EXHIBIT 2.8
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AMENDED AND RESTATED AGREEMENT AND PLAN OF
REORGANIZATION
BY AND AMONG
VIALOG CORPORATION
AMCS ACQUISITION CORPORATION
AND
AMERICAN CONFERENCING COMPANY, INC.
AND
▇▇▇▇▇ ▇▇▇▇▇▇
Dated as of September 30, 1997
TABLE OF CONTENTS
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.......................................... 4
SECTION 1.6 Certificate of Incorporation.................................. 4
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........................................... 6
SECTION 2.3 Stock Transfer Books.......................................... 8
SECTION 2.4 Option Securities and Convertible Securities; Etc............. 8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................... 9
SECTION 3.1 Organization and Business; Power and Authority;
Effect of Transaction......................................... 9
SECTION 3.2 Financial and Other Information............................... 11
SECTION 3.3 Changes in Condition.......................................... 12
SECTION 3.4 Liabilities................................................... 12
SECTION 3.5 Title to Properties; Leases................................... 13
SECTION 3.6 Compliance with Private Authorizations........................ 14
SECTION 3.7 Compliance with Governmental Authorizations and
Applicable Law................................................ 14
SECTION 3.8 Intangible Assets............................................. 16
SECTION 3.9 Related Transactions.......................................... 16
SECTION 3.10 Insurance..................................................... 16
SECTION 3.11 Tax Matters................................................... 17
SECTION 3.12 Employee Retirement Income Security Act of 1974............... 18
SECTION 3.13 Absence of Sensitive Payments................................. 21
SECTION 3.14 Inapplicability of Specified Statutes......................... 21
SECTION 3.15 Authorized and Outstanding Capital Stock...................... 21
SECTION 3.16 Employment Arrangements....................................... 22
SECTION 3.17 Material Agreements........................................... 23
SECTION 3.18 Ordinary Course of Business................................... 23
SECTION 3.19 Bank Accounts; Etc............................................ 25
SECTION 3.20 Adverse Restrictions.......................................... 25
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SECTION 3.21 Broker or Finder.............................................. 26
SECTION 3.22 Personal Injury or Property Damage; Warranty Claims; Etc...... 26
SECTION 3.23 Environmental Matters......................................... 26
SECTION 3.24 Materiality................................................... 28
SECTION 3.25 Solvency...................................................... 28
SECTION 3.26 VIALOG Stock.................................................. 28
SECTION 3.27 Compliance with Regulations Relating to Securities Credit..... 28
SECTION 3.28 Certain State Statutes Inapplicable........................... 29
SECTION 3.29 Continuing Representations and Warranties..................... 29
SECTION 3.30 Financing Document............................................ 29
SECTION 3.31 Predecessor Status; Etc....................................... 29
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE
PRINCIPAL STOCKHOLDER...................................................... 30
SECTION 4.1 Organization.................................................. 30
SECTION 4.2 Power and Authority........................................... 30
SECTION 4.3 Enforceability................................................ 30
SECTION 4.4 Title to Shares............................................... 30
SECTION 4.5 No Conflict; Required Filings and Consents.................... 30
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF VIALOG AND
VIALOG MERGER SUBSIDIARY................................................... 31
SECTION 5.1 Organization and Qualification................................ 31
SECTION 5.2 Power and Authority........................................... 31
SECTION 5.3 No Conflict; Required Filings and Consents.................... 32
SECTION 5.4 Financing..................................................... 32
SECTION 5.5 Broker or Finder.............................................. 32
SECTION 5.6 Prior Activities of VIALOG and VIALOG Merger Subsidiary....... 32
SECTION 5.7 Capitalization of VIALOG and VIALOG Merger Subsidiary......... 32
SECTION 5.8 Financing Document............................................ 33
SECTION 5.9 Solvency...................................................... 33
SECTION 5.10 This Section Intentionally Left Blank......................... 33
SECTION 5.11 Participating Agreements of Other Participating Companies..... 34
SECTION 5.12 Continuing Representations and Warranties..................... 34
ARTICLE 6 ADDITIONAL COVENANTS.................................................. 34
SECTION 6.1 Access to Information; Confidentiality........................ 34
SECTION 6.2 Agreement to Cooperate........................................ 35
SECTION 6.3 Assignment of Contracts and Rights............................ 37
SECTION 6.4 Compliance with the Securities Act............................ 37
SECTION 6.5 Conduct of Business........................................... 37
SECTION 6.6 No Solicitation............................................... 38
SECTION 6.7 Directors' and Officers' Indemnification and Insurance........ 39
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SECTION 6.8 Notification of Certain Matters............................... 39
SECTION 6.9 Public Announcements.......................................... 40
SECTION 6.10 Conveyance Taxes.............................................. 40
SECTION 6.11 Obligations of VIALOG......................................... 40
SECTION 6.12 Employee Benefits; Severance Policy........................... 40
SECTION 6.13 Certain Actions Concerning Business Combinations.............. 41
SECTION 6.14 Termination of Option Securities and Convertible Securities... 41
SECTION 6.15 Tax Returns................................................... 41
SECTION 6.16 Employment and Noncompetition................................. 42
SECTION 6.17 Distributions, Liabilities, Etc............................... 42
SECTION 6.18 Release from Personal Guarantees.............................. 42
SECTION 6.19 No Significant Changes........................................ 43
SECTION 6.20 Financing Document............................................ 43
SECTION 6.21 Tax Status.................................................... 43
SECTION 6.22 Self Dealing.................................................. 43
ARTICLE 7 CLOSING CONDITIONS.................................................... 44
SECTION 7.1 Conditions to Obligations of Each Party to Effect the Merger.. 44
SECTION 7.2 Conditions to Obligations of VIALOG and VIALOG Merger
Subsidiary.................................................... 45
SECTION 7.3 Conditions to Obligations of the Company...................... 51
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER..................................... 53
SECTION 8.1 Termination................................................... 53
SECTION 8.2 Effect of Termination......................................... 56
SECTION 8.3 Amendment..................................................... 56
SECTION 8.4 Waiver........................................................ 56
SECTION 8.5 Fees, Expenses and Other Payments............................. 56
SECTION 8.6 Effect of Investigation....................................... 57
ARTICLE 9 FEDERAL SECURITIES ACT AND OTHER RESTRICTIONS
ON VIALOG STOCK............................................................ 57
SECTION 9.1 Shares not Registered......................................... 57
SECTION 9.2 Economic Risk; Sophistication................................. 57
SECTION 9.3 Restrictions on Resale; Legends............................... 58
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ARTICLE 10 INDEMNIFICATION...................................................... 58
SECTION 10.1 Indemnification.............................................. 58
SECTION 10.2 Procedures Concerning Claims by Third Parties;
Payment of Damages; Etc...................................... 60
SECTION 10.3 Access to Books and Records.................................. 61
SECTION 10.4 Exclusivity.................................................. 61
ARTICLE 11 GENERAL PROVISIONS................................................... 61
SECTION 11.1 Effectiveness of Representations; Etc........................ 61
SECTION 11.2 Notices...................................................... 62
SECTION 11.3 Headings..................................................... 63
SECTION 11.4 Severability................................................. 63
SECTION 11.5 Entire Agreement............................................. 63
SECTION 11.6 Assignment................................................... 63
SECTION 11.7 Parties in Interest.......................................... 63
SECTION 11.8 Governing Law................................................ 63
SECTION 11.9 Enforcement of the Agreement................................. 63
SECTION 11.10 Counterparts................................................. 64
SECTION 11.11 Disclosure Supplements....................................... 64
ARTICLE 12 DEFINITIONS.......................................................... 64
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AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION dated as of
September 30, 1997 among VIALOG CORPORATION, a Massachusetts corporation
("VIALOG"), AMCS Acquisition Corporation, a Delaware corporation and wholly
owned subsidiary of VIALOG ("VIALOG Merger Subsidiary"), AMERICAN CONFERENCING
COMPANY, INC., a New Jersey corporation (the "Company"), and ▇▇▇▇▇ ▇▇▇▇▇▇ (the
"Principal Stockholder").
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 New Jersey Business Corporation Act
(the "BCA") and the General Corporation Law of the State of Delaware (the
"DBCL"), pursuant to which the Company will merge with and into the VIALOG
Merger Subsidiary (the "Merger") and the Stockholders and other Persons holding
equity interests in the Company will convert their holdings into cash and shares
of common stock, $.01 par value per share of VIALOG ("VIALOG Stock"), determined
in accordance with Section 2.1(a).
2. Each of the Other Participating Companies will enter into an
agreement and plan of reorganization or stock or asset purchase agreement with
VIALOG and a wholly-owned Subsidiary of VIALOG (each a "Participating
Agreement") whereby, contemporaneously with the Merger, each Other Participating
Company and a Subsidiary of VIALOG will carry out a business combination
transaction pursuant to which each such Subsidiary will merge with and into one
of the Other Participating Companies or VIALOG or one of the Other Participating
Companies will merge with and into such Subsidiary or VIALOG or such Subsidiary
shall purchase stock or assets of such Other Participating Companies and
stockholders of and other Persons holding equity interests in the Other
Participating Companies will convert their holdings into cash, cash and notes or
cash and shares of VIALOG Stock determined in accordance with provisions
substantially similar to those in Section 2.1(a).
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 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.
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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.
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
Company will be merged with and into the VIALOG Merger Subsidiary. As a result
of the Merger, the separate existence of the Company will cease and the VIALOG
Merger Subsidiary 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 Stockholders, (ii) approved this
Agreement, the Merger and the Transactions, which approval satisfies in full the
requirements of the BCA and New Jersey 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.
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(a) The Company, acting through its Board of Directors, will, in
accordance with Applicable Law and its Organizational Documents: (i) as soon as
practicable, 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
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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.
(b) VIALOG Merger Subsidiary, as soon as practicable, will submit to
VIALOG this Agreement, the Merger and the Transactions for approval and adoption
by written consent as the sole stockholder of VIALOG Merger Subsidiary, and
VIALOG will take all additional actions as such sole stockholder necessary to
adopt and approve this Agreement, the Merger and the Transactions.
(c) The approvals required by Sections 1.2(a) and (b) will occur
prior to any filing required pursuant to the Securities Act of 1933, as amended
(the "Securities Act") 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
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8.1 and the Merger and the Transactions have been abandoned, and subject to the
satisfaction or, if possible, waiver of conditions set forth in Article 7 other
than Section 7.1(d), the closing of the Merger (the "Merger Closing") will take
place on the date designated by VIALOG by written notice in accordance with
Article 11 hereof delivered at least three (3) days prior to such date, at the
offices of ▇▇▇▇▇▇, ▇'▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, unless another date, time
or place is agreed to in writing by the Parties to this Agreement and each
Participating Agreement. Counsel for the Parties to this Agreement and each
Participating Agreement will hold a pre-closing 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, which is expected to occur no later than five 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 Effective Time and shall be
released from escrow concurrently with the Effective Time on the Financing
Closing Date. In the event that the Effective Time and Financing Closing Date
occur on a date other than the fifth 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, including, without limitation, the conditions set
forth in Sections 7.1(a), (c), (f), and (h), to be satisfied prior to the Merger
Closing.
1.4 Effective Time. On the Financing Closing Date, the Parties will
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cause the Merger to be consummated by filing articles or certificates of merger,
as the case may be, with the Secretary of State of New Jersey 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
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may be, are duly filed with the Secretary of State of New Jersey and the
Secretary of State of Delaware, respectively (the "Effective Time").
1.5 Effect of the Merger. From and after the Effective Time, the
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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
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Certificate of Incorporation of the Surviving Corporation will be substantially
in the form attached as Exhibit 1.6 until amended in accordance with Applicable
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Law, and the name of the Surviving Corporation will be the name of the Company
or such other name as VIALOG may elect.
1.7 By-laws. From and after the Effective Time, the by-laws of the
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Surviving Corporation will be in the form attached as Exhibit 1.7, until
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amended in accordance with Applicable Law.
1.8 Directors and Officers. From and after the Effective Time, until
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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
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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, no 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 shares of VIALOG Stock (the "Stock Merger Consideration") and cash (the
"Cash Merger Consideration") (together with the Stock Merger Consideration, the
"Merger Consideration") pursuant to the following formula:
Aggregate Merger Consideration = $2,800,000
Aggregate Stock Merger Consideration = 133,913 shares
Aggregate Cash Merger Consideration = $1,260,001
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Merger Consideration = Aggregate Merger Consideration
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Aggregate Equity
Stock Merger Consideration = Aggregate Stock Merger Consideration
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Aggregate Equity
Cash Merger Consideration = Aggregate Cash 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, the number of Shares represented by such Certificate multiplied by
(i) the Stock Merger Consideration plus (ii) the Cash Merger Consideration. A
holder of more than one Certificate will have the right to receive the Stock
Merger Consideration and the Cash Merger Consideration multiplied by the number
of Shares represented by all such Certificates (the "Exchange Merger
Consideration"). The holders of all Certificates may allocate the Stock Merger
Consideration and Cash Merger Consideration disproportionately among all such
holders; provided, however, that (i) a Schedule 2.1 setting forth the allocation
of Stock Merger Consideration and Cash Merger Consideration among the holders of
all Certificates is completed and consented to in writing by all such holders
contemporaneously with the execution and delivery of this Agreement, all in such
form as required by VIALOG; (ii) for each Share, the total of (A) the allocated
Stock Merger Consideration multiplied by the Offering Price, plus (B) the
allocated Cash Merger Consideration, must equal the Merger Consideration, (iii)
the total allocation of the Stock Merger Consideration must equal the Aggregate
Stock Merger Consideration, and (iv) the total allocation of the Cash Merger
Consideration must equal the Aggregate Cash Merger Consideration. Any such
election to allocate the Stock Merger Consideration and Cash Merger
Consideration disproportionately may not thereafter be withdrawn or amended.
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.
(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 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.
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(d) In lieu of issuing fractional shares, VIALOG may convert a
holder's right to receive shares of VIALOG Stock pursuant to Section 2.1(a) into
a right to receive the highest whole number of shares of VIALOG Stock
constituting the non-cash portion of the Exchange Merger Consideration plus cash
equal to the fraction of a share of VIALOG Stock to which the holder would
otherwise be entitled multiplied by the Offering Price, and the Exchange Merger
Consideration to which a holder is entitled will be deemed to be such number of
shares of VIALOG Stock plus such cash plus the cash portion of the Exchange
Merger Consideration.
(e) If a dividend is declared upon the VIALOG Stock payable in VIALOG
Stock between the date hereof and the Effective Time, then the shares of VIALOG
Stock the holder has the right to receive pursuant to Section 2.1(a) will be
increased proportionately. If the outstanding VIALOG Stock is changed into or
exchanged for a different number or class of shares of stock of VIALOG or of
another corporation, whether through reorganization, recapitalization, stock
split-up, combination of shares, merger or consolidation, then there shall be
substituted for each such share of VIALOG Stock the holder has the right to
receive pursuant to Section 2.1(a) the number and class of shares of VIALOG
Stock into which each outstanding share of VIALOG Stock is so changed or
exchanged.
2.2 Exchange of Certificates; Exchange Agent and Exchange Procedures.
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(a) Prior to the Merger Closing, VIALOG will deposit or cause to be
deposited with a bank, trust company or other Entity designated by VIALOG (the
"Exchange Agent"), for the benefit of the holders of Shares for exchange in
accordance with this Article, through the Exchange Agent, the stock portion of
the Merger Consideration multiplied by the number of all Shares issued and
outstanding immediately prior to the Effective Time (other than Shares to be
canceled pursuant to Section 2.1(b)) (said number of Shares less Shares to be
canceled to be referred to as the "Net Shares"), and within one (1) business day
of the Financing Closing Date, a check or checks representing next day funds
from the Underwriter in (or, pursuant to instructions reasonably satisfactory to
the Exchange Agent, wire transfer of) an amount equal to the Cash Merger
Consideration multiplied by the number of Net Shares plus cash in an amount
sufficient to make payment for fractional shares, in exchange for all of the
outstanding Shares (collectively the "Exchange Fund"). The Exchange Agent will,
pursuant to irrevocable instructions from VIALOG, deliver the Exchange Merger
Consideration to be issued pursuant to Section 2.1(a) out of the Exchange Fund
to holders of Shares upon transmittal of Certificates for exchange as provided
therein and in Section 2.2(b). The Exchange Fund will not be used for any other
purposes. Any interest, dividends or other income earned by the Exchange Fund
will be for the account of VIALOG.
(b) As soon as reasonably practicable after the date as of which the
Stockholders act to approve and adopt this Agreement, the Merger and the
Transactions, the Company will notify VIALOG thereof and VIALOG will promptly
instruct the Exchange Agent to deliver to the Stockholders, for the purpose of
accepting Certificates for exchange on the terms provided in Section 2.1(a) at
the Effective Time, and subject to withdrawal of Certificates by their holders
prior thereto, (i) a letter of transmittal (which will specify that delivery
will be effected, and risk of loss and title to the Certificates will pass, only
upon proper delivery of the
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Certificates to the Exchange Agent and will be in such form and have such other
provisions as VIALOG may reasonably specify), and (ii) instructions to effect
the surrender of the Certificates in exchange for the Exchange Merger
Consideration. Subject to the occurrence of the Effective Time, upon surrender
of a Certificate for cancellation to the Exchange Agent 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 Sections
2.1(a) and 2.1(d), and the Certificate so surrendered will be canceled. In the
event of a transfer of ownership of Shares which is not registered in the
transfer records of the Company, the Exchange Merger Consideration may be issued
and paid in accordance with this Article to a transferee if the Certificate
evidencing such Shares is presented to the Exchange Agent, accompanied by all
documents reasonably required to evidence and effect such transfer and by
evidence that any applicable stock transfer taxes have been paid. The Exchange
Merger Consideration will be delivered by the Exchange Agent within two business
days (or such greater period not to exceed five business days as may be
customarily required by the Exchange Agent) following the later of (i) two
business days after the Financing Closing Date, or (ii) surrender of a
Certificate and the related Transmittal Documents, and cash payments for
fractional shares and the cash portion of the Exchange Merger Consideration may
be made by check (or, pursuant to instructions reasonably satisfactory to the
Exchange Agent, by wire transfer). No interest will be payable on the Exchange
Merger Consideration regardless of any delay in making payments. 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 Sections 2.1(a) and 2.1(d). 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) Any portion of the Exchange Fund which remains undistributed to
the holders of the Company Stock for thirty (30) days after the Effective Time
will be delivered to VIALOG upon demand by VIALOG, and any holders of
Certificates who have not theretofore complied with this Article will thereafter
look only to VIALOG for the Exchange Merger Consideration to which they are
entitled pursuant to this Article.
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(e) None of VIALOG, VIALOG Merger Subsidiary, the Company or the
Surviving Corporation will be liable to any holder of Shares for any shares of
VIALOG Stock or cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) Each of VIALOG, the Surviving Corporation and the Exchange Agent
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, the
Surviving Corporation or the Exchange Agent 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. To the extent that amounts are so withheld by
VIALOG, the Surviving Corporation or the Exchange Agent, 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, the Surviving Corporation or the Exchange Agent.
2.3 Stock Transfer Books. At the Effective Time, the stock transfer
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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; Etc. At the
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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 shares of VIALOG Stock issuable and 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), plus
cash in lieu of receipt of a fractional share in an amount determined as
provided in Section 2.1(d), (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, and (c) VIALOG
shall grant to the Principal Stockholder options for 75,000 shares of VIALOG
Stock as constituted at the Effective Time exercisable at the fair market value
at the Effective Time as determined by the VIALOG Board of Directors, 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 each of the 11 calendar quarters thereafter and
expiring on the third anniversary of the Effective Time.
8
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; Effect of Transaction.
---------------------------------------------------------------------
(a) The Company:
(i) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of
incorporation as set forth in Section 3.1(a) of the
Disclosure Schedule,
(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, 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 Schedule) 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
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 such enforceability may be
subject to bankruptcy, moratorium,
9
insolvency, reorganization, arrangement, voidable preference, fraudulent
conveyance and other similar laws relating to or affecting the rights of
creditors and except as the same may be subject to the effect of general
principles of equity. The affirmative vote or action by written consent of 100%
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
Schedule, 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, 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 Schedule) 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 Financing 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 Schedule. 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 Schedule, and is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction (as shown in Section 3.1(d) of the Disclosure Schedule) in which
the character of its property or the nature of its business or operations
requires such qualification or authorization,
10
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 Schedule) of each
Subsidiary, free and clear of all Liens (except to the extent set forth in
Section 3.1(d) of the Disclosure Schedule), 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 Schedule (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 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 Schedule, 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 Schedule, 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,
(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
11
(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 Schedule. None of the Entities, if
any, so set forth in Section 3.2(c) of the Disclosure Schedule 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 Schedule) 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
Schedule), 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 Schedule.
3.3 Changes in Condition. Since the date of the most recent financial
--------------------
statements forming part of the Financial Statements, except to the extent
specifically described in Section 3.3 of the Disclosure Schedule, 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 Schedule.
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 Schedule.
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 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
Schedule.
12
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 Schedule. 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 Schedule), 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 Schedule. 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.
(b) Section 3.5(b) of the Disclosure Schedule 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. 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 Schedule. The real property
13
(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 Schedule:
(i) 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 Environmental Laws and all applicable
zoning, wetlands, land use and other Applicable Law, and
(ii) neither the Company nor any Subsidiary, nor, to the
knowledge of the Company, any landlord, tenant or other
occupant or user of any such real property, has used such
real property for the storage or disposal of Hazardous
Materials or engaged in the business of storing or
disposing of Hazardous Materials, except for use in the
ordinary course of business of the type conducted by the
Company.
3.6 Compliance with Private Authorizations. Section 3.6 of the Disclosure
--------------------------------------
Schedule 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 Schedule contains a description
of:
(i) all Legal Actions which are pending or, other than those
finally adjudicated or settled on or before December 31,
1996, in which the Company or any of its Subsidiaries, or
any of its officers or directors, is, or at any time since
its organization has been,
14
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, 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, 1991 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
Schedule.
(c) With respect to matters, if any, of a nature referred to in
Sections 3.7(a) or 3.7(b) of the Disclosure Schedule, all such information and
matters set forth in the Disclosure
15
Schedule, 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 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 Schedule.
(b) Section 3.8(b) of the Disclosure Schedule 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 Schedule 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 no less favorable 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 Schedule.
3.10 Insurance.
---------
(a) Section 3.10(a) of the Disclosure Schedule 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.
16
(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 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 Schedule, 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 C corporation under the Code, except
as otherwise set forth in Section 3.11(a) of the Disclosure Schedule. 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 Schedule.
(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.
17
(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 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 Schedules, 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 Schedule.
(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 Schedule.
(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 Schedule.
3.12 Employee Retirement Income Security Act of 1974.
-----------------------------------------------
(a) Section 3.12(a) of the Disclosure Schedule 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 Schedule:
(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
18
Code), whether or not waived, as of the last day of the
most recently completed fiscal year of such Plan,
(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,
19
(xii) except as set forth in Section 3.12(a) of the Disclosure
Schedule (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 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
Schedule,
(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,
20
(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.
(c) Section 3.12(c) of the Disclosure Schedule 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 Schedule. 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 Schedule, (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, put 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
Merger Closing, 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 Schedule, 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 Schedule. 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
21
Company is not controlled by any other Person, except as set forth in Section
3.15(b) of the Disclosure Schedule.
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 Schedule), other than those listed
or described in Section 3.16(a) of the Disclosure Schedule. 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 Schedule. 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
Schedule, 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 good, and except as set forth in Section 3.16(c) of the
Disclosure Schedule, 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 Financing Closing Date 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
22
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
department, from the date hereof or through the Financing Closing Date or during
the twelve-month period immediately prior thereto.
3.17 Material Agreements.
-------------------
(a) Listed on Section 3.17(a) of the Disclosure Schedule 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 Schedule, 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 such enforceability
may be subject to bankruptcy, moratorium, insolvency, reorganization,
arrangement, voidable preference, fraudulent conveyance and other similar laws
relating to or affecting the rights of creditors and except as the same may be
subject to the effect of the general principles of equity), 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 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 Schedule 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 Schedule.
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, 1996 to the date of this Agreement, and until the Financing Closing
Date, except as may be described in Section 3.18(a) of the Disclosure Schedule
or as may be required or permitted expressly by the terms of this Agreement or
as may be approved in writing by VIALOG:
23
(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,
(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 Schedule,
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,
24
(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,
(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
Schedule, 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.
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
25
Company or the Company and its Subsidiaries taken as a whole, except as set
forth in Section 3.20 of the Disclosure Schedule.
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 Schedule, neither the Company nor
any Subsidiary or any Person acting for or on behalf of the Company or any
Subsidiary, including without limitation any insurance carrier, has at any time
since December 31, 1996, 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
Schedule, 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
26
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
Schedule:
(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
Schedule, 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 Financing Closing
Date, 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
27
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
Schedule, 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 Schedule 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 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 Schedule 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 Schedule.
3.24 Materiality. 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
Financing Closing Date, will be solvent.
3.26 VIALOG Stock. The Stockholders will hold for investment the VIALOG
------------
Stock constituting the Stock Merger Consideration.
3.27 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
28
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".
3.28 Certain State Statutes Inapplicable. The provisions of applicable
-----------------------------------
New Jersey takeover laws, if any, will not apply to this Agreement, the Merger
or the Transactions.
3.29 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 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 a specific date will be true and correct in all material respects
as of such date.
3.30 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 3.30 of the Disclosure Schedule and all information relating to
the Company in the Prospectus (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 Financing Closing Date, 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.
3.31 Predecessor Status; Etc. Set forth in Section 3.31 of the Disclosure
-----------------------
Schedule is a listing of all names of all predecessor companies of the Company
and the names of any Entities from which, since December 31, 1991, the Company
previously acquired material properties or assets. Except as disclosed in
Section 3.31 of the Disclosure Schedule, 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 3.31
of the Disclosure Schedule, has there been, since December 31, 1991, any sale or
spin-off of material assets by the Company or any Subsidiary other than in the
ordinary course of business.
29
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, of 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 the Principal Stockholder will
constitute legal, valid and binding obligations of the Principal Stockholder,
enforceable in accordance with their respective terms, except as such
enforceability may be subject to bankruptcy, moratorium, insolvency,
reorganization, arrangement, voidable preference, fraudulent conveyance and
other similar laws relating to or affecting the rights of creditors and except
as the same may be subject to the effect of general principles of equity.
4.4 Title to Shares. Except as set forth in Section 4.4 of the
---------------
Disclosure Schedule (all of which exceptions will be removed, satisfied or
discharged no later than the Merger Closing), the Principal Stockholder owns and
has good and merchantable title to those Shares owned by the 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
30
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 the Principal Stockholder,
(b) will result in or permit the creation or imposition of any
Lien upon any property or asset of the 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 the Principal Stockholder with
the provisions of this Agreement relating to the Financing and registration
rights, pursuant to the HSR Act (if applicable) or as set forth in Section 4.5
of the Disclosure Schedule.
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 Schedule,
each of VIALOG and VIALOG Merger 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
31
VIALOG and VIALOG Merger Subsidiary, respectively, enforceable in accordance
with their respective terms, except as such enforceability may be subject to
bankruptcy, moratorium, insolvency, reorganization, arrangement, voidable
preference, fraudulent conveyance and other similar laws relating to or
affecting the rights of creditors and except as the same may be subject to the
effect of general principles of equity.
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 Schedule, 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, 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 registration rights
and except pursuant to the HSR Act (if applicable).
5.4 Financing. On the Financing Closing Date VIALOG has or, upon
---------
consummation of the Financing, 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 Sections 2.1(a) and 2.1(d),
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 and as set forth in
----------------
Section 5.5 of the Disclosure Schedule, 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 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 and VIALOG Merger Subsidiary. Neither
-------------------------------------------------------
VIALOG nor VIALOG Merger Subsidiary has incurred any liabilities or Contractual
Obligations, except those incurred in connection with its organization and
ordinary course business operations (including Employment Arrangements), the
negotiation of this Agreement and the performance of this Agreement and of the
Participating Agreements with the Other Participating Companies, the proposed
registration of VIALOG Stock under the Securities Act, compliance with the
32
requirements of the HSR Act (if applicable) and the performance of all other
Governmental Filings, and the financing of the foregoing. Except as contemplated
by the foregoing, neither of VIALOG or VIALOG Merger Subsidiary has engaged in
any business activities of any type or kind whatsoever, nor entered into any
agreements or arrangements with any Person, nor is it subject to or bound by any
obligation or undertaking.
5.7 Capitalization of VIALOG and VIALOG Merger Subsidiary. The
-----------------------------------------------------
authorized and outstanding capital stock of each of VIALOG and VIALOG Merger
Subsidiary is as set forth in Section 5.7 of the Disclosure Schedule. 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. 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. As of
the date of this Agreement, except for this Agreement, the Participating
Agreements, the Underwriting Agreement, and as set forth on Section 5.7 of the
Disclosure Schedule, there are not any outstanding or authorized subscriptions,
options, warrants, calls, rights, commitments or any other agreements of any
character obligating VIALOG or VIALOG Merger Subsidiary to issue any shares of
VIALOG Stock or other shares of capital stock of VIALOG or of VIALOG Merger
Subsidiary, or any other securities convertible into or evidencing the right to
subscribe for any such shares. When issued in connection with the Merger, the
VIALOG Stock will be duly authorized, validly issued, fully paid and non-
assessable and will not be 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 Prospectus 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 or the Prospectus 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 Prospectus.
5.9 Solvency. After the Effective Time, and upon the consummation of the
--------
Merger, the Participating Mergers and the Transactions, VIALOG and its
subsidiaries, individually and taken as a whole, will be solvent.
5.10 This Section Intentionally Left Blank.
-------------------------------------
33
5.11 Participating Agreements of Other Participating Companies. Except as
---------------------------------------------------------
set forth in Section 5.11 of the Disclosure Schedule or as dictated by the
structuring of any transaction with a Participating Company as a sale of assets
or stock rather than a merger or as set forth in any employment or
noncompetition agreement required to be executed as a condition to closing
pursuant to Article 7 of a Participating Agreement, each Participating Agreement
entered into among VIALOG, any Subsidiary of VIALOG, and any Other Participating
Company contains provisions substantially identical in form and substance to the
provisions contained in Articles 3 through 12 of this Agreement, including,
without limitation, the representations and warranties, covenants, termination
provisions and indemnification provisions contained in those Articles. Except as
set forth in Section 5.11 of the Disclosure Schedule or as dictated by the
structuring of any transaction with a Participating Company as a sale of assets
or stock rather than a merger or as set forth in any employment or
noncompetition agreement required to be executed as a condition to closing
pursuant to Article 7 of a Participating Agreement, no Participating Agreement
contains any material provision which is not contained in substantially
identical form in this Agreement.
5.12 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.
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
34
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,
and 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
VIALOG or to the Company, as the case may be, in connection with the
Transactions.
(b) 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.
(c) 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.
(d) 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 commercially reasonable 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 commercially
reasonable 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, other filings under the
Securities Act or
35
the HSR Act and any other submissions requested by the SEC or the Federal Trade
Commission or Department of Justice) 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 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 commercially reasonable 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 commercially reasonable 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 commercially reasonable 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 Schedule, 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 Schedule.
36
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 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 Compliance with the Securities Act. Each of VIALOG and the Company
----------------------------------
will use its commercially reasonable efforts to cause each executive officer,
each director and each other Person who is an "affiliate," as that term is
defined in paragraph (a) of Rule 144 under the Securities Act, of the Company,
or who will, upon consummation of the Merger and the Transactions become, an
"affiliate" of VIALOG, and each Stockholder of the Company, to deliver to VIALOG
on or prior to the Merger Closing a written agreement (the "Registration Rights
Agreement") to the effect that such Person will not offer to sell, sell or
otherwise dispose of any shares of VIALOG Stock issued pursuant to the
consummation of the Transactions, except, in each case, pursuant to an effective
registration statement or in compliance with Rule 144, or in a transaction
which, in the opinion of legal counsel for such "affiliates" (such legal counsel
to be satisfactory to legal counsel for VIALOG), as set forth in a written
opinion satisfactory in form, scope and substance to the legal counsel of
VIALOG, is exempt from registration under the Securities Act and applicable
state securities laws. The Registration Rights Agreement shall be substantially
in the form of Exhibit 6.4. Notwithstanding anything to the contrary in this
-----------
Agreement, VIALOG will have no obligation under the Registration Rights
Agreement or otherwise to register under the Securities Act or any applicable
state securities laws, or otherwise to facilitate the transfer of, shares of
VIALOG Stock received by any such Person who fails to execute the Registration
Rights Agreement as provided herein, and such Person will forfeit all "demand
registration" and other rights provided for in the Registration Rights Agreement
and all "piggyback" rights provided for in the Registration Rights Agreement.
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
37
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 Schedule 6.5(b) (or Section 6.5(b) of
the Disclosure Schedule, as the case may be) or with the written permission of
VIALOG, the Company agrees further that the Company (i) will not make, declare
or pay any dividends or other distributions on any Shares 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
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 June 1, 1996 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. 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 inquires 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
38
Board of Directors in accordance with, and based upon the written advice of
outside counsel, is required under Applicable Law. 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). 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 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, 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 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 (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, upon receipt from the Person to whom expenses
are advanced of an undertaking to repay such advances to the extent required
under the BCA). 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 Schedule.
(b) This Section 6.7 is intended to be for the benefit of, and
will be enforceable by, the 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.
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 Schedule 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.
39
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 and the written advice of legal counsel to VIALOG that such
press release or such public statement will not affect the issuance of VIALOG
securities under the Securities Act. 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 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 National Association of Securities Dealers, Inc.
Automated Quotation System, or as recommended by outside counsel. VIALOG will
exercise commercially reasonable efforts to furnish the Company a copy of any
press release relating to Other Participating Companies prior to its publication
and will furnish a copy of any such press release so issued as soon as
practicable after its publication, but any failure on VIALOG's part to do so
will not be deemed a breach of or default under this Agreement. 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 Obligations of VIALOG. VIALOG agrees to take all action necessary to
---------------------
cause VIALOG Merger Subsidiary and the Surviving Corporation to perform their
respective obligations under this Agreement and will use commercially reasonable
efforts to consummate, and cause VIALOG Merger Subsidiary to consummate, the
Merger on the terms and conditions set forth in this Agreement.
6.12 Employee Benefits; Severance Policy. VIALOG will cause the Surviving
-----------------------------------
Corporation to maintain through its fiscal year ending December 31, 1997:
(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
40
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 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 New Jersey 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 Schedule,
(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 Schedule 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
41
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 Employment and Noncompetition. On or before the Merger Closing, the
-----------------------------
Principal Stockholder will execute and deliver to VIALOG the employment
agreement contemplated by Section 7.2(s) to be effective as of the Financing
Closing Date. From and after the Financing Closing Date, the Principal
Stockholder will not compete with VIALOG or any of its Subsidiaries except to
the extent not prohibited by Exhibit 7.2(s).
---------------
6.17 Distributions, Liabilities, Etc.
--------------------------------
(a) The Company and VIALOG acknowledge and agree that the Company
contemplates that (i) prior to the Merger Closing it will make certain
Distributions to Stockholders, employees of and consultants to the Company, (ii)
no later than Merger Closing, it will cause certain Liens to be discharged in
their entirety (with financing statement terminations properly recorded), and
(iii) as of Merger Closing, it 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 Schedule.
Schedule 6.17 (or Section 6.17 of the Disclosure Schedule, as the case may be)
lists each such Distribution, Lien and liability;
(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 Schedule 6.17 (or
Section 6.17 of the Disclosure Schedule, as the case may be); and
(c) The Company further agrees that, notwithstanding anything to
the contrary in Section 10.1, it 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 Schedule 6.17 (or Section 6.17
of the Disclosure Schedule, as the case may be) or any damage or harm
attributable to a liability to be indemnified against as contemplated by
Schedule 6.17 (or Section 6.17 of the Disclosure Schedule, as the case may be).
6.18 Release from Personal Guarantees. On or prior to the Financing
--------------------------------
Closing Date, VIALOG will either obtain releases of the personal guarantees of
the Stockholders of Indebtedness or discharge or arrange for the discharge of
such Indebtedness. VIALOG will either obtain releases of the personal guarantees
of the Stockholders of Contractual Obligations
42
which extend beyond the Financing Closing Date or indemnify and hold the
Stockholders harmless from such personal guarantees.
6.19 No Significant Changes. VIALOG agrees that there will be no
----------------------
"significant change" (as defined below) in the conduct of the business of the
Company for a period of two years after the Financing Closing Date without the
approval of a majority in interest of the Stockholders. "Significant change"
means any change in the location of the Company's facilities, a physical merging
of the Company's operations with another operation, any change in the position
of those employees who receive employment agreements pursuant to Section 7.2(s),
or a reduction in force or the termination of any employee except as related to
employee performance or the contemplated reorganization of the combined
sales/marketing staff or the accounting function.
6.20 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 Prospectus,
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 such Prospectus.
(c) VIALOG agrees to use its best efforts to prepare the
Financing Document prior to October 30, 1997 and furnish to the Company and the
Principal Stockholder a copy of information concerning the Company and the
Stockholders included therein and each amendment thereto two business days prior
to use thereof.
6.21 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 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.
6.22 Self Dealing. VIALOG agrees that it will not and will not allow any
------------
Subsidiary to enter into contracts and business arrangements with Persons and
Entities owned in whole or in part by officers and directors of VIALOG or any
Subsidiary except on an arms length basis and with the approval of the VIALOG
Board of Directors.
43
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,
(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 (except as provided
in clause (iv) immediately succeeding) shall have been satisfied or properly
waived and (iv) release of the closing documents relating to the Financing and
distribution of the proceeds of the sale of securities of VIALOG sold and
purchased in the Financing shall have been unconditionally authorized by the
Underwriter upon consummation of the Merger and the Participating Mergers,
(e) This subsection intentionally left blank.
(f) Subject to such material amendments, if any, as shall be
proposed prior to Merger Closing by VIALOG to be effective immediately after the
Merger Closing, and to the extent reasonably satisfactory to the Company and the
Other Participating Companies, the
44
VIALOG stock option plan described in the Registration Statement shall have been
approved and adopted by all action (corporate and other) required for
implementation thereof,
(g) This subsection intentionally left blank.
(h) VIALOG shall have delivered to the Exchange Agent that number
of shares of VIALOG Stock as determined pursuant to Section 2.1 of this
Agreement and of the Participating Agreements issued in the name of the
Stockholders and the stockholders and other Persons holding equity interests in
the Participating Companies.
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 Wells, Jaworski,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, which may contain limitations and qualifications as to scope
and law and rely on certifications as to facts of officers of the Company and
public officials as are reasonable and customary to opinions delivered in the
type of business transactions covered by this Agreement, addressing the
following:
(i) Due organization, valid existence and good standing
of the Company and each Subsidiary, together with an
opinion as to foreign qualifications,
(ii) Requisite corporate power and authority and all, to
such counsel's knowledge, necessary Governmental
Authorizations for the Company and each Subsidiary to
own, lease and operate its properties and to carry on
its business as it is now being conducted,
(iii) In respect of the Company and each Subsidiary, the
number of shares of capital stock or other voting
securities authorized, issued, reserved for issuance
or outstanding as of the date of this Agreement and
the Effective Time and number of Option Securities
and amount of Convertible Securities outstanding as
of such dates,
45
(iv) Due authorization, valid issuance, full payment and
non-assessability of outstanding shares of capital
stock of the Company and each Subsidiary and (upon
issuance on the terms and conditions specified in the
Option Securities and Convertible Securities pursuant
to which they are issuable) all shares of such
capital stock subject to issuance and absence of
preemptive rights with respect thereto,
(v) To the knowledge of counsel, (A) there are not
Contractual Obligations to repurchase, redeem or
otherwise acquire any shares of Company Stock or any
stock of any Subsidiary, or any Option Securities and
Convertible Securities, (B) the Merger will not cause
an acceleration of the exercise or vesting schedule
of any Option Securities and Convertible Securities
and (C) all outstanding shares of stock of each
Subsidiary are owned by the Company or by another
Subsidiary, free and clear of any Lien (except as set
forth in Section 3.1(d) of the Disclosure Schedule),
(vi) Corporate power and authority of the Company to
execute and deliver the Agreement and all Collateral
Documents executed or required to be executed
pursuant thereto or to consummate the Merger, to
perform its obligations thereunder and to consummate
the Merger,
(vii) Due and valid authorization by the Company and the
Principal Stockholder by all necessary corporate (and
other) action of the execution, delivery and
performance of the Agreement and all Collateral
Documents executed or required to be executed
pursuant thereto or to consummate the Merger and the
consummation by the Company of the Merger,
(viii) Due authorization and valid execution and delivery
by, and enforceability against, the Company and the
Principal Stockholder of the Agreement and all
Collateral Documents executed or required to be
executed pursuant hereto or thereto or to consummate
the Merger and the Transactions except (A) as such
enforceability may be subject to bankruptcy,
moratorium, insolvency, reorganization, arrangement,
voidable preference, fraudulent conveyance and other
similar laws relating to or affecting the rights of
creditors and as the same may be subject to the
effect of general principles of equity and (B) that
no opinion need be expressed as to the enforceability
of indemnification and noncompetition provisions
included herein,
46
(ix) The execution and delivery of the Agreement and all
Collateral Documents executed or required to be
executed pursuant thereto or to consummate the Merger
by the Company do not, and the performance of the
Agreement and all Collateral Documents executed or
required to be executed pursuant thereto or to
consummate the Merger and the consummation of the
Transactions by the Company will not, (i) conflict
with or violate the Organizational Documents of the
Company or any Subsidiary, (ii) conflict with or
violate any Applicable Law, or (iii) to counsel's
knowledge, constitute a breach or default under, or
give to others any right of termination, amendment,
acceleration, increased payments or cancellation of,
or result in the creation of a Lien on any property
or asset of the Company or any Subsidiary pursuant
to, any Material Agreement to which the Company or
any Subsidiary is a party or by which the Company or
any Subsidiary or any property or asset of the
Company or any Subsidiary is bound or affected,
(x) No consents from or filings with any Governmental
Authority (other than filings under the HSR Act, if
applicable, and filings of certificates of merger)
are required for the execution and delivery of the
Agreement by the Company and the performance of the
Agreement and all Collateral Documents executed or
required to be executed pursuant thereto or to
consummate the Merger and the consummation of the
Merger by the Company,
(xi) Required filings with the Secretary of State of New
Jersey have been made,
(xii) To the knowledge of counsel, absence of pending or
threatened material Legal Action,
(xiii) Nonapplicability of New Jersey takeover laws, and
(xiv) such other customary matters concerning the
Stockholders in connection with the Financing as may
reasonably be requested by the Underwriter or its
counsel.
(c) 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,
47
(d) Each Principal Stockholder (other than a Principal
Stockholder executing and delivering the agreement contemplated by Section
7.2(s)) and other Persons listed on Schedule 7.2(d) (or Section 7.2(d) of the
Disclosure Schedule, as the case may be) shall have executed and delivered to
VIALOG a noncompetition agreement, substantially in the form of Exhibit 7.2(d),
---------------
(e) 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 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,
(f) 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 6.1(a), 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,
(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
48
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 Schedule, 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 Financing Closing
Date, 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 6.1(a) or in the most recent financial statements set
forth in the Financing Document,
(j) 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,
(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
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 of 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
49
from such Principal Stockholder having acted as a director or officer of the
Company or such Subsidiary as contemplated by Section 6.7),
(o) The Registration Rights Agreement shall have been executed
and delivered by the Stockholders and the Executive Officers and principal
Stockholders of VIALOG.
(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 Schedule 7.2(q) (or Section 7.2(q) of the Disclosure Schedule,
as the case may be) and are executed, delivered and effective as of the
Effective Time, all Contractual Obligations set forth in Section 3.9 of the
Disclosure Schedule 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
6.20, 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) The Principal Stockholder shall have executed and delivered
to VIALOG an employment and noncompetition agreement, substantially in the form
of Exhibit 7.2(s),
-------------
(t) The individuals listed on Schedule 7.2(t) (or Section 7.2(t)
of the Disclosure Schedule, as the case may be) shall have executed and
delivered to VIALOG an Employment Arrangement substantially in the form of
Exhibit 7.2(t) and reasonably satisfactory to VIALOG and its counsel, and
(u) VIALOG shall have received a letter from its Accountants to
the effect that the Merger and the Transactions, the Participating Mergers and
the transactions contemplated thereby, and the acquisition of stock of any Other
Participating Company by VIALOG and the transactions contemplated thereby
together qualify as a transaction to which Section 368(a) of the Code applies or
as a cash forward 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.
50
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:
(a) 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, which may contain limitations and qualifications as to scope and law
and rely on certifications as to facts of officers of VIALOG and VIALOG Merger
Subsidiary and public officials as are reasonable and customary to opinions
delivered in the type of business transactions covered by this Agreement,
addressing the following:
(i) Due organization, valid existence and good standing
of VIALOG and VIALOG Merger Subsidiary,
(ii) Due authorization and valid execution and delivery
by, and enforceability against, VIALOG and VIALOG
Merger Subsidiary of the Agreement except (A) as such
enforceability may be subject to bankruptcy,
moratorium, insolvency, reorganization, arrangement,
voidable preference, fraudulent conveyance and other
similar laws relating to or affecting the rights of
creditors and as the same may be subject to the
effect of general principles of equity and (B) that
no opinion need be expressed as to the enforceability
of indemnification provisions,
(iii) Due authorization, valid issuance, full payment and
non-assessability of and absence of preemptive rights
with respect to the shares of VIALOG Stock to be
received by the Stockholders,
(iv) The execution and delivery of the Agreement by VIALOG
and VIALOG Merger Subsidiary and all Collateral
Documents executed or required to be executed
pursuant thereto or to consummate the Merger by them
do not, and the performance of the Agreement and all
Collateral Documents executed or required to be
executed pursuant thereto or to consummate the Merger
and the consummation of the Merger by them will not,
(A) conflict with or violate the Organizational
Documents of VIALOG or VIALOG Merger Subsidiary, (B)
conflict with or violate any Applicable Law, or (C)
to counsel's knowledge, constitute a default under,
or give to others any right of termination,
amendment, acceleration, increased payments or
cancellation of, or result in the creation of a Lien
on any property or assets of VIALOG or VIALOG Merger
Subsidiary pursuant to, any Material
51
Agreement to which either is a party or by which
either or any property or asset of either is bound or
affected,
(v) No consents from or filings with any Governmental
Authority (other than filings under the HSR Act, if
applicable, and filings of certificates of merger)
are required for the execution and delivery of the
Agreement by VIALOG and VIALOG Merger Subsidiary and
the performance of the Agreement and all Collateral
Documents executed or required to be executed
pursuant thereto or to consummate the Merger and the
consummation of the Merger by them, and
(vi) The required filings with the Delaware Secretary of
State and the New Jersey Secretary of State shall
have been made, and a Certificate of Merger shall
have been issued by the New Jersey Secretary of State
for the Merger.
(b) 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,
(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 on Schedule 7.2(t) (or Section 7.2(t) of the Disclosure Schedule, as the
case may be) shall have been executed by the Surviving Corporation and delivered
by VIALOG to the indicated person,
52
(e) 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,
(f) VIALOG shall have obtained the insurance set forth in Section
6.7(c),
(g) 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,
(h) The Company shall have received a letter from the Accountants
to the effect that the Merger and the Transactions qualify as a transaction to
which Section 368 of the Code applies for federal income tax purposes and the
exchange of the Shares for the Stock Merger Consideration, as contemplated
hereby, will not result in any taxable income or gain or deductible loss to the
common stockholders of the Company in their capacities as such common
stockholders to the extent of the Stock Merger Consideration, and
(i) The by-laws of VIALOG shall have been amended to remove the
right of first refusal contained therein and the Company shall have received
certification to its reasonable satisfaction that the VIALOG Stock to be issued
in the Merger will not be subject to any transfer restrictions or purchase
options under VIALOG's Certificate of Incorporation or by-laws.
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 or other Person of
material Legal Action, or
53
(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 by or beyond the Termination Date, or
(ii) in the event ▇▇▇▇▇▇▇▇ & Company, Inc. shall terminate
its engagement or otherwise withdraw as an
Underwriter for any substantive reason other than
material failure to perform or material
nonfulfillment of any covenant by the Company or the
Principal Stockholder or a material breach of a
representation or warranty of the Company or the
Principal Stockholder
(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,
(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 against 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 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
54
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, or
(viii) in the event of a material breach of this Agreement
by the Company or the Principal Stockholder that has
not been cured, or 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.
(e) by VIALOG if (i) 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 (i)
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)), (ii) the Board of
Directors of the Company shall have recommended or resolved to recommend to the
Stockholders an Other Transaction, (iii) 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 (iv) the
55
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), 6.9 and 8.5, 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.
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. If this Agreement is terminated,
---------------------------------
then 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"). VIALOG
acknowledges and agrees 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. It is
understood and agreed that certain of such Expenses may be paid by the Company
prior to the execution of this Agreement, and VIALOG agrees to refrain from
taking any action which would prevent or delay the payment of reasonable
Expenses by the Company. Any Expenses incurred and not paid will constitute
liabilities of the Company. VIALOG agrees to take all action necessary to cause
the Surviving Corporation to pay promptly any of the foregoing reasonable
Expenses incurred, but not paid, by the Company prior to the Effective Time.
56
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
FEDERAL SECURITIES ACT AND OTHER
RESTRICTIONS ON VIALOG STOCK
9.1 Shares not Registered. The Principal Stockholder acknowledges that
---------------------
the shares of VIALOG Stock to be delivered to Stockholders pursuant to this
Agreement have not and will not be registered under the Securities Act (except
pursuant to the Registration Rights Agreement) and may not be resold except
pursuant to an effective registration statement under the Securities Act or
pursuant to an exemption from registration. The Principal Stockholder represents
and warrants that the VIALOG Stock to be acquired by the Stockholders pursuant
to this Agreement is being acquired solely for its own account, for investment
purposes only and with no present intention of distributing, selling or
otherwise disposing of it in connection with a distribution.
9.2 Economic Risk; Sophistication. The Principal Stockholder represents
-----------------------------
and warrants that the Principal Stockholder and the other Stockholders are able
to bear the economic risk of an investment in the VIALOG Stock acquired pursuant
to this Agreement and can afford to sustain a total loss on such investment and
have such knowledge and experience in financial and business matters that they
are capable of evaluating the merits and risks of the proposed investment and
therefore have the capacity to protect their own interests in connection with
the acquisition of the VIALOG Stock. The Principal Stockholder acknowledges that
prior to the Merger Closing VIALOG will have furnished a copy of the Prospectus
to the Stockholders and at the Merger Closing the Stockholders will be required
to confirm that VIALOG has responded to due diligence and information requests
made on behalf of the Company similar in extent and scope to the due diligence
requests made to the Company by VIALOG. The Principal Stockholder will at that
time confirm that the Principal Stockholder has had an adequate opportunity to
ask questions and receive answers from the officers of VIALOG (and, in the case
of the other Stockholders, to ask questions and receive answers from the
Principal Stockholder) concerning any and all matters relating to this
Agreement, the Merger, the Transactions, or Other Participating Companies, the
Participating Agreements and the Financing Document, and have read and
understood the matters described in the copies of the Financing Document
provided to them including, without limitation, the background and experience of
the officers and directors of VIALOG, the plans for the operations of the
business of VIALOG, the potential dilutive effects of the Financing and future
acquisitions and projected uses of the proceeds of the Financing. The Principal
Stockholder will confirm at the Merger Closing that the Principal Stockholder
has asked any and all questions in the nature described in the preceding
sentence or otherwise of interest in connection with the exchange of VIALOG
Stock for Shares as provided
57
in this Agreement, and all questions have been answered to the Principal
Stockholder's satisfaction.
9.3 Restrictions on Resale; Legends. The Principal Stockholder agrees,
-------------------------------
and the Company will use commercially reasonable efforts to cause each other
Stockholder to agree, not to offer, sell, assign, exchange, transfer, encumber,
pledge, distribute or otherwise dispose of the VIALOG Stock to be acquired by
them pursuant to this Agreement except after full compliance with all of the
applicable provisions of the Securities Act and applicable state securities
Laws, and any attempt by a Stockholder to do so will be treated as ineffective
for all purposes. The certificates of VIALOG Stock issued pursuant to Section
2.1(a) of this Agreement will bear the following legend substantially as set
forth:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY
APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD,
ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED,
DISTRIBUTED OR OTHERWISE DISPOSED OF WITHOUT (1) REGISTRATION
UNDER THE ACT AND ANY APPLICABLE STATE LAW, OR (2) AN OPINION
(SATISFACTORY TO VIALOG) OF COUNSEL (SATISFACTORY TO VIALOG)
THAT REGISTRATION IS NOT REQUIRED.
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
58
or more of the Company or the Stockholders under this
Agreement or any Collateral Document;
(iii) 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 Principal Stockholder (and each Stockholder that
delivers the agreements contemplated by Section 6.4) and their respective
Affiliates, agents, heirs, successors and assigns (collectively, the "Company
Indemnified Parties") harmless as a result of, from or against:
(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) No Principal Stockholder will be required to pay to the
VIALOG Indemnified Parties an aggregate amount in excess of an amount equal to
the cash received by such Stockholder as the cash portion of the Exchange Merger
Consideration pursuant to Sections 2.1(a) and 2.4, cash received by such
Stockholder pursuant to Section 2.1(d) plus, with respect to shares of VIALOG
Stock issued to such Stockholder as the stock portion of the Exchange Merger
Consideration pursuant to Section 2.1(a), Section 2.1(e) and Section 2.4, the
Indemnity Value thereof. VIALOG will not be required to pay any Company
Indemnified Party an aggregate amount in excess of the Indemnity Value of the
shares of VIALOG Stock issued to such Company Indemnified Party plus the amount
of cash delivered to such Company Indemnified Party pursuant to Section 2.1(a),
Section 2.1(d) and Section 2.4. No Claim for indemnification may be commenced
beyond the period applicable to such Claim set forth in Section 11.1.
(d) Notwithstanding the foregoing, no Principal Stockholder will
be required to pay any amount for indemnification to the VIALOG Indemnified
Parties except to the extent the aggregate amount of Claims under this Section
10.1 asserted collectively against the Principal Stockholder exceeds the greater
of $100,000 or one percent (1%) of the Aggregate Merger Consideration paid to
all Stockholders pursuant to Sections 2.1(a), 2.1(d), 2.1(e) and 2.4.
59
10.2 Procedures Concerning Claims by Third Parties; Payment of Damages;
------------------------------------------------------------------
etc.
---
(a) If any Legal Action 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 Legal Action 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 Legal Action which related
to any Claims 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 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 Legal Action which related to any such Claims, it will within thirty
(30) days of receipt of said notice (or sooner, if the nature of the Legal
Action 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 Legal Action which relates to any such Claims, fails to
notify the indemnified party of its election as herein provided or contests its
obligation to indemnify the indemnified party for such Claims under this
Agreement, the indemnified party may defend against, negotiate, settle or
otherwise deal with such Legal Action. If the indemnified party defends any
Legal Action, then the indemnifying party will reimburse the indemnified party
for reasonable Claims incurred in defending such Legal Action upon a final
determination that the indemnified party was entitled to indemnity hereunder.
Neither the indemnifying party nor the indemnified party may settle any Legal
Action 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 Legal Action 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 Legal Action.
(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 Legal Action hereunder, the indemnifying party will pay all of
the sums due and owing to the indemnified party by wire transfer of immediately
available funds, or by delivery of shares of VIALOG Stock, as permitted pursuant
to the definition of Indemnity Value in Article 12, 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 Legal Action instituted or asserted by any Person other
than such indemnified party and
60
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 legal 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.
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 Principal Stockholder and
its Representatives reasonable access to all files, documents, instruments,
papers, books and records relating to the Company or the Principal Stockholder,
and to all employees of the Company in connection with the matters for which
indemnification is sought to the extent the Principal Stockholder reasonably
deems necessary in connection with his 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 and Section 3.12 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 January 31, 1999.
61
(b) Except as set forth in Section 8.2, and except for the
representations, warranties, covenants and agreements contained in Article 3,
Article 4 and Article 5, 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 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 delivered or transmitted, and will be effective upon
receipt, if delivered personally, 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:
VIALOG Corporation
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, President
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇'▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, llp
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company:
▇▇▇▇▇ ▇▇▇▇▇▇, President
American Conferencing Company, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Wells, Jaworski, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
62
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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
----------------
Schedule, 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 Delaware Law may be
-------------
applicable to the Merger, this Agreement will be governed by, and construed in
accordance with, the substantive laws of the Commonwealth of Massachusetts
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.
11.9 Enforcement of the Agreement. Each Party recognizes and agrees that
----------------------------
each other Party's remedy at law for any breach of the provisions of this
Agreement would be inadequate
63
and agrees that for breach of such provisions, such 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 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 Supplements. From time to time prior to the Financing
----------------------
Closing Date, the Company will promptly supplement or amend the Disclosure
Schedule 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 Schedule or which
is necessary to correct any information in such Disclosure Schedule which has
been rendered inaccurate thereby; provided, however, that no supplement or
amendment to the Disclosure Schedule 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 Schedule 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.
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
64
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, 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 venture 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).
Aggregate Cash Merger Consideration will have the meaning given to it in
Section 2.1(a).
Aggregate Stock 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 Schedule 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.
65
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.
Cash Merger Consideration will have the meaning given to it in Section
2.1(a).
Certificate will have the meaning given to it in Section 2.1(a).
Claims means any and all 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.
66
Company Indemnified Parties will have the meaning given to it in Section
10.1(b).
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 Schedule means the disclosure schedules dated as of the date of
this Agreement delivered by the Company to VIALOG and VIALOG to the Company.
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
67
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.
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 venture 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
68
statutory or regulatory provision will be deemed to be a reference to any
successor statutory or regulatory provision.
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 Agent will have the meaning given to it in Section 2.2(a).
Exchange Fund will have the meaning given to it in Section 2.2(a).
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.
69
Financing Closing Date means the date on which the Financing is closed.
Financing Document means the private offering circular furnished to
potential investors or financial institutions in connection with the Financing
(which may include the Registration Statement, the Prospectus, exhibits, and
financial statements, and any amendments thereto) 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,
70
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.
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.
Indemnity Value means with respect to each share of VIALOG Stock issued to
a Stockholder pursuant to the Merger, the Offering Price. In satisfaction of a
Claim under this Agreement for which a stockholder is liable to VIALOG, until
January 31, 1999, and in lieu of all cash, such Stockholder may tender shares of
VIALOG Stock valued at the Offering Price and cash in a ratio not exceeding
fifty-one (51) to forty-nine (49), for all payments by such Stockholder, and
after January 31, 1999, cash and shares of VIALOG Stock in such proportion as
such Stockholder determines.
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
71
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 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, 1996.
72
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 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.
Net Shares will have the meaning given to it in Section 2.2(a).
Offering Price means $11.50 per share of VIALOG Stock adjusted for any
issuances pursuant to Section 2.1(e).
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 Agreement will have the meaning given to it in the Preamble.
Participating Companies will mean the Company and the Other Participating
Companies.
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Participating Mergers means the mergers of each of the Other Participating
Companies with a Subsidiary of VIALOG pursuant to a Participating Agreement.
Participating Stockholders means the Persons receiving VIALOG Stock
pursuant to the Participating Mergers.
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 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.
Prospectus means the form of offering document used by VIALOG in
completing the Financing including any preliminary prospectus first filed by
VIALOG in the Registration Statement dated February 28, 1997 and the prospectus
filed pursuant to Rule 424(b) under the Securities Act and any supplements or
amendments thereto used by VIALOG in connection with the Financing.
Registration Rights Agreement will have the meaning given to it in Section
6.4.
Registration Statement means the registration statement (including the
Prospectus, exhibits, financial statements and schedules included therein), and
all amendments thereof (including post-effective amendments and any registration
statement filed under Rule 462(b) relating to the securities of VIALOG.
Representatives of a Party means the officers, directors, employees,
accountants, counsel, financial advisors, consultants and other representatives
of such Party.
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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).
Stock Merger Consideration will have the meaning given to it in Section
2.1(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, 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.
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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) December 31, 1997, or (b) such date after
December 31, 1997 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 Registration Statement 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 entity 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.
[THIS SPACE IS INTENTIONALLY LEFT BLANK.]
76
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 & CEO
AMCS ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
AMERICAN CONFERENCING COMPANY, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
PRINCIPAL STOCKHOLDER:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
77
THE FOLLOWING IS A SUMMARY OF INFORMATION PROVIDED
IN THE DISCLOSURE SCHEDULE OF THE AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION. FURTHER INFORMATION
WILL BE FURNISHED UPON REQUEST
------------------------------
SECTION 2.1
. Allocation of merger consideration.
SECTION 3.1(a)
. Jurisdiction of incorporation of the Company.
. Jurisdictions where Company qualified to do business.
SECTION 3.1(c)
. Exceptions to no breach or default, etc., upon execution and delivery of
the Agreement or any collateral document.
. Exceptions to no lien created or imposed upon execution and delivery of the
Agreement or any collateral document.
. Exceptions to no governmental authorization or governmental filing required
upon execution and delivery of the Agreement or any collateral document.
SECTION 3.1(d)
. Subsidiaries of the Company, including jurisdictions of incorporation and
where qualified to do business.
. Capital stock of any subsidiary.
. Exceptions to Company's ownership of all stock of any subsidiary.
. Exceptions to no liens against subsidiaries.
SECTION 3.2(a)
. Financial statements of the Company and any subsidiary, prepared in
accordance with GAAP.
SECTION 3.2(c)
. The Company's ownership of other entities.
SECTION 3.3
. Changes and condition of the Company and any subsidiary, since the date of
the most recent financial statements.
SECTION 3.4
. Exceptions to liabilities of the Company or any subsidiary.
. Any obligations or liabilities, past, present or deferred, or accrued or
unaccrued, fixed, absolute, contingent or other, except as disclosed in the
balance sheet of the financial statements, or notes thereto, and any
obligations or liabilities, other than obligations and liabilities incurred
in the ordinary course of business consistent with past practice of the
Company and any subsidiary, which will adversely affect the Company or any
of the Company's subsidiaries.
. Guarantees or primary or secondary liabilities of the Company or any
subsidiary (except as disclosed in Financial Statements).
SECTION 3.5(a)
. Exceptions to no liens with respect to all real property owned or leased,
and to all other assets, tangible and intangible.
. Financing statements evidencing any liens.
. Impairments to valid leasehold interests.
SECTION 3.5(b)
. Real estate owned or leased, and property leased by the Company and any
subsidiary.
. Material fixed assets.
. Title retention agreements.
SECTION 3.5(c)
. Exceptions to compliance with title covenants and conditions and
environmental laws.
. Hazardous materials used or stored by the Company or any subsidiary.
SECTION 3.6
. Private authorizations material to the Company or any subsidiary.
2
SECTION 3.7(a)
. Legal actions pending, finally adjudicated or settled on or before December
31, 1996.
. Governmental authorizations.
SECTION 3.7(b)
. Breaches, violations or defaults under governmental authorizations or any
applicable law or under any requirement of any insurance carrier.
SECTION 3.8(a)
. Governmental authorizations and intangible assets upon which the conduct of
business by the Company or any subsidiary is dependent.
SECTION 3.8(b)
. Description of intangible assets and governmental authorizations.
SECTION 3.9
. Contractual obligations or transactions 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 or out-of-pocket expenses reasonably incurred in support of the
Company's business).
SECTION 3.10(a)
. Insurance policies maintained by the Company or any subsidiary.
. Insurance carriers which have refused the Company or any subsidiary
insurance within the past five years.
SECTION 3.11(a)
. Exceptions to taxation as a subchapter C corporation.
. Membership in a consolidated group for tax purposes.
SECTION 3.11(d)
. Tax audits of the Company or any subsidiary by the IRS or any notifications
thereof.
SECTION 3.11(e)
. Tax sharing agreement or arrangement of the Company or any subsidiary.
3
SECTION 3.11(f)
. Consents concerning collapsible corporations under Section 341(f) of the
Code.
. Ownership changes within the meaning of Section 382(g) of the Code.
SECTION 3.12(a)
. ERISA plans, including, inter alia, exceptions to compliance to applicable
----- ----
laws, notices from any authority questioning compliance, deficiencies,
"prohibited transactions", any amounts of liability, termination
proceedings, annual reports, or any membership in or contributions to
multi-employer plans.
SECTION 3.12(c)
. Basis of funding and current status of any past service liability with
respect to each employment arrangement.
SECTION 3.15(a)
. Authorized and outstanding capital stock of the Company.
. Agreements by the Company or any subsidiary to grant or issue any shares of
its capital stock or any option security or convertible security.
. Any agreement, put or commitment pursuant to which the Company or any
subsidiary is obligated to purchase, redeem or otherwise acquire any shares
of capital stock or any option security or convertible security.
SECTION 3.15(b)
. Stockholders.
. Stock not held free and clear of all liens.
. Persons or groups of persons owning as much as 5% of the Company's
outstanding common stock.
SECTION 3.16(a)
. Employment arrangements of the Company or any subsidiary.
. Collective bargaining agreements or pending grievances or labor disputes.
4
SECTION 3.16(b)
. Accelerated payments or benefits, including parachute payments, that will
be received as a result of the transactions contemplated by this Agreement.
SECTION 3.16(c)
. Any unfavorable relationships with employees of the Company or any
subsidiary.
SECTION 3.17(a)
. 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.
SECTION 3.17(b)
. Exceptions to satisfaction or performance of material agreements by the
Company or any subsidiary.
SECTION 3.18(a)
. Exceptions to operation of business in the ordinary course.
SECTION 3.18(b)
. Distributions from end of most recent fiscal year to the date of this
Agreement.
SECTION 3.19
. Banks, trust companies, savings and loan associations and brokerage firms
in which the Company or any subsidiary has an account or safe deposit box,
and the names of all persons with access thereto.
SECTION 3.20
. Adverse restrictions which impairs the Company or any subsidiary's ability
to conduct its business or which could have any adverse effect on the
Company or any subsidiary.
SECTION 3.22
. Personal injury, warranty claims, etc., pending or threatened.
5
SECTION 3.23(a)
. Environmental matters - compliance and governmental authorizations and
private authorizations.
SECTION 3.23(b)
. Any actual or expected spill, disposal, release, burial or placement of
hazardous materials in the soil, air or water on any property or facility
owned, leased, operated or occupied by the Company or any subsidiary.
. Notices or liens arising under environmental law.
SECTION 3.23(c)
. Above or underground tanks for the storage of hazardous materials.
SECTION 3.23(e)
. Hazardous materials used in the conduct of business of the Company or any
subsidiary.
. Description and annual volume of hazardous materials used.
. Years during which use occurred.
. Persons to whom such hazardous materials were transferred and/or
transported.
SECTION 3.23(f)
. Hazardous materials generated.
. Annual volume.
. Persons to whom such hazardous materials were transferred and/or
transported.
SECTION 3.23(g)
. Environmental site assessments.
SECTION 3.30
. Information furnished by or on behalf of the Company or any stockholder for
use in financing document.
SECTION 3.31
. Predecessor entities and entities from which, since December 31, 1991, the
Company previously acquired material properties or assets.
6
SECTION 4.4
. Exceptions to good and merchantable title to shares to be exchanged
pursuant to this Agreement.
SECTION 4.5
. Conflicts with, breaches of, or defaults under any contractual Obligation
of principal stockholder resulting from the execution and delivery of this
Agreement or any collateral document.
. Liens created or imposed upon any property or asset of principal
stockholder as a result of the execution and delivery of this Agreement or
any collateral document.
. Governmental authorizations, governmental filing or private authorizations
required as a result of the execution and delivery of this Agreement or any
collateral document.
SECTION 5.5
. Exceptions to no broker, agent or finder.
SECTION 5.7
. Authorized and outstanding capital stock of each of VIALOG and VIALOG
merger subsidiary.
. Options, warrant, calls, rights, commitments or any other agreements of any
character obligating VIALOG or VIALOG merger subsidiary to issue any shares
of VIALOG stock or other shares of capital stock of VIALOG or VIALOG merger
subsidiary, or any other securities convertible into or evidencing the
right to subscribe for any such shares.
SECTION 5.11
. Provisions in other participating agreements of other participating
companies not substantially identical in form and substance to the
provisions contained in Articles 3 through 12 of this Agreement.
SECTION 6.5(b)
. Business (other than business in the ordinary course) the Company will
conduct without the written permission of VIALOG Corporation.
SECTION 6.17
. Distributions to stockholders, employees and consultants contemplated to be
made prior to the merger closing.
. Liens to be discharged prior to the merger closing.
7
. Certain liabilities for which the Company will indemnify VIALOG as of the
merger closing.
SECTION 7.2(d)
. Persons executing non-competition agreements.
SECTION 7.2(q)
. Leases and Contractual Obligations not satisfied and discharged as of the
public offering closing date.
SECTION 7.2(t)
. Individuals executing and delivering employment agreements.
8