EXHIBIT 99.2
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
VIALOG CORPORATION
ABC ACQUISITION CORPORATION
A BUSINESS CONFERENCE CALL, INC.
AND
XXXXXX X. XXXXXX
AND
XXXXXX X. XXXXX
Dated as of May 23, 1998
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..................................................2
SECTION 1.4 Effective Time...........................................3
SECTION 1.5 Effect of the Merger.....................................3
SECTION 1.6 Certificate of Incorporation.............................3
SECTION 1.7 Bylaws...................................................3
SECTION 1.8 Directors and Officers...................................3
ARTICLE 2 CONVERSION OF SECURITIES AND EXCHANGE
OF CERTIFICATES .....................................................4
SECTION 2.1 Conversion of Securities.................................4
SECTION 2.2 Exchange of Certificates and Exchange Procedures.........4
SECTION 2.3 Stock Transfer Books.....................................5
SECTION 2.4 Option Securities........................................5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................5
SECTION 3.1 Organization and Business; Power and Authority; Etc......6
SECTION 3.2 Financial and Other Information..........................7
SECTION 3.3 Changes in Condition.....................................8
SECTION 3.4 Liabilities..............................................8
SECTION 3.5 Title to Properties; Leases..............................8
SECTION 3.6 Compliance with Private Authorizations...................9
SECTION 3.7 Compliance with Governmental Authorizations and
Applicable Law..........................................10
SECTION 3.8 Intangible Assets.......................................11
SECTION 3.9 Related Transactions....................................11
SECTION 3.10 Insurance...............................................12
SECTION 3.11 Tax Matters.............................................12
SECTION 3.12 Employee Retirement Income Security Act of 1974.........13
SECTION 3.13 Absence of Sensitive Payments...........................16
SECTION 3.14 Inapplicability of Specified Statutes...................16
SECTION 3.15 Authorized and Outstanding Capital Stock................16
SECTION 3.16 Employment Arrangements.................................17
SECTION 3.17 Material Agreements.....................................18
SECTION 3.18 Ordinary Course of Business.............................18
SECTION 3.19 Bank Accounts; Etc......................................20
SECTION 3.20 Adverse Restrictions....................................20
SECTION 3.21 Broker or Finder........................................20
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SECTION 3.22 Personal Injury or Property Damage;
Warranty Claims; Etc. ..................................20
SECTION 3.23 Environmental Matters...................................20
SECTION 3.24 This Section Intentionally Left Blank...................22
SECTION 3.25 Solvency................................................22
SECTION 3.26 Public Utilities Commission.............................22
SECTION 3.27 Compliance with Regulations Relating to
Securities Credit ......................................23
SECTION 3.28 This Section Intentionally Left Blank...................23
SECTION 3.29 Continuing Representations and Warranties...............23
SECTION 3.30 This Section Intentionally Left Blank...................23
SECTION 3.31 Predecessor Status; Etc.................................23
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE
PRINCIPAL STOCKHOLDER ..............................................23
SECTION 4.1 Enforceability..........................................24
SECTION 4.2 Title to Shares.........................................24
SECTION 4.3 No Conflict; Required Filings and Consents..............24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF VIALOG AND
VIALOG MERGER SUBSIDIARY............................................25
SECTION 5.1 Organization and Qualification..........................25
SECTION 5.2 Power and Authority.....................................25
SECTION 5.3 No Conflict; Required Filings and Consents..............25
SECTION 5.4 Financing...............................................26
SECTION 5.5 Brokers or Finder.......................................26
SECTION 5.6 Continuing Representations and Warranties...............26
SECTION 5.7 Capitalization and Fraudulent Conveyance................26
SECTION 5.8 Prior Activities of VIALOG Merger Subsidiary............26
SECTION 5.9 Registration Statement..................................27
ARTICLE 6 ADDITIONAL COVENANTS................................................27
SECTION 6.1 Access to Information; Confidentiality..................27
SECTION 6.2 Agreement to Cooperate..................................28
SECTION 6.3 Assignment of Contracts and Rights......................29
SECTION 6.4 Audited Financial Statements............................30
SECTION 6.5 Conduct of Business.....................................30
SECTION 6.6 No Solicitation.........................................31
SECTION 6.7 Directors' and Officers' Indemnification
and Insurance ..........................................31
SECTION 6.8 Notification of Certain Matters.........................32
SECTION 6.9 Public Announcements....................................32
SECTION 6.10 Conveyance Taxes........................................32
SECTION 6.11 Obligations of VIALOG...................................33
SECTION 6.12 Employee Benefits; Severance Policy.....................33
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SECTION 6.13 Certain Actions Concerning Business Combinations........33
SECTION 6.14 No Significant Changes..................................33
SECTION 6.15 Tax Returns.............................................34
SECTION 6.16 Employment and Noncompetition...........................34
SECTION 6.17 Distributions; Liabilities; Etc.........................34
SECTION 6.18 Release from Personal Guarantees........................34
SECTION 6.19 Section 338(h)(10) Election.............................35
SECTION 6.20 Registration Statement..................................36
ARTICLE 7 CLOSING CONDITIONS .................................................37
SECTION 7.1 Conditions to Obligations of Each Party to
Effect the Merger ......................................37
SECTION 7.2 Conditions to Obligations of VIALOG and VIALOG
Merger Subsidiary.......................................37
SECTION 7.3 Conditions to Obligations of the Company................41
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER...................................42
SECTION 8.1 Termination.............................................42
SECTION 8.2 Effect of Termination...................................44
SECTION 8.3 Amendment...............................................44
SECTION 8.4 Waiver..................................................44
SECTION 8.5 Fees, Expenses and Other Payments.......................45
SECTION 8.6 Effect of Investigation.................................45
ARTICLE 9 THIS ARTICLE INTENTIONALLY LEFT BLANK...............................45
ARTICLE 10 INDEMNIFICATION ...................................................45
SECTION 10.1 Indemnification.........................................45
SECTION 10.2 Procedure Concerning Claims by Third Parties;
Payment of Damages; Etc.................................47
SECTION 10.3 Access to Books and Records.............................48
SECTION 10.4 Exclusivity.............................................49
ARTICLE 11 GENERAL PROVISIONS ................................................49
SECTION 11.1 Effectiveness of Representations; Etc..................49
SECTION 11.2 Notices................................................50
SECTION 11.3 Headings...............................................51
SECTION 11.4 Severability...........................................51
SECTION 11.5 Entire Agreement.......................................51
SECTION 11.6 Assignment.............................................51
SECTION 11.7 Parties in Interest....................................51
SECTION 11.8 Governing Law..........................................51
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SECTION 11.9 Enforcement of the Agreement...........................51
SECTION 11.10 Counterparts...........................................52
SECTION 11.11 Disclosure Supplements.................................52
ARTICLE 12 DEFINITIONS .......................................................52
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of May , 1998 among
VIALOG CORPORATION, a Massachusetts corporation ("VIALOG"), ABC Acquisition
Corporation, a Delaware corporation and wholly owned subsidiary of VIALOG
("VIALOG Merger Subsidiary"), A Business Conference Call, Inc., a Minnesota
corporation (the "Company"), and Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxx (the
"Stockholders").
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 Minnesota Business Corporation Act
(the "BCA") and the General Corporation Law of the State of Delaware (the
"DBCL"), pursuant to which the VIALOG Merger Subsidiary will merge with and into
the Company (the "Merger") and the Stockholders will convert their holdings into
cash determined in accordance with Section 2.1(a).
2. Pursuant to the Underwriting Agreement, VIALOG will issue and sell
VIALOG Stock in a firm commitment public offering (the "Public Offering")
registered on Form S-1 (the "Registration Statement") in accordance with the
requirements of the Securities Act of 1933, as amended (the "Securities Act").
3. The Board of Directors of the Company has unanimously determined
that the Merger is fair to, and in the best interests of, the Company and the
Stockholders and has approved and adopted this Agreement and the Merger as a
convenient means to accomplish a forward cash merger pursuant to the Internal
Revenue Code of 1986, as amended (the "Code") and a convenient means to cause
all of the Stockholders to transfer their capital stock of the Company to
VIALOG, has approved this Agreement, the Merger and the Transactions and has
recommended approval and adoption of this Agreement, the Merger and the
Transactions by the Stockholders.
4. The Board of Directors of VIALOG has approved and adopted this
Agreement and has approved the Merger and the Transactions as the sole
stockholder of VIALOG Merger Subsidiary and the Board of Directors of VIALOG
Merger Subsidiary has approved and adopted this Agreement.
AGREEMENT
In consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth in this Agreement, the parties
agree as follows:
1
ARTICLE
1
THE MERGER
1.1 The Merger.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the BCA and the DBCL at the Effective Time the
VIALOG Merger Subsidiary will be merged with and into the Company. As a result
of the Merger, the separate existence of the VIALOG Merger Subsidiary will cease
and the Company will continue as the surviving corporation of the Merger (the
"Surviving Corporation").
(b) The Company represents 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 Minnesota law, and (iii) resolved to recommend approval and adoption by
the Stockholders of this Agreement, the Merger and the Transactions to the
extent required and in a manner permitted by Applicable Law.
1.2 Action by Stockholders.
(a) The Company, acting through its Board of Directors, will, in
accordance with Applicable Law and its Organizational Documents: (i) as soon as
practicable, 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"); and
(ii) use its reasonable commercial 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 the initial filing of the Registration Statement, which is expected to occur
on or about May 26, 1998 and in any event within 30 days of the date hereof.
1.3 Closing. Unless this Agreement is terminated pursuant to Section
8.1 and the Merger and the Transactions have been abandoned, and subject to the
satisfaction or, if possible, waiver of conditions set forth in Article 7, the
closing of the Merger (the "Merger Closing') will take place one day prior to
the Effective Date at the location mutually agreed upon by VIALOG and the
Company. Counsel for the parties to this Agreement will hold a pre-closing two
days
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prior to the Effective Date, at the location agreed upon by the parties for the
purpose of finalizing all documents to be signed at the Merger Closing. All
certificates 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 or other instrument shall, except to the extent otherwise provided
in Article 7, be dated as of the anticipated Effective Time, which is expected
to occur three business days following the date of Merger Closing. All such
certificates and other instruments shall be held in escrow by Xxxxxx, X'Xxxxxxx,
XxXxxxxx & Xxxxxx, LLP between the Merger Closing and the Effective Time
pursuant to the escrow letter in the form attached as Exhibit 1.3 and shall be
released from escrow concurrently with the Effective Time. In the event that the
Effective Time occurs on a date other than the third business day following the
Merger Closing, all such certificates and instruments shall be re-dated as of
the Effective Time. The Company, the Stockholders, VIALOG and VIALOG Merger
Subsidiary shall use their reasonable commercial efforts to cause each of the
conditions set forth in Article 7 reasonably capable of being satisfied prior to
the Merger Closing.
1.4 Effective Time. On the Public Offering Closing Date, the Parties
will cause the Merger to be consummated by filing a certificate of merger with
the Secretary of State of Delaware and articles of merger and a short form plan
and agreement of merger with the State of Minnesota, 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 Public Offering Closing Date) as such
certificate and articles and plan, as the case may be, are duly filed with the
Secretary of State of Delaware and the Secretary of State of Minnesota,
respectively (the "Effective Time)".
1.5 Effect of the Merger. From and after the Effective Time, the
Surviving Corporation will possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and duties of
the Company and VIALOG Merger Subsidiary, and the Merger will otherwise have the
effects, all as provided under the BCA and the DBCL.
1.6 Articles of Incorporation. From and after the Effective Time, the
Articles of Incorporation of the Surviving Corporation will be substantially in
the form attached as Exhibit 1.6 until amended in accordance with Applicable
Law, and the name of the Surviving Corporation will be the name of the Company
or such other name as VIALOG may elect.
1.7 Bylaws. From and after the Effective Time, the bylaws of the
Surviving Corporation will be in the form attached as Exhibit 1.7, until amended
in accordance with Applicable Law.
1.8 Directors and Officers. From and after the Effective Time, until
successors are duly elected or appointed and qualified (or their earlier
resignation or removal) in accordance with Applicable Law the directors and
officers of the VIALOG Merger Subsidiary at the Effective Time will be the
directors and officers of the Surviving Corporation.
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ARTICLE
2
CONVERSION OF SECURITIES AND EXCHANGE OF CERTIFICATES
2.1 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of VIALOG Merger Subsidiary, the
Company or the holders of any of the following securities:
(a) Each share of Common Stock, $.01 par value of the Company (the
"Company Stock") issued and outstanding will be converted into the right to
receive cash (the "Aggregate Merger Consideration") pursuant to the following
formula:
Aggregate Merger Consideration = $14,000,000 cash
Merger Consideration = Aggregate Merger Consideration
------------------------------
Aggregate Equity
At the Effective Time, all issued and outstanding shares of Company
Stock (the "Shares") will no longer be outstanding and will automatically be
canceled and retired and will cease to exist, and certificates previously
evidencing any such Shares (each a "Certificate") will thereafter represent the
right to receive, upon the surrender of such Certificate in accordance with the
provisions of Section 2.2, cash equal to the number of Shares represented by
such Certificate multiplied by the Merger Consideration. A holder of more than
one Certificate will have the right to receive cash equal to the Merger
Consideration multiplied by the number of Shares represented by all such
Certificates (the "Exchange Merger Consideration"). The holders of Certificates
previously evidencing Shares outstanding immediately prior to the Effective Time
will cease to have any rights with respect to such Shares except as otherwise
provided in this Agreement or by Applicable Law.
(b) 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.
2.2 Exchange of Certificates and Exchange Procedures.
(a) On the Public Offering Closing Date, VIALOG will deliver to the
holders of Shares for exchange in accordance with this Article, by wire transfer
of immediately available funds to the bank accounts designated by the respective
Stockholders, an amount equal to the Merger Consideration multiplied by the
number of all Shares issued and outstanding immediately prior to the Effective
Time.
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(b) Upon surrender of a Certificate for cancellation to VIALOG or to
such other agent or agents as may be appointed by VIALOG together with such
letter of transmittal, duly executed, and such other customary documents as may
be reasonably required pursuant to such instructions (collectively, the
"Transmittal Documents"), the holder of such Certificate will become entitled to
receive in exchange therefor the Merger Consideration which such holder has the
right to receive pursuant to Sections 2.1(a), and the Certificate so surrendered
will be canceled. Until surrendered as contemplated by this Section, each
Certificate will be deemed at any time after the Effective Time to evidence only
the right to receive, upon such surrender, the Merger Consideration, without
interest.
(c) Each of VIALOG and the Surviving Corporation will be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Shares such amounts as VIALOG or the Surviving
Corporation is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by VIALOG or the Surviving
Corporation, such withheld amounts will be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by VIALOG, or the Surviving Corporation.
2.3 Stock Transfer Books. At the Merger Closing Date, the stock
transfer books of the Company will be closed, and there will be no further
registration of transfers of Shares thereafter on the records of the Company
other than to VIALOG. On or after the Effective Time any Certificate presented
to VIALOG or the Surviving Corporation will be converted into the Merger
Consideration.
2.4 Option Securities. At the Effective Time, VIALOG will grant to the
Stockholders incentive options, substantially in the form of Exhibit 2.4, for a
total of 75,000 shares of VIALOG Stock exercisable at the fair market value on
the date of grant. Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxx shall each receive
options for 37,500 shares which such options shall become exercisable for 3,125
shares on the date of grant and an additional 3,125 shares on each October 1,
January 1, April 1 and July 1 thereafter until fully vested. Such options shall
expire three (3) years from the date of grant. In the event of termination of
the employment of Xxxxxx X. Xxxxxx or Xxxxxx X. Xxxxx the option of such person
shall become a non-qualified option if not exercised within 90 days of the
termination of employment and be exercisable for another 275 days for the
options vested as of the date of such termination.
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:
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3.1 Organization and Business; Power and Authority; Etc.
(a) The Company:
(i) is a corporation duly organized, validly existing and
in good standing under the laws of Minnesota,
(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 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) Except as set forth in Section 3.1(b) of the Disclosure Schedule,
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 will constitute, legal, valid and binding obligations of the Company,
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 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 percent 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
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executed pursuant hereto or thereto, nor the consummation of the Transactions,
nor compliance with the terms, conditions and provisions hereof or thereof by
the Company or any of the other parties hereto or thereto which is Affiliated
with the Company:
(i) will conflict with, or result in a breach or
violation of, or constitute a default under, the
Certificate of Incorporation, Bylaws or any
Applicable Law on the part of the Company or 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,
(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 Merger.
(d) The Company does not have any Subsidiaries.
3.2 Financial and Other Information.
(a) The Company has furnished to VIALOG copies of the financial
statements of the Company 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, and fairly present the financial
condition and results of operations of the Company, 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 the absence of
footnotes and normal nonmaterial audit adjustments and accruals.
(b) Except as set forth in Section 3.2(b) of the Disclosure Schedule,
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.
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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. There is no Event to the knowledge of the
Company which Adversely Affects, or in the future might (so far as the Company
or the Stockholders can now reasonably foresee) Adversely Affect, the Company,
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 or industry
conditions (including the effect of competition) 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, the Company had no 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 the Company has not 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, which do not
and, to the Company's knowledge, will not, in the aggregate, Adversely Affect
the Company except to the extent set forth in Section 3.4 of the Disclosure
Schedule.
The Company has not Guaranteed and is not otherwise primarily or
secondarily liable in respect of any obligation or liability of any other Person
material to the Company, 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.
3.5 Title to Properties; Leases.
(a) The Company has good indefeasible and merchantable title to all
assets, tangible and intangible (excluding leased property), reflected on the
most recent balance sheet forming part of the Financial Statements or held by
the Company for use in its business if not so reflected, or purported to have
been acquired by the Company 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, 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 as debtor or which covers or purports to cover any of the property of
the Company is on file in any state or other jurisdiction, and the Company has
not 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 holds real or personal property has been duly authorized,
executed and delivered by the Company, and, to the Company's knowledge without
investigation by the Company, by each of the parties thereto.
8
Each such Lease is a legal, valid and binding obligation of the Company, and, to
the Company's knowledge without investigation by the Company, of each other
party thereto, enforceable in accordance with its terms. The Company 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, 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) The Company owns no real estate. Section 3.5(b) of the Disclosure
Schedule contains a true, correct and complete description of all real estate
leased by the Company 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 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 (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) nothing has come to the attention of the Company
which would lead the Company to believe that all real
property leased by the Company does not conform to
and comply with all applicable title covenants,
conditions, restrictions and reservations and all
Environmental Laws and all applicable zoning,
wetlands, land use and other Applicable Laws, and
(ii) neither the Company, nor, to the knowledge of the
Company without investigation by 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, all
of which are in full force and effect. The Company has obtained all Private
Authorizations which are necessary for the ownership by the Company of its
properties and the conduct of its business as now conducted or which, if not
obtained and maintained, could, singly or in the aggregate, Adversely Affect the
Company. The Company is not 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
9
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 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, 1997, in which the Company, or any of
its officers or directors, is, or at any time during
the last three calendar years ending on December 31,
1997 has been, engaged, or which involves, or at any
time during such period involved, the business,
operations or properties of the Company or, to the
Company's knowledge, which is threatened or
contemplated against, or in any other manner relating
Adversely to, the Company 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
is subject and which relates to the business,
operations, properties, condition (financial or
other), or results of operations of the Company all
of which are in full force and effect.
(b) Except as otherwise specifically described in Section 3.7(b) of the
Disclosure Schedule the Company 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 by the Company or which, if not obtained and
maintained, could singly or in the aggregate, have any Adverse Effect on the
Company. 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 officer or director (in connection with the business, operations
and properties of the Company) is or at any time since January 2, 1993 has been,
or is or has during such time been charged with, or to the knowledge of the
Company, is threatened or under investigation with respect to any material
breach or violation of, or in default in the performance, observance or
fulfillment of, any Governmental Authorization or any Applicable Law, and no
Event exists or has occurred to the Company's knowledge, 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
10
(i) any Governmental Authorization or any Applicable Law,
except for such breaches, violations or defaults as
do not and, to the Company's knowledge without
investigation by the Company, will not have in the
aggregate any Adverse Effect on the Company 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.
(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 Schedule, individually and in the aggregate,
if adversely determined against the Company, will not Adversely Affect the
Company, 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) The Company owns or possesses or otherwise has the right to use all
Governmental Authorizations and other Intangible Assets necessary for the
present and to the knowledge of the Company without investigation by the Company
future conduct of its business without any known conflict with the rights of
others. The conduct of the present business and to the Company's knowledge the
continuation of the present business by the Company 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 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
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 January 1, 1997, 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
11
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 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 and includes insurers' names, policy numbers,
expiration dates, risks insured against, amounts of coverage, the annual
premiums, deductibles and self-insured retention.
(b) The Company is not 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 Effective Time. The insurance policies so listed
and identified are of a nature and scope and in amounts sufficient to prevent
the Company from being under insured and becoming a coinsurer within the terms
of such policies. Except as set forth in Section 3.10(a) of the Disclosure
Schedule, the Company has not, 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) The Company 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 have been prepared in
accordance with all Applicable Laws and generally accepted principles applicable
to taxation consistently applied. All Taxes which the Company 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. The Company has not 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 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 for
which an adequate reserve has not been provided on such balance sheet. The
Company has at all times been taxable as a Subchapter S corporation under the
Code, except as otherwise set forth in Section 3.11(a) of the
12
Disclosure Schedule. The Company has not ever been a member of any consolidated
group for Tax purposes, except as set forth in Section 3.11(a) of the Disclosure
Schedule.
(b) The Company 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 the
Company has not made any payment on account of any Taxes except regular payments
required in the ordinary course of business with respect to current operations
or property presently owned.
(d) The information shown on the federal income Tax Returns of the
Company (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 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 the Company has not been notified regarding any pending audit,
except as shown in Section 3.11(d) of the Disclosure Schedule.
(e) The Company is not a party to any tax sharing agreement or
arrangement, except as set forth in Section 3.11(e) of the Disclosure Schedule.
The Company has never (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 (e) 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 (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 the Company
has not 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
13
Plan which constitutes a funded welfare plan as
defined in Section 3(1) of ERISA; and nothing has
occurred since the date of each such determination or
recognition that would adversely affect such
qualification.
(iii) no Plan which is subject to Part 3 of Subtitle B of
Title 1 of ERISA or Section 412 of the Code had an
accumulated funding deficiency (as defined in Section
302(a)(2) of ERISA and Section 412 of the Code),
whether or not waived, as of the last day of the most
recently completed fiscal year of such Plan,
(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 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
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 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 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,
14
(xi) there are no Claims (other than routine claims for
benefits) pending or threatened involving any Plan or
Benefit Arrangement or any of the assets thereof,
(xii) except as set forth in Section 3.12(a) of the
Disclosure 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, the Company does
not maintain any Plan that provides benefits
described in Section 3(1) of ERISA to any former
employees or retirees of the Company,
(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, 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 may
be liable,
(xiv) neither the Company 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 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
Merger 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
15
such actuarial valuation report was true, correct and
complete in all material respects,
(b) The Company is not and never 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 and to the
Company's knowledge, none of its officers, directors, employees or
Representatives have, on behalf of the Company, (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. The Company is not 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. There is
neither outstanding nor has the Company agreed to grant or issue any shares of
its capital stock or any Option Security or Convertible Security, and the
Company is not 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 Effective Time, the Company will not issue,
sell or purchase or agree to issue, sell or purchase any capital stock or any
Option Security or Convertible Security of the Company.
(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.
16
3.16 Employment Arrangements.
(a) The Company has no 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. The Company is not now or during the past
five (5) years has not 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 are now, or during the past five (5) years have been, represented
by any labor union or other employee collective bargaining organization. The
Company is not a party 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 has performed all obligations required to be performed
under all Employment Arrangements and is 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 relationships with employees to be good,
and except as set forth in Section 3.16(c) of the Disclosure Schedule, the
Company has not experienced a work slowdown or stoppage due to labor problems.
The Company has not received notice of any claim that it has failed to comply
with any federal or state law, or to the Company's knowledge is it 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) The Company has not conducted, and on or prior to the Effective
Time will not conduct, a "plant closing" or "mass layoff" of employees of the
Company as defined by the Worker Adjustment and Retraining Notification Act of
0000 (xxx "XXXX Xxx"), 00 X.X.X. 0000-0000 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
17
hereof or through the Effective Time or during the twelve-month period
immediately prior thereto.
3.17 Material Agreements.
(a) Listed on Section 3.17(a) of the Disclosure Schedule are all
Material Agreements relating to the ownership or operation of the business and
property of the Company presently held or used by the Company or to which the
Company is a party or to which it or any or 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 Company (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 is validly and lawfully operating its business and owning its
property under each of the Material Agreements. The Company has duly complied
with all of the terms and conditions of each Material Agreement and has 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 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, 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 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. The Company, from the earlier of the
date of the most recent balance sheet forming part of the Financial Statements
or December 31, 1997 to the date of this Agreement, and until the Effective
Time, except as may be described in Section 3.18 of the Disclosure Schedule or
as may be required or permitted expressly by the terms of this Agreement or as
may be approved in writing by VIALOG:
(a) 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,
(b) 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,
18
(c) 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 of the Disclosure Schedule, and except as
expressly otherwise contemplated hereby,
(i) has not incurred and will not incur any obligations
or liabilities (fixed, contingent or other),
(ii) has not entered and will not enter into any
commitments, and
(iii) has not canceled and will not cancel any debts or
claims,
(d) 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,
(e) 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,
(f) 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,
(g) 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,
(h) has not waived, and will not waive, any rights of material value
without fair and adequate consideration,
(i) has not experienced any work stoppage,
(j) 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,
(k) 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,
19
(l) has not entered into, and will not enter into, any other
transaction or series or related transactions which individually or in the
aggregate is material to the Company, except in the ordinary course of business,
and
(m) 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.
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 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 and a summary statement as
to the terms thereof has been previously delivered to VIALOG.
3.20 Adverse Restrictions. The Company is not a party to or subject to,
and its property is not subject to, any current 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
ability to conduct its business as it is currently being conducted or which
could, with reasonable foreseeability, have any Adverse Effect on the Company's
business as currently conducted, 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 or
any Person acting for or on its behalf including without limitation any
insurance carrier, has at any time since December 31, 1997, paid, and there is
not now pending or, to the knowledge of the Company, threatened any Claim (or
any basis for any such Claim) relating to, any damages to any third party for
injuries to Persons or damage to property, or for breach of warranty, which, in
the case of pending or threatened Claims, if determined Adversely to the
Company, individually or in the aggregate (taking into account unasserted Claims
of similar nature), could have any Adverse Effect on the Company.
3.23 Environmental Matters.
(a) Except as set forth in Section 3.23(a) of the Disclosure Schedule,
the Company:
(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
20
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, administrative order or notice of
Lien 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 for the ownership of its property,
facilities and assets and the operation of its
businesses under all Environmental Laws, is and at
all times since its organization has been in material
compliance with the terms and conditions of all such
required Governmental and Private Authorizations and
all Environmental Requirements, and is not the
subject of or, to the Company's knowledge, threatened
with any Legal Action involving a demand for damages
or any other potential liability with respect to
violations or breaches of any Environmental
Requirement.
(b) Except as set forth in Section 3.23(b) of the Disclosure Schedule:
(i) no spill, disposal, release, burial or placement of
Hazardous Materials in the soil, air or water has
occurred on any premises leased, operated or occupied
by the Company during the period that such premises
were leased, operated or occupied by it or, to the
knowledge of the Company without investigation by the
Company, at any other time or at any other facility
or site to which Hazardous Materials from or
generated by the Company may have been taken at any
time in the past, and
(ii) there has been no spill, disposal, release, burial or
placement of Hazardous Materials, in the soil, air or
water on any property, to the knowledge of the
Company without investigation, 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 during the period that such facilities and
21
properties were owned, leased, operated or occupied
by it or, at any other time.
(c) Except as set forth in Section 3.23(c) of the Disclosure Schedule,
the Company has no 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 at or prior to the Effective Time, there
will not be, any past or present Events or plans of the Company or any of its
predecessors, which, individually or in the aggregate, constitute a breach of
any Environmental Requirements or which, individually or in the aggregate, may
interfere with or prevent continued compliance with all Environmental
Requirements, or which, individually or in the aggregate, may give rise to any
common law, statutory or other legal liability, or otherwise form the basis of
any Claim, assessment or remediation cost, fine, penalty or assessment based on
or related to the transportation, transmission, gathering, processing,
distribution, use, treatment, storage, disposal or handling, or the emission,
discharge, release or threatened release into the environment, of any Hazardous
Material with respect to the Company or any of its predecessors or its business,
operations or property which could have any Adverse Effect on the Company.
(e) Except as set forth in Section 3.23(e) of the Disclosure Schedule,
the Company has not 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 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, 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, except as set forth in Section 3.23(g) of the Disclosure Schedule.
3.24 This Section Intentionally Left Blank.
3.25 Solvency. As of the execution and delivery of this Agreement, the
Company is and, as of the Effective Time, will be solvent.
3.26 Public Utilities Commission. The Minnesota Public Utilities
Commission has issued an order finding that the Company is not a telephone
company pursuant to Chapter 237 of
22
the Minnesota Statutes (the "Minnesota Telephone Act") and is not subject to the
Minnesota Telephone Act.
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
the Company owns no margin stock or other margin security, or a "security that
is publicly held", and the Company has no present intention of acquiring any
margin stock or other margin security, or any "security that is publicly held".
3.28 This Section Intentionally Left Blank.
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 at the Effective Time with the same
force and effect as though made on and as of that date and those, if any, which
speak as a specific date will be true and correct in all material respects as of
such date.
3.30 This Section Intentionally Left Blank.
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, 1992,
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 or another Entity, nor a part of an acquisition which
was later rescinded. None of the Company or the Stockholders has ever owned any
securities of VIALOG nor, except as set forth in Section 3.31 of the Disclosure
Schedule, has there been, since December 31, 1992, any sale or spin-off of
material assets by the Company other than in the ordinary course of business.
ARTICLE
4
REPRESENTATIONS AND WARRANTIES OF
THE STOCKHOLDERS
The Stockholders represent, warrant and covenant to, and agree with,
VIALOG and VIALOG Merger Subsidiary as follows:
23
4.1 Enforceability. This Agreement has been duly executed and delivered
by the Stockholders and constitutes, and each Collateral Document executed or
required to be executed by the Stockholders pursuant hereto or thereto when
executed and delivered by the Stockholders will constitute legal, valid and
binding obligations of the Stockholders, 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 the general
principles of equity).
4.2 Title to Shares. Except as set forth in Section 4.2 of the
Disclosure Schedule (all of which exceptions will be removed, satisfied or
discharged no later than the Merger Closing), the Stockholders own and have good
and merchantable title to those Shares owned by the Stockholders and to be
exchanged pursuant to this Agreement, free and clear or all Liens.
4.3 No Conflict; Required Filings and Consents. Except as set forth in
Section 4.3 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 Merger and the
Transactions, nor compliance with the terms, conditions and provisions hereof or
thereof by the Stockholders:
(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 the
Stockholders or will conflict with, or result in a material breach or violation
of, or constitute a material default in the performance, observance or
fulfillment of, or a material default under, or permit the acceleration of any
obligation or liability in, or, but for any requirements of notice or passage of
time or both would constitute such a conflict with, breach or violation of, or
default under, or permit any such acceleration in, any Contractual Obligation of
the Stockholders,
(b) will result in or permit the creation or imposition of any Lien
upon any property or asset of the Stockholders 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 Stockholders with the provisions
of this Agreement relating to the Merger or as set forth in Section 4.3 of the
Disclosure Schedule.
24
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
organized, validly existing and in good standing under the laws of
Massachusetts. VIALOG Merger Subsidiary is a corporation duly organized, 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 VIALOG and VIALOG Merger Subsidiary,
respectively, enforceable in accordance with their respective terms.
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, the Articles of Organization or Certificate of
Incorporation, Bylaws or any Applicable Law on the part of VIALOG or VIALOG
Merger Subsidiary or will conflict with, or result in a breach or violation of,
or constitute a default under, or permit the acceleration of any obligation or
liability in, or but for any requirement of giving of notice or passage of time
or both would constitute such a conflict with, breach or violation of, or
default under, or permit any such acceleration in, any Contractual Obligation of
VIALOG or VIALOG Merger Subsidiary, or
25
(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 Public Offering.
5.4 Financing. On the Public Offering Closing Date VIALOG will have
sufficient funds to enable the Surviving Corporation to pay the Merger
Consideration for all Shares of the Company Stock as provided in Section 2.1(a).
5.5 Brokers or Finder. Except for the Underwriter, the fees and
expenses of which 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 Continuing Representations and Warranties. Except for those
representations and warranties which speak as of a specific date, all of the
representations and warranties of VIALOG and VIALOG Merger Subsidiary set forth
in this Article will be true and correct in all material respects at the
Effective Time with the same force and effect as though made on and as of that
date, and those, if any, which speak as of a specific date will be true and
correct in all material respects as of such date.
5.7 Capitalization and Fraudulent Conveyance. On the Public Offering
Closing Date, after giving effect to the Public Offering Closing and the
Transactions contemplated hereby to occur on the Public Offering Closing Date
VIALOG and its subsidiaries, individually and as a whole will be solvent. As of
the date hereof VIALOG and VIALOG Merger Subsidiary have the long-term debt and
equity capitalization within the range set forth on Section 5.7 of the
Disclosure Schedule. VIALOG and the VIALOG Merger Subsidiary further represent
and warrant that (i) they are entering into the Merger and the Transactions
without the actual intent to hinder, delay or defraud any creditor of VIALOG,
VIALOG Merger Subsidiary or the Company, (ii) VIALOG and VIALOG Merger
Subsidiary have, to VIALOG's best knowledge, received reasonably equivalent
value for the Merger Consideration delivered in exchange for the Shares, and
(iii) VIALOG and the Surviving Corporation (a) are not about to engage in a
business or transaction for which the Assets of VIALOG or the Surviving
Corporation are unreasonably small in relation to such business or transaction,
(b) will not incur debts beyond the ability of VIALOG or the Surviving
Corporation to pay as they become due, and (c) will not be rendered insolvent by
the consummation of the Merger and the Transactions contemplated by this
Agreement. Notwithstanding any contrary provision contained in this Agreement or
any Collateral Document, this representation shall survive for 60 days after the
statute of limitations period applicable to fraudulent transfers and conveyances
applicable under Delaware Law, the law of the State of Minnesota or any
applicable law of the jurisdiction in which such claim is or may be brought,
whichever last expires.
5.8 Prior Activities of VIALOG Merger Subsidiary. VIALOG Merger
Subsidiary is a first tier subsidiary corporation of VIALOG formed for the
purpose of this transaction. VIALOG
26
Merger Subsidiary has not incurred any liabilities or Contractual Obligations,
except those incurred in connection with its organization the negotiation of
this Agreement and the performance of this Agreement, the performance of all
other governmental filings, and the financing of this Agreement. Except as
contemplated by the foregoing VIALOG Merger Subsidiary has not engaged in any
business activity 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
obligations or undertaking.
5.9 Registration Statement. The Registration Statement and any
amendments thereto will comply when the Registration Statement 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 5.9 will not apply to (a) statements in the
Registration Statement or the Prospectus based on information about the Company
or the Stockholders furnished to VIALOG in writing by the Company or the
Stockholders or reviewed by or on behalf of the Stockholders pursuant to Section
6.20 hereof, or (b) information about the Company or the Stockholders which was
omitted from the Registration Statement or Prospectus and was not included (i)
in this Agreement, (ii) any Disclosure Schedule to this Agreement, or (iii) in
any written due diligence material furnished by the Company or the Stockholders
to VIALOG, unless, in the case of (a) or (b) hereof, the information was known
to be inaccurate by VIALOG or the information not included was otherwise known
to VIALOG. VIALOG will furnish the Company with a copy of the Registration
Statement and of each amendment thereto until the Public Offering Closing and
thereafter will furnish the Stockholder with each amendment thereto and the
final Prospectus.
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 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 it pursuant to the requirements of any Applicable
Law (including without limitation federal or state securities laws) or filed by
it with any Authority in connection with the Transactions or which may have a
material effect on its business, operations, properties, personnel, condition
(financial or other), or results of operations, (ii) to the extent not provided
for pursuant to the preceding clause, all financial records, ledgers,
27
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 certifying financial
statements and financial information, and (iii) such other information
concerning the Company and the Stockholders 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 Agreement (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, and (iii) to lift any injunction or other legal bar to the Merger and
the Transactions (and, in such
28
case, to proceed with the Merger and the Transactions as expeditiously as
possible), subject, however, to the requisite votes of the Stockholders.
(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 at or prior to
the Effective Time (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 the Company; and (iii) to attempt to cause those
key employees of the Company mutually agreed upon by VIALOG and the Company 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
reasonable commercial efforts at or prior to the Effective Time to obtain the
satisfaction of the conditions applicable to it specified in Sections 7.1 and
7.3. The Stockholders will use commercially reasonable efforts to obtain the
satisfaction of the conditions applicable to the Stockholders in Section 7.2.
(d) The Company agrees prior to the Effective Time 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, delay or condition.
(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.
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
29
Surviving Corporation of any and all rights of the Company or its Subsidiaries
against a third party thereto arising out of the breach or cancellation by such
third party or otherwise. Any assumption by the Surviving Corporation of the
Company's rights thereunder by operation of law in connection with the Merger
which will require the consent or approval of any third party will be made
subject to such consent or approval being obtained.
6.4 Audited Financial Statements. The Company agrees to allow VIALOG's
Accountants access to the Company's business as is necessary for the Accountant
to perform and update an audit of the Company's Financial Statements for the two
years ended December 31, 1997 (the "Audit"). The Company agrees to promptly
prepare such financial statements and update and deliver them to VIALOG's
Accountants. VIALOG shall instruct VIALOG's auditor to promptly audit such
financial statements at VIALOG's expense. Draft copies of the Audit and updates
will be provided to ABCC contemporaneously with its distribution to VIALOG.
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 will (i) use its reasonable
commercial efforts to preserve intact its business organization and good will,
keep available the services of its officers and employees as a group and
maintain satisfactory relationships with suppliers, distributors, customers and
others having business relationships with it, (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 its
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.
(b) Except as set forth in Section 6.5(b) of the Disclosure Schedule or
with the written permission of VIALOG, the Company agrees further that the
Company (i) will not make, declare or pay any non cash dividends or other non
cash distributions on any shares except as permitted pursuant to Section 6.17
hereof or 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, (x) will not make any change in credit terms offered by
the Company,
30
(xi) will not make any capital expenditure or Material Commitment for any
additions or improvements to its 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 the
date hereof and (xiv) will otherwise conduct its operations according to its
ordinary and usual course of business.
6.6 No Solicitation. The Company will not, nor will it permit any of
the Company's Representatives (including, without limitation, any investment
banker, attorney or accountant retained by it) to, initiate, or solicit,
directly or indirectly, any inquiries or the making of any proposal with respect
to an Other Transaction (as defined below), engage in any discussions or
negotiations concerning, or provide to any other person any information or data
relating to it or otherwise cooperate in any way with or assist or participate
in, the making of any proposal which constitutes, or may reasonably be expected
to lead to, a proposal to seek or effect an Other Transaction, or agree to or
endorse any Other Transaction. Nothing contained in this Section will prohibit
the Company or its Board of Directors from making any disclosure to Stockholders
that, in the reasonable judgment of its Board of Directors in accordance with,
and based upon the written advice of, outside counsel, is required under
Applicable Law. 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, or in any way
facilitates, an Other Transaction, or affects any other obligation of the
Company under this Agreement.
6.7 Directors' and Officers' Indemnification and Insurance.
(a) From and after the Effective Time, VIALOG and the Surviving
Corporation will indemnify, defend and hold harmless the present and former
officers and directors of the Company against all Claims or amounts that are
paid in settlement of, with the approval of the Surviving Corporation, or
otherwise in connection with any Claim based in whole or in part on the fact
that such Person is or was a director or officer of the Company and arising out
of actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the Merger and the Transactions), in each case to the
fullest extent permitted under the BCA or the DBCL or the laws of the
Commonwealth of Massachusetts whichever governs and affords the greatest
protection (and will pay any expenses in advance of the final disposition of any
such action or proceeding to each such Person to the fullest extent permitted
under the BCA or the DBCL or the laws of the Commonwealth of Massachusetts, upon
receipt from the Person to whom expenses are advanced of an undertaking to repay
such advances to the extent required under such laws). VIALOG will cause the
Surviving Corporation to, and the Surviving Corporation will observe and comply
with the Company's obligations pursuant to the indemnification agreements, if
any, listed in Section 3.9 of the Disclosure Schedule.
31
(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 maintain directors and officers insurance in the
minimum amount of $2,000,000 for the benefit of the directors and officers of
VIALOG and the Surviving Corporations.
(d) The Surviving Corporation will not amend or change its Articles of
Incorporation or By-Laws to adopt a lesser standard of indemnification.
6.8 Notification of Certain Matters. The Company will give prompt
notice to VIALOG, and VIALOG will give prompt notice to the Company, of (a) any
Event 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 Stockholders, 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.
6.9 Public Announcements. Until the Effective Time, or in the event of
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 termination of
this Agreement) and will not issue any such press release or make any such
public statement without the prior consent of VIALOG. The Company acknowledges
and agrees that VIALOG may, without the prior consent of the Company, issue such
press release or make such public statement as in the reasonable opinion of
counsel to VIALOG is 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.
VIALOG will exercise commercially reasonable efforts to furnish the Company a
copy of any press release prior to its publication and will furnish a copy of
any 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 not make any statements attributable to the
Stockholders without the prior consent of the Stockholders.
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.
32
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 cause the Registration Statement to become effective and the closing
of the Public Offering to occur simultaneous with the Effective Time and 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.
(a) Within a reasonable time after the Effective Time, VIALOG will
cause the Surviving Corporation to substitute for the Plans and Benefits
Arrangements previously maintained by the Company, the Plans and Benefits
Arrangements provided to VIALOG's other employees and the employees of other
VIALOG Subsidiaries. Employees of the Surviving Corporation will be granted (i)
eligibility and vesting service in any employee pension plan (as defined in
Section 3(2)(A) of ERISA) maintained by VIALOG for their service with the
Company, (ii) eligibility service in any employee welfare plan (as defined in
Section 3(1) of ERISA) maintained by VIALOG for their service with the Company
and (iii) a dollar-for-dollar credit for annual "out-of-pocket maximums" paid
under the Company's health plan (with respect to the plan year commencing
January 1, 1998) toward their annual "out-of-pocket maximums" under the VIALOG
health plan for the plan year ending December 31, 1998.
(b) Within a reasonable time after the Effective Time, the Company's
section 125 cafeteria plan will be merged into the VIALOG section 125 cafeteria
plan such that all employee elections (and corresponding flexible spending
account balances where applicable) for the period commencing January 1, 1998 and
ending with the date of such plan merger are preserved and credited,
dollar-for-dollar.
(c) The Company's 401(k) plan will be (i) "frozen" with no further
contributions other than those accrued as of the Effective Time, and (ii)
maintained for a seven year period following the later of the last contribution
to the 401(k) plan or the Effective Time; provided, however, that VIALOG shall
have the right to amend such plan from time-to-time to as required by law in
order to maintain the plan's tax qualified status. Thereafter, VIALOG shall
cause the Company's 401(k) plan to be merged into the VIALOG 401(k) plan so as
to allow employees of the Company to roll over their account balances (including
outstanding loan balances) to the VIALOG 401(k) plan. VIALOG shall cause the
Company to pay timely any accrued liability to the 401(k) plan.
6.13 Certain Actions Concerning Business Combinations. The Company and
the Stockholders will not apply, and will not take any action resulting in the
application of, or otherwise elect to apply, the provisions of applicable
Minnesota takeover laws, if any, with respect to or as a result of the Merger or
the Transactions.
6.14 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 Effective Time without the approval
of one of the Stockholders. "Significant change" means,
33
(i) a relocation of the Company's operations outside of the greater Minneapolis
Metropolitan area except the relocation or consolidation of certain operational
equipment, (ii) any change in the position of those employees who receive
employment agreements pursuant to Section 7.2(t), (iii) a general reduction in
force or (iv) the termination of any employee (including the Stockholders and
employees who receive employment agreements pursuant to Section 7.2(t)) except
as related to such Stockholders' or employee's performance. The sales/marketing
staff, the accounting function, the human resources function and the benefits
administration function will be reorganized to report and be responsible
directly to VIALOG corporate staff rather than local management.
6.15 Tax Returns. The Stockholders will cause all Tax Returns of the
Company with respect to taxable periods ending on or before the Effective Time
to be prepared in a manner consistent with past practices, execute such Tax
Returns on behalf of the Company and timely file such Tax Returns prior to the
due date taking into account all extensions. At least thirty days before the due
date for any such Tax Returns, the Stockholders 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 Stockholders and provide the Stockholders with access to
any books and records reasonably necessary for their preparation of such draft
Tax Returns and authorize one or both of the Stockholders to execute such Tax
Returns on behalf of the Surviving Corporation. For any Tax Returns for taxable
periods ending on or before the Effective Time (to the extent not filed by the
Stockholders) which Tax Returns are due after the Effective Time VIALOG will
provide the Stockholders drafts of such Tax Returns for their review and comment
(which reasonable comments will be incorporated into the final Tax Returns).
VIALOG will file no amended Tax Returns with respect to the Company for any
taxable period ending on or before the Effective Time if the Stockholders
reasonably objects thereto and furnishes VIALOG thereto 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 Stockholders will execute and deliver to VIALOG the employment agreement
contemplated by Section 7.2(s) to be effective as of the Effective Time. From
and after the Effective Time, the Stockholders 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. The Company and VIALOG
acknowledge and agree that the Company contemplates that (i) prior to the
Effective Time it will make certain Distributions to Stockholders as set forth
in Schedule 6.17 of the Disclosure Schedule, and (ii) subsequent to the
Effective Time further Distributions may be required pursuant to this Section
6.17 as set forth in said Schedule 6.17.
6.18 Release from Personal Guarantees. At or prior to the Effective
Time, 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
34
personal guarantees of the Stockholders of Contractual Obligations which extend
beyond the Effective Time or indemnify and hold the Stockholders harmless from
such personal guarantees.
6.19 Section 338(h)(10) Election.
(a) The Company and the Stockholders agree to join with VIALOG in
making an election under Section 338(h)(10) of the Code (and any corresponding
election under state, local and foreign tax law) that is consistent with the
calculations promulgated in accordance with this Section 6.19 with respect to
the purchase and sale of the stock of the Company hereunder (the "Section
338(h)(10) Election"). The Stockholders agree to include any income, gain, loss,
deduction or other tax item resulting from the Section 338(h)(10) Election on
their tax returns to the extent permitted by Applicable Law and agree to pay any
taxes imposed on the Company attributed to the making of the Section 338(h)(10)
Election, including but not limited to, (i) any taxes imposed under Section 1374
of the Code, (ii) any taxes imposed under Regulation Section
1.338(h)(10)-1(e)(5), or (iii) any state, local or foreign taxes imposed on the
Company's gain.
(b) At the Effective Time, VIALOG agrees to remit to each of the
Stockholders (i) a preliminary reimbursement amount equal to the sum of the
difference between (A) the taxes calculated to be incurred by each of the
Stockholders under the immediately preceding paragraph (a) and (B) the taxes
calculated which such Stockholder would have incurred if no Section 338(h)(10)
Election had been made and (ii) an additional amount equal to the taxes incurred
by the Stockholders on the preliminary reimbursement amount and any payments
made pursuant to this paragraph 6.19(b) as an initial tax gross up amount,
assuming that each of the Stockholder is in the highest federal and state
applicable income tax brackets in each case under (i) and (ii) immediately
preceding.
(c) The preliminary reimbursement amount and the initial tax gross-up
amount are set forth on Schedule 6.19 of the Disclosure Schedule. The Section
338(h)(10) Election shall be made exactly in accordance with the methodology
used to determine the preliminary reimbursement amount; provided, however, that
the parties acknowledge and agree that the financial accounting numbers used for
calculation of the preliminary reimbursement amount will be replaced with the
final financial accounting numbers determined in accordance with generally
accepted accounting principles, consistently applied, as of the Effective Time.
(d) Promptly following the Effective Time, but in no event later than
sixty (60) days after the Effective Time, the Stockholders shall prepare and
cause Stockholders' accountants to prepare a statement of a final reimbursement
amount under the Section 338(h)(10) Election, using the exact methodology
utilized for the preliminary reimbursement amount, as of the Effective Time. The
foregoing calculation shall be prepared on a basis consistent with that of the
preliminary reimbursement amount.
(e) In connection with the preparation of the statement of final
reimbursement amount under the Section 338(h)(10) Election, VIALOG and the
Company shall afford the Stockholders and their Representatives reasonable and
timely access to the Company's books and records, personnel and facilities to
permit the Stockholders to prepare, and the Stockholders'
35
accounts to calculate and prepare, the statement of the final reimbursement
amount under Section 338(h)(10).
(f) Within 15 days after its receipt of the statement of the final
reimbursement amount under the Section 338(h)(10) Election, VIALOG shall either
inform the Stockholders in writing that such statement is acceptable or object
thereto in writing, setting forth a specific description of its objections. If
VIALOG so objects, any objection that the Stockholders and VIALOG cannot resolve
within 15 days from the date VIALOG notifies the Stockholders of any such
objection shall be referred to an independent certified public accounting firm
mutually agreeable to the Stockholders and VIALOG. The final determination by
such independent certified public accounting firm of the final reimbursement
amount under the Section 338(h)(10) Election shall be conclusive and binding
upon the parties hereto. Notwithstanding any contrary provision of this Section
6.19, the Section 338(h)(10) Election shall be executed by the parties and filed
with the Internal Revenue Service only in accordance with either (i) the
parties' agreement or (ii) the binding determination of the independent public
accounting firm. VIALOG shall pay the fees and expenses of VIALOG's Accountants.
Stockholders shall pay the fees and expenses of their accountants. The fees and
reimbursements, if any, of the independent accounting firm selected by the
parties shall be paid one-half by the Stockholders and one-half by VIALOG.
(g) Upon the determination of the final reimbursement amount under
Section 338(h)(10) Election, the preliminary reimbursement amount shall be
adjusted, up or down, as follows: (i) if the final reimbursement amount under
Section 338(h)(10) is greater than the preliminary reimbursement amount, the
amount of such difference shall be paid by VIALOG to the Stockholders and (ii)
if the final reimbursement amount under Section 338(h)(10) Election is less than
the preliminary reimbursement amount, the amount of such difference shall be
paid by the Stockholders to VIALOG. Such payments, if any, shall be made by wire
transfer of immediately available funds in the manner and amounts set forth or
calculated in this Section 6.19 within five business days after the date upon
which such amount is finally determined hereunder to an account as designated by
the receiving party.
6.20 Registration Statement.
(a) The Company and the Stockholders will review or will 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 Registration Statement
and Prospectus and any amendment thereto (including the Financial Statements),
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 in such Prospectus.
(b) VIALOG agrees to furnish to the Company and the Stockholders a copy
of information concerning the Company and the Stockholders included therein and
each amendment thereto at least two business days prior to such filing date.
36
(c) The Company and the Stockholders will furnish to VIALOG a letter
confirming their review pursuant to paragraph (a) hereof by such filing date.
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 subsection intentionally left blank,
(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 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.
(d) (i) The Registration Statement shall have become effective and
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 and no stop order suspending its effectiveness has been
issued and no proceedings for that purpose have been instituted or threatened by
the SEC, (ii) the shares of VIALOG Stock offered in the Public Offering shall
have been sold and purchased subject only to consummation of the Merger, (iii)
every condition to closing the Public Offering (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 Public Offering and
distribution of the proceeds of the sale of all shares of VIALOG Stock sold and
purchased in the Public Offering shall have been unconditionally authorized by
the Underwriter upon consummation of the Merger.
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
37
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 with, favorable opinions,
dated the Effective Time of Xxxxxx and Xxxxxx P.A., in the form of Exhibit
7.2(b),
(c) No Legal Action or other Claim shall be pending or threatened at
any time prior to or at the Effective Time 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, assuming
consummation of the Merger, VIALOG and its Subsidiaries taken as a whole,
(d) The representations, warranties, covenants and agreements of the
Company contained in this Agreement or as supplemented pursuant to Section 11.11
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 Effective Time 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 Effective Time. Each and all of
the agreements and conditions to be performed or satisfied by the Company under
this Agreement at or prior to the Effective Time 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,
(e) VIALOG shall have received from its Accountants, a certificate or
letter, dated the Public Offering 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 Registration Statement 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 delivered pursuant to Section
38
3.2 hereof and set forth in the Registration Statement prepared by the
Accountants as contemplated by Section 6.4 to a date not more than five (5) days
prior to the Public Offering Closing Date, there has been any Adverse Change in
the financial position or results of the operations of the Company which is not
set forth in the Registration Statement,
(f) The financial statements audited by VIALOG's accountants are
satisfactory to VIALOG,
(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 is a party or by which it or any of its
property or assets is bound,
(h) The Company shall have obtained consents to the assignment and
continuation of all Material Agreements which, in the reasonable judgment of
VIALOG or its counsel, require such consents, including appropriate binders or
consents as to policies of insurance to be assigned to VIALOG or the Surviving
Corporation under this Agreement. The Company shall have obtained satisfaction
and discharge of all Liens set forth in Section 3.15(b) of the Disclosure
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 Effective Time, there
shall not have occurred and be continuing any Adverse Change affecting the
Company from the condition thereof (financial and other) reflected in the
Financial Statements or in the audited financial statements prepared by the
Accountants as contemplated by Section 6.4 or in the most recent financial
statements set forth in the Registration Statement,
(j) 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 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,
(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 could restrain, prevent or change the Merger or the Transactions or
Adversely Affect the ability of the Stockholders to perform their obligations
under this Agreement, or
39
Adversely Affect the ability of VIALOG to continue to own, operate and conduct
the business of the Surviving Corporation, substantially on the basis heretofore
owned, operated and conducted by the Company and as proposed to be owned,
operated and conducted by the Surviving Corporation,
(l) VIALOG shall have received copies of any environmental audits the
Company has received in respect of all real property owned or leased by the
Company 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 trustee under each
Plan shall have submitted his or her unqualified written resignation, dated as
of the Effective Time,
(n) Each of the Stockholders shall have delivered to VIALOG an
agreement, substantially in the form of Exhibit 7.2(n), dated the Effective
Time, releasing the Company from any and all Claims against them (other than
Claims arising from such Stockholders having acted as a director or officer of
the Company as contemplated by Section 6.7),
(o) This subsection intentionally left blank,
(p) This subsection intentionally left blank,
(q) Except for such leases and other Contractual Obligations as are set
forth on Schedule 7.2(q) 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 at or prior to the
Effective Time,
(r) The representations, warranties, covenants and agreements of the
Stockholders contained in this Agreement or otherwise made in writing by or on
behalf of the Stockholders 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 Effective Time 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. Each and all of the agreements and conditions to be performed or
satisfied by the Stockholders under this Agreement at or prior to the Effective
Time shall have been duly performed or satisfied in all material respects, and
the Stockholders 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) Each of the Stockholders shall have executed and delivered to
VIALOG an employment and noncompetition agreement, substantially in the form of
Exhibit 7.2(s),
40
(t) The individuals listed on Section 7.2(t) of the Disclosure Schedule
shall have executed and delivered to VIALOG an Employment Arrangement 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 qualify 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 Subsidiary.
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) Each of VIALOG and VIALOG Merger Subsidiary shall have complied in
all material respects with its agreements contained in this Agreement, and the
certificates to be furnished to the Company pursuant to this Section shall be
true, correct and complete. All Collateral Documents shall be reasonably
satisfactory in form, scope and substance to the Company and its counsel, and
the Company and its counsel shall have received all information and copies of
all documents, including records of corporate proceedings, which they may
reasonably request in connection therewith, such documents where appropriate to
be certified by proper corporate officers,
(b) VIALOG shall have furnished the Company and the Stockholders with
the favorable opinion dated the Public Offering Closing Date of Xxxxxx,
X'Xxxxxxx, XxXxxxxx & Xxxxxx, LLP, counsel to VIALOG and VIALOG Merger
Subsidiary in the form of Exhibit 7.3(b),
(c) No Legal Action or other Claim shall be pending or threatened at
any time at or prior to the Effective Time 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 or, assuming consummation of the Merger, VIALOG and its
Subsidiaries taken as a whole.
(d) The representations, warranties, covenants and agreements of each
of VIALOG and VIALOG Merger Subsidiary contained in this Agreement or as
supplemented pursuant to Section 11.11 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 Effective Time 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. 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
Effective Time shall have been duly
41
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,
(e) 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) shall have been executed by the individuals listed on
Section 7.2(t) of the Disclosure Schedule and the VIALOG Subsidiary and
delivered by VIALOG to the indicated person,
(f) All actions taken by VIALOG or VIALOG Merger Subsidiary,
respectively, 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 its jurisdiction of
incorporation, its respective Organizational Documents and all Material
Agreements to which it is a party or by which it or any of its property or
assets is bound.
(g) VIALOG shall have obtained the insurance set forth in Section
6.7(c),
(h) 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 the Company's reasonable judgment, could have any Adverse Effect on
VIALOG or its Subsidiaries taken as a whole, or could restrain, prevent or
change the Merger or the Transactions or Adversely Affect the ability of VIALOG
to perform its obligations under this Agreement, or Adversely Affect the ability
of VIALOG to continue to own, operate and conduct the business of the Surviving
Corporation, substantially on the basis heretofore owned, operated and conducted
by the Company and as proposed to be owned, operated and conducted by the
Surviving Corporation, and
(i) This Agreement, the Merger and the Transactions shall have been
approved and adopted in accordance with the DBCL by the affirmative vote or to
the extent permitted by law, by written consent of VIALOG as the sole
stockholder of VIALOG Merger Subsidiary.
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 by the Stockholders:
(a) by mutual consent of the Company and VIALOG.
42
(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 Public Offering shall have become final
and non-appealable, 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,
(ii) if the Merger Closing shall not occur on or before
the Termination Date,
(iii) by the delivery or receipt of written notice of
objection to a Supplement to or from the other Party
or Parties pursuant to the procedures described in
Section 11.11 hereof. In order to terminate this
Agreement, such Supplement shall be material (in the
receiving Party's sole and reasonable discretion) to
the representation or warranty so modified,
(iv) if a party 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) it being understood and agreed that a
written request by governmental authorities for
information with respect to the Merger or the
Transactions, which information could be used in
connection with such Legal Action or proceedings, may
be deemed by the other Party to be a threat of
material Legal Action or proceedings,
(v) if the business, assets, prospects, management,
condition (financial or other) or results of
operation of the Company 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, or
(vi) 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.
(c) by the Company 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
43
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 Effective Date or will prevent or delay consummation of the Merger
by or beyond the Termination Date, or
(d) by VIALOG:
(i) if the Merger and the Transactions fail to receive
the approval required by Applicable Law, by vote (or
to the extent permitted by Applicable Law, by
consent) of the Stockholders, or
(ii) in the event of a material breach of this Agreement
by the Company or the Stockholders that has not been
cured, or if any representation or warranty of the
Company or the Stockholders shall have become untrue
in any material respect, so that such breach or
untruth is incapable of being substantially cured by
the Merger Closing Date 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.
8.2 Effect of Termination. Except as provided in Sections 6.1(b),
6.1(c), 6.9, 8.5, 11.2 through 11.11 and Article 12, in the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void, there shall be no liability on the part of any Party, or
any of their respective officers or directors, to the other and all rights and
obligations of any Party shall cease; provided, however, that [(i)] 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 and (ii) if VIALOG terminates this Agreement for any reason other
than pursuant to Section 7.1, Section 7.2 or 11.11 VIALOG shall immediately pay
to the Company the sum of $100,000 to reimburse the Company's expenses
associated with 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
Stockholders 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
44
shall be valid only if set forth in an agreement in writing signed by the Party
or Parties to be bound thereby.
8.5 Fees, Expenses and Other Payments. All costs and expenses incurred
by the Parties in connection with this Agreement, the Merger and the
Transactions and in connection with compliance with Applicable Law and
Contractual Obligations as a consequence hereof and thereof, including fees and
disbursements of counsel, financial advisors and accountants, will be borne
solely and entirely by the Party which has incurred such costs and expenses.
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
THIS ARTICLE INTENTIONALLY LEFT BLANK
ARTICLE
10
INDEMNIFICATION
10.1 Indemnification.
(a) Except as provided in Section 11.1, the Stockholders agree to make
whole, indemnify and hold VIALOG, VIALOG Merger Subsidiary, the Surviving
Corporation and their respective successors and permitted assigns (collectively,
the "VIALOG Indemnified Parties") harmless as a result of, from or against:
(i) any and all Claims of the VIALOG Indemnified Parties
or other Persons based upon, attributable to or
resulting from any material inaccuracy in or material
breach of any representation or warranty on the part
of any one or more of the Company or the Stockholders
under this Agreement or any Collateral Document;
(ii) any and all Claims of the VIALOG Indemnified Parties
or other Persons based upon, attributable to or
resulting from the material breach of any covenant or
other agreement on the part of any one or more of the
Company or the Stockholders under this Agreement or
any Collateral Document;
45
(iii) any and all Claims and/or taxes incurred by the
VIALOG Indemnified Parties or other Persons with
respect to each tax year in which the Company is not
treated as an S corporation because distributions
made by the Company caused it to violate the single
class of stock rule of IRC Section 1361(b)(1)(D) and
Treasury Regulation 1.1361-1(1); and
(iv) any and all other material Claims of the VIALOG
Indemnified Parties or other Persons incident to the
foregoing or to the enforcement of this Section.
(b) Except as provided in Section 11.1, VIALOG agrees to make whole,
indemnify (and in the case of subparagraph 10.1(b)(ii), defend and hold the
Stockholders and their respective heirs (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 against the Company Indemnified
Parties brought by parties other than VIALOG
Indemnified Parties and arising out of information
contained in the Registration Statement or the
Prospectus relating to the Company or the
Stockholders (excluding herefrom that portion of any
damages for Claims directly arising out of (A)
materially inaccurate information contained in the
Registration Statement or Prospectus (and
specifically excluding oral communications by VIALOG
or its Representatives to third parties) about the
Company or the Stockholders furnished in writing to
VIALOG by the Company or the Stockholders or reviewed
by or on behalf of the Stockholders pursuant to
Section 6.20 hereof or (B) information about the
Company or the Stockholders which was omitted from
the Registration Statement or Prospectus and was not
included (i) in this Agreement, (ii) any Disclosure
Schedule to this Agreement or (iii) in any written
due diligence material furnished by the Company or
the Stockholders to VIALOG, unless, in the case of
(A) or (B) hereof, the information was known to be
inaccurate by VIALOG or the information not included
was otherwise known to VIALOG.
(iii) 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
46
or VIALOG Merger Subsidiary under this Agreement or
any Collateral Document; and
(iv) any and all other material Claims of the Company
Indemnified Parties or other Persons incident to the
foregoing or to the enforcement of this Section.
(c) Except in connection with Claims pursuant to Section 10.1(a)(iii),
no one of the Stockholders will be required to pay to the VIALOG Indemnified
Parties for damages an aggregate amount in excess of an amount equal to the cash
received by such Stockholder as the Merger Consideration pursuant to Sections
2.1(a). VIALOG will not be required to pay any Company Indemnified Party for
damages an aggregate amount in excess of the amount of cash delivered to such
Company Indemnified Party pursuant to Section 2.1(a) other than damages for
Claims covered by Section 10.1(b)(ii) hereof. No Claim for indemnification may
be commenced beyond the period applicable to such Claim set forth in Section
11.1.
(d) Notwithstanding the foregoing, the Stockholders will not be
required to pay any amount for indemnification to the VIALOG Indemnified Parties
except to the extent that (i) the claim is in connection with any of the matters
set forth in Section 10.1(a)(iii); or (ii) the aggregate amount of Claims under
this Section 10.1 asserted collectively against the Stockholders exceed $150,000
after giving effect to the provisions of subsection (e) hereof.
(e) The claims of the Parties for indemnification shall be reduced by
tax benefits or insurance proceeds available to such Party, and no multiplier
shall be used for calculation of Claims for damages.
10.2 Procedures Concerning Claims by Third Parties; Payment of Damages;
Etc.
(a) If any Claim is instituted or asserted by any Person other than
such indemnified party in respect of which payment may be sought hereunder, the
indemnified party will reasonably and promptly cause written notice of the
assertion of any Claim of which it has knowledge which is covered by the
indemnities under Section 10.1 to be forwarded to the indemnifying party. In
such event, the indemnifying party will have the right, at its sole option and
expense, to be represented by counsel of its choice, which must be reasonably
satisfactory to the indemnified party, and to defend against, negotiate, settle
or otherwise deal with any Claim instituted or asserted by any Person other than
such indemnified party and indemnified against hereunder; provided, however,
that no settlement thereof will be made without the prior written 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 such Claims, it will within five (5) days of
receipt of said notice (or sooner, if the nature of the Claim so requires)
notify in writing the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any 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 Claim. If the
47
indemnified party defends any Claim as a result of the foregoing, then the
indemnifying party will reimburse the indemnified party for reasonable Claims
incurred in defending such Claim upon a final determination that the indemnified
party was entitled to indemnity hereunder. Neither the indemnifying party or the
indemnified party may settle any Claim without the prior written consent of the
other party, which consent will not be unreasonably withheld, conditioned or
delayed. If the indemnifying party will assume the defense of any Claim
instituted or asserted by any Person other than an indemnified party, the
indemnified party may participate by observation and suggestion but not as
co-counsel, at such party's own expense, in the defense of such Claim.
Notwithstanding the foregoing, or any contrary provision of this Agreement,
VIALOG shall have an absolute duty to defend the Stockholders against Claims
arising under Section 10.1(b)(ii) hereof regardless as to whether the Claims may
assert damages arising out of information about the Company or the Stockholders
or their omission to provide information.
(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 within five business days after the date of notice of such
judgment or award conditioned, however, on the indemnifying party having been
finally determined by the parties' agreement or by final court or arbitration
that the indemnifying party is obligated hereunder to make said payment and
subject to the provisions of this Article 10.
(c) The failure of the indemnified party to give reasonably prompt
notice of any Claim instituted or asserted by any Person other than such
indemnified party and indemnified against hereunder will not release, waive or
otherwise affect the indemnifying party's obligations with respect thereto
except to the extent that the indemnifying party can demonstrate actual loss or
material prejudice as a result of such failure.
(d) No 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 State of
Minnesota, 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 Stockholders and
their Representatives reasonable access to all files, documents, instruments,
papers, books and records relating to the Company or the Stockholders, and to
all employees of the Company in connection with the
48
matters for which indemnification is sought to the extent the Stockholders
reasonably deem necessary in connection with their rights and obligations under
this Article 10.
10.4 Exclusivity. After the Effective Time, 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 or right of rescission, all of which
the parties hereto hereby waive; except, in both instances, for (i) claims based
upon fraud or willful or reckless misconduct or (ii) claims for specific
performance, injunctive relief or other equitable remedies.
ARTICLE
11
GENERAL PROVISIONS
11.1 Effectiveness of Representations; Etc.
(a) Regardless of any investigation made by or on behalf of any other
party hereto, any Person Controlling such party or any of their respective
Representatives whether prior to or after the execution and consummation of this
Agreement, the representations, warranties, covenants and agreements contained
in Article 3, Article 4 and Article 5 will survive the Merger and remain
operative and in full force and effect as follows:
(i) Section 3.11, Section 3.12, Section 3.21, Section
3.23, Section 3.25, Section 5.7 and Section 5.9 until
sixty (60) days after the applicable statute of
limitations, as the same may be extended from time to
time, has terminated and Section 3.1 until expiration
of the last time period set forth in this Section
11.1(a)(i);
(ii) Section 3.15, Section 4.2, Section 5.1, Section 5.2
and Section 5.3 for six years following the Merger
Closing; and
(iii) all other Sections, one year following the Merger
Closing.
(b) Except as set forth in Section 8.2 and as limited by Section
11.1(a) hereof, the representations, warranties, covenants and agreements of
each Party will survive and remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any other Party, any
Person Controlling any such Party or any of their respective Representatives
whether such investigation was prior to or after the execution and consummation
of this Agreement.
49
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: Xxxxx Xxxxxx, President
Ten Xxx Xxxxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
with a copy to:
Xxxxxx, X'Xxxxxxx, XxXxxxxx & Xxxxxx, LLP
Attention: Xxxxx X. Xxxxxx, Esq.
0000 XxxxXxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
(b) If to the Stockholders:
Xxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxx
0000 00xx Xxxxxx
Xxxxxx, XX 00000
with a copy to:
Xxxxxx and Xxxxxx P.A.
Attention: Xxxxxxx X. Xxxxxx, Esq.
2400 IDS Center
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Fax: (000) 000-0000
Any address for notice as hereinabove 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.
50
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 Supplement, 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 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 Merger Consideration, under this
Agreement to such Subsidiary.
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 State of Delaware governing
contracts made and to be performed in such jurisdiction, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law.
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 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 seek
injunctive relief and to enforce its rights by an action for specific
performance to the extent permitted by Applicable Law. 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
51
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 Supplementation of Schedules. Any Party hereto may elect to
deliver a supplement (a "Supplement") to one or more of the Disclosure
Schedules, contemplated by this Agreement and previously delivered to the other
Parties in accordance with the procedures set forth in this Section 11.11 as
follows:
(a) prior to the Effective Date any and all Supplements must be in
writing and must be delivered to the other Parties hereto before the date that
is two (2) days prior to the scheduled Effective Date (such date of delivery,
the "Delivery Date"). The other Parties hereto shall be given the opportunity
during the two (2) business days following the Delivery Date to consider a
proposed Supplement, and if such Parties do not object to the contents thereof
within such period the Schedules in question will be deemed amended by the
Supplement. If the other Party or Parties object to a proposed Supplement, the
sole remedy of such objecting Party or Parties shall be the termination of this
Agreement in accordance with Section 8 hereof; and
(b) any and all Supplements within two (2) days prior to the Effective
Date and thereafter must be in writing and delivered to the other Parties
pursuant to Section 11.2 hereof and will only be deemed to amend a Schedule with
the written consent of the other parties.
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.
52
Adverse, Adversely, when used alone or in conjunction with other terms
(including without limitation "Affect," "Change" and "Effect") means, with
respect to the Company, 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 as a whole, VIALOG or VIALOG
Merger Subsidiary, as they case may be, or (c) impair the Company's or VIALOG's
or VIALOG Merger Subsidiary's ability to fulfill its obligations under the terms
of this Agreement or any Collateral Document executed or required to be executed
pursuant hereto or thereto, or (d) adversely affect the aggregate rights and
remedies of VIALOG or the Company under this Agreement or any Collateral
Document executed or required to be executed pursuant hereto or thereto, in all
cases, unless otherwise specifically set forth, in a material respect or manner
or to a material degree. Adverse or Adversely shall not contemplate a change in
business conditions or the effect of changes in the telecommunications industry.
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).
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.
Authority means any governmental or quasi-governmental authority,
whether administrative, executive, judicial, legislative or other, or any
combination thereof, including
00
xxxxxxx xxxxxxxxxx xxx xxxxxxx, xxxxx, xxxxxxxxxxx, county, municipal or other
government or governmental or quasi-governmental agency, arbitrator, authority,
board, body, branch, bureau, central bank or comparable agency or Entity,
commission, corporation, court, department, instrumentality, master, mediator,
panel, referee, system or other political unit or subdivision or other Entity of
any of the foregoing, whether domestic or foreign.
BCA will have the meaning given to it in the Preamble.
Benefit Arrangement means any material benefit arrangement that is not
a Plan, including (a) any employment or consulting agreement, (b) any
arrangement providing for insurance coverage or workers' compensation benefits,
(c) any incentive bonus or deferred bonus arrangement, (d) any arrangement
providing termination allowance, severance or similar benefits, (e) any equity
compensation plan, (f) any deferred compensation plan and (g) any compensation
policy and practice.
Certificate will have the meaning given to it in Section 2.1(a).
Claims means any and all Tax Claims, debts, liabilities, obligations,
losses, damages, deficiencies, assessments and penalties, together with all
Legal Actions, pending or threatened, claims and judgments of whatever kind and
nature relating thereto, and all reasonable fees, costs, expenses and
disbursements (including without limitation attorneys' fees, costs and expenses)
relating to any of the foregoing.
COBRA means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, as set forth in Section 4980B of the Code and Part 6 of Title I of
ERISA.
Code will have the meaning given to it in the Preamble.
Collateral Document means any agreement, instrument, certificate,
opinion, memorandum, schedule or other document delivered by a Party or a
Stockholder pursuant to this Agreement or in connection with the Merger and the
Transactions. For purposes of the representations, warranties, covenants and
agreements of the Company and the Stockholders, 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 Stockholders or VIALOG and VIALOG
Merger Subsidiary, as the case may be, assume no responsibility for the
authority of or genuineness of signatures relating to the others as counterparts
or their representations, warranties, covenants and agreements.
Company will have the meaning given to it in the Preamble.
Company Indemnified Parties will have the meaning given to it in
Section 10.1(b).
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
54
Stockholders; and that such director, executive officer or Stockholders, 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 shall mean (i) the schedule prepared and delivered
by the Company or the Stockholders to VIALOG and the VIALOG Merger Subsidiary or
by VIALOG and the VIALOG Merger Subsidiary to the Company or the Stockholders
and dated as of the date hereof, and (ii) the Supplement (if accepted, as
described in Section 11.11 below), both of which set forth the exceptions to the
representations and warranties contained herein and certain other information
called for by this Agreement. Unless otherwise specified each referenced in this
Agreement to any numbered schedule is a reference to that numbered schedule
which is included in the Disclosure Schedule. As provided in Section 11.11
hereof, no later than two (2) full calendar days prior to the scheduled date of
Closing, VIALOG, VIALOG Merger Subsidiary, the Company and the Stockholders may
deliver a Supplement to the Disclosure Schedule so delivered, and if, and only
if, such Supplement is accepted by the other Party as provided in such Section
11.11, the phrase the "Disclosure Schedule" shall be deemed to refer to the
initial Disclosure Schedule, as so supplemented.
55
Distribution means, with respect to the Company: (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, (b) the purchase, redemption or other retirement of any shares of any
class of capital stock of the Company, and (c) any other distribution on or in
respect of any shares of any class of capital stock of the Company.
Effective Date means the effective date of the Registration Statement
and commencement of the Public Offering.
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.
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 Law 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 includes 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
56
Mining Control and Reclamation Act of 1977 (30 U.S.C. Section 1201 et seq.), and
any analogous future federal, or present or future state, local or foreign,
Laws, and the rules and regulations promulgated thereunder all as from time to
time in effect, and any reference to any statutory or regulatory provision will
be deemed to be a reference to any successor statutory or regulatory provision.
Environmental Permit means any Governmental Authorization required by
or pursuant to any Environmental Law.
Environmental Requirements means all applicable present and future
Governmental Authorizations, Private Authorizations or other requirements
(including without limitation those pertaining to reporting, licensing and
permitting) relating to or required by or pursuant to any Environmental Law,
including without limitation all requirements pertaining or relating to:
(a) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of, or the
remediation, emission, discharge or release into the air,
surface water, groundwater or land of, Hazardous Materials;
(b) the protection of the health and safety of employees or the
public;
(c) the reclamation or restoration of land; and
(d) the ownership or operation of underground storage tanks.
ERISA means the Employee Retirement Security Act of 1974, and the rules
and regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations, and any reference to any statutory or regulatory
provision will be deemed to be a reference to any successor statutory or
regulatory provision.
ERISA Affiliate means any Person that is treated as a single employer
with the Company or any of its Subsidiaries under Sections 414(b), (c), (m) or
(o) of the Code or Section 4001(b)(1) of ERISA.
Event means the occurrence or existence of any act, action, activity,
circumstance, condition, event, fact, failure to act, omission, incident or
practice, or any set or combination of any of the foregoing.
Exchange Merger Consideration will have the meaning given to it in
Section 2.1(a).
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.
57
Governmental Authorizations means all approvals, concessions, consents,
franchises, licenses, permits, plans, registrations and other authorizations of
each applicable Authority.
Governmental Filings means all filings, including franchise and similar
Tax filings, and the payment of all fees, assessments, interest and penalties
associated with such filings, with each applicable Authority.
Guaranty or Guaranteed means any agreement, undertaking or arrangement
by which the Company or any of its Subsidiaries, VIALOG or VIALOG Merger
Subsidiary, as the case may be, guarantees, endorses or otherwise becomes or is
liable, directly or indirectly, upon any Indebtedness of any other Person
including without limitation the payment of amounts drawn down by beneficiaries
of letters of credit (other than by endorsements of negotiable instruments for
deposit or collection in the ordinary course of business). The amount of the
obligor's obligation under any Guaranty will be deemed to be the outstanding
amount (or maximum permitted amount, if larger) of the Indebtedness directly or
indirectly guaranteed thereby (subject to any limitation set forth therein).
Hazardous Materials means any substance (in whatever state or matter):
(a) the presence of which requires investigation or remediation under any
Environmental Law; (b) that is defined as a "hazardous waste", "hazardous
material" or "hazardous substance" under any Environmental Law; (c) that is
toxic, explosive, corrosive, pollutive, contaminating, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated by
any Authority; (d) that contains or consists of petroleum or petroleum products,
or (e) that contains or consists of PCBs, asbestos, or urea formaldehyde foam
insulation.
Indebtedness means, with respect to the Company 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 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 VIALOG or any VIALOG Merger Subsidiary is subject, whether or not the
obligation secured thereby will have been assumed, and (iii) to the extent not
otherwise included, all Contractual Obligations of the Company or VIALOG or any
VIALOG Merger Subsidiary constituting capitalized leases and all obligations of
the Company or VIALOG or any VIALOG Merger Subsidiary with respect to Leases
constituting part of a sale and leaseback arrangement.
Intangible Assets means all assets and property lacking physical
properties the evidence of ownership of which must customarily be maintained by
independent registration, documentation, certification, recordation or other
means.
Law means any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction,
58
interpretation, judgment, order, ordinance, policy statement, proclamation,
promulgation, regulation, requirement, rule, rule of law, rule of public policy,
settlement agreement, statute, or writ of any Authority, domestic of foreign;
(b) the common law, or other legal or quasi-legal precedent; or (c)
arbitrator's, mediator's or referee's award, decision, finding or
recommendation; including, in each such case or instance, any interpretation,
directive, guideline or request, whether or not having the force of law
including, in all cases, without limitation any particular section, part or
provision thereof.
Lease means any lease of property, whether real, personal or mixed, and
all amendments thereto.
Legal Action means any litigation or legal or other actions,
arbitrations, counterclaims, investigations, proceedings, requests for material
information by or pursuant to the order of any 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 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
59
than five percent (5%) of purchases or sales projected to be made by the Company
for the year ended December 31, 1997.
Merger will have the meaning given to it in the Preamble.
Merger Closing will have the meaning given to it in Section 1.3.
Merger Closing Date means the date on which the Merger is closed.
Merger Consideration will have the meaning given to it in Section
2.1(a).
Minnesota Telephone Act means Minnesota Statute ss.237.16, ss.237.23,
ss.237.58, ss.237.59 and ss.237.60 and related rules.
Multiemployer Plan means a "multiemployer plan" within the meaning of
Section 4001(a)3 of ERISA.
Option Securities means all rights, options and warrants, all calls or
commitments evidencing the right, to subscribe for, purchase or otherwise
acquire Shares of 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 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, regardless of whether the
Company 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 not otherwise permitted under Section 3.18.
Party means any natural individual or any Entity.
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
60
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.
Private Authorizations means all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than Authorities) 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 prospectus first filed by VIALOG in the
Registration Statement, any preliminary prospectus and the prospectus filed
pursuant to Rule 424(b) under the Securities Act and any supplements or
amendments thereto filed with the SEC prior to the termination of the Public
Offering.
Public Offering will have the meaning given to it in the Preamble.
Public Offering Closing Date means the date on which the Public
Offering is closed.
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) with respect to the Public Offering), filed
under the Securities Act registering the shares of VIALOG Stock to be sold in
the Public Offering in accordance with the terms and conditions of the
Underwriting Agreement.
Representatives of a Party means the officers, directors, employees,
accountants, counsel, financial advisors, consultants, underwriters and other
representatives of such Party.
SEC means the Securities and Exchange Commission of the United States
or any successor Authority.
Securities Act means the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as from time to time in effect, or
any successor law, rules or regulations.
Shares will have the meaning given to it in Section 2.1(a).
Special Meeting will have the meaning given to it in Section 1.2.
Stockholders means Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxx and all other
Persons entitled to Merger Consideration pursuant to Sections 2.1(a).
61
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.
Supplement will have the meaning given to it in Section 11.11.
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 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 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 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 VIALOG or any VIALOG Merger Subsidiary
for the payment of any amounts of the type described in (a) as a result of any
express or implied obligation to indemnify any other Person.
Tax Claim means any Claim which relates to Taxes, including without
limitation the representations and warranties set forth in Section 3.11.
Tax Return or Returns means all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
Taxing Authority means any Authority responsible for the imposition of
any Tax.
Termination Date means (a) September 30, 1998, or (b) such date after
September 30, 1998 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.
Transmittal Documents will have the meaning given to it in Section
2.2(b).
Underwriter means the lead underwriters and any other Person who
executes the Underwriting Agreement as an underwriter of VIALOG Stock in the
Public Offering.
62
Underwriting Agreement means the firm commitment underwriting agreement
between VIALOG and the Underwriter to be filed as an exhibit to the Registration
Statement and to be executed on or about the Effective Date.
63
IN WITNESS WHEREOF, VIALOG, VIALOG Merger Subsidiary, the Company and
the Stockholders 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/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
Title: President
ABC ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
Title: President
A BUSINESS CONFERENCE
CALL, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
Title: President
PRINCIPAL STOCKHOLDER:
/s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
THE FOLLOWING IS AN INDEX OF INFORMATION PROVIDED IN THE DISCLOSURE
SCHEDULES AND EXHIBITS OF THE AGREEMENT AND PLAN OF REORGANIZATION BY AND AMONG
VIALOG CORPORATION, ABC ACQUISITION CORPORATION, A BUSINESS CONFERENCE CALL,
INC. AND XXXXXX x. XXXXXX AND XXXXXX X. XXXXX DATED AS OF MAY 23, 1998. FURTHER
INFORMATION WILL BE FURNISHED UPON REQUEST.
Schedule 3.1(a) Foreign Jurisdictions In Which Qualified To Do Business
Schedule 3.1(b) Governmental Authorizations and Private Authorizations
Schedule 3.1(c) Noncontravention
Schedule 3.2(a) Financial and Other Information
Schedule 3.2(b) Capital Stock or Equity in Another Entity
Schedule 3.3 Changes in Condition
Schedule 3.4 Liabilities
Schedule 3.5(a) Title to Properties; Leases
Schedule 3.5(b) Leased Property
Schedule 3.5(c) Title to Properties
Schedule 3.6 Compliance With Private Authorization
Schedule 3.7(a) Compliance with Governmental Authorizations and Applicable Law
Schedule 3.7(b) Governmental Authorizations Not Obtained
Schedule 3.8(a) Intangible Assets and Governmental Authorizations Business is Dependent Upon
Schedule 3.8(b) List of Governmental Authorizations and Intangible Assets
Schedule 3.9 Related Transactions
Schedule 3.10(a) Insurance
Schedule 3.11(a) Tax Matters
Schedule 3.11(d) Past or Pending Audits
Schedule 3.11(e) Tax Agreements
Schedule 3.12(a) Benefit Plans and Arrangements
Schedule 3.12(c) Funding and Service Liability of Employment Arrangements
Schedule 3.15(a) Authorized and Outstanding Capital Stock
Schedule 3.15(b) Stock Ownership and Liens Thereto
Schedule 3.16(a) Employment Arrangements
Schedule 3.16(b) Employment Arrangements As Result of Agreement
Schedule 3.16(c) Labor Conflicts
Schedule 3.17(a) Material Agreements
Schedule 3.17(b) Material Agreement Unable to Provide Operating Profit
Schedule 3.18 Ordinary Course of Business Since December 31, 1997
Schedule 3.20 Adverse Restrictions
Schedule 3.22 Personal Injury or Property Damage; Warranty Claims; Etc.
Schedule 3.23(a) Environmental Matters
Schedule 3.23(b) Hazardous Spills/Placement
Schedule 3.23(c) Above Ground or Under Ground Tanks
Schedule 3.23(e) Hazardous Materials
Schedule 3.23(f) Hazardous Materials and Transport Of
Schedule 3.23(g) Environmental Investigations
Schedule 3.31 Predecessor Status; Etc.
Schedule 4.2 Liens to Title to Shares
Schedule 4.3 No Conflict; Required Filings and Consents
Schedule 5.7 Capitalization and Fraudulent Conveyance
Schedule 6.5(b) Conduct of Business
Schedule 6.17 Distributions; Liabilities; Etc.
Schedule 6.19 Preliminary Reimbursement Amount and Initial Tax Gross-Up
Schedule 7.2(q) Related Transactions Continuing After Effective Time
Schedule 7.2(t) Individuals Executing Employment Arrangements
Exhibit 1.3 Form of Escrow Agreement
Exhibit 1.6 Form of Articles of Incorporation of Surviving Corporation
Exhibit 1.7 Form of By-Laws of Surviving Corporation
Exhibit 2.4 Form of Incentive Stock Option Agreement
Exhibit 6.2(c) Form of Key Employee Noncompetition and Confidentiality Agreement
Exhibit 7.2(b) Form of Xxxxxx and Xxxxxx Legal Opion
Exhibit 7.2(n) Form of Limited Release
Exhibit 7.2(s) Form of Executive Employment Agreement
Exhibit 7.2(t) Form of Employee Employment Agreement
Exhibit 7.3(b) Form of Xxxxxx, X'Xxxxxxx, XxXxxxxx & Xxxxxx LLP Legal Opinion
