EXHIBIT 2.15
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
VIALOG CORPORATION
CPI ACQUISITION CORPORATION
AND
CONFERENCE PROS INTERNATIONAL, INC.
AND
▇▇▇▇▇▇▇ ▇▇▇▇▇
DATED AS OF NOVEMBER 30, 1998
TABLE OF CONTENTS
PREAMBLE.......................................................... 1
ARTICLE 1 THE MERGER.............................................. 2
SECTION 1.1 The Merger..................................... 2
SECTION 1.2 Action by Stockholders......................... 2
SECTION 1.3 Closing........................................ 3
SECTION 1.4 Effective Time................................. 3
SECTION 1.5 Effect of the Merger........................... 3
SECTION 1.6 Certificate of Incorporation................... 3
SECTION 1.7 By-laws........................................ 4
SECTION 1.8 Directors and Officers......................... 4
ARTICLE 2 CONVERSION OF SECURITIES AND EXCHANGE OF CERTIFICATES... 4
SECTION 2.1 Conversion of Securities....................... 4
SECTION 2.2 Exchange of Certificates; Exchange Agent and
Exchange Procedures............................ 5
SECTION 2.3 Stock Transfer Books........................... 6
SECTION 2.4 Option Securities and Convertible Securities... 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......... 7
SECTION 3.1 Organization and Business; Power and Authority;
Etc............................................ 7
SECTION 3.2 Financial and Other Information................ 9
SECTION 3.3 Changes in Condition........................... 10
SECTION 3.4 Liabilities.................................... 10
SECTION 3.5 Title to Properties; Leases.................... 11
SECTION 3.6 Compliance with Private Authorizations......... 12
SECTION 3.7 Compliance with Governmental Authorizations and
Applicable Law................................. 12
SECTION 3.8 Intangible Assets.............................. 14
SECTION 3.9 Related Transactions........................... 14
SECTION 3.10 Insurance...................................... 14
SECTION 3.11 Tax Matters.................................... 15
SECTION 3.12 Employee Retirement Income Security Act
of 1974........................................ 16
SECTION 3.13 Absence of Sensitive Payments.................. 19
SECTION 3.14 Inapplicability of Specified Statutes.......... 19
SECTION 3.15 Authorized and Outstanding Capital Stock....... 19
SECTION 3.16 Employment Arrangements........................ 20
SECTION 3.17 Material Agreements............................ 21
SECTION 3.18 Ordinary Course of Business.................... 21
SECTION 3.19 Bank Accounts; Etc............................. 23
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SECTION 3.20 Adverse Restrictions........................... 23
SECTION 3.21 Broker or Finder............................... 23
SECTION 3.22 Personal Injury or Property Damage; Warranty
Claims; Etc.................................... 23
SECTION 3.23 Environmental Matters.......................... 24
SECTION 3.24 Materiality.................................... 26
SECTION 3.25 Solvency....................................... 26
SECTION 3.26 Compliance with Regulations Relating to
Securities Credit.............................. 26
SECTION 3.27 Certain State Statutes Inapplicable............ 26
SECTION 3.28 Continuing Representations and Warranties...... 26
SECTION 3.29 Financing Document............................. 27
SECTION 3.30 Predecessor Status; Etc........................ 27
SECTION 3.31 Systems Performance............................ 27
SECTION 3.32 Year 2000 Compliance........................... 27
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE
PRINCIPAL STOCKHOLDER........................................ 28
SECTION 4.1 Organization................................... 28
SECTION 4.2 Power and Authority............................ 28
SECTION 4.3 Enforceability................................. 28
SECTION 4.4 Title to Shares................................ 28
SECTION 4.5 No Conflict; Required Filings and Consents..... 29
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF VIALOG AND
VIALOG MERGER SUBSIDIARY..................................... 29
SECTION 5.1 Organization and Qualification................. 29
SECTION 5.2 Power and Authority............................ 29
SECTION 5.3 No Conflict; Required Filings and Consents..... 30
SECTION 5.4 Financing...................................... 30
SECTION 5.5 Broker or Finder............................... 30
SECTION 5.6 Prior Activities of VIALOG Merger Subsidiary... 31
SECTION 5.7 Capitalization of VIALOG Merger Subsidiary..... 31
SECTION 5.8 Financing Document............................. 31
SECTION 5.9 Financing Commitment........................... 31
SECTION 5.10 Continuing Representations and Warranties...... 31
ARTICLE 6 ADDITIONAL COVENANTS.................................... 32
SECTION 6.1 Access to Information; Confidentiality......... 32
SECTION 6.2 Agreement to Cooperate......................... 33
SECTION 6.3 Assignment of Contracts and Rights............. 34
SECTION 6.4 Audit Financial Statements..................... 35
SECTION 6.5 Conduct of Business............................ 35
SECTION 6.6 No Solicitation................................ 36
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SECTION 6.7 Directors' and Officers' Indemnification
and Insurance.................................. 36
SECTION 6.8 Notification of Certain Matters................ 37
SECTION 6.9 Public Announcements........................... 37
SECTION 6.10 Conveyance Taxes............................... 38
SECTION 6.11 This Section Intentionally Left Blank.......... 38
SECTION 6.12 Employee Benefits; Severance Policy............ 38
SECTION 6.13 Certain Actions Concerning Business
Combinations................................... 38
SECTION 6.14 Termination of Option Securities and
Convertible Securities......................... 39
SECTION 6.15 Tax Returns.................................... 39
SECTION 6.16 This Section Intentionally Left Blank.......... 39
SECTION 6.17 Distributions; Liabilities; Etc................ 39
SECTION 6.18 Release from Personal Guarantees and Payment of
Indebtedness................................... 40
SECTION 6.19 Financing Document............................. 40
SECTION 6.20 Section 338(h)(10) Election.................... 41
SECTION 6.21 Allocation..................................... 42
SECTION 6.22 Tax Status..................................... 42
ARTICLE 7 CLOSING CONDITIONS...................................... 42
SECTION 7.1 Conditions to Obligations of Each Party to
Effect the Merger.............................. 42
SECTION 7.2 Conditions to Obligations of VIALOG and
VIALOG Merger Subsidiary....................... 43
SECTION 7.3 Conditions to Obligations of the Company....... 46
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER....................... 48
SECTION 8.1 Termination.................................... 48
SECTION 8.2 Effect of Termination.......................... 50
SECTION 8.3 Amendment...................................... 50
SECTION 8.4 Waiver......................................... 51
SECTION 8.5 Fees, Expenses and Other Payments.............. 51
SECTION 8.6 Effect of Investigation........................ 51
ARTICLE 9 ARBITRATION............................................. 51
SECTION 9.1 Best Efforts to Settle Disputes................ 51
SECTION 9.2 Arbitration.................................... 51
ARTICLE 10 INDEMNIFICATION........................................ 53
SECTION 10.1 Indemnification................................ 53
SECTION 10.2 Procedures Concerning Claims by Third Parties;
Payment of Damages; Etc........................ 54
SECTION 10.3 Access to Books and Records.................... 56
SECTION 10.4 Exclusivity.................................... 56
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ARTICLE 11 GENERAL PROVISIONS..................................... 56
SECTION 11.1 Effectiveness of Representations; Etc.......... 56
SECTION 11.2 Notices........................................ 56
SECTION 11.3 Headings....................................... 58
SECTION 11.4 Severability................................... 58
SECTION 11.5 Entire Agreement............................... 58
SECTION 11.6 Assignment..................................... 58
SECTION 11.7 Parties in Interest............................ 58
SECTION 11.8 Governing Law.................................. 58
SECTION 11.9 Enforcement of the Agreement................... 59
SECTION 11.10 Counterparts................................... 59
SECTION 11.11 Disclosure Supplements......................... 59
ARTICLE 12 DEFINITIONS............................................ 59
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EXHIBIT 2.14
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of November 30, 1998 among
VIALOG Corporation, a Massachusetts corporation ("VIALOG"), CPI Acquisition
Corporation, a Delaware corporation and wholly owned subsidiary of VIALOG
("VIALOG Merger Subsidiary"), CONFERENCE PROS INTERNATIONAL, INC., a Texas
corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Principal Stockholder").
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed thereto in Article 12 hereof.
PREAMBLE
1. The Company and VIALOG Merger Subsidiary have agreed to carry
out a business combination transaction upon the terms and subject to the
conditions of this Agreement and in accordance with the Texas Business
Corporation Act (the "BCA") and the General Corporation Law of the State of
Delaware (the "DBCL"), pursuant to which the VIALOG Merger Subsidiary will merge
with and into the Company (the "Merger") and the Principal Stockholder and other
Persons holding equity interests in the Company (the "Stockholders") will
convert their holdings into cash determined in accordance with Section 2.1(a).
2. Pursuant to the Underwriting Agreement, VIALOG will issue and
sell VIALOG stock in a firm commitment offering (the "Financing") in accordance
with the requirements of the Securities Act of 1933, as amended (the "Securities
Act").
3. The Board of Directors of the Company has unanimously determined that
the Merger is fair to, and in the best interests of, the Company and the
Stockholders and has approved and adopted this Agreement and the Merger as a
convenient means to accomplish a cash reverse merger pursuant to the Internal
Revenue Code of 1986, as amended (the "Code") and a convenient means to cause
all of the Stockholders to transfer their capital stock of the Company to
VIALOG, has approved this Agreement, the Merger and the Transactions and has
recommended approval and adoption of this Agreement, the Merger and the
Transactions by the Stockholders.
4. The Board of Directors of VIALOG has approved and adopted this
Agreement and has approved the Merger and the Transactions as the sole
stockholder of VIALOG Merger Subsidiary and the Board of Directors of VIALOG
Merger Subsidiary has approved and adopted this Agreement.
AGREEMENT
In consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth in this Agreement, the parties
agree as follows:
ARTICLE
1
THE MERGER
1.1 The Merger.
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(a) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the BCA and the DBCL at the Effective Time the
VIALOG Merger Subsidiary will be merged with and into the Company. As a result
of the Merger, the separate existence of the VIALOG Merger Subsidiary will cease
and the Company will continue as the surviving corporation of the Merger (the
"Surviving Corporation").
(b) The Company represents that, at a meeting duly called and held at
which a quorum was present and acting throughout, its Board of Directors has
unanimously (i) determined that this Agreement, the Merger and the Transactions
are fair to and in the best interest of the Stockholders, (ii) approved this
Agreement, the Merger and the Transactions, which approval satisfies in full the
requirements of the BCA and Texas law, and (iii) resolved to recommend approval
and adoption by the Stockholders of this Agreement, the Merger and the
Transactions to the extent required and in a manner permitted by Applicable Law.
1.2 Action by Stockholders.
----------------------
(a) The Company, acting through its Board of Directors, will, in
accordance with Applicable Law and its Organizational Documents: (i) as soon as
practicable and after consultation with VIALOG, duly call, give notice of,
convene and hold a special meeting of, or to the extent permitted by Applicable
Law submit for approval and adoption by written consent by, the Stockholders for
the purpose of adopting and approving this Agreement, the Merger and the
Transactions (the "Special Meeting"); (ii) include in any proxy statement the
conclusion and recommendation of the Board of Directors to the effect that the
Board of Directors, having determined that this Agreement, the Merger and the
Transactions are in the best interests of the Company and the Stockholders, has
approved this Agreement, the Merger and the Transactions and recommends that the
Stockholders vote in favor of the approval and adoption of this Agreement, the
Merger and the Transactions; and (iii) use its reasonable best efforts to obtain
the necessary approval and adoption of this Agreement, the Merger and the
Transactions by the Stockholders.
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(b) The approvals required by Sections 1.2(a) will occur prior to the
closing of the Merger (the "Merger Closing") or any filing required by state law
and in any event within 30 days of the date hereof.
1.3 Closing. Unless this Agreement is terminated pursuant to Section 8.1 and
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the Merger and the Transactions have been abandoned, and subject to the
satisfaction or, if possible, waiver of conditions set forth in Article 7, the
Merger Closing will take place one day prior to the Effective Date, at the
offices of ▇▇▇▇▇▇, ▇'▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, unless another date, time
or place is agreed to in writing by the Parties to this Agreement. Counsel for
the Parties to this Agreement will hold a pre-closing at least one day prior to
the Merger Closing, at the offices of ▇▇▇▇▇▇, ▇'▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP,
for the purpose of finalizing all documents to be signed at the Merger Closing.
All certificates, legal opinions and other instruments required to be delivered
in order to satisfy the conditions to the obligations of the Parties to effect
the Merger set forth in Article 7 below shall be delivered at the Merger
Closing, and each such certificate, legal opinion or other instrument shall,
except to the extent otherwise provided in Article 7, be dated as of the
anticipated Financing Closing Date as hereafter defined, which is expected to
occur no later than three business days following the date of Merger Closing.
All such certificates, legal opinions and other instruments shall be held in
escrow by ▇▇▇▇▇▇, ▇'▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP between the Merger Closing
and the Financing Closing Date and shall be released from escrow on the
Financing Closing Date. In the event that the Financing Closing Date occurs on
a date other than the third business day following the Merger Closing, all such
certificates, legal opinions and instruments shall be re-dated as of the
Financing Closing Date. The Company, the Principal Stockholder, VIALOG and
VIALOG Merger Subsidiary shall use their respective best efforts to cause each
of the conditions set forth in Article 7 reasonably capable of being satisfied
prior to the Merger Closing, to be satisfied prior to the Merger Closing.
1.4 Effective Time. On the Financing Closing Date, the Parties will cause the
--------------
Merger to be consummated by filing articles or certificates of merger, as the
case may be, with the Secretary of State of Texas and with the Secretary of
State of Delaware, and by making any related filings required under the BCA and
the DBCL. The Merger will become effective at such time (but not prior to the
Financing Closing Date) as such articles or certificates, as the case may be,
are duly filed with the Secretary of State of Texas and the Secretary of State
of Delaware, respectively (the "Effective Time").
1.5 Effect of the Merger. From and after the Effective Time, the Surviving
--------------------
Corporation will possess all the rights, privileges, powers and franchises and
be subject to all of the restrictions, disabilities and duties of the Company
and VIALOG Merger Subsidiary, and the Merger will otherwise have the effects,
all as provided under the BCA and the DBCL.
1.6 Certificate of Incorporation. From and after the Effective Time, the
----------------------------
Certificate of Incorporation of the Surviving Corporation will be substantially
in the form attached as Exhibit 1.6 until amended in accordance with Applicable
-----------
Law, and the name of the Surviving Corporation will be the name of the Company
or such other name as VIALOG may select.
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1.7 By-laws. From and after the Effective Time, the by-laws of the Surviving
-------
Corporation will be in the form attached as Exhibit 1.7, until amended in
-----------
accordance with Applicable Law.
1.8 Directors and Officers. From and after the Effective Time, until
----------------------
successors are duly elected or appointed and qualified (or their earlier
resignation or removal) in accordance with Applicable Law (a) the directors of
VIALOG Merger Subsidiary at the Effective Time will be the directors of the
Surviving Corporation and (b) the officers of the Company at the Effective Time
will be the officers of the Surviving Corporation.
ARTICLE
2
CONVERSION OF SECURITIES AND EXCHANGE OF CERTIFICATES
2.1 Conversion of Securities. At the Effective Time, by virtue of the Merger
------------------------
and without any action on the part of VIALOG Merger Subsidiary, the Company or
the holders of any of the following securities:
(a) Each share of common stock, without par value of the Company (the
"Company Stock") issued and outstanding or issuable upon the election to
exercise or convert outstanding Option Securities and Convertible Securities
immediately prior to the Effective Time (other than any shares of Company Stock
to be canceled pursuant to Section 2.1(b)) will be converted into the right to
receive cash (the "Merger Consideration") pursuant to the following formula:
Aggregate Merger Consideration = $6,000,000
Merger Consideration = Aggregate Merger Consideration
------------------------------
Aggregate Equity
At the Effective Time, all issued and outstanding shares of Company Stock (the
"Shares") will no longer be outstanding and will automatically be canceled and
retired and will cease to exist, and certificates previously evidencing any such
Shares (each a "Certificate") will thereafter represent the right to receive,
upon the surrender of such Certificate in accordance with the provisions of
Section 2.2, cash equal to the number of Shares represented by such Certificate
multiplied by the Merger Consideration. A holder of more than one Certificate
will have the right to receive cash equal to the Merger Consideration multiplied
by the number of Shares represented by all such Certificates (the "Exchange
Merger Consideration"). The holders of Certificates previously evidencing
Shares outstanding immediately prior to the Effective Time will cease to have
any rights with respect to such Shares except as otherwise provided in this
Agreement or by Applicable Law.
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(b) Each Share held in the treasury of the Company or by any direct or
indirect wholly-owned Subsidiary of the Company immediately prior to the
Effective Time will automatically be canceled and extinguished without
conversion, and no payment will be made with respect to such Share.
(c) Each share of common stock of the VIALOG Merger Subsidiary outstanding
immediately prior to the Effective Time will be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and will constitute the only
outstanding shares of capital stock of the Surviving Corporation.
2.2 Exchange of Certificates; Exchange Agent and Exchange Procedures.
----------------------------------------------------------------
(a) On the Financing Closing Date, VIALOG will deliver to the holders of
Shares for exchange in accordance with this Article by wire transfer of
immediately available funds to the bank accounts designated by the respective
Stockholders, an amount equal to the Merger Consideration multiplied by the
number of shares issued and outstanding immediately prior to the Effective Time
(other than Shares to be canceled pursuant to Section 2.1(b)) in exchange for
all of the outstanding Shares (collectively the "Exchange Fund").
(b) Upon surrender of a Certificate for cancellation to VIALOG or to
such other agent or agents as may be appointed by VIALOG together with such
letter of transmittal, duly executed, and such other customary documents as may
be reasonably required pursuant to such instructions (collectively, the
"Transmittal Documents"), the holder of such Certificate will become entitled to
receive, as of the Effective Time, in exchange therefor the Exchange Merger
Consideration which such holder has the right to receive pursuant to Section
2.1(a), and the Certificate so surrendered will be canceled. Until surrendered
as contemplated by this Section, each Certificate will be deemed at any time
after the Effective Time to evidence only the right to receive, upon such
surrender, the Exchange Merger Consideration, without interest.
(c) If any Certificate is lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and subject to such other conditions as VIALOG may impose,
the Surviving Corporation will issue in exchange for such lost, stolen or
destroyed Certificate the Exchange Merger Consideration deliverable in respect
thereof as determined in accordance with Section 2.1(a). VIALOG may, in its
discretion and as a condition precedent to authorizing the issuance thereof by
the Surviving Corporation, require the owner of such lost, stolen or destroyed
Certificate to provide a bond or other surety to VIALOG and the Surviving
Corporation in such sum as VIALOG may reasonably direct as indemnity against any
claim that may be made against VIALOG, VIALOG Merger Subsidiary or the Surviving
Corporation (and their Affiliates) with respect to the Certificate alleged to
have been lost, stolen or destroyed.
(d) None of VIALOG, VIALOG Merger Subsidiary, the Company or the Surviving
Corporation will be liable to any holder of Shares for any cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
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(e) Each of VIALOG and the Surviving Corporation will be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Shares such amounts as VIALOG or the Surviving
Corporation is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. If any holder of Shares who has the right under the Code (or other
Applicable Law) to elect to receive the Exchange Merger Consideration without
any deduction or withholding therefrom, notifies VIALOG of such election to do
so and the form and content of the election is reasonably acceptable to VIALOG,
neither VIALOG nor the Surviving Corporation will deduct or withhold any amount
from the consideration payable to any such holder of Shares. To the extent that
amounts are so withheld by VIALOG or the Surviving Corporation, such withheld
amounts will be treated for all purposes of this Agreement as having been paid
to the holder of the Shares in respect of which such deduction and withholding
was made by VIALOG or the Surviving Corporation.
2.3 Stock Transfer Books. At the Merger Closing Date, the stock transfer books
--------------------
of the Company will be closed, and there will be no further registration of
transfers of Shares thereafter on the records of the Company other than to
VIALOG. On or after the Effective Time, any Certificate presented to the
Exchange Agent or the Surviving Corporation will be converted into the Exchange
Merger Consideration.
2.4 Option Securities and Convertible Securities. At the Effective Time:
--------------------------------------------
(a) Each outstanding Option Security and each outstanding Convertible
Security exercisable or convertible to purchase Shares as of immediately prior
to the Effective Time, will be canceled and the holder thereof will be entitled
to receive, and will receive, upon payment of the consideration required to
exercise or convert, or debit of such consideration against the Merger
Consideration otherwise due, and termination of such holder's rights to exercise
or convert, as the case may be, all other Option Securities or Convertible
Securities issued to such holder, Merger Consideration in the form of cash
payable with respect to the number of Shares issuable pursuant to such Option
Security or Convertible Security so exercised or converted, as the case may be,
as provided in Section 2.1(a).
(b) Each Option Security outstanding not then exercisable or exercised
and the conversion rights of each Convertible Security outstanding not then
convertible or converted will be canceled.
(c) VIALOG shall grant to ▇▇▇▇▇ ▇▇▇▇▇▇ options for 75,000 shares of VIALOG
Stock as constituted on the date hereof exercisable at the fair market value at
the Effective Time as determined by the VIALOG Board of Directors in its
reasonable and good faith judgment, which such options shall become exercisable
for 5,700 shares on the last day of the calendar quarter in which the Effective
Time occurs and an additional 6,300 shares on the last day of the 11 calendar
quarters thereafter and expiring on the third anniversary of the Effective Time.
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ARTICLE
3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to, and agrees with, VIALOG
and VIALOG Merger Subsidiary as follows:
3.1 Organization and Business; Power and Authority; Etc.
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(a) The Company:
(i) is a corporation duly organized, validly existing and in good
standing under the laws of Texas.
(ii) has all requisite power and authority (corporate and other) to
own or hold under lease its properties and to conduct its
business as now conducted and as presently proposed to be
conducted, and has in full force and effect all Governmental
Authorizations and Private Authorizations and has made all
Governmental Filings, to the extent required for such ownership
and lease of its property and conduct of its business, except to
the extent the failure to have in full force and effect all
governmental authorizations and Private Authorizations and the
failure to make all governmental filings would not have an
Adverse Effect, and
(iii) has duly qualified and is authorized to do business and is in
good standing as a foreign corporation in each jurisdiction (a
true and correct list of which is set forth in Section 3.1(a) of
the Disclosure Letter as hereafter defined) in which the
character of its property or the nature of its business or
operations requires such qualification or authorization, except
to the extent the failure so to qualify or to maintain such
authorizations would not have an Adverse Effect.
(b) The Company has all requisite power and authority (corporate and
other) and has in full force and effect all Governmental Authorizations and
Private Authorizations in order to enable it to execute and deliver, and to
perform its obligations under, this Agreement and each Collateral Document
executed or required to be executed by it pursuant hereto or thereto and to
consummate the Merger and the Transactions. The execution, delivery and
performance of this Agreement and each Collateral Document executed or required
to be executed pursuant hereto or thereto have been duly authorized by all
requisite corporate or other action (other than that of the Stockholders). This
Agreement has been duly executed and delivered by the Company and constitutes,
and each Collateral Document executed or required to be executed pursuant hereto
or thereto or to consummate the Merger and the Transactions, when executed and
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delivered by the Company or an Affiliate of the Company will constitute, legal,
valid and binding obligations of the Company or such Affiliate, enforceable in
accordance with their respective terms except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The affirmative vote or action by
written consent of 2/3rds of the votes the holders of the outstanding shares of
the Company are entitled to cast is the only vote of the holders of any class or
series of the capital stock of the Company necessary to approve this Agreement,
the Merger and the Transactions under Applicable Law and the Company's
Organizational Documents.
(c) Except as set forth in Section 3.1(c) of the Disclosure Letter,
neither the execution and delivery of this Agreement or any Collateral Document
executed or required to be executed pursuant hereto or thereto, nor the
consummation of the Transactions, nor compliance with the terms, conditions and
provisions hereof or thereof by the Company or any of the other parties hereto
or thereto which is Affiliated with the Company:
(i) will conflict with, or result in a breach or violation of, or
constitute a default under, the Certificate of Incorporation,
Bylaws or any Applicable Law on the part of the Company or any
Subsidiary or will conflict with, or result in a breach or
violation of, or constitute a default under, or permit the
acceleration of any obligation or liability in, or but for any
requirement of giving of notice or passage of time or both would
constitute such a conflict with, breach or violation of, or
default under, or permit any such acceleration in, any
Contractual Obligation of the Company or any Subsidiary,
(ii) will result in or permit the creation or imposition of any
Lien (except to the extent set forth in Section 3.1(c) of the
Disclosure Letter) upon any property now owned or leased by the
Company or any such other party, or
(iii) will require any Governmental Authorization or Governmental
Filing or Private Authorization, except for filing requirements
under Applicable Law in connection with the Merger and the
Transactions and as the Securities Act and applicable state
securities laws may apply to compliance by the Company with the
provisions of this Agreement relating to the Merger and
registration rights provided for hereunder and except pursuant
to the HSR Act. (if applicable).
(d) The Company does not have any Subsidiaries other than those listed on
Section 3.1(d) of the Disclosure Letter. Each Subsidiary so listed is wholly-
owned, is a corporation which is duly organized, validly existing and in good
standing under the laws of the respective state of incorporation set forth
opposite its name on Section 3.1(d) of the Disclosure Letter, and is duly
qualified and in good standing as a foreign corporation in each other
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jurisdiction (as shown in Section 3.1(d) of the Disclosure Letter) in which the
character of its property or the nature of its business or operations requires
such qualification or authorization, with full power and authority (corporate
and other) to carry on the business in which it is engaged. Each Subsidiary has
in full force and effect all Governmental Authorizations and Private
Authorizations and has made all Governmental Filings, to the extent required for
such ownership and lease of its property and conduct of its business. The
Company owns all of the outstanding capital stock (as shown on Section 3.1(d) of
the Disclosure Letter) of each Subsidiary, free and clear of all Liens (except
to the extent set forth in Section 3.1(d) of the Disclosure Letter), and all
such stock has been duly authorized and validly issued and is fully paid and
non-assessable. There are no outstanding Option Securities or Convertible
Securities, or agreements or understandings with respect to any of the
foregoing, of any nature whatsoever relating to the authorized and unissued or
the outstanding capital stock of any Subsidiary.
3.2 Financial and Other Information.
-------------------------------
(a) The Company has furnished to VIALOG copies of the financial
statements of the Company and its Subsidiaries listed in Section 3.2(a) of the
Disclosure Letter (the "Financial Statements"). The Financial Statements,
including in each case the notes thereto, have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby,
except as otherwise noted therein, are materially true, correct and complete, do
not contain any untrue statement of a material fact or omit to state a material
fact required by GAAP to be stated therein or necessary in order to make any
statements contained therein not misleading, and fairly present the financial
condition and results of operations of the Company and its Subsidiaries, on the
bases therein stated, as of the respective dates thereof, and for the respective
periods covered thereby subject, in the case of unaudited financial statements
to normal nonmaterial year-end audit adjustments and accruals.
(b) Neither the Disclosure Letter, the Financial Statements, this
Agreement nor any Collateral Document furnished or to be furnished by or on
behalf of the Company or any of the Stockholders pursuant to this Agreement or
any Collateral Document executed or required to be executed by or on behalf of
the Company or the Stockholders pursuant hereto or thereto or to consummate the
Merger and the Transactions, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact required to be
stated in such document by its terms or necessary in order to make the
statements contained herein or therein not misleading and all such Collateral
Documents are and will be true, correct and complete in all material respects;
provided that:
(i) with respect to projections contained or referred to in the
Disclosure Letter, the Company represents and warrants only that
such projections were prepared in good faith on the basis of the
past business of the Company and other information and
assumptions which the Company and the Principal Stockholder
believe to be reasonable,
13
(ii) each such Collateral Document will not be deemed misleading by
virtue of the absence of factual recitations or references not
germane thereto and necessary to the purpose thereof, and
(iii) responses to due diligence requests will not be subject to this
Section 3.2(b) except to the extent that, to the Company's
knowledge, such response is materially misleading.
(c) The Company does not own any capital stock or equity or proprietary
interest in any other Entity or enterprise, however organized and however such
interest may be denominated or evidenced, except as set forth in Sections 3.1(d)
or 3.2(c) of the Disclosure Letter. None of the Entities, if any, so set forth
in Section 3.2(c) of the Disclosure Letter is a Subsidiary of the Company except
as so set forth. The Company owns all of the outstanding capital stock or equity
or proprietary interests (as shown on Section 3.2(c) of the Disclosure Letter)
of each such Entity or other enterprise, free and clear of all Liens (except to
the extent set forth in Section 3.2(c) of the Disclosure Letter), and all of
such stock or equity or proprietary interests have been duly authorized and
validly issued and are fully paid and non-assessable. There are no outstanding
Option Securities or Convertible Securities, or agreements or understandings
with respect to any of the foregoing, of any nature whatsoever, except as
described in Section 3.2(c) of the Disclosure Letter.
3.3 Changes in Condition. Since the date of the most recent financial
--------------------
statements forming part of the Financial Statements, to the Company's knowledge
and except to the extent specifically described in Section 3.3 of the Disclosure
Letter, there has been no Adverse Change in the Company or the Company and its
Subsidiaries taken as a whole. There is no Event known to the Company which
Adversely Affects, or in the future might (so far as the Company or the
Principal Stockholder can now reasonably foresee) Adversely Affect, the Company
or the Company and its Subsidiaries taken as a whole, or the ability of the
Company to perform any of the obligations set forth in this Agreement or any
Collateral Document executed or required to be executed pursuant hereto or
thereto except for changes in general economic conditions and to the extent set
forth in Section 3.3 of the Disclosure Letter.
3.4 Liabilities. At the date of the most recent balance sheet forming part of
-----------
the Financial Statements, neither the Company nor any Subsidiary had any
obligations or liabilities, past, present or deferred, accrued or unaccrued,
fixed, absolute, contingent or other, except as disclosed in such balance sheet,
or the notes thereto, and since such date neither the Company nor any Subsidiary
has incurred any such obligations or liabilities, other than obligations and
liabilities incurred in the ordinary course of business consistent with past
practice of the Company and its Subsidiaries, which do not and, to the Company's
knowledge, will not, in the aggregate, Adversely Affect the Company or the
Company and its Subsidiaries taken as a whole except to the extent set forth in
Section 3.4 of the Disclosure Letter.
Neither the Company nor any Subsidiary has Guaranteed or is otherwise
primarily or secondarily liable in respect of any obligation or liability of any
other Person material to the Company or the Company and its Subsidiaries, except
for endorsements of negotiable
14
instruments for deposit in the ordinary course of business or as disclosed in
the most recent balance sheet, or the notes thereto, forming part of the
Financial Statements or in Section 3.4 of the Disclosure Letter.
3.5 Title to Properties; Leases.
---------------------------
(a) Each of the Company and its Subsidiaries has good legal and insurable
title, with respect to all real property owned or leased (in fee simple if owned
and leasehold if leased) and marketable title if owned (in fee simple), if any,
reflected as an asset on the most recent balance sheet forming part of the
Financial Statements, or held by the Company or any of its Subsidiaries for use
in its business if not so reflected, and good indefeasible and merchantable
title to all other assets, tangible and intangible (excluding leased property),
reflected on such balance sheet, or held by the Company or any of its
Subsidiaries for use in its business if not so reflected, or purported to have
been acquired by the Company or any of its Subsidiaries since such date, except
inventory sold or depleted, or property, plant and other equipment used up or
retired, since such date, in each case in the ordinary course of business
consistent with past practice of the Company and its Subsidiaries, free and
clear of all Liens, except such as are reflected in the most recent balance
sheet, or the notes thereto, forming part of the Financial Statements or set
forth in Section 3.5(a) of the Disclosure Letter. Except for financing
statements evidencing Liens referred to in the preceding sentence (a true,
correct and complete list and description of which is set forth in Section
3.5(a) of the Disclosure Letter), to the Company's knowledge, no financing
statements under the Uniform Commercial Code and no other filing which names the
Company or any of its Subsidiaries as debtor or which covers or purports to
cover any of the property of the Company or any of its Subsidiaries is on file
in any state or other jurisdiction, and neither the Company nor any Subsidiary
has signed or agreed to sign any such financing statement or filing or any
agreement authorizing any secured party thereunder to file any such financing
statement or filing. Each Lease or other occupancy or other agreement under
which the Company or any of its Subsidiaries holds real or personal property has
been duly authorized, executed and delivered by the Company or Subsidiary, as
the case may be, and, to the Company's knowledge, by each of the parties
thereto. Each such Lease is a legal, valid and binding obligation of the Company
or a Subsidiary, as the case may be, and, to the Company's knowledge, of each
other party thereto, enforceable in accordance with its terms. Each of the
Company and its Subsidiaries has a valid leasehold interest in and enjoys
peaceful and undisturbed possession under all Leases pursuant to which it holds
any real property or tangible personal property, none of which contains any
provision which would impair the Company's ability to use such property as it is
currently used by the Company, except as described in Section 3.5(a) of the
Disclosure Letter. All of such Leases are valid and subsisting and in full force
and effect. Neither the Company nor any of its Subsidiaries nor, to the
Company's knowledge, any other party thereto, is in default in the performance,
observance or fulfillment of any obligation, covenant or condition contained in
any such Lease, except to the extent any such default would not have an Adverse
Effect.
(b) Section 3.5(b) of the Disclosure Letter contains a true, correct and
complete description of all real estate owned or leased by the Company or any of
its Subsidiaries and all Leases and an identification of all material items of
fixed assets and machinery and equipment.
15
None of the fixed assets and machinery and equipment is subject to contracts of
sale, and none is held by the Company or any of its Subsidiaries as lessee or as
conditional sales venue under any Lease or conditional sales contract and none
is subject to any title retention agreement, except as set forth in Section
3.5(b) of the Disclosure Letter. The real property (other than land), fixtures,
fixed assets and machinery and equipment are in a state of good repair and
maintenance and are in good operating condition, reasonable wear and tear
excepted.
(c) Except as set forth in Section 3.5(c) of the Disclosure Letter all
real property owned or leased by the Company or any of its Subsidiaries conforms
to and complies with all applicable title covenants, conditions, restrictions
and reservations and all applicable zoning, wetlands, land use and other
Applicable Law.
3.6 Compliance with Private Authorizations. Section 3.6 of the Disclosure
--------------------------------------
Letter sets forth a true, correct and complete list and description of each
Private Authorization which individually is material to the Company or the
Company and its Subsidiaries taken as a whole, all of which are in full force
and effect. Each of the Company and each Subsidiary has obtained all Private
Authorizations which are necessary for the ownership by the Company or each
Subsidiary of its properties and the conduct of its business as now conducted or
as presently proposed to be conducted or which, if not obtained and maintained,
could, singly or in the aggregate, Adversely Affect the Company or the Company
and its Subsidiaries taken as a whole. Neither the Company nor any Subsidiary
is in breach or violation of, or is in default in the performance, observance or
fulfillment of, any Private Authorization, and no Event exists or has occurred,
which constitutes, or but for any requirement of giving of notice or passage of
time or both would constitute, such a breach, violation default, under any
Contractual Obligation or Private Authorization, except for such defaults,
breaches or violations, as do not and, to the Company's knowledge, will not have
in the aggregate any Adverse Effect on the Company or the Company and its
Subsidiaries taken as a whole or the ability of the Company to perform any of
the obligations set forth in this Agreement or any Collateral Document executed
or required to be executed pursuant hereto or thereto or to consummate the
Merger and the Transactions. No Private Authorization is the subject of any
pending or, to the Company's knowledge, threatened attack, revocation or
termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
--------------------------------------------------------------
(a) Section 3.7(a) of the Disclosure Letter contains a description of:
(i) all Legal Actions which are pending or, other than those finally
adjudicated or settled on or before December 31, 1997, in which
the Company or any of its Subsidiaries, or any of its officers
or directors, is, or at any time during the last three calendar
years ending on December 31, 1997 has been, engaged, or which
involves, or at any time during such period involved, the
business, operations or properties of the Company or any of its
Subsidiaries or, to the Company's knowledge, which is threatened
or contemplated against, or in any other manner relating
Adversely to,
16
the Company or any of its Subsidiaries or the business,
operations or properties, or the officers or directors, or any
of them in connection therewith; and
(ii) each Governmental Authorization to which the Company or any
Subsidiary is subject and which relates to the business,
operations, properties, prospects, condition (financial or
other), or results of operations of the Company or the Company
and its Subsidiaries taken as a whole, all of which are in full
force and effect.
(b) Each of the Company and each of its Subsidiaries has obtained all
Governmental Authorizations which are necessary for the ownership or uses of its
properties and the conduct of its business as now conducted or as presently
proposed to be conducted by the Company or which, if not obtained and
maintained, could singly or in the aggregate, have any Adverse Effect on the
Company or the Company and its Subsidiaries taken as a whole. No Governmental
Authorization is the subject of any pending or, to the Company's knowledge,
threatened attack, revocation or termination. Neither the Company nor any
Subsidiary nor any officer or director (in connection with the business,
operations and properties of the Company or any Subsidiary) is or at any time
since January 1, 1993 has been, or is or has during such time been charged with,
or to the knowledge of the Company, is threatened or under investigation with
respect to any material breach or violation of, or in default in the
performance, observance or fulfillment of, any Governmental Authorization or any
Applicable Law, and no Event exists or has occurred, which constitutes, or but
for any requirement of giving of notice or passage of time or both would
constitute, such a breach, violation or default, under
(i) any Governmental Authorization or any Applicable Law, except
for such breaches, violations or defaults as do not and, to the
Company's knowledge, will not have in the aggregate any Adverse
Effect on the Company or the Company and its Subsidiaries taken
as a whole or the ability of the Company to perform any of the
obligations set forth in this Agreement or any Collateral
Document executed or required to be executed pursuant hereto or
thereto, or to consummate the Merger and the Transactions, or
(ii) any requirement of any insurance carrier, applicable to its
business, operations or properties,
except as otherwise specifically described in Section 3.7(b) of the Disclosure
Letter.
(c) With respect to matters, if any, of a nature referred to in Sections
3.7(a) or 3.7(b) of the Disclosure Letter, all such information and matters set
forth in the Disclosure Letter, individually and in the aggregate, if adversely
determined against the Company or any Subsidiary, will not Adversely Affect the
Company or the Company and its Subsidiaries taken as a whole, or the ability of
the Company to perform its obligations under this Agreement or any
17
Collateral Documents or required to be executed pursuant hereto or thereto or to
consummate the Merger and the Transactions.
3.8 Intangible Assets.
-----------------
(a) Each of the Company and each Subsidiary owns or possesses or
otherwise has the right to use all Governmental Authorizations and other
Intangible Assets necessary for the present and planned future conduct of its
business, without any known conflict with the rights of others. The present and
planned future conduct of business by the Company and each Subsidiary is not
dependent upon any one or more, or all, of such Governmental Authorizations and
other Intangible Assets or rights with respect to any of the foregoing, except
as set forth in Section 3.8(a) of the Disclosure Letter.
(b) Section 3.8(b) of the Disclosure Letter sets forth a true, correct and
complete description of all of such Governmental Authorizations and other
Intangible Assets or rights with respect thereto, including without limitation
the nature of the Company's and each Subsidiary's interest in each and the
extent to which the same have been duly registered in the offices as indicated
therein.
3.9 Related Transactions. Section 3.9 of the Disclosure Letter sets forth a
--------------------
true, correct and complete description of any Contractual Obligation or
transaction, not fully discharged or consummated, as the case may be, on or
before the beginning of the Company's current fiscal year, between the Company
or any of its Subsidiaries and any of its officers, directors, employees,
stockholders, or any Affiliate of any thereof (other than reasonable
compensation for services as officers, directors and employees and reimbursement
for out-of-pocket expenses reasonably incurred in support of the Company's
business), now existing or which, at any time since its organization, existed or
occurred, including without limitation any providing for the furnishing of
services to or by, providing for rental of property, real, personal or mixed, to
or from, or providing for the lending or borrowing of money to or from or
otherwise requiring payments to or from, any officer, director, stockholder or
employee, or any Affiliate of any thereof. All such Contractual Obligations and
transactions were and are on terms and conditions not materially different to
the Company or any of its Subsidiaries than would be customary for such between
Persons who are not Affiliates or upon terms and conditions on which similar
Contractual Obligations and transactions with Persons who are not Affiliates
could fairly and reasonably be expected to be entered into, except as otherwise
set forth in Section 3.9 of the Disclosure Letter.
3.10 Insurance.
---------
(a) Section 3.10(a) of the Disclosure Letter lists all insurance policies
maintained by the Company or any Subsidiary and includes insurers' names, policy
numbers, expiration dates, risks insured against, amounts of coverage, the
annual premiums, exclusions, deductibles and self-insured retention.
(b) Neither the Company nor any Subsidiary is in breach or violation of
or in default under any such policy, and all premiums due thereon have been
paid, and each such
18
policy or a comparable replacement policy will continue to be in force and
effect up to and including the Financing Closing Date. The insurance policies so
listed and identified are of a nature and scope and in amounts sufficient to
prevent the Company or any Subsidiary from becoming a coinsurer within the terms
of such policies. Except as set forth in Section 3.10(a) of the Disclosure
Letter, neither the Company nor any Subsidiary has, within the past five (5)
years, been refused insurance by any insurance carrier to which it has applied
for insurance.
3.11 Tax Matters.
-----------
(a) Each of the Company and each Subsidiary has in accordance with all
Applicable Laws filed all Tax Returns which are required to be filed, and has
paid, or made adequate provision for the payment of, all Taxes which have or may
become due and payable pursuant to said Returns and all other governmental
charges and assessments received to date. The Tax Returns of the Company and
each Subsidiary have been prepared in accordance with all Applicable Laws and
generally accepted principles applicable to taxation consistently applied. All
Taxes which the Company and each Subsidiary are required by law to withhold and
collect have been duly withheld and collected and have been paid over, in a
timely manner, to the proper Authorities to the extent due and payable. Neither
the Company nor any Subsidiary has executed any waiver to extend, or otherwise
taken or failed to take any action that would have the effect of extending, the
applicable statute of limitations in respect of any Tax liabilities of the
Company or any Subsidiary for the fiscal year prior to and including the most
recent fiscal year. Adequate provision has been made on the most recent balance
sheet forming part of the Financial Statements for all Taxes of any kind,
including interest and penalties in respect thereof, whether disputed or not,
and whether past, current or deferred, accrued or unaccrued, fixed, contingent,
absolute or other, and to the knowledge of the Company there are no transactions
or matters or any basis which might or could result in additional Taxes of any
nature to the Company or any Subsidiary for which an adequate reserve has not
been provided on such balance sheet. Each of the Company and each Subsidiary has
at all times been taxable as a Subchapter S corporation under the Code, except
as otherwise set forth in Section 3.11(a) of the Disclosure Letter. Neither the
Company nor any Subsidiary has ever been a member of any consolidated group
(other than exclusively with the Company and its Subsidiaries) for Tax purposes,
except as set forth in Section 3.11(a) of the Disclosure Letter.
(b) Each of the Company and each Subsidiary has paid all Taxes which have
become due pursuant to its Returns and has paid all installments (to the extent
required to avoid material underpayment penalties) of estimated Taxes due and
payable.
(c) From the end of its most recent fiscal year to the date hereof
neither the Company nor any Subsidiary has made any payment on account of any
Taxes except regular payments required in the ordinary course of business with
respect to current operations or property presently owned.
(d) The information shown on the federal income Tax Returns of the
Company and its Subsidiaries (true, correct and complete copies of which have
been furnished by the Company to VIALOG) is true, correct and complete and
fairly and accurately reflects the
19
information purported to be shown. Federal and state income Tax Returns of the
Company and its Subsidiaries have been audited by the IRS or applicable state
Authority for the taxable periods set forth in Section 3.11(d) of the Disclosure
Letters, and neither the Company nor any Subsidiary has been notified regarding
any pending audit, except as shown in Section 3.11(d) of the Disclosure Letter.
(e) Neither the Company nor any Subsidiary is a party to any tax sharing
agreement or arrangement, except as set forth in Section 3.11(e) of the
Disclosure Letter.
(f) Neither the Company nor any Subsidiary has ever (i) filed a consent
under Section 341(f) of the Code concerning collapsible corporations or (ii)
undergone an "ownership change" within the meaning of Section 382(g) of the
Code, except as set forth in Section 3.11(f) of the Disclosure Letter.
3.12 Employee Retirement Income Security Act of 1974.
-----------------------------------------------
(a) Section 3.12(a) of the Disclosure Letter sets forth a list of all
Plans and Benefit Arrangements maintained by the Company and any of its
Subsidiaries (which for purposes of this Section 3.12 will include any ERISA
Affiliate with respect to any Plan subject to Title IV of ERISA). As to all such
Plans and Benefit Arrangements, and except as disclosed in such Section 3.12(a)
of the Disclosure Letter:
(i) all Plans and Benefit Arrangements comply currently, and have
complied in the past, in all material respects both as to form
and operation, with their terms and with all Applicable Laws,
and neither the Company nor any of its Subsidiaries has received
any outstanding notice from any Authority questioning or
challenging such compliance,
(ii) all necessary governmental approvals for each Plan and Benefit
Arrangement have been obtained; the Internal Revenue Service has
issued a favorable determination as to the tax qualified status
of each Plan intended to comply with section 401(a) of the Code
and each amendment thereto, and a recognition of exemption from
federal income taxation under Section 501(a) of the Code of each
Plan which constitutes a funded welfare plan as defined in
Section 3(1) of ERISA; and nothing has occurred since the date
of each such determination or recognition that would adversely
affect such qualification.
(iii) no Plan which is subject to Part 3 of Subtitle B of Title 1 of
ERISA or Section 412 of the Code had an accumulated funding
deficiency (as defined in Section 302(a)(2) of ERISA and Section
412 of the Code), whether or not waived, as of the last day of
the most recently completed fiscal year of such Plan,
20
(iv) there are no "prohibited transactions" (as described in Section
406 of ERISA or Section 4975 of the Code) with respect to any
Plan for which the Company or any of its Subsidiaries has any
liability, nor are any of the assets of any Plan invested in
employer securities or employer real property,
(v) no Plan is subject to Title IV of ERISA, or if subject, there
have been no "reportable events" (as described in Section 4043
of ERISA) as to which there is any material risk of termination
of such Plan,
(vi) no material liability to the PBGC has been or is expected by
the Company to be incurred by the Company or any of its
Subsidiaries with respect to any Plan, and there has been no
event or condition which presents a material risk of termination
of any Plan by the PBGC,
(vii) with respect to each Plan subject to Title IV of ERISA, the
amount for which Company or any of its Subsidiaries would be
liable pursuant to the provisions of Sections 4062, 4063 or 4064
of ERISA would be zero if such Plans terminated on the date of
this Agreement,
(viii) no notice of intent to terminate a Plan has been filed with,
nor has any Plan been terminated pursuant to the provisions of
Section 4041 of ERISA,
(ix) the PBGC has not instituted proceedings to terminate (or
appointed a trustee to administer) a Plan and no event has
occurred or condition exists which might constitute grounds
under the provisions of Section 4042 of ERISA for the
termination of (or the appointment of a trustee to administer)
any such Plan,
(x) no Plan or Benefit Arrangement covers any employee or former
employee of the Company or any of its Subsidiaries that could
give rise to the payment of any amount that would not be
deductible pursuant to the terms of section 280G of the Code,
(xi) there are no Claims (other than routine claims for benefits)
pending or threatened involving any Plan or Benefit
Arrangement or any of the assets thereof,
(xii) except as set forth in Section 3.12(a) of the Disclosure
Letter (which entry, if applicable, will indicate the present
value of accumulated plan liabilities calculated in a manner
consistent with FAS 106 and the actual annual expense for such
benefits for each
21
of the last two (2) years) and pursuant to the provisions of
COBRA, neither the Company nor any of its Subsidiaries maintains
any Plan that provides benefits described in Section 3(1) of
ERISA to any former employees or retirees of the Company or any
of its Subsidiaries,
(xiii) all reports, returns and similar items required to be filed
with any Authority or distributed to employees and/or Plan
participants in connection with the maintenance or operation of
any Plan or Benefit Arrangement have been duly and timely filed
and distributed, and there have been no acts or omissions by the
Company or any of its Subsidiaries, which have given rise to or
may reasonably be expected to give rise to fines, penalties,
taxes or related charges under Sections 502(c), 502(i) or 4071
or ERISA or Chapter 43 or Section 6039D of the Code for which
the Company or any of its Subsidiaries may be liable,
(xiv) neither the Company nor any of its Subsidiaries nor any of its
respective directors, officers or employees has committed, nor
to the best of the Company's knowledge has any other fiduciary
committed, any breach of the fiduciary responsibility standards
imposed by ERISA that would subject the Company or any of its
Subsidiaries or any of its respective directors, officers or
employees to liability under ERISA,
(xv) to the extent that the most recent balance sheet forming part
of the Financial Statements does not include a pro rata amount
of the contributions which would otherwise have been made in
accordance with past practices for the Plan years which include
the Financing Closing Date, such amounts are set forth in
Section 3.12(a) of the Disclosure Letter,
(xvi) the Company has furnished to VIALOG a copy of the three most
recently filed annual reports (IRS Form 5500) series and
accountant's opinion, if applicable, for each Plan (and the
three most recent actuarial valuation reports for each Plan, if
any, that is subject to Title IV of ERISA), and all information
provided by the Company to any actuary in connection with the
preparation of any such actuarial valuation report was true,
correct and complete in all material respects,
(b) Neither the Company nor any of its Subsidiaries is or ever has been
a party to any Multiemployer Plan or made contributions to any such plan.
22
(c) Section 3.12(c) of the Disclosure Letter sets forth the basis of
funding, and the current status of, any past service liability with respect to
each Employment Arrangement to which the same is applicable.
3.13 Absence of Sensitive Payments. The Company has not, nor has any
-----------------------------
Subsidiary, or, to the Company's knowledge, any of its or any Subsidiary's
officers, directors, employees or Representatives, (a) made any contributions,
payments or gifts to or for the private use of any governmental office, employee
or agent where either the payment or the purpose of such contribution, payment
or gift is illegal under the laws of the United States or the jurisdiction in
which made, (b) established or maintained any unrecorded fund or asset for any
purpose or made any false or artificial entries on its books, or (c) made any
payments to any person with the intention or understanding that any part of such
payment was to be used for any purpose other than that described in the
documents supporting the payment.
3.14 Inapplicability of Specified Statutes. Neither the Company nor any
-------------------------------------
Subsidiary is a "holding company", or a "subsidiary company" or an "affiliate"
or a "holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, or an "investment company" or a company
"controlled" by or acting on behalf of an "investment company", as defined in
the Investment Company Act of 1940, as amended.
3.15 Authorized and Outstanding Capital Stock.
----------------------------------------
(a) The authorized and outstanding capital stock of the Company is as
set forth in Section 3.15(a) of the Disclosure Letter. All of such outstanding
capital stock has been duly authorized and validly issued, is fully paid and
non-assessable and is not subject to any preemptive or similar rights. Except as
set forth in Section 3.15(a) of the Disclosure Letter, (i) there is neither
outstanding nor has the Company or any Subsidiary agreed to grant or issue any
shares of its capital stock or any Option Security or Convertible Security, and
(ii) neither the Company nor any Subsidiary is a party to or is bound by any
agreement or commitment pursuant to which it is obligated to purchase, redeem or
otherwise acquire any shares of capital stock or any Option Security or
Convertible Security. Between the date of this Agreement and the Effective Time,
the Company will not, and will not permit any Subsidiary to, issue, sell or
purchase or agree to issue, sell or purchase any capital stock or any Option
Security or Convertible Security of the Company or any Subsidiary. As of the
Effective Time, the rights of the holders of all Option Securities and
Convertible Securities issued by the Company to exercise or convert such
Securities will have been terminated pursuant to the terms thereof.
(b) All of the outstanding capital stock of the Company is owned by the
Stockholders as set forth in Section 3.15(b) of the Disclosure Letter, and is,
to the Company's knowledge, free and clear of all Liens, except as set forth in
Section 3.15(b) of the Disclosure Letter. To the Company's knowledge, no Person,
and no group of Persons acting in concert, owns as much as five percent (5%) of
the Company's outstanding Common Stock, and the Company is not controlled by any
other Person, except as set forth in Section 3.15(b) of the Disclosure Letter.
23
3.16 Employment Arrangements.
-----------------------
(a) Neither the Company nor any Subsidiary has any obligation or
liability, contingent or other, under any Employment Arrangement (whether or not
listed in Section 3.12(a) of the Disclosure Letter), other than those listed or
described in Section 3.16(a) of the Disclosure Letter. Neither the Company nor
any Subsidiary is now or during the past five (5) years has been subject to or
involved in or, to the Company's knowledge, threatened with any election for the
certification of a bargaining representative for any employees, petitions
therefor or other organizational activities, including but not limited to
voluntary requests for recognition as a bargaining representative, or
organizational campaigns of any nature, except as described in Section 3.16(a)
of the Disclosure Letter. None of the employees of the Company or any Subsidiary
are now, or during the past five (5) years have been, represented by any labor
union or other employee collective bargaining organization. Neither the Company
nor any Subsidiary are parties to any labor or other collective bargaining
agreement, and there are no pending grievances, disputes or controversies with
any union or any other employee collective bargaining organization of such
employees, or, to the Company's knowledge, threats of strikes, work stoppages or
slowdowns or any pending demands for collective bargaining by any union or other
such organization. The Company and each Subsidiary have performed all
obligations required to be performed under all Employment Arrangements and are
not in breach or violation of or in default or arrears under any of the terms,
provisions or conditions thereof.
(b) Except as set forth in Section 3.16(b) of the Disclosure Letter, no
employee will accrue or receive additional benefits, service or accelerated
rights to payments of benefits under any Employment Arrangement, including the
right to receive any parachute payment, as defined in Section 280G of the Code,
or become entitled to severance, termination allowance or similar payments as a
direct result of the transactions contemplated by this Agreement.
(c) The Company considers its and each Subsidiary's relationships with
employees to be appropriate, and except as set forth in Section 3.16(c) of the
Disclosure Letter, neither the Company nor any Subsidiary has experienced a work
slowdown or stoppage due to labor problems. Neither the Company nor any
Subsidiary has received notice of any claim that it has failed to comply with
any federal or state law, or is the subject of any investigation by any federal
or state agency to determine compliance with any federal or state law, relating
to the employment of labor, including any provisions relating to wages, hours,
collective bargaining, the payment of taxes, discrimination, equal employment
opportunity, employment discrimination, worker injury and/or occupational
safety, nor to the knowledge of the Company is there any basis for such a claim.
(d) Neither the Company nor any Subsidiary has conducted, and on or prior
to the Effective Time will not conduct, a "plant closing" or "mass layoff" of
employees of the Company or any Subsidiary as defined by the Worker Adjustment
and Retraining Notification Act of 1988 ("the WARN Act"), 29 U.S.C. 2101-2109 as
amended, or discharge, layoff, or reduce the hours of work, of employees in a
sufficient number or manner to trigger any state or local law or regulation
conditioning or regulating in any manner the discharge, layoff, or reduction in
hours of employees or the closing of a facility, plant, workplace, division or
24
department, from the date hereof or through the Effective Time or during the
twelve-month period immediately prior thereto.
3.17 Material Agreements.
-------------------
(a) Listed on Section 3.17(a) of the Disclosure Letter are all Material
Agreements relating to the ownership or operation of the business and property
of the Company or any Subsidiary presently held or used by the Company or any
Subsidiary or to which the Company or any Subsidiary is a party or to which it
or any of its property is subject or bound. True, complete and correct copies of
each of the Material Agreements have been furnished by the Company to VIALOG (or
true, complete and correct descriptions thereof have been set forth in Section
3.17(a) of the Disclosure Letter, if any such Material Agreements are oral). All
of the Material Agreements are valid, binding and legally enforceable
obligations of the parties thereto, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies and the Company or one of its
Subsidiaries is validly and lawfully operating its business and owning its
property under each of the Material Agreements. The Company and each Subsidiary
have duly complied with all of the material terms and conditions of each
Material Agreement and have not done or performed, or failed to do or perform
(and there is no pending or, to the knowledge of the Company, threatened Claim
that the Company or any Subsidiary has not complied, done and performed or
failed to do and perform) any act the effect of which would be to invalidate or
provide grounds for the other party thereto to terminate (with or without
notice, passage of time or both) such Material Agreement or impair the rights or
benefits, or increase the costs, of the Company or any Subsidiary, under any of
the Material Agreements.
(b) Each Material Agreement, if any, set forth in Section 3.17(a) of the
Disclosure Letter calling for the delivery of goods or merchandise or the
performance of services can be satisfied or performed by the Company or one of
its Subsidiaries at margins providing an operating profit, except as set forth
in Section 3.17(b) of the Disclosure Letter.
3.18 Ordinary Course of Business.
---------------------------
(a) The Company and each Subsidiary, from the earlier of the date of the
most recent balance sheet forming part of the Financial Statements or December
31, 1997 to the date of this Agreement, and until the Effective Time, except as
may be described in Section 3.18 of the Disclosure Letter or as may be required
or permitted expressly by the terms of this Agreement or as may be approved in
writing by VIALOG:
(i) has operated, and will continue to operate, its business in
the normal, usual and customary manner in the ordinary and
regular course of business, consistent with prior practice,
(ii) has not sold or otherwise disposed of, or contracted to sell
or otherwise dispose of, and will not sell or otherwise dispose
of or contract to sell or otherwise dispose of, any of its
properties or assets, other than in the ordinary course of
business,
25
(iii) except in each case in the ordinary course of business or as
detailed as transactions not in the ordinary course in the
Company's business plan set forth as Section 3.18(a) of the
Disclosure Letter, and except as expressly otherwise
contemplated hereby,
(A) has not incurred and will not incur any obligations or
liabilities (fixed, contingent or other),
(B) has not entered and will not enter into any
commitments, and
(C) has not canceled and will not cancel any debts or claims,
(iv) has not made or committed to make, and will not make or commit
to make, any additions to its property or any purchases of
machinery or equipment, except for normal maintenance and
replacements,
(v) has not discharged or satisfied, and will not discharge or
satisfy, any Lien and has not paid and will not pay any
obligation or liability (absolute or contingent) other than
current liabilities or obligations under contracts then existing
or thereafter entered into in the ordinary course of business,
and commitments under Leases existing on that date or incurred
since that date in the ordinary course of business,
(vi) except in the ordinary course, has not increased and will not
increase the compensation payable or to become payable to any of
its directors, officers, employees, advisers, consultants,
salesmen or agents or otherwise alter, modify or change the
terms of their employment or engagement,
(vii) has not suffered any material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or
taking of property by any Authority,
(viii) has not waived, and will not waive, any rights of material
value without fair and adequate consideration,
(ix) has not experienced any work stoppage,
(x) has not entered into, amended or terminated and will not enter
into, amend or terminate any Lease, Governmental Authorization,
Private Authorization, Material Agreement, Employment
Arrangement, Contractual Obligation or transaction with any
Affiliate, except for terminations in the ordinary course of
business in accordance with the terms thereof,
26
(xi) has not amended or terminated and will not amend or terminate,
and has kept and will keep in full force and effect including
without limitation renewing to the extent the same would
otherwise expire or terminate, all insurance policies and
coverage,
(xii) has not entered into, and will not enter into, any other
transaction or series of related transactions which individually
or in the aggregate is material to the Company or the Company
and its Subsidiaries taken as a whole, except in the ordinary
course of business, and
(xiii) has not, nor has any affiliate (as defined in Section
517.021(1) of the Florida Statutes), transacted business with
the government of Cuba or with any person or affiliate located
in Cuba.
(b) From the end of its most recent fiscal year to the date of this
Agreement, except as described in Section 3.18(b) of the Disclosure Letter,
neither the Company nor any Subsidiary has, or on or prior to the Financing
Closing Date will have, declared, made or paid, or agreed to declare, make or
pay, any Distribution.
3.19 Bank Accounts; Etc. A true and correct and complete list as of the date of
-------------------
this Agreement of all banks, trust companies, savings and loan associations and
brokerage firms in which the Company or any Subsidiary has an account or a safe
deposit box and the names of all Persons authorized to draw thereon, to have
access thereto, or to authorize transactions therein, the names of all Persons,
if any, holding powers of attorney from the Company or any Subsidiary and a
summary statement as to the terms thereof has been previously delivered to
VIALOG or is set forth in Section 3.19 of the Disclosure Letter.
3.20 Adverse Restrictions. Neither the Company nor any Subsidiary is a party to
--------------------
or subject to, nor is any of its property subject to, any Applicable Law,
Governmental Authorization, Contractual Obligation, Employment Arrangement,
Material Agreement or Private Authorization, or any other obligation or
restriction of any kind or character, or any aggregation thereof, which impairs
the Company's or any Subsidiary's ability to conduct its business as it is
currently being conducted or which could have any Adverse Effect on the Company
or the Company and its Subsidiaries taken as a whole, except as set forth in
Section 3.20 of the Disclosure Letter.
3.21 Broker or Finder. No Person assisted in or brought about the negotiation
----------------
of this Agreement, the Merger or the subject matter of the Transactions in the
capacity of broker, agent or finder or in any similar capacity on behalf of the
Company or any Stockholder.
3.22 Personal Injury or Property Damage; Warranty Claims; Etc. Except as set
---------------------------------------------------------
forth in Section 3.22 of the Disclosure Letter, neither the Company nor any
Subsidiary or any Person
27
acting for or on behalf of the Company or any Subsidiary, including without
limitation any insurance carrier, has at any time since December 31, 1997, paid,
and there is not now pending or, to the knowledge of the Company, threatened any
Claim (or any basis for any such Claim) relating to, any damages to any third
party for injuries to Persons or damage to property, or for breach of warranty,
which, in the case of pending or threatened Claims, if determined Adversely to
the Company or any Subsidiary, individually or in the aggregate (taking into
account unasserted Claims of similar nature), could have any Adverse Effect on
the Company or the Company and its Subsidiaries taken as a whole.
3.23 Environmental Matters.
---------------------
(a) Except as set forth in Section 3.23(a) of the Disclosure Letter, the
Company and each Subsidiary:
(i) is in compliance in all material respects with all
Environmental Laws and has not been notified that it is liable
or potentially liable, has not received any request for
information or other correspondence concerning any site or
facility, and is not a "responsible party" or "potentially
responsible party" under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended,
the Resource Conservation Recovery Act of 1976, as amended, or
any similar state law,
(ii) has not entered into or received any consent decree, compliance
order, or administrative order relating to Environmental
Requirements,
(iii) is not a party in interest or in default under any judgment,
order, writ, injunction or decree or any final order relating to
Environmental Requirements, and
(iv) has obtained all material Governmental Authorizations and
Private Authorizations (including without limitation all
Environmental Permits) and made all Governmental Filings which
are required to be filed by the Company and each Subsidiary for
the ownership of its property, facilities and assets and the
operation of its businesses under all Environmental Laws, is and
at all times since its organization has been in material
compliance with the terms and conditions of all such required
Governmental and Private Authorizations and all Environmental
Requirements, and is not the subject of or, to the Company's
knowledge, threatened with any Legal Action involving a demand
for damages or any other potential liability with respect to
violations or breaches of any Environmental Requirement.
(b) Except as set forth in Section 3.23(b) of the Disclosure Letter:
28
(i) no spill, disposal, release, burial or placement of Hazardous
Materials in the soil, air or water has occurred on any property
or facility owned, leased, operated or occupied by the Company
or any Subsidiary during the period that such facilities and
properties were owned, leased, operated or occupied by it or, to
the knowledge of the Company, at any other time or at any other
facility or site to which Hazardous Materials from or generated
by the Company or any Subsidiary may have been taken at any time
in the past,
(ii) there has been no spill, disposal, release, burial or placement
of Hazardous Materials, in the soil, air or water on any
property which could reasonably be expected to result or has
resulted in contamination of or beneath any properties or
facilities owned, leased, operated or occupied by the Company or
any Subsidiary during the period that such facilities and
properties were owned, leased, operated or occupied by it (or,
to the knowledge of the Company, at any other time), and
(iii) no notice has been received by the Company or any Subsidiary
and no Lien has arisen on its or any Subsidiary's properties or
facilities under Environmental Law.
(c) Except as set forth in Section 3.23(c) of the Disclosure Letter,
neither the Company nor any Subsidiary has any above-ground or underground tanks
on property owned, leased, operated or occupied by it for the storage of
Hazardous Materials.
(d) There has not been, and on or prior to the Effective Time, there will
not be, any past or present Events or plans of the Company or any Subsidiary or
any of its predecessors, which, individually or in the aggregate, constitute a
breach of any Environmental Requirements or which, individually or in the
aggregate, may interfere with or prevent continued compliance with all
Environmental Requirements, or which, individually or in the aggregate, may give
rise to any common law, statutory or other legal liability, or otherwise form
the basis of any Claim, assessment or remediation cost, fine, penalty or
assessment based on or related to the transportation, transmission, gathering,
processing, distribution, use, treatment, storage, disposal or handling, or the
emission, discharge, release or threatened release into the environment, of any
Hazardous Material with respect to the Company or any Subsidiary or any of its
predecessors or its or any of their business, operations or property which could
have any Adverse Effect on the Company or the Company and its Subsidiaries taken
as a whole.
(e) Except as set forth in Section 3.23(e) of the Disclosure Letter,
neither the Company nor any Subsidiary has used any Hazardous Materials in the
conduct of its business. To the extent that any Hazardous Materials are so set
forth, Section 3.23(e) of the Disclosure Letter also sets forth (i) a
description of Hazardous Materials used, (ii) the annual volume of each of the
Hazardous Materials used, (iii) the years during which each of the Hazardous
Materials
29
used occurred, and (iv) the Persons to whom such Hazardous Materials were
transferred and/or transported after such use.
(f) Section 3.23(f) of the Disclosure Letter contains a complete and
correct description of all Hazardous Materials generated by the Company or any
Subsidiary which are not set forth in Section 3.23(e), the approximate annual
volumes of each of the Hazardous Materials, and all Persons to whom such
Hazardous Materials have been transferred and/or transported.
(g) No site assessment, audit, study, test or other investigation has been
conducted by or on behalf of the Company or any Subsidiary, nor has the Company
received any notice from any governmental agency, or financial institution as to
environmental matters at any property owned, leased, operated or occupied by the
Company or any Subsidiary, except as set forth in Section 3.23(g) of the
Disclosure Letter.
3.24 Materiality. To the Company's knowledge, the matters and items excluded
-----------
from the representations and warranties set forth in this Article by operation
of the materiality exceptions and materiality qualifications contained in such
representations and warranties, in the aggregate for all such excluded matters
and items, are not and could not reasonably be expected to be Adverse to the
Company or the Company and its Subsidiaries taken as a whole.
3.25 Solvency. As of the execution and delivery of this Agreement, the Company
--------
and the Company and its Subsidiaries taken as a whole are and, as of the
Effective Time, will be solvent.
3.26 Compliance with Regulations Relating to Securities Credit. None of the
---------------------------------------------------------
borrowings, if any, of the Company were incurred or used for the purpose of
purchasing or carrying any security which at the date of its acquisitions was,
or any security which now is, margin stock or other margin security within the
meaning of Regulations T of the Margin Rules or a "security that is publicly
held," within the meaning of the Margin Rules, and the cash portion of the
proceeds from the consummation of the Transactions will not be used for the
purpose of purchasing or carrying any margin stock or other margin security, or
a "security that is publicly held", or any security issued by VIALOG, or in any
way which would involve the Company in any violation of the Margin Rules, and
neither the Company nor any Subsidiary owns any margin stock or other margin
security, or a "security that is publicly held", and neither the Company nor any
Subsidiary has any present intention of acquiring any margin stock or other
margin security, or any "security that is publicly held".
3.27 Certain State Statutes Inapplicable. The provisions of applicable state
-----------------------------------
takeover laws, if any, will not apply to this Agreement, the Merger or the
Transactions.
3.28 Continuing Representations and Warranties. Except for those
-----------------------------------------
representations and warranties which speak as of a specific date, all of the
representations and warranties of the Company set forth in this Article will be
true and correct in all material respects at the Effective Time with the same
force and effect as though made on and as of that date and those, if any, which
speak as a specific date will be true and correct in all material respects as of
such date.
30
3.29 Financing Document. All information furnished by or on behalf of the
------------------
Company or any Stockholder in writing for use in the Financing Document is set
forth in Section 3.29 of the Disclosure Letter and all information relating to
the Company in the Financing Document (a copy of which shall be provided by
VIALOG to the Company and Principal Stockholder for their review) is true,
correct and complete and does not contain any untrue statement of material fact
or omit to state any material fact necessary to make such statements, in the
light of the circumstances in which they were made, not misleading. In the
event any such information, through the occurrence or nonoccurrence of any event
or events between the date of this Agreement and the Effective Time, ceases to
be true, correct and complete or contains any untrue statement of material fact
or omits to state any material fact necessary to make such statements, in the
light of the circumstances in which they were made, not misleading, the Company,
upon discovery thereof will provide VIALOG, in writing, sufficient information
to correct such untrue statement or omission.
3.30 Predecessor Status; Etc. Set forth in Section 3.30 of the Disclosure
------------------------
Letter is a listing of all names of all predecessor companies of the Company and
the names of any Entities from which, since December 31, 1992, the Company
previously acquired material properties or assets. Except as disclosed in
Section 3.30 of the Disclosure Letter, the Company has never been a Subsidiary
or division of another Entity, nor a part of an acquisition which was later
rescinded. None of the Company, the Principal Stockholder or any Subsidiary has
ever owned any capital stock of VIALOG nor, except as set forth in Section 3.30
of the Disclosure Letter, has there been, since December 31, 1992, any sale or
spin-off of material assets by the Company or any Subsidiary other than in the
ordinary course of business.
3.31 Systems Performance. To the Company's knowledge, the Systems used by
--------------------
Company and each of its Subsidiaries are adequate for the conduct of their
business as presently conducted and as proposed to be conducted and there are no
requirements for Systems integration, upgrade or replacement, except as
otherwise disclosed, and there are no inadequacies that could reasonably be
expected to have an adverse effect on the future business operations of VIALOG
Merger Subsidiary. To the Company's knowledge, the Systems perform in accordance
with the written specifications therefor. The Systems' components are capable of
interconnecting or interfacing with each other, and they deliver the
functionality needed to satisfy the information system requirements of the
business of the Company and each Subsidiary as it is presently conducted.
3.32 Year 2000 Compliance.
--------------------
(a) To the Company's knowledge, the software and hardware operated by the
Company are capable of providing or are being adapted or replaced to provide
uninterrupted millennium functionality to record, store, process and present
calendar dates falling on or after January 1, 2000 and date-dependent data in
substantially the same manner and with the same functionality as such software
records, stores, processes and presents such calendar dates and date-dependent
data as of the date hereof, except for the failure to have such capability which
would not, individually or in the aggregate, be reasonably likely to have an
Adverse Effect on the
31
Company. Schedule 3.32(a) of the Disclosure Letter describes actions taken by
the Company and each Subsidiary to address potential Year 2000 compliance
issues.
(b) The Company and each Subsidiary have made written inquiries of their
key suppliers, vendors and customers as to whether such persons are or will be
Year 2000 Compliant. Schedule 3.31(b) of the Disclosure Letter lists all key
suppliers, vendors and customers and includes a form of letter inquiring into
their preparations and status for becoming Year 2000 Compliant and their
response to the Company's inquiry. To the Company's knowledge, these key
suppliers, vendors and customers are Year 2000 Compliant or will be Year 2000
Compliant in a timely manner except as set forth in Section 3.31 of the
Disclosure Letter.
ARTICLE
4
REPRESENTATIONS AND WARRANTIES OF
THE PRINCIPAL STOCKHOLDER
The Principal Stockholder represents, warrants and covenants to, and agrees
with, VIALOG and VIALOG Merger Subsidiary as follows:
4.1 Organization. The Principal Stockholder (if other than an individual) is an
------------
Entity duly organized, validly existing and in good standing under the laws or
its jurisdiction of organization.
4.2 Power and Authority. The Principal Stockholder (if other than an
-------------------
individual) has adequate power and authority (corporate, partnership, trust or
other) and all necessary Governmental Authorizations and Private Authorizations
in order to enable it to execute and deliver, and to perform its obligations
under, this Agreement and each other Collateral Document executed or required to
be executed pursuant hereto or thereto. The execution, delivery and performance
of this Agreement and each other Collateral Document executed or required to be
executed pursuant hereto or thereto have, to the extent applicable, been duly
authorized by all requisite corporate, partnership, trust or other action,
including that, if required, the Principal Stockholder's stockholders or
partners.
4.3 Enforceability. This Agreement has been duly executed and delivered by the
--------------
Principal Stockholder and constitutes, and each Collateral Document executed or
required to be executed by the Principal Stockholder pursuant hereto or thereto
when executed and delivered by such Principal Stockholder will constitute legal,
valid and binding obligations of such Principal Stockholder, enforceable in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies.
4.4 Title to Shares. Except as set forth in Section 4.4 of the Disclosure
---------------
Letter (all of which exceptions will be removed, satisfied or discharged no
later than the Merger Closing),
32
each of the Principal Stockholder owns and has good and merchantable title to
those Shares owned by such Principal Stockholder and to be exchanged pursuant to
this Agreement, free and clear or all Liens.
4.5 No Conflict; Required Filings and Consents. Neither the execution and
------------------------------------------
delivery of this Agreement or any Collateral Document executed or required to be
executed pursuant hereto or thereto, nor the consummation of the Merger and the
Transactions, nor compliance with the terms, conditions and provisions hereof or
thereof by the Principal Stockholder:
(a) will materially conflict with, or result in a breach or violation of,
or constitute a default under, any Applicable Law on the part of such
Stockholder or will conflict with, or result in a material breach or violation
of, or constitute a material default in the performance, observance or
fulfillment of, or a material default under, or permit the acceleration of any
obligation or liability in, or, but for any requirements of notice or passage of
time or both, would constitute such a conflict with, breach or violation of, or
default under, or permit any such acceleration in, any Contractual Obligation of
such Principal Stockholder,
(b) will result in or permit the creation or imposition of any Lien upon
any property or asset of such Principal Stockholder used or now contemplated to
be used by the Company, or
(c) will require any Governmental Authorization or Governmental Filing or
Private Authorization, except for filing requirements in connection with the
Merger and the Transactions and as the Securities Act or applicable state
securities laws may apply to compliance by such Principal Stockholder with the
provisions of this Agreement relating to the Financing, pursuant to the HSR Act
(if applicable) or as set forth in Section 4.5 of the Disclosure Letter.
ARTICLE
5
REPRESENTATIONS AND WARRANTIES OF VIALOG
AND VIALOG MERGER SUBSIDIARY
VIALOG and VIALOG Merger Subsidiary, jointly and severally, represent,
warrant and covenant to, and agree with, the Company as follows:
5.1 Organization and Qualification. VIALOG is a corporation duly incorporated,
------------------------------
validly existing and in good standing under the laws of Massachusetts. VIALOG
Merger Subsidiary is a corporation duly incorporated, validly existing and in
good standing under the laws of Delaware.
5.2 Power and Authority. Except for such consents of Authorities as may be
-------------------
necessary in connection with change-of-control transactions with respect to
Governmental Authorities listed in Section 3.1(c) of the Disclosure Letter, each
of VIALOG and VIALOG Merger
33
Subsidiary has all requisite power and authority (corporate and other) and has
in full force and effect all Governmental Authorizations and Private
Authorizations in order to enable it to execute and deliver, and to perform its
obligations under, this Agreement and each Collateral Document executed or
required to be executed pursuant hereto or thereto and to consummate the Merger
and the Transactions. The execution, delivery and performance of this Agreement
and each Collateral Document executed or required to be executed pursuant hereto
or thereto have been duly authorized by all requisite corporate or other action.
This Agreement has been duly executed and delivered by each of VIALOG and VIALOG
Merger Subsidiary and constitutes, and each Collateral Document executed or
required to be executed pursuant hereto or thereto when executed and delivered
by it will constitute, legal, valid and binding obligations of VIALOG and VIALOG
Merger Subsidiary, respectively, enforceable in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally or the availability of equitable
remedies.
5.3 No Conflict; Required Filings and Consents. Except for such consents of
------------------------------------------
Authorities as may be necessary in connection with change-of-control
transactions with respect to Governmental Authorities listed in Section 3.1(c)
of the Disclosure Letter, neither the execution and delivery of this Agreement
or any Collateral Document executed or required to be executed pursuant hereto
or thereto, nor the consummation of the Transactions, nor compliance with the
terms, conditions and provisions hereof or thereof by each of VIALOG and VIALOG
Merger Subsidiary:
(a) will conflict with, or result in a breach or violation of, or
constitute a default under the Articles of Organization or Certificate of
Incorporation, Bylaws or any Applicable Law on the part of VIALOG or VIALOG
Merger Subsidiary or will conflict with, or result in a breach or violation of,
or constitute a default under, or permit the acceleration of any obligation or
liability in, or but for any requirement of giving of notice or passage of time
or both would constitute such a conflict with, breach or violation of, or
default under, or permit any such acceleration in, any Contractual Obligation of
VIALOG or VIALOG Merger Subsidiary, or
(b) will require any Governmental Authorization or Governmental Filing or
Private Authorization, except for filing requirements under Applicable Law in
connection with the Merger and the Transactions and as the Securities Act and
applicable state securities laws may apply to compliance by VIALOG with the
provisions of this Agreement relating to the Financing and except pursuant to
the HSR Act (if applicable).
5.4 Financing. On the Financing Closing Date VIALOG will have sufficient funds
---------
or available financing to enable the Surviving Corporation to pay the Aggregate
Merger Consideration for all Shares of the Company Stock as provided in Section
2.1(a), the consideration for each Option Security and each Convertible Security
as provided in Section 2.4, and all fees and expenses related to the Merger.
5.5 Broker or Finder. Except for the Underwriter the fees and expenses of
----------------
which (other than pursuant to the Underwriting Agreement) are solely the
responsibility of VIALOG, no Person assisted in or brought about the negotiation
of this Agreement or the subject matter of the
34
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of VIALOG or VIALOG Merger Subsidiary.
5.6 Prior Activities of VIALOG Merger Subsidiary. VIALOG Merger Subsidiary has
--------------------------------------------
not incurred any liabilities or Contractual Obligations, except those incurred
in connection with its organization and ordinary course business operations, the
negotiation of this Agreement and the performance of this Agreement, the
proposed Financing, and the performance of all other Governmental Filings.
5.7 Capitalization of VIALOG Merger Subsidiary. All shares of common stock of
------------------------------------------
VIALOG Merger Subsidiary held by VIALOG have been duly authorized and validly
issued to VIALOG and are fully paid and non-assessable and are not subject to
any preemptive or similar rights.
5.8 Financing Document. The Financing Document and any amendments thereto will
------------------
comply when the Financing Document becomes effective in all material respects
with the provisions of the Securities Act and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Financing Document will not as of the issue date thereof contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations and
warranties contained in this Section 5.8 will not apply to statements or
omissions in the Financing Document based on information relating to the
Underwriter furnished to VIALOG in writing by the Underwriter, or based on
information relating to any of the Other Participating Companies or its
stockholders furnished to VIALOG in writing by such Participating Company or any
of its stockholders, or the Company or the Stockholders furnished to VIALOG in
writing by the Company or any of the Stockholders. VIALOG will furnish the
Company with a copy of the Financing Document and of each amendment thereto
until the Merger Closing and thereafter will furnish the Principal Stockholder
with each amendment thereto and any final Financing Document.
5.9 Financing Commitment. The Financing shall be a firm commitment financing.
--------------------
5.10 Continuing Representations and Warranties. Except for those
-----------------------------------------
representations and warranties which speak as a specific date, all of the
representations and warranties of VIALOG and the VIALOG Merger Subsidiary set
forth in this Article will be true and correct in all material respects on the
Financing Closing Date with the same force and effect as though made on and as
of that date, and those, if any, which speak as of a specific date will be true
and correct in all material respects as of such date.
35
ARTICLE
6
ADDITIONAL COVENANTS
6.1 Access to Information; Confidentiality.
--------------------------------------
(a) The Company will afford to VIALOG and the Representatives of VIALOG
full access during normal business hours throughout the period prior to the
Effective Time to all of its (and its Subsidiaries') properties, books,
contracts, commitments and records (including without limitation Tax Returns)
and, during such period, will furnish promptly upon request (i) a copy of each
report, schedule and other document filed or received by any of them pursuant to
the requirements of any Applicable Law (including without limitation federal or
state securities laws) or filed by any of them with any Authority in connection
with the Transactions or which may have a material effect on their respective
businesses, operations, properties, prospects, personnel, condition (financial
or other), or results of operations, (ii) to the extent not provided for
pursuant to the preceding clause, (A) all financial records, ledgers, workpapers
and other sources of financial information processed or controlled by the
Company or its accountants deemed by the Accountants necessary or useful for the
purpose of performing an audit of the Company and the Company and its
Subsidiaries taken as a whole and certifying financial statements and financial
information and (B) all other information relating to the Company, its
Subsidiaries and Stockholders that VIALOG or its Representatives requires, in
either case for inclusion in or in support of the Financing Document, and (iii)
such other information concerning any of the foregoing as VIALOG will reasonably
request. Subject to the terms and conditions of the Confidentiality Letter (as
defined below), which are expressly incorporated in this Agreement by reference
for the benefit of the parties hereto, VIALOG will hold and will use
commercially reasonable efforts to cause the Representatives of VIALOG to hold,
in strict confidence all non-public documents and information furnished (whether
prior or subsequent hereto) to VIALOG as the case may be, in connection with the
Transactions. The cost of performing such due diligence shall be the
responsibility of VIALOG.
(b) VIALOG will afford to the Company and the Representatives of the
Company full access during normal business hours throughout the period prior to
the Effective Time to all of its (and its Subsidiaries') properties, books,
contracts, commitments and records (including without limitation Tax Returns)
and, during such period, will furnish promptly upon request (i) a copy of each
report, schedule and other document filed or received by any of them pursuant to
the requirements of any Applicable Law (including without limitation federal or
state securities laws) or filed by any of them with any Authority in connection
with the Transactions or which may have a material effect on their respective
businesses, operations, properties, prospects, personnel, condition (financial
or other), or results of operations, (ii) to the extent not provided for
pursuant to the preceding clause, (A) all financial records, ledgers, workpapers
and other sources of financial information processed or controlled by VIALOG or
its accountants and (B) all other information relating to VIALOG and its
Subsidiaries that the Company or its Representatives requires, and (iii) such
other information concerning any of the foregoing as the
36
Company will reasonably request. Subject to the terms and conditions of the
Confidentiality Letter (as defined below), which are expressly incorporated in
this Agreement by reference for the benefit of the parties hereto, the Company
will hold and will use commercially reasonable efforts to cause the
Representatives of the Company to hold in strict confidence all non-public
documents and information furnished (whether prior or subsequent hereto) to the
Company in connection with the Transactions. The cost of performing such due
diligence shall be the responsibility of the Stockholders.
(c) Subject to the terms and conditions of the Confidentiality Letter,
VIALOG and the Company may disclose such information as may be necessary in
connection with seeking all Governmental and Private Authorizations or that is
required by Applicable Law to be disclosed. In the event that this Agreement is
terminated in accordance with its terms, VIALOG and the Company will each
promptly redeliver all non-public written material provided pursuant to this
Section or any other provision of this Agreement or otherwise in connection with
the Merger and the Transactions and will not retain any copies, extracts or
other reproductions in whole or in part of such written material other than one
copy thereof which will be delivered to independent counsel for such party.
(d) The Company and VIALOG acknowledge that the Company and VIALOG
executed one or more Confidential Disclosure Agreements (collectively, the
"Confidentiality Letter"), which separately and as incorporated in this
Agreement will remain in full force and effect after and notwithstanding the
execution and delivery of this Agreement, and that information obtained from the
Company by VIALOG, or its Representatives or by the Company or its
Representatives from VIALOG pursuant to Section 6.1(a), the Confidentiality
Letter or otherwise will be subject to the provisions of the Confidentiality
Letter.
(e) No investigation pursuant to this Section 6.1 will affect any
representation or warranty in this Agreement of any party or any condition to
the obligations of the parties.
6.2 Agreement to Cooperate.
----------------------
(a) Each of the Parties will use good faith best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under Applicable Law to consummate the Merger and
make effective the Transactions, including using good faith best efforts (i) to
prepare and file with the applicable Authorities as promptly as practicable
after the execution of this Agreement all requisite applications and amendments
thereto, together with related information, data and exhibits, necessary to
request issuance of orders approving the Merger and the Transactions by all such
applicable Authorities, each of which must be obtained or become final in order
to satisfy the conditions applicable to it set forth in Section 7; (ii) to
obtain all necessary or appropriate waivers, consents and approvals, (iii) to
effect all necessary registration, filings and submissions (including without
limitation the Financing Document, any filings under the Securities Act or the
HSR Act and any other submissions required or requested by any Authority, and
(iv) to lift any injunction or other legal bar to the Merger and the
Transactions (and, in such case, to proceed with the Merger and the Transactions
as expeditiously as possible), subject, however, to the requisite votes of the
37
Stockholders. Each of the Parties recognizes that the consummation of the Merger
and the Transactions may be subject to the pre-merger notification requirements
of the HSR Act. Each agrees that, to the extent required by Applicable Law to
consummate the Merger, it will file with the Antitrust Division of the
Department of Justice and the Federal Trade Commission a Notification and Report
Form in a manner so as to constitute substantial compliance with the
notification requirements of the HSR Act. Each covenants and agrees to use good
faith best efforts to achieve the prompt termination or expiration of any
waiting period or any extensions thereof under the HSR Act.
(b) Each of the Parties agrees to take such actions as may be necessary to
obtain any Governmental Authorizations legally required for the consummation of
the Merger and the Transactions, including the making of any Governmental
Filings, publications and requests for extensions and waivers.
(c) The Company will use good faith best efforts on or prior to the
Financing Closing Date (i) to obtain the satisfaction of the conditions
specified in Sections 7.1 and 7.2; (ii) if requested by VIALOG, to seek the
consents (to the extent required) to the continued existence in accordance with
its then-stated terms of all long-term debt of each of the Company and each of
its Subsidiaries; and (iii) to attempt to cause those key employees of the
Company and its Subsidiaries designated by VIALOG that are not Stockholders to
execute and deliver non-competition agreements substantially conforming in form
and substance to the non-competition agreements currently maintained by VIALOG
with its key employees in the form attached as Exhibit 6.2(c). Each of VIALOG
--------------
and VIALOG Merger Subsidiary will use its best efforts on or prior to the
Financing Closing Date to obtain the satisfaction of the conditions applicable
to it specified in Sections 7.1 and 7.3. The Principal Stockholder will use good
faith best efforts to obtain the satisfaction of the conditions applicable to
the Principal Stockholder in Section 7.2.
(d) The Company agrees that, except as set forth in Section 3.19 of the
Disclosure Letter, prior to the Financing Closing Date it will not make or
permit to be made any material change affecting any bank, trust company, savings
and loan association, brokerage firm or safe deposit box or in the names of the
Persons authorized to draw thereon, to have access thereto or to authorize
transactions therein or in such powers of attorney, or open any additional
accounts or boxes or grant any additional powers of attorney, without in each
case obtaining the prior written consent of VIALOG, which consent VIALOG will
not unreasonably withhold.
(e) The Company will take such steps as are necessary and appropriate to
obtain, and will promptly obtain, satisfaction and discharge of all Liens set
forth in Section 3.15(b) of the Disclosure Letter.
6.3 Assignment of Contracts and Rights. Anything in this Agreement to the
----------------------------------
contrary notwithstanding, this Agreement will not constitute an agreement to
assign any Claim, Contractual Obligation, Governmental Authorization, Lease,
Private Authorization, commitment, sales, service or purchase order, or any
claim, right or benefit arising thereunder or resulting therefrom, if the Merger
or the Transactions would be deemed an attempted assignment thereof without the
required consent of a third party thereto and would constitute a breach thereof
or in
38
any way affect the rights of VIALOG, VIALOG Merger Subsidiary or the Company
thereunder. If such consent is not obtained, or if consummation of the Merger
and the Transactions would affect the rights of the Company thereunder so that
the Surviving Corporation would not in fact receive all such rights, the Company
will cooperate with VIALOG in any arrangement designed to provide for the
benefits thereof to the Surviving Corporation, including subcontracting, sub-
licensing or subleasing to the Surviving Corporation or enforcement for the
benefit of the Surviving Corporation of any and all rights of the Company or its
Subsidiaries against a third party thereto arising out of the breach or
cancellation by such third party or otherwise. Any assumption by the Surviving
Corporation of the Company's rights thereunder by operation of law in connection
with the Merger which will require the consent or approval of any third party
will be made subject to such consent or approval being obtained.
6.4 Audited Financial Statements. The Company agrees to allow VIALOG's
----------------------------
Accountants access to the Company's business as is necessary for the Accountant
to perform and update an audit of the Company's Financial Statements for the
three years ended December 31, 1997 and any interim statements for the periods
ending prior to the Financing Closing Date (the "Audit"). The Company agrees to
promptly prepare such financial statements and update and deliver them to
VIALOG's Accountants. VIALOG shall instruct VIALOG's auditor to promptly audit
such financial statements at VIALOG's expense.
6.5 Conduct of Business.
-------------------
(a) Prior to the Effective Time or the date, if any, on which this
Agreement is earlier terminated, the Company and its Subsidiaries will (i) use
their best efforts to preserve intact their respective business organizations
and good will, keep available the services of their respective officers and
employees as a group and maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with them, (ii)
confer on a regular and frequent basis with one or more representatives of
VIALOG to report operational matters of Materiality and the general status of
ongoing operations, and (iii) notify VIALOG of any emergency or other change in
the normal course of their business and of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) if such emergency, change, complaint, investigation or hearing
would be Material to the business, operations or financial condition of the
Company and its Subsidiaries, taken as a whole.
(b) Except as set forth in Section 6.5(b) of the Disclosure Letter or with
the written permission of VIALOG, the Company agrees further that the Company
(i) will not make, declare or pay any non cash dividends or other non cash
distributions on any shares except as permitted pursuant to Section 6.17 hereof
or the stock of the Company's Subsidiaries or redeem or repurchase or otherwise
acquire any Shares (except cancellation of options and warrants as required in
this Agreement), (ii) will not enter into or terminate any Employment
Arrangement with any director or officer, (iii) will not incur any obligation or
liability (absolute or contingent), except current liabilities incurred, and
obligations under contracts entered into, in the ordinary course of business,
(iv) will not discharge or satisfy any Lien or Encumbrance or pay any obligation
or liability (absolute or contingent) other than current liabilities shown on
its Financial
39
Statements, and current liabilities incurred since those dates in the ordinary
course of business, (v) will not mortgage, pledge, create a security interest
in, or subject to Lien or other Encumbrance any of its assets, tangible or
intangible, (vi) will not sell or transfer any of its tangible assets or cancel
any debts or claims except in each case in the ordinary course of business,
(vii) will not sell, assign, or transfer any trademark, trade name, patent, or
other Intangible Asset, (viii) will not waive any right of any substantial
value, (ix) will not make any material change in the tax procedures or practices
followed by the Company or any of its Subsidiaries, (x) will not make any change
in credit terms offered by the Company or any of its Subsidiaries, (xi) will not
make any capital expenditure or Material Commitment for any additions or
improvements to its or any of its Subsidiary's property, plant or equipment,
(xii) will not amend its capitalization, or issue any stocks, bonds or other
securities, except that the Company may issue shares pursuant to outstanding
Option Securities and Convertible Securities, (xiii) will not enter into, modify
or extend, or promise any bonus or incentive compensation program that was not
in place prior to December 31, 1997 and (xiv) will otherwise conduct its
operation and the operations of its Subsidiaries according to their ordinary and
usual course of business.
6.6 No Solicitation. During the term of this Agreement the Company will not,
---------------
nor will it permit any Subsidiary, or any of the Company's or any Subsidiary's
Representatives (including, without limitation, any investment banker, attorney
or accountant retained by it) to, initiate, or solicit, directly or indirectly,
any inquiries or the making of any proposal with respect to an Other
Transaction, engage in negotiations concerning, or provide to any other person
any information or data relating to it or any Subsidiary for the purposes of, or
otherwise cooperate in any way with or assist or participate in, the making of
any proposal which constitutes, or may reasonably be expected to lead to, a
proposal to seek or effect an Other Transaction, or agree to or endorse any
Other Transaction. Nothing contained in this Section will prohibit the Company
or its Board of Directors from making any disclosure to Stockholders that, in
the reasonable judgment of its Board of Directors in accordance with, and based
upon the written advice of outside counsel, is required under Applicable Law.
During the term of this Agreement the Company will promptly advise VIALOG of,
and communicate the material terms of, any proposal it may receive, or any
inquires it receives which may reasonably be expected to lead to such a proposal
relating to an Other Transaction, and the identity of the Person making it. The
Company will further advise VIALOG of the status and changes in the material
terms of any such proposal or inquiry (or any amendment to any of them) if any
such changes or amendments occur during the term hereof. During the term of
this Agreement, the Company will not enter into any agreement oral or written,
and whether or not legally binding, with any Person that provides for, or in any
way facilitates an Other Transaction, or affects any other obligation of the
Company under this Agreement.
6.7 Directors' and Officers' Indemnification and Insurance.
------------------------------------------------------
(a) From and after the Effective Time, VIALOG and the Surviving
Corporation will indemnify, defend and hold harmless the present and former
officers and directors of the Company against all Claims or amounts that are
paid in settlement of, with the approval of the Surviving Corporation, or
otherwise in connection with any Claim based in whole or in part on
40
the fact that such Person is or was a director or officer of the Company and
arising out of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the Merger and the Transactions), in each case
to the fullest extent permitted under the BCA or the DBCL or the laws of the
Commonwealth of Massachusetts whichever governs and affords the greatest
protection (and will pay any expenses in advance of the final disposition of any
such action or proceeding to each such Person to the fullest extent permitted
under the BCA or the DBCL or the laws of the Commonwealth of Massachusetts, upon
receipt from the Person to whom expenses are advanced of an undertaking to repay
such advances to the extent required under such laws. VIALOG will cause the
Surviving Corporation to, and the Surviving Corporation will observe and comply
with the Company's obligations pursuant to the indemnification agreements, if
any, listed in Section 3.9 of the Disclosure Letter.
(b) This Section 6.7 is intended to be for the benefit of, and will be
enforceable by, the current and former officers and directors of the Company,
their heirs and personal representatives and will be binding on the Surviving
Corporation and its respective successors and assigns.
(c) VIALOG will apply for directors and officers insurance in the amount
of $2,000,000 for the benefit of the directors and officers of VIALOG and the
Surviving Corporations.
(d) The Surviving Corporation will not amend or change its Articles or
Certificate of Incorporation or By-Laws to adopt a lesser standard of
indemnification.
6.8 Notification of Certain Matters. The Company will give prompt notice to
-------------------------------
VIALOG, and VIALOG will give prompt notice to the Company, of (a) the occurrence
or non-occurrence of any Event the occurrence or non-occurrence of which would
be likely to cause in any material respect (i) any representation or warranty of
the Company or VIALOG, as the case may be, contained in this Agreement to be
untrue or inaccurate, or (ii) in the case of the Company or the Principal
Stockholder, any change to be made in the Disclosure Letter and (b) any failure
of the Company or VIALOG, as the case may be, to comply with or satisfy, or be
able to comply with or satisfy, any material covenant, condition or agreement to
be complied with or satisfied by it under this Agreement. The delivery of any
notice pursuant to this Section 6.8 will not limit or otherwise affect the
remedies available hereunder to the Party receiving such notice.
6.9 Public Announcements. Until the earlier of the Effective Time or the
--------------------
termination of this Agreement the Company will consult with VIALOG before
issuing any press release or otherwise making any public statements with respect
to this Agreement, the Merger or any Transaction (including the Participating
Mergers or the termination of this Agreement in such event) and will not issue
any such press release or make any such public statement without the prior
consent of VIALOG. The Company acknowledges and agrees that VIALOG may, without
the prior consent of the Company, issue such press release or make such public
statement as in the reasonable opinion of counsel to VIALOG may be required by
Applicable Law or any listing agreement or arrangement to which VIALOG is a
party with a national securities exchange or the
41
National Association of Securities Dealers, Inc. Notwithstanding anything to the
contrary in the preceding sentence, VIALOG will give one day prior written
notice to the Company of any press release or public statement it may be
required to issue or make and VIALOG agrees to make any changes to such press
releases or public statements as reasonably requested by the Company. VIALOG
will furnish the Company with a copy of any press release or public information
of VIALOG, at a reasonable time prior to its release for publication.
6.10 Conveyance Taxes. The Parties will cooperate with one another in the
----------------
preparation, execution and filing of all Returns, questionnaires, applications,
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp Taxes, any transfer, recording,
registration and other fees, and any similar Taxes which become payable in
connection with the Transactions that are required or permitted to be filed on
or before the Effective Time.
6.11 This Section Intentionally Left Blank.
-------------------------------------
6.12 Employee Benefits; Severance Policy. VIALOG will cause the Surviving
-----------------------------------
Corporation to maintain for a period ending 90 days after the Effective Time:
(a) employee incentive compensation and fringe benefits that are
substantially equivalent to those provided to employees of the Company and its
Subsidiaries as in effect on the date of this Agreement, subject to the right of
VIALOG and the Surviving Corporation to amend or terminate such programs in
accordance with their terms, provided that after any such amendment or
termination the resulting programs continue to be substantially equivalent to
the existing programs, and
(b) employee severance pay and benefits that are substantially
equivalent to the applicable severance programs of the Company and its
Subsidiaries as in effect on the date hereof, subject to the right of VIALOG and
the Surviving Corporation to amend or terminate such programs in accordance with
their terms, provided that after any such amendment or termination, the
resulting programs continue to be substantially equivalent to the existing
programs.
Notwithstanding the foregoing, as soon as convenient after such period, the
Surviving Corporation may, in its sole discretion, substitute employee
compensation, benefit and severance programs for those of the Company as are
consistent with the programs provided to VIALOG's employees and the employees of
VIALOG's Subsidiaries.
6.13 Certain Actions Concerning Business Combinations.
------------------------------------------------
(a) Neither the Principal Stockholder nor any Representative thereof will,
during the period commencing on the date hereof and ending with the earlier to
occur of the Merger Closing or the termination of this Agreement in accordance
with its terms, directly or indirectly (i) solicit or initiate the submission of
proposals or offers from any Person or, (ii) participate in any negotiations
pertaining to, or (iii) furnish any information to any Person other than VIALOG
relating to, any acquisition or purchase of all or a material amount of the
42
assets of, or any equity interest in, the Company or a merger, consolidation or
business combination of the Company or any Subsidiary (other than the Merger).
(b) The Company will not apply, and will not take any action resulting
in the application of, or otherwise elect to apply, the provisions of applicable
state takeover laws, if any, with respect to or as a result of the Merger or the
Transactions.
6.14 Termination of Option Securities and Convertible Securities. The Company
-----------------------------------------------------------
will take all action necessary to terminate the exercise rights of all
outstanding Option Securities and the conversion rights of all Convertible
Securities issued by the Company as of the Effective Time to the extent such
option and conversion rights are not exercised prior to the Merger Closing, and
to provide timely notice to all holders of Option Securities and Convertible
Securities notifying them of such termination. Without the prior written
consent of VIALOG, except as set forth in Section 3.15(a) of the Disclosure
Letter, (a) such termination or notice will not cause an acceleration of the
exercise, conversion or vesting schedule of any Option Security or of any
Convertible Security, and (b) the Company will not otherwise accelerate, or
cause an acceleration of, the exercise, conversion or vesting schedule of any
Option Security or Convertible Security. Prior to the Merger Closing, the
Company will issue Certificates to all holders of properly exercised Option
Securities and properly converted Convertible Securities. Such Certificates
will accurately represent the number of Shares to which such holder is entitled
by virtue of such exercise or conversion and the Company will amend Section
3.15(b) of the Disclosure Letter accordingly.
6.15 Tax Returns. The Principal Stockholder will cause all Tax Returns of the
-----------
Company and its Subsidiaries with respect to taxable periods ending on or before
the Effective Time to be prepared in a manner consistent with past practices and
VIALOG will file such Tax Returns promptly upon receipt thereof from the
Principal Stockholder or the Company. At least thirty days before the due date
(including any extensions) for any such Tax Returns, the Principal Stockholder
or the Company will provide drafts of such Tax Returns to VIALOG for its review
and comment (which reasonable comments will be incorporated into the final Tax
Returns), and VIALOG will cooperate with the Principal Stockholder and provide
the Principal Stockholder with access to any books and records reasonably
necessary for their preparation of such draft Tax Returns. VIALOG will file no
amended Tax Returns with respect to the Company and the Subsidiaries for any
taxable period ending on or before the Effective Time if the Principal
Stockholder reasonably objects thereto and furnishes VIALOG with indemnification
satisfactory in form and substance to it, including without limitation,
indemnification for all interest, penalties and Expenses resulting from the
failure to amend such Tax Returns and all proceedings in connection therewith.
6.16 This Section Intentionally Left Blank.
-------------------------------------
6.17 Distributions; Liabilities; Etc.
-------------------------------
(a) The Company and the Principal Stockholder acknowledge and agree that
(i) prior to the Merger Closing the Company will make no Distributions to
Stockholders, employees of and consultants to the Company, (ii) no later than
Merger Closing, the Company
43
will cause certain Liens to be discharged in their entirety (with financing
statement terminations properly recorded), and (iii) as of Merger Closing, the
Principal Stockholder will indemnify VIALOG for certain liabilities (except to
the extent obligees with respect thereto release the Company and its Affiliates
therefrom), in each case as set forth in the Disclosure Letter. Section 6.17 of
the Disclosure Letter lists each such Distribution, Lien and liability, if any;
(b) The Company agrees that Distributions not permitted pursuant to
Section 3.18 will be made by the Company (or VIALOG or the Surviving Company if
after the Effective Time) only to the extent provided in Section 6.17 of the
Disclosure Letter; and
(c) The Company and the Principal Stockholder further agree that,
notwithstanding anything to the contrary in Section 10.1, they will indemnify
VIALOG and VIALOG Merger Subsidiary against all Claims and Expenses incurred by
VIALOG and VIALOG Merger Subsidiary (or either of them) by virtue of any failure
on the Company's part to secure the discharges from Liens contemplated by
Section 6.17 of the Disclosure Letter or any damage or harm attributable to a
liability to be indemnified against as contemplated by Section 6.17 of the
Disclosure Letter.
6.18 Release from Personal Guarantees and Payment of Indebtedness. On or prior
------------------------------------------------------------
to the Effective Time, VIALOG will:
(a) either obtain releases of the personal guarantees of the Stockholders
of Indebtedness or discharge or arrange for the discharge of such Indebtedness
as soon thereafter as practicable but in no event more than 30 days after the
Effective Time; and
(b) will repay the Indebtedness shown in Section 6.18 of the Disclosure
Letter. VIALOG will either obtain releases of the personal guarantees of the
Stockholders of Contractual Obligations which extend beyond the Effective Time
and or indemnify and hold the Stockholders harmless from such personal
guarantees.
6.19 Financing Document.
------------------
(a) The Company and the Principal Stockholder will furnish to VIALOG all
necessary information concerning the Company and the Principal Stockholder for
VIALOG to prepare the Financing Document.
(b) The Company and the Principal Stockholder have reviewed or have had
reviewed on their behalf, and will be familiar with the information concerning
the Company and the Stockholders (or any of them) in the Financing Document,
which will be furnished to them by VIALOG for their review, and will have no
knowledge of any material fact, condition or information concerning the Company
and the Stockholders misstated or not disclosed in the Financing Document.
44
6.20 Section 338(h)(10) Election.
---------------------------
(a) The Company and the Principal Stockholder agree, and each other
stockholder of the Company will agree to join with VIALOG in making an election
under Section 338(h)(10) of the Code (and any corresponding election under
state, local and foreign tax law) with respect to the purchase and sale of the
stock of the Company hereunder (the "Section 338(h)(10) Election"). Each
Stockholder will agree to include any income, gain, loss, deduction or other tax
item resulting from the Section 338(h)(10) Election on its tax returns to the
extent permitted by applicable law and agrees to pay any taxes imposed on the
Company attributed to the making of the Section 338(h)(10) Election, including
but not limited to, (i) any taxes imposed under Section 1374 of the Code, (ii)
any taxes imposed under Regulation Section 1.338(h)(10)-1(e)(5), or (iii) any
state, local or foreign taxes imposed on the Company's gain. At or promptly
following the closing, VIALOG agrees to remit to each of the Stockholders an
amount (the "preliminary reimbursement amount") equal to the amount described in
the following sentence in excess of $100,000, if any. If by reason of such
election, the net after-Tax amount realized by each of the Stockholders
(determined individually) with respect to the Merger Consideration, taking into
account (i) all federal, state and local income Taxes imposed on the
Stockholders as a result of the election, (ii) all costs and expenses of
whatsoever kind or nature incurred by the Stockholders by reason of
participating in such election, including, but not limited to, any reasonable
additional legal or reasonable accounting costs (whether incident to their
review of the final tax return of the Company reflecting such election or the
audit thereof by the Internal Revenue Service or any other Taxing Authority of
the election for that portion of the return relating to the election), or (iii)
any interest or penalties imposed as a consequence of any Tax audit or other
adjustment with respect to the election, is less by more than $100,000 than the
net after-Tax amount which would have been realized by each of the Stockholders
(determined individually) had the Section 338(h)(10) Election not been made,
then VIALOG shall increase the Merger Consideration by such amount which, after
payment of all Taxes payable by the Stockholders for any such increased Merger
Consideration, including any Taxes due with respect to any payment under this
Section 6.20, would result in the same net after-Tax Merger Consideration which
would have been realized by the Stockholders had such election not been made
less the $100,000. The preliminary reimbursement amount will be calculated by
VIALOG's accountants based on information available as of the closing and will
assume that each of the stockholders is in the highest federal and applicable
state income tax brackets. By April 15th of the year following the closing each
of the Stockholders agrees to provide VIALOG's accountants with all information
necessary to permit VIALOG's accountants to adjust the preliminary reimbursement
amount to reflect each of the Stockholder's actual income tax brackets and all
other relevant tax information affecting these calculations (the "final
reimbursement amount"). VIALOG's accountants will provide each of the
Stockholders with a schedule showing their calculation of the final
reimbursement amount within thirty (30) days after receipt of all necessary
information from the Stockholder. VIALOG agrees to reimburse the Stockholders to
the extent that the final reimbursement amount exceeds the preliminary
reimbursement amount, and each of the Stockholders agrees to reimburse VIALOG to
the extent that the preliminary reimbursement amount paid to each of such
Stockholders exceeds the final reimbursement amount, such reimbursement to be
made in each case within thirty (30) days after the final reimbursement amount
is finally determined.
45
(b) If the accountant for the Stockholders disagrees with the final
reimbursement amount, the Stockholders will give written notice thereof to
VIALOG within ten (10) days of receiving the schedule showing the final
reimbursement amount (the "Disagreement Notice"). VIALOG's Accountant and the
accountant for the Stockholders will try to resolve their differences with
respect to the final reimbursement amount within ten (10) days of the date of
the Disagreement Notice. VIALOG's Accountant and the accountant for the
Stockholders will, within ten (10) days of the date of the Disagreement Notice,
give written notice to VIALOG and the Stockholders that they have agreed or
failed to agree upon a final reimbursement amount. In the event VIALOG's
Accountant and the Stockholders' accountant cannot agree on the final
reimbursement amount, VIALOG's Accountants and the accountant for the
Stockholders will appoint a third accountant to determine the final
reimbursement amount within fifteen (15) days of the Disagreement Notice. If
VIALOG's Accountant and the Stockholders cannot agree on an accounting firm to
determine the national accounting firm of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall determine the
final reimbursement amount. The accounting firm selected by VIALOG's Accountant
and the Stockholder's accountant or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as the case may be, will
make the determination of the final reimbursement amount as soon as possible but
in no event later than thirty (30) days after receiving all necessary
information.
6.21 Allocation. The Parties agree to allocate the Aggregate Merger
----------
Consideration (and all other capitalizable costs) among the Company's assets for
all purposes (including financial accounting and tax purposes) in accordance
with the allocation schedule set forth in Section 6.21 of the Disclosure Letter.
6.22 Tax Status. VIALOG, the Company and the Principal Stockholder agree (i) to
----------
use their best efforts to maintain the status of the Merger as a cash reverse
merger pursuant to the Code and (ii) not to take any action to endanger the tax
free status for a period of two (2) years from the Merger Closing.
ARTICLE
7
CLOSING CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
------------------------------------------------------------
respective obligations of each Party to effect the Merger will be subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
or all of which may be waived, in whole or in part, to the extent permitted by
Applicable Law:
(a) This Agreement, the Merger and the Transactions shall have been
approved and adopted in accordance with the BCA by the affirmative vote, or to
the extent permitted by Applicable Law, by written consent, of the Stockholders
holding at least the minimum number of shares of the Company Stock then issued
and outstanding as are required by Applicable Law and the Company's
Organizational Documents for such approval and adoption,
46
(b) No proceeding before any Authority or Claim by any Person shall be
pending, challenging or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or prohibit the consummation of the
Merger or the Financing, or seeking material damages or imposing any Adverse
conditions in connection therewith,
(c) Other than the filing of merger documents in accordance with the BCA
and the DBCL, all authorizations, consents, waivers, orders or approvals
required to be obtained, and all filings, submissions, registrations, notices or
declarations required to be made, by VIALOG or VIALOG Merger Subsidiary and the
Company prior to the consummation of the Merger and the Transactions shall have
been obtained from, and made with, all required Authorities, except for such
authorizations, consents, waivers, orders, approvals, filings, registrations,
notices or declarations the failure to obtain or make would not, assuming
consummation of the Merger, have an Adverse Effect on the Company and the
Company and its Subsidiaries taken as a whole,
(d) (i) The Financing Document shall contain no untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, (ii) the securities
of VIALOG offered in the Financing shall have been sold and purchased subject
only to consummation of the Merger, the Participating Mergers and the
Transactions, (iii) every condition to closing the Financing shall have been
satisfied or properly waived.
7.2 Conditions to Obligations of VIALOG and VIALOG Merger Subsidiary. The
----------------------------------------------------------------
obligations of VIALOG and VIALOG Merger Subsidiary to effect the Merger will be
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by Applicable Law:
(a) The Company shall have complied in all material respects with its
agreements contained in this Agreement, the certificates to be furnished to
VIALOG pursuant to this Section shall be true, correct and complete, all
Collateral Documents shall be reasonably satisfactory in form, scope and
substance to VIALOG and its counsel, and VIALOG and its counsel shall have
received all information and copies of all documents, including records of
corporate proceedings, which they may reasonably request in connection
therewith, such documents where appropriate to be certified by proper corporate
officers,
(b) The Company shall have furnished VIALOG and the Underwriters with the
favorable opinion, dated the Financing Closing Date of ▇▇▇▇▇▇ Westheimer, PC,
Houston, Texas, in the form attached as Exhibit 7.2(b).
--------------
(c) The representations, warranties, covenants and agreements of the
Company contained in this Agreement or otherwise made in writing by it or on its
behalf pursuant to this Agreement or otherwise made in connection with the
Merger and the Transactions shall be true and correct in all material respects
at and as of the Financing Closing Date with the same force and effect as though
made on and as of such date except those which speak as of a certain date which
shall continue to be true and correct in all material respects as of such date
and the Financing Closing Date, each and all of the agreements and conditions to
be performed or satisfied by the Company under this Agreement at or prior to the
Financing Closing Date shall
47
have been duly performed or satisfied in all material respects, and the Company
shall have furnished VIALOG with such certificates and other documents
evidencing the truth of such representations, warranties, covenants and
agreements and the performance of such agreements or conditions as VIALOG shall
have reasonably requested,
(d) The Principal Stockholder shall have executed and delivered to
VIALOG a noncompetition agreement, substantially in the form attached as
Exhibit 7.2(d),
--------------
(e) No Legal Action or other Claim shall be pending or threatened at any
time prior to or on the Financing Closing Date before or by any Authority or by
any other Person seeking to restrain or prohibit, or damages or other relief in
connection with, the execution and delivery of this Agreement or the
consummation of the Merger and the Transactions or which might in the reasonable
judgment of VIALOG have any Adverse Effect on the Company or the Company and its
Subsidiaries taken as a whole or, assuming consummation of the Merger and the
Participating Mergers, VIALOG and its Subsidiaries taken as a whole,
(f) The filing and waiting period requirements (if applicable) under the
HSR Act relating to the consummation of the Merger and the Participating Mergers
shall have been complied with,
(g) All actions taken by the Stockholders to approve and adopt this
Agreement, the Merger and the Transactions shall comply in all respects with and
shall be legal, valid, binding, enforceable and effective under the Law of the
jurisdiction of incorporation of the Company, its Organizational Documents and
all Material Agreements to which it or any of its Subsidiaries is a party or by
which it or any of them or any of its or any of their property or assets is
bound,
(h) The Company shall have obtained consents to the assignment and
continuation of all Material Agreements which, in the reasonable judgment of
VIALOG or its counsel, require such consents, including appropriate binders or
consents as to policies of insurance to be assigned to VIALOG or the Surviving
Corporation under this Agreement. The Company shall have obtained satisfaction
and discharge of all Liens set forth in Section 3.15(b) of the Disclosure
Letter, and shall have obtained, on terms and conditions reasonably satisfactory
to VIALOG, all Governmental Authorizations and Private Authorizations, and all
modifications of Contractual Obligations relating to Indebtedness, which VIALOG
deems, reasonably necessary or desirable in order to own and operate and conduct
the business of the Surviving Corporation, substantially on the basis heretofore
owned, operated and conducted by the Company and proposed to be owned, operated
and conducted by VIALOG,
(i) Between the date of this Agreement and the Effective Time, there
shall not have occurred and be continuing any Adverse Change affecting the
Company or the Company and its Subsidiaries taken as a whole from the condition
thereof (financial and other) reflected in the Financial Statements or in the
audited financial statements prepared by the Accountants as contemplated by
Section 6.4 or in the most recent financial statements set forth in the
Financing Document,
48
(j) VIALOG shall have received from its Accountants, a certificate or
letter, dated the Financing Closing Date, to the effect that, on the basis of a
limited review in accordance with the standards for such reviews promulgated by
the American Institute of Certified Public Accountants as outlined in Statement
of Standards of Accounting and Review Services No. 1, they have no reason to
believe that the unaudited financial statements set forth in the Financing
Document were not prepared in accordance with GAAP and practices consistent with
those followed in the preparation of the audited financial statements audited by
the Accountants as contemplated by Section 6.4, or that any material
modifications of such unaudited financial statements are required for a fair
presentation of the financial position or results of operations or changes in
financial position of the Company or that during the period from the last day
covered by the most recent financial statements set forth in the Financing
Document prepared by the Accountants as contemplated by Section 6.1(a) to a date
not more than five (5) days prior to the Financing Closing Date, there has been
any Adverse Change in the financial position or results of the operations of the
Company or the Company and its Subsidiaries taken as a whole which is not
described in the Financing Document,
(k) No Law shall have been enacted or made by or on behalf of any
Authority nor shall any legislation have been introduced and favorably reported
for passage to either House of Congress by any committee, nor shall any Legal
Action by any Authority have been commenced or threatened, nor shall any
decision, order or other action of any Authority have been rendered or taken,
which in VIALOG's reasonable judgment, could have any Adverse Effect on the
Company or the Company and its Subsidiaries taken as a whole, or could restrain,
prevent or change the Merger or the Transactions or Adversely Affect the ability
of the Principal Stockholder to perform its obligations under this Agreement, or
Adversely Affect the ability of VIALOG to continue to own, operate and conduct
the business of the Surviving Corporation, substantially on the basis heretofore
owned, operated and conducted by the Company and as proposed to be owned,
operated and conducted by the Surviving Corporation,
(l) VIALOG shall have received copies of any environmental audits the
Company has received in respect of all real property owned or leased by the
Company or any of its Subsidiaries. VIALOG, in its sole discretion and at its
sole expense, may engage an independent environmental engineer to perform such
audits and the results thereof shall not be materially inconsistent with the
representations and warranties set forth in Section 3.23,
(m) Each of the directors of the Company and each of its Subsidiaries and
each trustee under each Plan shall have submitted his or her unqualified written
resignation, dated as of the Financing Closing Date,
(n) The Principal Stockholder shall have delivered to VIALOG an agreement,
substantially in the form attached as Exhibit 7.2(n), dated the Financing
--------------
Closing Date, releasing the Company and its Subsidiaries from any and all Claims
against them (other than Claims arising from such Principal Stockholder having
acted as a director or officer of the Company or such Subsidiary as contemplated
by Section 6.7),
49
(o) VIALOG shall have received a letter from its Accountants to the
effect that the Merger and the Transactions qualify as a cash reverse merger
pursuant to the Code and will not result in any taxable income or gain or
deductible loss to the Company, VIALOG or VIALOG Merger Subsidiary.
(p) The Company shall not have suffered any material damage, destruction
or loss (whether or not covered by insurance) or any material acquisition or
taking of property by any Authority, nor shall it have experienced any material
work stoppage,
(q) Except for such leases and other Contractual Obligations as are set
forth on Section 7.2(q) of the Disclosure Letter and are executed, delivered and
effective as of the Effective Time, all Contractual Obligations set forth in
Section 3.9 of the Disclosure Letter shall have been satisfied and discharged as
of the Financing Closing Date,
(r) The representations, warranties, covenants and agreements of the
Principal Stockholder contained in this Agreement or otherwise made in writing
by or on behalf of the Principal Stockholder pursuant to this Agreement or
otherwise made in connection with the Merger and the Transactions shall be true
and correct in all material respects at and as of the Financing Closing Date
with the same force and effect as though made on and as of such date except
those which speak as of a certain date which shall continue to be true and
correct in all material respects as of such date and on the Financing Closing
Date. Each and all of the agreements and conditions to be performed or satisfied
by the Principal Stockholder under this Agreement at or prior to the Financing
Closing Date, including without limitation the provisions set forth in Section
6.19, shall have been duly performed or satisfied in all material respects, and
the Principal Stockholder shall have furnished VIALOG with such certificates and
other documents evidencing the truth of such representations, warranties,
covenants and agreements and the performance of such agreements or conditions as
VIALOG or its counsel shall have reasonably requested,
(s) ▇▇▇▇▇ ▇▇▇▇▇▇ shall have executed and delivered to VIALOG an
employment and noncompetition agreement, substantially in the form attached
as Exhibit 7.2(s),
--------------
(t) The individuals listed in Section 7.2(t) of the Disclosure Letter,
shall have executed and delivered to VIALOG an Employment Arrangement
substantially in the form attached as Exhibit 7.2(t), and
(u) The Company shall have entered into (i) a written sublease with
Telesystems for the space occupied by the Company, (ii) written agreements with
Telesystems for the use of long distance, local access, security system and
copier, and (iii) in the case of (i) and (ii) above in each case reasonably
acceptable to VIALOG.
7.3 Conditions to Obligations of the Company. The obligations of the Company
----------------------------------------
to effect the Merger will be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which may be waived,
in whole or in part to the extent permitted by Applicable Law:
50
(a) Each of VIALOG and VIALOG Merger Subsidiary shall have complied in all
material respects with its agreements contained in this Agreement, and the
certificates to be furnished to the Company pursuant to this Section shall be
true, correct and complete. All Collateral Documents shall be reasonably
satisfactory in form, scope and substance to the Company and its counsel, and
the Company and its counsel shall have received all information and copies of
all documents, including records of corporate proceedings, which they may
reasonably request in connection therewith, such documents where appropriate to
be certified by proper corporate officers,
(b) VIALOG shall have furnished the Company and the Principal Stockholder
with the favorable opinion dated the Financing Closing Date of ▇▇▇▇▇▇,
▇'▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, counsel to VIALOG and VIALOG Merger
Subsidiary in the form attached as Exhibit 7.3(b).
--------------
(c) The representations, warranties, covenants and agreements of each of
VIALOG and VIALOG Merger Subsidiary contained in this Agreement or otherwise
made in writing by it or on its behalf pursuant to this Agreement or otherwise
made in connection with the Merger and the Transactions shall be true and
correct in all material respects at and as of the Financing Closing Date with
the same force and effect as though made on and as of such date except those
which speak as of a certain date which shall continue to be true and correct in
all material respects as of such date and on the Financing Closing Date; each
and all of the agreements and conditions to be performed or satisfied by each of
VIALOG and VIALOG Merger Subsidiary under this Agreement at or prior to the
Financing Closing Date shall have been duly performed or satisfied in all
material respects; and each of VIALOG and VIALOG Merger Subsidiary shall have
furnished the Company with such certificates and other documents evidencing the
truth of such representations, warranties, covenants and agreements and the
performance of such agreements or conditions as the Company shall have
reasonably requested,
(d) If executed and delivered to VIALOG by the Merger Closing, the
employment agreements contemplated by Section 7.2(s) and for those persons
listed in Section 7.2(t) of the Disclosure Letter shall have been executed by
the Surviving Corporation and delivered by VIALOG to the indicated person,
(e) No Legal Action or other Claim shall be pending or threatened at any
time prior to or on the Financing Closing Date before or by any Authority or by
any other Person seeking to restrain or prohibit, or damages or other relief in
connection with, the execution and delivery of this Agreement or the
consummation of the Merger and the Transactions or which might in the reasonable
judgment of the Company have any Adverse Effect on VIALOG and its Subsidiaries
or the Company and its Subsidiaries taken as a whole or, assuming consummation
of the Merger and the Participating Agreements, VIALOG and its Subsidiaries
taken as a whole, and
(f) The filing and waiting period requirements (if applicable) under the
HSR Act relating to the consummation of the Merger and the Participating Mergers
shall have been complied with,
51
(g) VIALOG shall have obtained the insurance set forth in Section 6.7(c),
and
(h) The Company shall have received a letter from the Accountants to the
effect that the Merger and the Transactions qualify as a cash reverse merger
pursuant to the Code.
ARTICLE
8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to the
-----------
Effective Time, whether before or after approval of this Agreement, the Merger
and the Transactions as follows:
(a) by mutual consent of the Company and VIALOG.
(b) by either VIALOG or the Company,
(i) if any permanent injunction, decree or judgment by any Authority
preventing the consummation of the Merger or the Financing shall
have become final and nonappealable, or if the terminating party
determines in its reasonable discretion that the Merger has
become inadvisable or impracticable by reason of the institution
by any Authority of other Person of material Legal Action, or
(ii) if the Merger Closing shall not occur on or before the
Termination Date,
(c) by the Company:
(i) in the event of a breach of this Agreement by VIALOG or VIALOG
Merger Subsidiary that has not been cured, or if any
representation or warranty of VIALOG or VIALOG Merger Subsidiary
shall have become untrue in any material respect, in either case
such that such breach or untruth is incapable of being cured by
the Merger Closing or will prevent or delay consummation of the
Merger beyond the Termination Date, or
(d) by VIALOG:
(i) if the Merger and the Transactions fail to receive the approval
required by Applicable Law, by vote (or to the extent permitted
by Applicable Law, by consent) of the Stockholders, or if any
Stockholder entitled to vote (or entitled to appraisal rights)
with respect to the Merger dissents from the Merger and the
Transactions,
52
(ii) if it shall determine in its reasonable discretion that the
Merger or the Transactions has or have become inadvisable or
impracticable by reason of the threat by any Authority, or any
other Person of material Legal Action or proceedings which is
likely to result in material harm to either or both of the
Company and VIALOG (or VIALOG Merger Subsidiary, or a Subsidiary
of any of them), it being understood and agreed that a written
request by governmental authorities (other than the SEC) for
information with respect to the Transactions, which information
could be used in connection with such Legal Action or
proceedings, may be deemed by VIALOG to be a threat of material
Legal Action or proceedings,
(iii) if arrangements reasonably satisfactory to VIALOG cannot be
made for (A) the assumption by the Surviving Corporation
substantially on the terms and conditions in effect as of the
date of this Agreement, or for the prepayment without premium,
of all outstanding Indebtedness of the Company for borrowed
money, or (B) the Financing,
(iv) if the business, assets, prospects, management, condition
(financial or other) or results of operation of the Company or
the Company and its Subsidiaries taken as a whole shall have
been Adversely Affected, whether by reason of changes or
developments in the economy or industry generally or operations
in the ordinary course of business or otherwise,
(v) if the Company shall not have received, without the imposition
of any burdensome condition or material cost, all Governmental
Authorizations and Private Authorizations, or if any Authority
or other Person shall withdraw any such Governmental
Authorizations or Private Authorizations,
(vi) if the terms of this Agreement shall not have been approved by
the Underwriter,
(vii) if the Company shall have suffered any material damage,
destruction or loss (whether or not covered by insurance) or any
material acquisition or taking of property by any Authority, or
if it or any of its Subsidiaries shall have suffered a material
work stoppage,
(viii) in the event of a material breach of this Agreement by the
Company or the Principal Stockholder that has not been cured,
or
53
if any representation or warranty of the Company or the
Principal Stockholder shall have become untrue in any material
respect, so that such breach or untruth is incapable of being
substantially cured by the Merger Closing or will prevent or
delay consummation of the Merger by or beyond the Termination
Date, or if any condition to VIALOG's obligation to close under
this Agreement shall not have been satisfied,
(ix) if the Board of Directors of the Company shall withdraw, modify
or change its recommendation so that it is not in favor of this
Agreement, the Merger or the Transactions, or shall have
resolved to do any of the foregoing (it being agreed and
understood that nothing in this clause, obliges the Company to
effect the Merger if the conditions set forth in Section 7.1 and
Section 7.3 are not satisfied or limits the rights of the
Company to consent to terminate this Agreement pursuant to
Section 8.1(a) or to terminate the Agreement pursuant to Section
8.1(b) or Section 8.1(c)),
(x) if the Board of Directors of the Company shall have recommended
or resolved to recommend to the Stockholders an Other
Transaction,
(xi) if the Company, the Board of Directors of the Company or the
Principal Stockholder shall have taken any action in
contravention of Sections 6.6 or 6.13, or
(xii) if the Principal Stockholder shall fail to vote to approve and
adopt this Agreement, the Merger and the Transactions.
8.2 Effect of Termination. Except as provided in Sections 2.2(a), 2.2(d)
---------------------
6.1(c), 6.1(d), 8.5, 11.2 through 11.10 and Article 12, in the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void, there shall be no liability on the part of any Party, or
any of their respective officers or directors, to the other and all rights and
obligations of any Party shall cease; provided, however, that such termination
will not relieve any Party from liability for the willful breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
8.3 Amendment. This Agreement may be amended by the Parties by action taken by
---------
or on behalf of their respective Boards of Directors and by the Principal
Stockholder at any time prior to the Effective Time; provided, however, that,
after approval of this Agreement and the Merger by the Stockholders, no
amendment, which under Applicable Law may not be made without the approval of
the Stockholders, may be made without such approval. This Agreement may not be
amended to impose any additional material obligation on a Party or to burden or
limit a material right of such Party except by an agreement in writing signed by
the Party so affected.
54
8.4 Waiver. At any time prior to the Effective Time, except to the extent
------
Applicable Law does not permit, either VIALOG or VIALOG Merger Subsidiary and
the Company may (a) extend the time for the performance of any of the
obligations or other acts of the other, subject, however, to the terms and
conditions of Section 8.1, (b) waive any inaccuracies in the representations and
warranties of the other contained in this Agreement or in any document delivered
pursuant to this Agreement and (c) waive compliance by the other with any of the
agreements, covenants or conditions contained in this Agreement. Any such
extension or waiver shall be valid only if set forth in an agreement in writing
signed by the Party or Parties to be bound thereby.
8.5 Fees, Expenses and Other Payments. All costs and expenses incurred by the
---------------------------------
Parties in connection with this Agreement, the Merger and the Transactions and
in connection with compliance with Applicable Law and Contractual Obligations as
a consequence hereof and thereof, including fees and disbursements of counsel,
financial advisors and accountants, will be borne solely and entirely by the
Party which has incurred such costs and expenses (with respect to such Party,
its "Expenses"). The Principal Stockholder acknowledges and agrees for himself
and on behalf of the other Stockholders that the Company has disclosed that it
is obligated and will become further obligated for Expenses (including fees and
expenses of its counsel, its independent accountants, and its financial advisor)
incurred by it in connection with this Agreement, the Merger and the
Transactions and such expenses will not be paid by the Company or become a
liability of the Surviving Company if the Merger is consummated but will be paid
by the Stockholders on a pro-rata basis based on their ownership of the Company
Stock and the Shares outstanding. VIALOG acknowledges that its Expenses also
include the costs of the Audit and Financing.
8.6 Effect of Investigation. The right of any Party to terminate this
-----------------------
Agreement pursuant to Section 8.1 will remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Party, any
Person controlling any such Party or any of their respective Representatives
whether prior to or after the execution of this Agreement.
ARTICLE
9
ARBITRATION
9.1 Best Efforts to Settle Disputes. Except as otherwise expressly provided in
-------------------------------
this Agreement, in the event any dispute, claim, question or difference (a
"Dispute") arises with respect to this Agreement or its performance,
enforcement, breach, termination or validity, the Parties shall use their best
efforts to settle the Dispute. To this end, they shall consult and negotiate
with each other, in good faith and understanding of their mutual interests, to
reach a just and equitable solution satisfactory to all Parties.
9.2 Arbitration. Except as is expressly provided in this Agreement, if the
-----------
Parties do not reach a solution pursuant to Section 9.1 within a period of
fifteen (15) business days following the first notice of the Dispute by any
Party to any other Party, then upon written notice by any
55
such Party to the other Parties, the Dispute shall be finally settled by
arbitration in effect on the date of this Agreement, except with respect to a
Dispute related to the Principal Stockholder complying with the terms of the
non-competition provisions set forth in the Principal Stockholder's Non-
Competition Agreement or other agreement executed by any such Principal
Stockholder in connection with this Agreement, the Merger or the Other
Transactions. Any arbitration invoked hereunder will be in accordance with the
provisions of the Commercial Arbitration Rules of the American Arbitration
Association in effect on the date of this Agreement. Any arbitration invoked
hereunder will be based on the following:
(a) the arbitration tribunal shall consist of one arbitrator appointed by
mutual agreement of the Parties, or in the event of failure to agree within ten
(10) business days following delivery of the written notice to arbitrate, then
each of the Parties shall appoint one arbitrator and the two nominated shall in
turn choose one-third arbitrator. If arbitrators chosen by the Parties cannot
agree on a choice of the third arbitrator within a period of 10 business days
after their nomination, then any Party may apply to any judge of the United
States District Court for the Central District of Massachusetts to appoint the
third arbitrator. The arbitrators shall be qualified by education and training
to pass upon the particular matter to be decided;
(b) the arbitrator shall be instructed that time is of the essence in the
arbitration proceeding and, in any event, the arbitration award must be made
within sixty (60) days of the submission of the Dispute to arbitration;
(c) after written notice is give to refer any Dispute to arbitration, the
Parties will meet within fifteen (15) business days of delivery of the notice
and will negotiate in good faith any changes in these arbitration provisions or
the rules of arbitration which are herein adopted, in an effort to expedite the
process and otherwise ensure that the process is appropriate given the nature of
the Dispute and the values at risk;
(d) the arbitration shall take place in Boston, Massachusetts;
(e) the arbitration shall be conducted pursuant to such procedures and
schedule for discovery, preparation and filing of pre-hearing briefs, hearing,
preparation and filing of post-hearing briefs and such other matters as the
arbitrator (or, if there is more than one (1), a majority of the arbitrators)
shall determine to be necessary and shall be fixed by the arbitrator or
arbitrators after consultation with the Parties, for such purpose, with the
understanding and agreement of the Parties that all matters pertaining to the
arbitration shall be expedited to the maximum extent possible; provided,
however, that any necessary discovery shall be conducted pursuant to the Federal
Rules of Civil Procedure in effect at the time of such proceeding.
(f) the arbitration award shall be given in writing and shall be final and
binding on the Parties, not subject to any appeal, and shall deal with the
question of costs of arbitration and all related matters;
(g) judgment upon any award may be entered in any court having
jurisdiction or application may be made to such court for a judicial recognition
of the award of an order of enforcement, as the case may be; and
56
(h) all Disputes referred to arbitration (including the scope of the
agreement to arbitrate, any statute of limitations, set-off claims, conflict of
laws rules, tort claims and interest claims) shall be governed by the
substantive law of Delaware except to the extent Texas law may be applicable to
the Merger and except as otherwise provided in Section 9.1(e) hereof.
ARTICLE
10
INDEMNIFICATION
10.1 Indemnification.
---------------
(a) Except as provided in Section 11.1, the Principal Stockholder agrees
to make whole, indemnify and hold VIALOG, VIALOG Merger Subsidiary, the
Surviving Corporation, the Underwriters and their respective Affiliates, agents,
successors and assigns (collectively, the "VIALOG Indemnified Parties") harmless
as a result of, from or against:
(i) any and all Claims of the VIALOG Indemnified Parties or other
Persons based upon, attributable to or resulting from any
material inaccuracy in or material breach of any representation
or warranty on the part of any one or more of the Company or the
Stockholders under this Agreement or any Collateral Document;
(ii) any and all Claims of the VIALOG Indemnified Parties or other
Persons based upon, attributable to or resulting from the
material breach of any covenant or other agreement on the part
of any one or more of the Company or the Stockholders under this
Agreement or any Collateral Document;
(iii) any and all Claims and/or taxes incurred by the VIALOG
Indemnified Parties or other Persons with respect to each tax
year in which the Company is not treated as an S corporation
because distributions made by the Company caused it to violate
the single class of stock rule of IRC Section 1361(b)(1)(D) and
Treasury Regulation 1.1361-1(1); and
(iv) any and all other material Claims of the VIALOG Indemnified
Parties or other Persons incident to the foregoing or to the
enforcement of this Section.
(b) Except as provided in Section 11.1, VIALOG agrees to make whole,
indemnify and hold the Stockholders and their respective Affiliates, agents,
heirs, successors and assigns (collectively, the "Company Indemnified Parties")
harmless as a result of, from or against:
57
(i) any and all Claims of the Company Indemnified Parties or other
Persons based upon, attributable to or resulting from any
material inaccuracy in or material breach of any representation
or warranty on the part of VIALOG or VIALOG Merger Subsidiary
under this Agreement or any Collateral Document;
(ii) any and all Claims of the Company Indemnified Parties or other
Persons based upon, attributable to or resulting from the
material breach of any covenant or other agreement on the part
of VIALOG or VIALOG Merger Subsidiary; and
(iii) any and all other material Claims of the Company Indemnified
Parties or other Persons incident to the foregoing or to the
enforcement of this Section.
(c) Except in connection with Claims pursuant to Section 10.1(a)(iii),
no one of the Stockholders will be required to pay to the VIALOG Indemnified
Parties for damages an aggregate amount in excess of an amount equal to the cash
received by such Stockholder as the Merger Consideration pursuant to Section
2.1(a). VIALOG will not be required to pay any Company Indemnified Party for
damages an aggregate amount in excess of the amount of cash delivered to such
Company Indemnified Party pursuant to Section 2.1(a). No Claim for
indemnification may be commenced beyond the period applicable to such Claim set
forth in Section 11.1.
(d) Notwithstanding the foregoing, the Stockholders will not be required
to pay any amount for indemnification to the VIALOG Indemnified Parties except
to the extent that (i) the claim is in connection with any of the matters set
forth in Section 10.1(a)(iii); or (b) the aggregate amount of Claims under this
Section 10.1 asserted collectively against the Stockholders exceeds $100,000,
and (iii) in the case under (ii) above after giving effect to the provisions of
subsection (e).
(e) The claims of the Parties for indemnification shall be reduced by tax
benefits or insurance proceeds available to such Party, and no multiplier shall
be used for calculation of Claims for damages.
10.2 Procedures Concerning Claims by Third Parties; Payment of Damages; Etc.
-----------------------------------------------------------------------
(a) If any Claim is instituted or asserted by any person other than such
indemnified party in respect of which payment may be sought hereunder, the
indemnified party will reasonably and promptly cause written notice of the
assertion of any Claim of which it has knowledge which is covered by the
indemnities under Section 10.1 to be forwarded to the indemnifying party. In
such event, the indemnifying party will have the right, at its sole option and
expense, to be represented by counsel of its choice, which must be reasonably
satisfactory to the indemnified party, and to defend against, negotiate, settle
or otherwise deal with any Claim instituted or asserted by any Person other than
such indemnified party and indemnified against hereunder; provided, however,
that no settlement thereof will be made without the prior written
58
consent of the indemnified party, which consent will not be unreasonably
withheld, conditioned or delayed. If the indemnifying party elects to defend
against, negotiate, settle or otherwise deal with any Claim, it will within five
(5) days of receipt of said notice (or sooner, if the nature of the Claim so
requires) notify in writing the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Claim, fails to notify the indemnified party of its election as
herein provided or contests its obligation to indemnify the indemnified party
for such Claim under this Agreement, the indemnified party may defend against,
negotiate, settle or otherwise deal with such Claim. If the indemnified party
defends any Claim, then the indemnifying party will reimburse the indemnified
party for reasonable Claims incurred in defending such Claim upon a final
determination that the indemnified party was entitled to indemnity hereunder.
Neither the indemnifying party nor the indemnified party may settle any Claim
without the prior written consent of the other party, which consent will not be
unreasonably withheld, conditioned or delayed. If the indemnifying party will
assume the defense of any Claim instituted or asserted by any Person other than
an indemnified party, the indemnified party may participate, at such party's own
expense, in the defense of such Claim.
(b) After any final judgment or award will have been rendered by a court,
arbitration board (which may be engaged upon the consent of each of the
indemnifying party and the indemnified parties) or administrative agency of
competent jurisdiction and the expiration of the time in which to appeal
therefrom, or a settlement will have been consummated, or the indemnified party
and the indemnifying party will have arrived at a mutually binding agreement
with respect to a Claim hereunder, the indemnifying party will pay all of the
sums due and owing to the indemnified party by wire transfer of immediately
available funds, within five business days after the date of notice of such
judgment or award conditioned, however, on the indemnifying party having been
finally determined by the parties' agreement or by final court or arbitration
that the indemnifying party is obligated hereunder to make said payment and
subject to the provisions of this Article 10.
(c) The failure of the indemnified party to give reasonably prompt notice
of any Claim instituted or asserted by any Person other than such indemnified
party and indemnified against hereunder will not release, waive or otherwise
affect the indemnifying party's obligations with respect thereto except to the
extent that the indemnifying party can demonstrate actual loss or material
prejudice as a result of such failure.
(d) No action to enforce a Claim for indemnity will be stayed or
dismissed for failure to join one or more indemnifying parties or to permit an
indemnifying party to cross-claim against another indemnifying party, nor will
the failure to join as indemnifying party be deemed grounds for preventing a
separate or subsequent Legal Action to enforce a Claim for indemnification
against such party, each such Legal Action being deemed a separate and
independent Claim for indemnification. A Legal Action to enforce a Claim for
indemnity may be instituted in the Commonwealth of Massachusetts, or the
jurisdiction to which each Party consents, or any other state having
jurisdiction with respect thereto.
59
10.3 Access to Books and Records. In the event of any claim for indemnity under
---------------------------
Section 10.1 or 10.2, VIALOG agrees to give the Stockholders and their
Representatives reasonable access to all files, documents, instruments, papers,
books and records relating to the Company or the Stockholders, and to all
employees of the Company in connection with the matters for which
indemnification is sought to the extent the Stockholders reasonably deem
necessary in connection with their rights and obligations under this Article 10.
10.4 Exclusivity. After the Financing Closing Date, to the extent permitted by
-----------
Law, the indemnities set forth in this Article 10 shall be the exclusive
remedies of the VIALOG Indemnified Parties and the Company Indemnified Parties
for any misrepresentation, breach of warranty or nonfulfillment or failure to be
performed of any covenant or agreement contained in this Agreement, and the
parties shall not be entitled to any further indemnification rights or claims of
any nature whatsoever in respect thereof, all of which the parties hereto hereby
waive.
ARTICLE
11
GENERAL PROVISIONS
11.1 Effectiveness of Representations; Etc.
--------------------------------------
(a) Regardless of any investigation made by or on behalf of any other
party hereto, any Person controlling such party or any of their respective
Representatives whether prior to or after the execution and consummation of this
Agreement, the representations, warranties, covenants and agreements contained
in Article 3, Article 4 and Article 5 will survive the Merger and remain
operative and in full force and effect as follows:
(i) Section 3.11, Section 3.12, Section 3.21, Section 3.23 and
Section 4.4 until sixty (60) days after the applicable statute
of limitations, as the same may be extended from time to time,
has terminated; and
(ii) all other Sections, until the greater of eighteen months or 90
days after the end of the second fiscal year of VIALOG following
the Closing Date.
(b) Except as set forth in Section 8.2, as limited by Section 11.1(a)
hereof, the representations, warranties, covenants and agreements of each Party
will survive and remain operative and in full force and effect, regardless of
any investigation made by or on behalf of any other Party, any Person
Controlling any such Party or any of their respective Representatives whether
such investigation was prior to or after the execution and consummation of this
Agreement.
11.2 Notices. All notices and other communications given or made pursuant to
-------
this Agreement will be in writing and will be deemed to have been duly given or
made as of the date
60
delivered or transmitted, and will be effective upon receipt, if delivered
personally or by recognized national overnight delivery service, mailed by
certified mail (postage prepaid, return receipt requested) to the Parties at the
following addresses or sent by electronic transmission to the fax number
specified below:
(a) If to VIALOG or VIALOG Merger Subsidiary:
▇▇▇▇▇ ▇▇▇▇▇▇, President
VIALOG Corporation
▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇'▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company:
Conference Pros International, Inc.
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & Westheimer, P.C.
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(c) If to the Principal Stockholder:
▇▇▇▇▇▇▇ ▇▇▇▇▇
Conference Pros International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
61
▇▇▇▇▇▇ & Westheimer, P.C.
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Any address for notice as herein above provided may be changed by the party
or person for whom the change is made by giving notice of said change in the
manner provided in this Section.
11.3 Headings. The headings contained in this Agreement are for reference
--------
purposes only and will not affect in any way the meaning and interpretation of
this Agreement.
11.4 Severability. If any term or other provision of this Agreement is invalid,
------------
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement will nevertheless remain in
full force and effect so long as the economic or legal substance of the
Transactions is not affected in any manner Adverse to any Party. Upon such
determination that any term or other provisions is invalid, illegal or incapable
of being enforced, the Parties will negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible to the fullest extent permitted by Applicable Law in an acceptable
manner to the end that the Transactions are fulfilled to the extent possible.
11.5 Entire Agreement. This Agreement (together with the Disclosure Letter, the
----------------
Confidentiality Agreement and the other Collateral Documents delivered in
connection herewith), constitutes the entire agreement of the Parties and
supersedes all prior agreements (other than the Confidentiality Agreement) and
undertakings, both written and oral, between the Parties, or any of them, with
respect to the subject matter hereof.
11.6 Assignment. This Agreement may not be assigned by operation of law or
----------
otherwise and any purported assignment will be null and void, provided that
VIALOG may cause a wholly owned Subsidiary of VIALOG or Holding Company to be
substituted for VIALOG or VIALOG Merger Subsidiary as the party to the Merger
and may, in addition, assign the other rights, but not its obligations,
including, without limitation, its obligation for payment of the Aggregate
Merger Consideration, under this Agreement to such Subsidiary or Holding
Company.
11.7 Parties in Interest. This Agreement will be binding upon and inure solely
-------------------
to the benefit of each Party, and nothing in this Agreement, express or implied
(other than the provisions of Section 6.7, which provisions are intended to
benefit and may be enforced by the beneficiaries thereof), is intended to or
will confer upon any Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
11.8 Governing Law. Except to the extent that Texas Law may be applicable to
-------------
the Merger, this Agreement will be governed by, and construed in accordance
with, the substantive laws of the State of Delaware governing contracts made and
to be performed in such jurisdiction, regardless of the laws that might
otherwise govern under applicable principles of conflicts of law.
62
11.9 Enforcement of the Agreement. Each Party recognizes and agrees that if the
----------------------------
remedy of specific performance or injunctive relief is not available under
Article 9 Arbitration, each Party will, in addition to such other remedies as
may be available to it at law or in equity or as provided in this Agreement, be
entitled to seek injunctive relief and to enforce its rights by an action for
specific performance to the extent permitted by Applicable Law. Each party
hereby waives any requirement for security or the posting of any bond or other
surety in connection with any temporary or permanent award of injunctive,
mandatory or other equitable relief. Nothing herein contained will be construed
as prohibiting a Party from pursuing any other remedies available to such Party
for any breach or threatened breach hereof or failure to take or refrain from
any action as required hereunder to consummate the Merger and carry out the
Transactions.
11.10 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different Parties hereto in separate counterparts, each
of which when executed will be deemed to be an original but all of which taken
together will constitute one and the same agreement.
11.11 Disclosure Letter and Supplements. From time to time prior to the
---------------------------------
Financing Closing Date, the Company will promptly supplement or amend the
Disclosure Letter delivered in connection with this Agreement, with respect to
any matter which, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in such Disclosure Letter
or which is necessary to correct any information in such Disclosure Letter which
has been rendered inaccurate thereby; provided, however, that no supplement or
amendment to the Disclosure Letter that constitutes or reflects a Material
Adverse Change to the Company may be made without the prior written consent of
VIALOG.
ARTICLE
12
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) have the following
respective meanings. Terms defined in the singular will have a comparable
meaning when used in the plural, and vice versa, and the reference to any gender
will be deemed to include all genders. Any reference to any statutory or
regulatory provision will be deemed to be a reference to any successor statutory
or regulatory provision. Unless otherwise defined or the context otherwise
clearly requires, terms for which meanings are provided in this Agreement will
have such meanings when used in the Disclosure Letter and each Collateral
Document, notice, certificate, communication, opinion, or other document
executed or required to be executed pursuant hereto or thereto or otherwise
delivered, from time to time, pursuant hereto or thereto.
63
Accountants means KPMG Peat Marwick, LLP.
Adverse, Adversely, when used alone or in conjunction with other terms
(including without limitation "Affect," "Change" and "Effect") means, with
respect to the Company or any of its Subsidiaries, VIALOG or VIALOG Merger
Subsidiary, as the case may be, any Event which could reasonably be expected to
(a) adversely affect the validity or enforceability of this Agreement or any
Collateral Document executed or required to be executed pursuant hereto or
thereto, or (b) adversely affect the business, operations, management,
properties or the condition, (financial or other), or results of operation of
the Company or the Company and its Subsidiaries taken as a whole, VIALOG or
VIALOG Merger Subsidiary, as the case may be, or (c) impair the Company's, or
VIALOG's or VIALOG Merger Subsidiary's ability to fulfill its obligations under
the terms of this Agreement or any Collateral Document executed or required to
be executed pursuant hereto or thereto, or (d) adversely affect the aggregate
rights and remedies of VIALOG or the Company under this Agreement or any
Collateral Document executed or required to be executed pursuant hereto or
thereto, in all cases, unless otherwise specifically set forth, in a material
respect or manner or to a material degree.
Affiliate or Affiliated means, with respect to any Person, (a) any other
Person at the time directly or indirectly controlling, controlled by or under
direct or indirect common control with such Person, (b) any other Person of
which such Person at the time owns, or has the right to acquire, directly or
indirectly, twenty percent (20%) or more of any class of the capital stock or
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, twenty percent (20%) or more of any
class of the capital stock or beneficial interest of such Person, (d) any
executive officer or director of such Person, (e) with respect to any
partnership, joint VIALOG or similar Entity, any general partner thereof, and
(f) when used with respect to an individual, will include any member of such
individual's immediate family or a family trust.
Aggregate Equity means such number of shares of Company Stock as shall
equal the aggregate of (a) the Shares, and (b) all shares of Company Stock
otherwise issuable based upon the affirmative election to exercise or convert
outstanding Option Securities and/or Convertible Securities pursuant to Section
2.4.
Aggregate Merger Consideration will have the meaning given to it in Section
2.1(a).
Agreement means this Agreement as originally in effect, including unless
the context otherwise specifically requires, all schedules, including the
Disclosure Letter and exhibits to this Agreement, and as the same may from time
to time be supplemented, amended, modified or restated in the manner herein or
therein provided.
Applicable Law means any Law of any Authority, whether domestic or foreign,
including without limitation all federal and state securities laws and
Environmental Laws, to or by which a Person or to any of its business or
operations is subject or any of its property or assets is bound.
64
Authority means any governmental or quasi-governmental authority, whether
administrative, executive, judicial, legislative or other, or any combination
thereof, including without limitation any federal, state, territorial, county,
municipal or other government or governmental or quasi-governmental agency,
arbitrator, authority, board, body, branch, bureau, central bank or comparable
agency or Entity, commission, corporation, court, department, instrumentality,
master, mediator, panel, referee, system or other political unit or subdivision
or other Entity of any of the foregoing, whether domestic or foreign.
BCA will have the meaning given to it in the Preamble.
Benefit Arrangement means any material benefit arrangement that is not a
Plan, including (a) any employment or consulting agreement, (b) any arrangement
providing for insurance coverage or workers' compensation benefits, (c) any
incentive bonus or deferred bonus arrangement, (d) any arrangement providing
termination allowance, severance or similar benefits, (e) any equity
compensation plan, (f) any deferred compensation plan, and (g) any compensation
policy and practice.
Certificate will have the meaning given to it in Section 2.1(a).
Claims means any and all Tax Claims, debts, liabilities, obligations,
losses, damages, deficiencies, assessments and penalties, together with all
Legal Actions, pending or threatened, claims and judgments of whatever kind and
nature relating thereto, and all reasonable fees, costs, expenses and
disbursements (including without limitation attorneys' fees, costs and expenses)
relating to any of the foregoing.
COBRA means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, as set forth in Section 4980B of the Code and Part 6 of Title I of
ERISA.
Code will have the meaning given to it in the Preamble.
Collateral Document means any agreement, instrument, certificate, opinion,
memorandum, schedule or other document delivered by a Party or a Stockholder
pursuant to this Agreement or in connection with the Merger and the
Transactions. For purposes of the representations, warranties, covenants and
agreements of the Company and the Principal Stockholder, on the one hand, or
VIALOG and VIALOG Merger Subsidiary on the other, under this Agreement and with
respect to opinions to be delivered pursuant to this Agreement, except to the
extent of a Party's actual knowledge, the Company and the Principal Stockholder
or VIALOG and VIALOG Merger Subsidiary, as the case may be, assume no
responsibility for the authority of or genuineness of signatures relating to the
others as counterparts or their representations, warranties, covenants and
agreements.
Company will have the meaning given to it in the Preamble.
Company Indemnified Parties will have the meaning given to it in Section
10.1(b).
65
The Company's knowledge (including the term "to the knowledge of the
Company") means the knowledge, information or belief of any Company director,
executive officer or the Principal Stockholder; and that such director,
executive officer or Principal Stockholder, after reasonable investigation, will
have reason to believe and will believe that the subject representation or
warranty is true and accurate as stated.
Company Stock will have the meaning given to it in Section 2.1(a).
Confidentiality Letter will have the meaning given to it in Section 6.1(c).
Contract or Contractual Obligation means any term, condition, provision,
representation, warranty, agreement, covenant, undertaking, commitment,
indemnity or other obligation set forth in the Organizational Documents of the
obligee or which is outstanding or existing under any instrument, contract,
lease or other contractual undertaking (including without limitation any
instrument relating to or evidencing any Indebtedness) to which the obligee is a
party or by which it or any of its business is subject or property or assets is
bound.
Control (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, or the disposition of such Person's assets or properties,
whether through the ownership of stock, equity or other ownership, by contract,
arrangement or understanding, or as trustee or executor, by contract or credit
arrangement or otherwise.
Convertible Securities means any evidences of indebtedness, shares of
capital stock (other than common stock) or other securities directly or
indirectly convertible into or exchangeable for Shares, whether or not the right
to convert or exchange thereunder is immediately exercisable or is conditioned
upon the passage of time, the occurrence or non-occurrence or existence or non-
existence of some other Event, or both.
DBCL will have the meaning given to it in the Preamble.
Disclosure Letter shall mean a separate letter entitled Disclosure Letter
prepared by the Company and the Principal Stockholder.
Distribution means, with respect to the Company or any of its Subsidiaries:
(a) the declaration or payment of any dividend (except dividends payable in
common stock of the Company) on or in respect of any shares of any class of
capital stock of the Company or any shares of capital stock of any Subsidiary
owned by a Person other than the Company or a Subsidiary, (b) the purchase,
redemption or other retirement of any shares of any class of capital stock of
the Company or any shares of capital stock of any Subsidiary owned by a Person
other than the Company or a Subsidiary, and (c) any other distribution on or in
respect of any shares of any class of capital stock of the Company or any shares
of capital stock of any Subsidiary owned by a Person other than the Company or a
Subsidiary.
66
Effective Date means the effective date of the Registration Statement and
commencement of the Financing, if applicable, or the dates designated by the
Underwriter if a private financing.
Effective Time will have the meaning given to it in Section 1.4.
Employment Arrangement means, with respect to any Person, any employment,
consulting, retainer, severance or similar contract, agreement, plan,
arrangement or policy (exclusive of any which is terminable within thirty (30)
days without liability, penalty or payment of any kind by such Person or any
Affiliate), or providing for severance, termination payments, insurance coverage
(including any self-insured arrangements), workers compensation, disability
benefits, life, health, medical dental or hospitalization benefits, supplemental
unemployment benefits, vacation or sick leave benefits, pension or retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock purchase or appreciation rights or other forms of incentive compensation
or post-retirement insurance, compensation or benefits, or any collective
bargaining or other labor agreement, whether or not any of the foregoing is
subject to the provisions of ERISA.
Encumber means to suffer, accept, agree to or permit the imposition of a
Lien.
Entity means any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual, business
trust, joint stock company, joint VIALOG or other organization, entity or
business, whether acting in an individual, fiduciary or other capacity, or any
Authority.
Environmental Laws means any Law relating to or otherwise imposing
liability or standards of conduct concerning pollution or protection of the
environment or occupational health and safety, including without limitation Laws
relating to emissions, discharges, releases or threatened releases of Hazardous
Materials or other pollutants, contaminants, chemicals, noises, odors or
industrial, toxic or hazardous substances, materials or wastes, whether as
matter or energy, into the environment (including, without limitation, ambient
air, surface water, ground water, mining or reclamation or mined land, land
surface or subsurface strata) or otherwise relating to the manufacture,
processing, generation, distribution, use, treatment, storage, disposal,
cleanup, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances, materials or wastes. Environmental
Laws include the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. Section 9601 et seq.), the Hazardous Material
-- ---
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
-- ---
and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), the Federal Water
-- ---
Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42
-- ---
U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
-- ---
Section 2601 et seq.), the Occupational Safety and Health Act of 1970 (29 U.S.C.
-- ---
Section 651 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7
-- ---
U.S.C. Section 136 et seq.), and the Surface Mining Control and Reclamation Act
-- ---
of 1977 (30 U.S.C. Section 1201 et seq.), and any analogous future federal, or
-- ---
present or future state, local or foreign, Laws, and the rules and regulations
promulgated thereunder all as from time to time in effect, and any reference to
any statutory or regulatory provision will be deemed to be a reference to any
successor statutory or regulatory provision.
67
Environmental Permit means any Governmental Authorization required by or
pursuant to any Environmental Law.
Environmental Requirements means all applicable present and future
Governmental Authorizations, Private Authorizations or other requirements
(including without limitation those pertaining to reporting, licensing and
permitting) relating to or required by or pursuant to any Environmental Law,
including without limitation all requirements pertaining or relating to:
(a) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of, or the remediation, emission,
discharge or release into the air, surface water, groundwater or land
of, Hazardous Materials;
(b) the protection of the health and safety of employees or the public;
(c) the reclamation or restoration of land; and
(d) the ownership or operation of underground storage tanks.
ERISA means the Employee Retirement Security Act of 1974, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations, and any reference to any statutory or regulatory
provision will be deemed to be a reference to any successor statutory or
regulatory provision.
ERISA Affiliate means any Person that is treated as a single employer with
the Company or any of its Subsidiaries under Sections 414(b), (c), (m) or (o) of
the Code or Section 4001(b)(1) of ERISA.
Event means the occurrence or existence of any act, action, activity,
circumstance, condition, event, fact, failure to act, omission, incident or
practice, or any set or combination of any of the foregoing.
Exchange Merger Consideration will have the meaning given to it in Section
2.1(a).
Expenses will have the meaning set forth in Section 8.5.
Financing means the sale of VIALOG securities or borrowings from financial
institutions necessary to raise the cash so as to enable VIALOG to pay the
Aggregate Merger Consideration.
Financing Closing Date means the date on which the Financing is closed.
68
Financing Document means the offering document furnished to potential
investors or financial institutions in connection with the Financing and any
securities of VIALOG issued to consummate the Financing.
Final Determination (a) means with respect to federal Taxes, a
"determination" as defined in Section 1313(a) of the Code or execution of an IRS
Form 870AD and, with respect to Taxes other than federal Taxes, any final
determination of liability in respect of a Tax which, under Applicable Law, is
not subject to further appeal, review or modification through proceedings or
otherwise, including without limitation the expiration of a statute of
limitations or a period for the filing of claims for refunds, amended returns or
appeals from adverse determinations; and (b) will include the payment of Tax by
the Company or whichever Party is responsible for payment of such Tax under
Applicable Law, with respect to any item disallowed or adjusted by a Taxing
Authority, provided that the other party is notified of such payment and the
party that is responsible for such Tax under this Agreement determines that no
action should be taken to recoup such payment from such Taxing Authority.
Financial Statements will have the meaning given to it in Section 3.2(a).
GAAP means generally accepted accounting principles as in effect from time
to time in the United States of America.
Governmental Authorizations means all approvals, concessions, consents,
franchises, licenses, permits, plans, registrations and other authorizations of
each applicable Authority.
Governmental Filings means all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with each applicable Authority.
Guaranty or Guaranteed means any agreement, undertaking or arrangement
by which the Company or any of its Subsidiaries, VIALOG or VIALOG Merger
Subsidiary, as the case may be, guarantees, endorses or otherwise becomes or is
liable, directly or indirectly, upon any Indebtedness of any other Person
including without limitation the payment of amounts drawn down by beneficiaries
of letters of credit (other than by endorsements of negotiable instruments for
deposit or collection in the ordinary course of business). The amount of the
obligor's obligation under any Guaranty will be deemed to be the outstanding
amount (or maximum permitted amount, if larger) of the Indebtedness directly or
indirectly guaranteed thereby (subject to any limitation set forth therein).
Hazardous Materials means any substance (in whatever state or matter):
(a) the presence of which requires investigation or remediation under any
Environmental Law; (b) that is defined as a "hazardous waste", "hazardous
material" or "hazardous substance" under any Environmental Law; (c) that is
toxic, explosive, corrosive, pollutive, contaminating, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated by
any Authority; (d) that contains or consists of petroleum or petroleum products,
or (e) that contains or consists of PCBs, asbestos, or urea formaldehyde foam
insulation.
69
Holding Company means a corporation established by or on behalf of
VIALOG into which VIALOG merges or assigns its rights and obligations hereunder
if the Accountants so advise for purpose of a tax free incorporation of all
parties provided the relative ownership rights of all parties remain the same.
HSR Act means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1976,
and the rules and regulations thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision will be deemed to be a reference to any successor statutory
or regulatory provision.
Indebtedness means, with respect to the Company or any of its Subsidiaries
or VIALOG or VIALOG Merger Subsidiary, as the case may be, (a) all items, except
items of capital stock or of surplus or of general contingency or deferred tax
reserves or any minority interest in any Subsidiary to the extent such interest
is treated as a liability with indeterminate term on the consolidated balance
sheet of the Company or VIALOG, which in accordance with GAAP would be included
in determining total liabilities as shown on the liability side of a balance
sheet of the Company or such Subsidiary or VIALOG or VIALOG Merger Subsidiary,
(b) all obligations secured by any Lien to which any property or asset owned or
held by the Company or any Subsidiary or VIALOG or any VIALOG Merger Subsidiary
is subject, whether or not the obligation secured thereby will have been
assumed, and (c) to the extent not otherwise included, all Contractual
Obligations of the Company or any Subsidiary or VIALOG or any VIALOG Merger
Subsidiary constituting capitalized leases and all obligations of the Company or
any Subsidiary or VIALOG or any VIALOG Merger Subsidiary with respect to Leases
constituting part of a sale and leaseback arrangement.
Intangible Assets means all assets and property lacking physical properties
the evidence of ownership of which must customarily be maintained by independent
registration, documentation, certification, recordation or other means.
Law means any (a) administrative, judicial, legislative or other action,
code, consent decree, constitution, decree, directive, enactment, finding,
guideline, law, injunction, interpretation, judgment, order, ordinance, policy
statement, proclamation, promulgation, regulation, requirement, rule, rule of
law, rule of public policy, settlement agreement, statute, or writ of any
Authority, domestic of foreign; (b) the common law, or other legal or quasi-
legal precedent; or (c) arbitrator's, mediator's or referee's award, decision,
finding or recommendation; including, in each such case or instance, any
interpretation, directive, guideline or request, whether or not having the force
of law including, in all cases, without limitation any particular section, part
or provision thereof.
Lease means any lease of property, whether real, personal or mixed, and all
amendments thereto.
Legal Action means any litigation or legal or other actions, arbitrations,
counterclaims, investigations, proceedings, requests for material information by
or pursuant to the order of any
70
Authority, or suits, at law or in arbitration, equity or admiralty commenced by
any Person, whether or not purported to be brought on behalf of a party hereto
affecting such party or any of such party's business, property or assets.
Lien means any of the following: mortgage, lien (statutory or other);
preference, priority or other security agreement, arrangement or interest;
hypothecation, pledge or other deposit arrangement; assignment; charge; levy;
executory seizure; attachment; garnishment; encumbrance (including any easement,
exception, variance, reservation or limitation, right of way, zoning
restriction, building to use restriction, and the like); conditional sale, title
retention or other similar agreement, arrangement, device or restriction;
preemptive or similar right; any financing lease involving substantially the
same economic effect as any of the foregoing; the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction; restriction on sale, transfer, assignment, disposition or other
alienation; or any option, equity, claim or right of or obligation to, any other
Person, of whatever kind and character.
Margin Rules means Regulations G, T, U or X of the Board of Governors of
the Federal Reserve System, 12 C.F.R., parts 207, 220, 221 and 224, as now in
effect.
Material or Materiality for the purposes of this Agreement, will, unless
specifically stated to the contrary, be determined without regard to the fact
that various provisions of this Agreement set forth specific dollar amounts.
Material Agreement or Material Commitment means, with respect to the
Company or any of its Subsidiaries, or VIALOG or VIALOG Merger Subsidiary any
Contractual Obligation which (a) was not entered into in the ordinary course of
business, (b) was entered into in the ordinary course of business which (i)
involves the purchase, sale or lease of goods or materials or performance of
services aggregating more than Twenty-Five Thousand Dollars ($25,000), (ii)
extends for more than three (3) months, or (iii) is not terminable on thirty
(30) days or less notice without penalty or other payment, (c) involves
Indebtedness for money borrowed in excess of One Hundred Thousand Dollars
($100,000), (d) is or otherwise constitutes a written agency, dealer, license,
distributorship, sales representative or similar written agreement, or (e) would
account for more than five percent (5%) of purchases or sales made by the
Company and its Subsidiaries for the year ended December 31, 1997.
Merger will have the meaning given to it in the Preamble.
Merger Closing will have the meaning given to it in Section 1.3.
Merger Closing Date means the date on which the Merger is closed.
Merger Consideration will have the meaning given to it in Section 2.1(a).
Multiemployer Plan means a "multiemployer plan" within the meaning of
Section 4001(a)3 of ERISA.
71
Net Shares will have the meaning given to it in Section 2.2(a).
Option Securities means all rights, options and warrants, all calls or
commitments evidencing the right, to subscribe for, purchase or otherwise
acquire Shares or Convertible Securities, whether or not the right to subscribe
for, purchase or otherwise acquire is immediately exercisable or is conditioned
upon the passage of time, the occurrence or non-occurrence or the existence or
non-existence of some other Event.
Organizational Documents means, with respect to a Person which is a
corporation, its charter, its by-laws, and all stockholder agreements, voting
trusts and similar arrangements applicable to any of its capital stock, and,
with respect to a Person which is a partnership, its agreement and certificate
of partnership, any agreement among partners, and any management and similar
agreements between the partnership and any general partners (or any Affiliate
thereof).
Other Participating Companies mean those companies or entities engaged
in the teleconferencing business who execute agreements and plans of
reorganization, stock purchase agreements or asset purchase agreements with
VIALOG which agreements close contemporaneously with this Agreement.
Other Transaction means a transaction or series of related transactions
(other than the Merger) resulting in (a) any change in control of the Company,
(b) any merger or consolidation of the Company or any of its Subsidiaries,
regardless of whether the Company or such Subsidiary is the surviving Entity,
(c) any tender offer or exchange offer for, or any acquisition of, any
securities of the Company, or (d) any sale or other disposition of assets of the
Company or any Subsidiary not otherwise permitted under Section 3.18.
Participating Companies will mean the Company and the Other Participating
Companies.
Participating Mergers means the mergers of each of the Other Participating
Companies with a Subsidiary of VIALOG pursuant to a Participating Agreement.
Party means any natural individual or any Entity that has executed this
Agreement.
PBGC means the Pension Benefit Guaranty Corporation and any Entity
succeeding to any or all of its functions under ERISA.
Person means any natural individual or any Entity.
Plan means any "employee benefit plan" as defined in Section 3(3) of
ERISA (whether or not terminated) which is (or was in the case of a frozen or
terminated plan) maintained by the Company or any Subsidiary or VIALOG or VIALOG
Merger Subsidiary, and with respect to which the Company, such Subsidiary or
VIALOG or VIALOG Merger Subsidiary or, in the case of any such plan subject to
Title IV of ERISA, an ERISA Affiliate is (or, if such plan were
72
terminated at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA, other than a Multiemployer Plan.
Principal Stockholder will have the meaning given to it in the Preamble.
Private Authorizations means all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than each Authority) including without limitation those with respect to patents,
trademarks, service marks, trade names, copyrights, computer software programs,
technology and know-how.
Representatives of a Party means the officers, directors, employees,
accountants, counsel, financial advisors, consultants and other representatives
of such Party.
SEC means the Securities and Exchange Commission of the United States or
any successor Authority.
Securities Act means the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as from time to time in effect, or
any successor law, rules or regulations.
Shares will have the meaning given to it in Section 2.1(a).
Special Meeting will have the meaning given to it in Section 1.2(a).
Stockholders means the Principal Stockholder and all other Persons
entitled to Merger Consideration (or who would be entitled thereto but for their
dissent from the Merger) pursuant to Sections 2.1(a) or (to the extent Persons
holding Option Securities or Convertible Securities exercise their rights to
acquire Shares prior to the Effective Time, from and after the time they acquire
such Shares) Section 2.4.
Subsidiary means, with respect to a Person, any Entity a majority of
the capital stock ordinarily entitled to vote for the election of directors of
which, or if no such voting stock is outstanding, a majority of the equity
interests of which, is owned directly or indirectly, legally or beneficially, by
such Person or any other Person controlled by such Person.
Surviving Corporation will have the meaning given to it in Section 1.1.
Tax (and "Taxable", which means subject to Tax), means with respect to
the Company or any of its Subsidiaries or VIALOG or any VIALOG Merger
Subsidiary, (a) all taxes (domestic or foreign), including without limitation
any income (net, gross or other including recapture of any tax items such as
investment tax credits), alternative or add-on minimum tax, gross income, gross
receipts, gains, sales, use, leasing, lease, user, ad valorem, transfer,
recording, franchise, profits, property (real or personal, tangible or
intangible), fuel, license, withholding on amounts paid to or by the Company or
any of its Subsidiaries, or VIALOG or any VIALOG Merger Subsidiary, payroll,
employment, unemployment, social security, excise severance, stamp, occupation,
73
premium, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, levies, assessments, charges, penalties, addition to
tax or additional amount imposed by any Taxing Authority, (b) any joint or
several liability of the Company or any of its Subsidiaries or VIALOG or any
VIALOG Merger Subsidiary with any other Person for the payment of any amounts of
the type described in (a), and (c) any liability of the Company or any of its
Subsidiaries or VIALOG or any VIALOG Merger Subsidiary for the payment of any
amounts of the type described in (a) as a result of any express or implied
obligation to indemnify any other Person.
Tax Claim means any Claim which relates to Taxes, including without
limitation the representations and warranties set forth in Section 3.11.
Tax Return or Returns means all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
Taxing Authority means any Authority responsible for the imposition of
any Tax.
Termination Date means (a) March 31, 1999, or (b) such date after March 31,
1999 as to which the parties agree.
Transactions means the other transactions contemplated by this Agreement or
the Merger or by any Collateral Document executed or required to be executed in
connection herewith or therewith, but will not include the Participating
Mergers, the sale of VIALOG securities pursuant to the Financing Document or any
credit facilities between VIALOG and any bank described in the Financing
Document.
Transmittal Documents will have the meaning given to it in Section 2.2(b).
Underwriter means any underwriter placement agent, sales agent or other
entity by whatever name known, who assists VIALOG either as agent or for its own
account in selling VIALOG's securities pursuant to the Financing Document.
Underwriting Agreement means the agreement between VIALOG and the
Underwriter.
VIALOG will have the meaning given to it in the Preamble.
VIALOG Indemnified Parties will have the meaning given to it in Section
10.1(a).
VIALOG Merger Subsidiary will have the meaning given to it in the Preamble.
VIALOG Stock will have the meaning given to it in the Preamble.
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[THIS SPACE IS INTENTIONALLY LEFT BLANK.]
75
IN WITNESS WHEREOF, VIALOG, VIALOG Merger Subsidiary, the Company and
the Principal Stockholder have caused this Agreement to be executed as of the
date first written above by their respective officers thereunto duly authorized.
VIALOG CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
CPI ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
CONFERENCE PROS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
PRINCIPAL STOCKHOLDER:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
SPOUSAL CONSENT
---------------
The spouse of the Principal Stockholder has executed this Agreement
below as of the date first above written (a) to indicate her understanding of
and Agreement with all of the terms and provisions of this Agreement and (b) to
bind the community property interest, if any, of the spouse in the Shares of the
Principal Stockholder.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
76
THE FOLLOWING IS AN INDEX OF INFORMATION PROVIDED IN THE DISCLOSURE SCHEDULES
AND EXHIBITS OF THE AGREEMENT AND PLAN OF REORGANIZATION BY AND AMONG VIALOG
CORPORATION AND CONFERENCE PROS INTERNATIONAL, INC. FURTHER INFORMATION WILL BE
FURNISHED UPON REQUEST.
Schedule 3.1(a) Jurisdictions
Schedule 3.1(c) Conflicts, Breaches, Defaults and Resulting Liens,
Authorizations
Schedule 3.1(d) Subsidiaries, Jurisdictions and Ownership
Schedule 3.2(a) Financial Statements
Schedule 3.2(c) Other Equity Ownership
Schedule 3.3 Adverse Change
Schedule 3.4 Other Company or Subsidiary Liabilities
Schedule 3.5(a) Liens; Financing Statements; Leasehold Interests
Schedule 3.5(b) Description of Owned and Leased Property
Schedule 3.5(c) Compliance with Certain Laws
Schedule 3.6 Private Authorizations
Schedule 3.7(a) Litigation, Permits and Licenses
Schedule 3.7(b) Violations of Certain Governmental Authorizations/Laws
Schedule 3.8(a) Exceptions to Title to Intangible Assets
Schedule 3.8(b) Description of Tangible Assets
Schedule 3.9 Related Transactions
Schedule 3.10(a) Insurance
Schedule 3.11(a) Tax Matters
Schedule 3.11(d) Tax Audits
Schedule 3.11(e) Tax Sharing Agreements
Schedule 3.11(f) Consent Under Code Section 341(f)
Schedule 3.12(a) Employee Plans and Benefits
Schedule 3.12(c) Past Service Liabilities
Schedule 3.15(a) Capitalization
Schedule 3.15(b) Stockholders and Liens on Stock
Schedule 3.16(a) Employment Arrangements
Schedule 3.16(b) Certain Employment Arrangement Payments
77
Schedule 3.16(c) Employee Relations; Work Stoppages
Schedule 3.17(a) Material Agreements
Schedule 3.17(b) Margins Under Certain Material Agreements
Schedule 3.18(a) Exceptions to Ordinary Course
Schedule 3.18(b) Distributions
Schedule 3.19 Bank Accounts
Schedule 3.20 Adverse Restrictions
Schedule 3.22 Personal Injury/Property Claims
Schedule 3.23(a) Environmental Compliance
Schedule 3.23(b) Spills and Releases
Schedule 3.23(c) Storage Tanks
Schedule 3.23(e) Use of Hazardous Materials
Schedule 3.23(f) Generated Hazardous Materials
Schedule 3.23(g) Site Assessments
Schedule 3.29 Information for Financing
Schedule 3.30 Predecessor Companies; Certain Transactions
Schedule 4.4 Title to Shares
Schedule 4.5 No Conflict; Required Filings and Consents
Schedule 6.5(b) Conduct of Business Between Signing and Closing
Schedule 6.17 Distributions and Liens to be Made or Released
Schedule 6.21 Allocation of Aggregate Merger Consideration
Schedule 7.2(q) Related Transactions to Survive Closing
Schedule 7.2(t) List of Continuing Key Employees and Terms of Employment
Exhibit 1.6 Certificate of Incorporation of Surviving Corporation
Exhibit 1.7 Bylaws of Surviving Corporation
Exhibit 6.2(c) Key Employee Non-Compete
Exhibit 7.2(b) Seller's Opinion
Exhibit 7.2(d) Non Comp Agreement (principal shareholder not signing
7.2(s))
Exhibit 7.2(n) Release by Shareholder
Exhibit 7.2(s) ▇▇▇▇▇ ▇▇▇▇▇▇ Employment Agreement
Exhibit 7.2(t) Employment Agreements
Exhibit 7.3(b) MODL Opinion
78
