Exhibit 10.1
VIALOG CORPORATION
February 25, 2000
Re: Exchange Offer for the Company's 12-3/4% Senior Notes
Dear Noteholder:
This letter agreement (the "Letter Agreement"), dated as of the date
first written above, by and between Vialog Corporation, a Massachusetts
corporation (the "Company"), and you (referred herein as either the "Noteholder"
or the "Holder") is entered into in connection with a proposed exchange offer
for the Company's 12-3/4% Senior Notes due 2001 (the "Notes").
As previously disclosed to the Holder, the Company is in the process of
implementing a strategic plan that includes an exchange offer (the "Exchange
Offer") on the terms and conditions set forth in the Summary of Proposed Terms
(the "Summary of Terms") attached as Exhibit A. If completed, the Exchange Offer
will allow Noteholders to receive, prior to maturity of the Notes, both a
significant amount of cash and a new series of the Company's convertible
preferred stock. The Company's current willingness to proceed with the Exchange
Offer is contingent upon receiving signed Letter Agreements from Holders of at
least 95% of the aggregate principal amount of the outstanding Notes. This
condition may, however, be waived by the Company in its sole discretion.
Based upon and subject to the foregoing, the parties agree as follows:
1. Commencement of Exchange Offer. The Company will commence the
Exchange Offer as soon as practicable following receipt of signed Letter
Agreements from Holders of at least 95% of the aggregate principal amount of the
outstanding Notes and approval of the terms of the proposed Exchange Offer by
the Company's Board of Directors; provided, however, that the Company shall not
be obligated to commence the Exchange Offer if (i) signed Letter Agreements from
Holders of at least 95% of the aggregate principal amount of the outstanding
Notes are not received by the close of business on February 28, 2000; (ii) the
Company is unable to obtain financing for the Exchange Offer; or (iii) approval
of the Company's Board of Directors is not obtained.
2. Agreements of Noteholders. The Noteholder agrees that, following
receipt from the Company of formal Exchange Offer and Consent Solicitation
documents incorporating the Summary of Terms attached hereto (the "Exchange
Offer Documents") and otherwise acceptable in form and substance to the
Noteholder and its advisors, it will take such actions as may be necessary (i)
to cause its consent to be given to the amendment of certain covenants contained
in the indenture governing the Notes, as may be proposed by the Company, and
(ii) to cause all of its Notes to be tendered prior to the initial Expiration
Date set forth in the Exchange Offer Documents in exchange for cash and the
Company's convertible pay-in-kind preferred stock as described in the Summary of
Terms. The Noteholder acknowledges that in the event that less than a 95% tender
occurs, the Exchange Offer may be implemented through a pre-packaged bankruptcy
plan and agrees to consent to and support such a plan on terms substantially
identical to the Exchange Offer, if proposed by the Company. The Noteholder also
agrees not to sell or transfer any or all of such Xxxxxx's Notes unless the
transferee (the "Transferee") of such Notes agrees to be bound by the terms of
this Letter Agreement prior to such transfer.
3. Disclosure. The parties to this Letter Agreement authorize the
Company to disclose in the Exchange Offer Documents the existence and terms of
this Letter Agreement.
4. Termination. This Letter Agreement shall terminate upon the earlier
of (i) 30 days from the date hereof, if by that date the Company has not
obtained a written commitment for the financing necessary to consummate the
Exchange Offer, (ii) April 15, 2000, if the Exchange Offer Documents have not
been distributed by that date, (iii) the termination of the Exchange Offer by
the Company or (iv) June 30, 2000.
5. GOVERNING LAW. THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF
LAWS THEREOF.
6. Enforcement. Irreparable damages would occur in the event that any
of the provisions of this Letter Agreement were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, the parties shall
be entitled to an injunction or injunctions to prevent breaches of this Letter
Agreement and to enforce specifically the terms and provisions of this Letter
Agreement in the federal courts of the United States located in the State of New
York, this being in addition to any other remedy to which they are entitled at
law or in equity.
7. Further Assurances. Holder shall execute and deliver such other
documents and instruments and take such further actions as may be necessary or
appropriate or as may be reasonably requested by the Company in connection with
the Exchange Offer.
8. Counterparts. This Letter Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
9. No Waiver. Except as expressly provided in this Letter Agreement,
the Holders are not waiving any defaults or other rights, and reserve all rights
and remedies they may have, under the Indenture (as defined in Exhibit A and the
Notes).
10. Legal Fees. The Company agrees to pay the reasonable legal fees and
disbursements of Debevoise & Xxxxxxxx, counsel to the unofficial Noteholders
Committee.
* * * * * * * * *
If the foregoing accurately reflects our understanding, please
indicate your acceptance by signing a copy of this letter and returning it to
the undersigned.
VIALOG CORPORATION
By: _____________________________
Name:
Title:
ACCEPTED AND AGREED TO:
Print Name: ____________________
By: ___________________________ Principal Amount of Notes:_________
Name: Address for Notices:
Title: ___________________________________
___________________________________
___________________________________
Exhibit A to Letter
Agreement dated February ___, 2000
Summary of Proposed Terms
{Attached}
SUMMARY OF PROPOSED TERMS
$16,500,000 CONVERTIBLE PIK PREFERRED SHARES
Issuer: "Vialog Corporation" the ("Company").
Issue: Convertible PIK Preferred Shares (the
"Preferred Shares").
Amount: $16,500,000
Issue Price: $__ per share.
Final Maturity: 6 years.
Liquidation Preference: $100 per share plus accrued and unpaid
dividends.
Dividends: 8.00%, payable semi-annually. In the
event dividends are not paid in cash,
the dividends will be paid in additional
Preferred Shares.
Ranking: The Preferred Shares will rank senior to
the Company's common stock and common
and preferred stock dividends and will
rank senior to any class of preferred
shares issued after the closing date.
Nature of Offering: Private placement to qualified
institutional buyers without
registration under the Securities Act of
1933, as amended.
Call Features: The Preferred Shares shall be callable
at any time at a price in accordance
with the schedule below:
|X| Year 1 - 101%
|X| Year 2 - 102%
|X| Year 3 - 103%
|X| Years 4 - 6 @ par
Conversion Feature: The holder of any Preferred Share has
the right, upon delivery of written
notice to the Company and surrender of
the certificate for such share, to
convert such Preferred Share into common
shares in the manner described below.
Each Preferred Share is convertible into
the number of fully paid common shares
as is obtained by (i) multiplying the
number of the Preferred Shares so to be
converted by $100.00 and adding
aggregate "paid in kind" dividends on
such shares as of the date of the
conversion, and (ii) dividing the result
by the Conversion Price. The Conversion
Price will be equal to the lesser of $8
per share or 150% of the average closing
price of the Company's common stock for
the 20 trading days prior to closing,
("market price").
Adjustment of Preferred On the first anniversary of the closing,
Share Conversion Price: the conversion price may be adjusted
(only downward) as follows; if the
"market price" of the Company's common
stock falls below the "market price"
established at closing, then the
conversion price in effect will be
adjusted proportionately to reflect the
percentage decline in the "market
price." For example, if the "market
price" at close is $6 per share, then
the conversion price will be set at $8.
On the first anniversary, if the "market
price" is $5 per share (a 16.67%
decline) then the conversion price will
be adjusted downward by 16.67% to
establish a new conversion price of
$6.67. This option will be exercisable
only once, on the first anniversary, and
will only adjust for declines in the
initial market price.
Anti Dilution Provision: If the Company issues or sells any
common shares at a price less than the
Preferred Shares' Conversion Price, the
Conversion Price will be reduced to
equal the lowest price received by the
Company for such issuance or sale.
The Company may grant or issue any
warrants, rights or options for the
purchase of common shares or any stock
or security convertible into or
exchangeable for common shares (such
warrants, rights or options being called
"Options" and such convertible or
exchangeable stock or securities being
called "Convertible Securities"). If the
price per share for which common shares
are issuable upon the exercise of such
Options or the exchange of such
Convertible Securities will be less than
the Conversion Price in effect
immediately prior to issuing the Options
or Convertible Securities, the total
maximum number of common shares issuable
upon the exercise of such Options or the
exchange of such Convertible Securities
will be deemed to have been issued.
There will be no adjustment of the
Conversion Price upon the actual
issuance of Common Shares upon the
exercise of Options or exchange of
Convertible Securities. If the price per
share for which common shares are
issueable upon the exercise or the
exchange of Convertible Securities
subsequently changes, the Conversion
Price will be adjusted, but only if the
effect is to reduce the Conversion
Price. On the termination of any Options
or right to exchange or convert
Convertible Securities, the Conversion
Price then in effect will be increased
to the price which would have been in
effect, had such Options or Convertible
Securities, to the extent outstanding
immediately prior to such termination,
never been issued.
Mandatory
Redemption: The Preferred Shares will be redeemed in
full at maturity.
Voting Rights: The affirmative vote of the holders of
not less than a majority of the
outstanding Preferred Shares and common
shares is required for the approval of
(i) any merger or consolidation of the
Company with any other corporation; (ii)
any sale, lease, exchange or other
disposition by the Company of all or
substantially all of its assets; (iii)
any increase in the number of authorized
common shares or preferred stock; or
(iv) the dissolution, liquidation or
winding up of the Company. The
affirmative vote of the holders of not
less than a majority of the outstanding
Preferred Shares is required for the
approval of (i) any amendment to the
articles or bylaws of the Company that
would (a) change the rights, preferences
or privileges of the Preferred Shares or
(b) permit the issuance of new preferred
stock at parity or senior to the
Preferred Shares; or (ii) the making of
any Restricted Payments (as defined in
the indenture governing the Notes (the
"Indenture")) not currently permitted by
the Indenture.
Except as described above or otherwise
required by law, all common shares and
Preferred Share vote together as a
single class on all actions to be taken
by the Company's stockholders. Each
Preferred Share entitles the holder to
such number of votes as will equal the
number of Common Shares into which such
Preferred Share is then convertible.
Registration: The Company will register the Preferred Shares within 120
days of closing.
