish to the
Holders, addressed to them, a "cold comfort" letter signed by the independent
certified public accountants who have certified Premiere's financial
statements included in such registration, covering substantially the same
matters with respect to such registration (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered
to underwriters in underwritten public offerings of securities and such other
matters as the Shareholder Representative may reasonably request;
(xi) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months, but not more than 18 months,
beginning with the first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;
(xii) provide promptly to the Holders upon request any document
filed by Premiere with the Commission pursuant to the requirements of Section
13 and Section 15 of the Exchange Act; and
(xiii) use its reasonable best efforts to cause all Registrable
Securities included in any registration pursuant hereto to be listed on each
securities exchange on which securities of the same class are then listed,
or, if not then listed on any securities exchange, to be eligible for trading
in any over-the-counter market or trading system in which securities of the
same class are then traded.
-9-
<PAGE>
(e) Indemnification.
---------------
(i) Premiere will indemnify each of the Holders, as applicable,
each of its officers, directors, members and partners, and each person
controlling each of the Holders, with respect to each registration which has
been effected pursuant to this Section 3, and each underwriter, if any, and each
person who controls any underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on 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 any violation by
Premiere of the Securities Act or the Exchange Act or any rule or regulation
thereunder applicable to Premiere and relating to action or inaction required of
Premiere in connection with any such registration, qualification or compliance,
and will reimburse each of the Holders, each of its officers, directors, members
and partners, and each person controlling each of the Holders, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided that
Premiere will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to Premiere by
the Holders or underwriter and stated to be specifically for use therein.
(ii) Each of the Holders will, if Registrable Securities held by
it are included in the securities as to which such registration, qualification
or compliance is being effected, indemnify Premiere, each of its directors and
officers and each underwriter, if any, of Premiere's securities covered by such
a registration statement, each person who controls Premiere or such underwriter,
each Other Stockholder and each of their officers, directors, members and
partners, and each person controlling such Other Stockholder against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document made by such Holder, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements by such Holder therein not misleading, and will reimburse
Premiere and such Other Stockholders, directors, officers, partners, members,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to Premiere by such Holder and
stated to be specifically for use therein; provided, however, that the
obligations of each of the Holders hereunder and under clause (vi) below shall
be limited to an amount equal to the net proceeds to such Holder of securities
sold as contemplated herein.
-10-
<PAGE>
(iii) Each party entitled to indemnification under this Section
3(e) (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld) and the Indemnified Party
may participate in such defense at such party's expense (unless the Indemnified
Party shall have reasonably concluded that there may be a conflict of interest
between the Indemnifying Party and the Indemnified Party in such action, in
which case the fees and expenses of one such counsel for all Indemnified Parties
shall be at the expense of the Indemnifying Party), and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 3 unless
the Indemnifying Party is materially prejudiced thereby. No Indemnifying Party,
in the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party (which consent shall not be unreasonably withheld or
delayed), consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 3(e) is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party 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 Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(v) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with any underwritten public offering
contemplated by this Agreement are in conflict with the foregoing provisions,
the provisions in such underwriting agreement shall be controlling.
(vi) The foregoing indemnity agreement of Premiere and Holders is
subject to the condition that, insofar as they relate to any loss, claim,
liability or damage made in a preliminary prospectus but eliminated or remedied
in the amended prospectus on file with the
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<PAGE>
Commission at the time the registration statement in question becomes effective
or the amended prospectus filed with the Commission pursuant to Commission Rule
424(b) (the "Final Prospectus"), such indemnity or contribution agreement shall
not inure to the benefit of any underwriter or Holder (but only if such Holder
was required to deliver such Final Prospectus) if a copy of the Final Prospectus
was furnished to the underwriter and was not furnished to the person asserting
the loss, liability, claim or damage at or prior to the time such action is
required by the Securities Act.
(f) Information by the Holders. Each of the Holders holding
--------------------------
securities included in any registration shall furnish to Premiere such
information regarding such Holder and the distribution proposed by such Holder
as Premiere may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Section 3.
(g) Holdback Agreement; Postponement. Notwithstanding the provisions
--------------------------------
of Sections 3(a) and (b), if the Board of Directors of Premiere determines in
good faith that it is in the best interests of Premiere (A) not to disclose the
existence of facts surrounding any proposed or pending acquisition, disposition,
strategic alliance or financing transaction involving Premiere or (B) for any
reasonable purpose relating to the business of Premiere, to suspend the
registration rights set forth herein, Premiere may, by notice to the Shareholder
Representative in accordance with Section 6(a), (1) suspend the rights of the
Holders to make sales pursuant to any effective registration statement, and (2)
postpone any obligation of Premiere hereunder to take any action for such a
period of time as the Board of Directors may determine in its sole discretion;
provided, however, that such periods of suspension may not exceed 90 days in the
aggregate.
(h) Assignment. The registration rights set forth in Section 3 hereof
----------
may be assigned, in whole or in part, to any transferee of Registrable
Securities (who shall be considered thereafter to be a Holder (provided that any
transferee who is not an affiliate of Investor shall be a Holder only with
respect to such Registrable Securities so acquired and any stock of Premiere
issued as a dividend or other distribution with respect to, or in exchange for
or in replacement of, such Registrable Securities) and shall be bound by all
obligations and limitations of this Agreement).
4. RULE 144 REPORTING
------------------
With a view to making available the benefits of certain rules and
regulations of the Commission which may permit the sale of restricted securities
to the public without registration, Premiere agrees to:
(i) make and keep public information available (as those terms are
understood and defined in Rule 144) at all times;
(ii) use its reasonable best efforts to file with the Commission in a
timely manner all reports and other documents required of Premiere
under the Securities Act and the Exchange Act; and
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<PAGE>
(iii) so long as there are outstanding any Registrable Securities, furnish
to each Holder, upon request, a written statement by Premiere as to
its compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual
or quarterly report of Premiere, and such other reports and documents
so filed as such Holder may reasonably request in availing itself of
any rule or regulation of the Commission allowing such Holder to sell
any such securities without registration.
5. INTERPRETATION OF THIS AGREEMENT
--------------------------------
(a) Directly or Indirectly. Where any provision in this Agreement
----------------------
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
(b) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Georgia.
(c) Section Headings. The headings of the sections and subsections of
----------------
this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
6. MISCELLANEOUS
-------------
(a) Notices.
-------
(i) All communications under this Agreement shall be in writing and
shall be delivered by facsimile or by hand or mailed by overnight courier or by
registered or certified mail, postage prepaid: .
(A) if to Premiere, to Premiere Technologies, Inc., The Lenox
Building, Suite 400, 3399 Peachtree Road, N.E., Atlanta, Georgia 30326,
Attention: Boland T. Jones, President and Chief Executive Officer, with a
required copy to Alston & Bird LLP, One Atlantic Center, 1201 West Peachtree
Street, Atlanta, Georgia 30309-3424, Attention: Janine Brown, Esq., or at such
other address as it may have furnished in writing to the Investors;
(B) if to the Investors, at the addresses listed on Schedule I
hereto, or at such other addresses as may have been furnished Premiere in
writing.
(C) if to the Shareholder Representative, to Cowan, 580 Sunny
Glen Ct., Woodland Park, Colorado 80863 and to Jaffe, 2677 :Larkin #104, San
Francisco, California 94109or at such other address as it may have furnished in
writing to Premiere.
(ii) Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if mailed by courier, on the
first business day following the date of
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<PAGE>
such mailing; and if mailed by registered or certified mail, on the third
business day after the date of such mailing.
(b) Reproduction of Documents. This Agreement and all documents
-------------------------
relating thereto, including, without limitation, any consents, waivers and
modifications which may hereafter be executed may be reproduced by the Investor
by any photographic, photostatic, microfilm, microcard, miniature photographic
or other similar process and the Investors may destroy any original document so
reproduced. The parties hereto agree and stipulate that any such reproduction
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by the Investors in the regular course
of business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
(c) Entire Agreement; Amendment and Waiver. This Agreement
--------------------------------------
constitutes the entire understanding of the parties hereto and supersedes all
prior understanding among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only with) the
written consent of Premiere and the Holders of a majority of the then
outstanding Registrable Securities.
(d) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(e) No Inconsistent Agreements. Premiere will not hereafter enter
--------------------------
into any agreement with respect to its securities which is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement.
(f) Remedies. Each Holder of Registrable Securities, in addition to
--------
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. Premiere agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(g) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended and understood that all of the rights and privileges
of each of the Holders shall be enforceable to the fullest extent permitted by
law.
[Signatures on the following page.]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
PREMIERE TECHNOLOGIES, INC.
By: /s/ Jeffrey A. Allred
----------------------------------
Name: Jeffrey A. Allred
--------------------------------
Title: Executive Vice President of
------------------------------
Strategic Development
------------------------------
INVESTORS:
/s/ Robert A. Cowan (SEAL)
----------------------------
Robert A. Cowan
/s/ Louis I. Jaffe (SEAL)
----------------------------
Louis I. Jaffe
/s/ Richard L. Clark (SEAL)
----------------------------
Richard L. Clark
/s/ Norma L. Dukstein, (SEAL)
----------------------------
Norma L. Dukstein, Successor Trustee under
Agreement dated November 3, 1986
/s/ Elizabeth D. White (SEAL)
----------------------------
Elizabeth D. White
/s/ Richard L. Johnson (SEAL)
----------------------------
Richard L. Johnson
/s/ Robert Stewart
/s/ Kathryn Stewart (SEAL)
----------------------------
Robert Stewart & Kathryn Stewart, Trustees under
Living Trust Agreement dated December 18, 1995
/s/ Louis Jaffe (SEAL)
----------------------------
Louis Jaffe, Trustee of the Jaffe 1996 Irrevocable
Trust dated 12/2/96
-15-
<PAGE>
EXHIBIT 10.12
PREMIERE TECHNOLOGIES, INC.
---------------------------
EXECUTIVE EMPLOYMENT AND INCENTIVE OPTION AGREEMENT
---------------------------------------------------
THIS AGREEMENT is made and entered into by and between Premiere
Technologies, Inc. (the "Company"), a Georgia corporation, and William Porter
Payne(the "Executive"), effective as of July 6, 1998.
BACKGROUND STATEMENT
--------------------
The Company and its subsidiaries are in the business of designing,
developing, marketing and providing enhanced communications services, and in
connection therewith the Company and its subsidiaries have developed, and expect
to develop, trade secrets and methods of conducting business which are worthy of
protection. The Executive has substantial business experience and expertise
through his service as President and Chief Executive Officer of the Atlanta
Committee for the Olympic Games and as Vice Chairman of NationsBank Corporation
("NationsBank"), and otherwise. The Company considers it to be in its best
interest to have the benefit of the Executive's services as provided in this
Agreement, and the Executive is willing to render such services to the Company
in accordance with the provisions of this Agreement. More specifically, the
Company believes it is in its best interest to initially utilize the Executive's
abilities to develop and support the business ventures involving
Orchestrate.com, Inc. ("Orchestrate.com"), a wholly-owned subsidiary of the
Company, and Endeavor Technologies, Inc. ("Endeavor"). The Company has a
significant investment in Endeavor, which provides integrated Internet-based
information and communications services to healthcare professionals under the
name "WebMD." The Company believes that the Executive can provide significant
assistance with the large-scale introduction of the Orchestrate(R) product
through Endeavor.
THEREFORE, in consideration of and reliance upon the foregoing background
statement and the representations and warranties contained in this Agreement,
the Company and the Executive agree to the following provisions:
TERMS
-----
Section 1. Duties.
------
The Company hereby agrees to employ the Executive as the Chairman of
Orchestrate.com to advise and assist Orchestrate. com, Premiere and Premiere's
affiliated companies in client development, sales and marketing activities and
in establishing and developing strategic relationships principally with large
corporations, and in particular to assist Endeavor as provided in the Memorandum
(as defined below). The Executive shall have such powers, duties and
responsibilities from time to time assigned to him by the Company's board of
directors (the "Board") or its chief executive officer as are consistent with
the foregoing activities. During the term of his employment under this
Agreement, the Executive will devote substantially all of his
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business time to faithfully and industriously perform his duties and promote the
business and best interests of the Company and Orchestrate; provided, however,
that the Executive shall be allowed to continue to serve on the boards of
directors on which he currently serves, to pursue speaking engagements and other
such public and charitable activities consistent with the promotion of the
Executive's network and business experience, and to retain all compensation
received by the Executive in connection therewith. In addition, the Company and
the Executive hereby incorporate by reference the Memorandum of Understanding
entered into effective as of July 6, 1998, by and among the Executive, the
Company and Endeavor (the "Memorandum"). The Memorandum sets forth the sharing
arrangement with regard to the Executive's time, compensation and
responsibilities, and is intended to supplement the express terms of this
Agreement.
Section 2. Compensation.
------------
Section 2.1. Base Salary. During the term of the Executive's employment
-----------
under this Agreement, the Company will pay the Executive a base salary at the
annual rate of $750,000, payable in accordance with the Company's standard
payroll practices.
Section 2.2. Initial Bonus. The Company recognizes that the Executive is
-------------
foregoing substantial salary and benefits that he was receiving as Vice Chairman
of NationsBank in order to accept employment with the Company. Specifically, the
Executive: (a) is foregoing options to purchase 50,000 shares of NationsBank
stock currently valued at $1,250,000; (b) is foregoing a guaranteed salary from
NationsBank which, over the two (2) year period of his employment there, would
have exceeded the salary guaranteed by the Company by $500,000; (c) is foregoing
NationsBank's participation in a cash savings plan at a rate of nine percent
(9%) of salary per year; and (d) is losing considerable value due to the
required premature exercise of vested stock options with NationsBank. In
recognition of the above, and in recognition of the Executive's significant
business experience and expertise, the Company has paid Executive a bonus in the
amount of $2,250,000.
Section 2.3. Bonus Compensation. In addition to his base salary, the
------------------
Executive will be entitled to receive an annual bonus of at least $250,000. Any
amount over and above the $250,000 minimum shall be determined by the Chief
Executive Officer of the Company. Such annual bonus shall be paid to the
Executive in full within ten (10) days following each anniversary date of the
Executive's employment with the Company, and if the Company does not pay such
bonus to the Executive within such 10-day period, then the Company shall pay
such bonus to the Executive within five (5) business days following receipt of
notice from the Executive that his bonus has not been paid. The Executive will
also be entitled to any other bonus compensation provided for by resolution of
the Board or its Compensation Committee.
Section 2.4. Stock Options.
-------------
Section 2.4.1. Issuance of Stock Options. The Company hereby grants to
-------------------------
the Executive nonqualified stock options ("Options") to purchase 500,000 shares
(the "Option Shares") of the
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Company's $.01 par value common stock (the "Common Stock"), pursuant to the
Premiere Technologies, Inc. Second Amended and Restated 1995 Stock Plan, as
amended (the "1995 Stock Plan"), having terms set forth in this Section 2.4. The
Options shall vest with respect to all of the Option Shares on August 20, 1998,
provided that the Executive has not voluntarily terminated his employment with
the Company prior to that date, and following vesting the Options shall become
exercisable on such dates and with respect to such number of Option Shares as
are specified below:
(a) Commencing as of the date of the 1999 annual meeting of shareholders of
the Company, the Executive shall have the right to exercise the Options with
respect to, and to thereby purchase, one-half (1/2) of the Option Shares; prior
to said date, the Options shall not be exercisable.
(b) Commencing as of the date of the 2000 annual meeting of shareholders of
the Company, the Executive shall have the right to exercise the Options with
respect to, and to thereby purchase, one-half (1/2) of the Option Shares.
Section 2.4.2. Acceleration. Notwithstanding anything else contained in
------------
this Agreement, the Executive will be vested immediately in all of the Options
described in this Section 2.4 and they shall be immediately exercisable upon the
earliest of the Executive's death, his becoming Disabled (as defined in Section
2.4.3), or a Change in Control of the Company. For the purposes of this
Agreement, a "Change in Control" shall mean the occurrence of any of the
following events:
(a) An acquisition (other than directly from the Company) of any voting
securities of the Company ("Voting Securities") by any "Person" (as the term
person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934 (the "1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the
1934 Act) of 25% or more of the combined voting power of the Company's then
outstanding Voting Securities; provided, however, that in determining whether a
Change in Control has occurred, Voting Securities that are acquired in an
acquisition by (i) an employee benefit plan (or a trust forming a part thereof)
maintained by (A) the Company or (B) any corporation or other person of which a
majority of its voting power or its equity securities or equity interests are
owned directly or indirectly by the Company (a "Subsidiary"), or (ii) the
Company or any Subsidiary, or (iii) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined), shall not constitute an acquisition for
purposes for this clause (a); or
(b) The individuals who, as of the date of this Agreement, are members of
the Board (the "Incumbent Board") cease for any reason to constitute at least
60% of the Board; provided, however, that if the election, or nomination for
election by the Company's shareholders, of any new director was approved by a
vote of at least 80% of the Incumbent Board, such new director shall for
purposes of this Agreement, be considered as a member of the Incumbent Board;
provided, further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual
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<PAGE>
or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board (a "Proxy Contest"), including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest; or
(c) Approval by the shareholders of the Company of:
(i) a merger, consolidation or reorganization involving the Company,
unless:
(A) the shareholders of the Company, immediately before such
merger, consolidation or reorganization, own, directly or indirectly,
immediately following such a merger, consolidation or reorganization, at
least two-thirds of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger, consolidation or
reorganization (the "Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities immediately before
such merger, consolidation or reorganization, and
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the Agreement providing for such
merger, consolidation or reorganization constitute at least 80% of the
members of the board of directors of the Surviving Corporation. (A
transaction described in clauses (A) and (B) above shall hereinafter be
referred to as a "Non-Control Transaction.")
(ii) A complete liquidation or dissolution of the Company; or
(iii) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary).
Section 2.4.3. Disability. For purposes of this Agreement, the Executive
----------
shall be considered "Disabled" if the Executive, in the opinion of a majority of
the Board (excluding the Executive if he is serving on the Board), as confirmed
by competent medical evidence, becomes physically or mentally unable to perform
his duties hereunder. The Executive hereby agrees to submit himself for
appropriate medical examination by a physician selected by the Company for the
purposes of this Section 2.4.3; provided, however, that the Executive, in his
sole discretion, shall have the option to submit to a medical examination by a
physician of his own choice prior to the submission of the matter to the Board
for consideration. Should the examinations by the two physicians produce
conflicting evidence, the Executive hereby agrees to submit himself for
appropriate medical examination by an independent physician selected and agreed
upon by the Company's and the Executive's physicians to resolve the dispute.
Section 2.4.4. Basic Option Terms. Each of the Options will entitle the
------------------
Executive to purchase one share of the Company's Common Stock at a price of
$7.75, as adjusted pursuant to Section 2.4.6 (the "Exercise Price"), and will
expire on December 31, 2005. The vested Options will be exercisable by the
Executive delivering to the Company a written notice of exercise signed
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<PAGE>
by the Executive, in substantially the form attached hereto as Exhibit A,
together with a check payable to the Company in the amount of the total Exercise
Price for the shares being purchased. In lieu of cash, all or any portion of the
Exercise Price may be paid by the Executive tendering to the Company shares of
the Company's common stock duly endorsed for transfer and owned by the Executive
for at least six (6) months, to be credited against the Exercise Price at the
fair market value of such shares on the date of exercise (however, no fractional
shares may be so transferred, and the Company shall not be obligated to make any
cash payments in consideration of any excess of the aggregate fair market value
of shares transferred over the aggregate Exercise Price). In addition to and at
the time of payment of the Exercise Price, the Company may withhold, or require
the Executive to pay to the Company in cash, the amount of any federal, state
and local income, employment or other withholding taxes which the Company
determines are required to be withheld under federal, state or local law in
connection with the exercise of an Option; provided, however, that the minimum
required withholding amount of such tax obligations may, upon the election of
the Executive, be paid by tendering to the Company whole shares of the Company's
common stock duly endorsed for transfer and owned by the Executive, or by
authorization to the Company to withhold shares of the Company's common stock
otherwise issuable upon exercise of the Option, in either case in that number of
shares of the Company's common stock having a fair market value on the date of
exercise equal to the amount of such taxes thereby being paid. Each Option must
be exercised in full. As soon as practicable after exercise of an Option by the
Executive, the Company will deliver or cause to be delivered to the Executive
certificates or a certificate representing the number of fully paid and non-
assessable shares of voting common stock of the Company purchased. The Company
will not issue fractional shares. Fractional calculations will be rounded up to
the nearest number of whole shares. The Executive will be deemed a shareholder
of record as of the date of exercise. The Company will at all times reserve and
keep available sufficient authorized voting common stock for the exercise or
conversion of all warrants, options and other securities it issues.
Section 2.4.5. Registered Owner. Ownership of the Options will be
----------------
registered on the books of the Company and the Company will be entitled to treat
the registered owner as the absolute owner of the Options for all purposes. The
registered owner will not be entitled to any of the rights of a shareholder of
the Company by virtue of owning Options. No transfer of the Options will be
valid unless and until the Company has consented in writing to such transfer and
the Company has received an instrument of transfer, in a form satisfactory to
the Company and executed by the registered owner or an authorized agent, and the
transfer is recorded by the Company. Transfers incident to the death of the
Executive shall not require the Company's approval and the assignee of such
Options shall have all rights as the Executive with respect to such Options.
Section 2.4.6. Adjustments.
-----------
(a) Stock Dividends and Stock Splits. If after the date of this Agreement
--------------------------------
the number of outstanding shares of the Company's Common Stock is increased by a
stock dividend payable in shares of the Company's Common Stock or by a split-up
of shares of the Common Stock, then, on the day following the date fixed for
determination of holders of common stock entitled to receive the stock dividend
or split-up, the number of shares issuable upon exercise of the Options
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<PAGE>
will be increased in proportion to the increase in the number of outstanding
shares and the Exercise Price will be correspondingly decreased.
(b) Combination or Reclassification. If after the date of this Agreement
-------------------------------
the number of outstanding shares of the Company's Common Stock is decreased by a
combination or reclassification of shares of Common Stock, then, on the day
after the effective date of the combination or reclassification, the number of
shares issuable upon exercise of the Options will be decreased in proportion to
the decrease in the number of outstanding shares and the Exercise Price will be
correspondingly increased.
(c) Reorganization. If after the date of this Agreement the Company
--------------
effects any capital reorganization or reclassification of its Common Stock, or a
consolidation or merger with another corporation, or the sale or other transfer
of substantially all of its assets to another person or entity, then, as a
condition to such transaction, the Company will make fair and lawful provision
whereby the registered owner of the Options will have the right to purchase at
the Exercise Price, in lieu of Common Stock of the Company, such shares of
stock, securities, or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of the Company's Common Stock equal
to the number of shares of Common Stock which the registered owner would be
entitled to purchase at the applicable Exercise Price as of the effective date
of such transaction. The Company will not effect any such transaction unless
the resulting successor or purchasing entity (if not the Company) assumes by
written instrument the obligation to deliver the applicable shares of stock,
securities, or assets in accordance with the foregoing provision.
(d) Notice of Adjustments. Within ten (10) days after the Board approves
---------------------
of an event which is likely to cause an adjustment to the Exercise Price, the
Company will deliver written notice to the registered owner of the Options
setting forth in reasonable detail the facts of the event and the expected
calculation of the adjustment.
Section 2.4.7. 1995 Stock Plan. The Executive accepts the Options subject
---------------
to all the terms and provisions of the 1995 Stock Plan, a copy of which has been
delivered to the Executive. The Executive agrees to accept as binding,
conclusive and final all decisions and interpretations of the 1995 Stock Plan
Committee and, where applicable, the Company's Board of Directors, regarding the
1995 Stock Plan.
Section 2.5. Employee Benefits. During the term of his employment under
-----------------
this Agreement, the Executive will be entitled to participate in all employee
benefit programs, including any pension, profit-sharing, or deferred
compensation plans, any medical, health, dental, disability and other insurance
programs(other than life insurance), and any fringe benefits, such as club dues,
professional dues, the cost of an annual medical examination and the cost of
professional fees associated with tax planning and the preparation of tax
returns, on a basis at least equal to the other senior executives of the
Company. In addition to such benefits, the Company will (a) reimburse the
Executive for his COBRA cost from the date hereof until the date that his
insurance coverage with the Company begins, and (b) pay or reimburse the
Executive for the annual premium, prorated as appropriate, for his $2,000,000
life insurance policy issued by
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<PAGE>
TransAmerica Occidental (policy no.92370400) and owned by Martha B. Payne,
Trustee, which premium is approximately $25,000.
Section 2.6. Reimbursement of Expenditures. The Company will reimburse
-----------------------------
the Executive for all reasonable expenditures incurred by the Executive in the
course of his employment or in promoting the interests of the Company, including
expenditures for (i) transportation, lodging and meals during overnight business
trips, (ii) business meals and entertainment, (iii) supplies and business
equipment, (iv) long-distance telephone calls and (v) membership dues of
business associations. Notwithstanding the foregoing, the Company will have no
obligation to pay reimbursements under this Section 2.6 unless the Executive
submits timely reports of his expenditures to the Company in the manner
prescribed by the Board and the rules and regulations underlying Section 162 of
the Internal Revenue Code (the "Code").
Section 2.7. Severance Pay. If the Executive voluntarily terminates his
-------------
employment with the Company at any time between January 6 and July 6, 1999, then
in addition to any other rights or remedies the Executive may have, the
Executive will be entitled to receive severance pay equal to the Executive's
base salary in effect at the date of termination, payable in accordance with the
Company's standard payroll practices over the twelve (12) month period following
the date of termination. If the Company terminates the Executive's employment
under this Agreement without "cause" (as defined in Section 5.1 hereof) at any
time prior to July 6, 1999, then the Executive shall be entitled to receive
severance pay equal to the Executive's base salary in effect at the date of
termination, payable in accordance with the Company's standard payroll practices
in equal installments over what would have been the remaining term of this
Agreement. If the Company terminates the Executive's employment under this
Agreement without "cause" on or after July 6, 1999, or if the Executive's
employment is terminated by the Executive or the Company after a Change in
Control, then in addition to any other rights or remedies the Executive may
have, the Executive will be entitled to receive severance pay equal to two (2)
times the Executive's base salary in effect at the date of termination, payable
in accordance with the Company's standard payroll practices over the twelve (12)
month period following the date of termination.
Section 2.8. Disability of Executive. If during the term of the
-----------------------
Executive's employment under this Agreement the Executive becomes Disabled, then
for the first year of his Disability the Executive will receive his full base
salary and for the next six months of his Disability he will receive one-half of
his base salary. (The Company may satisfy this obligation in whole or in part
by payments to the Executive provided through disability insurance.) The
Company will not, however, be obligated to pay any salary to the Executive under
this Section beyond expiration of his term of employment hereunder. Nor will
the Company be obligated to pay bonus compensation or an automobile allowance
with respect to the period of Disability. Bonus compensation in this
circumstance will be a pro rata portion of the bonus the Executive would have
earned absent the period of Disability based upon the number of days during the
fiscal year the Executive was not Disabled. When the Executive is again able to
perform his duties he will be entitled to resume his full position and salary.
If the Executive's Disability endures for a continuous period of eighteen (18)
months, then the Company may terminate the Executive's employment under this
Agreement after delivery of ten (10) days written notice. The Executive
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<PAGE>
hereby agrees to submit himself for appropriate medical examination in
accordance with Section 2.4.3 hereof.
Section 2.9. Death of Executive. In addition to any other rights and
------------------
benefits innuring to the estate of the Executive upon his death under this
Agreement, any benefit plan maintained by the Company or otherwise, within
forty-five days after the Executive's death during the term of this Agreement,
the Company will pay to the Executive's estate, or his heirs, the amount of any
accrued and unpaid base salary (determined as of the date of death) and accrued
and unpaid bonus compensation determined as if the Company's fiscal year ended
at the date of death. In addition, the Company will pay to the Executive's
spouse (or if she is not alive, to his estate or heirs) a death benefit of
$5,000.
Section 2.10. Automobile Allowance. During the term of his employment
--------------------
under this Agreement, the Company will pay the Executive a monthly automobile
allowance of $1,000.
Section 2.11. Vacation. The Executive will be entitled to three weeks
--------
paid vacation annually. Unused vacation time will accumulate and carryover to
subsequent years. Any unused vacation at the date of termination of this
Agreement (for any reason) will be paid to the Executive.
Section 3. Certain Additional Payments by the Company.
------------------------------------------
Section 3.1. Amount of Additional Payment. Anything in this Agreement to
----------------------------
the contrary notwithstanding and except as set forth below, in the event it
shall be determined that any payment or distribution by the Company to or for
the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
3) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
Section 3.2. Determinations. Subject to the provisions of Section 3.3, all
--------------
determinations required to be made under this Section 3, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by Arthur Andersen LLP or such other certified public accounting firm as may be
designated by the Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within fifteen
(15) business days of the receipt of notice from the Executive that there has
been a Payment, or
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such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the change in control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 3, shall be paid by the Company to the Executive within five (5) days of
the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 3.3 and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
Section 3.3. Contest of Claims. The Executive shall notify the Company in
-----------------
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten (10) business days
after the Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the thirty (30)day period following the date on which it gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim and such notification includes a legal opinion of
reputable tax counsel stating that a reasonable basis exists for contesting such
claim, the Executive shall:
(i) give the Company any information reasonably requested by the Company
relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment
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<PAGE>
of costs and expenses. Without limitation of the foregoing provisions of this
Section 3.3, the Company shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
Section 3.4. Refunds. If, after the receipt by the Executive of an amount
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advanced by the Company pursuant to Section 3.3, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 3.3) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 3.3, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
Section 3.5 Waiver by the Executive. The Executive may in his sole
-----------------------
discretion elect at any time after the Company has notified the Executive that
it desires to contest a claim to waive the operation of any or all of the
provisions contained in Section 3.3 by providing written notice to the Company
of such election, and in such case the Executive shall pay the Excise Tax and
the Company shall have no obligation to make the Gross-Up Payment to the
Executive.
Section 4. Term of Employment.
------------------
The Executive's initial term of employment under this Agreement will begin
on July 6, 1998 and will expire on July 6, 2000. The initial term of employment
will automatically renew for an additional one-year period upon the foregoing
expiration, and thereafter upon the expiration of any renewal term provided by
this Section 4, unless the Company or the Executive provides
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written notice to the other party at least thirty (30) days prior to expiration
that such party does not want this Agreement to renew.
Section 5. Termination of Employment.
-------------------------
Section 5.1. Termination by the Company. The Company may terminate the
--------------------------
Executive's employment under this Agreement only for "cause" amounting to gross,
continuing and willful malconduct, misconduct or non-performance, having a
substantial, adverse effect upon the Company, or for Disability, as described in
Section 2.8 of this Agreement. No act or failure to act by the Executive will be
considered "willful" unless done or not done in bad faith and without reasonable
belief that the Executive's action or omission was in the best interests of the
Company. Termination for cause will not be effective unless the Company
delivers to the Executive thirty (30) days advance written notice setting forth
in reasonable detail the allegations of cause, and the Executive does not
correct the acts or omissions documented in such notice within such 30-day
period. For purposes of this Agreement, any significant change to the
Executive's title, his powers, duties or responsibilities, or his employee
benefits or working conditions, or any relocation of his workplace outside of
Atlanta, Georgia, will, at the option of the Executive, constitute a termination
of his employment by the Company without cause. Notwithstanding anything else
contained in this Agreement, if, for any reason whatsoever, the Company
terminates the Executive's employment, then the Company will reimburse the
Executive for all reasonable costs and expenses incurred by him (including
attorneys' fees, court costs and the costs of paralegal and other legal or
investigative support personnel) connected with investigating, preparing,
defending or appealing any litigation or similar proceeding arising out of this
Agreement, whether commenced or threatened. Such reimbursements will be paid in
advance of the final disposition of such litigation within ten (10) days after
the Executive submits requests for reimbursement along with supporting invoices.
Section 5.2. Termination by the Executive. The Executive may terminate
----------------------------
his employment under this Agreement thirty (30)days after giving written notice
to the Company. If the Executive terminates his employment under this
Agreement, then he will be entitled to pro rata portions of his base salary and
bonus compensation with respect to the fiscal year in which the termination
occurs (based on the number of days the Executive is employed by the Company
during such fiscal year) as well as any accrued but unpaid compensation.
Section 6. Restrictive Covenants.
---------------------
Section 6.1. Prohibited Activities. During the term of his employment
---------------------
under this Agreement and for a period of one (1) year thereafter, the Executive
will not, as a shareholder, owner, operator, employee, partner, independent
contractor, consultant, lender, financier, officer, director or by any other
means whatsoever participate in any of the following activities:
(i) Engage in or be associated with any business that directly or
indirectly competes with the Company with respect to personal communications
services;
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(ii) Induce any person who is an employee, officer, agent, affiliate,
supplier, client or customer of the Company to terminate such relationship or
refuse to do business with the Company; or
(iii) Solicit, direct, take away, serve, interfere with, or endeavor to
entice away from the Company any person, company, firm, institution, or other
entity that has purchased products or services from the Company.
Section 6.2. Trade Secrets. The Executive acknowledges and recognizes
-------------
that during his employment with the Company he may acquire secret or
confidential information, knowledge, or data with respect to the business or
products of the Company which may provide advantage to the Company over others
not having such information. During his employment hereunder and for a period
of one (1) year thereafter, the Executive will not communicate, disclose or
divulge any such secret or confidential information to the detriment of the
Company. Following the termination of the Executive's employment hereunder, the
provisions of this Section 6.2 shall not apply to any information that becomes
generally available to the telecommunications industry other than as a result of
disclosure by the Executive.
Section 6.3. Property of the Company. The Executive acknowledges that all
-----------------------
confidential information relating to computer software or hardware currently
utilized by the Company or incorporated into its products and all such
information the Company currently plans to utilize or incorporate into its
products is the exclusive property of the Company. Furthermore, the Executive
agrees that all discoveries, inventions, creations and designs of the Executive
during the course of his employment pursuant to this Agreement will be the
exclusive property of the Company.
Section 6.4. Remedies. In the event the Executive violates or threatens
--------
to violate the provisions of this Section 6, damages at law will be an
insufficient remedy and the Company will be entitled to equitable relief in
addition to any other remedies or rights available to the Company and no bond or
security will be required in connection with such equitable relief.
Section 6.5. Counterclaims. The existence of any claim or cause of action
-------------
the Executive may have against the Company will not at any time constitute a
defense to the enforcement by the Company of the restrictions or rights provided
by this Section 6.
Section 7. Service as Director.
-------------------
The Executive agrees to be nominated to serve as a director of the Company,
and subject to his election by the shareholders, to serve as a director.
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<PAGE>
Section 8. Indemnification.
---------------
The indemnification rights provided under this Agreement are intended to be
in addition to, not in lieu of, the indemnification rights provided in the
Officer's Indemnification Agreement and the Director's Indemnification
Agreement, both dated May 22, 1998, between the Company and the Executive, and
should in no way be interpreted to limit the Executive's rights under those
Agreements or applicable provisions of Georgia law.
Section 8.1. Non-Derivative Actions. The Company will indemnify the
----------------------
Executive if he becomes a party to any proceeding (other than an action by, or
in the right of, the Company), by reason of the fact that he is or was a
director, officer, employee, or agent of the Company or is or was serving at the
request of the Company as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
liability incurred in connection with such proceeding, including any appeal,
provided he acted in good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of the Company and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any proceeding by judgment, order, settlement,
or conviction or upon a plea of nolo contendere or its equivalent will not, of
itself, create a presumption that he did not act in good faith and in a manner
which he reasonably believed to be in, and not opposed to, the best interests of
the Company or, with respect to any criminal proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section 8.2. Derivative Actions. The Company will indemnify the Executive
------------------
if he becomes a party to any proceeding by or in the right of the Company to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee, or agent of the Company or is or was serving at the
request of the Company as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not exceeding, in the judgment of the
Board, the estimated expense of litigating the proceeding to conclusion,
actually and reasonably incurred in connection with the defense or settlement of
such proceeding, including any appeal; provided that he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Company.
Section 8.3. Advancement of Expenses. Expenses incurred by the Executive
-----------------------
in defending a civil or criminal proceeding described in this Section 8 will be
paid by the Company in advance of the final disposition of the proceeding within
ten (10) days after the Executive submits a request for payment; provided
however, that the Executive has undertaken in writing to repay such amounts if
he is ultimately found not to be entitled to indemnification by the Company.
Section 8.4. Non-Exclusivity; Continuity. The indemnification provided
---------------------------
for by this Agreement will not be exclusive and the Company may make any other
indemnification allowed by law. The indemnification provided for by this
Agreement will continue after the Executive has ceased to be a director,
officer, employee, or agent of the Company or ceases to serve at the request of
the Company as a director, officer, employee, or agent of another corporation,
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<PAGE>
partnership, joint venture, trust, or other enterprise and will inure to the
Executive's heirs, executors, and administrators.
Section 8.5. No Subrogation. The indemnification provided for by this
--------------
Agreement will be personal in nature and the Company will not have any liability
under this Section 8 to any insurer or any person, corporation, partnership,
trust or association or other entity (other than heirs, executors or
administrators) by reason of subrogation, assignment, or succession by any other
means to the claim of the Executive.
Section 9. Compliance With Other Agreements.
--------------------------------
The Executive represents and warrants to the Company that he is free to
enter this Agreement and that the execution of this Agreement and the
performance of the obligations under this Agreement will not, as of the date of
this Agreement or with the passage of time, conflict with, cause a breach of or
constitute a default under any agreement to which the Executive is a party or
may be bound.
Section 10. Severability.
------------
Every provision of this Agreement is intended to be severable. If any
provision or portion of a provision is illegal or invalid, then the remainder of
this Agreement will not be affected. Moreover, any provision of this Agreement
which is determined to be unreasonable, arbitrary or against public policy will
be modified as necessary so that it is not unreasonable, arbitrary or against
public policy.
Section 11. Waivers.
-------
A waiver by a party to this Agreement of any breach of this Agreement by
the other party will not operate or be construed as a waiver of any other breach
or of the same breach on a future occasion. No delay or omission by either
party to enforce any rights it may have under this Agreement will operate or be
construed as a waiver.
Section 12. Modification.
------------
This Agreement may not be modified or amended except by a writing signed by
both parties.
-14-
<PAGE>
Section 13. Headings.
--------
The various headings contained in this Agreement are inserted only as a
matter of convenience and in no way define, limit or extend the scope or intent
of any of the provisions of this Agreement.
Section 14. Counterparts.
------------
This Agreement may be executed in several counterparts, each of which will
be deemed an original, but all of which taken together will constitute one and
the same instrument.
Section 15. Number and Pronouns.
-------------------
Wherever from the context it appears appropriate, each term stated in
either the singular or the plural will include the singular and the plural and
pronouns stated in the masculine, feminine or neuter gender will include the
masculine, feminine and neuter genders.
Section 16. Survival of Representations and Warranties.
------------------------------------------
The respective representations and warranties of the parties to this
Agreement will survive the execution of this Agreement and continue without
limitation.
Section 17. Assignment; Binding Effect.
--------------------------
Neither this Agreement nor any right or interest hereunder shall be
assignable by either the Executive or the Company without the other party's
prior written consent; provided, however, that nothing in this Section 17 shall
preclude (a) the Executive from designating a beneficiary to receive any
benefits payable hereunder upon his death, or (b) the executors, administrators
or other legal representatives of the Executive or his estate from assigning any
rights hereunder to the person or persons entitled thereto In addition, this
Agreement may be assigned by the Company to Orchestrate.com without the consent
of the Executive, provided that the Company shall remain liable for all payments
hereunder.
In addition, at the request of the Executive, the Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company,
by agreement in form and substance satisfactory to the Executive, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession will be a breach of this Agreement and will
entitle the Executive to compensation
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<PAGE>
from the Company in the same amount and on the same terms as he would be
entitled to hereunder if his employment was terminated by the Company without
cause.
Except as otherwise provided herein, this Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective legal
representatives, administrators, executors, successors and assigns.
Section 18. Waiver of Jury.
--------------
With respect to any dispute which may arise in connection with this
Agreement each party to this Agreement hereby irrevocably waives all rights to
demand a jury trial.
Section 19. Entire Agreement.
----------------
With respect to the subject matter hereof, this Agreement and that certain
Memorandum of Understanding, effective as of July 6, 1998, by and among the
Executive, the Company and Endeavor, constitute the entire understanding of the
parties superseding all prior agreements, understandings, negotiations and
discussions between them, whether written or oral, and there are no other
understandings, representations, warranties or commitments with respect thereto.
Section 20. Governing Law; Venue.
--------------------
This Agreement will be governed by and interpreted in accordance with the
substantive laws of the State of Georgia without reference to conflicts of law.
Venue for the purposes of any litigation in connection with this Agreement will
lie solely in the state courts in and for Fulton County, Georgia or the United
States District Court in and for the Northern District of Georgia, Atlanta
Division.
Section 21. Notices.
-------
Any notices or other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly given and
delivered when delivered in person, two (2) days after being mailed postage
prepaid by certified or registered mail with return receipt requested, or when
delivered by overnight delivery service or by facsimile to the recipient at the
following address or facsimile number, or to such other address or facsimile
number as to which the other party subsequently shall have been notified in
writing by such recipient:
If to the Company:
Premiere Technologies, Inc.
3399 Peachtree Road
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<PAGE>
The Lenox Building
Suite 600
Atlanta, GA 30326
Attn: Chief Executive Officer
With a copy to:
Premiere Technologies, Inc.
3399 Peachtree Road
The Lenox Building
Suite 600
Atlanta, GA 30326
Attn: Chief Legal Officer
Facsimile: (404) 262-8540
If to the Executive:
William Porter Payne
5373 Forest Springs
Dunwoody, Georgia 30308
With a copy to:
Horace H. Sibley, Esq.
King & Spalding
191 Peachtree Street
Atlanta, GA 30303-1763
The parties have executed this Agreement effective as of the 6th day of
July, 1998.
PREMIERE TECHNOLOGIES, INC.
By: /s/ Boland T. Jones
-------------------
Boland T. Jones
THE EXECUTIVE
/s/ William P. Payne
-----------------------
William Porter Payne
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<PAGE>
EXHIBIT A
[DATE]
Premiere Technologies, Inc.
3399 Peachtree Road
Suite 600
Atlanta, Georgia 30326
Attention: Stock Option Plan Administrator
Re: Exercise of Stock Option
To whom it may concern:
The undersigned, William Porter Payne, pursuant to that certain Executive
Employment and Incentive Option Agreement dated as of July 6, 1998, by and
between Premiere Technologies, Inc. ("PTEK") and the undersigned (the
"Agreement"), hereby exercises the options granted under the Agreement for the
following number of option shares, subject to the terms and conditions of the
Agreement:
Number of option shares being purchased _______________
Total purchase price $______________
Purchase price paid by check $______________
Purchase price paid by tendering PTEK stock $______________
Very truly yours,
William Porter Payne
<PAGE>
EXHIBIT 10.13
MEMORANDUM OF UNDERSTANDING
---------------------------
This Memorandum of Understanding ("MOU") is entered into effective as of
the 6th day of July, 1998, by and among William Porter Payne, a resident of the
State of Georgia ("Payne"), Premiere Technologies, Inc., a Georgia corporation
("Premiere"), and Endeavor Technologies, Inc., a Georgia corporation
("Endeavor").
WHEREAS, effective May 22, 1998, Premiere and Payne agreed that Payne would
be employed by Premiere's wholly-owned subsidiary, Orchestrate.com, Inc.
("Orchestrate"), and, in respect of such service, would enter into a two-year
employment agreement with Premiere providing for (i) a salary of $750,000 per
year, (ii) a minimum bonus of $250,000 per year, (iii) a car allowance of $1,000
per month and (iv) options to purchase 500,000 shares of Common Stock of
Premiere, in addition to certain other benefits and remuneration agreed upon by
the parties at such time, which agreement was reflected in and subsumed by an
Executive Employment and Incentive Option Agreement dated July 6, 1998 between
Premiere and Payne (the "Payne Employment Agreement");
WHEREAS, as Chairman of Orchestrate, one of Payne's principal duties is to
assist Endeavor in the development of its business for the purpose of increasing
revenue opportunities for Premiere and enhancing the value of Premiere's
interest in Endeavor, recognizing that (i) Premiere is a substantial shareholder
of Endeavor and (ii) Endeavor represents an important channel for the
distribution of Premiere's "Orchestrate" family of products;
WHEREAS, in entering into the Payne Employment Agreement, the parties
contemplated that Payne, acting in his capacity as Chairman of Orchestrate,
would play a significant role in the development of Endeavor's "WebMD" product,
and that Endeavor would also compensate for such assistance through the grant to
Payne of an option to purchase 200,000 shares of Common Stock of Endeavor at an
exercise price of $2.00 per share;
WHEREAS, Premiere and Endeavor have determined that Payne's services to
Endeavor are so valuable to Endeavor that it is both useful and appropriate for
Endeavor to reimburse Premiere for a portion of his services as an employee of
Premiere;
WHEREAS, Premiere and Endeavor are prepared to share Payne's services on
the basis described herein; and
WHEREAS, to avoid future disputes, ambiguities and conflicts of interest,
each of Payne, Premiere and Endeavor desire to set forth in writing the nature
of the sharing arrangement they are prepared to enter into with respect to
Payne's services.
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this MOU, the parties hereto agree as follows:
1. SHARING ARRANGEMENT. Each of Payne, Premiere and Endeavor agrees that,
notwithstanding that Payne is a full-time employee of Premiere or the contrary
provisions of the Payne Employment Agreement, Payne may devote up to 60% of his
time (or roughly three days a week) directly to the business of Endeavor. As an
employee of Premiere, Payne shall have the title of Chairman of Orchestrate. In
his service to Endeavor, Payne may serve as a member of its Board of Directors
and have the title of Vice Chairman, but shall not otherwise serve as an officer
or employee of Endeavor. Without Premiere's prior written consent, in his
service to Endeavor, Payne shall not carry any title that implies that he serves
as an employee of Endeavor. The Board of Directors of Endeavor shall act
expeditiously to create a vacancy on the Board and to appoint Payne to fill that
vacancy as soon as possible. Payne's appointment to the Board of Directors of
Endeavor shall not fulfill Endeavor's obligation to appoint a Premiere
designated director to the Board of Endeavor pursuant to Section 2 of the First
Amendment to Restated Shareholders Agreement of Endeavor Technologies, Inc.
dated December 15, 1997.
2. COMPENSATION. Effective as of August 6, 1998, for the balance of the
two-year term of Payne's agreed-upon employment with Premiere, Endeavor agrees
to reimburse Premiere for one-half of (i) Payne's salary of $750,000 per year,
(ii) minimum bonus of $250,000 per year and (iii) automobile allowance of $1,000
per month provided under the Payne Employment Agreement.
Endeavor shall be obligated to indemnify Payne for his service to Endeavor
pursuant to a standard form of Indemnification Agreement between Endeavor and
its directors. Endeavor has previously agreed to provide Payne options to
purchase 200,000 shares of Common Stock of Endeavor at an exercise price of
$2.00 per share in connection with its efforts to recruit Payne to Endeavor's
Board of Directors, and it will honor this agreement.
Except as set forth in this Section 2, Endeavor shall have no further
compensation obligations to Payne or Premiere relating to Payne's employment,
but shall reimburse Payne in accordance with its corporate policies for expenses
incurred by Payne in discharging the business of Endeavor.
3. OFFICE AND STAFF RESOURCES. As Payne's employer, Premiere shall
provide Payne (i) an office at Premiere's headquarters in Atlanta, Georgia and
(ii) a secretary. All of the expenses associated with such arrangements shall
be borne by Premiere.
4. RESPONSIBILITIES. Premiere and Endeavor agree that the principal
services offered by Payne to them involve the establishment and/or continuation
of sales and marketing efforts and the creation of strategic relationships
principally with large corporations. In order to reduce the potential that
Payne's sales and marketing efforts on
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<PAGE>
behalf of one company may conflict with his efforts on behalf of the other
company, each of Payne, Premiere and Endeavor agrees that:
(a) On behalf of Endeavor, Payne's responsibilities will be directed
toward the establishment of Endeavor as a leading provider of
healthcare-related Internet services, including healthcare
content and turnkey solutions, delivered (at least in part)
through Premiere's Orchestrate(R) service and network. In this
capacity, Payne will seek to create strategic relationships
and/or sales relationships with healthcare organizations,
providers and insurers and the providers of healthcare
information and other healthcare-related "content" delivered via
the Internet. Payne and Endeavor agree with Premiere that
business opportunities and potential strategic relationships that
involve the marketing, sale or provision of communications
services or solutions via the Internet, private data networks or
the public switched telephone network, including without
limitation long distance calling cards, voice messaging services,
enhanced document distribution services, conferencing services,
unified messaging services, or other services commonly understood
by Premiere and Endeavor as elements of Premiere's Orchestrate(R)
service (whether involving the provision of communications
services through the Internet, private data networks or via the
public switched telephone network) (collectively, "Enhanced
Communications Services") shall be directed to Premiere; and
(b) On behalf of Premiere, Payne's marketing and sales efforts will
be directed to the continuation of Premiere as a leading provider
of Enhanced Communications Services, including without
limitation, the establishment of Orchestrate(R) as the leading
Web-enabled enhanced communications solution. In this capacity,
Payne will provide marketing and sales services, as directed by
the Chairman or President of Premiere, on behalf of Premiere and
each of its subsidiaries, and will seek to create strategic
relationships and/or sales relationships with entities or
organizations who may themselves, or whose customers may, seek
Enhanced Communications Services, including without limitation,
Orchestrate(R) services. Payne and Premiere agree with Endeavor
that business opportunities and potential strategic relationships
that involve the marketing, sale or provision of healthcare-
related Internet services such as content and turnkey solutions
shall be directed to Endeavor.
Any facts raising conflicts or potential conflicts in terms of Payne's
allegiances shall be reported to the Chief Executive Officers of the Company and
Endeavor for an appropriate, mutually acceptable resolution. Such conflicts or
potential conflicts shall
-3-
<PAGE>
include, without limitation, any such conflicts or potential conflicts arising
from the expansion of either party's business beyond the scope of such business
as presently conducted.
5. EXCULPATORY PROVISION. Premiere shall not be liable for, and Payne and
Endeavor hereby agree to hold Premiere harmless against, any loss, cost,
liability or expense (including attorneys' fees and costs and expenses of
investigation) directly or indirectly occurring or arising from actions taken by
Payne (or omissions or failures to act on his part) occurring in the course of
Payne's service to Endeavor or any subsidiary or affiliate thereof.
Endeavor shall not be liable for, and Payne and Premiere hereby agree to
hold Endeavor harmless against, any loss, cost, liability or expense (including
attorneys' fees and costs and expenses of investigation) directly or indirectly
occurring or arising from actions taken by Payne (or omissions or failures to
act on his part) occurring in the course of Payne's employment to Premiere or
any subsidiary or affiliate thereof.
6. BINDING INTENT; GOVERNING LAW. This MOU shall constitute a binding and
enforceable agreement among the parties hereto with respect to the subject
matter hereof. This MOU shall be governed by and construed in accordance with
the laws of the State of Georgia, and may be executed in counterparts, all of
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this MOU effective as of the
6th day of July, 1998.
WILLIAM PORTER PAYNE
/s/ William Porter Payne
--------------------------
ENDEAVOR TECHNOLOGIES, INC.
By: /s/ W. Michael Heekin
---------------------
Its: COO
--------------------
PREMIERE TECHNOLOGIES, INC.
By: /s/ Boland Jones
---------------------
Its: CEO
--------------------
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<PAGE>
EXHIBIT 10.14
PREMIERE TECHNOLOGIES, INC.
---------------------------
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
THIS AGREEMENT is made and entered into by and between Premiere
Technologies, Inc. (the "Company"), a Georgia corporation, and Harvey A. Wagner
(the "Executive"), effective as of May 4, 1998.
BACKGROUND STATEMENT
--------------------
The Company and its subsidiaries are in the business of designing,
developing, marketing, selling and providing enhanced communications services,
and in connection therewith the Company and its subsidiaries have developed, and
expect to develop, trade secrets and methods of conducting business which are
worthy of protection. The Executive has substantial business experience and
expertise. The Company considers it to be in its best interest to have the
benefit of the Executive's services as provided in this Agreement, and the
Executive is willing to render such services to the Company in accordance with
the provisions of this Agreement.
THEREFORE, in consideration of and reliance upon the foregoing background
statement and the representations and warranties contained in this Agreement,
the Company and the Executive agree to the following provisions:
TERMS
-----
Section 1. Duties.
------
The Company hereby agrees to employ the Executive as its Executive Vice
President of Finance and Administration and Chief Financial Officer. The
Executive will have the powers, duties and responsibilities from time to time
assigned to him by the Company's board of directors (the "Board") or its Chief
Executive Officer, and the Executive will report directly to the Chief Executive
Officer of the Company. During the term of his employment under this Agreement,
the Executive will devote substantially all of his business time to faithfully
and industriously perform his duties and promote the business and best interests
of the Company.
Section 2. Compensation.
------------
Section 2.1. Base Salary. During the term of the Executive's employment
-----------
under this Agreement, the Company will pay the Executive a base salary at the
annual rate of $350,000, payable in accordance with the Company's standard
payroll practices. At the beginning of each year after 1998 during the term of
this Agreement, the Executive will be entitled to an increase in his base salary
equal to 5% of the previous year's base salary.
<PAGE>
Section 2.2. Bonus Compensation. In addition to his base salary, the
------------------
Executive will be entitled to receive an annual bonus equal to one-third (1/3)
of his base salary, with the specific requirements of such bonus to be mutually
agreed upon by the Company and the Executive. The Executive will also be
entitled to any other bonus compensation provided for by resolution of the Board
or its Compensation Committee.
Section 2.3. Employee Benefits. During the term of his employment under
-----------------
this Agreement, the Executive will be entitled to participate in all employee
benefit programs, including any pension, profit-sharing, or deferred
compensation plans, any medical, health, dental, disability and other insurance
programs and any fringe benefits, such as club dues (including Standard Club,
Buckhead Club and airline club dues), professional dues, the cost of an annual
medical examination and the cost of professional fees associated with tax
planning and the preparation of tax returns, on a basis at least equal to the
other senior executives of the Company. In addition to such benefits, the
Company will purchase and maintain a variable life insurance policy in the
minimum amount of $1,000,000 on the life of and in the name of the Executive,
and such other insurance as the Board may determine. The Executive or the
Company as his designee shall be the owner of such insurance policy. The
Executive shall have all rights pursuant thereto, including, without limitation,
the right to transfer ownership and designate beneficiaries. Notwithstanding
anything else contained in this Agreement, after termination or expiration of
his employment under this Agreement, the Executive will be entitled to
participate for an additional eighteen (18) months in any medical, health,
dental, disability or similar programs on the same basis as during his
employment (including payment by the Company of the costs and expenses
associated with such programs on the same terms as during the time the Executive
was employed with the Company), and in meeting its obligations under this
provision the Company will take all actions which may be necessary or
appropriate to comply with criteria set forth by the Company's insurance
carriers and other program providers (including the continued employment of the
Executive in some nominal capacity, if necessary).
Section 2.4. Reimbursement of Expenditures. The Company will reimburse
-----------------------------
the Executive for all reasonable expenditures incurred by the Executive in the
course of his employment or in promoting the interests of the Company, including
expenditures for (i) transportation, lodging and meals during overnight business
trips, (ii) business meals and entertainment, (iii) supplies and business
equipment, (iv) long-distance telephone calls and (v) membership dues of
business associations. Notwithstanding the foregoing, the Company will have no
obligation to pay reimbursements under this Section 2.4 unless the Executive
submits timely reports of his expenditures to the Company in the manner
prescribed by the Board and the rules and regulations underlying Section 162 of
the Internal Revenue Code (the "Code").
Section 2.5. Transition Loan. The Company will make a $100,000 loan to the
---------------
Executive, which will be paid to the Executive at his request, and which will be
evidenced by a Promissory Note in substantially the form attached hereto as
Exhibit A (the "Note"). The Company shall forgive 50% of the outstanding amount
of the Note, including accrued interest thereon, on the first anniversary of the
date of this Agreement if the Executive is employed by the Company on that date,
and shall forgive the remaining amount of the Note, including accrued interest
thereon, on the second anniversary of the date of this Agreement if the
Executive is employed by the
-2-
<PAGE>
Company on that date. The foregoing notwithstanding, if the Company terminates
the Executive's employment without "cause" (as defined in Section 5.1 hereof),
then in addition to any other rights or remedies the Executive may have, the
entire amount of the Note then outstanding, including accrued interest thereon,
will be forgiven by the Company. Likewise, the Loan will be forgiven in its
entirety by the Company if there is a Change in Control of the Company. For the
purposes of this Agreement, a "Change in Control" shall mean the occurrence of
any of the following events:
(a) An acquisition (other than directly from the Company) of any voting
securities of the Company ("Voting Securities") by any "Person" (as the
term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 (the "1934 Act")) immediately after which
such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 25% or more of the combined voting power
of the Company's then outstanding Voting Securities; provided, however,
that in determining whether a Change in Control has occurred, Voting
Securities that are acquired in an acquisition by (i) an employee benefit
plan (or a trust forming a part thereof) maintained by (A) the Company or
(B) any corporation or other person of which a majority of its voting power
or its equity securities or equity interests are owned directly or
indirectly by the Company (a "Subsidiary"), or (ii) the Company or any
Subsidiary, or (iii) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined), shall not constitute an acquisition
for purposes for this clause (a); or
(b) The individuals who, as of the date of this Agreement, are members
of the Board (the "Incumbent Board") cease for any reason to constitute at
least 60% of the Board; provided, however, that if the election, or
nomination for election by the Company's shareholders, of any new director
was approved by a vote of at least 80% of the Incumbent Board, such new
director shall for purposes of this Agreement, be considered as a member of
the Incumbent Board; provided, further, however, that no individual shall
be considered a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened "Election
Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest"), including by
reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
(c) Approval by the shareholders of the Company of:
(i) a merger, consolidation, reorganization or other business
combination involving the Company, unless:
(A) the shareholders of the Company, immediately before such
merger, consolidation, reorganization or other business combination, own,
directly or indirectly, immediately following such a merger, consolidation,
reorganization or other business combination, at least two-thirds of the
combined voting power of the outstanding voting securities of the
corporation resulting from such merger, consolidation,
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<PAGE>
reorganization or other business combination (the "Surviving Corporation")
in substantially the same proportion as their ownership of the Voting
Securities immediately before such merger, consolidation, reorganization or
other business combination, and
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the Agreement providing for such
merger, consolidation, reorganization or other business combination
constitute at least 80% of the members of the board of directors of the
Surviving Corporation. (A transaction described in clauses (A) and (B)
above shall hereinafter be referred to as a "Non-Control Transaction.")
(ii) A complete liquidation or dissolution of the Company; or
(iii) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary).
Section 2.6. Severance Pay. If the Executive terminates his employment with
-------------
the Company after November 4, 1998 but on or before May 4, 1999, or if the
Company terminates the Executive's employment at any time on or before May 4,
1999, the Executive will be entitled to receive severance pay equal to the
Executive's base salary in effect on the date of termination, payable in
accordance with the Company's standard payroll practices over the next twelve
(12) month period following the date of termination. If (a) the Company
terminates the Executive's employment under this Agreement without "cause" after
May 4, 1999 but before a Change in Control of the Company, or (b) during the
twenty-four (24) month period following a Change in Control of the Company the
Executive's employment with the Company is terminated (i) by the Executive for
any reason or (ii) by the Company for any reason other than "cause," then in
addition to any other rights or remedies the Executive may have, the Executive
will be entitled to receive severance pay equal to two and one-half (2 1/2)
times the Executive's base salary in effect at the date of termination, payable
in accordance with the Company's standard payroll practices over the twelve (12)
month period following the date of termination. In addition, the Executive shall
be entitled to any prorated bonus payment to which the Executive is entitled as
of the date of termination as calculated pursuant to Section 5.2 hereof.
Section 2.7. Disability of Executive. If during the term of the
-----------------------
Executive's employment under this Agreement, the Executive, in the opinion of a
majority of the Board (excluding the Executive if he is serving on the Board),
as confirmed by competent medical evidence, becomes physically or mentally
unable to perform his duties for a continuous period ("Disability"), then for
the first year of his Disability the Executive will receive his full base salary
and for the next six months of his Disability he will receive one-half of his
base salary. (The Company may satisfy this obligation in whole or in part by
payments to the Executive provided through disability insurance.) The Company
will not, however, be obligated to pay any salary to the Executive under this
Section beyond expiration of his term of employment hereunder. Nor will the
Company be obligated to pay bonus compensation or an automobile allowance with
respect to the period of Disability. Bonus compensation in this circumstance
will be a pro rata portion of the bonus the Executive would have earned absent
the period of Disability based upon the number of
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days during the fiscal year the Executive was not Disabled. When the Executive
is again able to perform his duties he will be entitled to resume his full
position and salary. If the Executive's Disability endures for a continuous
period of 18 months, then the Company may terminate the Executive's employment
under this Agreement after delivery of ten days written notice. The Executive
hereby agrees to submit himself for appropriate medical examination by a
physician selected by the Company for the purposes of this Section 2.7.
Section 2.8. Death of Executive. In addition to any other rights and
------------------
benefits inuring to the estate of the Executive upon his death under this
Agreement, any benefit plan maintained by the Company or otherwise, within
forty-five (45) days after the Executive's death during the term of this
Agreement, the Company will pay to the Executive's estate, or his heirs, the
amount of any accrued and unpaid base salary (determined as of the date of
death) and accrued and unpaid bonus compensation determined as if the Company's
fiscal year ended at the date of death. In addition, the Company will pay to
the Executive's spouse (or if she is not alive, to his estate or heirs) a death
benefit of $5,000.
Section 2.9. Automobile Allowance. During the term of his employment
--------------------
under this Agreement, the Company will pay the Executive a monthly automobile
allowance of $1,000.
Section 2.10. Vacation. The Executive will be entitled to three weeks
--------
paid vacation annually. Unused vacation time will accumulate and carryover to
subsequent years. Any unused vacation at the date of termination of this
Agreement (for any reason) will be paid to the Executive.
Section 3. Certain Additional Payments by the Company.
------------------------------------------
Section 3.1. Amount of Additional Payment. Anything in this Agreement to
----------------------------
the contrary notwithstanding and except as set forth below, in the event it
shall be determined that any payment or distribution by the Company to or for
the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 3) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
Section 3.2. Determinations. Subject to the provisions of Section 3.3,
--------------
all determinations required to be made under this Section 3, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by Arthur Andersen LLP or such other certified public
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<PAGE>
accounting firm as may be designated by the Executive (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and the
Executive within fifteen (15) business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the change in control, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 3, shall be paid by the Company to the
Executive within five (5) days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 3.3 and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
Section 3.3. Contest of Claims. The Executive shall notify the Company in
-----------------
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten (10) business days
after the Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the thirty (30)day period following the date on which it gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:
(a) give the Company any information reasonably requested by the
Company relating to such claim,
(b) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith in order effectively to
contest such claim, and
(d) permit the Company to participate in any proceedings relating to
such claim;
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<PAGE>
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses, including reasonable attorneys' fees incurred by
the Executive. Without limitation of the foregoing provisions of this Section
3.3, the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
Section 3.4. Refunds. If, after the receipt by the Executive of an amount
-------
advanced by the Company pursuant to Section 3.3, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 3.3) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 3.3, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
Section 4. Term of Employment.
------------------
The Executive's initial term of employment under this Agreement will begin
on May 4, 1998 and will expire on May 4, 2001. The initial term of employment
will automatically renew for an additional one-year period upon the foregoing
expiration, and thereafter upon the expiration of any renewal term provided by
this Section 4, unless the Company or the Executive provides written notice to
the other party at least thirty (30) days prior to expiration that such party
does not want this Agreement to renew.
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<PAGE>
Section 5. Termination of Employment.
-------------------------
Section 5.1. Termination by the Company. The Company may terminate the
--------------------------
Executive's employment under this Agreement for "cause," as defined herein, or
for Disability, as described in Section 2.7 of this Agreement. For purposes of
this Agreement, "cause" is defined to mean such act, omission or course of
conduct of the Executive that is (a) continuing willful misconduct that is
demonstratably injurious to the Company, monetarily or otherwise; (b) the
commission of a felony involving the Company and/or its business and suggesting
moral turpitude on the part of the Executive; (c) improper or unethical business
activity, which is defined as the Executive's fraud, misappropriation,
embezzlement, dishonesty, unlawful harassment or gross negligence; or (d) a
breach of any material term or covenant of this Agreement. Termination for cause
will not be effective unless the Company delivers to the Executive thirty (30)
days advance written notice setting forth in reasonable detail the allegations
of cause, and the Executive does not correct the acts or omissions documented in
such notice within such 30-day period. For purposes of this Agreement, any
significant change to the Executive's title, his powers, duties or
responsibilities, or his employee benefits or working conditions, or any
relocation of his workplace outside of Atlanta, Georgia, will, at the option of
the Executive, constitute a termination of his employment by the Company without
cause. Notwithstanding anything else contained in this Agreement, if, for any
reason whatsoever, the Company terminates the Executive's employment, then the
Company will reimburse the Executive for all reasonable costs and expenses
incurred by him (including attorneys' fees, court costs and the costs of
paralegal and other legal or investigative support personnel) connected with
investigating, preparing, defending or appealing any litigation or similar
proceeding arising out of this Agreement, whether commenced or threatened. Such
reimbursements will be paid in advance of the final disposition of such
litigation within 10 days after the Executive submits requests for reimbursement
along with supporting invoices.
Section 5.2. Termination by the Executive. The Executive may terminate
----------------------------
his employment under this Agreement thirty (30)days after giving written notice
to the Company. If the Executive terminates his employment under this Agreement,
then he will be entitled to pro rata portions of his base salary and bonus
compensation with respect to the fiscal year in which the termination occurs
(based on the number of days the Executive is employed by the Company during
such fiscal year) as well as any accrued but unpaid base salary, and if the
conditions of Section 2.6 hereof are met, he shall be entitled to severance
payments thereunder.
Section 6. Restrictive Covenants.
---------------------
Section 6.1. Prohibited Activities. During the term of his employment
---------------------
under this Agreement and for a period of one (1) year thereafter, the Executive
will not, within the United States, either directly or indirectly, on his own
behalf or on behalf of or in conjunction with any person or entity:
(a) Perform financial or administrative services for any other person
or entity engaged in the design, development, marketing, sale or
provisioning of enhanced communications services, including enhanced
calling services, voice messaging services,
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<PAGE>
enhanced electronic documentation distribution services, video and data
conferencing services, computer telephony services, and Internet telephony
services;
(b) Induce any person who is an employee, officer, agent, affiliate,
supplier, client or customer of the Company to terminate such relationship
or refuse to do business with the Company; or
(c) Solicit, direct, take away, interfere with, or endeavor to entice
away from the Company any person, company, firm, institution, or other
entity that has purchased products or services from the Company.
Section 6.2. Trade Secrets. The Executive acknowledges and recognizes
-------------
that during his employment with the Company he may acquire Trade Secrets or
Confidential Business Information.
(a) The Executive agrees to maintain in strict confidence, and not use
or disclose except pursuant to written instructions from the Company, any
Trade Secret (as hereinafter defined) of the Company, for so long as the
pertinent data or information remains a Trade Secret, provided that the
obligation to protect the confidentiality of any such information or data
shall not be excused if such information or data ceases to qualify as a
Trade Secret as a result of the acts or omissions of the Executive.
(b) The Executive agrees to maintain in strict confidence and not to
use or disclose any Confidential Business Information (as hereinafter
defined) during his employment with the Company and for a period of one (1)
year thereafter.
(c) The Executive may disclose Trade Secrets or Confidential Business
Information pursuant to any order or legal process requiring him (in his
legal counsel's reasonable opinion) to do so, provided that the Executive
shall first have notified the Company in writing of the request or order to
so disclose the Trade Secrets or Confidential Business Information in
sufficient time to allow the Company to seek an appropriate protective
order.
(d) "Trade Secret" shall mean any information, including, but not
limited to, technical or non-technical data, a formula, a pattern, a
compilation, a program, a plan, a device, a method, a technique, a drawing,
a process, financial data, financial plans, product plans, or a list of
actual or potential customers or suppliers which (i) derives economic
value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use, and (ii) is the subject
of efforts that are reasonable under the circumstances to maintain its
secrecy.
(e) "Confidential Business Information" shall mean any non-public
information of a competitively sensitive or personal nature, other than
Trade Secrets, acquired by the Executive, directly or indirectly, in
connection with the Executive's employment with the
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Company, including without limitation oral and written information
concerning the Company's financial positions and results of operations
(revenues, margins, assets, net income, etc.), annual and long-range
business plans, marketing plans and methods, account invoices, oral or
written customer information, and personnel information.
Section 6.3. Property of the Company. The Executive acknowledges that all
-----------------------
confidential information relating to computer software or hardware currently
utilized by the Company or incorporated into its products and all such
information the Company currently plans to utilize or incorporate into its
products is the exclusive property of the Company. Furthermore, the Executive
agrees that all discoveries, inventions, creations and designs of the Executive
during the course of his employment pursuant to this Agreement will be the
exclusive property of the Company.
Section 6.4. Remedies. In the event the Executive violates or threatens
--------
to violate the provisions of this Section 6, damages at law will be an
insufficient remedy and the Company will be entitled to equitable relief in
addition to any other remedies or rights available to the Company and no bond or
security will be required in connection with such equitable relief.
Section 6.5. Counterclaims. The existence of any claim or cause of action
-------------
the Executive may have against the Company will not at any time constitute a
defense to the enforcement by the Company of the restrictions or rights provided
by this Section 6.
Section 7. Service as Director.
-------------------
Subject to his election by the shareholders, the Executive agrees to serve
as a director of the Company if nominated.
Section 8. Indemnification.
---------------
The indemnification rights provided under this Agreement are intended to be
in addition to, not in lieu of, the indemnification rights provided in that
certain Officer's Indemnification Agreement dated April 1, 1998 by and between
the Company and the Executive, and should in no way be interpreted to limit the
Executive's rights under that Agreement or applicable provisions of Georgia law.
Section 8.1. Non-Derivative Actions. The Company will indemnify the
----------------------
Executive if he becomes a party to any proceeding (other than an action by, or
in the right of, the Company), by reason of the fact that he is or was a
director, officer, employee, or agent of the Company or is or was serving at the
request of the Company as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
liability incurred in connection with such proceeding, including any appeal,
provided he acted in good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of the Company and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any proceeding by judgment, order, settlement,
or conviction or upon a plea of nolo contendere or its equivalent will not, of
itself, create a presumption that he did
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<PAGE>
not act in good faith and in a manner which he reasonably believed to be in, and
not opposed to, the best interests of the Company or, with respect to any
criminal proceeding, had reasonable cause to believe that his conduct was
unlawful.
Section 8.2. Derivative Actions. The Company will indemnify the Executive
------------------
if he becomes a party to any proceeding by or in the right of the Company to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee, or agent of the Company or is or was serving at the
request of the Company as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not exceeding, in the judgment of the
Board, the estimated expense of litigating the proceeding to conclusion,
actually and reasonably incurred in connection with the defense or settlement of
such proceeding, including any appeal; provided that he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Company.
Section 8.3. Advancement of Expenses. Expenses incurred by the Executive
-----------------------
in defending a civil or criminal proceeding described in this Section 8 will be
paid by the Company in advance of the final disposition of the proceeding within
ten (10) days after the Executive submits a request for payment; provided
however, that the Executive has undertaken in writing to repay such amounts if
he is ultimately found not to be entitled to indemnification by the Company.
Section 8.4. Non-Exclusivity; Continuity. The indemnification provided
---------------------------
for by this Agreement will not be exclusive and the Company may make any other
indemnification allowed by law. The indemnification provided for by this
Agreement will continue after the Executive has ceased to be a director,
officer, employee, or agent of the Company or ceases to serve at the request of
the Company as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise and will inure to the
Executive's heirs, executors, and administrators.
Section 8.5. No Subrogation. The indemnification provided for by this
--------------
Agreement will be personal in nature and the Company will not have any liability
under this Section 8 to any insurer or any person, corporation, partnership,
trust or association or other entity (other than heirs, executors or
administrators) by reason of subrogation, assignment, or succession by any other
means to the claim of the Executive.
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<PAGE>
Section 9. Compliance With Other Agreements.
--------------------------------
The Executive represents and warrants to the Company that he is free to
enter this Agreement and that the execution of this Agreement and the
performance of the obligations under this Agreement will not, as of the date of
this Agreement or with the passage of time, conflict with, cause a breach of or
constitute a default under any agreement to which the Executive is a party or
may be bound.
Section 10. Severability.
------------
Every provision of this Agreement is intended to be severable. If any
provision or portion of a provision is illegal or invalid, then the remainder of
this Agreement will not be affected. Moreover, any provision of this Agreement
which is determined to be unreasonable, arbitrary or against public policy will
be modified as necessary so that it is not unreasonable, arbitrary or against
public policy.
Section 11. Waivers.
-------
A waiver by a party to this Agreement of any breach of this Agreement by
the other party will not operate or be construed as a waiver of any other breach
or of the same breach on a future occasion. No delay or omission by either party
to enforce any rights it may have under this Agreement will operate or be
construed as a waiver.
Section 12. Modification.
------------
This Agreement may not be modified or amended except by a writing signed by
both parties.
Section 13. Headings.
--------
The various headings contained in this Agreement are inserted only as a
matter of convenience and in no way define, limit or extend the scope or intent
of any of the provisions of this Agreement.
Section 14. Counterparts.
------------
This Agreement may be executed in several counterparts, each of which will
be deemed an original, but all of which taken together will constitute one and
the same instrument.
Section 15. Number and Pronouns.
-------------------
Wherever from the context it appears appropriate, each term stated in
either the singular or the plural will include the singular and the plural and
pronouns stated in the masculine, feminine or neuter gender will include the
masculine, feminine and neuter genders.
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<PAGE>
Section 16. Survival of Representations and Warranties.
------------------------------------------
The respective representations and warranties of the parties to this
Agreement will survive the execution of this Agreement and continue without
limitation.
Section 17. Assignment; Binding Effect.
--------------------------
Neither this Agreement nor any right or interest hereunder shall be
assignable by either the Executive or the Company without the other party's
prior written consent; provided, however, that nothing in this Section 17 shall
preclude (a) the Executive from designating a beneficiary to receive any
benefits payable hereunder upon his death, or (b) the executors, administrators
or other legal representatives of the Executive or his estate from assigning any
rights hereunder to the person or persons entitled thereto.
In addition, at the request of the Executive, the Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company,
by agreement in form and substance satisfactory to the Executive, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession will be a breach of this Agreement and will
entitle the Executive to compensation from the Company in the same amount and on
the same terms as he would be entitled to hereunder if his employment was
terminated by the Company without cause.
Except as otherwise provided herein, this Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective legal
representatives, administrators, executors, successors and assigns.
Section 18. Arbitration.
-----------
The Company and the Executive hereby consent to the resolution by
arbitration of all disputes, claims or controversies for which a court otherwise
would be authorized by law to grant relief, in any way arising out of, relating
to or associated with the Executive's employment with the Company or the
termination of the Executive's employment, that the Company may have against the
Executive or that the Executive may have against the Company or against its
officers, directors, employees or agents in their capacity as such or otherwise,
whether or not such dispute, claim or controversy concerns the terms of this
Agreement. Any such arbitration shall be in accordance with the procedures of
the American Arbitration Association ("AAA"). The arbitration hearing will be
held before an experienced employment arbitrator or panel of arbitrators
licensed to practice law in the State of Georgia and selected by and in
accordance with the rules of the AAA, as the exclusive remedy for such dispute,
claim or controversy. The forum for such arbitration shall be Atlanta, Georgia.
The party seeking arbitration of a dispute, claim or controversy as required by
this Section 18 must give specific written notice of any such dispute, claim or
controversy to the other party within six (6) months of the date the party
seeking arbitration first has knowledge of the event giving rise to such
dispute, claim or controversy;
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<PAGE>
otherwise, the dispute, claim or controversy shall be void and deemed waived,
even if there is a federal or state statute of limitations which would have
given more time to pursue the dispute, claim or controversy. Notwithstanding the
foregoing, the Company shall have the right to seek temporary and/or preliminary
injunctive relief in a court of competent jurisdiction to enforce the terms of
Section 6 hereof. Moreover, this agreement to arbitrate does not apply to or
cover other claims by the Company or any non-party to this Agreement for
injunctive and/or other equitable relief for unfair competition and/or the use
and/or unauthorized disclosure of trade secrets or confidential information. The
ultimate resolution of the underlying issues in such litigation shall, however,
be subject to this agreement by the parties to resolve any disputes, claims or
controversies by arbitration as set forth herein.
Section 19. Entire Agreement.
----------------
With respect to its subject matter, this Agreement constitutes the entire
understanding of the parties superseding all prior agreements, understandings,
negotiations and discussions between them, whether written or oral, and there
are no other understandings, representations, warranties or commitments with
respect thereto.
Section 20. Governing Law; Venue.
--------------------
This Agreement will be governed by and interpreted in accordance with the
substantive laws of the State of Georgia without reference to conflicts of law.
Venue for the purposes of any litigation in connection with this Agreement will
lie solely in the state or superior courts in and for Fulton County, Georgia or
the United States District Court in and for the Northern District of Georgia.
Section 21. Notices.
-------
Any notices or other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly given and
delivered when delivered in person, two (2) days after being mailed postage
prepaid by certified or registered mail with return receipt requested, or when
delivered by overnight delivery service or by facsimile to the recipient at the
following address or facsimile number, or to such other address or facsimile
number as to which the other party subsequently shall have been notified in
writing by such recipient:
If to the Company:
Premiere Technologies, Inc.
3399 Peachtree Road, N.E.
The Lenox Building
Suite 600
Atlanta, GA 30326
Attn: Chief Executive Officer
Facsimile: (404) 262-8522
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With a copy to (which shall not constitute notice):
Premiere Technologies, Inc.
3399 Peachtree Road, N.E.
The Lenox Building
Suite 600
Atlanta, GA 30326
Attn: Chief Legal Officer
Facsimile: (404) 262-8540
If to the Executive:
Harvey A. Wagner
2660 Peachtree Road, N.E.
Unit 32G
Atlanta, Georgia 30305
The parties have executed this Agreement effective as of the 4th day of
May, 1998.
PREMIERE TECHNOLOGIES, INC.
By: /s/ Patrick G. Jones
-------------------
Patrick G. Jones
THE EXECUTIVE
/s/ Harvey A. Wagner
--------------------
Harvey A. Wagner
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EXHIBIT A
PROMISSORY NOTE
$100,000.00 ____________, 1998
HARVEY A. WAGNER (hereinafter referred to as "Debtor"), for value received,
hereby promises to pay to the order of PREMIERE TECHNOLOGIES, INC., a Georgia
corporation (hereinafter referred to as "Payee"), the principal sum of ONE
HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00), on ___________, 2000,
together with interest on the unpaid principal balance at the rate of _________
percent (____%) per annum [the applicable Federal rate under IRC (S)1274(d) in
effect on the date of this Note], compounded annually. Any principal of or
interest on this Note not paid when due shall bear interest after such due date
until paid at the rate of __________ percent (____%) per annum [two points
higher than the primary interest rate], and Debtor shall pay all costs of
collection. The principal hereof and the interest thereon are payable at 3399
Peachtree Road, Suite 600, Atlanta, GA 30326, or at such other place as Payee
may from time to time designate to Debtor in writing, in coin or currency of the
United States of America.
PREPAYMENT. Debtor may, at any time and from time to time, prepay all or any
portion of the principal of this Note remaining unpaid, without penalty or
premium.
EVENTS OF DEFAULT. If any of the following events (an "Event of Default")
shall occur and be continuing for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise), then this Note shall thereupon be and become,
forthwith due and payable, without any further notice or demand of any kind
whatsoever, all of which are hereby expressly waived:
(a) If Debtor defaults in the payment of principal or interest on this Note
when and as the same shall become due and payable and such default continues for
ten (10) days after Debtor receives notice from Payee of such default; or
(b) If Debtor makes an assignment for the benefit of creditors or admits in
writing her inability to pay his debts generally as they become due; or
(c) If an order, judgment or decree is entered adjudicating Debtor bankrupt or
insolvent; or
(d) If Debtor petitions or applies to any tribunal for the appointment of a
trustee or receiver of Debtor, or of any substantial part of the assets of
Debtor, or commences any proceedings relating to Debtor under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect; or
<PAGE>
(e) If any such petition or application is filed, or any such proceedings are
commenced, against Debtor, and Debtor by any act indicates its approval thereof,
consent thereto, or acquiescence therein, or an order is entered appointing any
such trustee or receiver, or approving the petition in any such proceedings, and
such order remains unstayed and in effect for more than ninety (90) days.
CANCELLATION OF DEBT. If Debtor is employed by Payee on the first anniversary
of this Note, one-half (1/2) of the unpaid principal of this Note and all
accrued interest thereon shall be cancelled, and if Debtor is employed by Payee
on the second anniversary of this Note, the balance of the unpaid principal of
this Note and all accrued interest thereon shall be cancelled. If Debtor's
employment is terminated by Payee without "cause" (as defined in Debtor's
Executive Employment and Incentive Option Agreement with Payee) prior to the
second anniversary of this Note, then the entire amount of the unpaid principal
of this Note and all accrued interest thereon shall be cancelled as of the
termination date.
WAIVER. Any failure on the part of Payee at any time to require the
performance by Debtor of any of the terms or provisions hereof, even if known,
shall in no way affect the right thereafter to enforce the same, nor shall any
failure of Payee to insist on strict compliance with the terms and conditions
hereof be taken or held to be a waiver of any succeeding breach or of the right
of Payee to insist on strict compliance with the terms and conditions hereof.
TIME. Time is of the essence.
NOTICES. All notices, requests, demands and other communications to Debtor
hereunder shall be in writing and shall be deemed to have been duly given and
delivered when delivered in person, when mailed postage prepaid by registered or
certified mail with return receipt requested, or when delivered by overnight
delivery service to 2660 Peachtree Road, N.W., Unit 32G, Atlanta, GA 30305, or
to such other address as Debtor may designate to Payee in writing.
APPLICABLE LAW. This Note shall be governed by, and enforced and interpreted
in accordance with, the laws of the State of Georgia.
IN WITNESS WHEREOF, Debtor has executed this Note under seal as of the date
first set forth above.
(L.S.)
-------------------------
HARVEY A. WAGNER
2
<PAGE>
EXHIBIT 10.15
PROMISSORY NOTE
$100,000.00 May 11, 1998
HARVEY A. WAGNER (hereinafter referred to as "Debtor"), for value received,
hereby promises to pay to the order of PREMIERE TECHNOLOGIES, INC., a Georgia
corporation (hereinafter referred to as "Payee"), the principal sum of ONE
HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00), on May 11, 2000, together
with interest on the unpaid principal balance at the rate of five and one-half
percent (5.5%) per annum, compounded annually. Any principal of or interest on
this Note not paid when due shall bear interest after such due date until paid
at the rate of seven and one-half percent (7.5%) per annum, and Debtor shall pay
all costs of collection. The principal hereof and the interest thereon are
payable at 3399 Peachtree Road, Suite 600, Atlanta, GA 30326, or at such other
place as Payee may from time to time designate to Debtor in writing, in coin or
currency of the United States of America.
PREPAYMENT. Debtor may, at any time and from time to time, prepay all or any
portion of the principal of this Note remaining unpaid, without penalty or
premium.
EVENTS OF DEFAULT. If any of the following events (an "Event of Default")
shall occur and be continuing for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise), then this Note shall thereupon be and become,
forthwith due and payable, without any further notice or demand of any kind
whatsoever, all of which are hereby expressly waived:
(a) If Debtor defaults in the payment of principal or interest on this Note
when and as the same shall become due and payable and such default continues for
ten (10) days after Debtor receives notice from Payee of such default; or
(b) If Debtor makes an assignment for the benefit of creditors or admits in
writing her inability to pay his debts generally as they become due; or
(c) If an order, judgment or decree is entered adjudicating Debtor bankrupt or
insolvent; or
(d) If Debtor petitions or applies to any tribunal for the appointment of a
trustee or receiver of Debtor, or of any substantial part of the assets of
Debtor, or commences any proceedings relating to Debtor under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect; or
(e) If any such petition or application is filed, or any such proceedings are
commenced, against Debtor, and Debtor by any act indicates its approval thereof,
<PAGE>
consent thereto, or acquiescence therein, or an order is entered appointing any
such trustee or receiver, or approving the petition in any such proceedings, and
such order remains unstayed and in effect for more than ninety (90) days.
CANCELLATION OF DEBT. If Debtor is employed by Payee on the first anniversary
of this Note, one-half (1/2) of the unpaid principal of this Note and all
accrued interest thereon shall be cancelled, and if Debtor is employed by Payee
on the second anniversary of this Note, the balance of the unpaid principal of
this Note and all accrued interest thereon shall be cancelled. If Debtor's
employment is terminated by Payee without "cause" (as defined in Debtor's
Executive Employment and Incentive Option Agreement with Payee) prior to the
second anniversary of this Note, then the entire amount of the unpaid principal
of this Note and all accrued interest thereon shall be cancelled as of the
termination date.
WAIVER. Any failure on the part of Payee at any time to require the
performance by Debtor of any of the terms or provisions hereof, even if known,
shall in no way affect the right thereafter to enforce the same, nor shall any
failure of Payee to insist on strict compliance with the terms and conditions
hereof be taken or held to be a waiver of any succeeding breach or of the right
of Payee to insist on strict compliance with the terms and conditions hereof.
TIME. Time is of the essence.
NOTICES. All notices, requests, demands and other communications to Debtor
hereunder shall be in writing and shall be deemed to have been duly given and
delivered when delivered in person, when mailed postage prepaid by registered or
certified mail with return receipt requested, or when delivered by overnight
delivery service to 2660 Peachtree Road, N.W., Unit 32G, Atlanta, GA 30305, or
to such other address as Debtor may designate to Payee in writing.
APPLICABLE LAW. This Note shall be governed by, and enforced and interpreted
in accordance with, the laws of the State of Georgia.
IN WITNESS WHEREOF, Debtor has executed this Note under seal as of the date
first set forth above.
/s/ Harvey A. Wagner (L.S.)
----------------------
HARVEY A. WAGNER
2
<PAGE>
EXHIBIT 10.16
SPLIT-DOLLAR AGREEMENT
----------------------
THIS AGREEMENT is made and entered into as of the 11th day of November,
1998, by and between PREMIERE TECHNOLOGIES, INC., a Georgia corporation (the
"Company"), and HARVEY A. WAGNER (the "Owner" and the "Insured").
WITNESSETH:
----------
WHEREAS, the Insured is employed by the Company as a valuable key
executive; and
WHEREAS, the Insured wishes to provide life insurance protection for the
Insured's family when the Insured is dead, under a policy of life insurance (the
"Policy") which is described in Exhibit A attached hereto and by this reference
made a part hereof, and which is issued by Mass Mutual Life Insurance Company
(the "Insurer"); and
WHEREAS, the Company is willing to pay a portion of the premiums due on the
Policy, on the terms and conditions hereinafter set forth; and
WHEREAS, the Company wishes to have the Policy collaterally assigned to it
by the Owner, in order to secure the repayment of the amounts which it will pay
toward the premiums on the Policy;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:
1. By virtue of the Insured's change of employment from Scientific-
Atlanta, Inc., the Company has temporarily become the owner of the Policy.
However, as of the execution of this Agreement, the Insured (i.e., Harvey
Wagner) shall become the Owner of the Policy, subject to the collateral
assignment in favor of the Company made herein, and for all purposes under this
Agreement, the amount of premiums payments deemed to have been made by the
Company shall be determined
<PAGE>
as provided in paragraph 4 of this Agreement. The total face amount of the
Policy (as of the date of this Agreement) is $1,399,502.13. The Policy shall be
subject to the terms and conditions of this Agreement and of the collateral
assignment relating to the Policy.
2. The Owner shall be the sole and absolute owner of the Policy, and may
exercise all ownership rights granted to the owner thereof by the terms of the
Policy, except as may otherwise be provided herein. The Company shall have no
"incidents of ownership" in the Policy within the meaning of I.R.C. (S) 2042.
In particular, the Company may not borrow against the Policy or pledge it as
security for any indebtedness.
3. Any dividend declared on the Policy shall be applied in accordance with
the dividend election currently in force.
4. On or before the due date of each Policy premium, or within the grace
period provided therein, the Owner shall remit (or the Insured may remit on the
Owner's behalf) to the Company an amount of such premium equal to the one-year
term cost of the life insurance protection to which the Owner is entitled in
that year, determined in accordance with the principles of Rev. Rul. 64-328,
1964-2 C.B. 11, and Rev. Rul. 66-110, 1966-1 C.B. 12 (and the Company shall
cooperate with the Owner in obtaining this information from the Insurer). The
Company shall use such remittance for the payment of such premium to the Insurer
and shall pay the balance of the premium to the Insurer from its own funds, and
the Company shall also have the authority to pay the Insured taxable bonuses or
other taxable compensation to enable the Insured to pay the Owner's remittance
hereunder. If the Owner fails to pay its share of the premium as required by
this paragraph, the Company may elect to pay the full premium, and in such case
the Company shall be considered to have paid the full amount of such premium
even if such payment results in taxable income to the Insured and/or a taxable
gift from the Insured to the Owner. For all purposes under this Agreement, the
amount of premium payments deemed to have been made by the Company shall be (1)
the payment of $72,382.54 paid to Scientific-Atlanta, Inc., in connection with
the Insured's change of employment, plus (2) any premium payments subsequently
made by the Company pursuant to this Agreement or during the period between the
Company's acquisition of the policy from Scientific-Atlanta, Inc. and the date
of execution of this Agreement.
-2-
<PAGE>
5. To secure the repayment to the Company of the amount of the premiums on
the Policy paid by it hereunder, the Owner has, contemporaneously herewith,
assigned the Policy to the Company as collateral, under the form used by the
Insurer for such assignments. The collateral assignment of the Policy to the
Company hereunder shall not be terminated, altered or amended by the Owner
without the express written consent of the Company. The parties shall take all
action necessary to cause such collateral assignment to conform to the
provisions of this Agreement.
6. a. Except as otherwise provided herein, the Owner shall not sell,
assign, transfer, borrow against, surrender or cancel the Policy, change the
beneficiary designation provision thereof, nor terminate the dividend election
thereof, without the express written consent of the Company.
b. Notwithstanding any provision hereof to the contrary, (1) if the
Owner is the Insured, the Owner may transfer all of its right, title and
interest in and to the Policy to a trust created by the Insured for the
exclusive benefit (disregarding any remote and contingent beneficial interests)
of the Owner's spouse and/or one or more descendants of the Owner, and (2) if
the Owner is a trust created by the Insured, the Owner may distribute to a
beneficiary all of its right, title and interest in and to the Policy, in either
case subject to the collateral assignment of the Policy to the Company pursuant
hereto. The Owner may exercise such right by executing a written transfer of
ownership in the form used by the Insurer for such transfers of insurance
policies, and delivering this form to the Company. Upon receipt of such form,
executed by the Owner and duly accepted by the transferee or distributee
thereof, the Company shall consent thereto in writing, and shall thereafter
treat the Owner's transferee or distributee as the sole owner of all of the
Owner's right, title and interest in and to the Policy, subject to this
Agreement and the collateral assignment of the Policy to the Company pursuant
hereto, whereupon the Owner shall be considered a "former Owner" and such
transferee or distributee shall be considered the new Owner for all purposes
under this Agreement. Thereafter, the former Owner shall have no right, title or
interest in and to the Policy, all such rights being vested in and exercisable
only by such distributee or transferee.
-3-
<PAGE>
7. a. Upon the death of the Insured, the Owner shall promptly take all
action necessary to obtain the death benefit provided under the Policy, and the
Company shall cooperate with the Owner in this regard.
b. The Company shall have the unqualified right to receive a portion
of such death benefit equal to the total amount of the premiums paid by it
hereunder. The balance of the death benefit provided under the Policy, if any,
shall be paid directly to the beneficiary or beneficiaries designated by the
Owner (or the Owner's estate if the Company is inadvertently named as
beneficiary of such balance), in the manner and in the amount or amounts
provided in the beneficiary designation provision of the Policy. In no event
shall the amount payable to the Company hereunder exceed the Policy proceeds
payable at the death of the Insured. No amount shall be paid from such death
benefit to the beneficiary or beneficiaries designated by the Owner until the
full amount due the Company hereunder has been paid. The beneficiary
designation provision of the Policy shall conform to the provisions hereof.
c. Notwithstanding paragraph 6(a) of this Agreement, the Owner may
surrender, partially surrender, make withdrawals from or borrow against the
Policy at any time if the proceeds of such surrender, withdrawal or loan are at
least equal to the amount that the Company would be entitled to receive if the
Insured had died on the date of such borrowing or surrender and such amount is
immediately paid to the Company. The Owner may pay the Company the full amount
to which it would be entitled pursuant to the preceding sentence from other
sources at any time. Upon payment to the Company of the full amount to which it
is entitled, this Agreement shall terminate, and the Company shall release the
collateral assignment of the Policy to it.
d. In addition to the borrowing and withdrawals permitted under
paragraph 7(c), and notwithstanding paragraph 6(a) of this Agreement, the Owner
may make withdrawals from or borrow against the Policy at any time and continue
such borrowing provided such withdrawals and borrowing, including any accrued
but unpaid interest thereon, do not reduce the Policy's interpolated terminal
reserve (net of outstanding policy loans and accrued interest thereon) below the
amount that the Company would be entitled to receive if the Insured had died on
the date of such withdrawal or borrowing or any later date while any policy loan
remains outstanding.
-4-
<PAGE>
8. This Agreement shall terminate, without notice, (1) upon the total
cessation of the business of the Company, or the bankruptcy, receivership or
dissolution of the Company; (2) upon the failure of the Owner to pay its share
of premium in accordance with paragraph 4 if the Company does not elect to pay
the full premium as provided in paragraph 4; (3) upon the termination of the
Insured's employment with the Company for "cause" as defined in the Owner's
Executive Employment Agreement with the Company (the "Employment Agreement"), or
upon the Insured's voluntary termination of employment with the Company prior to
Disability (as defined in the Employment Agreement) or normal retirement; (4) at
the election of the Company upon the violation by the Owner of the policy loan
conditions specified in paragraph 7(d); or (5) upon death of the Insured or as
provided in paragraph 7(c). In addition, the Owner may terminate this Agreement
by written notice to the Company. Such termination shall be effective as of the
date of such notice.
9. In the event this Agreement is terminated, the Company shall have no
further obligation to pay any share of premiums on the Policy which subsequently
become due. The Owner shall continue to hold the Policy subject to the
Company's right to a share of death proceeds or proceeds of any surrender or
loan as provided in this Agreement, except that in the case of termination under
clause (2), (3) or (4) of paragraph 8 (failure to pay share of premium, certain
terminations of employment, or excessive borrowing), the Company shall be
entitled to immediately have the Owner take all necessary steps to cause the
cancellation of the Policy and enable the Company to receive out of the
cancellation proceeds the amount that the Company would be entitled to receive
if the Insured had died on the date of such termination (or the Company may
allow the Owner to pay the Company such amount from other sources).
10. The Insurer shall be fully discharged from its obligations under the
Policy by payment of the Policy death benefit to the beneficiary or
beneficiaries named in the Policy, except insofar as the provisions hereof are
made a part of the Policy by the collateral assignment executed by the Owner and
filed with the Insurer in connection herewith. In no event shall the Insurer be
considered a party to this Agreement, or any modification or amendment hereof.
No provision of this Agreement, nor of any modification or amendment hereof,
shall in any way be
-5-
<PAGE>
construed as enlarging, changing, varying, or in any other way affecting the
obligations of the Insurer as expressly provided in the Policy.
11. This Agreement may not be amended, altered or modified, except by a
written instrument signed by the parties hereto, or their respective successors
or assigns, and may not otherwise be terminated except as provided herein.
12. This Agreement shall be binding upon and inure to the benefit of the
Company and the Owner and their successors and assigns, and the Insured, his
successors, assigns, heirs, executors, administrators, and beneficiaries.
13. Any notice, consent, or demand required or permitted to be given under
the provisions of this Agreement must be in writing, and must be signed by the
party giving or making the same. If such notice, consent or demand is mailed to
a party hereto, it shall be sent by United States certified mail, postage
prepaid, addressed to such party's last known address. The date of such mailing
shall be deemed the date of notice, consent, or demand.
14. This Agreement, and the rights of the parties hereunder, shall be
governed by and construed in accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
duplicate, as of the day and year first above written.
PREMIERE TECHNOLOGIES, INC.
By: /s/ Patrick G. Jones
--------------------
Title: Senior Vice President
/s/ Harvey A. Wagner
--------------------
Harvey A. Wagner, Owner and Insured
-6-
<PAGE>
EXHIBIT A
DESCRIPTION OF POLICY
Mass Mutual Policy Number 0 020 173
Insured: Harvey A. Wagner
Level Death Benefit to Age 65: $1,399,502.13
Level Death Benefit from Age 65 on: $ 233,247.00
Annual premium based on above benefits: $ 4,016.64
-7-
<PAGE>
EXHIBIT 10.50
================================================================================
$150,000,000
CREDIT AGREEMENT
Dated as of December 17, 1997
As Amended and Restated as of December 16, 1998
Among
XPEDITE SYSTEMS, INC.
and
XPEDITE SYSTEMS HOLDINGS (UK) LIMITED,
as Borrowers,
the GUARANTORS party hereto,
the BANKS listed on the signature pages hereof,
NATIONSBANK, N.A.,
as Documentation Agent,
and
THE BANK OF NEW YORK,
as Administrative Agent
Arranged by
NATIONSBANC MONTGOMERY SECURITIES LLC,
as Sole Lead Arranger
and
BNY CAPITAL MARKETS, INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
CREDIT FACILITY
<TABLE>
<S> <C> <C>
Section 1.01 Commitment to Lend.................................. 7
Section 1.02 Manner of Borrowing................................. 8
Section 1.03 Interest............................................ 9
(a) Rates......................................... 9
(b) Payment....................................... 9
(c) Conversion and Continuation................... 9
(d) Maximum Interest Rate......................... 10
Section 1.04 Repayment........................................... 11
Section 1.05 Prepayments......................................... 11
(a) Optional Prepayments.......................... 11
(b) Mandatory Prepayments......................... 11
(c) Application to Types of Loans................. 11
Section 1.06 Limitation on Types of Loans........................ 12
Section 1.07 Reduction of Commitments............................ 12
(a) Mandatory Reductions.......................... 12
(b) Optional Reductions........................... 12
Section 1.08 Fees................................................ 13
(a) Commitment Fees............................... 13
(b) Agents' Fees................................. 13
(c) Fees Non-Refundable........................... 13
Section 1.09 Computation of Interest and Fees.................... 13
Section 1.10 Evidence of Indebtedness............................ 13
Section 1.11 Payments by the Borrowers........................... 13
(a) Time, Place and Manner........................ 13
(b) No Reductions................................. 14
(c) Extension of Payment Dates.................... 14
Section 1.12 Distribution of Payments by the Administrative Agent 14
Section 1.13 Taxes............................................... 15
(a) Taxes Payable by the Borrowers................ 15
(b) Credits and Deductions........................ 17
Section 1.14 Pro Rata Treatment.................................. 17
ARTICLE 2
CONDITIONS TO LOANS
Section 2.01 Conditions to Effectiveness of Amendment and
Restatement.......................................... 17
Section 2.02 Conditions to Each Loan.............................. 19
</TABLE>
<PAGE>
ARTICLE 3
CERTAIN REPRESENTATIONS AND WARRANTIES
<TABLE>
<S> <C> <C>
Section 3.01 Organization; Power; Qualification..................................... 20
Section 3.02 Subsidiaries........................................................... 20
Section 3.03 Authorization; Enforceability; Required Consents; Absence of Conflicts. 20
Section 3.04 Taxes.................................................................. 21
Section 3.05 Litigation............................................................. 21
Section 3.06 No Adverse Change or Event............................................. 21
Section 3.07 Additional Adverse Facts............................................... 22
Section 3.08 Investment Company Act................................................. 22
Section 3.09 Compliance With Applicable Law and Contracts........................... 22
Section 3.10 Substance Release and Disposal......................................... 22
Section 3.11 Senior Obligations..................................................... 22
ARTICLE 4
CERTAIN COVENANTS
Section 4.01 Preservation of Existence and Properties, Scope of Business,
Compliance With Law, Preservation of Enforceability.................... 23
Section 4.02 Insurance.............................................................. 23
Section 4.03 Additional Significant Subsidiaries.................................... 23
Section 4.04 Use of Proceeds........................................................ 24
Section 4.05 Indebtedness........................................................... 24
Section 4.06 Guaranties............................................................. 24
Section 4.07 Liens.................................................................. 25
Section 4.08 Merger or Consolidation; Acquisitions.................................. 25
Section 4.09 Disposition of Assets.................................................. 25
Section 4.10 Restricted Payments.................................................... 26
Section 4.11 Limitation on Restrictive Covenants.................................... 26
Section 4.12 Issuance or Disposition of Capital Securities.......................... 26
Section 4.13 Investments............................................................ 26
Section 4.14 Taxes of Other Persons................................................. 27
Section 4.15 Benefit Plans.......................................................... 27
Section 4.16 Transactions With Affiliates........................................... 27
Section 4.17 Substance Storage and Disposal......................................... 27
Section 4.18 Capital Expenditures................................................... 27
Section 4.19 Premiere Leverage Ratio................................................ 28
Section 4.20 Premiere Interest Coverage Ratio....................................... 28
Section 4.21 Minimum Consolidated Revenues.......................................... 28
Section 4.22 Xpedite Leverage Ratio................................................. 28
Section 4.23 Xpedite Interest Coverage Ratio........................................ 28
</TABLE>
-2-
<PAGE>
ARTICLE 5
INFORMATION
<TABLE>
<S> <C> <C>
Section 5.01 Information to Be Furnished........................................ 28
(a) Quarterly Financial Statements................................. 28
(b) Year-End Financial Statements; Accountants' Certificate........ 29
(c) Monthly Financial Statements................................... 29
(d) Officer's Certificate as to Financial Statements and Defaults.. 30
(e) Reports and Filings............................................ 30
(f) Requested Information.......................................... 30
(g) Notice of Defaults, Material Adverse Changes and Other
Matters........................................................ 30
Section 5.02 Accuracy of Financial Statements and Information.................. 31
(a) Financial Statements........................................... 31
(b) Other Information.............................................. 32
Section 5.03 Additional Covenants Relating to Disclosure........................ 33
(a) Accounting Methods and Financial Records....................... 33
(b) Fiscal Year.................................................... 33
(c) Visits, Inspections and Discussions............................ 33
Section 5.04 Authorization of Third Parties to Deliver Information.............. 33
ARTICLE 6
DEFAULT
Section 6.01 Events of Default................................................. 33
Section 6.02 Remedies Upon Event of Default.................................... 36
ARTICLE 7
ADDITIONAL CREDIT FACILITY PROVISIONS
Section 7.01 Mandatory Suspension and Conversion of Eurocurrency Rate Loans.... 37
Section 7.02 Regulatory Changes................................................ 38
Section 7.03 Funding Losses.................................................... 38
Section 7.04 Certain Determinations............................................ 39
Section 7.05 Change of Lending Office.......................................... 39
Section 7.06 Replacement of Banks.............................................. 39
ARTICLE 8
GUARANTY
Section 8.01 Guaranty of Payment and Performance; Limitation of Guaranty...... 40
Section 8.02 Continuance and Acceleration of Guaranteed Obligations Upon
Certain Events................................................... 41
Section 8.03 Recovered Payments............................................... 41
Section 8.04 Nature of Guarantors' Obligations................................ 41
Section 8.05 No Release of Guarantors......................................... 42
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C> <C>
Section 8.06 Certain Waivers.................................................. 43
Section 8.07 Subordination of Rights Against the Borrowers and Collateral..... 44
ARTICLE 9
THE AGENTS
Section 9.01 Appointment and Powers............................................ 44
Section 9.02 Limitation on Administrative Agent's Liability.................... 44
Section 9.03 Defaults.......................................................... 45
Section 9.04 Rights as a Bank.................................................. 45
Section 9.05 Indemnification................................................... 46
Section 9.06 Non-Reliance on Administrative Agent and Other Banks.............. 46
Section 9.07 Resignation of the Administrative Agent........................... 46
Section 9.08 Execution and Amendment of Loan Documents on Behalf of the Banks.. 47
ARTICLE 10
MISCELLANEOUS
Section 10.01 Notices and Deliveries............................................ 47
Section 10.02 Expenses; Indemnification......................................... 49
Section 10.03 Amounts Payable Due Upon Request for Payment...................... 50
Section 10.04 Remedies of the Essence........................................... 50
Section 10.05 Rights Cumulative................................................. 50
Section 10.06 Confidentiality and Disclosures................................... 50
Section 10.07 Amendments; Waivers............................................... 51
Section 10.08 Set-Off; Suspension of Payment and Performance.................... 51
Section 10.09 Sharing of Recoveries............................................. 52
Section 10.10 Assignments and Participations.................................... 52
(a) Assignments.................................................. 52
(b) Participations............................................... 53
Section 10.11 Governing Law..................................................... 54
Section 10.12 Judicial Proceedings; Waiver of Jury Trial........................ 54
Section 10.13 Reference Bank.................................................... 55
Section 10.14 Severability of Provisions........................................ 55
Section 10.15 Counterparts...................................................... 55
Section 10.16 Survival of Obligations........................................... 55
Section 10.17 Entire Agreement.................................................. 55
Section 10.18 Successors and Assigns............................................ 55
Section 10.19 No Fiduciary Relationship Established by Loan Documents........... 55
Section 10.20 Judgment Currency................................................. 56
Section 10.21 Worldwide UK Security Agreement................................... 56
</TABLE>
-4-
<PAGE>
ARTICLE 11
INTERPRETATION
Section 11.01 Defined Terms........................................... 56
Section 11.02 Other Interpretive Provisions........................... 72
Section 11.03 Accounting Matters...................................... 72
Section 11.04 Representations and Warranties.......................... 73
Section 11.05 Captions................................................ 73
Section 11.06 Interpretation and Related Documents.................... 73
Section 11.07 Undertaking by Premiere................................. 73
<PAGE>
ANNEX A BANKS, LENDING OFFICES AND NOTICE ADDRESSES
Schedule 1.02 NOTICE OF BORROWING FOR LOANS
Schedule 1.03(c)(iv) NOTICE OF CONVERSION OR CONTINUATION
Schedule 1.05(a) NOTICE OF PREPAYMENT
Schedule 2.01(a)(i) CERTIFICATE AS TO RESOLUTIONS, ETC.
Schedule 2.01(a)(iv) FORM OF OPINION OF COUNSEL FOR THE LOAN PARTIES
Schedule 2.01(a)(v) FORM OF OPINION OF ENGLISH COUNSEL FOR XPEDITE
SYSTEMS HOLDINGS (UK) LIMITED
Schedule 2.01(a)(vi) FORM OF OPINION OF WINTHROP, STIMSON, PUTNAM & ROBERTS
Schedule 3.02 SCHEDULE OF SUBSIDIARIES
Schedule 3.03 SCHEDULE OF REQUIRED CONSENTS AND
GOVERNMENTAL APPROVALS
Schedule 3.10 SCHEDULE OF ENVIRONMENTAL MATTERS
Schedule 4.03 FORM OF SUBSIDIARY GUARANTY SUPPLEMENT
Schedule 4.05 SCHEDULE OF EXISTING INDEBTEDNESS
Schedule 4.06 SCHEDULE OF EXISTING GUARANTIES
Schedule 4.07 SCHEDULE OF EXISTING LIENS
Schedule 4.11 SCHEDULE OF PERMITTED RESTRICTIVE COVENANTS
Schedule 4.13 SCHEDULE OF EXISTING INVESTMENTS
Schedule 4.15 SCHEDULE OF EXISTING BENEFIT PLANS
Schedule 5.02(a) SCHEDULE OF HISTORICAL FINANCIAL INFORMATION
Schedule 10.10(a) NOTICE OF ASSIGNMENT
Schedule 11.01(a) SCHEDULE OF SUBSIDIARIES THAT ARE GUARANTORS AS OF THE
AGREEMENT DATE
Schedule 11.01(b) SECURITIES AND EXCHANGE COMMISSION FILINGS
Schedule 11.01(c) CALCULATION OF ADDITIONAL STERLING COST
<PAGE>
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF SECURITY AGREEMENT
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<PAGE>
CREDIT AGREEMENT
Dated as of December 17, 1997
As Amended and Restated as of December 16, 1998
XPEDITE SYSTEMS, INC., a Delaware corporation (the "Company"), XPEDITE
SYSTEMS HOLDINGS (UK) LIMITED, an English corporation ("Xpedite UK", with each
of the Company and Xpedite UK individually a "Borrower" and collectively the
"Borrowers"), the GUARANTORS party hereto, the BANKS listed on the signature
pages hereof, NATIONSBANK, N.A., as Documentation Agent, and THE BANK OF NEW
YORK, as Administrative Agent, agree that the Credit Agreement among them dated
as of December 17, 1997, as amended by Amendment No. 1 dated as of February 27,
1998, shall be amended and restated as of December 16, 1998, subject to the
conditions to effectiveness set forth in Section 2.01, to read in its entirety
as follows (with certain terms used herein being defined in Article 11):
ARTICLE 1
CREDIT FACILITY
---------------
Section 1.01 Commitment to Lend.
------------------
(a) Upon the terms and subject to the conditions of this Agreement,
each Bank agrees to make, from time to time during the period from the Restated
Agreement Date through the Commitment Termination Date, one or more Loans to
either Borrower in an aggregate unpaid principal amount (with respect to all
Loans made by such Bank to either Borrower and with the outstanding principal
amount of each Loan to Xpedite UK being, for these purposes, the Dollar
Equivalent thereof at such time) not exceeding at any time such Bank's
Commitment at such time; provided, however, that the Banks shall not make Loans
-------- -------
to Xpedite UK if, after giving effect to such Loans, the Dollar Equivalent at
such time of the aggregate principal amount of all Loans to Xpedite UK then
outstanding would exceed the Sterling Sub-limit. Loans made to the Company
shall be denominated in Dollars and Loans made to Xpedite UK shall be
denominated in Sterling. Subject to Section 1.03 and the other terms and
conditions of this Agreement, (i) the Loans may, at the option of the applicable
Borrower, be made as, and from time to time continued as or converted into,
Eurocurrency Rate Loans of any permitted Type, or any combination thereof and
(ii) Loans made to the Company may, at the option of the Company, be made as,
and from time to time continued as or converted into, Base Rate Loans. The
aggregate amount of the Commitments on the Restated Agreement Date is
$150,000,000 and the Sterling Sub-limit on the Restated Agreement Date is
$70,000,000.
(b) Prior to April 30, 1999, the aggregate amount of the Commitments
may be increased to an amount not in excess of $200,000,000 (less the amount of
any mandatory reduction of the aggregate amount of the Commitments pursuant to
Section 1.07(a)) so long as additional lending commitments in respect of this
Agreement from lenders and in amounts
1
<PAGE>
satisfactory to the Banks and the Managing Agents have been obtained, subject to
the agreement related thereto among the Company and the Managing Agents.
Section 1.02 Manner of Borrowing. (a) The applicable Borrower shall give
-------------------
the Administrative Agent notice (which shall be irrevocable) no later than 11:00
a.m. (New York City time) on (1) in the case of Eurocurrency Rate Loans to be
made to the Company, the third Eurocurrency Business Day, (2) in the case of
Eurocurrency Rate Loans to be made to Xpedite UK, the fourth Eurocurrency
Business Day and (3) in the case of Base Rate Loans to be made to the Company,
the Business Day, before the requested date for the making of Loans. Each such
notice shall be in the form of Schedule 1.02 and shall specify (i) the requested
-------------
date for the making of the requested Loans, which shall be a Eurocurrency
Business Day (or, in the case of Base Rate Loans to be made to the Company, a
Business Day), (ii) the Type or Types of Loans requested and (iii) the amount of
each such Type of Loan, the aggregate of which amounts for all Types of Loans
requested shall be, in the case of Loans made to the Company, $1,000,000 or any
integral multiple of $1,000,000 in excess thereof, or, if less than $1,000,000,
the aggregate amount of the unused Commitments and, in the case of Loans made to
Xpedite UK, (Pounds)500,000 or any integral multiple of (Pounds)500,000 in
excess thereof, or, if less than (Pounds)500,000, the aggregate amount of the
unused Sterling Sub-limit. Upon receipt of any such notice, the Administrative
Agent shall promptly notify each Bank of the contents thereof and of the amount
and Type of each Loan to be made by such Bank on the requested date specified
therein.
(b) Not later than 11:00 a.m. (New York City time) on each requested
date for the making of Loans, each Bank shall make available to the
Administrative Agent, in Dollars or Sterling, as the case may be, in funds
immediately available to the Administrative Agent (or, in the case of Loans
disbursed in Sterling, in funds as may then be customary for the settlement of
international transactions in Sterling) at the Administrative Agent's Office,
the Loans to be made by such Bank on such date. Any Bank's failure to make any
Loan to be made by it on the requested date therefor shall not relieve any other
Bank of its obligation to make any Loan to be made by such other Bank on such
date, but such other Bank shall not be liable for such failure.
(c) Unless the Administrative Agent shall have received notice from a
Bank prior to 10:00 a.m. (New York City time) on the requested date for the
making of any Loans that such Bank will not make available to the Administrative
Agent the Loans requested to be made by such Bank on such date, the
Administrative Agent may assume that such Bank has made such Loans available to
the Administrative Agent on such date in accordance with Section 1.02(b) and the
Administrative Agent in its sole discretion may, in reliance upon such
assumption, make available to the applicable Borrower on such date a
corresponding amount on behalf of such Bank. If and to the extent such Bank
shall not have so made available to the Administrative Agent the Loans requested
to be made by such Bank on such date and the Administrative Agent shall have so
made available to the applicable Borrower a corresponding amount on behalf of
such Bank, such Bank shall, on demand, pay to the Administrative Agent such
corresponding amount together with interest thereon, for each day from the date
such amount shall have been so made available by the Administrative Agent to the
applicable Borrower until the date such amount shall have been repaid to the
Administrative Agent, at a rate per annum equal to, in the case of Loans
denominated in Dollars, the Federal Funds Rate until (and including) the third
Business Day after demand is made and thereafter at the Base Rate and, in the
case of Loans denominated in Sterling, the overnight London interbank Sterling
rate, as determined by the
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<PAGE>
Administrative Agent. If such Bank does not pay such corresponding amount
promptly upon the Administrative Agent's demand therefor, the Administrative
Agent shall promptly notify the applicable Borrower and such Borrower shall
immediately repay such corresponding amount to the Administrative Agent together
with accrued interest thereon at the applicable rate or rates provided in
Section 1.03(a). Nothing in this Section 1.02(c) shall be deemed to limit the
obligation of any Bank to make Loans hereunder or to limit the rights that the
Borrowers may have against any Bank for its failure to make any Loans hereunder.
(d) All Loans made available to the Administrative Agent in accordance
with Section 1.02(b) shall be disbursed by the Administrative Agent not later
than 12:00 noon (New York City time) on the requested date therefor in Dollars
or Sterling, as the case may be, in funds immediately available to the
applicable Borrower (or, in the case of Loans disbursed in Sterling, in funds as
may then be customary for the settlement of international transactions in
Sterling) by credit to an account of such Borrower at the Administrative Agent's
Office or in such other manner as may have been specified in the applicable
notice of borrowing and as shall be acceptable to the Administrative Agent.
Section 1.03 Interest.
--------
(a) Rates.
-----
(i) Subject to Section 1.03(a)(ii), each Loan shall bear interest
on the outstanding principal amount thereof at a rate per annum equal
to (A) in the case of Loans made to the Company, for so long as it is
a Base Rate Loan, the Base Rate as in effect from time to time plus 2.125%
----
and (B) for so long as it is a Eurocurrency Rate Loan, the applicable
Eurocurrency Rate plus 3.250%.
----
(ii) If all or any part of a Loan or any other amount due and payable
under the Loan Documents is not paid when due (whether at maturity, by reason of
notice of prepayment or acceleration or otherwise), such unpaid amount shall, to
the maximum extent permitted by Applicable Law, bear interest for each day
during the period from the date such amount became so due until it shall be paid
in full (whether before or after judgment) at a rate per annum equal to the
applicable Post-Default Rate.
(b) Payment.
-------
Interest shall be payable, in the case of Loans that are (i) Base Rate
Loans, on each Interest Payment Date, (ii) Eurocurrency Rate Loans, on the last
day of each applicable Interest Period (and, if an Interest Period is longer
than three months, at intervals of three months after the first day of such
Interest Period), (iii) any Loan, when such Loan shall be due (whether at
maturity, by reason of notice of prepayment or acceleration or otherwise) or
converted, but only to the extent then accrued on the amount then so due or
converted. Interest at the Post-Default Rate shall be payable on demand.
Interest on Loans denominated in Sterling shall be paid in Sterling.
(c) Conversion and Continuation.
---------------------------
(i) Subject to Section 7.03, all or any part of the principal amount
of Loans of any Type may, on any Business Day, be converted into any other Type
or Types of Loans (except that Loans made to Xpedite UK may not be converted
into Base Rate Loans), except that Base Rate Loans may be converted into
Eurocurrency Rate Loans only on a Eurocurrency Business Day.
(ii) Base Rate Loans shall continue as Base Rate Loans unless and
until such Loans are converted into Loans of another Type. Eurocurrency Rate
Loans of any Type shall
-3-
<PAGE>
continue as Loans of such Type until the end of the then current Interest Period
therefor, at which time they shall be automatically converted into, in the case
of Loans made to the Company, Base Rate Loans and, in the case of Loans made to
Xpedite UK, Eurocurrency Rate Loans having a one month Interest Period unless,
in either case, the applicable Borrower shall have given the Administrative
Agent notice in accordance with Section 1.03(c)(iv) requesting either that such
Loans continue as Loans of such Type for another Interest Period or that such
Loans be converted into Loans of another Type at the end of such Interest
Period.
(iii) Notwithstanding anything to the contrary contained in Section
1.03(c)(i) or (ii), during a Default, the Administrative Agent may notify the
Borrowers that Loans may only be converted into or continued as Loans of certain
specified Types and, thereafter, until no Default shall continue to exist, Loans
may not be converted into or continued as Loans of any Type other than one or
more of such specified Types.
(iv) The applicable Borrower shall give the Administrative Agent
notice (which shall be irrevocable) of each conversion of Loans or continuation
of Eurocurrency Rate Loans no later than 11:00 a.m. (New York City time) on, in
the case of a conversion of Loans made to the Company into Base Rate Loans, the
Business Day before, and, in the case of a conversion into or continuation of
Eurocurrency Rate Loans, the third Eurocurrency Business Day before, the
requested date of such conversion or continuation. Each notice of conversion or
continuation shall be in the form of Schedule 1.03(c)(iv) and shall specify (A)
--------------------
the requested date of such conversion or continuation, (B) the amount and Type
and, in the case of Eurocurrency Rate Loans, the last day of the applicable
Interest Period of the Loans to be converted or continued and (C) the amount and
Type or Types of Loans into which such Loans are to be converted or as which
such Loans are to be continued. Upon receipt of any such notice, the
Administrative Agent shall promptly notify each Bank of (x) the contents
thereof, (y) the amount and Type and, in the case of Eurocurrency Rate Loans,
the last day of the applicable Interest Period of each Loan to be converted or
continued by such Bank and (z) the amount and Type or Types of Loans into which
such Loans are to be converted or as which such Loans are to be continued.
(d) Maximum Interest Rate.
---------------------
Nothing contained in the Loan Documents shall require either Borrower
at any time to pay interest at a rate exceeding the Maximum Permissible Rate.
If interest payable by either Borrower on any date would exceed the maximum
amount permitted by the Maximum Permissible Rate, such interest payment shall
automatically be reduced to such maximum permitted amount, and interest for any
subsequent period, to the extent less than the maximum amount permitted for such
period by the Maximum Permissible Rate, shall be increased by the unpaid amount
of such reduction. Any interest actually received from a Borrower for any
period in excess of such maximum amount permitted for such period shall be
deemed to have been applied as a prepayment of the Loans of such Borrower.
Section 1.04 Repayment.
---------
The Loans shall mature and become due and payable, and shall be repaid by
the applicable Borrower in full, on the Commitment Termination Date.
Section 1.05 Prepayments.
-----------
(a) Optional Prepayments.
--------------------
Either Borrower may, at any time and from time to time, prepay the Loans
made to it in whole or in part, without premium or penalty (but subject to
Section 7.03), except that any partial prepayment of Loans shall be in an
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<PAGE>
aggregate principal amount of, in the case of Loans denominated in Dollars,
$1,000,000 or any integral multiple of $1,000,000 in excess thereof and, in the
case of Loans denominated in Sterling, (Pounds)500,000 or any integral multiple
of (Pounds)500,000 in excess thereof. The applicable Borrower shall give the
Administrative Agent notice of each prepayment pursuant to this Section 1.05(a)
no later than 11:00 a.m. (New York City time) on, in the case of a prepayment of
Base Rate Loans, the Business Day before, and, in the case of a prepayment of
Eurocurrency Rate Loans, the third Eurocurrency Business Day before, the date of
such prepayment. Each such notice of prepayment shall be in the form of
Schedule 1.05(a) and shall specify (i) the date such prepayment is to be made
- - ----------------
and (ii) the amount and Type and, in the case of Eurocurrency Rate Loans, the
last day of the applicable Interest Period of the Loans to be prepaid. Upon
receipt of any such notice, the Administrative Agent shall promptly notify each
Bank of the contents thereof and the amount and Type and, in the case of
Eurocurrency Rate Loans, the last day of the applicable Interest Period of each
Loan of such Bank to be prepaid. Amounts to be prepaid pursuant to this Section
1.05(a) shall irrevocably be due and payable on the date specified in the
applicable notice of prepayment, together with interest thereon as provided in
Section 1.03(b). Any Loan that shall have been prepaid prior to the Commitment
Termination Date may, subject to the terms and conditions hereof, be reborrowed
prior to the Commitment Termination Date.
(b) Mandatory Prepayments.
---------------------
If, after giving effect to any partial or total reduction of the
Commitments pursuant to Section 1.07, the aggregate unpaid principal amount of
the Loans (with the unpaid principal amount of the Loans made to Xpedite UK
being, for these purposes, the Dollar Equivalent thereof at such time) exceeds
the aggregate Commitments, either or both of the Borrowers shall prepay the
Loans on the date of such reduction in an aggregate amount (with the amount of
any such prepayment of the Loans made to Xpedite UK being, for these purposes,
the Dollar Equivalent thereof at such time) equal to the amount of such excess,
together with interest thereon as provided in Section 1.03.
(c) Application to Types of Loans.
-----------------------------
Amounts prepaid by either Borrower pursuant to this Section 1.05 shall
be applied, unless otherwise specified by such Borrower, to prepay (i) in the
case of prepayments by the Company, Base Rate Loans of the Company, and (ii) (in
the case of the Company, to the extent that the amount of any such prepayment
exceeds the then outstanding aggregate principal amount of such Base Rate Loans)
the Eurocurrency Rate Loans of such Borrower in the order that the Interest
Periods for such Loans end. Amounts to be prepaid pursuant to this Section 1.05
shall be paid on the day specified therefor, whether or not such payment would
require a prepayment of Eurocurrency Rate Loans prior to the last day of an
applicable Interest Period or would result in losses, costs or expenses
compensable under Section 7.03.
Section 1.06 Limitation on Types of Loans.
----------------------------
Notwithstanding anything to the contrary contained in this Agreement, the
Borrowers shall borrow, prepay, convert and continue Loans in a manner such that
(a) the aggregate principal amount of Eurocurrency Rate Loans of the same Type
and having the same Interest Period shall at all times be not less than, in the
case of Loans denominated in Dollars, $1,000,000 and, in the case of Loans
denominated in Sterling, (Pounds)500,000, (b) there shall not be, at any one
time, more than six Interest Periods in effect with respect to Eurocurrency Rate
Loans of all Types and (c) no payment of Eurocurrency Rate Loans will have to be
made prior to the last day of an applicable Interest Period in order to repay
the Loans (subject to Section 1.11(c)) on the date specified in Section 1.04.
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<PAGE>
Section 1.07 Reduction of Commitments.
------------------------
(a) Mandatory Reductions.
--------------------
In the event of any sale or disposition of investment securities by
Premiere or any Subsidiary permitted pursuant to Section 4.09(d)(i) (other than
any sale or disposition the Net Proceeds of which, together with the Net
Proceeds of all other such sales or dispositions since the Restated Agreement
Date, are not in excess of $5,000,000) (the Net Proceeds of such sale or
disposition in excess of $5,000,000 being hereinafter referred to for the
purposes of this Section 1.07(a) as "Recapture Proceeds"), the aggregate
Commitments shall, on the first Business Day following such sale or disposition,
be automatically reduced by an amount equal to (i) 100% of the first $10,000,000
of Recapture Proceeds and (ii) 50% of all other Recapture Proceeds.
(b) Optional Reductions.
-------------------
The Company may reduce the Commitments by giving the Administrative
Agent notice (which shall be irrevocable) thereof no later than 11:00 a.m. (New
York City time) on the third Business Day before the requested date of such
reduction, except that no reduction may reduce the Commitments to an amount less
than the aggregate unpaid principal amount of the Loans at such time (with the
amount of the unpaid Loans made to Xpedite UK being, for these purposes, the
Dollar Equivalent thereof at such time) and no partial reduction of the
Commitments shall be in an aggregate amount other than $1,000,000 or any
integral multiple of $1,000,000 in excess thereof. Upon receipt of any such
notice, the Administrative Agent shall promptly notify each Bank of the contents
thereof and the amount to which such Bank's Commitment is to be reduced. No
reduction of the Commitments shall reduce the Sterling Sub-limit except that if,
after giving effect to any such reduction of the Commitments, the aggregate
amount of the remaining Commitments would be less than the Sterling Sub-limit,
the Sterling Sub-limit thenceforth shall be such lesser amount.
Section 1.08 Fees.
----
(a) Commitment Fees.
---------------
The Borrowers shall pay to the Administrative Agent for the account of
each Bank a commitment fee on the daily amount of the unused Commitments (with
the amount of the utilization thereof consisting of Loans made to Xpedite UK
being, for these purposes, the Dollar Equivalent thereof on each such day) for
each day from the Restated Agreement Date through the Commitment Termination
Date at a rate per annum of 0.375%, payable in arrears on successive Quarterly
Dates and on the Commitment Termination Date. To the extent accrued and unpaid
prior to the Restated Agreement Date, the commitment fee payable pursuant to
this Section 1.08 prior to the amendment and restatement of this Agreement as of
the Restated Agreement Date shall be paid on the Restated Agreement Date.
(b) Agents' Fees.
------------
The Company or Premiere shall pay the fees payable pursuant to the
Agents' Fee Letters. Such fees shall be paid to the Persons, in the amounts and
at the times provided therein.
(c) Fees Non-Refundable.
-------------------
None of the fees payable under this Section 1.08 shall be refundable
in whole or in part.
Section 1.09 Computation of Interest and Fees.
--------------------------------
Interest calculated on the basis of the Eurocurrency Rate or the Federal
Funds Rate and the commitment fees shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed. Interest calculated on
the basis of the Prime Rate shall be computed on the basis of a year of 365 or
366 days, as
-6-
<PAGE>
applicable, and paid for the actual number of days elapsed. Interest for any
period shall be calculated from and including the first day thereof to but
excluding the last day thereof.
Section 1.10 Evidence of Indebtedness.
------------------------
Each Bank's Loans and each Borrower's obligation to repay such Loans with
interest in accordance with the terms of this Agreement shall be evidenced by
this Agreement, the records of such Bank and a single Note of each Borrower
payable to the order of such Bank. The records of each Bank shall be prima
facie evidence of such Bank's Loans, and of accrued interest thereon and of all
payments made in respect thereof.
Section 1.11 Payments by the Borrowers.
-------------------------
(a) Time, Place and Manner.
----------------------
All payments due to the Administrative Agent under the Loan Documents
shall be made to the Administrative Agent at the Administrative Agent's Office
or at such other address as the Administrative Agent may designate by notice to
the applicable Borrower. All payments due to any Bank under the Loan Documents
shall, in the case of payments on account of principal of or interest on the
Loans or fees, be made to the Administrative Agent at the Administrative Agent's
Office and, in the case of all other payments, be made directly to such Bank at
its Domestic Lending Office or at such other address as such Bank may designate
by notice to the applicable Borrower. All payments due to any Bank under the
Loan Documents, whether made to the Administrative Agent or directly to such
Bank, shall be made for the account of, in the case of payments in respect of
Eurocurrency Rate Loans, such Bank's Eurocurrency Lending Office and, in the
case of all other payments, such Bank's Domestic Lending Office. A payment
shall not be deemed to have been made on any day unless such payment has been
received by the required Person, at the required place of payment, in Dollars
(or, in the case of the principal of and interest on the Loans made to Xpedite
UK, in Sterling) in funds immediately available to such Person at such place, no
later than 2:00 p.m. (New York City time) on such day.
(b) No Reductions.
-------------
All payments due to the Administrative Agent or any Bank under the
Loan Documents shall be made by the applicable Borrower without any reduction or
deduction whatsoever, including any reduction or deduction for any set-off,
recoupment, counterclaim or Tax, except, subject to Section 1.13, for any
withholding or deduction for Taxes required to be withheld or deducted under
Applicable Law.
(c) Extension of Payment Dates.
--------------------------
Whenever any payment to the Administrative Agent or any Bank under the
Loan Documents would otherwise be due on a day that is not a Business Day, or,
in the case of payments of the principal of Eurocurrency Rate Loans, a
Eurocurrency Business Day, such payment shall instead be due on the next
succeeding Business or Eurocurrency Business Day, as the case may be, unless, in
the case of a payment of the principal of Eurocurrency Rate Loans, such
extension would cause payment to be due in the next succeeding calendar month,
in which case such due date shall be advanced to the next preceding Eurocurrency
Business Day. If the date any payment under the Loan Documents is due is
extended (whether by operation of any Loan Document, Applicable Law or
otherwise), such payment shall bear interest for such extended time at the rate
of interest applicable hereunder.
Section 1.12 Distribution of Payments by the Administrative Agent.
----------------------------------------------------
(a) The Administrative Agent shall promptly distribute to each Bank
its ratable share of each payment received by the Administrative Agent under the
Loan Documents for the account of the Banks by
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<PAGE>
credit to an account of such Bank at the Administrative Agent's Office or by
wire transfer to an account of such Bank at an office of any other commercial
bank located in the United States.
(b) Unless the Administrative Agent shall have received notice from
the applicable Loan Party prior to the date on which any payment is due to the
Banks under the Loan Documents that such Loan Party will not make such payment
in full, the Administrative Agent may assume that such Loan Party has made such
payment in full to the Administrative Agent on such date and the Administrative
Agent in its sole discretion may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date a corresponding amount with respect to
the amount then due such Bank. If and to the extent such Loan Party shall not
have so made such payment in full to the Administrative Agent and the
Administrative Agent shall have so distributed to any Bank a corresponding
amount, such Bank shall, on demand, repay to the Administrative Agent the amount
so distributed together with interest thereon, for each day from the date such
amount is distributed to such Bank until the date such Bank repays such amount
to the Administrative Agent, at, in the case of any such payment denominated in
Sterling, the overnight London interbank Sterling rate, as determined by the
Administrative Agent, or, in all other cases, the Federal Funds Rate until (and
including) the third Business Day after demand is made and thereafter at the
Base Rate.
Section 1.13 Taxes.
-----
(a) Taxes Payable by the Borrowers.
------------------------------
If under Applicable Law any Tax (other than a Bank Tax) is required to be
withheld or deducted by either Borrower from, or is otherwise payable by such
Borrower in connection with, any payment to the Administrative Agent or any Bank
under the Loan Documents, such Borrower shall, subject to Section 1.13(a)(ii),
pay to the Administrative Agent or such Bank, as applicable, such additional
amounts as may be necessary so that the net amount received by the
Administrative Agent, or such Bank with respect to such payment, after
withholding or deducting all Taxes (other than Bank Taxes) required to be
withheld or deducted by the Borrower, is equal to the full amount payable under
the Loan Documents.
(i) Taxes Payable by the Administrative Agent or any Bank.
-----------------------------------------------------
The applicable Borrower shall, promptly upon request by the
Administrative Agent or any Bank for the payment thereof, but subject to
Section 1.13(a)(ii), pay to the Administrative Agent or such Bank, as the
case may be, (A) all Taxes (other than Bank Taxes, payable by the
Administrative Agent or such Bank, as the case may be) with respect to any
payment due to the Administrative Agent or such Bank under the Loan
Documents from such Borrower and (B) all Taxes payable by the
Administrative Agent or such Bank as a result of payments made by such
Borrower (whether made to a taxing authority or to the Administrative Agent
or such Bank) pursuant to this Section 1.13(a)(i).
(ii) Limitations.
-----------
Notwithstanding anything to the contrary contained herein, neither
Borrower shall be required to pay any additional amount in respect of any
Taxes pursuant to this Section 1.13 to any Bank (A) except to the extent
such Taxes are required to be withheld as a result of (1) in the case of a
Person that is a Bank on the Restated Agreement Date, a Regulatory Change
Enacted after the Restated Agreement Date and (2) in the case of a Person
that becomes a Bank after the Restated Agreement Date, a Regulatory Change
Enacted after such Person becomes a Bank or (B) to the extent such
withholding is required because such Bank (including any Person that
becomes a Bank or
-8-
<PAGE>
a participant pursuant to Section 10.10) has failed to submit or submitted
incorrectly any form or certificate that it is entitled to so submit under
Applicable Law or required to submit pursuant to Section 1.13(a)(iii).
(iii) Exemption From U.S. Withholding Taxes.
-------------------------------------
There shall be submitted to the Company and the Administrative
Agent, (A) on or before the first date that interest or fees are payable to
a Bank (including any Person that becomes a Bank or a participant pursuant
to Section 10.10) under the Loan Documents, (or at any other time upon the
reasonable written request of the Company or the Administrative Agent) (1)
if at the time the same are applicable, by each Bank that is not a United
States Person, (aa) two duly completed and signed copies of Internal
Revenue Service Form 1001 or 4224, entitling such Bank to a complete
exemption from withholding of any United States federal income taxes on all
amounts to be received by such Bank under the Loan Documents, and (bb) two
duly completed and signed copies of Internal Revenue Service Form W-8
establishing a full exemption from U.S. backup withholding in respect of
amounts to be received by such Bank under the Loan Documents, or (2) if at
the time any of the foregoing are inapplicable, duly completed and signed
copies of such form, if any, as entitles such Bank to exemption from
withholding of United States federal income taxes to the maximum extent to
which such Bank is then entitled under Applicable Law, and (B) from time to
time thereafter, prior to the expiration or obsolescence of any previously
delivered form or upon any previously delivered form becoming inaccurate or
inapplicable, such further duly completed and signed copies of such form,
if any, as entitles such Bank to exemption from withholding of United
States federal income taxes to the maximum extent to which such Bank is
then entitled under Applicable Law. Each Bank (including any Person that
becomes a Bank or a participant pursuant to Section 10.10) shall promptly
notify the Company and the Administrative Agent if (A) it is required to
withdraw or cancel any form or certificate previously submitted by it or
any such form or certificate has otherwise become ineffective or inaccurate
or (B) payments to it are or will be subject to withholding of United
States federal income taxes (or any other Taxes (other than Bank Taxes)) to
a greater extent than the extent to which payments to it were previously
subject. On or before the first date that interest or fees are payable to
a Bank (including any Person that becomes a Bank or a participant pursuant
to Section 10/10), or upon the request of the Company or the Administrative
Agent, each Bank that is a United States Person shall from time to time
submit to the Company and the Administrative Agent a certificate to the
effect that it is such a United States Person and a duly completed Internal
Revenue Service Form W-9. A Borrower shall be entitled to rely upon the
accuracy of any such forms, documents, certificates or other information
furnished to it by any Bank pursuant to this Section 1.13(a)(iii) and shall
have no obligation to make any additional payments or indemnify the
Administrative Agent or any Bank for any Taxes under Section 1.13(a)(i)
that would not have become payable by such Person had such documentation
been accurate.
(b) Credits and Deductions.
----------------------
If the Administrative Agent or any Bank (i) is, in its sole,
reasonable, good-faith opinion, able to apply for any credit, refund, deduction
or other reduction in Taxes in respect of any payment made by a Borrower under
Section 1.13(a)(i), the Administrative Agent or such Bank, as the case may be,
shall use reasonable efforts to obtain such credit, refund, deduction or other
reduction or, (ii) realizes a Tax benefit (whether by way
-9-
<PAGE>
of credit, deduction or otherwise) in respect of or receives a refund of, or in
respect of, any Taxes for which a Borrower has made any payments to or on behalf
of such Administrative Agent or Bank pursuant to Section 1.13(a)(i), then, upon
receipt or realization thereof, the Administrative Agent or such Bank will pay
to such Borrower, as promptly as practicable after the receipt or realization
thereof, such amount, not exceeding the increased amount paid by such Borrower,
as is equal to the net after-tax value to the Administrative Agent or such Bank,
in its sole, reasonable and good-faith opinion, of such part of such credit,
deduction or other reduction as it reasonably considers to be allocable to such
payment by such Borrower, having regard to all of the Administrative Agent's or
such Bank's dealings giving rise to similar credits, refunds, deductions or
other reductions in relation to the same tax period and to the cost of obtaining
the same; provided, however, that (i) the Administrative Agent or such Bank, as
-------- -------
the case may be, shall not be obligated to disclose to the Borrowers any
information regarding its tax affairs or computations and (ii) nothing in this
Section 1.13(b) shall interfere with the right of the Administrative Agent or
such Bank to arrange its tax affairs as it deems appropriate.
Section 1.14 Pro Rata Treatment.
------------------
Except to the extent otherwise provided herein, (a) Loans of each Type to
be made on any day shall be made by the Banks pro rata in accordance with their
respective Commitments, (b) Loans of the Banks shall be converted and continued
pro rata in accordance with their respective amounts of Loans of the Type and,
in the case of Eurocurrency Rate Loans, having the Interest Period being so
converted or continued, (c) each reduction in the Commitments shall be made pro
rata in accordance with the respective amounts thereof and (d) each payment of
the principal of or interest on the Loans or of fees shall be made for the
account of the Banks pro rata in accordance with the respective amounts thereof
then due and payable.
ARTICLE 2
CONDITIONS TO LOANS
-------------------
Section 2.01 Conditions to Effectiveness of Amendment and Restatement.
--------------------------------------------------------
The effectiveness of the amendment and restatement of this Agreement as of
the Restated Agreement Date is subject to the determination of each Bank in its
sole and absolute discretion, that each of the following conditions has been
fulfilled:
(a) the Administrative Agent shall have received each of the
following, in form and substance and, in the case of the materials referred to
in clauses (i), (ii), (iii), (vii), (viii) and (xiv), certified in a manner
satisfactory to the Managing Agents:
(i) a certificate of the Secretary or an Assistant Secretary of
each Loan Party, dated the Restated Agreement Date, substantially in the
form of Schedule 2.01(a)(i), to which shall be attached copies of the
-------------------
resolutions and by-laws (or equivalent corporate governing document)
referred to in such certificate;
(ii) a copy of the certificate of incorporation (or other
constitutive document) of each Loan Party, certified, as of a recent date,
by the Secretary of State or other appropriate official of such Loan
Party's jurisdiction of organization;
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<PAGE>
(iii) a good standing certificate (or other analogous document)
with respect to each Loan Party, issued as of a recent date by the
Secretary of State or other appropriate official of such Person's
jurisdiction of organization;
(iv) an opinion of counsel for the Loan Parties, dated the
Restated Agreement Date, substantially in the form of Schedule 2.01(a)(iv);
--------------------
(v) an opinion of English counsel for Xpedite UK, dated the
Restated Agreement Date, substantially in the form of Schedule 2.01(a)(v);
-------------------
(vi) an opinion of Winthrop, Stimson, Putnam & Roberts, special
counsel for the Administrative Agent, dated the Restated Agreement Date,
substantially in the form of Schedule 2.01(a)(vi);
--------------------
(vii) a copy of each Governmental Approval and other consent or
approval, and each Governmental Registration, listed on Schedule 3.03;
-------------
(viii) a certificate of the chief financial officer of
Premiere, dated the Restated Agreement Date, with respect to the conditions
set forth in Sections 2.02(b) and (c) and setting forth the calculation of
the Premiere Leverage Ratio and the Xpedite Leverage Ratio in effect on the
Restated Agreement Date (and giving effect to the making of any Loans and
the application of the proceeds thereof on such day);
(ix) duly executed copies of the Security Agreements to which
Premiere, Voice-Tel and American Teleconferencing are party;
(x) either (A) such duly executed UCC-1 financing statements and
other documents as the Administrative Agent may request, the filing or
recordation of which is necessary or appropriate in the Administrative
Agent's reasonable determination to create or perfect a security interest
in the Collateral under Applicable Law, or (B) evidence of the filing or
recordation of the same in such offices as the Administrative Agent shall
have reasonably specified;
(xi) such instruments and other documents as the Administrative
Agent may reasonably request, the execution, delivery, filing or possession
of which is necessary or appropriate in the Administrative Agent's
determination to create or perfect a security interest in the Collateral
under Applicable Law, including but not limited to share certificates and
stock powers executed in blank with respect to the Capital Securities
subject to the Security Interest;
(xii) such instruments of termination, release and discharge and
other documents, including UCC-3 financing statements, as the
Administrative Agent may request, the delivery of which is necessary or
appropriate in the Administrative Agent's determination to effect the
termination of all Liens other than Permitted Liens;
(xiii) to the extent not previously delivered to the Banks
pursuant to this Agreement certificates of insurance and loss payee
endorsements with respect to all
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<PAGE>
insurance policies required under the Security Agreements and the UK
Security Agreements.
(b) all fees payable on or prior to the Restated Agreement Date
pursuant to Section 1.08, and all amounts payable pursuant to Section 10.02 for
which invoices (in reasonable detail) have been delivered to the Company on or
prior to such date, shall have been paid in full or arrangements satisfactory to
the Managing Agents shall have been made to cause them to be paid in full
concurrently with the disbursement of the proceeds of the Loans to be made on
such date.
Section 2.02 Conditions to Each Loan.
-----------------------
The obligation of each Bank to make each Loan requested to be made by it is
subject to the fulfillment of each of the following conditions:
(a) the Administrative Agent shall have received a notice of borrowing
with respect to such Loan complying with the requirements of Section 1.02;
(b) each Loan Document Representation and Warranty shall be true and
correct at and as of the time such Loan is to be made, both with and without
giving effect to such Loan and all other Loans to be made or issued at such time
and to the application of the proceeds thereof; and
(c) no Default shall have occurred and be continuing at the time such
Loan is to be made or would result from the making of such Loan and all other
Loans to be made at such time or from the application of the proceeds thereof.
Except to the extent that the applicable Borrower shall have disclosed in
the notice of borrowing or in a subsequent notice given to the Banks prior to
5:00 p.m. (New York City time) on the Business Day before the requested date for
the making of the requested Loans, that a condition specified in clause (b) or
(c) above will not be fulfilled as of the requested time for the making of such
Loans, such Borrower shall be deemed to have made a Representation and Warranty
as of the time of the making of such Loans that the conditions specified in such
clauses have been fulfilled as of such time.
ARTICLE 3
CERTAIN REPRESENTATIONS AND WARRANTIES
--------------------------------------
In order to induce the Administrative Agent and each Bank to enter into
this Agreement and to make each Loan requested to be made by it, Premiere
represents and warrants as follows:
Section 3.01 Organization; Power; Qualification.
----------------------------------
Premiere and each Subsidiary are Persons duly organized, validly existing
and, where applicable, in good standing under the laws of their respective
jurisdictions of organization, have the corporate or legal power and authority
to own their respective properties and to carry on their respective businesses
as now being and hereafter proposed to be conducted and, where applicable, are
duly qualified and in good standing as foreign corporations, and are authorized
to do business, in all jurisdictions in which the character of their respective
properties or the nature of their respective businesses requires
-12-
<PAGE>
such qualification or authorization, except for qualifications and
authorizations the lack of which, singly or in the aggregate, has not had and
will not have a Materially Adverse Effect on (x) Premiere and its Consolidated
Subsidiaries taken as a whole, (y) any Loan Document or (z) the Collateral.
Section 3.02 Subsidiaries.
------------
Schedule 3.02 sets forth, as of the Restated Agreement Date, all of the
-------------
Subsidiaries, their jurisdictions of organization and the percentages of the
various classes of their Capital Securities owned by Premiere or another
Subsidiary and indicates which Subsidiaries are Consolidated Subsidiaries of
Premiere, which Subsidiaries are Consolidated Subsidiaries of the Company and
which Subsidiaries are Significant Subsidiaries. Except as otherwise set forth
on Schedule 3.02, Premiere or another Subsidiary, as the case may be, has the
-------------
unrestricted right to vote, and (subject to limitations imposed by Applicable
Law) to receive dividends and distributions on, all Capital Securities of the
Subsidiaries indicated on Schedule 3.02 as owned by Premiere or such Subsidiary.
-------------
All such Capital Securities have been duly authorized and issued and are fully
paid and nonassessable.
Section 3.03 Authorization; Enforceability; Required Consents; Absence of
------------------------------------------------------------
Conflicts.
- - ---------
Each of the Loan Parties has the power, and has taken all necessary
action (including, if a corporation, any necessary stockholder action) to
authorize it, to execute, deliver and perform in accordance with their
respective terms the Loan Documents and, in the case of the Company, to borrow
hereunder in the amount of the unused Commitments and, in the case of Xpedite
UK, to borrow hereunder in the amount of the Sterling Sub-limit. This Agreement
has been, and each of the other Loan Documents when delivered to the
Administrative Agent will have been, duly executed and delivered by each of the
Loan Parties and is, or when so delivered will be, a legal, valid and binding
obligation of each such Person, enforceable against such Person in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity.
The execution, delivery and performance in accordance with their respective
terms by each Loan Party of the Loan Documents, and each borrowing hereunder,
whether or not in the amount of the unused Commitments, do not and (absent any
change in any Applicable Law or applicable Contract) will not (a) require any
Governmental Approval or any other consent or approval, including any consent or
approval of the stockholders of any such Person, to have been obtained or any
Governmental Registration to have been made, by any such Person, other than
Governmental Approvals and other consents and approvals and Governmental
Registrations that have been obtained or made, as the case may be, are final and
not subject to review on appeal or to collateral attack, are in full force and
effect and, in the case of any such required under any Applicable Law or
Contract as in effect on the Restated Agreement Date, are listed on Schedule
--------
3.03, or (b) violate, conflict with, result in a breach of, constitute a default
- - ----
under, or result in or require the creation of any Lien upon any assets of any
such Person or any Subsidiary under, (i) any Contract to which any such Person
or any Subsidiary is a party or by which any such Person or any Subsidiary or
any of their respective properties may be bound or (ii) any Applicable Law
binding on such Person.
Section 3.04 Taxes.
-----
Premiere and each Subsidiary have (a) filed all material Tax returns
required to have been filed by it under Applicable Law, (b) paid all Taxes
indicated on such returns as due and payable by it or have been assessed against
it except for (i) Taxes the
-13-
<PAGE>
failure to have paid which does not contravene Section 4.01; or (ii) Taxes which
are being contested in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with Generally Accepted
Accounting Principles, and (c) to the extent required by Generally Accepted
Accounting Principles, reserved against all Taxes that are payable by it but are
not yet due or that are due and payable by it or have been assessed against it
but have not yet been paid.
Section 3.05 Litigation.
----------
Except for the Disclosed Matters, there are not, in any court or before any
arbitrator of any kind or before or by any governmental or non-governmental
body, any actions, suits or proceedings pending or (to the knowledge of
Premiere) threatened against (a) Premiere or any Subsidiary or any of their
respective businesses or properties or (b) any Loan Document, except actions,
suits or proceedings that, if adversely determined, would not, singly or in the
aggregate, reasonably be expected to have a Materially Adverse Effect on (x)
Premiere and the Consolidated Subsidiaries taken as a whole, (y) any Loan
Document or (z) the Collateral.
Section 3.06 No Adverse Change or Event.
--------------------------
Except for the Disclosed Matters, since December 31, 1997 no change in the
business, assets, Liabilities, financial condition, results of operations or
business prospects of Premiere or any Subsidiary has occurred, and no event has
occurred or failed to occur, that has had or could reasonably be expected to
have, either alone or in conjunction with all other such changes, events and
failures, a Materially Adverse Effect on (a) Premiere and the Consolidated
Subsidiaries taken as a whole, (b) any Loan Document or (c) the Collateral.
Such an adverse change may have occurred, and such an event may have occurred or
failed to occur, at any particular time notwithstanding the fact that at such
time no Default shall have occurred and be continuing.
Section 3.07 Additional Adverse Facts.
------------------------
Except for the Disclosed Matters, no fact or circumstance is known to
Premiere, as of the Restated Agreement Date, that, either alone or in
conjunction with all other such facts and circumstances, has had or could
reasonably be expected to have (so far as Premiere and the Subsidiaries can
foresee) a Materially Adverse Effect on (a) Premiere and the Consolidated
Subsidiaries taken as a whole, (b) any Loan Document or (c) the Collateral. If
a fact or circumstance disclosed on such Schedules or in such notes should in
the future have a Materially Adverse Effect on (x) Premiere and the Consolidated
Subsidiaries taken as a whole, (y) any Loan Document or (z) the Collateral, such
Materially Adverse Effect shall be a change or event subject to Section 3.06
notwithstanding such disclosure.
Section 3.08 Investment Company Act.
----------------------
Neither Premiere nor any Subsidiary is an "investment company" or a Person
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940.
Section 3.09 Compliance With Applicable Law and Contracts.
--------------------------------------------
Premiere and each Subsidiary is, to the best of Premiere's knowledge, in
compliance with all Applicable Law and the terms of all Contracts to which such
Person is a party or by which it or any of its properties may be bound, except
for non-compliances that, either singly or in the aggregate, would not
reasonably be expected to have a Materially Adverse Effect on (a) Premiere and
its Consolidated Subsidiaries taken as a whole, (b) any Loan Document or (c) the
Collateral.
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<PAGE>
Section 3.10 Substance Release and Disposal.
------------------------------
Except as set forth on Schedule 3.10, there have been no releases or
-------------
disposals of hazardous wastes, environmental contaminants or other substances in
quantities or locations that, singly or in the aggregate, could result in the
incurrence by Premiere or any Subsidiary of remedial obligations under
Applicable Law that would reasonably be expected to have a Materially Adverse
Effect on Premiere and the Consolidated Subsidiaries taken as a whole. Except
as set forth on Schedule 3.10, neither Premiere nor any Subsidiary has received
-------------
any notice or order advising it that it has or may have any remedial obligation
with respect to any such releases or disposals or that it is or may be
responsible for the costs of any remedial action taken or to be taken by any
other Persons with respect to any such releases or disposals that, singly or in
the aggregate, could reasonably be expected to have a Materially Adverse Effect
on Premiere and the Consolidated Subsidiaries taken as a whole.
Section 3.11 Senior Obligations.
------------------
The obligations of Premiere under the Loan Documents constitute "Senior
Indebtedness" within the meaning and pursuant to the terms of the Indenture
dated as of June 15, 1997 between Premiere and IBJ Schroder Bank and Trust
Company, as Trustee. The obligations of Premiere under the Loan Documents are
hereby designated to constitute "Designated Senior Indebtedness" within the
meaning and pursuant to the terms of such Indenture. Premiere hereby agrees to
give written notice to such Trustee of such designation, such notice to be given
promptly following the Restated Agreement Date and in no event later than
December 31, 1998. Premiere shall give a copy of such notice to the
Administrative Agent, together with evidence reasonably satisfactory to the
Administrative Agent of the giving of such notice to such Trustee.
ARTICLE 4
CERTAIN COVENANTS
-----------------
From the Restated Agreement Date and until the Repayment Date,
A. Premiere shall and shall cause each Subsidiary to:
-------------------------------------------------
Section 4.01 Preservation of Existence and Properties, Scope of Business,
------------------------------------------------------------
Compliance With Law, Preservation of Enforceability.
- - ---------------------------------------------------
(a) Preserve and maintain its corporate existence (except as contemplated
by Section 4.08) and all of its other franchises, licenses, rights and
privileges, (b) preserve, protect and obtain all Intellectual Property, and
preserve and maintain in good repair, working order and condition all other
properties, required for the conduct of its business, (c) engage only in
businesses in substantially the same fields as the businesses conducted on the
Restated Agreement Date and in businesses directly related thereto, (d) comply
with Applicable Law and (e) take all action and obtain all consents and
Governmental Approvals and make all Governmental Registrations required so that
its obligations under the Loan Documents will at all times be legal, valid and
binding and enforceable in accordance with their respective terms, except that
this Section 4.01 (other than clauses (a), insofar as it requires any Loan Party
to preserve its corporate existence, (c) and (e)) shall not apply in any
circumstance where noncompliance, together with all other noncompliances with
this Section 4.01, will not have a Materially Adverse Effect on
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<PAGE>
(x) Premiere and the Consolidated Subsidiaries taken as a whole, (y) any Loan
Document or (z) the Collateral.
Section 4.02 Insurance.
---------
Maintain insurance with responsible insurance companies against at least
such risks and in at least such amounts as is customarily maintained by similar
businesses, or, if greater in scope or coverage, as may be required by
Applicable Law.
Section 4.03 Additional Significant Subsidiaries.
-----------------------------------
Not later than the tenth day after the date it forms or acquires any new
Significant Subsidiary or any Subsidiary becomes a Significant Subsidiary (as
determined on the basis of the most recent financial statements of Premiere and
the Consolidated Subsidiaries furnished to the Banks pursuant to Section 5.01),
deliver to the Administrative Agent (i) certificates representing all (or, in
the case of any such new Significant Subsidiary that is not a United States
Person and that is not a Subsidiary of Xpedite UK, such lesser amount as is the
maximum amount that can be subjected to the Security Interest without, in the
reasonable opinion of Premiere, resulting in a material adverse tax consequence
to Premiere) of the issued and outstanding shares of capital stock of such new
Significant Subsidiary held by Premiere and the Subsidiaries (other than
directors' qualifying shares), together with appropriate stock powers, duly
endorsed in blank, (ii) if the owner or owners of such shares of capital stock
have not executed and delivered a Security Agreement or UK Security Agreement
that subjects such shares of capital stock to the Security Interest, a Security
Agreement in the form of Exhibit B or a UK Security Agreement in the form of
---------
Exhibit E, as the case may be, duly executed by the owner or owners of such
- - ---------
shares of capital stock, (iii) a Security Agreement in the form of Exhibit B if
---------
such new Significant Subsidiary is a United States Person, or a UK Security
Agreement in the form of Exhibit E if such new Significant Subsidiary is
---------
created, incorporated or organized under the laws of the United Kingdom or any
jurisdiction therein, or, in any other case, a security agreement substantially
similar in purpose and effect as the UK Security Agreements and in form
reasonably satisfactory to the Managing Agents, as the case may be, duly
executed by such new Significant Subsidiary, (iv) a Subsidiary Guaranty
Supplement in the form of Schedule 4.03, duly executed by such new Significant
-------------
Subsidiary and (v) such certificates, resolutions, legal opinions, copies of
filings and notices, and other materials, relating to such new Significant
Subsidiary or such owner or owners, the documents referred to above and the
actions required thereunder, as the Administrative Agent may reasonably request;
provided however, that so long as Premiere Communications and VoiceCom would be
- - -------- -------
required to obtain a Governmental Approval in order for it to lawfully execute
and deliver a Security Agreement, such Persons shall not be required to execute
and deliver a Security Agreement.
Section 4.04 Use of Proceeds.
---------------
Use the proceeds of the Loans for general corporate purposes of Premiere
and its Subsidiaries, including the payment of transaction fees and expenses.
None of the proceeds of any of the Loans shall be used (i) to purchase or carry,
or to reduce or retire or refinance any credit incurred to purchase or carry,
any margin stock (within the meaning of Regulations U and X of the Board of
Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any such margin stock or (ii) for the purpose
of reducing or discharging, directly or indirectly, any existing liability of
Worldwide in relation to the acquisition of shares in Xpedite UK. If requested
by any Bank, the Borrowers shall complete and sign Part I of a copy of Federal
Reserve Form U-1 referred to in Regulation U and deliver such copy to such Bank.
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<PAGE>
B. Premiere shall not, and shall not permit any Subsidiary to, directly or
-----------------------------------------------------------------------
indirectly:
- - ----------
Section 4.05 Indebtedness.
------------
Have any Indebtedness at any time, except that this Section 4.05 shall not
apply to (a) the Loans, (b) Guaranties permitted pursuant to Section 4.06(a),
(c) Existing Indebtedness, (d) Intercompany Indebtedness, (e) Indebtedness of
Premiere or any Subsidiary owed to Premiere or any Subsidiary and incurred in
the ordinary course of business pursuant to customary cash management practices
of Premiere and the Subsidiaries, (f) Purchase Money Indebtedness in an
aggregate outstanding amount not in excess of $10,000,000 at any time and (g)
other Indebtedness in an aggregate outstanding amount not in excess of
$15,000,000 at any time.
Section 4.06 Guaranties.
----------
Be obligated, at any time, in respect of any Guaranty, except that this
Section 4.06 shall not apply to (a) Existing Guaranties and (b) Permitted
Guaranties.
Section 4.07 Liens.
-----
Permit to exist, at any time, any Lien upon any of its properties or
assets of any character, whether now owned or hereafter acquired, or upon any
income or profits therefrom, except that this Section 4.07 shall not apply to
Permitted Liens; provided, however, that if, notwithstanding this Section 4.07,
-------- -------
any Lien to which this Section is applicable shall be created or arise, the
Liabilities of the Loan Parties under the Loan Documents shall, to the extent
such Lien attaches to any asset that does not constitute Collateral or to any
asset with respect to which such Lien would be prior to the Security Interest,
automatically be secured by such Lien equally and ratably with the other
Liabilities secured thereby, and the holder of such other Liabilities, by
accepting such Lien, shall be deemed to have agreed thereto and to share with
the Banks, on that basis, the proceeds of such Lien, whether or not the Banks'
security interest shall be perfected; provided further, however, that
-------- ------- -------
notwithstanding such equal and ratable securing and sharing, the existence of
such Lien shall constitute a default by the Borrower in the performance or
observance of this Section 4.07.
Section 4.08 Merger or Consolidation; Acquisitions.
-------------------------------------
Merge or consolidate with any Person, or acquire any assets or business
from or Capital Securities of any Person, except that, if after giving effect
thereto no Default would exist, this Section 4.08 shall not apply to (a) any
merger or consolidation of Premiere or any Subsidiary (other than Xpedite UK or
XSL) with Premiere or any Subsidiary (other than Xpedite UK or XSL), provided
that, in the case of a merger to which the Company is party, the Company shall
be the continuing Person and, in the case of any merger to which any Guarantor
that is a United States Person and any Subsidiary that is not a Guarantor or is
not a United States Person are party, the Guarantor that is a United States
Person shall be the continuing Person, (b) any acquisition of assets in the
ordinary course of business, (c) any other acquisition, so long as the aggregate
consideration paid or otherwise provided by Premiere and its Subsidiaries for
all such other acquisitions since the Restated Agreement Date (excluding any
such consideration paid in the form of common stock of Premiere) does not exceed
$10,000,000 plus the lesser of (i) $5,000,000 and (ii) the amount by which
$35,000,000 exceeds the aggregate consideration actually expended for the
acquisitions referred to in clause (d) below, (d) the acquisition of the Capital
Securities of Xpedite Systems S.A. or Xpedite International Hong Kong Limited
not owned by Premiere or any of its Subsidiaries on the Restated Agreement Date,
so long as the aggregate consideration therefor is
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<PAGE>
not in excess of $35,000,000 and (e) acquisitions constituting Investments
permitted pursuant to Section 4.13.
Section 4.09 Disposition of Assets.
---------------------
Sell, lease, license, transfer or otherwise dispose of any asset or any
interest therein, except that this Section 4.09 shall not apply to (a) any
disposition of any asset or any interest therein in the ordinary course of
business, (b) any disposition of any obsolete or retired property not used or
useful in its business, (c) any disposition of any asset or any interest therein
to Premiere or a Guarantor that is a United States Person, (d) other
dispositions subsequent to the Restated Agreement Date for cash in an aggregate
amount with respect to (i) all such dispositions of investment securities listed
on Schedule 4.13 not in excess of $30,000,000 or (ii) all other such
-------------
dispositions not in excess of $10,000,000 and (e) any transaction to which any
of the other provisions of this Agreement (other than Section 4.16) is by its
express terms inapplicable.
Section 4.10 Restricted Payments.
-------------------
Make or declare or otherwise become obligated to make any Restricted
Payment, except that this Section 4.10 shall not apply to any Restricted Payment
(a) made by any Subsidiary in the ordinary course of business pursuant to
customary cash management practices of Premiere and the Subsidiaries, (b)
consisting of purchases of common stock of Premiere in an aggregate amount not
in excess of $1,000,000 for use in connection with Premiere's employee benefit
programs or (c) made by any Subsidiary to Premiere or any Guarantor that is a
United States Person, so long as, in the case of any such Restricted Payment
made by the Company or any of its Subsidiaries pursuant to this clause (c), no
Default shall have occurred and be continuing either before or after giving
effect to such Restricted Payment.
Section 4.11 Limitation on Restrictive Covenants.
-----------------------------------
Permit to exist, at any time, any consensual restriction limiting the
ability (whether by covenant, event of default, subordination or otherwise) of
any Subsidiary to (a) pay dividends or make any other distributions on shares of
its capital stock held by Premiere or any other Subsidiary, (b) pay any
obligation owed to Premiere or any other Subsidiary, (c) make any loans or
advances to or investments in Premiere or in any other Subsidiary, (d) transfer
any of its property or assets to Premiere or any other Subsidiary or (e) create
any Lien upon its property or assets whether now owned or hereafter acquired or
upon any income or profits therefrom unless such restriction permits the
creation of such a Lien to secure the obligations of the Loan Parties with
respect to the Loans and all other amounts payable under the Loan Documents,
except that this Section 4.11 shall not apply to Permitted Restrictive
Covenants.
Section 4.12 Issuance or Disposition of Capital Securities.
---------------------------------------------
Issue any of its Capital Securities or sell, transfer or otherwise dispose
of any Capital Securities of any Significant Subsidiary, except that this
Section 4.12 shall not apply to (a) any issuance of Capital Securities of a
Significant Subsidiary (i) that are subjected to the Security Interest in a
manner reasonably satisfactory to the Managing Agents or (ii) for the purpose of
effecting a disposition contemplated or permitted by Section 4.09(d), (b) any
issuance by Premiere of its capital stock to any present or former employee of
Premiere or other Persons pursuant to any stock plan of Premiere in effect on
the Restated Agreement Date or (c) any issuance, sale, transfer or other
disposition of such Capital Securities as consideration for an acquisition
permitted by Section 4.08(c).
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<PAGE>
Section 4.13 Investments.
-----------
Make or acquire any Investment or have any Investment outstanding, except
that this Section 4.13 shall not apply to (a) Money Market Investments, (b)
Investments constituting acquisitions permitted under Section 4.08, (c)
Investments by Premiere or any Subsidiary in Premiere or any Guarantor that is a
United States Person, (d) Investments existing on the Restated Agreement Date
and set forth on Schedule 4.13, (e) Investments by Premiere or any Subsidiary in
-------------
Premiere or any Subsidiary made in the ordinary course of business of Premiere
or any Subsidiary pursuant to customary cash management practices of Premiere
and the Subsidiaries, (f)(i) loans to Mr. Boland Jones to fund tax liabilities
incurred by Mr. Jones arising from his exercise of employee stock options in an
aggregate amount with respect to all such loans not in excess of $15,000,000 at
any time and (ii) other Investments in an aggregate amount with respect to all
such Investments not in excess of $15,000,000 at any time, in each case with
respect to clause (f)(i) and (f)(ii) for so long as (x) no Default shall have
occurred and be continuing or would result therefrom and (y) after giving effect
thereto, Premiere and the Company and/or any of their respective Subsidiaries
would collectively be entitled to incur not less than $10,000,000 of additional
Indebtedness and remain in compliance with Sections 4.19 and 4.22, respectively.
Section 4.14 Taxes of Other Persons.
----------------------
(a) File a consolidated, combined, unitary or similar group tax return
with any other Person other than, in the case of Premiere, a Consolidated
Subsidiary and, in the case of any such Subsidiary, Premiere or a Consolidated
Subsidiary, or (b) enter into any tax sharing agreement or similar Contract to
pay, or make payments with respect to, any Taxes owing by any Person other than
Premiere or a Consolidated Subsidiary.
Section 4.15 Benefit Plans.
-------------
Have, or permit any of its ERISA Affiliates to have, any Benefit Plan other
than an Existing Benefit Plan.
Section 4.16 Transactions With Affiliates.
----------------------------
Effect any transaction (or series of related transactions) with any
Affiliate (other than Premiere and any Guarantor that is a United States Person)
that is on a basis less favorable than would at the time be obtainable with an
unrelated third party in a commercially reasonable transaction, except that this
Section 4.16 shall not apply to (a) the provision of customary overhead and
corporate managerial services by Premiere or a Subsidiary to Premiere or to any
of the Subsidiaries and (b) transactions in the ordinary course of business of
Premiere or any Subsidiary pursuant to customary cash management practices of
Premiere and the Subsidiaries.
Section 4.17 Substance Storage and Disposal.
------------------------------
Permit any hazardous wastes, environmental contaminants or other substances
the improper release or disposal of which could result in the incurrence by
Premiere or any Subsidiary of remedial obligations under Applicable Law, to be
brought onto or stored on the properties owned or leased by it if such remedial
obligations could reasonably be expected to have a Materially Adverse Effect on
Premiere and the Consolidated Subsidiaries taken as a whole.
Section 4.18 Capital Expenditures.
--------------------
Make or be obligated at any time to make Capital Expenditures in an amount,
together with the aggregate amount of all other Capital Expenditures made or
obligated to be made since January 1, 1999, in excess of $70,000,000.
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<PAGE>
C. Premiere shall not:
------------------
Section 4.19 Premiere Leverage Ratio.
-----------------------
Permit the Premiere Leverage Ratio to be greater than 4.10 to 1 at any time
prior to June 30, 1999, or 3.25 to 1 at any time on or after June 30, 1999.
Section 4.20 Premiere Interest Coverage Ratio.
--------------------------------
Permit the Premiere Interest Coverage Ratio to be less than 3.00 to 1 at
any time.
Section 4.21 Minimum Consolidated Revenues.
-----------------------------
Permit Consolidated Revenues to be less than (i) $105,000,000 with respect
to the fiscal quarter of Premiere ending December 31, 1998, (ii) $111,000,000
with respect to the fiscal quarter of Premiere ending March 31, 1999, (iii)
$117,000,000 with respect to the fiscal quarter of Premiere ending June 30,
1999, and (iv) $125,000,000 with respect to the fiscal quarter of Premiere
ending September 30, 1999.
D. The Company shall not:
---------------------
Section 4.22 Xpedite Leverage Ratio.
----------------------
Permit the Xpedite Leverage Ratio to be greater than 3.00 to 1 at any time
prior to June 30, 1999, or 2.75 to 1 at any time on or after June 30, 1999.
Section 4.23 Xpedite Interest Coverage Ratio.
-------------------------------
Permit the Xpedite Interest Coverage Ratio to be less than 3.00 to 1 at any
time.
ARTICLE 5
INFORMATION
-----------
Section 5.01 Information to Be Furnished.
---------------------------
From the Restated Agreement Date and until the Repayment Date, Premiere and
the Company shall furnish to each Bank:
(a) Quarterly Financial Statements.
------------------------------
As soon as available and in any event within 55 days after the close
of each of the first three quarterly accounting periods in each fiscal year of
Premiere or the Company, as the case may be, commencing with the quarterly
period ending March 31, 1999:
(i) a consolidated balance sheet of Premiere and the
Consolidated Subsidiaries as at the end of such quarterly period and the
related consolidated statements of income, retained earnings and cash flows
of Premiere and the Consolidated Subsidiaries for such quarterly period and
for the elapsed portion of the fiscal year ended with the last day of such
quarterly period, setting forth in each case in comparative form the
figures for the corresponding periods of the previous fiscal year; and
(ii) a consolidated balance sheet of the Company and its
Consolidated Subsidiaries as at the end of such quarterly period and the
related consolidated statements of income, retained earnings and cash flows
of the Company and its Consolidated Subsidiaries for such quarterly period
and for the elapsed portion of the fiscal year ended
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with the last day of such quarterly period, setting forth in each case in
comparative form the figures for the corresponding periods of the previous
fiscal year.
(b) Year-End Financial Statements; Accountants' Certificate.
-------------------------------------------------------
As soon as available and in any event within 105 days after the end of
each fiscal year of Premiere or the Company, as the case may be, commencing with
the fiscal year ending December 31, 1998:
(i) a consolidated balance sheet of Premiere and the Consolidated
Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income, retained earnings and cash flows of Premiere and the
Consolidated Subsidiaries for such fiscal year, setting forth in
comparative form the figures as at the end of and for the previous fiscal
year;
(ii) a consolidated balance sheet of the Company and its
Consolidated Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income, retained earnings and cash flows of the
Company and its Consolidated Subsidiaries for such fiscal year, setting
forth in comparative form the figures as at the end of and for the previous
fiscal year; and
(iii) audit reports of Ernst & Young, or other independent
certified public accountants of recognized standing reasonably satisfactory
to the Required Banks, with respect to the financial statements delivered
pursuant to clauses (i) and (ii) above.
(c) Monthly Financial Statements.
----------------------------
As soon as available and in any event within 45 days after the end of
each month, financial statements and other financial information with respect to
Premiere and the Consolidated Subsidiaries satisfactory in form and content to
the Managing Agents. The Managing Agents acknowledge that Premiere's current
monthly statements are satisfactory in form.
(d) Officer's Certificate as to Financial Statements and Defaults.
-------------------------------------------------------------
At the time that financial statements are furnished pursuant to
Section 5.01(a) or (b), a certificate of the president or chief financial
officer of Premiere or the Company, as the case may be, stating that to the best
of his or her knowledge after due inquiry, no Default or Event of Default exists
or, if one exists, the actions being taken to remedy it. At the time that
financial statements are furnished pursuant to Section 5.01(a) and (b), a
certificate of the president or chief financial officer of Premiere calculating
the Premiere Leverage Ratio and the Xpedite Leverage Ratio.
(e) Reports and Filings.
-------------------
(i) As soon as practicable upon receipt thereof, copies of all
material reports, if any, submitted to Premiere or any Subsidiary, or the Board
of Directors of Premiere or any Subsidiary, by its independent certified public
accountants, including any management letter; (ii) as soon as practicable,
copies of all such financial statements and reports as Premiere or any
Subsidiary shall send to its public stockholders, if any, and of all
registration statements and all regular or periodic reports that Premiere or any
Subsidiary shall file with the Securities and Exchange Commission or any
successor commission.
(f) Requested Information.
---------------------
From time to time and promptly upon request of any Bank, such
Information regarding the Loan Documents, the Loans or the business, assets,
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<PAGE>
Liabilities, financial condition, results of operations or business prospects of
Premiere and the Subsidiaries as such Bank through the Administrative Agent may
reasonably request.
(g) Notice of Defaults, Material Adverse Changes and Other Matters.
--------------------------------------------------------------
Prompt notice, after a senior officer of any Loan Party shall have
become aware thereof, of:
(i) any Default,
(ii) the acquisition or formation of a new Subsidiary and, in the
case of each such new Subsidiary, its name, jurisdiction of incorporation,
the percentages of the various classes of its Capital Securities owned by
Premiere or another Subsidiary and whether or not such new Subsidiary is a
Consolidated Subsidiary or a Significant Subsidiary,
(iii) any change in the name of any Subsidiary, its jurisdiction
of incorporation, the percentages of the various classes of its Capital
Securities owned by Premiere or another Subsidiary or its status as a
Consolidated or non-Consolidated Subsidiary,
(iv) the threatening or commencement of, or the occurrence or
nonoccurrence of any change or event relating to, any action, suit or
proceeding that would cause the Representation and Warranty contained in
Section 3.05 to be incorrect if made at such time,
(v) the occurrence or nonoccurrence of any change or event that
would cause the Representation and Warranty contained in Section 3.06 or
Section 3.10 to be incorrect if made at such time,
(vi) any event or condition referred to in clauses (i) through
(vi) of Section 6.01(g), whether or not such event or condition shall
constitute an Event of Default, and
(vii) any amendment of the certificate of incorporation or by-
laws of Premiere or any Subsidiary that is a Loan Party.
Section 5.02 Accuracy of Financial Statements and Information.
-------------------------------------------------
(a) Financial Statements.
--------------------
(i) Premiere hereby represents and warrants that (A) Schedule 5.02(a)
----------------
sets forth a complete and correct list of the financial statements
submitted by Premiere to the Banks in order to induce them to execute and
deliver this Agreement, (B) such financial statements are complete and
correct and fairly present in all material respects, in accordance with
Generally Accepted Accounting Principles, the consolidated financial
position of Premiere and the Consolidated Subsidiaries as at their
respective dates and the consolidated results of operations, retained
earnings and, as applicable, changes in financial position or cash flows of
Premiere and such Subsidiaries for the respective periods to which such
statements relate (except that the interim financial statements included
therein may omit footnotes and are subject to year-end adjustments), (C)
except for the Disclosed Matters, neither Premiere nor any Subsidiary had
any Liability, contingent or otherwise, or any unrealized or anticipated
loss, that,
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<PAGE>
singly or in the aggregate, has had or could reasonably be expected to have
a Materially Adverse Effect on Premiere and the Consolidated Subsidiaries
taken as a whole, and (D) the financial statements furnished pursuant to
Section 5.01(a)(i) or (b)(i) will fairly present in all material respects,
in accordance with Generally Accepted Accounting Principles except for
changes therein or departures therefrom that are described in the
certificate or report accompanying such statements and that have been
approved in writing by Premiere's then current independent certified public
accountants), the consolidated financial position of Premiere and the
Consolidated Subsidiaries as at their respective dates and the consolidated
results of operations, retained earnings and (in the case of audited
financial statements included therein) cash flows of Premiere and such
Subsidiaries for the respective periods to which such statements relate
(except that the interim financial statements included therein may omit
footnotes and are subject to year-end adjustments) and the furnishing of
the same to the Banks shall constitute a representation and warranty by
Premiere made on the date the same are furnished to the Banks to that
effect and to the further effect that, except as disclosed or reflected in
such financial statements, as at the respective dates thereof, neither
Premiere nor any Subsidiary had any Liability, contingent or otherwise, or
any unrealized or anticipated loss, that, singly or in the aggregate, has
had or could reasonably be expected to have a Materially Adverse Effect on
Premiere and the Consolidated Subsidiaries taken as a whole.
(ii) The Company hereby represents and warrants that (A) Schedule
--------
5.02(a) sets forth a complete and correct list of the financial statements
-------
submitted by the Company to the Banks in order to induce them to execute
and deliver this Agreement, (B) such financial statements are complete and
correct and fairly present in all material respects, in accordance with
Generally Accepted Accounting Principles, the consolidated financial
position of the Company and its Consolidated Subsidiaries as at their
respective dates and the consolidated results of operations, retained
earnings and, as applicable, changes in financial position or cash flows of
the Company and such Subsidiaries for the respective periods to which such
statements relate (except that the interim financial statements included
therein may omit footnotes and are subject to year-end adjustments), (C)
except as disclosed or reflected in such financial statements, as at
September 30, 1998, neither the Company nor any Subsidiary of the Company
had any Liability, contingent or otherwise, or any unrealized or
anticipated loss, that, singly or in the aggregate, has had or could
reasonably be expected to have a Materially Adverse Effect on the Company
and its Consolidated Subsidiaries taken as a whole, and (D) the financial
statements furnished pursuant to Section 5.01(a)(i) or (b)(i) will fairly
present in all material respects, in accordance with Generally Accepted
Accounting Principles except for changes therein or departures therefrom
that are described in the certificate or report accompanying such
statements and that have been approved in writing by Premiere's then
current independent certified public accountants), the consolidated
financial position of the Company and its Consolidated Subsidiaries as at
their respective dates and the consolidated results of operations, retained
earnings and (in the case of audited financial statements included therein)
cash flows of the Company and such Subsidiaries for the respective periods
to which such statements relate (except that the interim financial
statements included therein may omit footnotes and are subject to year-end
adjustments) and the furnishing of the same to the Banks shall constitute a
representation and warranty
-23-
<PAGE>
by the Company made on the date the same are furnished to the Banks to that
effect and to the further effect that, except for the Disclosed Matters,
neither the Company nor any Subsidiary had any Liability, contingent or
otherwise, or any unrealized or anticipated loss, that, singly or in the
aggregate, has had or could reasonably be expected to have a Materially
Adverse Effect on the Company and its Consolidated Subsidiaries taken as a
whole.
(b) Other Information.
-----------------
Premiere or the Company, as the case may be, hereby represents and
warrants that the Information furnished to the Administrative Agent or the Banks
by or on behalf of Premiere or the Company, as the case may be, on or prior to
the Restated Agreement Date (other than the financial statements referred to in
Section 5.02(a)), and the Information furnished to the Administrative Agent or
the Banks by or on behalf of Premiere or the Company, as the case may be, after
the Restated Agreement Date (other than the financial statements referred to in
Section 5.02(a)), in the case of any Information prepared in the ordinary course
of business, was or shall be, as the case may be, complete and correct in all
material respects in the light of the purpose prepared, and, in the case of any
Information the preparation of which was requested by any Bank, was or shall be,
as the case may be, complete and correct in all material respects to the extent
necessary to give such Bank true and accurate knowledge of the subject matter
thereof and, in each case, did not or will not, as the case may be, contain any
untrue statement of a material fact.
Section 5.03 Additional Covenants Relating to Disclosure.
-------------------------------------------
From the Restated Agreement Date and until the Repayment Date, Premiere
shall and shall cause each Subsidiary to:
(a) Accounting Methods and Financial Records.
----------------------------------------
Maintain a system of accounting, and keep such books, records and
accounts, as may be required or necessary to permit (i) the preparation of
financial statements required to be delivered pursuant to Section 5.01(a) and
(b) and (ii) the determination of the compliance of Premiere and the
Subsidiaries with the terms of the Loan Documents.
(b) Fiscal Year.
-----------
Maintain the same opening and closing date for each fiscal year as for
the fiscal year reflected in the Base Financial Statements.
(c) Visits, Inspections and Discussions.
-----------------------------------
Subject to Section 10.06, permit representatives of any Bank, from
time to time during normal business hours, as often as may be reasonably
requested, upon reasonable prior notice, to (i) visit any of its premises or
property, (ii) inspect, and verify the amount, character and condition of, any
of its property, (iii) review and make copies from its books and records,
including management letters prepared by its independent certified public
accountants, and (iv) discuss with its senior financial officers its business,
assets, Liabilities, financial condition, results of operation and business
prospects.
Section 5.04 Authorization of Third Parties to Deliver Information.
-----------------------------------------------------
Premiere and the Company hereby authorize and direct each Person whose
preparation or delivery to the Administrative Agent or the Banks of any opinion,
report or other Information is a condition or covenant under the Loan Documents
(including under Article 2 or this Article 5) to so prepare or deliver such
Information for the benefit of the Administrative Agent and the Banks. Premiere
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<PAGE>
and the Company agree to promptly execute and deliver from time to time such
further authorizations to effect the purposes of this Section 5.04 as the
Administrative Agent or any Bank may reasonably request.
ARTICLE 6
DEFAULT
-------
Section 6.01 Events of Default.
-----------------
Each of the following shall constitute an Event of Default, whatever the
reason for such event and whether it shall be voluntary or involuntary, or
within or without the control of Premiere, any Subsidiary or any other Loan
Party, or be effected by operation of law or pursuant to any judgment or order
of any court or any order, rule or regulation of any governmental or
nongovernmental body:
(a) Any payment of principal of or interest on any of the Loans or the
Notes, or any payment of any fees shall not be made (i) in the case of principal
of Loans when and as due (whether at maturity, by reason of notice of prepayment
or acceleration or otherwise) and in any case in accordance with the terms of
this Agreement and the Notes and (ii) in all other cases, within 5 days of the
date on which such payment is due;
(b) Any Loan Document Representation and Warranty shall at any time
prove to have been incorrect or misleading in any material respect when made;
(c) (i) Premiere or the Company, as the case may be, shall default in
the performance or observance of:
(A) any term, covenant, condition or agreement contained in
Section 4.01(a) (insofar as such Section requires the preservation of the
corporate existence of each of the Loan Parties), 4.01(e), 4.04 through
4.23, 5.01(g)(i) or 11.07; or
(B) any term, covenant, condition or agreement contained in this
Agreement (other than a term, covenant, condition or agreement a default in
the performance or observance of which is elsewhere in this Section
specifically dealt with) and, if capable of being remedied, such default
shall continue unremedied for a period of 30 days after notice of such
default from the Administrative Agent; or
(ii) Any Loan Party shall default in the performance or
observance of:
(A) any term, covenant, condition or agreement contained in
Section 8.01 hereof or in Sections 1.02, 2.01(a)(i), 2.01(a)(iii)(B),
2.01(a)(vii), 2.01(b)(i), 2.01(b)(ii), 2.01(b)(iv) or 2.01(c)(v) of any
Security Agreement to which such Loan Party is a party, or, in the case of
Xpedite UK, Sections 6.1.2(A), 9.1.1(A), 9.1.1(B), 9.1.2, 23.3.1 of the
Xpedite UK Security Agreement, or, in the case of XSL or any Significant
Subsidiary of Xpedite UK other than XSL, Sections 6.1.2(A), 9.1.1(A),
9.1.1(B), 9.1.2, 21.3.1 of the XSL Security Agreement or the UK Security
Agreement to which such Significant Subsidiary is a party, as the case may
be, or, in the case of any other security
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<PAGE>
agreement executed and delivered pursuant to Section 4.03(iii), the
sections thereof directly analogous to such Sections in the UK Security
Agreements; or
(B) any term, covenant, condition or agreement contained in any
Loan Document (other than any term, covenant, condition or agreement a
default in the performance or observance of which is elsewhere in this
Section specifically dealt with) and, if capable of being remedied, such
default shall continue unremedied for a period of 30 days after notice of
such default from the Administrative Agent;
(d) (i) Premiere, any Subsidiary or any other Loan Party shall fail
to pay, in accordance with its terms and when due and payable (after giving
effect to applicable grace periods), any of the principal of or interest on any
of its Indebtedness having a then outstanding principal amount in excess of
$2,500,000, (ii) the maturity of any such Indebtedness shall, in whole or in
part, have been accelerated, or any such Indebtedness shall, in whole or in
part, have been required to be prepaid prior to the stated maturity thereof, in
accordance with the provisions of any Contract evidencing, providing for the
creation of or concerning such Indebtedness, or (iii) any event shall have
occurred and be continuing that permits any holder or holders of any
Indebtedness of any such Person (other than the Loans), any trustee or
Administrative Agent acting on behalf of such holder or holders or any other
Person so to accelerate such maturity or require any such prepayment;
(e) (i) Premiere, any Subsidiary or any other Loan Party shall (A)
commence a voluntary case under the Federal bankruptcy laws (as now or hereafter
in effect), (B) file a petition seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition or adjustment of debts, (C) consent to or fail to contest in a
timely and appropriate manner any petition filed against it in an involuntary
case under such bankruptcy laws or other laws, (D) apply for, or consent to, or
fail to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee, liquidator or the like
of itself or of a substantial part of its assets, domestic or foreign, (E) admit
in writing its inability to pay, or generally not be paying, its debts (other
than those that are the subject of bona fide disputes) as they become due, (F)
make a general assignment for the benefit of creditors, or (G) take any
corporate action for the purpose of authorizing any of the foregoing;
(ii) (A) A case or other proceeding shall be commenced against
Premiere, any Subsidiary or any other Loan Party seeking (1) relief under the
Federal bankruptcy laws (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition or adjustment of debts, or (2) the appointment of a trustee,
receiver, custodian, liquidator or the like of Premiere, any Subsidiary or any
other Loan Party, or of all or any substantial part of the assets, domestic or
foreign, of Premiere, any Subsidiary or any other Loan Party, and, with respect
to both clauses (1) and (2), such case or proceeding shall continue undismissed
and unstayed for a period of 60 days, or (B) an order granting the relief
requested in such case or proceeding against Premiere, any Subsidiary or any
other Loan Party (including an order for relief under such Federal bankruptcy
laws) shall be entered;
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<PAGE>
(f) A judgment or order shall be entered against Premiere, any
Subsidiary or any other Loan Party by any court, and shall continue
undischarged, unbonded or unstayed for a period of 45 days (i) in which the
aggregate amount of all such judgments and orders in excess of Premiere's
applicable insurance coverage (so long as the insurer in respect thereof is not
disputing, and could not reasonably be expected to dispute, the applicability of
such insurance coverage) exceeds $2,500,000 or (ii) in the case of any judgment
or order for other than the payment of money, such judgment or order could, in
the reasonable judgment of the Required Banks, together with all other such
judgments or orders, have a Materially Adverse Effect on (A) Premiere and the
Consolidated Subsidiaries taken as a whole, (B) any Loan Document or (C) the
Collateral; or
(g) (i) any Termination Event shall occur with respect to any Benefit
Plan of Premiere, any Subsidiary, any other Loan Party or any of their
respective ERISA Affiliates, (ii) any Accumulated Funding Deficiency, whether or
not waived, shall exist with respect to any such Benefit Plan, (iii) any Person
shall engage in any Prohibited Transaction involving any such Benefit Plan, (iv)
Premiere, any Subsidiary, any other Loan Party or any of their respective ERISA
Affiliates shall be in "default" (as defined in ERISA Section 4219(c)(5)) with
respect to payments owing to any such Benefit Plan that is a Multiemployer
Benefit Plan as a result of such Person's complete or partial withdrawal (as
described in ERISA Section 4203 or 4205) therefrom, (v) Premiere, any
Subsidiary, any other Loan Party or any of their respective ERISA Affiliates
shall fail to pay when due an amount that is payable by it to the PBGC or to any
such Benefit Plan under Title IV of ERISA or (vi) a proceeding shall be
instituted by a fiduciary of any such Benefit Plan against Premiere, any
Subsidiary, any other Loan Party or any of their respective ERISA Affiliates to
enforce ERISA Section 515 and such proceeding shall not have been dismissed
within 30 days thereafter, except that no event or condition referred to in
clauses (i) through (vi) shall constitute an Event of Default if it, together
with all other such events or conditions at the time existing, has not
subjected, and in the reasonable determination of the Required Banks will not
subject, Premiere, any Subsidiary or any other Loan Party to any Liability that,
alone or in the aggregate with all such Liabilities for all such Persons,
exceeds $1,000,000; or
(h) Any Loan Party or any Affiliate of any Loan Party asserts, or any
Loan Party or any Affiliate of any Loan Party institutes any proceedings seeking
to establish, that (i) any provision of the Loan Documents is invalid, not
binding or unenforceable or (ii) the Security Interest is not a valid and
perfected first priority security interest in the Collateral subject only to
Permitted Liens; or
(i) (i) Premiere shall at any time cease to own and control all of
the Capital Securities of the Company outstanding at such time or (ii) any
person or group of persons acting together (within the meaning of Section 13 or
14 of the Securities Exchange Act of 1934) shall have or acquire at any time
after the Agreement Date beneficial ownership (within the meaning of rule 13d-3
promulgated by the Securities and Exchange Commission under said Act) of, or the
right to exercise voting power with respect to, more than 30% of the Capital
Securities of Premiere outstanding at such time.
Section 6.02 Remedies Upon Event of Default.
------------------------------
During the continuance of any Event of Default (other than one specified in
Section 6.01(e)) and in every such event, the
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<PAGE>
Administrative Agent may and, if the Required Banks shall so request, shall,
upon notice to Premiere, do either or both of the following: (a) declare, in
whole or, from time to time, in part, the principal of and interest on the Loans
and the Notes and all other amounts owing under the Loan Documents to be, and
the Loans and the Notes and all such other amounts shall thereupon and to that
extent become, immediately due and payable or (b) terminate, in whole or, from
time to time, in part, the Commitments. Upon the occurrence of an Event of
Default specified in Section 6.01(e), automatically and without any notice to
the Borrower or the Guarantor, (a) the principal of and interest on the Loans
and the Notes and all other amounts owing under the Loan Documents shall be
immediately due and payable and (b) the Commitments shall terminate.
Presentment, demand, protest or notice of any kind (other than the notice
provided for in the first sentence of this Section 6.02) are hereby expressly
waived.
ARTICLE 7
ADDITIONAL CREDIT FACILITY PROVISIONS
-------------------------------------
Section 7.01 Mandatory Suspension and Conversion of Eurocurrency Rate
--------------------------------------------------------
Loans.
- - -----
A Bank's obligations to make, continue or convert into Eurocurrency Rate
Loans of any Type shall be suspended, all such Bank's outstanding Loans of that
Type shall be converted (or, in the case of Loans to Xpedite UK, shall be repaid
(unless Xpedite UK and such Bank shall have agreed to an alternative interest
rate on such Bank's Loans to Xpedite UK, which alternative interest rate they
agree to negotiate in good faith)) on the last day of their applicable Interest
Periods (or, if earlier, in the case of clause (c) below, (or, in the case of
Loans to Xpedite UK, shall be repaid) on the last day such Bank may lawfully
continue to maintain Loans of that Type or, in the case of clause (d) below, on
the day determined by such Bank to be the last Business Day before the effective
date of the applicable restriction) into, and all pending requests for the
making or continuation of or conversion into Loans of such Type by such Bank
shall be deemed requests for, Base Rate Loans (or, in the case of Loans to
Xpedite UK, shall be deemed withdrawn (unless Xpedite UK and such Bank shall
have agreed to an alternative interest rate on such Bank's Loans to Xpedite
UK)), if:
(a) on or prior to the determination of an interest rate for a
Eurocurrency Rate Loan of that Type for any Interest Period, the Administrative
Agent reasonably determines that for any reason appropriate information is not
available to it for purposes of determining the Eurocurrency Rate for such
Interest Period;
(b) on or prior to the first day of any Interest Period for a
Eurocurrency Rate Loan of that Type, the Required Banks have informed the
Administrative Agent of their determination that the Eurocurrency Rate as
determined by the Administrative Agent for such Interest Period would not
accurately reflect the cost to such Banks of making, continuing or converting
into a Eurocurrency Rate Loan of such Type for such Interest Period; or
(c) at any time such Bank reasonably determines that any Regulatory
Change Enacted after the Restated Agreement Date makes it unlawful or
impracticable for such Bank or its applicable Lending Office to make, continue
or convert into, or fund, any Eurocurrency Rate Loan of that Type, or to comply
with its obligations hereunder in respect thereof.
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If, as a result of this Section 7.01, any Loan of any Bank that would otherwise
be made or maintained as or converted into a Eurocurrency Rate Loan of any Type
for any Interest Period is instead made or maintained as or converted into a
Base Rate Loan (or, in the case of Loans to Xpedite UK, if such Bank and Xpedite
UK have agreed to an alternative interest rate on such Bank's Loans to Xpedite
UK), then, unless the corresponding Loan of each of the other Banks is also to
be made or maintained as or converted into a Base Rate Loan, such Loan shall be
treated as being a Eurocurrency Rate Loan of such Type for such Interest Period
for all purposes of this Agreement (including the timing, application and
proration among the Banks of interest payments, conversions and prepayments)
except for the calculation of the interest rate borne by such Loan. The
Administrative Agent shall promptly notify the applicable Borrower and each Bank
of the existence or occurrence of any condition or circumstance specified in
clause (a) or (b) above, and each Bank shall promptly notify the applicable
Borrower and the Administrative Agent of the existence or occurrence of any
condition or circumstance specified in clause (c) above applicable to such
Bank's Loans, but the failure by the Administrative Agent or such Bank to give
any such notice shall not affect such Bank's rights hereunder.
Section 7.02 Regulatory Changes.
------------------
If in the reasonable determination of any Bank, (a) any Regulatory Change
Enacted after the Restated Agreement Date shall directly or indirectly (i)
reduce the amount of any sum received or receivable by such Bank with respect to
any Loan, (ii) impose a cost on such Bank or any Affiliate of such Bank that is
attributable to the making, funding or maintaining of, or such Bank's commitment
to make or acquire, any Loan, including any reserve requirement, whether under
Regulation D or otherwise, (iii) require such Bank or any Affiliate of such Bank
to make any payment on or calculated by reference to the gross amount of any
amount received by such Bank under any Loan Document in respect of its Loans or
its obligations to make Loans or (iv) reduce, or have the effect of reducing,
the rate of return on any capital of such Bank or any Affiliate of such Bank
that such Bank or such Affiliate is required to maintain on account of any Loan
or such Bank's commitment to make or acquire any Loan and (b) such reduction,
increased cost or payment shall not result from a Tax to which Section 1.13 is
applicable, then the applicable Borrower shall pay to such Bank such additional
amounts as such Bank reasonably determines will, together with any adjustment in
the applicable rates of interest payable hereunder, fully compensate for such
reduction, increased cost or payment. Such additional amounts shall be payable,
in the case of those applicable to prior periods, within 15 days after request
by such Bank for such payment and, in the case of those applicable to future
periods, on the dates specified, or determined in accordance with a method
specified, by such Bank. Each Bank will promptly notify the applicable Borrower
of any determination made by it referred to in clauses (a) and (b) above, but
the failure to give such notice shall not affect such Bank's right to
compensation; provided, however, that the applicable Borrower shall not be
-------- -------
required to pay such additional amounts in respect of any Regulatory Change for
any period ending prior to the date that is 90 days prior to the giving of the
notice of the determination of such additional amounts (unless such period shall
have commenced after the date that such Bank notified the applicable Borrower of
the possibility that additional amounts may be payable as a result of such
Regulatory Change), except, if such Regulatory Change shall have been imposed
retroactively, for the period from the effective date of such Regulatory Change
to the date that is 90 days after the first date on which such Bank reasonably
should have had knowledge of such Regulatory Change.
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Section 7.03 Funding Losses.
--------------
The applicable Borrower shall pay to each Bank, upon request, such amount
or amounts as such Bank reasonably determines are necessary to compensate it for
any loss, cost or expense (excluding loss of the Applicable Margin) incurred by
it as a result of (a) any payment, prepayment or conversion of a Eurocurrency
Rate Loan on a date other than the last day of an Interest Period for such
Eurocurrency Rate Loan or (b) a Eurocurrency Rate Loan for any reason not being
made or converted, or any payment of principal thereof or interest thereon not
being made, on the date therefor determined in accordance with the applicable
provisions of this Agreement. At the election of such Bank, and without
limiting the generality of the foregoing, but without duplication, such
compensation on account of losses may include an amount equal to the excess of
(i) the interest that would have been received from the applicable Borrower
under this Agreement (excluding the Applicable Margin) on any amounts to be
reemployed during an Interest Period or its remaining portion over (ii) the
interest component of the return that such Bank determines it could have
obtained had it placed such amount on deposit in the interbank Dollar or
Sterling market, as the case may be, selected by it for a period equal to such
Interest Period or its remaining portion.
Section 7.04 Certain Determinations.
----------------------
In making the determinations contemplated by Sections 7.01, 7.02 and 7.03,
each Bank may make such estimates, assumptions, allocations and the like that
such Person reasonably determines to be appropriate, and such Person's selection
thereof in accordance with this Section 7.04, and the determinations made by
such Person on the basis thereof, shall be final, binding and conclusive upon
the Borrowers, except, in the case of such determinations, for manifest errors
in computation or transmission. Each Bank shall furnish to the applicable
Borrower a certificate outlining in reasonable detail the computation of any
amounts claimed by it under Sections 7.02 and 7.03 and the assumptions
underlying such computations.
Section 7.05 Change of Lending Office.
------------------------
If an event occurs with respect to a Lending Office of any Bank that
obligates either Borrower to pay any amount under Section 1.13, makes operable
the provisions of clause (c) of Section 7.01 or would, absent this Section 7.05,
entitle such Bank to make a claim under Section 1.13(a) or 7.02, such Bank
shall, if requested by the applicable Borrower, use reasonable efforts to
designate another Lending Office or Offices the designation of which will reduce
the amount the Borrowers are so obligated to pay, eliminate such operability or
reduce the amount such Bank is so entitled to claim, provided that such
designation would not, in the sole and absolute discretion of such Bank be
disadvantageous to such Bank in any manner or contrary to such Bank's policies.
Each Bank may at any time and from time to time change any Lending Office and
shall give notice of any such change to the Administrative Agent and the
Borrowers. Except in the case of a change in Lending Offices made at the
request of a Borrower, the designation of a new Lending Office by any Bank shall
not obligate the Borrowers to pay any amount to such Bank under Section 1.13,
make operable the provisions of clause (c) of Section 7.01 or entitle such Bank
to make a claim under Section 1.13(a) or 7.02 if such obligation, the
operability of such clause or such claim results directly from such designation
and not from a Regulatory Change Enacted thereafter.
Section 7.06 Replacement of Banks.
--------------------
If any Bank requests compensation pursuant to Section 1.13 or 7.02, or such
Bank's obligation to make or continue, or to convert Loans of any other Type
into, any Type of Eurocurrency Rate Loan shall be suspended pursuant to Section
7.01, Premiere, upon three Business Days' notice, may require that such Bank
transfer all of its
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right, title and interest under this Agreement and such Bank's Notes to any bank
or financial institution identified by Premiere with the consent of the
Administrative Agent (a) if such proposed transferee agrees to assume all of the
obligations of such Bank for consideration equal to the outstanding principal
amount of such Bank's Loans, together with interest thereon to the date of such
transfer, and satisfactory arrangements are made for payment to such Bank of all
other amounts payable hereunder to such Bank on or prior to the date of such
transfer (including any fees accrued hereunder and any amounts that would be
payable under Section 7.03 as if all of such Bank's Loans were being prepaid in
full on such date) and (b) if such Bank being replaced has requested
compensation pursuant to Section 1.13 or 7.02, such proposed transferee's
aggregate requested compensation, if any, pursuant to Section 1.13 or 7.02 with
respect to such replaced Bank's Loans is lower than that of the Bank replaced.
Without prejudice to the survival of any other agreement of the Borrowers
hereunder, the agreements of the Borrowers contained in Sections 1.13, 7.02,
7.03 and 10.02) shall survive for the benefit of any Bank replaced under this
Section 7.06 with respect to the time prior to such replacement.
ARTICLE 8
GUARANTY
--------
Section 8.01 Guaranty of Payment and Performance; Limitation of Guaranty.
-----------------------------------------------------------
(a) Each of the Guarantors hereby (a) absolutely, unconditionally and
irrevocably guarantees to the Guaranteed Parties the due and punctual payment
and performance of all of the Guaranteed Obligations in accordance with their
respective terms and when and as due (whether at maturity, by reason of
acceleration or otherwise, but giving effect to any applicable grace period set
forth in Section 6.01(a)), or deemed to be due pursuant to Section 8.02, and (b)
agrees so to pay the same when so due, or deemed to be due, upon demand.
(b) It is the intention of the Guarantors and the Guaranteed Parties
that the obligations of the Guarantors under this Article 8 shall be in, but not
in excess of, the maximum amount permitted by Applicable Law. To that end, but
only to the extent such obligations would otherwise be avoidable, the
obligations of each Guarantor under this Article 8 shall be limited to the
maximum amount that, after giving effect to the incurrence thereof, would not
render such Guarantor insolvent or unable to pay its debts as they mature or
leave such Guarantor with an unreasonably small capital. The need for any such
limitation shall be determined, and any such needed limitation shall be
effective, with respect to each Guarantor at the time or times that such
Guarantor is deemed, under Applicable Law, to incur obligations thereunder. Any
such limitation shall be apportioned amongst the Guaranteed Obligations of the
Guaranteed Parties pro rata in accordance with their respective amounts thereof.
This Section 8.01(b) is intended solely to preserve the rights of the Guaranteed
Parties under this Article 8 to the maximum extent permitted by Applicable Law,
and none of the Guarantors or any other Person shall have any right under this
Section 8.01(b) that it would not otherwise have under Applicable Law. For the
purposes of this Section 8.01(b), "insolvency", "unreasonably small capital" and
"inability to pay debts as they mature" shall be determined in accordance with
Applicable Law.
Section 8.02 Continuance and Acceleration of Guaranteed Obligations Upon
-----------------------------------------------------------
Certain Events. If:
- - --------------
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<PAGE>
(a) any Event of Default resulting in the automatic acceleration of
any Guaranteed Obligations shall occur;
(b) any injunction, stay or the like that enjoins any acceleration, or
demand for the payment of any Guaranteed Obligations that would otherwise be
required or permitted under the Loan Documents shall become effective; or
(c) any Guaranteed Obligations shall be or be determined to be or
become discharged (other than by payment or performance in full), disallowed,
invalid, illegal, void or otherwise unenforceable (whether by operation of any
present or future law or by order of any court or governmental agency) against
the applicable Borrower;
then (i) such Guaranteed Obligations shall, for all purposes hereunder, be
deemed (A) in the case of clause (c), to continue to be outstanding and in full
force and effect notwithstanding the unenforceability thereof against the
applicable Borrower and (B) if such is not already the case, to have thereupon
become immediately due and payable and to have commenced bearing interest at the
Post-Default Rate and (ii) the Guaranteed Parties may exercise all of the rights
and remedies hereunder that would be available to them during an Event of
Default.
Section 8.03 Recovered Payments.
------------------
The Guaranteed Obligations shall be deemed not to have been paid, observed
or performed, and the Guarantor's obligations hereunder in respect thereof shall
continue and not be discharged, to the extent that any payment thereof by either
Borrower or any Guarantor, or out of the proceeds of any collateral, is
recovered from or paid over by or for the account of the Guaranteed Parties for
any reason, including as a preference or fraudulent transfer or by virtue of any
subordination (whether present or future or contractual or otherwise) of the
Guaranteed Obligations, whether such recovery or payment over is effected by any
judgment, decree or order of any court or governmental agency, by any plan of
reorganization or by settlement or compromise by the Guaranteed Parties (whether
or not consented to by either Borrower, any of the Guarantors or any other
guarantor) of any claim for any such recovery or payment over. Each of the
Guarantors hereby expressly waives the benefit of any applicable statute of
limitations and agrees that it shall be liable hereunder whenever such a
recovery or payment over occurs.
Section 8.04 Nature of Guarantors' Obligations.
---------------------------------
The Guarantors' obligations under the Loan Documents (a) are absolute and
unconditional, (b) constitute a guaranty of payment and not a guaranty of
collection, (c) are as primary obligor and not as a surety only, (d) shall be a
continuing guaranty of all present and future Guaranteed Obligations and all
promissory notes and other documentation given in extension or renewal or
substitution for any of the Guaranteed Obligations and (e) shall be irrevocable.
Section 8.05 No Release of Guarantors.
------------------------
THE OBLIGATIONS OF EACH OF THE GUARANTORS HEREUNDER SHALL NOT BE REDUCED,
LIMITED OR TERMINATED, NOR SHALL ANY GUARANTOR BE DISCHARGED FROM ANY THEREOF,
FOR ANY REASON WHATSOEVER (other than, subject to Sections 8.03, the payment,
observance and performance of the Guaranteed Obligations and except in the event
such Guarantor is not a Significant Subsidiary and is disposed of in accordance
with Section 4.09(d)), including (and
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whether or not the same shall have occurred or failed to occur once or more than
once and whether or not any Guarantor shall have received notice thereof):
(a) (i) any increase in the principal amount of, or interest rate
applicable to, (ii) any extension of the time of payment, observance or
performance of, (iii) any other amendment or modification of any of the other
terms and provisions of, (iv) any release, composition or settlement (whether by
way of acceptance of a plan of reorganization or otherwise) of, (v) any
subordination (whether present or future or contractual or otherwise) of, or
(vi) any discharge, disallowance, invalidity, illegality, voidness or other
unenforceability of, the Guaranteed Obligations;
(b) (i) any failure to obtain, (ii) any release, composition or
settlement of, (iii) any amendment or modification of any of the terms and
provisions of, (iv) any subordination of, or (v) any discharge, disallowance,
invalidity, illegality, voidness or other unenforceability of, any other
guaranties of the Guaranteed Obligations;
(c) (i) any failure to obtain or any release of, (ii) any failure to
protect or preserve, (iii) any release, compromise, settlement or extension of
the time of payment of any obligations constituting, (iv) any failure to perfect
or maintain the perfection or priority of any Lien upon, (v) any subordination
of any Lien upon, or (vi) any discharge, disallowance, invalidity, illegality,
voidness or other unenforceability of any Lien or intended Lien upon, any
collateral now or hereafter securing the Guaranteed Obligations or any other
guaranties thereof;
(d) any termination of or change in any relationship between any
Guarantor and any other Loan Party including any such termination or change
resulting from a change in the ownership of any Guarantor or any other Loan
Party or from the cessation of any commercial relationship between any Guarantor
and any other Loan Party;
(e) any exercise of, or any election not to exercise or failure to
exercise, delay in the exercise of, waiver of, or forbearance or other
indulgence with respect to, any right, remedy or power available to the
Guaranteed Parties, including (i) any election not to exercise or failure to
exercise any right of setoff, recoupment or counterclaim, (ii) any election of
remedies effected by the Guaranteed Parties, including the foreclosure upon any
real estate constituting election of remedies effected by the Guaranteed
Parties, including the foreclosure upon any real estate constituting collateral,
whether or not such election affects the right to obtain a deficiency judgment,
and (iii) any election by the Guaranteed Parties in any proceeding under the
Bankruptcy Code of the application of Section 1111(b)(2) of such Bankruptcy
Code; and
(f) ANY OTHER ACT OR FAILURE TO ACT OR ANY OTHER EVENT OR CIRCUMSTANCE
THAT (i) VARIES THE RISK OF ANY GUARANTOR HEREUNDER OR (ii) BUT FOR THE
PROVISIONS HEREOF, WOULD, AS A MATTER OF STATUTE OR RULE OF LAW OR EQUITY,
OPERATE TO REDUCE, LIMIT OR TERMINATE THE OBLIGATIONS OF ANY GUARANTOR HEREUNDER
OR DISCHARGE ANY GUARANTOR FROM ANY THEREOF.
Section 8.06 Certain Waivers.
---------------
Each of the Guarantors waives:
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(a) any requirement, and any right to require, that any right or power
be exercised or any action be taken against either Borrower or any collateral
for the Guaranteed Obligations;
(b) all defenses to, and all setoffs, counterclaims and claims of
recoupment against, the Guaranteed Obligations that may at any time be available
to any other Guarantor (and agrees that payments due from such Guarantor
hereunder shall be made without any reduction or deduction whatsoever, including
any reduction or deduction for any setoff, counterclaim or claim of recoupment
otherwise available to such Guarantor or to either Borrower);
(c) (i) notice of acceptance of and intention to rely hereunder, (ii)
notice of the making or renewal of any Loans or other extensions of credit
hereunder and of the incurrence or renewal of any other Guaranteed Obligations,
(iii) notice of any of the matters referred to in Section 8.05 and (iv) all
other notices that may be required by Applicable Law or otherwise to preserve
any rights against any Guarantor hereunder, including any notice of default,
demand, dishonor, presentment and protest;
(d) diligence;
(e) any defense based upon, arising out of or in any way related to
(i) any claim that any sale or other disposition of any collateral for the
Guaranteed Obligations was not conducted in a commercially reasonable fashion or
that a public sale, should the Guaranteed Parties have elected so to proceed,
was, in and of itself, not a commercially reasonable method of sale, (ii) any
claim that any election of remedies by the Guaranteed Parties, including the
exercise by the Guaranteed Parties of any rights against any collateral,
impaired, reduced, released or otherwise extinguished any right that any
Guarantor might otherwise have had against either Borrower or against any
collateral, including any right of subrogation, exoneration, reimbursement or
contribution or right to obtain a deficiency judgment, (iii) any claim based
upon, arising out of or in any way related to any of the matters referred to in
Section 8.06 and (iv) any claim that the Loan Documents should be strictly
construed against the Guaranteed Parties; and
(f) ALL OTHER DEFENSES UNDER ANY APPLICABLE LAW THAT WOULD, BUT FOR
THIS CLAUSE (f), BE AVAILABLE TO ANY GUARANTOR AS A DEFENSE AGAINST OR A
REDUCTION OR LIMITATION OF ITS LIABILITIES AND OBLIGATIONS HEREUNDER.
Section 8.07 Subordination of Rights Against the Borrowers and Collateral.
------------------------------------------------------------
All rights that any Guarantor may at any time have against either Borrower
or any collateral for the Guaranteed Obligations (including rights of
subrogation, exoneration, reimbursement and contribution and whether arising
under Applicable Law or otherwise), and all obligations that either Borrower may
at any time have to any Guarantor, arising by virtue of such Guarantor's
obligations to pay principal, interest or other amounts payable to Guaranteed
Parties hereunder, any payment made pursuant thereto or the exercise by the
Guaranteed Parties of their rights with respect to any collateral are hereby
expressly subordinated to the prior payment, observance and performance in full
of the Guaranteed Obligations. No Guarantor shall enforce any of the rights,
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or attempt to obtain payment or performance of any of the obligations,
subordinated pursuant to this Section 8.07 until the Guaranteed Obligations have
been paid, observed and performed in full, except that such prohibition shall
not apply to routine acts, such as the giving of notices and the filing of
continuation statements, necessary to preserve any such rights. If any amount
shall be paid to or recovered by any Guarantor (whether directly or by way of
setoff, recoupment or counterclaim) on account of any right or obligation
subordinated pursuant to this Section 8.07, such amount shall be held by such
Guarantor for the benefit of the Guaranteed Parties.
ARTICLE 9
THE AGENTS
----------
Section 9.01 Appointment and Powers.
----------------------
Each Bank hereby irrevocably appoints and authorizes The Bank of New York,
and The Bank of New York hereby agrees, to act as the Administrative Agent for
such Bank under the Loan Documents with such powers as are delegated to the
Administrative Agent and the Secured Party by the terms thereof, together with
such other powers as are reasonably incidental thereto. The Administrative
Agent's duties shall be purely ministerial and it shall have no duties or
responsibilities except those expressly set forth in the Loan Documents. The
Administrative Agent shall not be required under any circumstances to take any
action that, in its judgment, (a) is contrary to any provision of the Loan
Documents or Applicable Law or (b) would expose it to any Liability or expense
against which it has not been indemnified to its satisfaction. The
Administrative Agent shall not, by reason of its serving as the Administrative
Agent, be a trustee or other fiduciary for any Bank. NationsBank, N.A., as
Documentation Agent, shall have no rights or duties under, and no liability
arising out of, the Loan Documents in its capacity as Documentation Agent.
Section 9.02 Limitation on Administrative Agent's Liability.
----------------------------------------------
Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
The Administrative Agent shall not be responsible to any Bank for (a) any
recitals, statements, representations or warranties contained in the Loan
Documents or in any certificate or other document referred to or provided for
in, or received by any of the Banks under, the Loan Documents, (b) the validity,
effectiveness or enforceability of the Loan Documents or any such certificate or
other document or the value or sufficiency of the Collateral or (c) any failure
by the Loan Parties to perform any of their obligations under the Loan
Documents. The Administrative Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact so long as the Administrative Agent was not grossly negligent
in selecting or directing such agents or attorneys-in-fact. The Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telecopier, telegram
or cable) believed by it to be genuine and correct and to have been signed or
given by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the Administrative Agent. As to any matters not expressly provided for by
the Loan Documents, the Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under the Loan Documents in
accordance with instructions signed by the
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Required Banks, and such instructions of the Required Banks and any action taken
or failure to act pursuant thereto shall be binding on all of the Banks.
Section 9.03 Defaults.
--------
The Administrative Agent shall not be deemed to have knowledge of the
occurrence of a Default (other than the non-payment to it of principal of or
interest on Loans or fees) unless the Administrative Agent has received notice
from a Bank or a Borrower specifying such Default and stating that such notice
is a "Notice of Default". In the event that the Administrative Agent has
knowledge of such a non-payment or receives such a notice of the occurrence of a
Default, the Administrative Agent shall give prompt notice thereof to the Banks.
In the event of any Default, the Administrative Agent shall (a) in the case of a
Default that constitutes an Event of Default, take either or both of the actions
referred to in clauses (a) and (b) of the first sentence of Section 6.02 if so
directed by the Required Banks and (b) in the case of any Default, take such
other action with respect to such Default as shall be reasonably directed by the
Required Banks. Unless and until the Administrative Agent shall have received
such directions, in the event of any Default, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default as it shall deem advisable in the best interests of
the Banks.
Section 9.04 Rights as a Bank.
----------------
Each Person acting as the Administrative Agent that is also a Bank shall,
in its capacity as a Bank, have the same rights and powers under the Loan
Documents as any other Bank and may exercise the same as though it were not
acting as the Administrative Agent, and the term "Bank" or "Banks" shall include
such Person in its individual capacity. Each Person acting as the
Administrative Agent (whether or not such Person is a Bank) and its Affiliates
may (without having to account therefor to any Bank) accept deposits from, lend
money to and generally engage in any kind of banking, trust or other business
with the Loan Parties and their Affiliates as if it were not acting as the
Administrative Agent, and such Person and its Affiliates may accept fees and
other consideration from the Loan Parties and their Affiliates for services in
connection with the Loan Documents or otherwise without having to account for
the same to the Banks.
Section 9.05 Indemnification.
---------------
The Banks agree to indemnify the Administrative Agent (to the extent not
reimbursed by the Loan Parties under the Loan Documents), ratably on the basis
of the respective principal amounts of the Loans outstanding made by the Banks
(or, if no Loans are at the time outstanding, ratably on the basis of their
respective Commitments), for any and all Liabilities, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Administrative Agent (including the costs and expenses that the Loan
Parties are obligated to pay under the Loan Documents) in any way relating to or
arising out of the Loan Documents or any other documents contemplated thereby or
referred to therein or the transactions contemplated thereby or the enforcement
of any of the terms thereof or of any such other documents, provided that no
Bank shall be liable for any of the foregoing to the extent (a) they are subject
to the indemnity contemplated by the last sentence of Section 10.10(b) or (b)
they arise from gross negligence or willful misconduct by the Administrative
Agent.
Section 9.06 Non-Reliance on Administrative Agent and Other Banks.
----------------------------------------------------
Each Bank agrees that it has made and will continue to make, independently
and without reliance on the Administrative Agent or any other Bank, and based on
such documents and information as it
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deems appropriate, its own credit analysis of the Loan Parties and its own
decision to enter into the Loan Documents and to take or refrain from taking any
action in connection therewith. The Administrative Agent shall not be required
to keep itself informed as to the performance or observance by the Loan Parties
of the Loan Documents or any other document referred to or provided for therein
or to inspect the properties or books of any Loan Party or any Subsidiary
thereof. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Administrative Agent
under the Loan Documents, the Administrative Agent shall have no obligation to
provide any Bank with any information concerning the business, status or
condition of any Loan Party or any Subsidiary thereof or the Loan Documents that
may come into the possession of the Administrative Agent or any of its
Affiliates.
Section 9.07 Resignation of the Administrative Agent.
---------------------------------------
The Administrative Agent may at any time give notice of its resignation to
the Banks and the Borrowers. Upon receipt of any such notice of resignation,
the Required Banks may, with the consent of Premiere (which consent shall not be
unreasonably withheld), appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Required
Banks and shall have accepted such appointment within 30 days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Banks and with the consent of
Premiere (which consent shall not be unreasonably withheld), appoint a successor
Administrative Agent. Upon the acceptance by any Person of its appointment as a
successor Administrative Agent, such Person shall thereupon succeed to and
become vested with all the rights, powers, privileges, duties and obligations of
the retiring Administrative Agent and the retiring Administrative Agent shall be
discharged from its duties and obligations as Administrative Agent under the
Loan Documents. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Article 9 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Administrative Agent.
Section 9.08 Execution and Amendment of Loan Documents on Behalf of the
----------------------------------------------------------
Banks.
- - -----
Each Bank hereby authorizes the Administrative Agent to (a) execute and
deliver, in the name of and on behalf of such Bank, (i) the Security Agreements
and the UK Security Agreements, (ii) all UCC financing and continuation
statements and other documents the filing or recordation of which are, in the
determination of the Administrative Agent, necessary or appropriate to create,
perfect or maintain the existence or perfected status of the Security Interest
and (iii) any other Loan Document requiring execution by or on behalf of such
Bank, and (b) release Collateral from the Security Interest to the extent that
such Collateral has been disposed of in accordance with Section 4.09. The
Administrative Agent shall consent to any amendment of any term, covenant,
agreement or condition of the Security Agreements and the UK Security
Agreements, or to any waiver of any right thereunder, if, but only if, the
Administrative Agent is directed to do so in writing by the Required Banks;
provided, however, that (i) the Administrative Agent shall not be required to
- - -------- -------
consent to any such amendment or waiver that affects its rights or duties and
(ii) the Administrative Agent shall not, unless directed to do so in writing by
each Bank, (A) consent to any assignment by any Loan Party of any of its rights
or obligations under any such agreement or (B) release any Collateral from the
Security Interest, except as specified in clause (b) above.
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ARTICLE 10
MISCELLANEOUS
-------------
Section 10.01 Notices and Deliveries.
----------------------
Except as otherwise expressly provided, all notices, communications and
materials to be given or delivered pursuant to the Loan Documents shall be given
or delivered in writing (which shall include telecopy transmissions) at the
following respective addresses and telecopier numbers and to the attention of
the following individuals or departments or at such other address or telecopier
or telephone number or to the attention of such other individual or department
as the party to which such information pertains may hereafter specify:
(a) if to Premiere, or the Company, to Premiere at:
3399 Peachtree Road NE
Lenox Building, Suite 600
Atlanta, Georgia 30326
Telephone No.:
Telecopier No.:
Attention: Mr. Harvey A. Wagner
(b) if to any other Loan Party, to it at:
c/o Premiere Technologies, Inc.
3399 Peachtree Road NE
Lenox Building, Suite 400
Atlanta, Georgia 30326
Telephone No.:
Telecopier No.:
Attention: Mr. Harvey A. Wagner
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<PAGE>
(c) if to the Administrative Agent, to it at:
One Wall Street
New York, NY 10286
Telephone No.: (212) 635-8607
Telecopier No.: (212) 635-8595
Attention: Cindy Rogers
with a copy to:
The Bank of New York
One Wall Street
New York, NY 10286
Telephone No.: (212) 635-4695
Telecopier No.: (212) 635-6365 (6,7)
Attention: Geneveso Caviness, AFA, 18th Floor
(d) if to any Bank, to it at the address or telecopier number and to
the attention of the individual or department, set forth below such Bank's name
under the heading "Notice Address" on Annex A or, in the case of a Bank that
-------
becomes a Bank pursuant to an assignment, set forth under the heading "Notice
Address" in the Notice of Assignment given to the Borrowers and the
Administrative Agent with respect to such assignment.
Notices, communications and materials shall be deemed given or delivered
when delivered or received at the appropriate address or telecopy number to the
attention of the appropriate individual or department except that notices to be
given or items of Collateral to be delivered to the Administrative Agent or any
Bank pursuant to Sections 1.02, 1.03(c), 1.05, 1.07 and 1.12(b) or pursuant to
any Collateral Document shall not be deemed given or delivered until received by
the officer of the Administrative Agent or, in the case of such notices, such
Bank responsible, at the time, for the administration of the Loan Documents.
Section 10.02 Expenses; Indemnification.
-------------------------
Whether or not any Loans are made hereunder, Premiere shall:
(a) pay or reimburse the Administrative Agent and each Bank for all
transfer, documentary, stamp and similar taxes, and all recording and filing
fees and taxes, payable in connection with, arising out of, or in any way
related to, the execution, delivery and performance of the Loan Documents or the
making of the Loans;
(b) pay or reimburse the Administrative Agent for all reasonable costs
and expenses (including reasonable fees and disbursements of legal counsel,
appraisers, accountants and other experts employed or retained by the
Administrative Agent) incurred by the Administrative Agent in connection with,
arising out of, or in any way related to (i) the
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negotiation, preparation, execution and delivery of (A) the Loan Documents and
(B) whether or not executed, any waiver, amendment or consent thereunder or
thereto, (ii) the administration of and any operations under the Loan Documents,
including (A) the protection or preservation of the Collateral, (B) the
protection, preservation, exercise or enforcement of any of the rights of the
Administrative Agent or the Banks in, under or related to the Collateral or the
Loan Documents or (C) the performance of any of the obligations of the
Administrative Agent or the Banks under or related to the Loan Documents, (iii)
protecting or preserving the Collateral or (iv) protecting, preserving,
exercising or enforcing any of the rights of the Administrative Agent or the
Banks in, under or related to the Collateral or the Loan Documents, including
defending the Security Interest as a valid, perfected, first priority security
interest in the Collateral subject to Permitted Liens;
(c) pay or reimburse each of the Banks for all reasonable costs and
expenses (including reasonable fees and disbursements of legal counsel and other
experts employed or retained by such Bank) incurred by such Bank after the
occurrence of an Event of Default in connection with, arising out of, or in any
way related to protecting, preserving, exercising or enforcing any of its rights
in, under or related to the Collateral or the Loan Documents; and
(d) indemnify and hold each Indemnified Person harmless from and
against all losses (including judgments, penalties and fines) suffered, and pay
or reimburse each Indemnified Person for all reasonable costs and expenses
(including reasonable fees and disbursements of legal counsel and other experts
employed or retained by such Indemnified Person) incurred, by such Indemnified
Person in connection with, arising out of, or in any way related to (i) any Loan
Document Related Claim (whether asserted by such Indemnified Person, a Borrower,
any Guarantor or any other Person), including the prosecution or defense thereof
and any litigation or proceeding with respect thereto (whether or not, in the
case of any such litigation or proceeding, such Indemnified Person is a party
thereto), or (ii) any investigation, governmental or otherwise, arising out of,
related to, or in any way connected with, the Loan Documents or the
relationships established thereunder, except that the foregoing indemnity shall
not be applicable to any loss suffered by any Indemnified Person to the extent
such loss is determined by a judgment of a court that is binding on the
applicable Borrower and such Indemnified Person, to be the result of acts or
omissions on the part of such Indemnified Person constituting (x) gross
negligence or (y) willful misconduct.
Section 10.03 Amounts Payable Due Upon Request for Payment.
--------------------------------------------
All amounts payable by the Borrowers under Section 10.02 and under the
other provisions of the Loan Documents shall, except as otherwise expressly
provided, be due within five Business Days following written request for the
payment thereof.
Section 10.04 Remedies of the Essence.
-----------------------
The various rights and remedies of the Administrative Agent and the Banks
under the Loan Documents are of the essence of those agreements.
Section 10.05 Rights Cumulative.
-----------------
Each of the rights and remedies of the Administrative Agent, and the Banks
under the Loan Documents shall be in addition to all of their other rights and
remedies under the Loan Documents and Applicable Law, and nothing in the Loan
Documents shall be construed as limiting any such rights or remedies.
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Section 10.06 Confidentiality and Disclosures.
-------------------------------
The Administrative Agent and each Bank agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all non-
public information provided to it by the Borrowers or any Guarantor in
connection with any Loan Document, provided that the Administrative Agent and
--------
the Banks may disclose to, and exchange and discuss with, any other Person who
has agreed (to the extent that obtaining such agreement is reasonably
practicable) to be bound by the provisions of this Section 10.06 (the
Administrative Agent, the Banks and each such other Person being hereby
authorized to do so) any information concerning Premiere or any Subsidiary
(whether received by the Administrative Agent, the Banks or such other Person in
connection with or pursuant to the Loan Documents or otherwise) (a) if such
Person is an Affiliate of the Administrative Agent or such Bank or (b) for the
purpose of (i) complying with Applicable Law, (ii) protecting or preserving the
Collateral or protecting, preserving, exercising or enforcing any of their
rights in, under or related to the Collateral or the Loan Documents, (iii)
performing any of their obligations under or related to the Loan Documents or
(iv) consulting with respect to any of the foregoing matters.
Section 10.07 Amendments; Waivers.
-------------------
Any term, covenant, agreement or condition of the Loan Documents may be
amended, and any right under the Loan Documents may be waived, if, but only if,
such amendment or waiver is in writing and is signed by (a) in the case of an
amendment or waiver with respect to the Loan Documents referred to in Section
9.08(a), the Administrative Agent, (b) in the case of an amendment or waiver
with respect to any other Loan Document, the Required Banks and, if the rights
and duties of the Administrative Agent are affected thereby, by the
Administrative Agent and (c) in the case of an amendment with respect to any
Loan Document, by the Borrowers and, if such amendment amends Article 8 hereof,
the Guarantors; provided, however, that no amendment or waiver shall be
-------- -------
effective, unless in writing and signed by each Bank affected thereby, to the
extent it (i) changes the amount of such Bank's Commitment, (ii) reduces the
principal of or the rate of interest on such Bank's Loans or Notes or any fees
payable to such Bank hereunder, (iii) postpones any date fixed for any payment
of principal of or interest on such Bank's Loans, Notes or any fees payable to
such Bank hereunder, (iv) releases any Guarantor from its obligations under
Section 8.01 or releases any Collateral from the Security Interest except to the
extent that such Collateral has been disposed of in accordance with Section
4.09, or (v) amends Section 1.01(b), Section 1.14, this Section 10.07, the
definition of "Required Banks" contained in Section 11.01 or any other provision
of this Agreement requiring the consent or other action of all of the Banks.
Unless otherwise specified in such waiver, a waiver of any right under the Loan
Documents shall be effective only in the specific instance and for the specific
purpose for which given. No election not to exercise, failure to exercise or
delay in exercising any right, nor any course of dealing or performance, shall
operate as a waiver of any right of the Administrative Agent or any Bank under
the Loan Documents or Applicable Law, nor shall any single or partial exercise
of any such right preclude any other or further exercise thereof or the exercise
of any other right of the Administrative Agent or any Bank under the Loan
Documents or Applicable Law. Upon any disposition of assets (including Capital
Securities) permitted by Section 4.09, the Administrative Agent shall, and the
Banks hereby so direct it to, release its Lien in such assets and shall execute
and record, at Premiere's expense, such release documents as Premiere shall
reasonably request.
Section 10.08 Set-Off; Suspension of Payment and Performance.
----------------------------------------------
The Administrative Agent and each Bank are hereby authorized by the
Borrowers, at any time and from time to time, without notice, during any Event
of Default under Section 6.01(a) or at any time after amounts
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payable hereunder shall have been declared immediately due and payable pursuant
to Section 6.02, to set off against, and to appropriate and apply to the payment
of, the Liabilities of any Loan Party under the Loan Documents (whether owing to
such Person or to any other Person that is the Administrative Agent or a Bank
and whether matured or unmatured, fixed or contingent) any and all Liabilities
owing by such Person or any of its Affiliates to any Loan Party (whether payable
in Dollars, Sterling or any other currency, whether matured or unmatured and, in
the case of Liabilities that are deposits, whether general or special, time or
demand and however evidenced and whether maintained at a branch or office
located within or without the United States).
Section 10.09 Sharing of Recoveries.
---------------------
Each Bank agrees that, if, for any reason, including as a result of (i) the
exercise of any right of counterclaim, set-off, banker's lien or similar right,
(ii) its claim in any applicable bankruptcy, insolvency or other similar law
being deemed secured by a "debt" under Section 101(11) of the Bankruptcy Code
owed by it to any Loan Party, including a claim deemed secured under Section 506
of the Bankruptcy Code, or (iii) the allocation of payments by the
Administrative Agent or any Loan Party in a manner contrary to the provisions of
Section 1.14, such Bank shall receive payment of a proportion of the aggregate
amount due and payable to it hereunder as principal of or interest on the Loans
or fees that is greater than the proportion received by any other Bank in
respect of the aggregate of such amounts due and payable to such other Bank
hereunder, then the Bank receiving such proportionately greater payment shall
purchase participations (which it shall be deemed to have done simultaneously
upon the receipt of such payment) in the rights of the other Banks hereunder so
that all such recoveries with respect to such amounts due and payable hereunder
(net of costs of collection) shall be pro rata; provided that if all or part of
such proportionately greater payment received by the purchasing Bank is
thereafter recovered by or on behalf of any Loan Party from such Bank, such
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such Bank to the extent of such recovery,
but without interest (unless the purchasing Bank is required to pay interest on
the amount recovered to the Person recovering such amount, in which case the
selling Bank shall be required to pay interest at a like rate). Each of the
Borrowers and the Guarantors expressly consents to the foregoing arrangements
and agrees that any holder of a participation in any rights hereunder so
purchased or acquired pursuant to this Section 10.09 shall, with respect to such
participation, be entitled to all of the rights of a Bank under Sections 7.02,
10.02 and 10.08 (subject to any condition imposed on a Bank hereunder with
respect thereto) and may exercise any and all rights of set-off with respect to
such participation as fully as though the Loan Parties were directly indebted to
the holder of such participation for Loans in the amount of such participation.
Section 10.10 Assignments and Participations.
------------------------------
(a) Assignments.
-----------
(i) None of the Loan Parties may assign any of its rights or
obligations under the Loan Documents without the prior written consent of each
Bank, and no assignment of any such obligation shall release such Loan Party
therefrom unless each Bank shall have consented to such release in a writing
specifically referring to the obligation from which such Loan Party is to be
released.
(ii) Each Bank may from time to time assign any or all of its rights
and obligations under the Loan Documents to one or more Persons, provided that,
--------
except in the case of the grant of a security interest to a Federal Reserve Bank
(which may be made without condition or restriction) no such assignment shall be
effective unless (A) the assignment is consented to by
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<PAGE>
Premiere (unless an Event of Default exists at such time or such assignment is
to an Affiliate of such Bank) and the Administrative Agent, (B) a Notice of
Assignment with respect to the assignment, duly executed by the assignor and the
assignee, shall have been given to the Borrowers and the Administrative Agent
and (C) except in the case of an assignment by the Bank that is the
Administrative Agent, the Administrative Agent shall have been paid an
assignment fee of $3,500. Upon any effective assignment, (1) the assignor shall
be released from the obligations so assigned and, in the case of an assignment
of all of its Loans and Commitment, shall cease to be a Bank and (2) the
assignee shall have all of the rights and shall be obligated to perform all of
the obligations of a Bank; provided, however, that no assignee shall be entitled
-----------------
to any amounts that would otherwise be payable to it with respect to its
assignment under Section 1.13 or 7.02 unless (x) such amounts are payable in
respect of a Regulatory Change Enacted after the date the applicable assignment
agreement became effective or (y) such amounts would have been payable to the
Bank that made such assignment if such assignment had not been made. In the
event of any effective assignment by a Bank, each of the Borrowers shall,
against (except in the case of a partial assignment) receipt of the existing
Note of the assignor Bank, issue a new Note to the assignee Bank.
(b) Participations.
--------------
Each Bank may from time to time sell or otherwise grant participations in
any or all of its rights and obligations under the Loan Documents without the
consent of the Borrowers, any Guarantor, the Administrative Agent or any other
Bank. In the event of any such grant by a Bank of a participation, such Bank's
obligations under the Loan Documents to the other parties thereto shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, and the Loan Parties, the Administrative Agent and the other Banks may
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations thereunder. Each holder of a participation in any
rights under the Loan Documents, except to the extent the applicable
participation agreement provides to the contrary, shall, with respect to such
participation, be entitled to all of the rights of a Bank as fully as though it
were a Bank under Sections 1.13, 7.02, 7.03, 10.02(d) and 10.07 (subject to any
conditions imposed on a Bank hereunder with respect thereto, including delivery
of the forms and certificates required under Section 1.13(a)(iii)) and may
exercise any rights of set-off with respect to such participation as fully as
though the Loan Parties were directly indebted to the holder of such
participation for Loans in the amount of such participation; provided, however,
-------- -------
that no holder of a participation shall be entitled to any amounts that would
otherwise be payable to it with respect to its participation under Section 1.13
or 7.02 unless such amounts would have been payable to the Bank that granted
such participation if such participation had not been granted. In connection
with the sale of any participation hereunder, each participant (i) shall
represent to the granting Bank for the benefit of the Administrative Agent and
the Borrowers that under Applicable Law and treaties no Taxes (other than Bank
Taxes) will be required to be withheld by the Administrative Agent or any
Borrower with respect to any payments to be made with respect to such
participant under this Agreement, (ii) shall furnish to the granting Bank (which
Bank shall promptly forward to the Borrowers and the Administrative Agent) all
of the forms and statements required by Section 1.13(a)(iii), and (iii) shall
covenant to comply with all of the requirements of Section 1.13(a)(iii),
provided that any required forms and statements shall be provided to the
granting Bank, which Bank shall promptly forward such required forms and
statements to the Administrative Agent and the Borrowers. Notwithstanding the
above, in the event any Taxes are required to be withheld or deducted by any
taxing authority from any payment made to any participant, the Bank that grants
such participation shall (A) withhold or
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deduct from each payment to the participant the amount of any Tax required under
applicable law to be withheld or deducted from such payment, and (B) pay any Tax
so withheld or deducted by it to the appropriate taxing authority in accordance
with Applicable Law. Each Bank selling or granting a participation shall
indemnify the Loan Parties and the Administrative Agent for any Taxes (including
without limitation, any interest, penalties, additions to tax and additional
amounts incurred in connection therewith) and Liabilities that they may sustain
as a result of such Bank's failure to withhold and pay any Taxes applicable to
payments by such Bank to its participant in respect of such participation.
Section 10.11 Governing Law.
-------------
The rights and duties of the Borrowers, the Guarantors, the Administrative
Agent and the Banks under this Agreement and the Notes shall, pursuant to New
York General Obligations Law, Section 5-1401, be governed by the law of the
State of New York.
Section 10.12 Judicial Proceedings; Waiver of Jury Trial.
------------------------------------------
Any judicial proceeding brought against a Borrower or any Guarantor with
respect to any Loan Document Related Claim may be brought in any court of
competent jurisdiction in the City of New York, and, by execution and delivery
of this Agreement, each of the Borrowers and the Guarantors (a) accepts,
generally and unconditionally, the nonexclusive jurisdiction of such courts and
any related appellate court and irrevocably agrees to be bound by any judgment
rendered thereby in connection with any Loan Document Related Claim and (b)
irrevocably waives any objection it may now or hereafter have as to the venue of
any such proceeding brought in such a court or that such a court is an
inconvenient forum. Each of the Borrowers and the Guarantors hereby waives
personal service of process and consents that service of process upon it may be
made by certified or registered mail, return receipt requested, at its address
specified or determined in accordance with the provisions of Section 10.01, and
service so made shall be deemed completed on the third Business Day after such
service is deposited in the mail so long as such service is also delivered to
Premiere by overnight courier. Nothing herein shall affect the right of any
Administrative Agent, any Bank or any other Indemnified Person to serve process
in any other manner permitted by law or shall limit the right of any
Administrative Agent, any Bank or any other Indemnified Person to bring
proceedings against a Borrower or any Guarantor in the courts of any other
jurisdiction. To the extent permitted in accordance with Applicable Law
relating to jurisdiction and venue, any judicial proceeding by a Borrower or any
Guarantor against the Administrative Agent or any Bank involving any Loan
Document Related Claim shall be brought only in a court located in the City and
State of New York. THE BORROWERS, THE GUARANTORS, THE ADMINISTRATIVE AGENT AND
EACH BANK HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY
LOAN DOCUMENT RELATED CLAIM.
Section 10.13 Reference Bank.
--------------
The Reference Bank shall furnish to the Administrative Agent timely
information for the purpose of determining the applicable Eurocurrency Rate. If
the Reference Bank shall notify the Administrative Agent that thenceforth it
shall not be able to furnish such information in a timely manner or shall assign
all of its Loans or Commitment to a Person that is not an Affiliate of the
Reference Bank, the Administrative Agent shall, with the consent of the Required
Banks and Premiere, appoint another Bank as the Reference Bank in place of such
Reference Bank.
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Section 10.14 Severability of Provisions.
--------------------------
Any provision of the Loan Documents that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions thereof or affecting the validity or enforceability of such provision
in any other jurisdiction. To the extent permitted by Applicable Law, each of
the Borrowers and the Guarantors hereby waives any provision of Applicable Law
that renders any provision of the Loan Documents prohibited or unenforceable in
any respect.
Section 10.15 Counterparts.
------------
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto were
upon the same instrument.
Section 10.16 Survival of Obligations.
-----------------------
Except as otherwise expressly provided therein, the rights and obligations
of the Borrowers, the Guarantors, the Administrative Agent, the Banks and the
other Indemnified Persons under the Loan Documents shall survive the Repayment
Date and the termination of the Security Interest.
Section 10.17 Entire Agreement.
----------------
This Agreement, the Notes and the other Loan Documents embody the entire
agreement among the Borrowers, the Guarantors, the Administrative Agent and the
Banks relating to the subject matter hereof and supersede all prior agreements,
representations and understandings, if any, relating to the subject matter
hereof.
Section 10.18 Successors and Assigns.
----------------------
All of the provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
Section 10.19 No Fiduciary Relationship Established by Loan Documents.
-------------------------------------------------------
The relationship between each Borrower and the Banks is that of debtor and
creditor. The Loan Documents are not intended to, and do not, establish a
fiduciary relationship, nor does a fiduciary relationship otherwise exist,
between the Loan Parties, on the one hand, and the Administrative Agent and the
Banks, on the other hand. The parties hereto have acted at arm's-length in
negotiating the Loan Documents.
Section 10.20 Judgment Currency.
-----------------
If in connection with determining the amount of a judgment to be rendered
in a currency (a "Judgment Currency") other than the currency in which the
-----------------
relevant amount was due under this Agreement or a Note, it is necessary to
convert a sum payable by a Borrower or any other Loan Party under this
Agreement, the Notes or any other Loan Document in a currency other than such
Judgment Currency into such Judgment Currency, then, unless another rate of
exchange is required under Applicable Law, the rate of exchange used shall be
the Administrative Agent's spot rate of exchange in New York City on the
Business Day preceding the day on which final judgment is to be rendered. The
obligations of the applicable Loan Party in respect of any such sum payable by
it under the Loan Documents in a currency other than such Judgment Currency
shall, notwithstanding any such judgment in such Judgment Currency, be
discharged only to the extent that on the Business Day following actual receipt
by the Administrative Agent or Banks of the amount of the judgment in such
Judgment Currency, such Person is able to purchase the relevant currency in New
York City with such sum of Judgment Currency, whether or not at the
Administrative Agent's spot rate of exchange. As a
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separate obligation and notwithstanding any such judgment, the applicable Loan
Party shall pay such Person on demand in the relevant currency any difference
between the amount originally payable by such Loan Party to such Person in the
relevant currency and the amount of the relevant currency that may be so
purchased. In the event that the amount that may be so purchased exceeds the
amount originally payable, such Person shall promptly remit such excess to the
applicable Loan Party.
Section 10.21 Worldwide UK Security Agreement.
-------------------------------
Notwithstanding anything to the contrary in the Worldwide UK Security
Agreement, the Administrative Agent and the Banks hereby agree that no more than
65% (or such other percentage as is the maximum amount that can be subjected to
the Security Interest without, in the reasonable opinion of the Company,
resulting in any adverse tax consequence to the Company) of the shares of
capital stock of Xpedite UK pledged by Worldwide pursuant thereto shall secure
the liabilities of the Company or any Subsidiary that is a United States Person
under the Loan Documents.
ARTICLE 11
INTERPRETATION
--------------
Section 11.01 Defined Terms.
-------------
For the purposes of this Agreement:
"Accumulated Funding Deficiency" has the meaning ascribed to that term in
------------------------------
Section 302 of ERISA.
"Additional Sterling Cost" means, with respect to Eurocurrency Rate Loans
------------------------
made to Xpedite UK, for any Interest Period, the rate per annum for such
Interest Period determined in accordance with Schedule 11.01(c).
-----------------
"Administrative Agent" means The Bank of New York, as Administrative Agent
--------------------
for the Banks under the Loan Documents, and any successor Administrative Agent
appointed pursuant to Section 9.07.
"Administrative Agent's Office" means the address of the Administrative
-----------------------------
Agent specified in or determined in accordance with the provisions of Section
10.01.
"Affiliate" means, with respect to a Person, any other Person that,
---------
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person; unless
otherwise specified, "Affiliate" means an Affiliate of Premiere.
"Agents' Fee Letters" means the letter agreements providing for the payment
-------------------
of certain fees in connection with this Agreement among Premiere and the Company
and (i) The Bank of New York and BNY Capital Markets, Inc., and (ii)
NationsBank, N.A. and NationsBanc Montgomery Securities LLC, respectively.
"Agreement" means this Credit Agreement, including all schedules, annexes
---------
and exhibits hereto.
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"American Teleconferencing" means American Teleconferencing Services, Ltd.,
-------------------------
a Missouri corporation.
"Annualized Consolidated EBITDA" means, with respect to any Person, at any
------------------------------
time, Consolidated EBITDA of such Person for the fiscal quarter ending on, or
most recently ended prior to, such date of determination, times four; provided
--------
however, that any non-recurring cash charge included in such Consolidated EBITDA
- - -------
shall not be multiplied by four in determining Annualized Consolidated EBITDA
unless such annualization properly reflects the relevant circumstances in the
judgement of the Managing Agents.
"Applicable Law" means, anything in Section 10.11 to the contrary
--------------
notwithstanding, (a) all applicable common law and principles of equity and (b)
all applicable provisions of all (i) constitutions, statutes, rules, regulations
and orders of governmental bodies, (ii) Governmental Approvals and Governmental
Registrations and (iii) orders, decisions, judgments and decrees.
"Bank" means (a) any Person listed on the signature pages hereof following
----
the Administrative Agent and (b) any Person (other than the Borrower or any of
it's Affiliates) that has been assigned any or all of the rights or obligations
of a Bank pursuant to Section 10.10(a).
"Bank Tax" means any income (including net income), franchise, gains or
--------
profits Taxes (or similar Taxes imposed in lieu of such Taxes) that are imposed
by any taxing authority in any jurisdiction (including any political subdivision
thereof) in which the relevant Bank (or its Lending Office) or the
Administrative Agent (as the case may be) is organized, managed or controlled or
doing business or would not otherwise be subject to such Taxes but for a present
or former connection between such jurisdictions or the taxing authority imposing
such Taxes and the Bank or any Person affiliated with such Bank (including,
without limitation, a connection arising from such Bank or affiliated Person
being or having been a citizen or resident of such jurisdiction, or being or
having been, organized, present or engaged in a trade or business in such
jurisdiction, or having or having had a permanent establishment or fixed place
or business in such jurisdiction).
"Bankruptcy Code" means Title 11 of the United States Code.
---------------
"Base Financial Statements" means the most recent, audited, consolidated
-------------------------
balance sheet of Premiere and the Consolidated Subsidiaries referred to in
Section 5.02(a)(i) and the related statements of income, retained earnings and,
as applicable, changes in financial position or cash flows for the fiscal year
ended with the date of such balance sheet.
"Base Rate" means, for any day, a rate per annum equal to the higher of (i)
---------
the Prime Rate in effect on such day and (ii) the sum of the Federal Funds Rate
in effect on such day plus 1/2%.
----
"Base Rate Loan" means any Loan the interest on which is, or is to be, as
--------------
the context may require, computed on the basis of the Base Rate.
"Benefit Plan" of any Person, means, at any time, any employee benefit plan
------------
(including a Multiemployer Benefit Plan), the funding requirements of which
(under Section 302 of ERISA
-47-
<PAGE>
or Section 412 of the Code) are, or at any time within six years immediately
preceding the time in question were, in whole or in part, the responsibility of
such Person.
"Borrower" has the meaning ascribed thereto in the preamble hereof.
--------
"Business Day" means any day other than a Saturday, Sunday or other day on
------------
which banks in New York City are authorized to close.
"Capital Expenditures" means any expenditures in respect of the purchase or
--------------------
other acquisition (by way of the acquisition of securities of a Person or
otherwise) of fixed or capital assets (excluding any such asset acquired in
connection with normal replacement and maintenance programs properly charged to
current operations or acquired with proceeds of insurance for the purpose of
replacement thereof) and excluding Investments to which Section 4.13 is by its
express terms inapplicable.
"Capital Security" means, with respect to any Person, (a) any share of
----------------
capital stock of such Person or (b) any security convertible into, or any
option, warrant or other right to acquire, any share of capital stock of such
Person.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Collateral" means all property in which a Lien is created pursuant to the
----------
Collateral Documents.
"Collateral Documents" means the Security Agreements, the UK Security
--------------------
Agreements and any other Loan Documents evidencing, governing or perfecting the
Security Interest.
"Commitment" of any Bank means (a) the amount set forth opposite such
----------
Bank's name under the heading "Commitment" on Annex A or, in the case of a Bank
that becomes a Bank pursuant to an assignment, the amount of the assignor's
Commitment assigned to such Bank, in either case, as the same may be reduced
from time to time pursuant to Section 1.07 or increased or reduced from time to
time pursuant to assignments in accordance with Section 10.10(a), or (b) as the
context may require, the obligation of such Bank to make Loans in an aggregate
unpaid principal amount not exceeding such amount.
"Commitment Termination Date" means the 364th day following the Restated
---------------------------
Agreement Date.
"Company" has the meaning ascribed thereto in the preamble hereof.
-------
"Consolidated EBITDA" means, with respect to any Person for any period, the
-------------------
sum of (a) Consolidated Net Income of such Person for such period and (b) to the
extent deducted in determining such Consolidated Net Income for such period,
interest expense, income tax expense, depreciation expense, amortization
expense, non-cash charges relating to Premiere's relationship with Digitek,
Premiere Network and WorldCom arising from write-offs and other non-cash
charges, if any, as agreed to by the Managing Agents. Notwithstanding the
foregoing, Consolidated EBITDA for any period shall be calculated after giving
effect on a pro forma basis for the period of such calculation to (x) the sale
or other disposition of any Subsidiary or of all or
-48-
<PAGE>
substantially all of the assets of any Subsidiary during such period and up to
and including the date of determination (the "Reference Period") and (y) the
acquisition by Premiere or any Subsidiary during the Reference Period of any
other Person which, as a result of such acquisition, becomes a Subsidiary, or
the acquisition of assets during the Reference Period from any Person which
constitutes all or substantially all of an operating unit or business of such
Person, as if such sale or disposition or acquisition occurred on the first day
of the period of such calculation.
"Consolidated Indebtedness" means, with respect to any Person, at any time,
-------------------------
the consolidated Indebtedness of such Person and its Consolidated Subsidiaries
as of such time.
"Consolidated Net Income" means, with respect to any Person, for any
-----------------------
period, the amount of consolidated net income (or loss) of such Person and its
Consolidated Subsidiaries for such period (taken as a cumulative whole) provided
that there shall be excluded: (a) any net income (or net loss) of a
Consolidated Subsidiary (i) for any period during which it was not a
Consolidated Subsidiary or (ii), in case of any such net income, to the extent
that the declaration or payment of dividends or similar distributions by that
Consolidated Subsidiary is not at the time permitted by operation of the terms
of any Contract or Applicable Law; (b) any net income (or net loss) of any
Person (other than a Consolidated Subsidiary) in which such first Person or any
Consolidated Subsidiary has an ownership interest, except to the extent that any
such income has actually been received by such first Person or such Subsidiary
in the form of cash dividends or similar distributions or, in the case of any
Person not less than 50% of the Capital Securities or other ownership interests
of which is owned by such first Person or such Subsidiary, to the extent that
such first Person or such Subsidiary has the contractual right to cause such
Person to pay or declare such dividends or other distributions; (c) any
restoration of any contingency reserve, except to the extent that provision for
such reserve was made out of income during such period; (d) any net gains or
losses on the sale or other disposition of investments and other capital assets
other than in the ordinary course of business, provided that there shall also be
excluded any related charges for taxes thereon; (e) any net gains or losses
resulting from the extinguishment or defeasance of any Indebtedness; (f) any
earnings from discontinued businesses; (g) any extraordinary gains or losses;
(h) any interest income; and (i) all cash and non-cash nonrecurring charges or
gain related to an acquisition by such first Person and the Consolidated
Subsidiaries for such period and recorded on such first Person's consolidated
statements of operations.
"Consolidated Revenues" means, with respect to Premiere and the
---------------------
Subsidiaries, for any period, the consolidated revenue of Premiere and the
Subsidiaries for such period.
"Consolidated Subsidiary" means, with respect to any Person at any time,
-----------------------
any Subsidiary or other Person the accounts of which would be consolidated with
those of such first Person in its consolidated financial statements as of such
time; unless otherwise specified, "Consolidated Subsidiary" means a Consolidated
Subsidiary of Premiere.
"Contract" means (a) any agreement, including an indenture, lease or
--------
license, (b) any deed or other instrument of conveyance, (c) any certificate of
incorporation or charter and (d) any by-law.
-49-
<PAGE>
"Default" means any condition or event that constitutes an Event of Default
-------
or that with the giving of notice or lapse of time or both would, unless cured
or waived, become an Event of Default.
"Disclosed Matters" means the facts and circumstances expressly disclosed
-----------------
in Premiere's filings with the Securities and Exchange Commission listed on
Schedule 11.01(b); provided, however, that material adverse developments
- - ----------------- -------- -------
relating to any such facts or circumstances subsequent to such disclosure
thereof, or any ancillary effects thereof occurring subsequent to such
disclosure that could have a Material Adverse Effect on (x) Premiere and the
Consolidated Subsidiaries taken as a whole, (y) any Loan Document or (z) the
Collateral, shall not constitute Disclosed Matters.
"Dollar Equivalent" means, on any date, with respect to an amount of
-----------------
Sterling, the amount of Dollars that the Administrative Agent determines (which
determination shall be conclusive and binding absent manifest error) could then
be purchased by it, on a spot basis and in accordance with its customary banking
practices, with such amount of Sterling.
"Dollars" and the sign "$" mean lawful currency of the United States of
------- -
America.
"Domestic Lending Office" of any Bank means (a) the branch or office of
-----------------------
such Bank set forth below such Bank's name under the heading "Domestic Lending
Office" on Annex A or, in the case of a Bank that becomes a Bank pursuant to an
-------
assignment, the branch or office of such Bank set forth under the heading
"Domestic Lending Office" in the Notice of Assignment given to the Borrower and
the Administrative Agent with respect to such assignment or (b) such other
branch or office of such Bank designated by such Bank from time to time as the
branch or office at which its Base Rate Loans are to be made or maintained.
"Enacted", as applied to a Regulatory Change, means the date such
-------
Regulatory Change first becomes effective or is implemented or first required or
expected to be complied with, whether the same is the result of an enactment by
a government or any agency or political subdivision thereof, a determination of
a court or regulatory authority, or otherwise.
"ERISA" means the Employee Retirement Income Security Act of 1974.
-----
"ERISA Affiliate" means, with respect to any Person, any other Person,
---------------
including a Subsidiary or other Affiliate of such first Person, that is a member
of any group of organizations within the meaning of Code Sections 414(b), (c),
(m) or (o) of which such first Person is a member.
"Eurocurrency Business Day" means any Business Day on which dealings in
-------------------------
Dollar and Sterling deposits are carried on in the London interbank market and
on which commercial banks are open for domestic and international business
(including dealings in Dollar and Sterling deposits) in London, England.
"Eurocurrency Lending Office" of any Bank means (a) the branch or office of
---------------------------
such Bank set forth below such Bank's name under the heading "Eurocurrency
Lending Office" on Annex A or, in the case of a Bank that becomes a Bank
-------
pursuant to an assignment, the branch or office of such Bank set forth under the
heading "Eurocurrency Lending Office" in the Notice of
-50-
<PAGE>
Assignment given to the Borrower and the Administrative Agent with respect to
such assignment or (b) such other branch or office of such Bank designated by
such Bank from time to time as the branch or office at which its Eurocurrency
Rate Loans are to be made or maintained.
"Eurocurrency Rate" means, for any Interest Period, the sum of (i) the rate
-----------------
per annum determined by the Administrative Agent to be the rate per annum
(rounded upward, if necessary, to the next higher 1/16 of 1%) at which the
Reference Bank offered or would have offered to place with first-class banks in
the London interbank market deposits in Dollars or Sterling, as the case may be,
in amounts comparable to the Eurocurrency Rate Loan of the Reference Bank to
which such Interest Period applies, for a period equal to such Interest Period,
at 11:00 a.m. (London time) on the second Eurocurrency Business Day (or such
other day as is customary for eurocurrency loans denominated in Sterling) before
the first day of such Interest Period plus (ii) in the case of Eurocurrency Rate
----
Loans made to Xpedite UK, the Additional Sterling Cost for such Interest Period.
"Eurocurrency Rate Loan" means any Loan the interest on which is, or is to
----------------------
be, as the context may require, computed on the basis of the Eurocurrency Rate.
"Event of Default" means any of the events specified in Section 6.01.
----------------
"Existing Benefit Plan" means any Benefit Plan listed on Schedule 4.15.
--------------------- -------------
"Existing Guaranty" means (a) any Guaranty outstanding on the Restated
-----------------
Agreement Date, to the extent set forth on Schedule 4.06, and (b) any Guaranty
-------------
that constitutes a renewal, extension or replacement of an Existing Guaranty,
but only if (i) at the time such Guaranty is entered into and immediately after
giving effect thereto, no Default would exist, (ii) such Guaranty is binding
only on the obligor or obligors under the Guaranty so renewed, extended or
replaced, (iii) the principal amount of the obligations Guaranteed by such
Guaranty does not exceed the principal amount of the obligations Guaranteed by
the Guaranty so renewed, extended or replaced at the time of such renewal,
extension or replacement and (iv) the obligations Guaranteed by such Guaranty
bear interest at a rate per annum not exceeding the rate borne by the
obligations Guaranteed by the Guaranty so renewed, extended or replaced except
for any increase that is commercially reasonable at the time of such increase.
"Existing Indebtedness" means (a) any Indebtedness of Premiere or any
---------------------
Subsidiary outstanding on the Restated Agreement Date, to the extent set forth
on Schedule 4.05, and (b) any Indebtedness of Premiere or such Subsidiary
-------------
constituting a renewal, extension or refunding of any Existing Indebtedness of
Premiere or such Subsidiary, but only if (i) at the time such Indebtedness is
incurred and immediately after giving effect thereto, no Default would exist,
(ii) the principal amount of such Indebtedness does not exceed the principal
amount of the Indebtedness so renewed, extended or refunded (plus accrued
interest, fees and transaction costs) and (iii) such Indebtedness bears interest
at a rate per annum not exceeding the rate borne by the Indebtedness so renewed,
extended or refunded except for any increase that is commercially reasonable at
the time such Indebtedness is incurred.
"Federal Funds Rate" means, for any day, the weighted average of the rates
------------------
on overnight Federal funds transactions with members of the Federal
-51-
<PAGE>
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York or, if such rate is not so published for any
day that is a Business Day, the average of quotations for such day on such
transactions received by The Bank of New York from three Federal funds brokers
of recognized standing selected by such bank.
"Generally Accepted Accounting Principles" means (a) in the case of the
----------------------------------------
Base Financial Statements, generally accepted accounting principles at the time
of the issuance of the Base Financial Statements and (b) in all other cases, the
accounting principles followed in the preparation of the Base Financial
Statements.
"Governmental Approval" means any authority, consent, approval, license (or
---------------------
the like) or exemption (or the like) of any governmental unit.
"Governmental Registration" means any registration or filing (or the like)
-------------------------
with, or report or notice (or the like) to, any governmental unit.
"Guaranteed Obligations" means all Liabilities of the Borrowers and the
----------------------
other Loan Parties (including in its capacity as a "debtor in possession" under
the Bankruptcy Code) due or owing to, or in favor or for the benefit of, the
Guaranteed Parties under the Loan Documents, of every kind, nature and
description, direct or indirect, absolute or contingent, due or not due, now
existing or hereafter arising, and whether or not (a) due or owing to, or in
favor or for the benefit of, Persons that are Guaranteed Parties as of the
Restated Agreement Date or that become Guaranteed Parties by reason of any
succession or assignment at any time thereafter, (b) ARISING OR ACCRUING BEFORE
OR AFTER THE FILING BY OR AGAINST ANY LOAN PARTY OF A PETITION UNDER THE
BANKRUPTCY CODE OR (c) ALLOWABLE UNDER SECTION 502(b)(2) OF THE BANKRUPTCY CODE;
provided, however, that (i) the Guaranteed Obligations of the Company in its
- - -------- -------
capacity as a Guarantor shall not include any of such Liabilities of the Company
in its capacity as a Borrower and (ii) solely with respect to the obligations of
XSL as a Guarantor hereunder or any other Guarantor that is not a United States
Person, Guaranteed Obligations shall not include any such Liabilities of the
Company or any Subsidiary that is a United States Person under the Loan
Documents.
"Guaranteed Parties" means all Persons that are, or at any time were, the
------------------
Administrative Agent, or a Bank.
"Guarantor" means Premiere, the Company, all Subsidiaries listed on
---------
Schedule 11.01(a) and all Subsidiaries that shall have executed and delivered a
- - -----------------
Subsidiary Guaranty Supplement pursuant to Section 4.03 at any time after the
Restated Agreement Date.
"Guaranty" of any Person means any obligation, contingent or otherwise, of
--------
such Person (a) to pay any Liability of any other Person or to otherwise
protect, or having the practical effect of protecting, the holder of any such
Liability against loss (whether such obligation arises by virtue of such Person
being a partner of a partnership or participant in a joint venture or by
agreement to pay, to keep well, to purchase assets, goods, securities or
services or to take or pay, or otherwise) or (b) incurred in connection with the
issuance by a third Person of a Guaranty of any Liability of any other Person
(whether such obligation arises by agreement to reimburse or
-52-
<PAGE>
indemnify such third Person or otherwise). The word "Guarantee" when used as a
---------
verb has the correlative meaning.
"Indebtedness" of any Person means (a) any obligation of such Person for
------------
borrowed money, (b) any obligation of such Person evidenced by a bond,
debenture, note or other similar instrument, (c) any obligation of such Person
to pay the deferred purchase price of property or services, except a trade
account payable that arises in the ordinary course of business, (d) any
obligation of such Person as lessee under a capital lease, (e) any Mandatorily
Redeemable Stock of such Person, (f) any obligation of such Person to purchase
securities or other property that arises out of or in connection with the sale
of the same or substantially similar securities or property, (g) any obligation,
whether or not contingent, of such Person to reimburse any other Person in
respect of amounts paid under a letter of credit or other Guaranty issued by
such other Person, (h) any Indebtedness of others secured by a Lien on any asset
of such Person and (i) any Indebtedness of others Guaranteed by such Person.
"Indemnified Person" means any Person that is, or at any time was, the
------------------
Administrative Agent, a Bank, an Affiliate of the Administrative Agent or a Bank
or a director, officer, employee or Administrative Agent of any such Person.
"Information" means data, certificates, reports, statements (including
-----------
financial statements), documents and other information.
"Intellectual Property" means (a) (i) patents and patent rights, (ii)
---------------------
trademarks, trademark rights, trade names, trade name rights, corporate names,
business names, trade styles, service marks, logos and general intangibles of
like nature and (iii) copyrights, in each case whether registered, unregistered
or under pending registration and, in the case of any such that are registered
or under pending registration, whether registered or under pending registration
under the laws of the United States or any other country, (b) reissues,
continuations, continuations-in-part and extensions of any Intellectual Property
referred to in clause (a), and (c) rights relating to any Intellectual Property
referred to in clause (a) or (b), including rights under applications (whether
pending under the laws of the United States or any other country) or licenses
relating thereto.
"Intercompany Indebtedness" means Indebtedness owed by Premiere or any
-------------------------
other Guarantor to Premiere or any other Guarantor.
"Interest Expense" means, with respect to any Person, for any period,
----------------
without duplication, the sum of all interest expense of such Person and its
Consolidated Subsidiaries.
"Interest Payment Date" means the last day of each month of each year.
---------------------
"Interest Period" means a period commencing, in the case of the first
---------------
Interest Period applicable to a Eurocurrency Rate Loan, on the date of the
making of, or conversion into, such Loan, and, in the case of each subsequent,
successive Interest Period applicable thereto, on the last day of the
immediately preceding Interest Period, and ending, depending on the Type of
Loan, on the same day, so long as such day is not later than the Commitment
Termination Date, in the first, second, third or sixth calendar month thereafter
or, in the case of Eurocurrency Rate Loans made to Xpedite UK, or made
previously and which have an Interest Period ending, on
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<PAGE>
any day that is less than one month prior to the Commitment Termination Date,
ending on the Commitment Termination Date, except that (a) any Interest Period
that would otherwise end on a day that is not a Eurocurrency Business Day shall
be extended to the next succeeding Eurocurrency Business Day unless such
Eurocurrency Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Eurocurrency Business Day and
(b) any Interest Period that begins on the last Eurocurrency Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month in which such Interest Period ends) shall end on the last
Eurocurrency Business Day of a calendar month.
"Investment" of any Person means (a) any Capital Security, evidence of
----------
Indebtedness or other security or instrument issued by any other Person or (b)
any loan, advance or extension of credit to, or any contribution to the capital
of, any other Person.
"Lending Office" of any Bank means the Domestic Lending Office or the
--------------
Eurocurrency Lending Office of such Bank.
"Liability" of any Person means (in each case, whether with full or limited
---------
recourse) any indebtedness, liability, obligation, covenant or duty of or
binding upon, or any term or condition to be observed by or binding upon, such
Person or any of its assets, of any kind, nature or description, direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, whether arising under Contract, Applicable Law, or
otherwise, whether now existing or hereafter arising, and whether for the
payment of money or the performance or non-performance of any act.
"Lien" means, with respect to any property or asset (or any income or
----
profits therefrom) of any Person (in each case whether the same is consensual or
nonconsensual or arises by Contract, operation of law, legal process or
otherwise), any mortgage, lien, pledge, attachment, levy or other security
interest of any kind thereupon or in respect thereof. For the purposes of this
Agreement, a Person shall be deemed to own subject to a Lien any asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means any amount advanced by a Bank pursuant to Section 1.01.
----
"Loan Document Related Claim" means any claim or dispute (whether arising
---------------------------
under Applicable Law, including any "environmental" or similar law, under
Contract or otherwise and, in the case of any proceeding relating to any such
claim or dispute, whether civil, criminal, administrative or otherwise) in any
way arising out of, related to, or connected with, the Loan Documents, the
relationships established thereunder or any actions or conduct thereunder or
with respect thereto, whether such claim or dispute arises or is asserted before
or after the Restated Agreement Date or before or after the Repayment Date.
"Loan Document Representation and Warranty" means any "Representation and
-----------------------------------------
Warranty" as defined in any Loan Document and any other representation or
warranty made or deemed made under any Loan Document.
-54-
<PAGE>
"Loan Documents" means (a) this Agreement, the Notes, the Security
--------------
Agreements and the UK Security Agreements and (b) all other agreements,
documents and instruments executed or delivered under or in connection with (i)
any agreement, document or instrument referred to in clause (a), (ii) any other
agreement, document or instrument referred to in this clause (b) or (iii) any of
the transactions contemplated by any agreement, document or instrument referred
to in clause (a) or in this clause (b).
"Loan Party" means any Person (other than the Administrative Agent or a
----------
Bank) that is a party to a Loan Document.
"Managing Agents" means The Bank of New York and NationsBank, N.A.
---------------
"Mandatorily Redeemable Stock" means, with respect to any Person, any share
----------------------------
of such Person's capital stock to the extent that it is (a) redeemable, payable
or required to be purchased or otherwise retired or extinguished, or convertible
into any Indebtedness or other Liability of such Person, (i) at a fixed or
determinable date, whether by operation of a sinking fund or otherwise, (ii) at
the option of any Person other than such Person or (iii) upon the occurrence of
a condition not solely within the control of such Person, such as a redemption
required to be made out of future earnings or (b) convertible into Mandatorily
Redeemable Stock.
"Materially Adverse Effect" means, (a) with respect to a group of Persons
-------------------------
"taken as a whole", any materially adverse effect on such Persons' business,
assets, Liabilities, financial conditions, results of operations or business
prospects taken as a whole on a consolidated basis in accordance with Generally
Accepted Accounting Principles, (b) with respect to any Loan Document, any
materially adverse effect, on the binding nature, validity or enforceability
thereof as an obligation of any Loan Party that is a party thereto and (c) with
respect to any Collateral, or any category of Collateral, pledged by any Loan
Party, a materially adverse effect on the validity, perfection, priority or
enforceability of the Security Interest therein.
"Maximum Permissible Rate" means, with respect to interest payable on any
------------------------
amount, the rate of interest on such amount that, if exceeded, could, under
Applicable Law, result in (a) civil or criminal penalties being imposed on the
payee or (b) the payee's being unable to enforce payment of (or, if collected,
to retain) all or any part of such amount or the interest payable thereon.
"Money Market Investment" means (a) any security issued or directly and
-----------------------
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof having a remaining maturity of not more than one year,
(b) any certificate of deposit, eurodollar time deposit and bankers' acceptance
with remaining maturity of not more than one year, any overnight bank deposit,
and any demand deposit account, in each case with any Bank or with any United
States or United Kingdom commercial bank having capital and surplus in excess of
$500,000,000 or (Pounds)500,000,000, (c) any repurchase obligation with a term
of not more than seven days for underlying securities of the types described in
clauses (a) and (b) above entered into with any financial institution meeting
the qualifications specified in clause (b) above, (d) any commercial paper
issued by any Bank or the parent corporation of any Bank and any other
commercial paper rated A-1 or higher by Standard & Poor's, a division of the
McGraw Hill Companies, Inc., or Prime-1 by Moody's Investors Service, Inc. and
in any case having a
-55-
<PAGE>
remaining maturity of not more than one year, (e) any money market fund that
invests solely in any or all of the Money Market Investments described in
clauses (a) through (d) of this definition and (f) foreign currency investments
of credit quality similar to the foregoing by any Subsidiary that is not a
United States Person made in the ordinary course of business and reasonably
related to the business needs of such Subsidiary.
"Multiemployer Benefit Plan" means any Benefit Plan that is a multiemployer
--------------------------
plan as defined in Section 4001(a)(3) of ERISA.
"Net Consolidated Indebtedness" means, at any time, Consolidated
-----------------------------
Indebtedness of Premiere at such time less the amount of cash and cash-
equivalents owned and held by Premiere and the Consolidated Subsidiaries at such
time in excess of $10,000,000.
"Net Proceeds" means proceeds received by Premiere or any of its
------------
Subsidiaries in cash from the sale or other disposition of any investment
security in any calendar year permitted pursuant to Section 4.09(d)(i), net of
the amount of (i) brokers' and advisors' fees and commissions payable in
connection with such sale or other disposition, (ii) all Federal, state and
local taxes payable as a direct consequence of such sale or other disposition
and (iii) the fees and expenses attributable to such sale or other disposition,
to the extent not included in clause (i), except to the extent payable to any
Affiliate of Premiere.
"Note" means any promissory note in the form of Exhibit A.
---- ---------
"Notice of Assignment" means any notice to the Borrowers and the
--------------------
Administrative Agent with respect to an assignment pursuant to Section 10.10(a)
in the form of Schedule 10.10(a).
-----------------
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Permitted Guaranty" means any Guaranty that is (a) an endorsement for
------------------
deposit or collection in the ordinary course of business, (b) a Guaranty of and
only of the obligations of the Loan Parties under the Loan Documents, (c) a
Guaranty of obligations of Premiere or any Subsidiary not constituting
Indebtedness of such Person and not otherwise prohibited by this Agreement, (d)
a Guaranty of Indebtedness permitted pursuant to Section 4.05 (other than
Premiere's 5-3/4% Convertible Subordinated Notes due 2004) or (e) Guaranties by
Premiere of obligations and Indebtedness of its Subsidiaries (including real
property leases and other ordinary course obligations) not prohibited to be
incurred hereunder.
"Permitted Lien" means (a) with respect to any asset that does not
--------------
constitute Collateral, (i) any Lien existing on the Restated Agreement Date, to
the extent set forth on Schedule 4.07; (ii) any Lien existing on any asset of
--------------
any Person at the time such Person becomes a Subsidiary or on any asset at the
time such asset is acquired by Premiere or a Subsidiary, but only, in either
case, if such Lien was not created in contemplation of such Person becoming a
Subsidiary or such asset being acquired and such Lien secures only the
obligation secured thereby at the time such Person becomes a Subsidiary or such
asset is acquired; (iii) any Lien on any asset securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of acquiring
such asset, provided that such Lien attaches to such asset concurrently with or
--------
within 30 days after the acquisition thereof; (iv) any Lien arising out of the
refinancing, extension, renewal or refunding of any Liability secured by any
Lien permitted by any of the foregoing
-56-
<PAGE>
clauses of this Section, provided that such Liability is not increased and is
--------
not secured by any additional assets; (v) Liens on the assets of Premiere or any
Subsidiary incidental to conduct of its business or the ownership of its assets
that do not secure Indebtedness; (vi) any Lien securing and only securing the
obligations of the Loan Parties under the Loan Documents; (vii) Liens securing
Indebtedness of Premiere or any Subsidiary under a capital lease to the extent
that such Liens attach solely to the assets subject to such capital lease or
acquired with the proceeds of such Indebtedness; (viii) other Liens securing
Indebtedness of Premiere and its Subsidiaries not prohibited by this Agreement
in an aggregate principal amount outstanding at any time not in excess of
$1,000,000 and (b) with respect to any asset that constitutes Collateral, any
Lien that constitutes a "Permitted Lien" under the applicable Security Agreement
or UK Security Agreements; and (ix) any Liens for Taxes which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with Generally Accepted Accounting
Principles.
"Permitted Restrictive Covenants" means (a) any covenant or restriction
-------------------------------
contained in any Loan Document, (b) any covenant or restriction described in
Schedule 4.11, but only to the extent that such covenant or restriction is there
- - -------------
identified by specific reference to the provision of the Contract in which such
covenant or restriction is contained, or (c) any covenant or restriction that
(i) is not more burdensome than an existing Permitted Restrictive Covenant that
is such by virtue of clause (b), (ii) is contained in a Contract constituting a
renewal, extension or replacement of the Contract in which such existing
Permitted Restrictive Covenant is contained and (iii) is binding only on the
Person or Persons bound by such existing Permitted Restrictive Covenant.
"Person" means any individual, sole proprietorship, corporation,
------
partnership, limited liability company, trust, unincorporated organization,
mutual company, joint stock company, estate, union, employee organization,
government or any agency or political subdivision thereof or, for the purpose of
the definition of "ERISA Affiliate", any trade or business.
"Post-Default Rate" means the rate otherwise applicable under Section
-----------------
1.03(a)(i) plus 2.00%.
"Premiere" means Premiere Technologies, Inc., a Georgia corporation.
--------
"Premiere Communications" means Premiere Communications, Inc., a Florida
-----------------------
corporation.
"Premiere Interest Coverage Ratio" means, at any time, the ratio of (x)
--------------------------------
Consolidated EBITDA of Premiere for the fiscal quarter of Premiere ending on, or
most recently ended prior to, such date of determination to (y) Interest Expense
of Premiere minus interest income and minus, to the extent included in Interest
----- -----
Expense, amortization of financing costs of Premiere and the Consolidated
Subsidiaries for such period.
"Premiere Leverage Ratio" means, at any time, the ratio of Net Consolidated
-----------------------
Indebtedness of Premiere at such time to Annualized Consolidated EBITDA of
Premiere at such time.
-57-
<PAGE>
"Prime Rate" means the prime commercial lending rate of The Bank of New
----------
York, as publicly announced to be in effect from time to time. The Prime Rate
shall be adjusted automatically, without notice, on the effective date of any
change in such prime commercial lending rate. The Prime Rate is not necessarily
The Bank of New York's lowest rate of interest.
"Prohibited Transaction" means any transaction that is prohibited under
----------------------
Code Section 4975 or ERISA Section 406 and not exempt under Code Section 4975 or
ERISA Section 408.
"Purchase Money Indebtedness" means (a) Indebtedness that is incurred to
---------------------------
finance part or all of (but not more than) the purchase price of a tangible
asset, provided that (i) neither Premiere nor any Subsidiary had at any time
--------
prior to such purchase any interest in such asset other than a security interest
or an interest as lessee under an operating lease and (ii) such Indebtedness is
incurred within 30 days after such purchase, or (b) Indebtedness that (i)
constitutes a renewal, extension or refunding of, but not an increase in the
principal amount of, Purchase Money Indebtedness that is such by virtue of
clause (a) or (b) and (ii) bears interest at a rate per annum that is
commercially reasonable at the time such Indebtedness is incurred.
"Quarterly Date" means the last day of each March, June, September and
--------------
December of each year.
"Reference Bank" means The Bank of New York and any replacement Reference
--------------
Bank appointed pursuant to Section 10.13.
"Regulation D" means Regulation D of the Board of Governors of the Federal
------------
Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the Federal
------------
Reserve System.
"Regulatory Change" means any Applicable Law, interpretation, directive,
-----------------
request or guideline (whether or not having the force of law), or any change
therein or in the administration or enforcement thereof, that is Enacted after
the Restated Agreement Date, including any such that imposes, increases or
modifies any Tax, reserve requirement, insurance charge, special deposit
requirement, assessment or capital adequacy requirement, but excluding any such
that imposes, increases or modifies any Bank Tax.
"Repayment Date" means the later of (a) the termination of the Commitments
--------------
(whether as a result of the occurrence of the Commitment Termination Date,
reduction to zero pursuant to Section 1.07 or termination pursuant to Section
6.02) and (b) the payment in full of all principal of and interest on the Loans
and all other amounts payable or accrued hereunder.
"Reportable Event" means, with respect to any Benefit Plan of any Person,
----------------
(a) the occurrence of any of the events set forth in ERISA Sections 4043(c),
other than an event as to which the requirement of 30 days' notice, or the
penalty for failure to provide such notice, has been waived by the PBGC, (b) the
existence of conditions sufficient to require advance notice to the PBGC
pursuant to ERISA Section 4043(b), (c) the occurrence of any of the events set
forth in ERISA Sections 4062(e) or 4063(a) or the regulations thereunder, (d)
any event requiring such Person or any of its ERISA Affiliates to provide
security to such Benefit Plan under Code
-58-
<PAGE>
Section 401(a)(29) or (e) any failure to make a payment required by Code Section
412(m) with respect to such Benefit Plan.
"Representation and Warranty" means any representation or warranty made
---------------------------
pursuant to or under (a) Section 2.02, Article 3, Section 5.02 or any other
provision of this Agreement or (b) any amendment to, or waiver of rights under,
this Agreement.
"Required Banks" means, at any time, Banks having more than 75% of the
--------------
aggregate amount of the Commitments or, if the Commitments shall have expired or
been terminated, Banks having more than 75% of the aggregate amount of the Loans
outstanding.
"Restated Agreement Date" means the date set forth as such on the signature
-----------------------
pages hereof, which date is the date the executed copies of this Agreement, as
amended and restated, were delivered by all parties hereto and, accordingly,
this Agreement, as amended and restated, became effective. If no such date is
there set forth, the Restated Agreement Date shall be the date as of which this
Agreement is dated.
"Restricted Payment" means (a) any payment with respect to or on account of
------------------
any of Premiere's or any Subsidiary's Capital Securities, including any dividend
or other distribution on any such Capital Securities or (b) any payment on
account of any purchase, redemption, retirement, exchange, defeasance or
conversion of, or on account of any claim relating to or arising out of the
offer, sale or purchase of, any such Capital Security, other than any such
payment with respect to Premiere's 5-3/4% Convertible Subordinated Notes due
2004 required to be made in accordance with the terms thereof as in effect on
the Restated Agreement Date. For the purposes of this definition, a "payment"
shall include the transfer of any asset or the incurrence of any Indebtedness or
other Liability (the amount of any such payment to be the fair market value of
such asset or the amount of such obligation, respectively) but shall not include
the issuance of any capital stock of Premiere or any Subsidiary other than
Mandatorily Redeemable Stock.
"Secured Party" has the meaning ascribed to such term in the Security
-------------
Agreements and to the term "Agent" in the UK Security Agreements and to any
analogous term in any other security agreement executed and delivered pursuant
to Section 4.03(iii).
"Security Agreements" means collectively (a) each of the Security
-------------------
Agreements between Premiere and the Administrative Agent, American
Teleconferencing and the Administrative Agent, Voice-Tel and the Administrative
Agent, Worldwide and the Administrative Agent and the Company and the
Administrative Agent, in each case in substantially the form of Exhibit B and
---------
(b) any other security agreement entered into by a Significant Subsidiary and
the Administrative Agent pursuant to Section 4.03, in each case in substantially
the form of Exhibit B.
---------
"Security Interest" means the Liens created, or purported to be created, by
-----------------
the Loan Documents.
"Significant Subsidiary" means, at any time, any Subsidiary whose assets
----------------------
(after elimination of intercompany items) equal or exceed [5%] of the total
consolidated assets of Premiere and the Consolidated Subsidiaries, or whose
revenues (after elimination of
-59-
<PAGE>
intercompany items) equal or exceed [5%] of the total consolidated revenues of
Premiere and the Consolidated Subsidiaries, in each case as shown on the most
recent financial statements of Premiere and its Consolidated Subsidiaries
furnished to the Banks pursuant to Section 5.01.
"Sterling" and the sign "(Pounds)" mean lawful currency of the United
-------- --------
Kingdom.
"Sterling Sub-limit" means $70,000,000, as such amount may be decreased
------------------
from time to time pursuant to Section 1.07.
"Subsidiary" means, with respect to any Person, any other Person (a)
----------
securities of which having ordinary voting power to elect a majority of the
board of directors (or other persons having similar functions) or (b) other
ownership interests of which ordinarily constituting a majority voting interest,
are at the time, directly or indirectly, owned or controlled by such first
Person, or by one or more of its Subsidiaries, or by such first Person and one
or more of its Subsidiaries; unless otherwise specified, "Subsidiary" means a
Subsidiary of Premiere.
"Tax" means any Federal, State or foreign tax, assessment or other
---
governmental charge (including any withholding tax) upon a Person or upon its
assets, revenues, income or profits.
"Termination Event" means, with respect to any Benefit Plan, (a) any
-----------------
Reportable Event with respect to such Benefit Plan, (b) the termination of such
Benefit Plan, or the filing of a notice of intent to terminate such Benefit
Plan, or the treatment of any amendment to such Benefit Plan as a termination
under ERISA Section 4041(c), (c) the institution of proceedings to terminate
such Benefit Plan under ERISA Section 4042 or (d) the appointment of a trustee
to administer such Benefit Plan under ERISA Section 4042.
"Type" means, with respect to Loans, any of the following, each of which
----
shall be deemed to be a different "Type" of Loan: Base Rate Loans, Eurocurrency
Rate Loans having a one-month Interest Period, Eurocurrency Rate Loans having a
two-month Interest Period, Eurocurrency Rate Loans having a three-month Interest
Period, and Eurocurrency Rate Loans having a six-month Interest Period. Any
Eurocurrency Rate Loan having an Interest Period that differs from the duration
specified for a Type of Eurocurrency Rate Loan listed above solely as a result
of the operation of clauses (a) and (b) of the definition of "Interest Period"
shall be deemed to be a Loan of such above-listed Type notwithstanding such
difference in duration of Interest Periods.
"UK Security Agreements" means collectively (a) the Worldwide UK Security
----------------------
Agreement, (b) the Xpedite UK Security Agreement, (c) the XSL Security Agreement
and (d) any other security agreement entered into by a Subsidiary of Xpedite UK
that is a Significant Subsidiary and the Administrative Agent pursuant to
Section 4.03, in each case in substantially the form of Exhibit E.
---------
"United States Person" means a corporation, partnership or other entity
--------------------
created, organized or incorporated under the laws of the United States of
America or a State thereof (including the District of Columbia).
"VoiceCom" means VoiceCom Systems, Inc., a Washington corporation.
--------
-60-
<PAGE>
"Voice-Tel" means Voice-Tel Enterprises, Inc., a Delaware corporation.
---------
"Worldwide" means Xpedite Systems Worldwide, Inc.
---------
"Worldwide UK Security Agreement" means the Deed of Charge over Shares and
-------------------------------
Securities dated December 17, 1997 between Worldwide, as Chargor, and The Bank
of New York, as Agent.
"Xpedite Interest Coverage Ratio" means, at any time, the ratio of (x)
-------------------------------
Consolidated EBITDA for the fiscal quarter of the Company ending on, or most
recently ended prior to, such date of determination to (y) Interest Expense of
the Company minus interest income and minus, to the extent included in Interest
----- -----
Expense, amortization of financing costs of the Company and its Consolidated
Subsidiaries for such period.
"Xpedite Leverage Ratio" means, at any time, the ratio of Consolidated
----------------------
Indebtedness of Xpedite at such time to Annualized Consolidated EBITDA of
Xpedite at such time.
"Xpedite UK" has the meaning ascribed thereto in the preamble hereto.
----------
"Xpedite UK Security Agreement" means the Fixed and Floating Charge dated
-----------------------------
December 17, 1997 between Xpedite UK and The Bank of New York, as Agent.
"XSL" means Xpedite Systems Limited., an English corporation.
---
"XSL Security Agreement" means the Fixed and Floating Charge dated December
----------------------
17, 1997 between XSL and The Bank of New York, as Agent.
Section 11.02 Other Interpretive Provisions.
-----------------------------
(a) Except as otherwise specified herein, all references herein or in
any other Loan Document (i) to any Person shall be deemed to include such
Person's successors and assigns, (ii) to any Applicable Law defined or referred
to herein shall be deemed references to such Applicable Law or any successor
Applicable Law as the same may have been or may be amended or supplemented from
time to time and (iii) to any Loan Document or Contract defined or referred to
herein shall be deemed references to such Loan Document or Contract (and, in the
case of any Note or any other instrument, any instrument issued in substitution
therefor) as the terms thereof may have been or may be amended, supplemented,
waived or otherwise modified from time to time.
(b) When used in this Agreement, the words "herein", "hereof" and
"hereunder" and words of similar import shall refer to this Agreement as a whole
and not to any provision of this Agreement, and the words "Article", "Section",
"Annex", "Schedule" and "Exhibit" shall refer to Articles and Sections of, and
Annexes, Schedules and Exhibits to, this Agreement unless otherwise specified.
(c) Whenever the context so requires, the neuter gender includes the
masculine or feminine, the masculine gender includes the feminine, and the
singular number includes the plural, and vice versa.
-61-
<PAGE>
(d) Any item or list of items set forth following the word
"including", "include" or "includes" is set forth only for the purpose of
indicating that, regardless of whatever other items are in the category in which
such item or items are "included", such item or items are in such category, and
shall not be construed as indicating that the items in the category in which
such item or items are "included" are limited to such items or to items similar
to such items.
(e) Except as otherwise specified herein, all references herein to the
Agent, any Bank or any Loan Party shall be deemed to refer to such Person
however designated in Loan Documents, so that (i) a reference to rights or
duties of the Administrative Agent under the Loan Documents shall be deemed to
include the rights or duties of such Person as the Security Party under the
Security Agreements and the UK Security Agreements, (ii) a reference to costs
incurred by a Bank in connection with the Loan Documents shall be deemed to
include costs incurred by such Person as a Principal under (and as defined in)
the Security Agreements and the UK Security Agreements, and (iii) a reference to
the obligations of the Borrowers or any other Loan Party under the Loan
Documents shall be deemed to include the obligations of such Person in any
capacity under the Loan Documents.
Section 11.03 Accounting Matters.
------------------
All accounting determinations hereunder and all computations utilized by
Premiere or the Company in complying with the covenants contained herein shall
be made, all accounting terms used herein shall be interpreted, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with Generally Accepted Accounting Principles, except, in the case of
such financial statements, for changes in Generally Accepted Accounting
Principles that may from time to time be approved by a significant segment of
the accounting profession.
Section 11.04 Representations and Warranties.
------------------------------
All Representations and Warranties shall be deemed made (a) in the case of
any Representations and Warranties contained in this Agreement at the time of
its initial execution and delivery, at and as of the Restated Agreement Date and
(b) in the case of any particular Representation and Warranty, wherever
contained, at such other time or times as such Representation and Warranty is
made or deemed made in accordance with the provisions of this Agreement or the
document pursuant to, under or in connection with which such Representation and
Warranty is made or deemed made.
Section 11.05 Captions.
--------
Captions to Articles, Sections and subsections of, and Annexes, Schedules
and Exhibits to, this Agreement are included for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose or in
any way affect the meaning or construction of any provision of this Agreement.
Section 11.06 Interpretation and Related Documents.
------------------------------------
Except as otherwise specified therein, terms that are defined herein that
are used in Notes, certificates, opinions and other documents delivered in
connection herewith shall have the meanings ascribed to them herein and such
documents shall be otherwise interpreted in accordance with the provisions of
this Article 11.
Section 11.07 Undertaking by Premiere.
------------------------
Notwithstanding the provisions of Section 2.01(a) hereto, the amendment and
restatement of this Agreement as of the Restated Agreement
-62-
<PAGE>
Date shall be effective notwithstanding that the Administrative Agent shall not
have received the following, and Premiere agrees to deliver or cause to be
delivered each of the following to the Administrative Agent, no later than the
date that is, in the case of items (i) and (ii) below, 30 days and, in the case
of item (iii) below, 10 days, after the Restated Agreement Date:
(i) opinions of local counsel for the Loan Parties in Florida,
Missouri, Washington and each other state, if any, in which the chief
executive office of any Loan Party or any substantial portion of Collateral
is located or deemed located, in form and substance reasonably satisfactory
to the Managing Agents;
(ii) Uniform Commercial Code, tax and judgement lien searches for
each of the Loan Parties that are United States Persons, in such
jurisdictions as shall have been reasonably requested by the Administrative
Agent; and
(iii) the items referred to in Section 2.01(a)(x).
-63-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers all as of the Restated Agreement
Date.
PREMIERE TECHNOLOGIES, INC.
By /s/
------------------------------------
Name:
Title:
XPEDITE SYSTEMS, INC.
By /s/
------------------------------------
Name:
Title:
XPEDITE SYSTEMS HOLDINGS (UK) LIMITED
By /s/
------------------------------------
Name:
Title:
XPEDITE SYSTEMS WORLDWIDE, INC.
By /s/
------------------------------------
Name:
Title:
i
<PAGE>
XPEDITE SYSTEMS LIMITED
By /s/
------------------------------------
Name:
Title:
AMERICAN TELECONFERENCING
SERVICES, LTD.
By /s/
------------------------------------
Name:
Title:
PREMIERE COMMUNICATIONS, INC
By /s/
------------------------------------
Name:
Title:
VOICECOM SYSTEMS, INC.
By /s/
------------------------------------
Name:
Title:
ii
<PAGE>
VOICE-TEL ENTERPRISES, INC.
By /s/
------------------------------------
Name:
Title:
iii
<PAGE>
THE BANK OF NEW YORK,
as Administrative Agent and as a Bank
By /s/
------------------------------------
Name:
Title:
NATIONSBANK, N.A.,
as Documentation Agent and as a Bank
By /s/
------------------------------------
Name:
Title:
Agreement Date:
iv
<PAGE>
ANNEX A
-------
BANKS, LENDING OFFICES
AND NOTICE ADDRESSES COMMITMENTS
- - --------------------- -----------
THE BANK OF NEW YORK $50,000,000
Domestic Lending Office:
The Bank of New York
One Wall Street, 16th Floor
New York, NY 10286
Eurocurrency Lending Office:
The Bank of New York
One Wall Street, 16th Floor
New York, NY 10286
Notice Address:
The Bank of New York
One Wall Street, 16th Floor
New York, NY 10286
Telephone: (212) 635-8607
Telecopy No.: (212) 635-8595
Attention: Ms. Cindy Rogers
<PAGE>
BANKS, LENDING OFFICES
AND NOTICE ADDRESSES COMMITMENTS
- - --------------------- -----------
NATIONSBANK, N.A. $100,000,000
Domestic Lending Office:
NationsBank, N.A.
101 North Tryon Street
NC1-001-15-03
Charlotte, NC 28255
Eurocurrency Lending Office:
NationsBank, N.A.
101 North Tryon Street
NC1-001-15-03
Charlotte, NC 28255
Notice Address:
NationsBank, N.A.
101 North Tryon Street
NC1-001-15-03
Charlotte, NC 28255
Telephone: (704) 386-8389
Telecopy No.: (704) 386-8694
Attention:
<PAGE>
Schedule 1.02
-------------
NOTICE OF BORROWING FOR LOANS
[Name and address
of Administrative Agent in accordance with
Section 10.01]
Date:
Ladies and Gentlemen:
Reference is made to the Amended and Restated Credit Agreement, dated as of
December 16, 1998, among Xpedite Systems, Inc. and Xpedite Systems Holdings (UK)
Limited, as Borrowers, the Guarantors party thereto, the Banks listed on the
signature pages thereof, NationsBank, N.A., as Documentation Agent, and The Bank
of New York, as Administrative Agent (the "Credit Agreement"). Terms defined in
the Credit Agreement that are not otherwise defined herein are used herein with
the meanings therein ascribed to them. The undersigned hereby gives notice
pursuant to Section 1.02 of the Credit Agreement of its request to have the
following Loans made to it on [insert requested date of borrowing or issuance]:
Type of Loan/1/ Amount
------------ ------
_________________________________ ______________
_________________________________ ______________
_________________________________ ______________
[Please disburse the proceeds of the Loans by [insert requested method of
disbursement].]/2/
The undersigned represents and warrants that (a) the borrowing requested
hereby complies with the requirements of Section 1.02 of the Credit Agreement
and (b) [except to the extent set forth on Annex A hereto,]/3/ (i) each Loan
Document Representation and Warranty is true and correct at and as of the date
hereof and (except to the extent the undersigned gives notice to the Banks to
the contrary prior to 5:00 p.m. on the Business Day before the requested date
for the making of the Loans) will be true and correct at and as of the time the
Loans are made, in each case both with and without giving effect to the Loans
and the application of the proceeds thereof, and (ii) no Default has occurred
and is continuing as of the date hereof or would result from the making of the
Loans or from the application of the proceeds thereof if the
<PAGE>
Loans were made on the date hereof, and (except to the extent the undersigned
gives notice to the Banks to the contrary prior to 5:00 p.m. on the Business Day
before the requested date for the making of the Loans) no Default will have
occurred and be continuing at the time the Loans are to be made or would result
from the making of the Loans or from the application of the proceeds thereof.
[XPEDITE SYSTEMS, INC.]
[XPEDITE SYSTEMS HOLDINGS (UK) LIMITED]
By ,
---------------------------
Name:
Title:
_____________________
1. Be sure to specify the duration of the Interest Period in the case of
Eurocurrency Rate Loans (e.g., one-month Eurocurrency Rate).
----
2. Include and complete this sentence if the proceeds of the requested Loans
are to be disbursed in a manner other than by credit to an account of the
Borrower at the Administrative Agent's Office.
3. If the representation and warranty in either clause (b)(i) or (b)(ii) would
be incorrect, include the material in brackets and set forth the reasons
such representation and warranty would be incorrect on an attachment
labeled Annex A.
2
<PAGE>
Schedule 1.03(c)(iv)
--------------------
NOTICE OF CONVERSION OR CONTINUATION
[Name and address
of Administrative Agent in accordance with
Section 10.01]
Date:
Ladies and Gentlemen:
Reference is made to the Amended and Restated Credit Agreement, dated as of
December 16, 1998, among Xpedite Systems, Inc. and Xpedite Systems Holdings (UK)
Limited, as Borrowers, the Guarantors party thereto, the Banks listed on the
signature pages thereof, NationsBank, N.A., as Documentation Agent, and The Bank
of New York, as Administrative Agent (the "Credit Agreement"). The undersigned
hereby gives notice pursuant to Section 1.03(c)(iv) of the Credit Agreement of
its desire to convert or continue the Loans specified below into or as Loans of
the Types and in the amounts specified below on [insert date of conversion or
continuation]:
<TABLE>
<CAPTION>
Loans to be Converted or Continued Converted or Continued Loans
- - -------------------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C>
Type Last Day of Current Type
of Loan/1/ Interest Period Amount of Loan/1/ Amount
- - ------------ ------------------- --------------- ------------------- -------------------
- - ------------ ------------------- --------------- ------------------- -------------------
- - ------------ ------------------- --------------- ------------------- -------------------
- - ------------ ------------------- --------------- ------------------- -------------------
</TABLE>
The undersigned represents and warrants that conversions and continuations
requested hereby comply with the requirements of the Credit Agreement.
[XPEDITE SYSTEMS, INC.]
[XPEDITE SYSTEMS HOLDINGS (UK) LIMITED]
By:
-------------------------------
Name:
Title:
______________
/1/ Be sure to specify the duration of the Interest Period in the case of
Eurocurrency Rate Loans (e.g., one-month Eurocurrency Rate).
<PAGE>
Schedule 1.05(a)
----------------
NOTICE OF PREPAYMENT
[Name and address
of Administrative Agent in accordance with
Section 10.01]
Date:
Ladies and Gentlemen:
Reference is made to the Amended and Restated Credit Agreement, dated as of
December 16, 1998, among Xpedite Systems, Inc. and Xpedite Systems Holdings (UK)
Limited, as Borrowers, the Guarantors party thereto, the Banks listed on the
signature pages thereof, NationsBank, N.A., as Documentation Agent, and The Bank
of New York, as Administrative Agent (the "Credit Agreement"). The undersigned
hereby gives notice pursuant to Section 1.05(a) of the Credit Agreement that it
will prepay the Loans specified below on [insert date of prepayment]:
<TABLE>
<CAPTION>
[Last Day of
Current
Type of Loan/1/ Interest Period] Amount
- - ---------------------------- ------------------------------ -----------------------------
<S> <C> <C>
- - ---------------------------- ------------------------------ -----------------------------
- - ---------------------------- ------------------------------ -----------------------------
- - ---------------------------- ------------------------------ -----------------------------
</TABLE>
The undersigned represents and warrants that the prepayment
requested hereby complies with the requirements of the Credit Agreement.
[XPEDITE SYSTEMS, INC.]
[XPEDITE SYSTEMS HOLDINGS (UK) LIMITED]
By
---------------------------------
Name:
Title:
- - -----------------
/1/ Be sure to specify the duration of the Interest Period in the case of
Eurocurrency Rate Loans (e.g., one-month Eurocurrency Rate).
----
2
<PAGE>
Schedule 2.01(a)(i)
-------------------
[INSERT NAME OF LOAN PARTY]
CERTIFICATE AS TO RESOLUTIONS, ETC.
I, __________, [Assistant] Secretary of [insert name of loan party], a
[__________] corporation (the "Company"), hereby certify, pursuant to Section
2.01(a)(i) of the Amended and Restated Credit Agreement, dated as of December
16, 1998, among Xpedite Systems, Inc. and Xpedite Systems Holdings (UK) Limited,
as Borrowers, the Guarantors party thereto, the Banks listed on the signature
pages thereof, NationsBank, N.A., as Documentation Agent, and The Bank of New
York, as Administrative Agent (the "Credit Agreement"), that:
1. The below named persons have been duly elected (or appointed) and have
duly qualified as, and on this day are, officers of the Company holding their
respective offices below set opposite their names, and the signatures below set
opposite their names are their genuine signatures:
Name Office Signature
---- ------ ---------
[Insert names and offices _______________________________
of persons authorized to sign _______________________________
the Loan Documents to which ______________________________
the Company is a party _______________________________
and any related documents] _______________________________
2. (a) Attached as Annex A is a true and correct copy of resolutions duly
adopted by [unanimous written consent of] the Board of Directors of the Company.
Such resolutions have not been amended, modified or revoked and are in full
force and effect on the date hereof.
[(b) Attached as Annex A-1 is a true and correct copy of resolutions duly
adopted by [unanimous written consent of] the stockholders of the Company. Such
resolutions have not been amended, modified or revoked and are in full force and
effect on the date hereof.]/1/
3. The loan documents to which the Company is a party, in each case as
executed and delivered on behalf of the Company, are in the forms thereof
approved by [unanimous written consent of] the Board of Directors of the
Company.
4. There has been no amendment to the Certificate of Incorporation of the
Company since __________, 19__./2/
<PAGE>
5. Attached as Annex B is a true and correct copy of the By-laws of the
Company as in effect on __________, 19__/3/ and at all subsequent times to and
including the date hereof.
IN WITNESS WHEREOF, I have signed this certificate this __ day of
__________, 1997.
___________________________
[Assistant] Secretary
I, __________, [title] of the Company, hereby certify that [name of the
above [Assistant] Secretary] has been duly elected or appointed and has been
duly qualified as, and on this day is, [Assistant] Secretary of the Company, and
the signature in paragraph 1 above is his genuine signature.
IN WITNESS WHEREOF, I have signed this certificate this __ day of
__________, 19__.
___________________________
[Title]
____________________
1. Omit if not applicable.
2. Insert date of the Secretary of State's Certificate of Incorporation
required by Section 2.01(a)(ii).
3. Insert date of the Board of Directors' meeting adopting the resolutions
referred to in paragraph 2(a).
2
<PAGE>
Schedule 2.01(a)(iv)
--------------------
FORM OF OPINION OF COUNSEL
FOR THE LOAN PARTIES
Schedule 2.01(a)(iv)
FORM OF OPINION OF COUNSEL FOR THE LOAN PARTIES
December 16, 1998
To the Persons Listed on the Schedule A hereto
Re: $150,000,000 Amended and Restated Credit Agreement to Xpedite Systems, Inc.
and Xpedite Systems Holdings (UK) Limited
Ladies and Gentlemen:
We have acted as special counsel to Premiere Technologies, Inc.
("Premiere"), a Georgia corporation, Xpedite Systems, Inc. ("Xpedite"), a
Delaware corporation, Xpedite Systems Holdings (UK) Limited ("Xpedite UK"), an
English corporation, Xpedite Systems Limited ("Xpedite Systems"), an English
corporation, Xpedite Systems Worldwide, Inc. ("Worldwide"), a Delaware
corporation, Premiere Communications, Inc. ("Premiere Communications"), a
Florida corporation, Voice-Tel Enterprises, Inc. ("Voice-Tel"), a Delaware
corporation, VoiceCom Systems, Inc. ("VoiceCom"), a Washington corporation, and
American Teleconferencing Services, Ltd., ("American Teleconferencing"), a
Missouri corporation in connection with the execution and delivery of that
certain Credit Agreement dated as of December 17, 1997, as Amended and Restated
as of December 16, 1999 (the "Credit Agreement"), by and among Xpedite and
Xpedite UK , as Borrowers, Xpedite Systems, Worldwide, Premiere, Premiere
Communications, Voice-Tel, VoiceCom and American Teleconferencing, as
Guarantors, the signatory banks thereto (collectively, the "Banks"), and The
Bank of New York, as administrative agent (the "Administrative Agent") for the
Banks, and NationsBank, N.A., as documentation agent, pursuant to which and
subject to the terms and conditions of which the Banks agree to make Loans to
the Borrowers on the terms and conditions set forth therein. Unless otherwise
defined herein, terms defined in the Credit Agreement are used herein as therein
defined. This opinion is being rendered pursuant to Section 2.01(a)(iv) of the
Credit Agreement.
In our capacity as special counsel to the Borrowers and Guarantors, we have
examined originals, or copies identified to our satisfaction as being true
copies of such originals of the following:
(a) The Certificate of Incorporation of each of Xpedite, Worldwide,
Premiere, Premiere Communications, Voice-Tel, VoiceCom and American
Teleconferencing (collectively, the "Domestic Credit Parties"), as amended to
date;
(b) The Bylaws of each of the Domestic Credit Parties, as amended to date;
(c) Certificates of the Secretary of State of the respective states of
incorporation for each of the Domestic Credit Parties, of recent date,
certifying as to the good standing of each of the Domestic Credit Parties,
(d) Resolutions of the Boards of Directors of each of the Domestic Credit
Parties relating to the Credit Agreement, the other Loan Documents (as defined
below) and the transactions contemplated thereby;
(e) The Credit Agreement;
(f) The Notes;
(g) A Security Agreement dated as of December 17, 1997 between Xpedite and
The Bank of New York, as Secured Party;
(h) A Security Agreement dated as of December 17, 1997 between Worldwide
and The Bank of New York, as Secured Party;
(i) Security Agreements dated as of the date hereof by each of Premiere,
Voice-Tel and American Teleconferencing in favor of The Bank of New York, as
Secured Party (the Security Agreements referred to in subparagraphs (g), (h) and
(i) referred to herein as the "Security Agreements");
(j) A Deed of Charge over Shares and Securities dated as of December 17,
1997 between Worldwide and The Bank of New York, as Agent (the "Deed of
Charge"); and
(k) Form of financing statements on Form UCC-1 naming each of the Domestic
Credit Parties, as debtors, and the Administrative Agent, as secured party (the
"Financing Statements").
The documents set forth in clauses (e) through (k) are hereinafter referred
to collectively as the "Loan Documents".
In rendering this opinion we have assumed (i) that the signatures on all
documents examined by us are genuine, (ii) that any individual executing such
documents had the legal capacity to execute such documents, (iii) the
authenticity of all documents submitted to us as originals, (iv) the conformity
to original documents of all documents submitted to us as photostatic or
certified copies, (v) the authenticity of such copies, and (vi) that the rights
set forth in the Loan Documents have been granted for adequate consideration,
and that the grants of such rights were not made with the intent to hinder,
delay or defeat any of the rights of any creditors of the Loan Parties. As to
certain factual matters which were not independently established, we have relied
to the extent we have deemed proper, on certificates and other information of
the Loan Parties or public officials.
We have also assumed, without independent investigation, that and relied
upon the fact that: (i) the representations and warranties set forth in the Loan
Documents are true and correct as to factual matters; (ii) each of the parties
to the Loan Documents (other than the Domestic Credit Parties) has been duly
organized and is validly existing and in good standing under the jurisdiction of
its incorporation or organization; (iii) the execution and delivery of? and
performance by, each party to the Loan Documents (other than the Domestic Credit
Parties) are within its power and authority; (iv) the execution, delivery and
performance of the Loan Documents by each of the parties thereto (other than the
Domestic Credit Parties) do not conflict with or violate such Person's
organizational documents or bylaws or any provision of any order, writ,
judgment, injunction, decree, determination or award applicable to such Person;
(v) the execution, delivery and performance of the Loan Documents by each of the
parties thereto (other than the Domestic Credit Parties and, as to Xpedite UK
and Xpedite Systems, New York and Federal law) do not violate any applicable law
with respect to such Person; (vi) each of the parties to the Loan Documents
(other than the Domestic Credit Parties) has duly authorized, executed and
delivered the Loan Documents; (vii) each of the Loan Documents is a legal, valid
and binding obligation of each party thereto, enforceable in accordance with
their respective terms against the parties thereto (other than, under New York,
Georgia and Federal law, with respect to the Domestic Credit Parties, Xpedite
UK and Xpedite Systems); (viii) all authorizations, approvals or other actions
by, and all notices to or filings with, any governmental authority, regulatory
body or other Person that are required for the due execution, delivery and
performance by the respective parties thereto (other than the Domestic Credit
Parties), if required, have been duly obtained or made and are in full force and
effect; (ix) there is no agreement or course of prior dealing between any of the
parties which would supplement the relationships set forth in the Loan
Documents; (x) the pledgors under the Security Agreements own, legally and
beneficially, the Shares, (as hereinafter defined) and otherwise have and
continue to have rights in such Collateral within the meaning of Section 9-203
(1) (c) of the Uniform Commercial Code, as adopted in the State of Georgia (the
"UCC"); and (xi) that there has not been any fraud, duress, undue influence or
material mistake of fact.
We have also examined such corporate records, certificates of corporate and
governmental representatives, and such questions of law and other matters as we
have considered necessary or appropriate for the purpose of enabling us to
express this opinion.
Based on the foregoing, and subject to all of the qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:
1. Each of the Domestic Credit Parties is validly existing and in good
standing under the laws of their respective jurisdictions of incorporation, with
full corporate power and authority to enter into and perform its respective
obligations under the Loan Documents and to consummate the transactions
contemplated thereby.
2. The execution and delivery by each of the Domestic Credit Parties of
each of the Loan Documents to which it is a party, and the consummation of the
transactions contemplated thereby, have been duly authorized by all necessary
corporate action by the Domestic Credit Parties.
3. The execution and delivery by each of the Domestic Credit Parties of
each of the Loan Documents to which it is a party, and the consummation of the
transactions contemplated thereby, do not violate any provision of the
Certificate of Incorporation or By-laws of such Domestic Credit Party, as the
case may be. The execution and delivery by the Domestic Credit Parties of the
Loan Documents do not require any such Person to obtain any authorization,
approval or consent of any Georgia or United States Governmental Authority for
the legality, validity, or binding effect of the Loan Documents or violate any
law, rule or regulation of the State of Georgia or the United States applicable
to the Domestic Credit Parties; provided, however, that, notwithstanding the
foregoing, we express no opinion as to (i) the necessity of obtaining any
authorization, approval or consent from any Governmental Authority having
specific jurisdiction over the regulation of Persons engaged in the
telecommunications business or (ii) whether the execution and delivery of the
Loan Documents violate any law, rule or regulation specifically relating to the
regulation of Persons engaged in the business of telecommunications.
4. Each of the Loan Documents to which any of the Domestic Credit Parties
is a party has been duly executed and delivered by such Domestic Credit Party.
5. The Loan Documents (other than any Loan Document governed by the laws
of the United Kingdom as to which we express no opinion) constitute the legal,
valid and binding obligation of each such Loan Party, as applicable, enforceable
against such applicable party in accordance with their respective terms.
6. To our knowledge, the execution and delivery by the Domestic Credit
Parties of each of the Loan Documents to which it is a party, and the
consummation of the transactions contemplated thereby, do not (a) cause any
Domestic Credit Party to violate any material order, writ, judgment, injunction,
decree, determination or award of any court, arbitrator or governmental
commission, board, bureau or agency to which any Domestic Credit Party is a
party or is bound or (b) require any consent or approval under, or otherwise
breach, any material agreement to which any Domestic Credit Party is a party or
is bound.
7. To our knowledge, there are no legal actions, suits or proceedings
pending or threatened against any Domestic Credit Party before any court,
arbitrator or governmental commission, board, bureau or agency which question
the validity of the Loan Documents to which any Domestic Credit Party is a
party.
8. Each of the Security Agreements is in proper form to create a valid
security interest under the UCC in favor of The Bank of New York, as Secured
Party thereunder (the "Secured Party") in such portion of the Collateral, a lien
or security interest in which is governed by, and subject to, the UCC, to secure
the Secured Obligations (as defined in the Security Agreements) purported to be
secured thereby.
9. Assuming the Secured Party is holding and continues to hold the
certificates representing the shares listed on Schedule 2.01(c) (v) to each of
the Security Agreements (the "Shares"), endorsed in blank or endorsed to the
Secured Party, in the State of New York and assuming that the Secured Party and
each Bank have taken such Shares in good faith and without notice of an adverse
claim the Security Agreements create a perfected security interest in such
Shares under the UCC. Please note, however, that, without limitation,
perfection of the applicable security interests will be terminated if the
Secured Party no longer has possession of any collateral described above as
being in its possession.
For purposes of the opinion set forth in paragraph 1 hereof we have relied
solely on certificates of existence or good standing issued by the secretary of
state of the jurisdiction of each of the Domestic Credit Parties and our opinion
is limited to, or qualified by, the substance of the certifications of such
certificates.
We note that we are admitted to practice only in the States of Georgia,
North Carolina and the District of Columbia and express no opinions other than
the laws of such jurisdictions, the General Corporation Law of the State of
Delaware and the federal laws of the United States of America. We note that
Premiere Communications, Voice-Com and American Teleconferencing are
corporations organized under the laws of Florida, Washington and Missouri,
respectively. Accordingly, with respect to these entities, for purposes of
paragraph 1 hereof relating to the opinion regarding corporate power, for
purposes of paragraph 2 hereof, and for purposes of the opinion set forth in
paragraph 4 hereof with respect to the due execution of the Loan Documents, we
have assumed that the corporation. Laws of the States of Florida, Washington
and Missouri are the same as the General Corporation Law of the State of
Delaware. We understand that you will obtain local counsel opinions with
respect to these matters after the date hereof However, to our knowledge, we
have no reason to believe that our opinions with respect to these entities is
not correct.
This opinion is limited to the specific opinions set forth above and is
further limited as follows:
(a) The opinions expressed herein are subject to the qualification that
enforceability of the Loan Documents may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and transfer and
other laws of general application affecting the rights and remedies of creditors
and by general principles of equity (whether applied in a proceeding at law or
in equity), including, without limitation, principles of materiality,
reasonableness and good faith, and the application of equitable principles to
limit the availability of equitable remedies, such as specific performance of
remedies granted under the Loan Documents.
(b) We express no opinion with respect to "proceeds" (within the meaning of
Section 9-306 of the UCC) of any Collateral. Notwithstanding any provision of
any Security Agreement, any enforcement of any security interest in the
Collateral purported to be created by any Security Agreement must be effected in
a "commercially reasonable manner: as prescribed by the UCC. Further, we express
no opinion as to the creation of any security interest in any of the Collateral
where federal law may have preempted the UCC including, but not limited to, the
Assignment of Claims Act of 1940, as amended.
(c) We express no opinion with respect to perfection of any security
interests (except as expressly set forth in Paragraph 10 above) and, in
particular, we express no opinion on the provisos contained in Section 4.07 of
the Credit Agreement, or the priority of the security interests of the Secured
Party in, or as to the ownership (including intellectual property) of, or as to
the absence of any Liens on, any of the Collateral. We express no opinion as to
the accuracy or adequacy of the description of any intellectual property
purported to be covered by the Security Agreements.
(d) We express no opinion with respect to any documents, agreements, or
instruments executed and delivered in connection with the loan transaction
evidenced by the Notes other than the Loan Documents.
(e) We note that the UCC provides that perfection, the effect of perfection
and non-perfection, and priority of security interests are governed by the laws
of the jurisdiction in which collateral or the debtor is located and we are not
opining as to whether Georgia substantive law would apply in any such other
jurisdiction. Further, we express no opinion s to where the debtor, other than
Premiere, is located. For purposes of the UCC, Premiere is located in Fulton
County, Georgia. In this connection, we advise you to file Financing Statements
for each Domestic Credit Party with the Clerk of the Superior Court of Fulton
County, Georgia, with the appropriate filing office in each jurisdiction where a
Domestic Credit Party has represented such jurisdiction to be the location of
its chief executive office (if different from Fulton County, Georgia) and with
the appropriate filing office in each jurisdiction where any tangible Collateral
is located. Further, we have assumed that none of the Collateral constitutes
"farm products", "minerals" or accounts arising therefrom or constitutes
"fixtures", as each is defined in the UCC. Further, we have assumed that the
name of each debtor appearing on each Financing Statement is the exact corporate
name of each such debtor, that the taxpayer identification number for each
debtor set forth on each Financing Statement is correct, that the address of the
secured party for each Financing Statement is an address where information
regarding the security interest may be obtained, that each Financing Statement
has been signed by the applicable debtor, that any and all attachments to each
Financing Statement are so attached and filed and that each Financing Statement
adequately describes the Collateral.
(f) We express no opinion with respect to the effect of any amendments
supplements, renewals, extensions or modifications of the Loan Documents which
may be made at any time or from time to time, or with respect to the lien of the
Security Agreements with respect to any advances made pursuant to the Credit
Agreement following any such amendments, supplements, renewals, extensions or
modifications.
(g) We express no opinion as to the effect of the laws of any jurisdiction
other than the State of New York, the State of Georgia, the General Corporation
Law of the State of Delaware and the Federal laws of the United States of
America in effect on the date hereof (but exclusive of (i) Federal and state
securities, tax, banking and antitrust laws, (ii) ERISA and (iii) criminal
laws), and we do not undertake any obligation to advise you of any changes
therein subsequent to the date hereof.
(h) We express no opinion as to the effect of compliance by the
Administrative Agent or any Bank with any state or Federal laws, rules or
regulations applicable to the transactions because of the nature of any such
Person's business or facts relating specifically to any of them, or as to the
effect of any such non-compliance on the opinions set forth above.
(i) Without limiting the qualifications set forth in paragraph (a) above,
certain of the provisions contained in the Loan Documents may be limited or
rendered unenforceable under applicable laws and judicial decisions including,
but not limited to (i) waivers of notices, defenses, remedies or demands (or the
delay or omission of enforcement thereof), including waiver of notice of set-off
or actions with respect to the Collateral, (ii) exculpation clauses in your
favor, (iii) clauses providing for recovery of attorneys' fees, (iv) provisions
for late payment fees and additional interest after default, (v) liability
limitations with respect to third parties or liquidated damages, (vi)
indemnification provisions, (vii) provisions appointing you as attorney-in-fact
for various purposes or similar provisions similar to Section 11.02(e) of the
Credit Agreement, (viii) remedial provisions of the Security Agreements, (ix)
provisions that purport to establish evidentiary standards, (x) waivers of trial
by jury and the defense of inconvenient forum, (xi) clauses regarding the
specification of methods of service of process; (xii) clauses relating to the
exercise of right of set-off other than in accordance with applicable law; and
(xiii) various waivers of rights of guarantors. Nevertheless, subject to
compliance with applicable procedural requirements and subject to the
qualifications in paragraph (a) above, such laws and decisions would not, in our
opinion, make the remedy of acceleration afforded by the Credit Agreement or the
remedies provided in the Security Agreement inadequate for the practical
realization of the essential benefit of enforcement of the obligations of the
Domestic Credit Parties upon a material default by such Loan Parties.
We express no opinion on the jurisdiction of or the acceptance of
jurisdiction by, a Federal court located in the State of Georgia with respect to
disputes arising under the Loan Documents.
(k) We express no opinion on the rights or obligations of third parties,
and, in particular, we express no opinion on the provisos contained in Section
4.07 of the Credit Agreement in this regard.
(l) As used herein, the phrase "to our knowledge" or any similar references
means that, while we have made no inquiry or other investigation or examination
of the Loan Parties, their records, our records, public records or otherwise,
whether in connection with the transaction contemplated by the Loan Documents,
the rendering of this opinion or otherwise, to determine the existence or
absence of matters as to which reference is made (and no inference as to our
knowledge of the existence or absence of such matters should be drawn from our
representation of the Loan Parties), we have obtained no actual knowledge to the
contrary in our representation of the Loan Parties in connection with their
execution and delivery of the Loan Documents. Moreover, "knowledge" of this
Firm is limited to the knowledge of the individual attorneys in the Firm who
have represented the Loan Parties in connection with the execution and delivery
of the Loan Documents.
We express no opinion as to the enforceability of any provision of the
Agreements which requires that amendments or waivers be in writing.
The opinion in paragraph 5 regarding the enforceability of the Agreements
is also subject to the following:
(i) the effect of course of dealing, course of performance, or the like,
that would modify the terms of such agreements or the respective rights or
obligations of the parties under such agreements;
(ii) the possible unenforceability of provisions that enumerated remedies
are not exclusive or that a party has the rigid to pursue multiple remedies
without regard to other remedies elected or that all remedies are cumulative;
(iii) the possible unenforceability of provisions that determinations by a
party or a party's designee are conclusive;
(iv) the possible unenforceability of provisions that the provisions of an
agreement are severable, and
(v) the effect of laws requiring mitigation of damages.
The opinions expressed herein are valid only as of the date of this
opinion. We have no obligation to update this letter as to any subsequent
matters, facts or events coming to our attention.
Opinions are as expressly set forth herein and no opinion is implied, or
may be inferred, other than the express language of such opinion.
This opinion may be relied upon only by you, and is solely for your benefit
in connection with the transactions contemplated by the Loan Documents and is
not to be relied upon by any other Person or be used, circulated, quoted or
otherwise referred to for any other purpose without our prior written consent.
Very truly yours,
ALSTON & BIRD LLP
By:
-----------------------------
<PAGE>
Schedule 2.01(a)(v)
-------------------
FORM OF OPINION OF ENGLISH COUNSEL FOR XPEDITE SYSTEMS HOLDINGS (UK) LIMITED
16 December 1998
To: The Bank of New York as Administrative Agent and Security Agent for
itself and for the financial institutions for whom the Bank of New
York is agent as at the date hereof.
Dear Sirs,
1. We have acted as English legal advisers to Xpedite Systems Holdings
(UK) Limited ("Holdings") and Xpedite Systems Limited ("Systems") in connection
with an amendment and restatement of a credit agreement (the "Credit Agreement")
originally dated 17 December 1997 made between Xpedite Systems, Inc. and Xpedite
Systems Holdings (UK) Limited as Borrowers, the Guarantors party thereto, the
Banks party thereto, Nationsbank, N.A. as Documentation Agent and The Bank of
New York as Administration Agent.
Terms defined in the Finance Documents shall have the same meanings herein.
2. We have examined copies of the following documents in the form signed
by the parties thereto:
(i) an amended and restated credit agreement (the "Amended Credit
Agreement") dated 16 December 1998 made between Xpedite Systems, Inc. and
Xpedite Systems Holdings (UK) Limited as Borrowers, the Guarantors party
thereto, the Banks party thereto, Nationsbank, N.A. as Documentation Agent and
The Bank of New York as Administration Agent;
(ii) a fixed and floating charge (the "Holdings Charge") dated 17 December
1997 and made between Holdings and The Bank of New York;
(iii) a fixed and floating charge (the "Systems Charge") dated 17 December
1997 and made between Systems and The Bank of New York;
(iv) the deed of charge over shares and securities (the "Share Charge")
dated 17 December 1997 and made between Xpedite Systems Worldwide, Inc. and The
Bank of New York;
and such other documents as we considered it necessary or desirable to examine
in order that we may give this opinion.
The Holdings Charge, the Systems Charge and the Share Charge are
hereinafter referred to as the "English Documents". The English Documents and
the Amended Credit Agreement are referred to as the "Finance Documents".
3. The opinion relates only to English law as it exists at the date hereof
and assumes:
(i) the genuineness of all signatures;
(ii) the completeness and conformity to originals of all documents
supplied to us as certified or photostatic copies and the authenticity of the
originals of such documents:
(iii) the capacity, power and authority of each of the parties other than
Holdings and Systems respectively to the Finance Documents;
(iv) the due execution and delivery of the Finance Documents by each of
the parties thereto (other than Holdings and Systems) on the date thereof;
(v) that there have been no amendments to the Memorandum and Articles of
Association of either Holdings or Systems in the form certified as being in
force by a duly authorised officer thereof;
(vi) that the resolutions of the board of directors of each of Holdings
and Systems certified by a duly authorised officer of Holdings and Systems were
duly passed at properly convened meetings of duly appointed directors of each
such company and have not been amended or rescinded and are in full force and
effect and that due disclosure (if any) had been made by each director of any
interest he might have in the Finance Documents in accordance with the
provisions of Section 317 of the Companies Act 1985 (the "Act") and such
company's Articles of Association and that no director of either of the
companies had any interest in the Finance Documents except to the extent
permitted by the relevant company's Articles of Association;
(vii) that neither of Holdings or Systems have passed a voluntary winding-
up resolution, no petition has been presented or order made by a Court for the
winding-up, dissolution or administration of either of Holdings or Systems and
no receiver, trustee, administrator or similar officer has been appointed in
relation to either of Holdings or Systems or any of its assets or revenues;
(viii) that the execution and delivery of each of the Finance Documents to
which they are a party by each of Holdings and Systems and the exercise of its
rights thereunder and the performance of its respective obligations thereunder
will materially benefit it;
(ix) there is no matter under the laws of any jurisdiction (other than
England) which would or might affect the opinions herein expressed:
(x) that the information disclosed by our enquiry of 16 December 1998 of
the Central Registry of Winding-up Petitions in relation to each of Holdings and
Systems was then accurate and has not since been altered;
(xi) that for the purposes of Section 155(2) of the Act, each of Holdings
and Systems had, at the time it gave any financial assistance (if any) under or
pursuant to or in connection with any Finance Document (other than the Share
Charge), net assets (as defined in Section 154(2) of the Act) which were not
thereby reduced or, to the extent that they were reduced, that the relevant
financial assistance was provided out of distributable profits;
(xii) that when Systems gave any financial assistance under or pursuant to
or in connection with any Finance Document (other than the Share Charge) it was
not at any relevant time a subsidiary of a public company if that public company
was itself a subsidiary of the company in respect of the acquisition of whose
shares such financial assistance was given;
(xiii) that the statutory declaration made on or about 17 December 1997 by
the director of Systems under Section 155(6) of the Act was duly made by the
sole director of that company (and that there were no other directors of the
company), that in forming his opinion for the purpose of Section 156(2) of the
Act the director has complied with the provisions of Section 156(3) of the Act
and that the statutory declaration and accompanying auditors report was, within
the prescribed time period, duly delivered by such company to the registrar of
companies in accordance with Section 156(5) of the Act; and
(xiv) that the statements of fact in the statutory declaration were
correct and that the statements of opinion in the statutory declaration and the
auditors' report were reasonable.
4. Our opinion is confined to and given on the basis of English law as
currently applied by the English courts and we have made no investigation of the
laws of any country other than England and we do not express or imply any
opinion on any such law. Furthermore. our opinion is to be construed in
accordance with and is governed by English law.
5. On the above assumptions and subject to the reservations set out below,
we are of the opinion that:
(i) each of Holdings and Systems is a company duly incorporated as a
private limited company in England with power to enter into the Amended Credit
Agreement and to exercise its rights and perform its obligations thereunder and
all corporate action required to authorise the execution and delivery by it of
the Amended Credit Agreement and the performance by it of its obligations
thereunder have been duly taken;
(ii) the Amended Credit Agreement will be duly executed if signed by any
director (or in the case of a deed) if signed by any two directors or any
director and the secretary;
(iii) the amendment and restatement of the Credit Agreement will not
affect the legality, validity and enforceability of the English Documents;
(iv) save for the registration of the English Documents with the
Registrar of Companies pursuant to Section 395 of the Companies Act 1985 and the
registration with the relevant office of H.M. Land Registry in relation to such
of the property as is described in the English Documents as being registered
land from time to time as appropriate, no further acts, conditions and things
were or, as the case may be, are required by English law to be done, fulfilled
and performed in order to enable either of Holdings or Systems lawfully to enter
into, exercise its rights under and perform the obligations expressed to be
assumed by it in each of the Finance Documents to which it is a party to ensure
that the obligations expressed to be assumed by each of Holdings and Systems in
the Finance Documents to which it is a party are or continue to be legal, valid
and binding and to make or ensure that each such Finance Document is admissible
in evidence in England;
(v) in any proceedings taken in England neither Holdings or Systems
shall be entitled to claim for itself or any of its assets immunity from suit,
execution, attachment or other legal process;
(vi) under English law, the claims of the Security Agent and the Banks
against either of Holdings or Systems under the Finance Documents to which it is
a party will rank at least pari passu with the claims of all its other unsecured
creditors other than those whose claims are preferred by any administration,
bankruptcy, insolvency or other similar laws of general application;
(vii) in any proceedings taken in England for the enforcement of the
English Documents, the choice of English law as the governing law of the English
Documents and any judgment on or in respect thereof obtained in England will be
recognised and enforced; and
(viii) the performance by either of the Holdings or Systems of its
obligations under the Finance Documents to which it is a party will not violate
any provision of any law or regulation of England or the Memorandum and Articles
of Association of such company.
6. The opinion set forth above is subject to the following reservations:
(i) provisions in the Finance Documents as to severability may not be
binding under English law and the question of whether or not provisions relating
to invalidity on account of illegality may be severed from other provisions in
order to save such other provisions would be determined by an English court at
its discretion;
(ii) undertakings and indemnities contained in the Finance Documents as
to the payment of any stamp duties may be void in respect of stamp duties
payable in the United Kingdom:
(iii) the English Documents together with prescribed particulars of the
charges constituted thereby must, as a matter of English law, be delivered to or
received by the Registrar of Companies for registration within 21 days after the
date of creation of the charges constituted thereby if such charges are not to
be void against the liquidator or administrator or any creditor of the company
creating the security constituted thereby. The English Documents were so
delivered to the Registrar of Companies within 21 days of the creation of the
charges constituted thereby;
(iv) under English law, any additional interest imposed upon either
Holdings or Systems by Clause 2.2.2 of each of the Holdings Charge and the
Systems Charge might be held to be irrecoverable on the grounds that they are
penalties and thus void but the fact that they were held to be void would not of
itself prejudice the legality or validity of any other provision of such Finance
Documents;
(v) there is some possibility that an English court would hold that a
judgment on the Finance Documents, whether given in an English court or
elsewhere, would supersede the Finance Documents to all intents and purposes so
that the obligations set forth in Clause 2.2.2 of the Holdings Charge and the
Systems Charge would not be held to survive such a judgment;
(vi) the power of the English courts to order specific performance of
any obligation or to order any other equitable remedy is discretionary and,
accordingly, an English court might make an award of damages where specific
performance of an obligation or any other equitable remedy was sought;
(vii) the enforcement of the rights and obligations of the parties to the
English Documents may be limited by the provision of English law applicable to
contracts held to have been frustrated by events happening after their
execution;
(viii) where any party to a Finance Document is vested with a discretion
or may determine a matter in its opinion, English law may require that such
discretion is exercised reasonably or that such opinion is based upon reasonable
grounds;
(ix) any provision in any Finance. Document providing that any
calculation or certification is to be conclusive and binding will not be
effective if such calculation or certification is fraudulent and will not
necessarily prevent judicial enquiry into the merits of any claim by any party
thereto;
(x) our opinion as regards the binding effect of the obligations of
each of Holdings and Systems under the Finance Documents to which it is
expressed to be a party is subject to any limitations arising from
administration, bankruptcy, insolvency, liquidation, reorganisation, moratoria
and other laws and general equitable principles relating to or affecting the
enforcement of creditors' rights (including, but without limitation, the effect
of the appointment of an administrator or administrative receiver within the
meaning of the Insolvency Act 1986);
(xi) the exercise by the Security Agent of the powers and remedies
conferred on it by any of the English Documents or otherwise vested in it by law
will be subject to general equitable principles regarding the enforcement of
security and the general supervisory powers and discretion of the English courts
in the context thereof and we express no opinion as to the efficacy of any
powers conferred upon the Security Agent or any receiver appointed under any of
the English Documents insofar as these powers go beyond those conferred by
statute or by common law;
(xii) an English court may refuse to give effect to a purported
contractual obligation to pay costs imposed upon another party in respect of the
costs of any unsuccessful litigation brought against that party and such a court
might not award by way of costs all of the expenditure incurred by a successful
litigant in proceedings brought before that court;
(xiii) claims may become barred pursuant to the provisions the Limitation
Acts or may be or become subject to defences of set-off or counterclaim;
(xiv) we express no opinion as to, whether any provision in the English
Documents conferring a right of set-off or similar right would be effective
against a liquidator or a creditor of a company in liquidation;
(xv) the opinion expressed in paragraph 5(i) above that each of Holdings
and Systems is a company duly incorporated under English law and the fact that
the English documents were delivered to the Registrar of Companies within 21
days of the date thereof is based solely upon our examination of the company
microfiche of each of Holdings and Systems obtained from the Registrar of
Companies. It should be noted that:
(a) a search at Companies Registry is not capable of revealing whether
or not a winding-up petition or a petition for the making of an
administration order has been presented; and
(b) notice of a winding-up order or resolution, notice of an
administration order and notice of the appointment of a receiver may not be
filed at the Companies Registry immediately and there may be delay in the
relevant notice appearing on the file of the relevant party;
(xvi) We express no opinion as to whether the English Courts would
recognise any of the security constituted by the English Documents which are
expressed to be by way of fixed or specific charge as a fixed charge since they
may hold security to be by way of floating charge for example, to the extent
that each of the Holdings and Systems is given liberty to deal with the sums
standing to the credit of any accounts which are charged, it may be that the
security constituted in respect of those accounts will be construed by the
courts as being of a floating rather than a fixed nature since it is of the
essence of a fixed security that the person creating the security does not have
liberty to deal with the assets which are the subject of the security;
(xvii) We express no opinion as to the priority of any of the security
created by the English Documents (in particular you should note that the
security constituted by any floating charge will rank after preferential debts
afforded priority under Section 175(2) of the Insolvency Act 1986) and whether
such constitutes a legal or equitable security interest and whether any charge
over future property is a fixed or floating charge;
(xviii) We express no opinion as to the existence of any property or
assets purporting to be comprised in any security expressed to be created by the
English Documents, whether any such property or assets is owned by either of
Holdings or Systems or Xpedite Systems Worldwide Inc. whether the same is now or
may hereafter become subject to any equities, liens, rights or interests in
favour of any other person ranking in priority to or free from such security or
whether the same could be transferred to any other person free of such security
in particular you should note that a company is not required to file notice of
all charges and mortgages with the Companies Registry including security
afforded over shares and accordingly it is not possible to verify whether the
security comprised in the English Documents is subject to any prior existing
encumbrances;
(xix) We express no opinion as to the efficacy of the English Documents
in relation to any property or assets situated outside England and Wales;
(xx) We express no opinion as to whether the English Documents will
constitute effective security over any cash deposited or credit balances
maintained with the Security Agent for the purposes of securing the obligations
expressed to be secured thereby by a charge in favour of the Security Agent;
(xxi) Under English law, the provision of a guarantee and/or security by
a company in respect of the obligations of its parent, or other subsidiary of
its parent, is only valid and binding upon the guaranteeing company if it can be
shown that (a) such company is duly authorised to provide guarantees and/or
security of that nature in its Memorandum of Association or other constitutive
documents (which each of Holdings and Systems are so authorised) and (b) that it
has derived some benefit from so doing. In the case of (b), this is a question
of fact in each case, relating to the nature of each of Holdings and Systems and
its business and operations and we do not express any opinion as to whether the
English courts would determine that either of the companies actually derived a
benefit from the transaction concerned and accordingly that it is valid and
binding under English law:
(xxii) This opinion is not to be taken to imply that any obligation would
necessarily be capable of enforcement in all circumstances in accordance with
its terms. Also, the term "enforceability" assumes that the obligations assumed
by the companies under the English Documents are of the type which an English
court enforces. In particular:
(a) enforcement of obligations of a party to be performed after the
date hereof may be limited by bankruptcy, insolvency, liquidation,
administration moratoria, reorganisation and other laws of general
application relating to or affecting the rights of creditors as such law
may be applied in the event of bankruptcy, insolvency, liquidation
administration, moratoria, reorganisation or other similar proceedings with
respect to such party;
(b) an English court will not necessarily grant any remedy, the
availability of which is subject to equitable considerations or which is
otherwise in the discretion of the court. In particular, orders for
specific performance and injunctions are, in general, discretionary
remedies under English law and specific performance is not available where
damages are considered by the court to be an adequate alternative remedy;
(c) claims may become barred under the Limitation Act 1980 or the
Foreign Limitation Periods Act 1984 or may be or become subject to the
defence or rights of set-off and notwithstanding provisions in the English
Documents purporting to exclude such defences or rights;
(d) where obligations are to be performed in a jurisdiction outside
England, they may not be enforceable in England to the extent that
performance would be illegal under the laws, or contrary to the exchange
control regulations of the other jurisdiction; and
(e) the enforcement of the obligations of the parties to the English
Documents may be limited by the provisions of English law applicable to
agreements held to have been frustrated by events happening after their
execution;
(xxiii) The opinion expressed in paragraph 5(iii) above is subject also to
the following provisions of the Insolvency Act 1986:
(a) under Section 238 of the Insolvency Act 1986 a gift given or
transaction entered into by either of Holdings or Systems with a person on
terms that provide for either of Holdings or Systems to receive either no
consideration or a consideration the value of which, in money or money's
worth, is significantly less than the value, in money or money's worth of
the consideration provided by Holdings or Systems may be set aside in the
event of either of Holdings or Systems subsequent insolvency;
(b) under Section 245 of the Insolvency Act 1986 a floating charge
created by either of Holdings or Systems within twelve months of the
commencement of the winding-up of either of Holdings or Systems may be held
to be invalid unless it is proved that either of Holdings or Systems
immediately after the creation of the charge was solvent, and except to the
amount of any cash paid to either of Holdings or Systems at the time of or
subsequently to the creation of, and in consideration for the charge;
(c) under Sections 239 or 240 of the Insolvency Act 1986 a charge
created by either of Holdings or Systems within six months of the
commencement of the winding-up of either of Holdings or Systems will be
subject to review as a preference. The charge will be liable to be set
aside if at the time the charge was given that such either of Holdings or
Systems was insolvent and the charge has the effect of putting any person
in a better position, in the event of either of Holdings or Systems going
into insolvent liquidation, than he would have been in if the charge had
not been created in his favour. However, no order will be made to set aside
the charge in such a case unless the company which gave the preference was
influenced in deciding to give it by a desire to obtain a preference; and
(d) under Sections 178 (Power to disclaim onerous property) and
Section 186 (Recissions of contracts by courts) of the Insolvency Act;
(xxiv) Where any obligations of any person are to be performed in any
jurisdiction outside England, such obligations may not be enforceable under
English law to the extent that such performance thereof would be illegal or
contrary to public policy under the laws of such jurisdiction; and
(xxv) we express no opinion as to any agreement, instrument or other
document other than as specified in this letter, or as to any liability to tax
which may arise or be suffered as a result of or in connection with the Finance
Documents.
7. This opinion is addressed to The Bank of New York as Security Agent
and Administrative Agent for itself and for the Banks and it may not be relied
upon by any other firm person or corporation whatsoever.
Yours faithfully
Clifford Chance
<PAGE>
Schedule 2.01 (a)(vi)
---------------------
FORM OF OPINION OF
WINTHROP, STIMSON, PUTNAM & ROBERTS
[WSP&R LETTERHEAD]
December 16, 1998
To the Administrative Agent and each Bank party
to the Credit Agreement referred to below
Ladies and Gentlemen:
We have acted as counsel to The Bank of New York, as Administrative Agent,
and NationsBank, N.A., as Documentation Agent, in connection with the
negotiation, execution and delivery of the Credit Agreement, dated as of
December 17, 1997 as amended and restated as of December 16, 1998, among Xpedite
Systems, Inc. and Xpedite Systems Holdings (UK) Limited, as Borrowers, the
Guarantors party thereto, the Banks listed on the signature pages thereof,
NationsBank, N.A., as Documentation Agent, and The Bank of New York, as
Administrative Agent (the "Credit Agreement"). Terms defined in the Credit
----------------
Agreement that are not otherwise defined herein are used herein with the
meanings therein ascribed to them.
For the purposes of rendering the opinions contained in this letter, we
have examined executed counterparts of the Credit Agreement, the Notes delivered
on the date hereof, and the Security Agreements (collectively, the "Loan
----
Documents").
- - ---------
For the purposes of this opinion, we have assumed (i) the authenticity of
all such documents submitted to us as originals, (ii) the due authorization,
execution and delivery by the Administrative Agent and the Banks of the Loan
Documents to which they are parties, (iii) that each of the Loan Parties has the
corporate power, and has taken all necessary corporate action to authorize it,
to execute, deliver and perform each of the Loan Documents to which it is a
party, (iv) that the Loan Documents have been duly executed and delivered by
each of the Loan Parties and (v) that the execution, delivery and performance in
accordance with their respective terms by each of the Loan Parties of the Loan
Documents to which it is a party do not and will not (A) require any
Governmental Approval or any other consent or approval, other than Governmental
Approvals and other consents or approvals that have been obtained, are final and
not subject to review or collateral attack and are in full force and effect, or
(B) violate or conflict with, result in a breach of, or constitute a default
under (1) any Contract to which any of the Loan Parties is a party or by which
it or its properties may be bound or (2) any Applicable Law referred to in
clause (ii)(B) or (C) of the definition thereof contained in the Credit
Agreement.
Based upon the foregoing, and subject to the qualifications and limitations
set forth herein, we are of the opinion that the Loan Documents are legal, valid
and binding obligations of the Loan Parties party thereto, enforceable against
such Loan Parties in accordance with their respective terms.
Our opinion above is subject to the following qualifications and
limitations:
(a) Our opinion is subject to the effect of applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and other laws affecting the
enforcement of creditors' rights generally and to the effect of general
equitable principles (whether considered in a proceeding in equity or at law).
Such principles applied by a court might include a requirement that a creditor
act with reasonableness and good faith. Furthermore, a court may refuse to
enforce a covenant where a court deems such covenant to be violative of
applicable public policy.
(b) Our opinions are limited to the law of the State of New York and
the Federal law of the United States. Without limiting the generality of the
foregoing, we express no opinion as to the effect of the law of any jurisdiction
other than the State of New York wherein any Bank may be located or wherein
enforcement of the Loan Documents may be sought that limits the rates of
interest legally chargeable or collectable.
(c) Certain remedial provisions of the Security Agreements may be
unenforceable in whole or in part, but the inclusion of such provisions does not
affect the validity of any of the Security Agreements, and each of the Security
Agreements taken as a whole contains adequate provisions for enforcing the
obligations of the Loan Parties pursuant thereto and for the practical
realization of the benefits created thereby. In addition, certain remedial
provisions of the Security Agreements may be subject to procedural requirements
not set forth therein.
(d) Our opinion (to the extent it relates to the Security Agreements)
is also subject to the limitation that we express no opinion with respect to:
(i) the perfection or priority of the Security Interest;
(ii) each Loan Party's rights in or title to or legal or
beneficial ownership of any of the Collateral; and
(iii) the validity or enforceability of the Security Interest
except to the extent that the creation thereof is governed by Article 8 or 9 of
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.
This opinion is intended for the sole benefit of the Administrative Agent
and the Banks and no other Person shall be entitled to rely hereon for any
purpose.
Very truly yours,
<PAGE>
Schedule 3.02
SUBSIDIARIES LISTING
Existing Subsidiaries of Premiere Technologies, Inc. ("PTEK")
<TABLE>
<CAPTION>
Jurisdiction of % Ownership by Premiere or
Subsidiary Organization Another Subsidiary Consolidated Significant
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Premiere Florida, US 100% owned by PTEK Yes Yes
Communications, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems, Inc. Delaware, US 100% owned by PTEK Yes Yes
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems Delaware, US 100% owned by Xpedite Yes Yes
Worldwide, Inc. Systems, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems United Kingdom 100% owned by Xpedite Yes Yes
Holdings (UK) Limited Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems Limited United Kingdom 100% owned by Xpedite Yes Yes
Systems Holdings (UK)
Limited
- - --------------------------------------------------------------------------------------------------------------
Voice-Tel Enterprises, Delaware, US 100% owned by PTEK Yes Yes
Inc.
- - --------------------------------------------------------------------------------------------------------------
VoiceCom Systems, Inc. Washington, US 100% owned by PTEK Yes Yes
- - --------------------------------------------------------------------------------------------------------------
American Missouri, US 100% owned by PTEK Yes Yes
Teleconferencing
Services, Ltd.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems Canada, Canada, New Brunswick 100% owned by Xpedite Yes No
Inc. Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Vitel Scandinavia A/S Denmark 100% owned by Xpedite Yes No
Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
PT Transtelindo Tritamo Indonesia 80% owned by Xpedite Yes No
Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Holdings GmbH Germany 100% owned by Xpedite Yes No
Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems Switzerland 99.9% owned by Xpedite Yes No
Switzerland AG Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite International Australia 72% owned by Xpedite Yes No
Australia Pty Limited Systems Worldwide, Inc.
28% owned by Comwave AG
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction of % Ownership by Premiere or
Subsidiary Organization Another Subsidiary Consolidated Significant
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Xpedite Systems Korea South Korea 100% owned by Xpedite Yes No
Ltd. Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite International New Zealand 100% owned by Xpedite Yes No
New Zealand Pty Limited Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems Japan, Japan 100% owned by Xpedite Yes No
Inc. Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Taiwan Ltd. Taiwan 99.9% owned by Xpedite Yes No
Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Comvave GmbH Germany 100% owned by Comwave AG Yes No
but no shares outstanding
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems SA France 18.8% owned by Xpedite No No
Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Comwave UK Ltd. United Kingdom 100% owned by Comwave AG Yes No
- - --------------------------------------------------------------------------------------------------------------
Vitel Limited United Kingdom 100% owned by Xpedite Yes No
Systems Holdings (UK)
Limited
- - --------------------------------------------------------------------------------------------------------------
Xpedite International Hong Kong 99.9% owned by Vitel Yes No
(HK) Ltd. Limited*
- - --------------------------------------------------------------------------------------------------------------
Xpedite Malaysia Sdn Bhd Malaysia 99.9% owned by Xpedite Yes No
International (HK) Ltd.*
- - --------------------------------------------------------------------------------------------------------------
Xpedite Global Singapore 50% owned by Xpedite No No
Communications Pte. International (HK) Ltd.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems GmbH Germany 41% owned by APA Expert Yes No
Beteiligungsgesellschaft
mbH; 59% owned by
Xpedite Systems
Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Transmit International United Kingdom 100% owned by Xpedite Yes No
Limited Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Connaught Commercial United Kingdom 100% owned by Xpedite Yes No
Services Limited Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Voice-Tel Canada Limited Canada 100% owned by PTEK Yes No
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction of % Ownership by Premiere or
Subsidiary Organization Another Subsidiary Consolidated Significant
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Voice-Tel Pty Ltd. Australia, New 100% owned by Voice-Tel Yes No
Zealand Enterprises, Inc.
- - --------------------------------------------------------------------------------------------------------------
Voice Partners Company Ohio, US General Partnership - Yes No
Premiere Communications,
Inc. and Voice-Tel
Enterprises, Inc.,
General Partners
- - ------------------------------------------------------------------------------------------------------------
Voice-Tel Network Delaware, US PTEK and Voice-Tel Yes No
Limited Partnership Enterprises, Inc. Limited
Partners
- - ------------------------------------------------------------------------------------------------------------
Orchestrate.com, Inc. Georgia, US 100% owned by PTEK Yes No
- - ------------------------------------------------------------------------------------------------------------
PCI Acquisition Corp. Georgia, US 100% owned by PTEK No No
- - ------------------------------------------------------------------------------------------------------------
EBIS Communications, Georgia, US 100% owned by PTEK No No
Inc.
- - ------------------------------------------------------------------------------------------------------------
Charp-Tel Enterprises, Rhode Island, US 100% owned by PTEK No No
Inc.
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
* Shares not owned by local directors for statutory reasons.
<PAGE>
Schedule 3.03
REQUIRED CONSENTS AND GOVERNMENT APPROVALS
None.
<PAGE>
Schedule 3.05
Material Litigation
See attached listing.
<PAGE>
Schedule 3.10
-------------
Schedule of Environmental Matters
None.
<PAGE>
Schedule 4.03
-------------
FORM OF SUBSIDIARY GUARANTY SUPPLEMENT
Amended and Restated Credit Agreement, dated as of December 16, 1998,
----------------------------------------------------------------------
among Xpedite Systems, Inc. and Xpedite Systems Holdings (UK)
-------------------------------------------------------------
Limited, as Borrowers, the Guarantors party thereto, the Banks party
--------------------------------------------------------------------
thereto, NationsBank, N.A., as Documentation Agent, and The Bank of
-------------------------------------------------------------------
New York, as Administrative Agent (the "Credit Agreement")
----------------------------------------------------------
Reference is made to the Credit Agreement as defined above;
capitalized terms used herein and not otherwise defined herein shall have the
meanings given to such terms in the Credit Agreement. The undersigned hereby
agrees that, upon delivery hereof to the Administrative Agent referred to above,
the undersigned Subsidiary shall be and become a Guarantor for all purposes of
the Credit Agreement as fully and to the same extent as if it were an original
signatory thereto and, without limiting the foregoing, shall be deemed to have
made on the date hereof the representations and warranties set forth in Article
3 of the Credit Agreement.
[Name of Subsidiary]
By:
----------------------------
Name:
Title:
Dated:
--------------------------- Notice Address:
Attention:
Telephone:
Telecopy:
<PAGE>
Schedule 4.05
Existing Indebtedness
Xpedite International Pty Limited has an overdraft facility of approximately
$38,000 with no outstanding value as of November 30, 1998.
Xpedite Systems, Inc. certain third party debt as shown on the attached Third
Party Debt Analysis.
Premiere Technologies, Inc. has $172,500,000 in 5 3/4% convertible bond debt @
$33.00/share.
Voice-Tel Enterprises, Inc., Voice-Tel network, L.P., Voice-Tel Pty Limited and
Voice-Tel of Canada, Ltd. have certain third party indebtedness as shown on the
attached schedule.
Expedite Systems, Inc. September 30, 1998
- - -----------------------------------------
Third Party Debt Analysis
<TABLE>
<CAPTION>
Int.
Obligor Guarantor Lender US$ Local Due Date Rate Commitment Comments
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
XSI XSWW BONY/Nations 62,000,000 12/16/98 L+1% 150,000,000
XSH XSL BONY/Nations 62,903,774 37,000,000(1) 12/16/98 (Pounds)L+1% Submit - (Pounds)
equivalent of $70M
Japan XSWW Mitsubishi Trust BK - - 9/30/98 2.8% - 3.6% 30,000,000
Commit Hypo Bank, Munich 120,726 201,564 2/28/99 7.0%
-----------
Total current 125,024,500
-----------
Commit Hypo Bank, Munich 2,198,356 3,670,375 5/30/00 6.5%
Commit Hypo Bank, LFA 404,288 675,000 6/30/02 7.5%
Commit Stadtsparkasse, Munich 718,735 1,200,000 3/30/07 4.75%
Commit Stadtsparkasse, Munich 278,510 465,000 4/30/02 8.00%
XSG Hypo Bank, Munich 1,796,838 3,000,000 4/30/01 4.8%
-----------
Total long-term 5,396,727
-----------
Other 3rd Party Notes (included in Acquisition liabilities)
Commit TBG-Bonn 2,153,210 3,595,000 12/31/05 6.00%
Commit Baypern Kapital 1,602,180 2,675,000 6/30/06 6.75%
Singapore Michael Tan 1,237,356 2,089,276 5/31/99 6.00%
-----------
4,992,746
-----------
Cap. Leases
Japan PBX (Nihon Lease) 21,773 2,975,427 12/27/00 2.47%
XSI Various 294,755
Singapore Hitachi leasing 158,496
-----------
475,024
-----------
-----------
Grand Total 135,888,997
===========
</TABLE>
(1) As of December 14, 1998, local amount 35,000,000.
<PAGE>
Schedule 4.06
Guarantees
A. Leased Properties:
------------------
1. Location: 40 University Avenue, Toronto, Ontario, Canada
---------------------------------------------------------
a. Landlord: MRC Properties
b. Tenant: Premier Communications, Inc.
c. Guarantor: Premier Technologies, Inc.
d. Square Footage: 4,500
e. Annual Rent: $36,000 (plus estimated operating expenses of 150% of
annual rent)
f. Commencement: 2/1/98 (Term: 5 years)
2. Location: 165 Halsey Street, 7th Floor, Newark, New Jersey
-----------------------------------------------------------
a. Landlord: Market Halsey Urban Renewal
b. Tenant: Premier Communications, Inc.
c. Guarantor: Premier Technologies, Inc.
d. Square Footage: 21,180
e. Annual Rent: $189,000
f. Commencement: 3/1/99 (Term: 20 years)
3. Location: 100 South Biscayne Boulevard, Suite 470, Miami, Florida
------------------------------------------------------------------
a. Landlord: Northwestern Capital Corporation
b. Tenant: Premier Communications, Inc.
c. Guarantor: Premier Technologies, Inc.
d. Square Footage: 8,673
e. Annual Rent: $158,282.28
f. Commencement: 11/1/98 (Term: 20 years)
4. Location: Level 5 and Part Level 3, 55 Clarence Street, Sydney,
----------------------------------------------------------------
Australia (Pending)
-------------------
a. Landlord: CIC Insurance Ltd.
b. Tenant: : Xpedite Systems, Inc.
c. Guarantor: Premier Technologies, Inc.
d. Square Footage: 1,300
e. Annual Rent: $500,000
f. Commencement: 2/1/99 (Term: 6 years)
5. Location: Canary Warf, One Canada Square, London E14, England (Pending)
-----------------------------------------------------------------------
a. Landlord: CWE SPVc Ltd.
b. Tenant: Premier Communications, Inc.
c. Guarantor: Premier Technologies, Inc.
d. Square Footage: 8,803
e. Annual Rent: (Pounds) 198,465 (plus estimated operating expenses
of 33% of annual rent)
f. Commencement: 11/1/98 (Term: 15 years)
6. Location: Cranberry Office Commons, 446 Highway 35, Eatontown, New
-------------------------------------------------------------------
Jersey
------
a. Landlord: WHMBL Real Estate Ltd. Partners
b. Tenant: Xpedite Systems, Inc.
c. Guarantor: Premier Technologies, Inc.
d. Square Footage: 4,500
e. Annual Rent: $183,910.68 (plus estimated operating expenses of
33% of annual rent)
f. Commencement: 10/1/98 (Term: 3 years and 1 month)
B. Contracts:
----------
1. Type of Agreement: Carrier Services (Guaranty for Payment for
--------------------------------------------------------------
services to be rendered)
------------------------
a. Provider: Frontier Communications, Inc., d/b/a West Coast
Telecommunications, Inc.
b. Customer: Premiere Communications, Inc.
c. Guarantor: Premiere Technologies, Inc.
d. Annual Payment: $720,000 (estimated)
e. Commencement: 10/6/98 (Term: Annual/Evergreen)
<PAGE>
SCHEDULE 4.07
Existing Liens
Customary restrictions contained in equipment leases entered into in the
ordinary course of business.
Liens in the form of capital leases or purchase money security interests in
various equipment of Premiere Technologies, Inc. and its subsidiaries not to
exceed $3,765,000.
<PAGE>
Schedule 4.11
Restrictive Covenants
None.
<PAGE>
Schedule 4.13
Existing Investments
Premiere Technologies, Inc. has investments in its subsidiaries (see Schedule
3.02).
Xpedite Systems, Inc. has investments in its subsidiaries (See Schedule 3.02).
Premiere Technologies, Inc. has investments as listed on the attached Schedule
of Existing Investments at 11/30/98.
Premiere Technologies, Inc. has a 1% ownership interest in Prado Aviation, LLC.
Premiere Technologies, Inc. loan to Prado Aviation, LLC in the amount of
$450,000.
Loans or advances outstanding on the date hereof or to be made after the date
hereof by Premiere Technologies, Inc. to various officers (or trusts or family
partnerships controlled by such officers) pursuant to employment agreements
existing on the date hereof between Premiere Technologies, Inc. and such
officers, the proceeds of which shall be used by such officers to finance the
exercise of various stock options. (Such advances made after the date hereof
pursuant to existing employment agreements shall be deemed to be existing
Investments for purposes of Section 4.13(d).) Such loans or advances are not
cash loans or advances.
Premiere Technologies, Inc. is currently in negotiations with VerticalOne in
anticipation of investing $700,000 in VerticalOne within the next 30 days.
Approximately $900,000 loan from Premiere Technologies, Inc. to Boland T. Jones.
<PAGE>
Schedule 4.13
Premiere Technologies, Inc.
Schedule of Existing Investments at 11/30/98
<TABLE>
<CAPTION>
Equity Investments
<S> <C> <C> <C>
WebMD common stock (less than) 20% $ 4,200,000
USA Net common stock (less than) 20% 5,999,999
Imaging Technology common stock (less than) 20% 101,259
DigiTec 2000 common stock (less than) 20% 6,255,638
Intellivoice common stock (less than) 20% 2,000,000
Webforia common stock (less than) 20% 1,034,000
-----------
Total $19,590,896
</TABLE>
<PAGE>
Schedule 4.15
Existing Benefit Plans
Premiere Technologies, Inc.
Premiere Communications, Inc.
Voice-Tel Enterprises, Inc.
VoiceCom Systems, Inc.
Major Medical - CIGNA HealthCare
Dental - CIGNA Dental
Group Life Insurance - Phoenix Home Life Insurance Company
Voluntary Life AD&D - UNUM Insurance Company
Vision - CIGNA
Long Term Disability - UNUM Insurance Company
Short Term Disability - UNUM Insurance Company
Xpedite Systems, Inc.
Major Medical - Guardian Insurance Company
Dental - Guardian Insurance Company
Group Life Insurance - Paul Revere Insurance Company
Long Term Disability - Paul Revere Insurance Company
Short Term Disability - Paul Revere Insurance Company
American Teleconferencing Services, Ltd.
Major Medical - CIGNA Healthcare
Dental - Delta Dental
Group Life Insurance - Phoenix Home Life Insurance Company
Voluntary Life and AD&D - Life Insurance Company of
North America
Premiere Technologies, Inc. 401(k) Plan
Various 401(k) plans assumed by Premiere Technologies, Inc. in the acquisitions
of Xpedite Systems, Inc., Voice-Tel Enterprises, Inc. and VoiceCom Systems,
Inc.
Premiere Technologies, Inc. 1994 Stock Plan
Premiere Technologies, Inc. 1995 Amended and Restated Stock Plan
Premiere Technologies, Inc. 1998 Stock Plan
Xpedite Systems, Inc. 1993 Incentive Stock Option Plan
Xpedite Systems, Inc. 1996 Incentive Stock Option Plan
VoiceCom Holdings, Inc. 1985 Stock Option Plan
VoiceCom Holdings, Inc. 1995 Stock Option Plan
Non-Qualified and Incentive Stock Option Plan of Voice-Tel Enterprises, Inc.
Non-Qualified and Incentive Stock Option Plan of VTN, Inc.
Premiere Technologies, Inc. Stock Option Agreements with certain employees
<PAGE>
Schedule 5.02(a)
Financial Statements
Premiere Technologies, Inc. Audited Financial Statement for the year ended
December 31, 1997.
Xpedite Systems, Inc. Audited Financial Statement for the year ended December
31, 1997.
Premiere Technologies, Inc. Form 10-Q, filed on November 16, 1998
Premiere Technologies, Inc. Form 10-Q, filed on August 14, 1998
Premiere Technologies, Inc. Form 10-Q, filed on May 15, 1998
Monthly financial statements for August 1998 for the following business
segments: Voice Messaging, Xpedite (US), ATS, and PTEK Enhanced Calling Card
Services.
Management projections for October dated September 29, 1998, October 12, 1998
and November 9, 1998.
Xpedite Systems, Inc. compliance packages for the period ending December 31,
1997, March 31, 1998, June 30, 1998 and September 30, 1998.
<PAGE>
Schedule 10.10(a)
-----------------
NOTICE OF ASSIGNMENT
[Name and address
of each Borrower in accordance
with Section 10.01]
[Name and address
of each Guarantor in accordance
with Section 10.01]
[Name and address
of Administrative Agent in accordance with
Section 10.01]
Date:
Ladies and Gentlemen:
Reference is made to the Amended and Restated Credit Agreement, dated as
of December 16, 1998, among Xpedite Systems, Inc. and Xpedite Systems Holdings
(UK) Limited, as Borrowers, the Guarantors party thereto, the Banks listed on
the signature pages thereof, NationsBank, N.A., as Documentation Agent, and The
Bank of New York, as Administrative Agent (the "Credit Agreement"). The
undersigned hereby give notice pursuant to Section 10.10(a) of the Credit
Agreement that [name of Assignor] [(the "Assignor")]/1/ has made the following
assignment to [name of Assignee] [(the "Assignee")]/2/:
Rights and Obligations
Assigned:
Effective Date of
Assignment:
<PAGE>
[The Assignee's Lending Offices and address for notices are as follows:
Domestic Lending Office:
Eurocurrency Lending Office:
Notice Address:]/3/
[The Assignor hereby requests that [each Borrower] [each Guarantor] [and
the Administrative Agent] consent to the assignment described above by signing a
copy of this letter in the space provided below and returning it to the
Assignor. Such consent shall release the Assignor from all of the obligations
described above as having been assigned to the Assignee.]/4/
[NAME OF ASSIGNOR]
By
--------------------------------
Name:
Title:
[NAME OF ASSIGNEE]
By
--------------------------------
Name:
Title:
Assignment and release consented to:/4/
XPEDITE SYSTEMS, INC.
By
-------------------------------
Name:
Title:
XPEDITE SYSTEMS HOLDINGS (UK) LIMITED
By
--------------------------------
Name:
Title:
<PAGE>
[GUARANTORS]
By
-------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Administrative Agent
By
-------------------------------
Name:
Title:
- - ---------------
1. Include definition if Footnote 4 material is to be included.
2. Include definition if Footnote 3 or Footnote 4 material is to be included.
3. Omit if the Assignee is a Bank.
4. Include the appropriate portion of the bracketed provision if (i) the
Assignor desires to be released from the assigned obligations, (ii) the consent
of the Borrowers and/or the Guarantors and/or the Administrative Agent is
required for such release and (iii) the Assignor has not otherwise obtained such
consents.
<PAGE>
NOTE GRID
Amount of Amount of
Notation
Date Loan Principal Repaid
- - ---- ---- ----------------
Made By
-------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
<PAGE>
Schedule 11.01(a)
Subsidiary Guarantors
Subsidiaries of Premiere Technologies, Inc. that are Guarantors as of the
Agreement Date:
Premiere Communications, Inc.
Xpedite Systems, Inc.
Xpedite Systems Worldwide, Inc.
Xpedite Systems Holdings (UK) Limited
Xpedite Systems Limited
Voice-Tel Enterprises, Inc.
VoiceCom Systems, Inc.
American Teleconferencing Services, Ltd.
<PAGE>
Schedule 11.01(b)
Securities and Exchange Commission Filings
Premiere Technologies, Inc. has filed the following reports with the Securities
and Exchange Commission:
Form 10-Q, filed on November 16, 1998
Form 10-Q, filed on August 14, 1998
Rule 424B3 Prospectus, filed on August 7, 1998
Form 8-K, filed on July 31, 1998
Schedule 13G/A, filed on July 31, 1998
Schedule 14A Definitive Proxy, filed on July 8, 1998
Form 8-A12G, filed on June 26, 1998
Form 8-K, filed on June 26, 1998
Schedule 13G/A, filed June 22, 1998
Form 8-K, filed on June 11, 1998
Rule 424B3 Prospectus, filed on June 5, 1998
Rule 424B3 Prospectus, filed on May 27, 1998
Rule 424B3 Prospectus, filed on May 18, 1998
Form 10-Q, filed on May 15, 1998
Form 8-K, filed on May 15, 1998
Form S-3 Registration Statement, filed on May 11, 1998
Form S-8 Registration Statement, filed on May 11, 1998
Form 8-K, filed on April 28, 1998
Form 10-K/A, filed on April 22, 1998
Form S-3 Registration Statement, filed on April 22, 1998
Form 8-K/A, filed on April 13, 1998
Form S-3 Registration Statement, filed on April 13, 1998
Rule 424B3 Prospectus, filed on April 9, 1998
Form 10-K, filed on March 31, 1998
Form 8-K, filed on March 13, 1998
Rule 424B3 Prospectus, filed on March 6, 1998
Form 8-K, filed on February 20, 1998
Schedule 13G, filed on February 12, 1998
Rule 424B3 Prospectus, filed on February 26, 1998
Form S-4 Registration Statement, filed on January 28, 1998
Form 8-K/A, filed on January 27, 1998
Rule 424B3 Prospectus, filed on January 15, 1998
Rule 424B3 Prospectus, filed on January 2, 1998
Xpedite Systems, Inc. has filed the following reports with the Securities and
Exchange Commission:
Schedule 13D/A, filed on April 2, 1998
Form 15-12G, filed on March 4, 1998
<PAGE>
Schedule 13D, filed on February 17, 1998
Schedule 13D/A, filed on February 6, 1998
Schedule 13D/A, filed on January 12, 1998
<PAGE>
Schedule 11.01(c)
-----------------
CALCULATION OF ADDITIONAL STERLING COST
---------------------------------------
1 The Additional Sterling Cost for any period shall (subject to paragraph 5
below) be calculated in accordance with the following formula:
BY + L(Y-X) + S(Y-Z) per cent per annum
--------------------
100 - (B+S)
where on the day of application of the formula:
B is the percentage of the Administrative Agent's eligible liabilities
which the Bank of England then requires the Administrative Agent to
hold on a non-interest-bearing deposit account in accordance with its
cash ratio requirements;
Y is the rate at which Sterling deposits are offered by the
Administrative Agent to leading banks in the London Interbank Market
at or about 11 a.m. on that day for the relevant period;
L is the percentage of eligible liabilities which (as a result of the
requirements of the Bank of England) the Administrative Agent
maintains as secured money with members of the London Discount Market
Association or in certain marketable or callable securities approved
by the Bank of England, which percentage shall (in the absence of
evidence that any other figure is appropriate) be conclusively
presumeed to be 5 per cent;
X is the rate at which secured Sterling investments may be placed by the
Administrative Agent with members of the London Discount Market
Association at or about 11 a.m. on that day for the relevant period
or, if greater, the rate at which Sterling bills of exchange (of a
tenor equal to the duration of the relevant period) eligible for
rediscounting at the Bank of England can be discounted in the London
Discount Market at or about 11 a.m. on that day;
S is the percentage of the Administrative Agent's eligible liabilities
which the Bank of England requires the Administrative Agent to place
as a special deposit; and
Z is the interest rate expressed as a percentage per annum allowed by
the Bank of England on special deposits.
2 For the purposes of this schedule 5:
(a) "eligible liabilities" and "special deposits" have the meanings given
to them at the time of application of the formula by the Bank of
England; and
<PAGE>
(b) "relevant period" in relation to each period for which Additional
Sterling Cost falls to be calculated means:
(i) if it is 3 months or less, that period; or
(ii) if it is more than 3 months, 3 months.
3 In the application of the formula, B, Y, L, X, S and Z are included in the
formula as figures and not as percentages, e.g. if B = 0.5 per cent and Y =
15 per cent BY is calculated as 0.5 x 15.
4 The formula shall be applied on the first day of each relevant period.
Each amount shall be rounded up to the nearest four decimal places.
5 If the Administrative Agent (acting reasonably) determines that a change in
circumstances has rendered, or will render, the formula inappropriate, the
Administrative Agent (after consultation with the Banks) shall notify the
Borrowers of the manner in which the Additional Cost will subsequently be
calculated. The manner of calculation so notified by the Administrative
Agent shall, in the absence of manifest error, be binding on all parties.
2
<PAGE>
EXHIBIT A
[XPEDITE SYSTEMS, INC.]/[XPEDITE SYSTEMS HOLDINGS (UK) LIMITED]
NOTE
_______________, 19__
FOR VALUE RECEIVED, [NAME OF BORROWER] (the "Borrower") hereby promises to
pay to the order of __________ (the "Bank"), for the account of its applicable
Lending Office, the unpaid principal amount of each Loan made by such Bank to
the Borrower under the Credit Agreement referred to below, on the dates and in
the amounts specified in Section 1.04 of such Credit Agreement, and to pay
interest on the principal amount of each such Loan on the dates and at the rates
specified in Section 1.03 of such Credit Agreement. All payments due the Bank
hereunder shall be made to the Bank at the place, in the type of money and funds
and in the manner specified in Section 1.11 of such Credit Agreement.
Each holder hereof is authorized to endorse on the grid attached hereto, or
on a continuation thereof, each Loan of the Bank and each payment, with respect
thereto, provided that the failure of the Bank to make any such endorsement
shall not affect the obligations of the Borrower hereunder or under such Credit
Agreement.
Presentment, demand, protest, notice of dishonor and notice of intent to
accelerate are hereby waived by the undersigned.
This Note evidences Loans made under, and is entitled to the benefits of,
the Amended and Restated Credit Agreement, dated as of December 16, 1998, among
the Borrower, [Xpedite Systems, Inc.][Xpedite Systems Holdings (UK) Limited],
the Guarantors party thereto, the Banks listed on the signature pages thereof,
NationsBank, N.A., as Documentation Agent, and The Bank of New York, as
Administrative Agent, as the same may be amended from time to time (the "Credit
Agreement"). Reference is made to such Credit Agreement, as so amended, for
provisions relating to the prepayment and the acceleration of the maturity
hereof.
i
<PAGE>
This Note shall, pursuant to New York General Obligations Law Section 5-
1401, be governed by the law of the State of New York.
[XPEDITE SYSTEMS, INC.]
[XPEDITE SYSTEMS HOLDINGS (UK) LIMITED]
By
------------------------------------
Name:
Title:
ii
<PAGE>
Exhibit B
================================================================================
SECURITY AGREEMENT
Dated as of ___________, 199_
Between
[PLEDGOR]
and
THE BANK OF NEW YORK,
as Secured Party
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
SECURITY INTEREST
<TABLE>
<CAPTION>
<S> <C> <C>
Section 1.01 Grant of Security Interest..................................... 1
Section 1.02 Validity and Priority of Security Interest; Authorized Action.. 1
Section 1.03 Pledgor Remains Obligated; Secured Party and Other Principals
Not Obligated.................................................. 2
Section 1.04 Proceeds of Collateral......................................... 2
Section 1.05 Limitation of Pledgor's Obligations............................ 2
ARTICLE II
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01 Collateral.................................................... 3
(c)........................................................... 4
Section 2.02 Consent to Pledge; Control Letters............................ 5
Section 2.03 New Accounts.................................................. 5
Section 2.04 Change of Jurisdiction........................................ 5
Section 2.05 Jurisdictions of Securities and Commodity Intermediaries...... 6
Section 2.06 Requirement of Materially Adverse Effect...................... 6
ARTICLE III
EVENT OF DEFAULT
Section 3.01 Application of Proceeds....................................... 6
Section 3.02 .............................................................. 7
(a) Use of Premises and Intellectual Property................ 7
(b) Directors, Officers and Employees........................ 7
(c) Power of Sale............................................ 7
(d) Foreclosure.............................................. 7
(e) Receiver................................................. 7
(f) Collection of Collateral Proceeds by Pledgor............. 7
(g) Notification............................................. 8
(h) Secured Party's Rights with Respect to Proceeds and
Other Collateral......................................... 8
(i) Enforcement by Secured Party............................. 8
(j) Adjustments.............................................. 8
(k) Warehousing.............................................. 8
Section 3.03 Securities and Instrument Collateral.......................... 8
(a) Registration and Indemnification......................... 8
(b) Restricted Offering Dispositions......................... 9
</TABLE>
<PAGE>
ARTICLE IV
MISCELLANEOUS
<TABLE>
<CAPTION>
<S> <C> <C>
Section 4.01 Expenses of Pledgor's Agreements and Duties.............................. 9
Section 4.02 Secured Party's Right to Perform on Pledgor's Behalf..................... 9
Section 4.03 Secured Party's Right to Use Agents and to Act in Name of Pledgor........ 9
Section 4.04 No Interference, Compensation or Expense................................. 9
Section 4.05 Limitation of Obligations with Respect to Collateral..................... 9
Section 4.06 Rights of Secured Party under Uniform Commercial Code and Applicable Law. 10
Section 4.07 Waivers of Rights Inhibiting Enforcement................................. 10
Section 4.08 Power of Attorney........................................................ 10
Section 4.09 Termination of Security Interest......................................... 11
Section 4.10 Notices and Deliveries................................................... 11
(a) Notices and Materials Other than Collateral.......................... 11
(b) Collateral........................................................... 13
Section 4.11 Governing Law............................................................ 13
Section 4.12 LIMITATION OF LIABILITY.................................................. 13
Section 4.13 Counterparts............................................................. 14
Section 4.14 Entire Agreement......................................................... 14
Section 4.15 Successors and Assigns................................................... 14
Section 4.16 Delivery of Opinions Authorized.......................................... 14
ARTICLE V
INTERPRETATION
Section 5.01 Definitional Provisions.................................................. 14
(a) Certain Terms Defined by Reference................................... 14
(b) Other Defined Terms.................................................. 14
Section 5.02 Other Interpretive Provisions............................................ 19
Section 5.03 Representations and Warranties........................................... 21
Section 5.04 Captions................................................................. 21
Schedule 1.02 Schedule of Required Action
Schedule 1.02(a) Form of UCC-1 Financing Statement
Schedule 1.02(c) Form of Financial Intermediary Agreement
Schedule 1.02(d)-A Memorandum of Security Agreement; Patents
Schedule 1.02(d)-B Memorandum of Security Agreement; Trademarks
Schedule 1.02(d)-C Memorandum of Security Agreement; Copyrights
Schedule 1.02A Schedule of Permitted Liens
Schedule 2.01(c)(v) Schedule of Initial Securities and Instrument Collateral
Schedule 2.01(c)(vi) Form of Security Agreement Questionnaire
Schedule 5.01(a)-1 Securities Account Control Agreement
Schedule 5.01(a)-2 Commodity Account Control Agreement
</TABLE>
2
<PAGE>
SECURITY AGREEMENT
Dated as of December 16, 1998
In consideration of the execution and delivery of the Credit Agreement,
dated as of December 17, 1997, as amended and restated as of the date hereof, by
the Banks listed on the signature pages thereof and The Bank of New York, as
Administrative Agent, [PLEDGOR], a [JURISDICTION] corporation, hereby agrees
with THE BANK OF NEW YORK, as Secured Party, as follows (with certain terms used
herein being defined in Article 5):
ARTICLE 12
SECURITY INTEREST
-----------------
Section 12.01 Grant of Security Interest.
--------------------------
To secure the payment, observance and performance of the Secured
Obligations, the Pledgor hereby mortgages, pledges and assigns the Collateral to
the Secured Party, and grants to the Secured Party a continuing security
interest in, and a continuing lien upon, the Collateral.
Section 12.02 Validity and Priority of Security Interest; Authorized
------------------------------------------------------
Action.
- - ------
(a) The Pledgor agrees that the Security Interest shall, and that the
Pledgor shall take all action necessary or desirable, or that the Secured Party
may reasonably request, including the actions specified on Schedule 1.02, (a) to
-------------
ensure that the Security Interest shall, at all times be valid, perfected and
enforceable against the Pledgor and all third parties, in accordance with the
terms hereof, as security for the Secured Obligations, and that neither the
Collateral, including, if the Collateral includes any securities accounts or
commodity accounts, any financial asset or commodity contract carried therein,
nor, if the Collateral includes any securities entitlements, any financial asset
subject thereto, shall at any time be subject to (x) control by any Person other
than the Secured Party or (y) any Lien, other than a Permitted Lien, that is
prior to, on a parity with or junior to such Security Interest, except that,
unless an Event of Default exists, this Section 1.02, shall not require the
continuation of the perfection of the Security Interest in Collateral that the
Pledgor is entitled to, and does, receive or retain pursuant to Section 1.04,
(b) to protect and preserve the Collateral and (c) to protect and preserve, and
to enable the exercise or enforcement of, the rights of the Secured Party
therein and hereunder and under the other Collateral Documents.
(b) (i) The Secured Party is hereby authorized to file one or more
financing or continuation statements or amendments thereto with respect to the
Collateral without the signature of or in the name of the Pledgor. A carbon,
photographic or other reproduction of this Agreement or of any financing
statement filed in connection with this Agreement shall be sufficient as a
financing statement.
(ii) Each (A) issuer of an uncertificated security registered in the
name of the Pledgor, (B) each securities intermediary maintaining a security
account for the Pledgor and (C) each commodity intermediary maintaining a
commodity account for the Pledgor, in each case to the extent it constitutes
Collateral, is hereby authorized and directed by the Pledgor to disclose to
<PAGE>
the Secured Party, at any time and from time to time, all agreements pursuant to
which any such issuer, securities intermediary or commodity intermediary has
agreed, without further consent by the Pledgor, to (1) comply with, (aa) in the
case of any such issuer, instructions with respect to such a security originated
by a Person other than the Pledgor and (bb) in the case of any such securities
intermediary, entitlement orders originated by a Person other than the Pledgor
and (2) apply, in the case of any such commodity intermediary, any value
distributed on account of any commodity contract carried in such commodity
account as directed by the Secured Party.
Section 12.03 Pledgor Remains Obligated; Secured Party and Other
--------------------------------------------------
Principals Not Obligated.
- - ------------------------
The grant by the Pledgor to the Secured Party of the Security Interest
shall not (a) relieve the Pledgor of any Liability to any Person under or in
respect of any of the Collateral or (b) impose on the Secured Party or the other
Principals any such Liability or any Liability for any act or omission on the
part of the Pledgor relative thereto.
Section 12.04 Proceeds of Collateral.
----------------------
(a) Except during an Event of Default, the Pledgor shall be entitled
to receive and retain all Account Proceeds, Ordinary Distributions and proceeds
of dispositions of Collateral not prohibited under Section 4.09 of the Credit
Agreement.
(b) Subject to the Pledgor's rights under Section 1.04(a), the Secured
Party shall be entitled to receive and retain all proceeds of Collateral and all
Distribution Collateral. The Secured Party is hereby irrevocably authorized,
upon the occurrence and continuation of an Event of Default, either in the name
and on behalf of the Pledgor or in its own name, to endorse and deposit, or
cause to be deposited, for collection, present, draw upon or under, or otherwise
take action to realize upon, all instruments, chattel paper, securities, letters
of credit and documents constituting part of the Collateral for the purpose of
holding and disposing of the proceeds thereof in accordance with the terms
hereof.
Section 12.05 Limitation of Pledgor's Obligations.
-----------------------------------
It is the intention of the Pledgor and the Secured Party that the
obligations of the Pledgor under this Agreement shall be in, but not in excess
of, the maximum amount permitted by Applicable Law. To that end, but only to
the extent such obligations would otherwise be avoidable, the obligations of the
Pledgor under this Agreement shall be limited to the maximum amount that, after
giving effect to the incurrence thereof, would not render the Pledgor insolvent
or unable to pay its debts as they mature or leave the Pledgor with an
unreasonably small capital. The need for any such limitation shall be
determined, and any such needed limitation shall be effective, at the time or
times that the Pledgor is deemed, under Applicable Law, to incur obligations
thereunder. This Section 1.05 is intended solely to preserve the rights of the
Secured Party under this Agreement to the maximum extent permitted by Applicable
Law, and neither the Pledgor nor any other Person shall have any right under
this Section 1.05 that it would not otherwise have under Applicable Law. For
the purposes of this Section 1.05, "insolvency", "unreasonably small capital"
and "inability to pay debts as they mature" shall be determined in accordance
with Applicable Law.
ARTICLE 13
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
-------------------------------------------------
2
<PAGE>
The Pledgor represents, warrants and covenants as follows:
Section 13.01 Collateral.
----------
(a) Except as permitted under the Credit Agreement, the Pledgor shall:
(i) be the sole owner of each and every item of Collateral free from any right,
title or interest of any third Person (other than the holder of a Permitted
Lien), (ii) defend the Collateral against the claims and demands of all third
Persons (other than holders of Permitted Liens), (iii) in the case of tangible
property constituting part of the Collateral, (A) properly maintain such
property and keep it in good order and repair, subject to normal wear and tear,
and (B) keep such property fully insured with responsible companies of
recognized national standing or otherwise acceptable to the Secured Party
against such risks as such Collateral may be subject to under policies
containing loss payable clauses naming the Secured Party as loss payee, (iv)
comply with (A) all Applicable Laws relating to or affecting the Collateral and
(B) the terms of all deeds and leases, mortgages and other Contracts relating to
premises where any Collateral is located and (C) all license and franchise
agreements and other Contracts pertaining to any of the Collateral, (v) duly
fulfill all obligations on its part to be fulfilled under or in connection with
all Receivables and General Intangibles and do nothing intentionally to impair
the security interests of the Secured Party therein, (vi) subject, during an
Event of Default, to the Secured Party's rights under Sections 3.02(f) and
3.02(i) hereof, endeavor to collect from the Collateral Debtor of each
Collateral Obligation when due all amounts owing thereunder, except that this
clause (vi) shall not require the Pledgor to take any action not in accordance
with its customary collection practices, (vii) maintain its chief executive
office and, if different from its chief executive office, each office where the
books and records relating to any Receivables or General Intangibles are kept,
only at and shall keep all tangible property constituting part of the Collateral
only at or in transit to, (A) in the case of such chief executive office or
other office, the location thereof specified in, and in the case of any such
tangible property constituting part of the Collateral, any of the respective
locations therefor specified in, the Questionnaire, or (B) in any case, a
location of which the Secured Party has received not less than 30 days prior
written notice and which is located within one of the States of the United
States, (viii) give the Secured Party (A) prompt notice of (1) the location of
each new place of business opened by the Pledgor and (2) each new location of
any Collateral, (ix) deliver to the Secured Party all certificates and
instruments evidencing Securities and Instrument Collateral, duly endorsed in
favor of the Secured Party or accompanied by stock powers duly executed in
blank, in either case as reasonably requested by the Secured Party and (x)
provide the Secured Party with such other information as to the Collateral as
the Secured Party may reasonably request.
(b) Except as permitted by the Credit Agreement, the Pledgor shall not
(i) sell, lease, transfer or otherwise dispose of any Collateral, including, if
the Collateral includes any securities accounts or commodity accounts, any
financial asset or commodity contract carried therein, or, if the Collateral
includes any security entitlements, any financial asset subject thereto, or any
interest therein or thereunder, including any license or sublicense, except for,
in the case of General Intangibles, the grant of any license or sublicense
therein in the ordinary course of business; or in the case of Inventory, sales
of Inventory in the ordinary course of business; or in the case of Machinery and
Equipment, sales of any thereof that Pledgor intends to no longer use or is no
longer useful in the operation of the Pledgor's business, (ii) rescind or cancel
any obligation evidenced by any Receivable or General Intangible or modify any
term thereof or make any adjustment with respect thereto or extend or renew the
same, or compromise or settle any dispute, claim, suit or legal proceeding
relating thereto, except in the ordinary course of
3
<PAGE>
business and subject, during an Event of Default, to the rights of the Secured
Party under Sections 3.02(i) and 3.02(j), (iii) (A) enter into any Contract
providing for any deduction from any Receivable that is an Account except for
agreements made in the ordinary course of business, or (B) subject to the
penultimate sentence of Section 2.01(d), cancel or terminate, or amend, modify
or waive in any manner materially adverse to the holder thereof any provision
of, any Securities and Instrument Collateral that constitutes Indebtedness, or
(C) subject to the penultimate sentence of Section 2.01(d), enter into or permit
to exist any restriction with respect to any rights under any Securities and
Instrument Collateral, or any other such asset referred to in clause (B), other
than restrictions arising under the Loan Documents or the Premiere Merger
Agreement, (iv) without giving at least 30 days' prior written notice to the
Secured Party, (A) change its name, identity or corporate structure or (B) do
business under any name, trade name or trade style not listed on the
Questionnaire, or (v) agree with any securities intermediary that such
securities intermediary may grant any Lien on any financial asset with respect
to which the Pledgor is an entitlement holder.
(c) (i) Each Receivable that is an Account (A) is and shall at all
times represent the legal, valid and binding obligation of its Collateral Debtor
and, subject to clause (B)(1), is and shall at all times be enforceable in
accordance with its terms, (B) shall at no time be subject to (1) any defense,
setoff or counterclaim other than one arising in the ordinary course of
business, (2) any agreement prohibiting assignment or requiring notice of or
consent to assignment, or (3) any stamp or other Tax, (C) shall comply with all
Applicable Laws, and (D) shall be genuine and in all respects what it purports
to be and shall arise out of a bona fide transaction.
(ii) All Inventory (A) is and at all times shall be in good condition,
(B) meets and at all times shall meet all governmental standards applicable
thereto or to its manufacture, use or sale, and (C) is and shall at all times be
currently either usable or saleable in the ordinary course of the Pledgor's
business.
(iii) All Machinery and Equipment (A) is and shall at all times be in
good operating condition and repair, normal wear and tear excepted, and (B)
complies and is operated and shall at all times comply and be operated in
compliance with all Applicable Laws.
(iv) All General Intangibles that constitute Intellectual Property
shall at all times be subsisting, valid and enforceable against third Persons.
(v) (A) All Securities and Instrument Collateral is and at all times
shall be duly authorized, validly issued, fully paid and non-assessable, and (B)
as of the Agreement Date, the shares of capital stock or other units of
ownership interests that constitute Securities and Instrument Collateral listed
on Schedule 2.01(c)(v) represent the respective percentages of the outstanding
shares of such capital stock or other units of ownership interests that are set
forth on such Schedule.
(vi) The Questionnaire is, as of the Agreement Date, complete and
correct in all material respects.
4
<PAGE>
(d) The Secured Party shall have the right, during an Event of
Default, (i) in the name of the Secured Party, in the name and on the stationery
of the Pledgor or any such other name as the Secured Party may select, to verify
the validity, amount or any other matter relating to any Receivable or General
Intangible by mail, telegram, telephone or any other means, (ii) after a notice
to the Pledgor that it intends to exercise its rights under this Section
2.01(d)(ii), to transfer into or register in its name or the name of its nominee
any or all of the Securities and Instrument Collateral and, in its own or the
Pledgor's name, to exercise any and all rights, powers and privileges with
respect to the Securities and Instrument Collateral, and with the same force and
effect, as could the Pledgor. Unless and until the Secured Party exercises its
rights under Section 2.01(d)(ii), the Pledgor may, with respect to any of the
Securities and Instrument Collateral, vote and give consents, ratifications and
waivers with respect thereto, except to the extent that any such action would
(x) be for a purpose that would constitute or result in an Event of Default or
(y) in the reasonable judgment of the Required Banks, detract from the value
thereof as Collateral, and from time to time, upon request from the Pledgor, the
Secured Party shall deliver to the Pledgor suitable proxies confirming the right
of the Pledgor to cast such votes, consents, ratifications and waivers. Each
such request from the Pledgor shall constitute a Representation and Warranty by
the Pledgor hereunder that no Event of Default exists or would result therefrom.
Section 13.02 Consent to Pledge; Control Letters.
----------------------------------
(a)(i) As of the Agreement Date, the Pledgor has not agreed with any
securities intermediary that such securities intermediary may grant any Lien on
any financial asset with respect to which the Pledgor is an entitlement holder.
(ii) No financial asset with respect to which the Pledgor is the
entitlement holder is subject to any Lien other than the Security Interest.
(b) As of the Agreement Date, the Pledgor is not a party to any
Control Letter or similar agreement relating to any investment property that
constitutes Collateral, except for those to which the Secured Party is a party.
Section 13.03 New Accounts.
------------
The Pledgor shall give to the Secured Party not less than 15 days' prior
notice of the opening of each new securities account or commodity account that
itself will constitute Collateral, or to which financial assets are to be
credited (or with respect to which there will be security entitlements), or in
which commodity contracts are to be carried, that constitute or are to
constitute Collateral, specifying, as appropriate, the securities intermediary
or the commodity intermediary maintaining such account, the account number and
the jurisdiction of each such Person, determined in accordance with, in the case
of a securities intermediary, Section 8-110(e) of the Uniform Commercial Code
and, in the case of a commodity intermediary, Section 9-103(6)(e) of the Uniform
Commercial Code.
Section 13.04 Change of Jurisdiction.
----------------------
Promptly upon its obtaining knowledge thereof, the Pledgor shall give to
the Secured Party notice of any change of the jurisdiction of a securities
intermediary or a commodity intermediary maintaining a securities account or
commodity account that itself constitutes Collateral, or to which financial
assets are credited (or with respect to which there are security entitlements),
or in which commodity contracts are carried, that constitute Collateral,
specifying such new jurisdiction.
5
<PAGE>
Section 13.05 Jurisdictions of Securities and Commodity Intermediaries.
--------------------------------------------------------
(a) The Pledgor shall not, after the Agreement Date, enter into any
Contract with any securities intermediary or with any commodity intermediary
with respect to any investment property that is or is to be Collateral, unless
such Contract or another agreement specifies effectively with respect to such
investment property that such securities intermediary's or commodity
intermediary's jurisdiction shall be the State of New York.
(b) The Pledgor shall use its best effort to cause each Contract with
each securities intermediary or commodities intermediary in effect on the
Agreement Date that relates to investment property that is or is to be
Collateral, and that does not so provide, to be amended so that thereafter such
Contract shall specify effectively with respect to such investment property that
such securities intermediary's or commodity intermediary's jurisdiction shall be
the State of New York. If in any case such an amendment shall not be effective
within 30 days of the Agreement Date, the Pledgor shall terminate such Contract,
and enter into a new Contract relating to such investment property with another
securities intermediary or commodity intermediary, as the case may be, which
does effectively so provide.
Section 13.06 Requirement of Materially Adverse Effect.
----------------------------------------
Clauses (i), (ii), (iii), (iv), (v), (vi) and (viii) of Section 2.01(a),
clauses (i), (ii), (iii) and (iv)(B) of Section 2.01(b), and clauses (i), (ii),
(iii) and (iv) of Section 2.01(c), shall not apply in any circumstances where
noncompliance, together with all other noncompliances with this Agreement will
not have a Materially Adverse Effect on the Collateral taken as a whole.
ARTICLE 14
EVENT OF DEFAULT
----------------
During an Event of Default, and in each such case:
(A) Proceeds.
--------
Section 14.01 Application of Proceeds.
-----------------------
All cash proceeds received by the Secured Party upon any sale of,
collection of, or other realization upon, all or any part of the Collateral and
all cash held by the Secured Party as Collateral shall, subject to the Secured
Party's right to continue to hold the same as cash Collateral, be applied as
follows:
First: To the payment of all out-of-pocket costs and expenses incurred in
connection with the sale of or other realization upon Collateral, including
attorneys' fees and disbursements;
Second: To the payment of the Secured Obligations owing to the Secured
Party in such order as the Secured Party may elect (with the Pledgor remaining
liable for any deficiency);
Third: To the payment of the other Secured Obligations ratably in
accordance with the amounts owed to each holder thereof and in such order as the
Required Banks may elect (with the Pledgor remaining liable for any deficiency);
and
6
<PAGE>
Fourth: To the extent of the balance (if any) of such proceeds, to the
payment to the Pledgor, subject to Applicable Law and to any duty to pay such
balance to the holder of any subordinate Lien in the Collateral.
(A) Remedies.
--------
Section 14.02
(a) Use of Premises and Intellectual Property.
-----------------------------------------
The Secured Party may (i) enter the Pledgor's premises and, until
the Secured Party completes the enforcement of its rights in the Collateral,
take exclusive possession of such premises or place custodians in exclusive
control thereof, remain on such premises and use the same and all machinery and
equipment for the purpose of (A) completing any work in process, preparing
Collateral for disposition and disposing thereof and (B) collecting Collateral
Obligations, and (ii) in the exercise of its rights under this Agreement, use
the Pledgor's rights in, to and under all patents, trademarks and copyrights and
licenses and sublicenses thereof, to the extent of the rights of the Pledgor
therein, and the Pledgor hereby grants a license to the Secured Party for such
purpose, subject to the consent, if required, of any licensor, franchisor or
other third Person.
(b) Directors, Officers and Employees.
---------------------------------
The Secured Party may retain the Pledgor's directors, officers and
employees, in each case upon such terms as the Secured Party and any such Person
may agree, notwithstanding the provisions of any employment, confidentiality or
non-disclosure agreement between any such Person and the Pledgors, and the
Pledgor hereby waives its rights under any such agreement and consents to each
such retention.
(c) Power of Sale.
-------------
The Secured Party (i) may sell the Collateral in one or more parcels
at public or private sale, at any of its offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as it may deem commercially reasonable, (ii) shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given, and
(iii) may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(d) Foreclosure.
-----------
The Secured Party, instead of exercising the power of sale conferred
upon it by Section 3.02(c) and Applicable Law, may proceed by a suit or suits at
law or in equity to foreclose the Security Interest and sell the Collateral, or
any portion thereof, under a judgment or a decree of a court or courts of
competent jurisdiction.
(e) Receiver.
--------
The Secured Party may obtain the appointment of a receiver of the
Collateral and the Pledgor consents to and waives any right to notice of such
appointment.
(f) Collection of Collateral Proceeds by Pledgor.
--------------------------------------------
The Secured Party may, by notice to the Pledgor, direct it to, and
thereupon the Pledgor shall, receive all proceeds of Collateral in trust for the
Secured Party, not commingle the same with any other property or funds of the
Pledgor and, unless the Secured Party shall have otherwise instructed the
Pledgor, deliver or cause to be delivered all such proceeds in the exact form
received, together with any necessary endorsements, to the Secured Party or to
such Person or Persons as the Secured Party may designate.
7
<PAGE>
(g) Notification.
------------
The Secured Party may notify, or request the Pledgor to notify, in
writing or otherwise, each Collateral Debtor to make payment directly to the
Secured Party. If, notwithstanding the giving of any notice, any such Person
shall make payments to the Pledgor, the Pledgor shall hold all such payments it
receives in trust for the Secured Party, without commingling the same with other
funds or property of the Pledgor or any other Person, and shall deliver the same
to the Secured Party immediately upon receipt by the Pledgor in the identical
form received, together with any necessary endorsements.
(h) Secured Party's Rights with Respect to Proceeds and Other
---------------------------------------------------------
Collateral.
- - ----------
All payments and other deliveries received by or for the account of
the Secured Party from time to time pursuant to Section 3.02(f) or (g), together
with the proceeds of all other Collateral from time to time held by or for the
account of the Secured Party may, at the election of the Secured Party, (i) be
or continue to be held by the Secured Party, or any Person designated by the
Secured Party to receive or hold the same, as Collateral, (ii) be applied as
provided in Section 3.01 or (iii) be disposed of in accordance with the
provisions of this Agreement and Applicable Law.
(i) Enforcement by Secured Party.
----------------------------
The Secured Party may, with only such notice to the Pledgor as is
required by, and not waivable under, Applicable Law and at such time or times as
the Secured Party in its sole discretion may determine, exercise any or all of
the Pledgor's rights in, to and under, or in any way connected with or related
to, any or all of the Collateral.
(j) Adjustments.
-----------
The Secured Party may settle or adjust disputes and claims directly
with Collateral Debtors for amounts and on terms that the Secured Party
considers advisable and in all such cases only the net amounts received by the
Secured Party in payment of such amounts, after deduction of out-of-pocket costs
and expenses of collection, including reasonable attorney's fees, shall be
subject to the other provisions of this Agreement. The Pledgor shall have no
further right under Section 2.01(b) or otherwise to make any such settlements or
adjustments or to accept any returns of merchandise.
(k) Warehousing.
-----------
The Secured Party may cause any or all of the Inventory and the
Machinery and Equipment to be placed in a public or field warehouse.
Section 14.03 Securities and Instrument Collateral.
------------------------------------
(a) Registration and Indemnification.
--------------------------------
If the Secured Party elects to sell or otherwise dispose of any
Securities and Instrument Collateral, the Pledgor shall, if it controls the
issuer or if it otherwise has the right to effect such registration, and if the
Secured Party deems such registration to be desirable, (i) cause the same to be
registered under the Securities Act of 1933 and take all other action, including
complying with the "blue sky" or securities laws of the several States of the
United States and delivering to the Secured Party appropriate quantities of
prospectuses, necessary or appropriate so as to permit the public sale or other
disposition thereof by the Secured Party in such jurisdictions as the Secured
Party may select, and (ii) indemnify, in the form then customary, all Persons
that are underwriters (whether statutory or otherwise) and all Affiliates of all
such Persons, in connection with such sale or disposition, such indemnity, to
the extent applicable to the Principals, to be in addition to and supplementary
of (and not to be construed as being in derogation of) that afforded the
Principals under Article 8 and Section 10.02 of the Credit Agreement.
8
<PAGE>
(b) Restricted Offering Dispositions.
--------------------------------
Whether or not the Pledgor controls the issuer or otherwise has the
right to effect the registrations and compliances referred to in Section 3.03(a)
and as an alternative to its rights thereunder, in connection with any sale of
any of the Securities and Instrument Collateral, the Secured Party may, at its
election, comply with any limitation or restriction (including any restrictions
on the number of prospective bidders and purchasers or any requirement that they
have certain qualifications or that they represent and agree that they are
purchasing for their own account for investment and not with a view to the
distribution or resale of such Securities and Investment Collateral) as it may
be advised by counsel is necessary in order to avoid any violation of Applicable
Law or to obtain any Governmental Approval, and such compliance shall not result
in such sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall any Principal be liable or accountable to the
Pledgor for any discount allowed by reason of the fact that such Securities and
Instrument Collateral is sold in compliance with any such limitation or
restriction.
ARTICLE 15
MISCELLANEOUS
-------------
Section 15.01 Expenses of Pledgor's Agreements and Duties.
-------------------------------------------
The terms, conditions, covenants and agreements to be observed or performed
by the Pledgor under the Collateral Documents shall be observed or performed by
it at its sole cost and expense.
Section 15.02 Secured Party's Right to Perform on Pledgor's Behalf.
----------------------------------------------------
If the Pledgor shall fail to observe or perform any of the terms,
conditions, covenants and agreements to be observed or performed by it under the
Collateral Documents, the Secured Party, upon five business days notice to the
Pledgor specifying the action to be taken, may (but shall not be obligated to)
do the same or cause it to be done or performed or observed, either in its name
or in the name and on behalf of the Pledgor, and the Pledgor hereby authorizes
the Secured Party so to do.
Section 15.03 Secured Party's Right to Use Agents and to Act in Name of
---------------------------------------------------------
Pledgor.
- - -------
The Secured Party may exercise its rights and remedies under the Collateral
Documents through an agent or other designee and, in the exercise thereof, the
Secured Party or any such other Person may act in its own name or in the name
and on behalf of the Pledgor.
Section 15.04 No Interference, Compensation or Expense.
----------------------------------------
The Secured Party may exercise its rights and remedies under the Collateral
Documents (a) without resistance or interference by the Pledgor, (b) without
payment of any rent, license fee or compensation of any kind to the Pledgor and
(c) during an Event of Default, for the account, and at the expense, of the
Pledgor.
Section 15.05 Limitation of Obligations with Respect to Collateral.
----------------------------------------------------
(a) Neither the Secured Party nor any other Principal shall have any
obligation to protect or preserve any Collateral or to preserve rights
pertaining thereto other than the obligation to use reasonable care in the
custody and preservation of any Collateral in its actual possession. The
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of any Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which the Secured Party accords
its own property. The Secured Party shall be relieved of all
9
<PAGE>
responsibility for any Collateral in its possession upon surrendering it, or
tendering surrender of it, to the Pledgor.
(b) Nothing contained in the Collateral Documents shall be construed
as requiring or obligating the Secured Party or any other Principal, and neither
the Secured Party nor any other Principal shall be required or obligated, to (i)
make any demand, or to make any inquiry as to the nature or sufficiency of any
payment received by it, or to present or file any claim or notice or take any
action, with respect to any Collateral Obligation or any other Collateral or the
monies due or to become due thereunder or in connection therewith, (ii)
ascertain or take action with respect to calls, conversions, exchanges,
maturities, tenders, offers or other matters relating to any Collateral, whether
or not the Secured Party or any other Principal has or is deemed to have
knowledge or notice thereof, (iii) take any necessary steps to preserve rights
against any prior parties with respect to any Collateral or (iv) notify the
Pledgor of any decline in the value of any Collateral.
Section 15.06 Rights of Secured Party under Uniform Commercial Code and
---------------------------------------------------------
Applicable Law.
- - --------------
The Secured Party shall have, with respect to the Collateral, in addition
to all of its rights and remedies under the Collateral Documents, (a) the rights
and remedies of a secured party under the Uniform Commercial Code, whether or
not the Uniform Commercial Code would otherwise apply to the Collateral in
question, and (b) the rights and remedies of a secured party under all other
Applicable Law.
Section 15.07 Waivers of Rights Inhibiting Enforcement.
----------------------------------------
The Pledgor waives (a) any claim that, as to any part of the Collateral, a
public sale, should the Secured Party elect so to proceed, is, in and of itself,
not a commercially reasonable method of sale for such Collateral, (b) the right
to assert in any action or proceeding between it and the Secured Party any
offsets or counterclaims (other than compulsory counterclaims) that it may have,
(c) except as otherwise provided in any of the Collateral Documents, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, NOTICE OR JUDICIAL HEARING IN CONNECTION
WITH THE SECURED PARTY'S TAKING POSSESSION OR DISPOSITION OF ANY OF THE
COLLATERAL INCLUDING ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT
REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT THE PLEDGOR WOULD OTHERWISE HAVE
UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, AND
ALL OTHER REQUIREMENTS AS TO THE TIME, PLACE AND TERMS OF SALE OR OTHER
REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF THE SECURED PARTY'S RIGHTS
HEREUNDER, (d) all rights of redemption, appraisement, valuation, stay and
extension or moratorium to the extent permitted by Applicable Law and (e) all
other rights the exercise of which would, directly or indirectly, prevent, delay
or inhibit the enforcement of any of the rights or remedies under the Collateral
Documents or the absolute sale of the Collateral, now or hereafter in force
under any Applicable Law, and the Pledgor, for itself and all who may claim
under it, insofar as it or they now or hereafter lawfully may, hereby waive the
benefit of all such laws and rights.
Section 15.08 Power of Attorney.
-----------------
In addition to the other powers granted the Secured Party by the Pledgor
under the Collateral Documents, the Pledgor hereby appoints the Secured Party,
and any other Person that the Secured Party may designate, as the Pledgor's
attorney-in-
10
<PAGE>
fact to act, in the name, place and stead of the Pledgor in any way
in which the Pledgor itself could do, with respect to each of the following
during an Event of Default: (a) endorsing the Pledgor's name on (i) any checks,
notes, acceptances, money orders, drafts or other forms of payment, (ii) any
proxies, documents, instruments, notices, freight bills, bills of lading or
other documents or agreements relating to the Collateral, (iii) notices of
assignment, financing statements and other public records, and endorsing and
depositing, or causing to be deposited, for collection, presenting, drawing upon
or under, or otherwise taking action to realize upon, all instruments, chattel
paper, securities, letters of credit and documents constituting part of the
Collateral for the purpose of holding and disposing of the proceeds thereof in
accordance with the terms of this Agreement; (b) claiming for, adjusting, and
instituting legal proceedings to collect, any amounts payable under insurance,
and applicable loss payable endorsements, required to be maintained under any of
the Collateral Documents; (c) taking any actions or exercising any rights,
powers or privileges that the Pledgor is entitled to take or exercise and that,
under the terms of any of the Collateral Documents, the Secured Party is
authorized to take or exercise; (d) doing or causing to be done any or all
things necessary or, in the determination of the Secured Party, desirable to
observe or perform the terms, conditions, covenants and agreements to be
observed or performed by the Pledgor under the Collateral Documents and
otherwise to carry out the provisions of the Collateral Documents; and (e)
notifying the post office authorities to change the address for delivery of the
Pledgor's mail to an address designated by the Secured Party, and receiving,
opening and disposing of all mail addressed to the Pledgor (with all mail not
constituting, evidencing or relating to the Collateral to be forwarded by the
Secured Party to the Pledgor). The Pledgor hereby ratifies and approves all
acts of the attorney pursuant to the foregoing other than any acts that are
determined by a judgment of a court that is binding on the Pledgor to constitute
gross negligence or willful misconduct.
Section 15.09 Termination of Security Interest.
--------------------------------
The Security Interest and all of the Pledgor's obligations under Articles
1, 2, 3 and 4 shall terminate upon (a) the payment in full of the Secured
Obligations and (b) the discharge, dismissal with prejudice, settlement, release
or other termination of any Loan Document Related Claims that may then be
pending against the Indemnified Persons.
Section 15.10 Notices and Deliveries.
----------------------
(a) Notices and Materials Other than Collateral. Except as provided
-------------------------------------------
in Section 4.10(b):
(i) Manner of Delivery.
------------------
All notices, communications and materials (including all
Information) to be given or delivered pursuant to the Collateral Documents
shall, except in those cases where giving notice by telephone is expressly
permitted, be given or delivered in writing (which shall include telex and
telecopy transmissions). In the event of a discrepancy between any
telephonic notice and any written confirmation thereof, such written
confirmation shall be deemed the effective notice except to the extent the
Secured Party has acted in reliance on such telephonic notice.
(ii) Addresses.
---------
All notices, communications and materials to be given or delivered
pursuant to the Collateral Documents shall be given or delivered at the
following respective addresses and telex, telecopier and telephone numbers
and to the attention of the following individuals or departments:
11
<PAGE>
A. if to the Pledgor, to it at:
[PLEDGOR]
[c/o Premiere Technologies, Inc.
3399 Peachtree Road NE
Lenox Building, Suite 400
Atlanta, Georgia 30326
Telecopier No.:
Telephone No.:
Attention: Mr. Harvey A Wagner
Chief Financial Officer
with a copy to:
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telecopier No.: (404) 881-7000
Telephone No.: (40) 881-7777
B. if to the Secured Party, to it at:
The Bank of New York
One Wall Street, 16th Floor
New York, NY 10286
Telecopier No.: (212) 635-8595
Telephone No.: (212) 635-8606
Attention: Cindy Rogers
with a copy to:
The Bank of New York
One Wall Street
New York, NY 10286
Telecopier No.: (212) 635-6365(6, 7)
Telephone No.: (212) 635-4695
Attention: Geneveso Caviness, AFA, 18th Floor
or at such other address or telex, telecopier or telephone number or to the
attention of such other individual or department as the party to which such
information pertains may hereafter specify for the purpose in a notice to
the other specifically captioned "Notice of Change of Address."
12
<PAGE>
(iii) Effectiveness.
-------------
Each notice and communication and any material to be given or
delivered pursuant to the Collateral Documents shall be deemed so given or
delivered (A) if sent by any means of physical delivery, when such notice,
communication or material is delivered or received at the appropriate
address as above provided, (B) if sent by telecopier, when such notice,
communication or material is transmitted to the appropriate telecopier
number as above provided and is received at such number and (C) if given by
telephone, when communicated to the individual or any member of the
department specified as the individual or department to whose attention
notices, communications and materials are to be given or delivered except
that notices, communications and materials to be given or delivered to the
Secured Party pursuant to the Collateral Documents shall not be deemed
given or delivered until received by the officer of the Secured Party
responsible, at the time, for the administration of the Collateral
Documents.
(iv) Reasonable Notice.
-----------------
Any requirement under Applicable Law of reasonable notice by the
Secured Party to the Pledgor of any event in connection with, or in any way
related to, the Loan Documents or the exercise by the Secured Party of any
of its rights thereunder shall be met if notice of such event is given to
the Pledgor in the manner prescribed above at least 10 days before (A) the
date of such event or (B) the date of the day after which such event will
occur.
(b) Collateral.
----------
Until the Secured Party shall otherwise specify, all Collateral to be
delivered to the Secured Party pursuant to the Collateral Documents consisting
of instruments, securities, chattel paper, letters of credit or documents shall
be delivered to the Secured Party at the Secured Party's Office either by hand
delivery or by registered or certified mail, postage prepaid, return receipt
requested, in either case insured in an amount not less than the greater of the
aggregate face amount and the aggregate fair market value of the Collateral so
being delivered. All other Collateral to be delivered to the Secured Party
pursuant to the Collateral Documents shall be delivered to such Person, at such
address, by such means and in such manner as the Secured Party may designate.
Section 15.11 Governing Law.
-------------
The rights and duties of the Pledgor, the Secured Party and the Principals
under the Collateral Documents (including matters relating to the Maximum
Permissible Rate) shall, pursuant to New York General Obligations Law Section 5-
1401, be governed by the law of the State of New York.
Section 15.12 LIMITATION OF LIABILITY.
-----------------------
NEITHER THE SECURED PARTY NOR ANY OTHER PRINCIPAL SHALL HAVE ANY LIABILITY
WITH RESPECT TO, AND THE PLEDGOR HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE
FOR ANY LOSS OR DAMAGE SUSTAINED BY THE PLEDGOR, OR ANY LOSS, DAMAGE,
DEPRECIATION OR OTHER DIMINUTION IN THE VALUE OF ANY COLLATERAL, THAT MAY OCCUR
AS A RESULT OF, IN CONNECTION WITH, OR THAT IS IN ANY WAY RELATED TO, ANY
EXERCISE OF ANY RIGHT OR REMEDY UNDER THE COLLATERAL DOCUMENTS, EXCEPT FOR ANY
SUCH LOSS, DAMAGE, DEPRECIATION OR DIMINUTION TO THE EXTENT THAT THE SAME IS
DETERMINED BY A JUDGMENT OF A COURT THAT IS BINDING ON THE PLEDGOR AND SUCH
PRINCIPAL, TO BE THE RESULT OF (i) A BREACH BY SUCH PRINCIPAL
<PAGE>
OF ITS OBLIGATIONS HEREUNDER OR (ii) ACTS OR OMISSIONS ON THE PART OF SUCH
PRINCIPAL CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
Section 15.13 Counterparts.
------------
Each Collateral Document may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
were upon the same instrument.
Section 15.14 Entire Agreement.
----------------
This Agreement embodies the entire agreement among the Pledgor, the Secured
Party and the Banks relating to the subject matter hereof and supersedes all
prior agreements, representations and understandings, if any, relating to the
subject matter hereof.
Section 15.15 Successors and Assigns.
----------------------
All of the provisions of each Collateral Document shall be binding upon and
inure to the benefit of the Pledgor, the Secured Party and the other Principals
and their respective successors and assigns.
Section 15.16 Delivery of Opinions Authorized.
-------------------------------
The Pledgor hereby acknowledges and agrees that each Person that has
rendered or may render an opinion, report or similar communication, including
legal opinions and accountant's reports, to any Person in connection with the
Collateral Documents, has been and is hereby authorized and directed to so
deliver such opinion, report or communication.
ARTICLE 16
INTERPRETATION
--------------
Section 16.01 Definitional Provisions.
-----------------------
(a) Certain Terms Defined by Reference.
----------------------------------
(i) Except where the context clearly indicates a different meaning,
all terms defined in Article 1, 8 or 9 of the Uniform Commercial Code, as in
effect on the date of this Agreement, are used herein with the meanings therein
ascribed to them. In addition, the terms "account", "collateral" and "security
interest", when capitalized, have the meanings specified in subsection (b) below
and the term "deposit account" includes an account evidenced by a certificate of
deposit.
(ii) Except in the case of "Agreement", "Agreement Date",
"Collateral", "Intellectual Property", "Permitted Lien", "Representation and
Warranty" and "Security Interest" and as otherwise specified herein, all terms
defined in the Credit Agreement are used herein with the meanings therein
ascribed to them.
(b) Other Defined Terms.
-------------------
For purposes of this Agreement:
"Account" means a Receivable that represents the right to payment for goods
-------
sold or leased or for services rendered, in each case in the ordinary course of
business.
"Account Proceeds" means proceeds of an Account other than an Account
----------------
representing the sale or other disposition of Machinery and Equipment pursuant
to Section 2.02(b)(i).
14
<PAGE>
"Agreement" means this Security Agreement, including all schedules, annexes
---------
and exhibits hereto.
"Agreement Date" means the date set forth as such on the last signature
--------------
page hereof, which date is the date the executed copies of this Agreement were
delivered by all parties hereto and, accordingly, the date this Agreement became
effective and, for the first time, binding upon such parties.
"Collateral" means the Pledgor's interest (WHATEVER IT MAY BE) in each of
----------
the following, IN EACH CASE WHETHER NOW OR HEREAFTER EXISTING OR NOW OWNED OR
HEREAFTER ACQUIRED BY THE PLEDGOR AND WHETHER OR NOT THE SAME IS NOW
CONTEMPLATED, ANTICIPATED OR FORESEEABLE, whether or not the same is subject to
Article 8 or 9 of the Uniform Commercial Code, whether or not the same
constitutes Collateral by reason of one or more than one of the following
clauses, AND WHEREVER THE SAME MAY BE LOCATED:
(i) all Receivables;
(ii) all General Intangibles;
(iii) all Inventory;
(iv) all Machinery and Equipment;
(v) all Securities and Instrument Collateral;
(vi) all Securities Accounts;
(vii) all Commodity Accounts;
(viii) all books, records, ledgercards, files, correspondence,
computer programs, tapes, disks and related data processing software (owned
by the Pledgor or in which it has an interest) that at any time evidence or
contain information relating to any Collateral or are otherwise necessary
or helpful in the collection thereof or realization thereupon;
(ix) all goods and other property, whether or not delivered, (A)
the sale, lease or furnishing of which gives or purports to give rise to
any Receivable, including all merchandise returned or rejected by or
repossessed from customers, or (B) securing any Receivable, including all
of the Pledgor's rights as an unpaid vendor or lienor, including stoppage
in transit, replevin and reclamation with respect to such goods and other
properties;
(x) all documents of title, policies and certificates of
insurance, securities, chattel paper and other documents or instruments
evidencing or pertaining to any Collateral;
15
<PAGE>
(xi) all guaranties, Liens on real or personal property, leases
and other agreements and property that in any way secure or relate to any
Collateral, or are acquired for the purpose of securing and enforcing any
item thereof;
(xii) all claims (including the right to sue or otherwise
recover on such claims) (A) to items referred to in the definition of
Collateral, (B) under warranties relating to any Collateral and (C) against
third parties for (1)(aa) loss, destruction, requisition, confiscation,
condemnation, seizure, forfeiture or infringement of, or damage to, any
Collateral, (bb) payments due or to become due under leases, rentals and
hires of any Collateral, (cc) proceeds payable under or unearned premiums
with respect to policies of insurance relating to any Collateral and (2)
breach of any Contract constituting Collateral; and
(xiii) all products and proceeds of Collateral in whatever form.
The inclusion of "proceeds" of Collateral in the definition of "Collateral"
shall not be deemed a consent by the Secured Party to any sale or other
disposition of any Collateral not otherwise specifically permitted by the
terms hereof or of the Credit Agreement.
"Collateral Debtor" means a Person (including an issuer of any share of
-----------------
capital stock or other unit of ownership interest constituting Securities and
Instrument Collateral) obligated on, bound by, or subject to, a Collateral
Obligation.
"Collateral Documents" means (i) this Agreement and (ii) all other
--------------------
agreements, documents and instruments executed or delivered under or in
connection with, (A) this Agreement, (B) any other agreement, document or
instrument referred to in this clause (ii), or (C) any of the transactions
contemplated by this Agreement or any such other agreement, document or
instrument, in each case whether now or hereafter executed.
"Collateral Obligation" means a Liability constituting part of the
---------------------
Collateral and includes any such constituting or arising under any Receivable,
General Intangible or Securities and Instrument Collateral.
"Commodity Account" means any commodity account.
-----------------
"Commodity Account Control Letter" means a control letter substantially in
--------------------------------
the form of Schedule 5.01(a)1.
-----------------
"Control Letter" means a Securities Account Control Letter and a Commodity
--------------
Account Control Letter.
"Credit Agreement" means the Credit Agreement, dated as of December 17,
----------------
1997, as amended and restated as of the date hereof, among Xpedite Systems, Inc.
and Xpedite Systems Holdings (UK) Limited, as Borrowers, the Guarantors party
thereto, the Banks listed on the signature pages thereof, NationsBank, N.A., as
Documentation Agent, and The Bank of New York, as Administrative Agent.
"Distribution Collateral" means (i) all Distributions on or in respect of
-----------------------
(A) the instruments and securities listed on Schedule 2.01(c)(v), (B) any shares
-------------------
of capital stock of or
16
<PAGE>
other units of ownership interests in any Significant Subsidiary which the
Pledgor forms or acquires, or of any Subsidiary that becomes a Significant
Subsidiary, after the date hereof that constitute Securities and Instrument
Collateral or (C) any instruments, securities or property that constitute
Distribution Collateral by virtue of any provision of this definition, including
this clause (i)(C) and (ii) all other instruments or securities and other
property issued with respect to or in exchange for (A) the instruments or
securities listed on Schedule 2.01(c)(v), (B) any shares of capital
-------------------
stock of or other units of ownership interests in any Significant
Subsidiary which the Pledgor forms or acquires, or of any Subsidiary that
becomes a Significant Subsidiary, after the date hereof that constitute
Securities and Instrument Collateral or (C) any instruments, securities or other
property that constitute Distribution Collateral by virtue of any provision of
this definition, including this clause (ii)(C) (whether, in either case, upon
conversion of convertible securities included therein or through stock split,
spin-off, reclassification, merger, consolidation, sale of assets, combination
of shares or otherwise).
"Distributions" means Ordinary Distributions and Extraordinary
-------------
Distributions.
"Extraordinary Distributions" means (in each case whether or not in cash)
---------------------------
all dividends, interest, principal payments, other distributions and other
property (including cash, instruments and securities payable in connection with
calls, conversions, redemptions and the like or otherwise) on or in respect of
or in exchange for, and all proceeds (including cash, instruments and securities
receivable in connection with tender or other offers or otherwise) of,
Securities and Instrument Collateral other than Ordinary Distributions.
"General Intangibles" means general intangibles (except to the extent that
-------------------
the terms of any lease or other contract would prohibit the Pledgor from
conveying the Security Interest in its interest in such lease or contract).
"Intellectual Property" means (i) (A) patents and patent rights, (B)
---------------------
trademarks, trademark rights, trade names, trade name rights, corporate names,
business names, trade styles, service marks, logos and general intangibles of
like nature, together with, in the case of each item referred to in or
contemplated by clauses (A), (B) or (C), the goodwill of the business connected
with the use of or symbolized by the same, and (C) copyrights, in each case
whether registered, unregistered or under pending registration and, in the case
of any such that are registered or under pending registration, whether
registered or under pending registration under the laws of the United States or
any other country, (ii) reissues, continuations, continuations-in-part and
extensions of any Intellectual Property referred to in clause (i), and (iii)
rights relating to any Intellectual Property referred to in clause (i) or (ii),
including rights under applications (whether pending under the laws of the
United States or any other country) or licenses relating thereto.
"Inventory" means all inventory.
---------
"Machinery and Equipment" means all equipment wherever located and whether
-----------------------
or not the same constitutes "fixtures."
"Ordinary Distributions" means cash dividends to the extent paid out of
----------------------
retained earnings or capital surplus, and interest paid in cash, in each case
with respect to Securities and Instrument Collateral or other securities or
instruments, except to the extent that any such dividend is made
17
<PAGE>
in connection with partial or total liquidation or a reduction of capital, or
any such interest is penalty interest, or, in each case, to the extent the same
is not declared or paid in the ordinary course.
"Permitted Lien" means (i) (A) a Lien listed on Schedule 1.02A and (B) a
-------------- --------------
Lien described in clause (a)(v) of the definition of "Permitted Lien" in the
Credit Agreement, including (1) a Lien for Taxes either not yet due or that are
being contested in good faith by appropriate proceedings and with respect to
which foreclosure, distraint, sale or other similar proceedings shall not have
been commenced or shall have been stayed and adequate reserves have been
established therefor in accordance with Generally Accepted Accounting Principles
and (2) in the case of any Collateral other than Securities and Instrument
Collateral and its proceeds, any other Lien, such as those in favor of a
landlord, warehouseman, carrier, or the like, arising by operation of law and
incurred in the ordinary course of business that does not (aa) arise under ERISA
or under any environmental law or (bb) secure an obligation for borrowed money,
(ii) any interest or title of a lessor under any lease (including UCC filings
relating to any such leasehold interest), (iii) any Lien securing a judgment (or
any equivalent prejudgment attachment) so long as, and to the extent that, such
judgment (or requested judgment) does not constitute an Event of Default under
Section 6.01(f) of the Credit Agreement, (iv) any easements, rights-of-way,
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Loan Parties (v) deposits made to secure
Liabilities other than Indebtedness or constituting Indebtedness (such as in
connection with letters of credit or surety bonds) incurred to provide a
substitute for, or similar security as, such a deposit and (vi) a Lien created
in favor of the Secured Party under the Collateral Documents.
"Pledgor" means [PLEDGOR], a [JURISDICTION] corporation.
-------
"Principals" means all Persons that are, or at any time were, the Secured
----------
Party, an Administrative Agent, a Bank or any other Indemnified Person.
"Questionnaire" means the Questionnaire in the form attached hereto as
-------------
Schedule 2.01(c)(vi) executed and delivered by the Pledgor to the Secured Party
- - --------------------
in connection with this Agreement.
"Receivables" means (i) all accounts and (ii) all other rights to the
-----------
payment of money.
"Representation and Warranty" means each representation or warranty made
---------------------------
pursuant to or under (i) Article 2 or any other provision of this Agreement,
(ii) any of the other Collateral Documents or (iii) any amendment to, or waiver
of rights under, this Agreement or any of the other Collateral Documents.
"Secured Obligations" means all Liabilities of the Pledgor owing to, or in
-------------------
favor or for the benefit of, or purporting to be owing to, or in favor or for
the benefit of, the Principals under the Loan Documents or any interest rate
swap or similar hedging agreement, in each case (i) WHETHER NOW EXISTING OR
HEREAFTER ARISING OR ACQUIRED, and (ii) whether owing to, or in favor or for the
benefit of, or purporting to be owing to, or in favor or
18
<PAGE>
for the benefit of, Persons that are Principals as of the Agreement Date or that
become Principals by reason of any permitted succession or assignment at any
time thereafter.
"Secured Party" means the Administrative Agent, acting both on its own
-------------
behalf as Administrative Agent and as the agent for and representative (within
the meaning of Section 9-105(m) of the Uniform Commercial Code) of the other
Principals.
"Secured Party's Office" means the address of the Secured Party specified
----------------------
in or determined in accordance with the provisions of Section 4.10.
"Securities Account" means any securities account.
------------------
"Securities and Instrument Collateral" means (i) all securities and
------------------------------------
instruments listed on Schedule 2.01(c)(v), (ii) without limiting the Loan
-------------------
Parties' obligations under the Loan Documents, (A) all other Capital Securities
at any time created, issued or granted to Pledgor by any Person named on
Schedule 2.01(c)(v) that is a United States Person and (B) 65% (or such other
percentage which in the reasonable determination of the Company constitutes the
maximum percentage which may be pledged hereunder without adversely affecting
the United States taxation treatment of the Company) of all other Capital
Securities at any time created, issued or granted to Pledgor by any Person named
on Schedule 2.01(c)(v) that is not a United States Person, (iii) all shares of
capital stock of or other units of ownership interests in any Significant
Subsidiary that is a United States Person which the Pledgor forms or acquires,
or in any Subsidiary that is a United States Person that becomes a Significant
Subsidiary, after the date hereof, (v) 65% (or such other percentage which in
the reasonable determination of the Company constitutes the maximum percentage
which may be pledged hereunder without adversely affecting the United States
taxation treatment of the Company) of the outstanding shares of capital stock or
other units of ownership interests in any Significant Subsidiary that is not a
United States Person which the Pledgor forms or acquires, or in any Subsidiary
that is not a United States Person that becomes a Significant Subsidiary, after
the date hereof, (vi) all Indebtedness described on Schedule 2.01(c)(v), (vii)
-------------------
all other Indebtedness from time to time owed to the Pledgor by a Significant
Subsidiary, (viii) all Distribution Collateral, (ix) all replacements and
substitutions for any Collateral that constitutes (whether by virtue of clause
(i), clause (ii), clause (iii), clause (iv), clause (v), clause (vi), clause
(vii), clause (viii) or this clause (ix)) Securities and Instrument Collateral
and (x) the certificates, if any, representing the foregoing; provided, however,
-------- -------
that Capital Securities of any Subsidiary that is not a Significant Subsidiary
shall not constitute Securities and Instrument Collateral.
"Security Account Control Letter" means a control letter substantially in
-------------------------------
the form of Schedule 5.01(a)-2.
-------------------
"Security Interest" means the mortgages, pledges and assignments to the
-----------------
Secured Party of, the continuing security interest of the Secured Party in, and
the continuing lien of the Secured Party upon, the Collateral intended to be
effected by the terms of this Agreement or any of the other Collateral
Documents.
Section 16.02 Other Interpretive Provisions.
-----------------------------
(a) Except as otherwise specified herein or in the Credit Agreement,
all references herein (i) to any Person shall be deemed to include such
19
<PAGE>
Person's permitted successors and assigns, (ii) to any Applicable Law defined or
referred to herein shall be deemed references to such Applicable Law or any
successor Applicable Law as the same may have been or may be amended or
supplemented from time to time and (iii) to any Loan Document or Contract
defined or referred to herein shall be deemed references to such Loan Document
or Contract (and, in the case of any instrument, any other instrument issued in
substitution therefor) as the terms thereof may have been or may be amended,
supplemented, waived or otherwise modified from time to time.
(b) When used in this Agreement, the words "herein", "hereof" and
"hereunder" and words of similar import shall refer to this Agreement as a whole
and not to any provision of this Agreement, and the words "Article", "Section",
"Annex", "Schedule" and "Exhibit" shall refer to Articles and Sections of, and
Annexes, Schedules and Exhibits to, this Agreement unless otherwise specified.
(c) Whenever the context so requires, the neuter gender includes the
masculine or feminine, the masculine gender includes the feminine, and the
singular number includes the plural, and vice versa.
(d) Any item or list of items set forth following the word
"including", "include" or "includes" is set forth only for the purpose of
indicating that, regardless of whatever other items are in the category in which
such item or items are "included", such item or items are in such category, and
shall not be construed as indicating that the items in the category in which
such item or items are "included" are limited to such items or to items similar
to such items.
(e) Each power of attorney in favor of the Secured Party or any other
Person granted by or pursuant to this Agreement shall be deemed to be
irrevocable and coupled with an interest.
(f) Except as otherwise indicated, any reference herein to the
"Collateral", the "Secured Obligations", the "Loan Documents", the "Collateral
Documents", the "Principals" or any other collective or plural term shall be
deemed a reference to each and every item included within the category described
by such collective or plural term, so that (i) a reference to the "Collateral",
the "Secured Obligations" or the "Principals" shall be deemed a reference to any
or all of the Collateral, the Secured Obligations or the Principals, as the case
may be, and (ii) a reference to the "obligations" of the Pledgor under the "Loan
Documents" or the "Collateral Documents" shall be deemed a reference to each and
every obligation under each and every Loan Document or Collateral Document, as
the case may be, whether any such obligation is incurred under one, some or all
of the Loan Documents or the Collateral Documents, as the case may be.
(g) Except where the context clearly indicates a different meaning,
references in this Agreement to Receivables, General Intangibles, Inventory and
Machinery and Equipment means the same to the extent they constitute Collateral.
(h) Except as otherwise specified therein, all terms defined in this
Agreement shall have the meanings herein ascribed to them when used in the other
Collateral Documents or any certificate, opinion or other document delivered
pursuant hereto or thereto.
20
<PAGE>
Section 16.03 Representations and Warranties.
------------------------------
All Representations and Warranties shall be deemed made (a) in the case of
any Representation and Warranty contained in this Agreement at the time of its
initial execution and delivery, at and as of the Agreement Date, (b) in the case
of any Representation and Warranty contained in this Agreement at the time any
Loan is made at and as of such time and (c) in the case of any particular
Representation and Warranty, wherever contained, at such other time or times as
such Representation and Warranty is made or deemed made in accordance with the
provisions of this Agreement or the document pursuant to, under or in connection
with which such Representation and Warranty is made or deemed made.
Section 16.04 Captions.
--------
Captions to Articles, Sections and subsections of, and Annexes, Schedules
and Exhibits to, the Collateral Documents are included for convenience of
reference only and shall not constitute a part of the Collateral Documents for
any other purpose or in any way affect the meaning or construction of any
provision of the Collateral Documents.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers all as of the Agreement Date.
[PLEDGOR]
By:
---------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Secured Party
By:
---------------------------------
Name:
Title:
Agreement Date:
21
<PAGE>
Schedule 1.02
-------------
SCHEDULE OF REQUIRED ACTION
Pursuant to, and without thereby limiting, its obligations under Section
1.02, the Pledgor hereby agrees that it will:
(a) file UCC-1 financing statements in the form of Schedule 1.02(a);
----------------
(b) within five Business Days (or, during an Event of Default, such
shorter period as the Secured Party may specify) after receipt by the Pledgor or
any of its agents, deliver or caused to be delivered to the Secured Party,
stamped, marked, endorsed or accompanied by such instruments of assignment as
the Secured Party may specify, all instruments, chattel paper, certificated
securities, letters of credit and documents evidencing or forming a part of the
Collateral and not constituting Account Proceeds;
(c)(i) in the case of each Securities Account or Commodity Account
that is Collateral, deliver to the Secured Party a Securities Account Control
Letter or Commodity Account Control Letter, as the case may be, duly executed by
the securities intermediary or commodity intermediary, as the case may be, and
the Pledgor;
(d) in the case of any Collateral constituting Intellectual Property,
cause a duly executed copy of Schedule 1.02(d)-A, -B or -C, as appropriate, with
------------------ -- --
respect thereto to be filed in the appropriate filing office; and
(e) at all times mark its books and records as may be necessary or
appropriate to evidence, protect and perfect the Security Interest.
<PAGE>
Schedule 1.02(a)
STANDARD FORM UCC-1
FINANCING STATEMENT
1. Debtor: [Insert Pledgor's name and address]
2. Secured Party: The Bank of New York, as Secured Party, One Wall Street, New
York, New York 10286
3. "Collateral" as defined in Annex A attached hereto, whether now or hereafter
existing or now owned or hereafter acquired, including certain accounts,
contract rights and general intangibles; certain goods, including certain
machinery, fixtures and attachments, accessories, components and parts
installed therein or affixed thereto, finished goods, work-in-process and
raw materials; certificated and uncertificated securities and instruments;
securities account and commodity accounts; and proceeds of the foregoing
(including, in the case of securities and instruments, all payments and
distributions on or with respect thereto, whether constituting principal,
interest or dividends).
Signature Lines:
Debtor: [Insert Pledgor's name]
Secured Party: The Bank of New York, as Secured Party
<PAGE>
ANNEX A TO UCC-1 FINANCING STATEMENT
DEBTOR:
SECURED PARTY:
THE TERMS "RECEIVABLES", "GENERAL INTANGIBLES", "INVENTORY", "MACHINERY AND
EQUIPMENT", "SECURITIES AND INSTRUMENTS COLLATERAL" "SECURITIES ACCOUNTS" AND
"COMMODITY ACCOUNTS" ARE DEFINED IN THE SECURITY AGREEMENT DATED AS OF DECEMBER
16, 1997 BETWEEN DEBTOR AND SECURED PARTY, AS AMENDED FROM TIME TO TIME.
COLLATERAL DESCRIPTION
"Collateral" means the Debtor's interest (whatever it may be) in each of
----------
the following, in each case whether now or hereafter existing or now owned or
hereafter acquired by the Debtor and whether or not the same is now
contemplated, anticipated or foreseeable, or constitutes Collateral by reason of
one or more than one of the following clauses, and wherever the same may be
located:
(a) all Receivables;
(b) all General Intangibles;
(c) all Inventory;
(d) all Machinery and Equipment;
(e) all Securities and Instruments Collateral;
(f) all Securities Accounts;
(g) all Commodity Accounts;
(h) all books, records, ledgercards, files, correspondence, computer
programs, tapes, disks and related data processing software (owned by the Debtor
or in which it has an interest) that at any time evidence or contain information
relating to any Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon;
(i) all goods and other property, whether or not delivered, (i) the
sale, lease or furnishing of which gives or purports to give rise to any
Receivable, including all merchandise returned or rejected by or repossessed
from customers, or (ii) securing any Receivable, including all of the Debtor's
rights as an unpaid vendor or lienor, including stoppage in transit, replevin
and reclamation with respect to such goods and other properties;
<PAGE>
(j) all documents of title, policies and certificates of insurance,
securities, chattel paper and other documents or instruments evidencing or
pertaining to any Collateral;
(k) all guaranties, liens on real or personal property, leases and
other agreements and property that in any way secure or relate to any
Collateral, or are acquired for the purpose of securing and enforcing any item
thereof;
(l) all claims (including the right to sue or otherwise recover on
such claims) (i) to items referred to in the definition of Collateral, (ii)
under warranties relating to any Collateral, (iii) against third parties for (A)
(1) loss, destruction, requisition, confiscation, condemnation, seizure,
forfeiture or infringement of, damage to, (2) payments due or to become due
under leases, rentals or hires of, and (3) proceeds payable under or unearned
premiums with respect to policies of insurance relating to, any Collateral and
(B) breach of any Contract constituting Collateral; and
(m) all products and proceeds of Collateral in whatever form.
Some of the Collateral may be located at: [Insert locations of Collateral]
<PAGE>
Schedule 1.02(d)-A
------------------
MEMORANDUM OF SECURITY AGREEMENT
--------------------------------
PATENTS
-------
Pursuant to a Security Agreement dated as of ____, 199_ (the "Security
Agreement"), [name of Pledgor], whose chief executive office is located at
[insert address] (the "Pledgor"), has granted to The Bank of New York, whose
chief executive office is located at One Wall Street, New York, NY 10286, as
Administrative Agent (the "Secured Party"), a continuing security interest in,
and a continuing lien upon, all of Pledgor's right, title and interest in and to
the patents and patent applications listed on the attached Schedule and all
reissues, divisions, continuations, continuations-in-part, extensions and
renewals thereof. Such security interest and lien can be terminated only in
accordance with the terms of the Security Agreement.
Dated: ____, 19__
[name of Pledgor]
By:
----------------------------------
Name:
Title:
<PAGE>
SCHEDULE
Patent Registrations
--------------------
<TABLE>
<CAPTION>
Title Inventor(s) Patent No. Issue Date Expiration Date
- - --------------------- ------------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Patent Applications
-------------------
Title Inventor(s) Application Serial No. Filing Date
- - --------------------------- ------------------------------- ---------------------------- ----------------------------
</TABLE>
<PAGE>
Schedule 1.02(d)-B
------------------
MEMORANDUM OF SECURITY AGREEMENT
--------------------------------
TRADEMARKS
----------
Pursuant to a Security Agreement dated as of ____, 199_ (the "Security
Agreement"), [name of Pledgor], whose chief executive office is located at
[insert address] (the "Pledgor"), has granted to The Bank of New York, whose
chief executive office is located at One Wall Street, New York, NY 10286, as
Administrative Agent (the "Secured Party"), a continuing security interest in,
and a continuing lien upon, all of Pledgor's right, title and interest in and to
the trademarks and trademark applications listed on the attached Schedule,
together with the goodwill connected with the use of and symbolized by each of
such trademarks, and all renewals thereof. Such security interest and lien can
be terminated only in accordance with the terms of the Security Agreement.
Dated: ____, 19__
[name of Pledgor]
By:
-----------------------------------
Name:
Title:
<PAGE>
SCHEDULE
Trademark Registrations
-----------------------
<TABLE>
<CAPTION>
Trademark Registration No. Registration Date
- - -------------------------- --------------------------------------------------- ----------------------------------
<S> <C> <C>
Trademark Applications
----------------------
Trademark Application Serial No. Filing Date
--------- ---------------------- -----------
</TABLE>
<PAGE>
Schedule 1.02(d)-C
------------------
MEMORANDUM OF SECURITY AGREEMENT
--------------------------------
COPYRIGHTS
----------
Pursuant to a Security Agreement dated as of _____, 199_ (the "Security
Agreement"), [name of Pledgor], whose chief executive office is located at
[insert address] (the "Pledgor"), has granted to The Bank of New York, whose
chief executive office is located at One Wall Street, New York, NY 10286, as
Administrative Agent (the "Secured Party"), a continuing security interest in,
and a continuing lien upon, all of Pledgor's right, title and interest in and to
the copyrights and copyright applications listed on the attached Schedule and
all renewals and extensions thereof. Such security interest and lien can be
terminated only in accordance with the terms of the Security Agreement.
Dated: _________, 19__
[name of Pledgor]
By:
----------------------------------
Name:
Title:
<PAGE>
SCHEDULE
Copyright Registrations
-----------------------
Title Registration No. Registration Date
----- ---------------- -----------------
Copyright Applications
----------------------
Title _________________________ Filing Date
----- -----------
<PAGE>
SCHEDULE 1.02A
Voice-Tel Enterprises, Ltd.
SCHEDULE OF PERMITTED LIENS
Customary restrictions contained in equipment leases entered into in the
ordinary course of business.
Liens in the form of capital leases or purchase money security interests in
various equipment of Voice-Tel Enterprises, Inc. not to exceed $2,000,000.
<PAGE>
SCHEDULE 1.02A
American Teleconferencing Services, Ltd.
SCHEDULE OF PERMITTED LIENS
Customary restrictions contained in equipment leases entered into in the
ordinary course of business.
Liens in the form of capital leases or purchase money security interests in
various equipment of American Teleconferencing Services, Ltd. not to exceed $0.
<PAGE>
SCHEDULE 1.02A
Xpedite Systems, Inc.
SCHEDULE OF PERMITTED LIENS
Customary restrictions contained in equipment leases entered into in the
ordinary course of business.
Liens in the form of capital leases or purchase money security interests in
various equipment of Xpedite Systems, Inc. not to exceed $1,765,000.
<PAGE>
Schedule 2.01(c)(v)
-------------------
Voice-Tel Enterprises, Inc.
Schedule of Initial Securities and Instrument Collateral
None
<PAGE>
Schedule 2.01(c)(v)
--------------------
American Teleconferencing Services, Inc.
Schedule of Initial Securities and Instrument Collateral
None
<PAGE>
Schedule 2.01(c)(v)
-------------------
Premiere Technologies, Inc.
Schedule of Initial Securities and Instrument Collateral
Capital Securities
------------------
<TABLE>
<CAPTION>
Jurisdiction of Number of Certificate Date of
Name Incorporation Shares Number % Ownership Issue
- - ---------------------------------------- --------------- --------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C>
Premiere Communications, Inc. Florida 6,000 3 100% 5/21/92
American Teleconferencing Services, Ltd. Missouri 100 2 100% 4/23/98
Voice-Tel Enterprises, Inc. Delaware 1,000 500 100% 4/30/97
Voicecom Systems, Inc. Washington 1,000 100 100% 9/30/97
Xpedite Systems, Inc. Delaware 100 500 100% 2/27/98
</TABLE>
Indebtedness
------------
None
Other Securities and Instrument Collateral
------------------------------------------
None
<PAGE>
Schedule 2.01(c)(vi)
--------------------
SECURITY AGREEMENT QUESTIONNAIRE
The undersigned (the "Pledgor") is entering into a Security Agreement with The
Bank of New York, as Administrative Agent. In connection with the Security
Agreement the Pledgor is required to answer the following questions.
1. What is the Pledgor's exact corporate name as it appears in its certificate
of incorporation (or, if not a corporation, the Pledgor's complete name)?
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2. Has the Pledgor ever changed its name? If so, state each other name the
Pledgor has had.
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3a. Does the Pledgor do business under any other name? If so, state each such
name.
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b. Does the Pledgor use or has the Pledgor used any trade names or trade
styles? If so, list each of them.
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c. If the Pledgor has at any time during the preceding five years done
business under any name or used any trade name or trade style not listed
under a. or b., list each such name or style.
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<PAGE>
4. Has the Pledgor changed its identity or corporate structure in any way
within the past five years? Changes in corporate structure would include
incorporation of a partnership or sole proprietorship, reincorporation in a
different state, mergers, consolidations and acquisitions. If any such
change has taken place, indicate the nature of such change and give the
names of each corporation or other entity that was incorporated, merged or
consolidated with or acquired by the Pledgor in such transaction (including
each name under which each such corporation or entity has done business)
and the address of each place of business of each such corporation or
entity immediately prior to such incorporation, merger, consolidation or
acquisition and within five years prior to the date of this Questionnaire.
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5a. State the complete address (including the county) of the Pledgor's place of
business or, if the Pledgor has more then one place of business, its chief
executive office and, if different from its chief executive office, of the
office where the Pledgor keeps its books and records relating to its
accounts or contract rights, specifying in each case whether such location
is owned or leased by the Pledgor and, if leased, specifying the name and
address of the landlord.
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b. If the Pledgor maintains any records relating to any of the Collateral with
an independent computer service firm or the like specify the address
(including the county) of each such Person.
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6. Has the Pledgor's place of business, chief executive office or office where
the Pledgor keeps its books and records relating to its accounts or
contract rights been located at any other address (including that of any
independent computer service firm or the like) during the past four months?
If so, specify each such address (including the county) and whether such
location was owned or leased by the Pledgor and, if leased, specifying the
name and address of the landlord.
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<PAGE>
7. State the complete address (including the county) of each other place of
business that the Pledgor presently has, specifying in each case whether
such location is owned or leased by the Pledgor and, if leased, specifying
the name and address of the landlord.
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8. State the complete address (including the county) of each place of business
that the Pledgor has had in the past four months, other than those listed
in the answers to questions 5, 6 and 7, specifying in each case whether
such location was owned or leased by the Pledgor and, if leased, specifying
the name and address of the landlord.
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9. State the complete address (including the county) of each location where
the Pledgor keeps any inventory or machinery and equipment, specifying (a)
in each case whether such location is owned or leased by the Pledgor and,
if leased, specifying the name and address of the landlord and (b) the
approximate book value of the (i) inventory and (ii) machinery and
equipment maintained at each such location.
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10. Has any of the Pledgor's inventory or machinery and equipment been located
during the past four months at any location other than the locations listed
in the answers to questions 5, 6, 7, 8 and 9? If so, state the complete
address (including the county) of each such location, specifying in each
case whether such location was owned or leased by the Pledgor and, if
leased, specifying the name and address of the landlord.
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11. Are any of the Pledgor's accounts receivables payable by the United States
Government or any department or agency thereof? If so, please state the
aggregate amount thereof and the percentage that those accounts receivables
are of all of the Pledgor's accounts receivables, in each case as of a
recent, specified date.
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<PAGE>
12a. Please supply the following information with respect to each patent and
patent application in which the Pledgor has any interest (whether as owner,
licensee or otherwise):
Patents
-------
<TABLE>
<CAPTION>
Nature of Interest (e.g.,
owner, licensee) Registered Patent No. Issue Date Country of Issue
- - -------------------------- --------------------- --------------------- ------------------------
<S> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Patent Applications
-------------------
<TABLE>
<CAPTION>
Nature of Interest (e.g.,
owner, licensee) Serial No. Filing Date Country of Issue
- - -------------------------- --------------------- --------------------- ------------------------
<S> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
b. If the Pledgor's interest in any of the foregoing is otherwise than as
owner, please describe the nature of such interest.
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
13a. Please supply the following information with respect to each registered
trademark and trademark application in which the Pledgor has any interest
(whether as owner, licensee or otherwise):
Registered Trademarks
---------------------
<TABLE>
<CAPTION>
Nature of
Interest (e.g.,
owner, Registered Registration Int'l Services Goods or Date Country of
licensee) Trademark No. Class Covered Covered Registered Registration
- - --------------- ------------ --------------- ------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Trademark Applications
----------------------
<TABLE>
<CAPTION>
Trademark
Nature of Application
Interest (e.g., relates to Goods or Services Country of
owner, licensee) following Trademark Serial No. Int'l Class Covered Covered Application
- - ----------------- ------------------- ---------- ------------------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
b. If the Pledgor's interest in any of the foregoing is otherwise than as
owner, please describe the nature of such interest.
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14a. Please supply the following information with respect to each copyright and
copyright application in which the Pledgor has any interest (whether as
owner, licensee or otherwise):
Copyrights
----------
<TABLE>
<CAPTION>
Nature of
Interest
(e.g., owner, Date of Country of
licensee) Copyright Copyright No. Property Covered Copyright Docket No. Registration
- - ------------- --------- ------------- ---------------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Copyright Applications
----------------------
<TABLE>
<CAPTION>
Copyright application
Nature of Interest (e.g., relates to following
owner, licensee) Copyright Property Covered Country of Registration
- - -------------------------- --------------------- ---------------- ------------------------
<S> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
b. If the Pledgor's interest in any of the foregoing is otherwise than as
owner, please describe the nature of such interest.
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--------------------------------------------------------------------------
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15. State the following information, in each case as of the Agreement Date,
with respect to each security that is to constitute Collateral on the
Agreement Date.
<TABLE>
<CAPTION>
Number of
Shares or Percent of
Certificated or Class or Principal Outstanding
Issuer Debt or Equity Uncertificated Series Amount Owned Class or Series
- - ------------ ---------------- ----------------- ---------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
</TABLE>
16. State the following information, in each case as of the Agreement Date,
with respect to each instrument that is to constitute Collateral on the
Agreement Date.
<TABLE>
<CAPTION>
Percent of
Certificated or Class or Principal Amount Outstanding Class
Maker or Drawer Uncertificated Series Owned or Series
- - ----------------- ---------------- ---------- ------------------ ------------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
17. State the following information, in each case as of the Agreement Date,
with respect to each securities account that is to constitute Collateral on
the Agreement Date.
<TABLE>
<CAPTION>
Securities Intermediary's Jurisdiction
(Determined Under Uniform Commercial Code
Account No. Section 8-110(e))
----------- -----------------------------------------
<S> <C>
</TABLE>
18. State the following information, in each case as of the Agreement Date,
with respect to each security entitlement that is to constitute Collateral
on the Agreement Date.
<TABLE>
<CAPTION>
Securities Intermediary Financial Asset(s)
----------------------- ------------------
No. of Shares % on Agreement Date
Class or or Principal of Outstanding Class
Issuer Series Amount or Series
--------- ---------- --------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
1(a) [Insert here name of applicable
Securities Intermediary]
[Security Account(s):
No. _______
No. _______]
(b) [Insert here Securities Intermediary's
Jurisdiction (Determined Under
Uniform Commercial
Code Section 8-110(e))]
2(a) [Insert here name of applicable
Securities Intermediary]
<PAGE>
[Security Account(s):
No _______
No _______]
(b) [Insert here Securities Intermediary's
Jurisdiction (Determined Under
Uniform Commercial
Code Section 8-110(e))]
19. State the following information, in each case as of the Agreement Date,
with respect to each commodity account that is to constitute Collateral on
the Agreement Date.
<TABLE>
<CAPTION>
Commodity Intermediary's Jurisdiction (Determined
Account No. Under Uniform Commercial Code Section 9-103(e))
------------ -------------------------------------------------
<S> <C>
</TABLE>
20. State the following information, in each case as of the Agreement Date,
with respect to each commodity contract that is to constitute collateral on
the Agreement Date.
<TABLE>
<S> <C>
Commodity Intermediary's Jurisdiction (Determined
Under Uniform Commercial Code Section 9-103(e)) If
Commodity Contract Is Maintained With Such Commodity
Description of Commodity Contract Intermediary
- - --------------------------------- ----------------------------------------------------
</TABLE>
21. Does the Pledgor have any existing lockbox arrangements? If so, please
identify each bank or other entity with which any such arrangement is
maintained.
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<PAGE>
The Pledgor hereby certifies that its answers to the foregoing questions
are complete and correct and confirms that such answers constitute
representations and warranties under the Security Agreement.
Date: _______________, 199_
[Pledgor]:
By
------------------------------
Name:
Title:
<PAGE>
Schedule 5.01(a)-1
------------------
Securities Account Control Agreement
_______________, 19__
[Insert here name and address
of Securities Intermediary]
Attention:
Re: Securities Accounts
-------------------
You ("Securities Intermediary") hereby represent and warrant to, and agree
with, [insert here name of Secured Party] (the "Secured Party") as follows:
1. [Insert here name of pledgor] (the "Pledgor") maintains the following
securities accounts with Securities Intermediary at the specified offices of the
Securities Intermediary:
Account Number Office
--------------- ------
2. Until the Secured Party shall have notified the Securities Intermediary
in writing to the contrary, the Securities Intermediary:
(a) will comply, without further consent by the Pledgor, with entitlement
<PAGE>
orders originated by the Secured Party relating to any one or more of the
present or future security entitlements carried in any of the securities
accounts listed in paragraph 1 above or in any securities account that the
Pledgor may in the future maintain with the Securities Intermediary,
whether at its main office or any of its branch offices;
(b) will make all payments due to the Pledgor representing dividends,
interest or other distributions on, or proceeds of the sale or other
disposition of, any securities or other financial assets that are now or
hereafter the subject of any of present or future security entitlements
carried in any of the Pledgor's present or future securities accounts with
the Securities Intermediary, directly to the Secured Party at its address
set forth below or at such other address as the Pledgor may hereafter
specify, without any reduction or deduction for any set-off, or counter
claim;
(c) will not execute and deliver, or otherwise become bound by, any agreement
(a "control agreement") under which the Securities Intermediary agrees with
any party other than the Pledgor or the Secured Party to comply with
entitlement orders originated by such party relating to any of the security
accounts or security entitlements that are the subject of this Securities
Account Control Agreement;
(d) will not grant any security interest in any financial asset that is the
subject of any security entitlement that is the subject of this Securities
Account Control Agreement; and
(e) hereby subordinates any security interest it may now or hereafter have in
any securities account, security entitlement, or financial asset that is
the subject of a security entitlement, that is the subject of this
Securities Account Control Agreement to the security interest therein, if
any, of the Secured Party.
3. Except for those listed on Annex A hereto, as of the date hereof, there
-------
are no (i)
<PAGE>
control agreements outstanding or (ii) any security interests in any
of the securities accounts, securities entitlements, or financial assets that
are the subject of any security entitlement, that are the subjects of this
Securities Account Control Agreement.
4. The copy of the securities account agreement between the Pledgor and the
Securities Intermediary relating to the securities accounts listed in paragraph
1 above delivered to the Secured Party is, as of the date hereof, accurate and
complete.
5. The rights and duties of the Secured Party, the Securities Intermediary
and the Pledgor under this Securities Account Control Agreement shall be
governed by the law of the State of New York.
6. This Securities Account Control Agreement may be signed in any number of
counterparts each of which shall be an original, with the same effect as if the
signatures thereto were upon the same instrument.
7. All of the provisions of this Securities Account Control Agreement shall
be binding upon and inure to the benefit of parties hereto and their respective
successors and assigns.
The Securities Intermediary hereby acknowledges that it has been informed
that (1) the securities accounts and the security entitlements carried therein
that are the subject of this Securities Account Control Agreement are the
subject of a security interest granted by the Pledgor to the Secured Party and
(2) the Pledgor has agreed with the Secured Party that such assets shall be
subject to no other security interests.
<PAGE>
Very truly yours,
[Insert here name of Secured Party]
[Insert here address of Secured Party to which
payments are to be made]
Executed and Agreed to:
[Insert here name of the Securities Intermediary]
By:_________________________________
(Authorized Signature)
Consented to:
[Insert here name of the Pledgor]
By:__________________________________
(Authorized Signature)
<PAGE>
Schedule 5.01(a)-2
------------------
Commodity Account Control Agreement
_______________, 19__
[Insert here name and address
of Commodity Intermediary]
Attention:
Re: Commodity Accounts
------------------
You ("Commodity Intermediary") hereby represent and warrant to, and agree
with, [insert here name of Secured Party] (the "Secured Party") as follows:
1. [Insert here name of pledgor] (the "Pledgor") maintains the following
commodity accounts with Commodity Intermediary at the specified offices of the
Commodity Intermediary:
Account Number Office
--------------- ------
2. Until the Secured Party shall have notified the Commodity Intermediary in
writing to the contrary, the Commodity Intermediary:
(a) will apply as directed by the Secured Party, without further consent by
the
<PAGE>
Pledgor, any value distributed on account of any one or more of the
present or future commodity contracts carried in any of the commodity
accounts listed in paragraph 1 above or in any commodity account that the
Pledgor may in the future maintain with the Commodity Intermediary, whether
at its main office or any of its branch offices;
(b) will make all payments due to the Pledgor of any value distributed on
account of any commodity contracts carried in any of the Pledgor's present
or future commodity accounts with the Commodity Intermediary, directly to
the Secured Party at its address set forth below or at such other address
as the Pledgor may hereafter specify, without any reduction or deduction
for any set-off, or counter claim;
(c) will not execute and deliver, or otherwise become bound by, any agreement
(a "control agreement") under which the Commodity Intermediary agrees with
any party other than the Pledgor or the Secured Party to apply as directed
by such party any value distributed on account of any of the commodity
accounts or commodity contracts that are the subject of this Commodity
Account Control Agreement;
(d) will not grant any security interest in any commodity account or
commodity contract that is the subject of this Commodity Account Control
Agreement; and
(e) hereby subordinates any security interest it may now or hereafter have in
any commodity account or commodity contract that is the subject of this
Commodity Account Control Agreement to the security interest therein, if
any, of the Secured Party.
3. Except for those listed on Annex A hereto, as of the date hereof, there
-------
are no (i) control agreements outstanding or (ii) any security interests in any
of the commodity accounts or commodity contracts that are the subjects of this
Commodity Account Control Agreement.
4. The copy of the commodity account agreement between the Pledgor and
<PAGE>
the Commodity Intermediary relating to the commodity accounts listed in
paragraph 1 above delivered to the Secured Party is, as of the date hereof,
accurate and complete.
5. The rights and duties of the Secured Party, the Commodity Intermediary
and the Pledgor under this Commodity Account Control Agreement shall be governed
by the law of the State of New York.
6. This Commodity Account Control Agreement may be signed in any number of
counterparts each of which shall be an original, with the same effect as if the
signatures thereto were upon the same instrument.
7. All of the provisions of this Commodity Account Control Agreement shall
be binding upon and inure to the benefit of parties hereto and their respective
successors and assigns.
The Commodity Intermediary hereby acknowledges that it has been informed that
(1) the commodity accounts and the contracts carried therein that are the
subject of this Commodity Account Control Agreement are the subject of a
security interest granted by the Pledgor to the Secured Party and (2) the
Pledgor has agreed with the Secured Party that such assets shall be subject to
no other security interests.
Very truly yours,
[Insert here name of Secured Party]
[Insert here address of Secured Party to which
payments are to be made]
Executed and Agreed to:
[Insert here name of the Commodity Intermediary]
By:_________________________________
(Authorized Signature)
<PAGE>
Consented to:
[Insert here name of the Pledgor]
By:__________________________________
(Authorized Signature)
Execution Copy
<PAGE>
Exhibit 11.1
PREMIERE TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF NET INCOME (LOSS) PER SHARE
FOR THE YEAR ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
For the Years Ended December 31
-----------------------------------------------------------------------------------
1998 1997 1996
---------------------------- ---------------------------- -------------------------
Weighted Weighted Net Weighted Net
Average Net Loss Average Income Net Average Income
Net Loss Shares Per Share Net Loss Shares Per Share Income Shares Per Share
-------- -------- --------- -------- -------- --------- ------ -------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income (loss)....... $(74,206) -- $ -- $(25,375) -- $ -- $3,458 -- $ --
Less: Preferred stock
dividends.............. -- -- -- -- -- -- 29 -- --
-------- ------ ------ -------- ------ ------ ------ ------ -----
Basic net income
(loss)................. $(74,206) 44,325 $(1.67) $(25,375) 32,443 $(0.78) $3,429 27,670 $0.12
Dilutive Securities
Stock options.......... -- -- -- -- -- -- -- 3,618 0.01
Series A convertible
redeemable 8%
cumulative preferred
stock.................. -- -- -- -- -- -- -- -- --
-------- ------ ------ -------- ------ ------ ------ ------ -----
Diluted net income
(loss)................. $(74,206) 44,325 $(1.67) $(25,375) 32,443 $(0.78) $3,429 31,288 $0.11
======== ====== ====== ======== ====== ====== ====== ====== =====
</TABLE>
1
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES LISTING
Existing Subsidiaries of Premiere Technologies, Inc. ("PTEK")
<TABLE>
<CAPTION>
Jurisdiction of % Ownership by Premiere or
Subsidiary Organization Another Subsidiary Consolidated Significant
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Premiere Florida, US 100% owned by PTEK Yes Yes
Communications, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems, Inc. Delaware, US 100% owned by PTEK Yes Yes
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems Delaware, US 100% owned by Xpedite Yes Yes
Worldwide, Inc. Systems, Inc.
- - --------------------------------------------------------------------------------------------------------------
Phonetech, Inc. Delaware 100% owned by Xpedite Yes No
Systems, Inc.
- - --------------------------------------------------------------------------------------------------------------
USComwave New York 100% owned by Xpedite Yes No
Communications, Inc. Systems, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems United Kingdom 100% owned by Xpedite Yes Yes
Holdings (UK) Limited Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems Limited United Kingdom 100% owned by Xpedite Yes Yes
Systems Holdings (UK)
Limited
- - --------------------------------------------------------------------------------------------------------------
Voice-Tel Enterprises, Delaware, US 100% owned by PTEK Yes Yes
Inc.
- - --------------------------------------------------------------------------------------------------------------
VoiceCom Systems, Inc. Washington, US 100% owned by PTEK Yes Yes
- - --------------------------------------------------------------------------------------------------------------
American Missouri, US 100% owned by PTEK Yes Yes
Teleconferencing
Services, Ltd.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems Canada, Canada, New Brunswick 100% owned by Xpedite Yes No
Inc. Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Vitel Scandinavia A/S Denmark 100% owned by Xpedite Yes No
Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
PT Transtelindo Tritamo Indonesia 80% owned by Xpedite Yes No
Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Holdings GmbH Germany 100% owned by Xpedite Yes No
Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems Switzerland 99.9% owned by Xpedite Yes No
Switzerland AG Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite International Australia 72% owned by Xpedite Yes No
Australia Pty Limited Systems Worldwide, Inc.
28% owned by Comwave AG
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems Korea South Korea 100% owned by Xpedite Yes No
Ltd. Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction of % Ownership by Premiere or
Subsidiary Organization Another Subsidiary Consolidated Significant
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Xpedite International New Zealand 100% owned by Xpedite Yes No
New Zealand Pty Limited Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems Japan, Japan 100% owned by Xpedite Yes No
Inc. Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Taiwan Ltd. Taiwan 99.9% owned by Xpedite Yes No
Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Comvave GmbH Germany 100% owned by Comwave AG Yes No
but no shares outstanding
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems SA France 18.8% owned by Xpedite No No
Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Comwave UK Ltd. United Kingdom 100% owned by Comwave AG Yes No
- - --------------------------------------------------------------------------------------------------------------
Vitel Limited United Kingdom 100% owned by Xpedite Yes No
Systems Holdings (UK)
Limited
- - --------------------------------------------------------------------------------------------------------------
Xpedite International Hong Kong 99.9% owned by Vitel Yes No
(HK) Ltd. Limited*
- - --------------------------------------------------------------------------------------------------------------
Xpedite Malaysia Sdn Bhd Malaysia 99.9% owned by Xpedite Yes No
International (HK) Ltd.*
- - --------------------------------------------------------------------------------------------------------------
Xpedite Global Singapore 50% owned by Xpedite No No
Communications Pte. International (HK) Ltd.
- - --------------------------------------------------------------------------------------------------------------
Xpedite Systems GmbH Germany 41% owned by APA Expert Yes No
Beteiligungsgesellschaft
mbH; 59% owned by Xpedite
Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Transmit International United Kingdom 100% owned by Xpedite Yes No
Limited Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Connaught Commercial United Kingdom 100% owned by Xpedite Yes No
Services Limited Systems Worldwide, Inc.
- - --------------------------------------------------------------------------------------------------------------
Voice-Tel Canada Limited Canada 100% owned by PTEK Yes No
- - --------------------------------------------------------------------------------------------------------------
Voice-Tel Pty Ltd. Australia, New 100% owned by Voice-Tel Yes No
Zealand Enterprises, Inc.
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction of % Ownership by Premiere or
Subsidiary Organization Another Subsidiary Consolidated Significant
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Voice Partners Company Ohio, US General Partnership Yes No
Premiere Communications,
Inc. and Voice-Tel
Enterprises, Inc.,
General Partners
- - ------------------------------------------------------------------------------------------------------------
Voice-Tel Network Delaware, US PTEK and Voice-Tel Yes No
Limited Partnership Enterprises, Inc. Limited
Partners
- - ------------------------------------------------------------------------------------------------------------
Orchestrate.com, Inc. Georgia, US 100% owned by PTEK Yes No
- - ------------------------------------------------------------------------------------------------------------
PCI Acquisition Corp. Georgia, US 100% owned by PTEK No No
- - ------------------------------------------------------------------------------------------------------------
EBIS Communications, Georgia, US 100% owned by PTEK No No
Inc.
- - ------------------------------------------------------------------------------------------------------------
Charp-Tel Enterprises, Rhode Island, US 100% owned by PTEK No No
Inc.
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
* Shares not owned by local directors for statutory reasons.
-3-
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated March 15, 1999, included in this Annual Report on Form 10-K, into
Premiere Technologies, Inc.'s previously filed Registration Statements (Files
Nos. 333-11281, 333-17593, 333-29787, 333-36557, 333-39693, and 333-52357). It
should be noted that we have not audited any financial statements of the
Company subsequent to December 31, 1998 or performed any audit procedures
subsequent to the date of our report.
/s/ Arthur Andersen
Atlanta, Georgia
March 31, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Premiere Technologies, Inc. for the year ended December
31, 1998 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 19,226
<SECURITIES> 20,769
<RECEIVABLES> 65,097
<ALLOWANCES> 9,437
<INVENTORY> 0
<CURRENT-ASSETS> 127,183
<PP&E> 245,009
<DEPRECIATION> 110,309
<TOTAL-ASSETS> 802,751
<CURRENT-LIABILITIES> 218,363
<BONDS> 172,500
0
0
<COMMON> 469
<OTHER-SE> 400,425
<TOTAL-LIABILITY-AND-EQUITY> 802,009
<SALES> 444,818
<TOTAL-REVENUES> 444,818
<CGS> 135,036
<TOTAL-COSTS> 135,036
<OTHER-EXPENSES> 384,364
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,102
<INCOME-PRETAX> (88,960)
<INCOME-TAX> (14,754)
<INCOME-CONTINUING> (74,206)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (74,206)
<EPS-PRIMARY> (1.67)
<EPS-DILUTED> (1.67)
</TABLE>
