Exhibit 2.5
AMENDED AND RESTATED AGREEMENT AND PLAN OF
REORGANIZATION
BY AND AMONG
VIALOG CORPORATION
KST ACQUISITION CORPORATION
AND
XXXXXXX SQUARE TELECONFERENCING, INC.
AND
XXXXXXXX XXXXXX, XXXX XXXXXXXXXX,
XXXX XXXXXXX AND XXXXXX GRADER
Dated as of February 28, 1997
TABLE OF CONTENTS
ARTICLE 1 THE MERGER..................................................................................2
SECTION 1.1 The Merger........................................................................2
SECTION 1.2 Action by Stockholders............................................................2
SECTION 1.3 Closing...........................................................................3
SECTION 1.4 Effective Time....................................................................3
SECTION 1.5 Effect of the Merger..............................................................4
SECTION 1.6 Certificate of Incorporation......................................................4
SECTION 1.7 By-laws...........................................................................4
SECTION 1.8 Directors and Officers............................................................4
ARTICLE 2 CONVERSION OF SECURITIES AND EXCHANGE OF CERTIFICATES.......................................4
SECTION 2.1 Conversion of Securities..........................................................4
SECTION 2.2 Exchange of Certificates; Exchange Agent and
Exchange Procedures...............................................................6
SECTION 2.3 Stock Transfer Books..............................................................8
SECTION 2.4 Option Securities and Convertible Securities;
Payment Rights....................................................................8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................................8
SECTION 3.1 Organization and Business; Power and Authority;
Effect of Transaction.............................................................8
SECTION 3.2 Financial and Other Information..................................................10
SECTION 3.3 Changes in Condition.............................................................12
SECTION 3.4 Liabilities......................................................................12
SECTION 3.5 Title to Properties; Leases......................................................12
SECTION 3.6 Compliance with Private Authorizations...........................................14
SECTION 3.7 Compliance with Governmental Authorizations and Applicable Law...................14
SECTION 3.8 Intangible Assets................................................................15
SECTION 3.9 Related Transactions.............................................................16
SECTION 3.10 Insurance........................................................................16
SECTION 3.11 Tax Matters......................................................................16
SECTION 3.12 Employee Retirement Income Security Act of 1974..................................18
SECTION 3.13 Absence of Sensitive Payments....................................................20
SECTION 3.14 Inapplicability of Specified Statutes............................................20
SECTION 3.15 Authorized and Outstanding Capital Stock.........................................21
SECTION 3.16 Employment Arrangements..........................................................21
SECTION 3.17 Material Agreements..............................................................22
SECTION 3.18 Ordinary Course of Business......................................................23
SECTION 3.19 Bank Accounts, Etc...............................................................25
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SECTION 3.20 Adverse Restrictions.............................................................25
SECTION 3.21 Broker or Finder.................................................................25
SECTION 3.22 Personal Injury or Property Damage; Warranty Claims; Etc.........................25
SECTION 3.23 Environmental Matters............................................................25
SECTION 3.24 Materiality......................................................................28
SECTION 3.25 Solvency.........................................................................28
SECTION 3.26 VIALOG Stock.....................................................................28
SECTION 3.27 Compliance with Regulations Relating to Securities Credit........................28
SECTION 3.28 Certain State Statutes Inapplicable..............................................28
SECTION 3.29 Continuing Representations and Warranties........................................28
SECTION 3.30 Registration Statement...........................................................28
SECTION 3.31 Predecessor Status, etc..........................................................29
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE
PRINCIPAL STOCKHOLDER.......................................................................29
SECTION 4.1 Organization.....................................................................29
SECTION 4.2 Power and Authority..............................................................29
SECTION 4.3 Enforceability...................................................................29
SECTION 4.4 Title to Shares..................................................................30
SECTION 4.5 No Conflict; Required Filings and Consents.......................................30
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF VIALOG AND
VIALOG MERGER SUBSIDIARY....................................................................30
SECTION 5.1 Organization and Qualification...................................................30
SECTION 5.2 Power and Authority..............................................................31
SECTION 5.3 No Conflict; Required Filings and Consents.......................................31
SECTION 5.4 Financing........................................................................32
SECTION 5.5 Broker or Finder.................................................................32
SECTION 5.6 Prior Activities of VIALOG and VIALOG Merger Subsidiary..........................32
SECTION 5.7 Capitalization of VIALOG and VIALOG Merger Subsidiary............................32
SECTION 5.8 Registration Statement...........................................................32
SECTION 5.9 Solvency.........................................................................33
SECTION 5.10 Firm Commitment..................................................................33
SECTION 5.11 Participating Agreements of Other Participating Companies........................33
SECTION 5.12 Continuing Representations and Warranties........................................33
ARTICLE 6 ADDITIONAL COVENANTS.......................................................................34
SECTION 6.1 Access to Information; Confidentiality...........................................34
SECTION 6.2 Agreement to Cooperate...........................................................35
SECTION 6.3 Assignment of Contracts and Rights...............................................36
SECTION 6.4 Compliance with the Securities Act...............................................36
SECTION 6.5 Conduct of Business..............................................................37
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SECTION 6.6 No Solicitation..................................................................38
SECTION 6.7 Directors' and Officers' Indemnification and Insurance...........................38
SECTION 6.8 Notification of Certain Matters..................................................39
SECTION 6.9 Public Announcements.............................................................39
SECTION 6.10 Conveyance Taxes.................................................................40
SECTION 6.11 Obligations of VIALOG............................................................40
SECTION 6.12 Employee Benefits; Severance Policy..............................................40
SECTION 6.13 Certain Actions Concerning Business Combinations.................................40
SECTION 6.14 Termination of Option Securities and Convertible Securities......................41
SECTION 6.15 Tax Returns......................................................................41
SECTION 6.16 Employment and Noncompetition....................................................41
SECTION 6.17 Distributions, Liabilities, Etc..................................................42
SECTION 6.18 Release from Personal Guarantees.................................................42
SECTION 6.19 No Significant Changes...........................................................42
SECTION 6.20 Registration Statement...........................................................43
SECTION 6.21 Tax Status.......................................................................43
SECTION 6.22 Self Dealing.....................................................................43
ARTICLE 7 CLOSING CONDITIONS.........................................................................43
SECTION 7.1 Conditions to Obligations of Each Party to Effect the Merger.....................43
SECTION 7.2 Conditions to Obligations of VIALOG and VIALOG Merger
Subsidiary.......................................................................45
SECTION 7.3 Conditions to Obligations of the Company.........................................50
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER..........................................................53
SECTION 8.1 Termination......................................................................53
SECTION 8.2 Effect of Termination............................................................55
SECTION 8.3 Amendment........................................................................56
SECTION 8.4 Waiver...........................................................................56
SECTION 8.5 Fees, Expenses and Other Payments................................................56
SECTION 8.6 Effect of Investigation..........................................................56
ARTICLE 9 FEDERAL SECURITIES ACT AND OTHER RESTRICTIONS
ON VIALOG STOCK.............................................................................57
SECTION 9.1 Shares not Registered............................................................57
SECTION 9.2 Economic Risk; Sophistication....................................................57
SECTION 9.3 Restrictions on Resale; Legends..................................................57
ARTICLE 10 INDEMNIFICATION...........................................................................58
SECTION 10.1 Indemnification..................................................................58
SECTION 10.2 Procedures Concerning Claims by Third Parties;
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Payment of Damages; etc..........................................................60
ARTICLE 11 GENERAL PROVISIONS........................................................................61
SECTION 11.1 Effectiveness of Representations; etc............................................61
SECTION 11.2 Notices..........................................................................62
SECTION 11.3 Headings.........................................................................63
SECTION 11.4 Severability.....................................................................63
SECTION 11.5 Entire Agreement.................................................................63
SECTION 11.6 Assignment.......................................................................63
SECTION 11.7 Parties in Interest..............................................................63
SECTION 11.8 Governing Law....................................................................63
SECTION 11.9 Enforcement of the Agreement.....................................................63
SECTION 11.10 Counterparts.....................................................................64
SECTION 11.11 Disclosure Supplements...........................................................64
ARTICLE 12 DEFINITIONS...............................................................................64
iv
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION dated as of
February 28, 1997 among VIALOG CORPORATION, a Massachusetts corporation
("VIALOG") KST Acquisition Corporation, a Delaware corporation and wholly owned
subsidiary of VIALOG ("VIALOG Merger Subsidiary"), XXXXXXX SQUARE
TELECONFERENCING, INC. a Massachusetts corporation (the "Company"), and XXXXXXXX
XXXXXX, XXXX XXXXXXXXXX, XXXX XXXXXXX and XXXXXX GRADER (the "Principal
Stockholder").
PREAMBLE
1. The Company and VIALOG Merger Subsidiary have agreed to carry out a
business combination transaction upon the terms and subject to the conditions of
this Agreement and in accordance with the Massachusetts 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 and other Persons holding equity
interests in the Company will convert their holdings into cash and shares of
common stock, $.01 par value per share of VIALOG ("VIALOG Stock"), determined in
accordance with Section 2.1(a).
2. Each of the Other Participating Companies will enter into an
agreement and plan of reorganization or stock or asset purchase agreement with
VIALOG and a wholly-owned Subsidiary of VIALOG (each a "Participating
Agreement") whereby, contemporaneously with the Merger, each Other Participating
Company and a Subsidiary of VIALOG will carry out a business combination
transaction pursuant to which each such Subsidiary will merge with and into one
of the Other Participating Companies or VIALOG or such Subsidiary shall purchase
stock or assets of such Other Participating Companies and stockholders of and
other Persons holding equity interests in the Other Participating Companies will
convert their holdings into cash and shares of VIALOG Stock determined in
accordance with provisions substantially similar to those in Section 2.1(a).
3. Pursuant to the Underwriting Agreement, VIALOG will issue and sell
VIALOG Stock in a firm commitment public offering registered on Form S-1 in
accordance with the requirements of the Securities Act (the "Public Offering").
4. 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 transaction pursuant to Section 351 of 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
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has recommended approval and adoption of this Agreement, the Merger and the
Transactions by the Stockholders.
5. The Board of Directors of VIALOG has approved and adopted this
Agreement and has approved the Merger and the Transactions as the sole
stockholder of VIALOG Merger Subsidiary.
AGREEMENT
In consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth in this Agreement, the parties
agree as follows:
ARTICLE
1
THE MERGER
1.1 The Merger.
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(a) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the BCA and the DBCL at the Effective Time the
VIALOG Merger Subsidiary will be merged with and into the Company. As a result
of the Merger, the separate existence of the VIALOG Merger Subsidiary will cease
and the Company will continue as the surviving corporation of the Merger (the
"Surviving Corporation").
(b) The Company represents that, at a meeting duly called and held
at which a quorum was present and acting throughout, its Board of Directors has
unanimously (i) determined that this Agreement, the Merger and the Transactions
are fair to and in the best interest of Stockholders, (ii) approved this
Agreement, the Merger and the Transactions, which approval satisfies in full the
requirements of the BCA and Massachusetts 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"); (ii)
include in any proxy statement the conclusion and recommendation of the Board of
Directors to the effect that the Board of Directors, having determined that this
Agreement, the
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Merger and the Transactions are in the best interests of the Company and the
Stockholders, has approved this Agreement, the Merger and the Transactions and
recommends that the Stockholders vote in favor of the approval and adoption of
this Agreement, the Merger and the Transactions; and (iii) use its reasonable
best efforts to obtain the necessary approval and adoption of this Agreement,
the Merger and the Transactions by the Stockholders.
(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 before February 28, 1997.
1.3 Closing. Unless this Agreement is terminated pursuant to Section 8.1
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and the Merger and the Transactions have been abandoned, and subject to the
satisfaction or, if possible, waiver of conditions set forth in Article 7 other
than Section 7.1(d), the closing of the Merger (the "Merger Closing") will take
place, one day prior to the Effective Date, at the offices of Xxxxxx, X'Xxxxxxx,
XxXxxxxx & Xxxxxx, LLP, unless another date, time or place is agreed to in
writing by the Parties to this Agreement and each Participating Agreement.
Counsel for the Parties to this Agreement and each Participating Agreement will
hold a pre-closing two days prior to the Effective Date, at the offices of
Xxxxxx, X'Xxxxxxx, XxXxxxxx & Xxxxxx, LLP, for the purpose of finalizing all
documents to be signed at the Merger Closing. All certificates, legal opinions
and other instruments required to be delivered in order to satisfy the
conditions to the obligations of the Parties to effect the Merger set forth in
Article 7 below shall be delivered at the Merger Closing, and each such
certificate, legal opinion or other instrument shall, except to the extent
otherwise provided in Article 7, be dated as of the anticipated Public Offering
Closing Date, which is expected to occur five business days following the date
of Merger Closing. All such certificates, legal opinions and other instruments
shall be held in escrow by Xxxxxx, X'Xxxxxxx, XxXxxxxx & Xxxxxx, LLP between the
Merger Closing and the Effective Time and shall be released from escrow
concurrently with the Effective Time on the Public Offering Closing Date. In the
event that the Effective Time and Public Offering Closing Date occur on a date
other than the fifth business day following the Merger Closing, all such
certificates, legal opinions and instruments shall be re-dated as of the Public
Offering Closing Date. The Company, the Principal Stockholder, VIALOG and VIALOG
Merger Subsidiary shall use their respective best efforts to cause each of the
conditions set forth in Article 7 reasonably capable of being satisfied prior to
the Merger Closing, including, without limitation, the conditions set forth in
Sections 7.1(a), (c), (e), (f), (g) and (h), to be 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 articles or certificates of merger,
as the case may be, with the Secretary of State of Massachusetts and with the
Secretary of State of Delaware, and by making any related filings required under
the BCA and the DBCL. The Merger will become
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effective at such time (but not prior to the Public Offering Closing Date) as
such articles or certificates, as the case may be, are duly filed with the
Secretary of State of Massachusetts and the Secretary of State of Delaware,
respectively (the "Effective Time)".
1.5 Effect of the Merger. From and after the Effective Time, the Surviving
--------------------
Corporation will possess all the rights, privileges, powers and franchises and
be subject to all of the restrictions, disabilities and duties of the Company
and VIALOG Merger Subsidiary, and the Merger will otherwise have the effects,
all as provided under the BCA and the DBCL.
1.6 Certificate of Incorporation. From and after the Effective Time, the
----------------------------
Certificate of Incorporation of the Surviving Corporation will be substantially
in the form attached as Exhibit 1.6 until amended in accordance with Applicable
-----------
Law, and the name of the Surviving Corporation will be the name of the Company
or such other name as VIALOG may elect.
1.7 By-laws. From and after the Effective Time, the by-laws of the
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Surviving Corporation will be in the form attached as Exhibit 1.7, until amended
-----------
in accordance with Applicable Law.
1.8 Directors and Officers. From and after the Effective Time, until
----------------------
successors are duly elected or appointed and qualified (or their earlier
resignation or removal) in accordance with Applicable Law (a) the directors of
VIALOG Merger Subsidiary at the Effective Time will be the directors of the
Surviving Corporation and (b) the officers of the Company at the Effective Time
will be the officers of the Surviving Corporation.
ARTICLE
2
CONVERSION OF SECURITIES AND EXCHANGE OF CERTIFICATES
2.1 Conversion of Securities. At the Effective Time, by virtue of the
------------------------
Merger and without any action on the part of VIALOG Merger Subsidiary, the
Company or the holders of any of the following securities:
(a) Each share of common stock, no par value of the Company (the
"Company Stock") issued and outstanding or issuable upon the election to
exercise or convert outstanding Option Securities and Convertible Securities
immediately prior to the Effective Time (other than any shares of Company Stock
to be canceled pursuant to Section 2.1(b)) will be converted into the right to
receive shares of VIALOG Stock (the "Stock Merger Consideration") and cash (the
"Cash Merger Consideration") (together with the Stock Merger Consideration, the
"Merger Consideration") pursuant to the following formula:
Aggregate Merger Consideration = $4,000,000
Aggregate Stock Merger Consideration = 173,913 shares
4
Aggregate Cash Merger Consideration = $2,000,001
Merger Consideration = Aggregate Merger Consideration
------------------------------
Aggregate Equity
Stock Merger Consideration. = Aggregate Stock Merger Consideration
------------------------------------
Aggregate Equity
Cash Merger Consideration.. = Aggregate Cash Merger Consideration
-----------------------------------
Aggregate Equity
At the Effective Time, all issued and outstanding shares of Company Stock (the
"Shares") will no longer be outstanding and will automatically be canceled and
retired and will cease to exist, and certificates previously evidencing any such
Shares (each a "Certificate") will thereafter represent the right to receive,
upon the surrender of such Certificate in accordance with the provisions of
Section 2.2, the number of Shares represented by such Certificate multiplied by
(i) the Stock Merger Consideration plus (ii) the Cash Merger Consideration. A
holder of more than one Certificate will have the right to receive the Stock
Merger Consideration and the Cash Merger Consideration multiplied by the number
of Shares represented by all such Certificates (the "Exchange Merger
Consideration"). The holders of all Certificates may allocate the Stock Merger
Consideration and Cash Merger Consideration disproportionately among all such
holders; provided, however, that (i) a Schedule 2.1 setting forth the allocation
of Stock Merger Consideration and Cash Merger Consideration among the holders of
all Certificates is completed and consented to in writing by all such holders
contemporaneously with the execution and delivery of this Agreement, all in such
form as required by VIALOG; (ii) for each Share, the total of (A) the allocated
Stock Merger Consideration multiplied by the Offering Price, plus (B) the
allocated Cash Merger Consideration, must equal the Merger Consideration, (iii)
the total allocation of the Stock Merger Consideration must equal the Aggregate
Stock Merger Consideration, and (iv) the total allocation of the Cash Merger
Consideration must equal the Aggregate Cash Merger Consideration. Any such
election to allocate the Stock Merger Consideration and Cash Merger
Consideration disproportionately may not thereafter be withdrawn or amended. The
holders of Certificates previously evidencing Shares outstanding immediately
prior to the Effective Time will cease to have any rights with respect to such
Shares except as otherwise provided in this Agreement or by Applicable Law.
(b) Each Share held in the treasury of the Company or by any
direct or indirect wholly-owned Subsidiary of the Company immediately prior to
the Effective Time will automatically be canceled and extinguished without
conversion, and no payment will be made with respect to such Share.
(c) Each share of common stock of VIALOG Merger Subsidiary
outstanding immediately prior to the Effective Time will be converted into and
become one share of common stock of the Surviving Corporation with the same
rights, powers and privileges as the shares so
5
converted and will constitute the only outstanding shares of capital stock of
the Surviving Corporation.
(d) In lieu of issuing fractional shares, VIALOG may convert a
holder's right to receive shares of VIALOG Stock pursuant to Section 2.1(a) into
a right to receive the highest whole number of shares of VIALOG Stock
constituting the non-cash portion of the Exchange Merger Consideration plus cash
equal to the fraction of a share of VIALOG Stock to which the holder would
otherwise be entitled multiplied by the Offering Price, and the Exchange Merger
Consideration to which a holder is entitled will be deemed to be such number of
shares of VIALOG Stock plus such cash plus the cash portion of the Exchange
Merger Consideration.
2.2 Exchange of Certificates; Exchange Agent and Exchange Procedures.
----------------------------------------------------------------
(a) Prior to the Merger Closing, VIALOG will deposit or cause to
be deposited with a bank, trust company or other Entity designated by VIALOG
(the "Exchange Agent"), for the benefit of the holders of Shares for exchange in
accordance with this Article, through the Exchange Agent, the stock portion of
the Merger Consideration multiplied by the number of all Shares issued and
outstanding immediately prior to the Effective Time (other than Shares to be
canceled pursuant to Section 2.1(b)) (said number of Shares less Shares to be
canceled to be referred to as the "Net Shares"), and within one (1) business day
of the Public Offering Closing Date, a check or checks representing next day
funds from the Underwriter in (or, pursuant to instructions reasonably
satisfactory to the Exchange Agent, wire transfer of) an amount equal to the
Cash Merger Consideration multiplied by the number of Net Shares plus cash in an
amount sufficient to make payment for fractional shares, in exchange for all of
the outstanding Shares (collectively the "Exchange Fund"). The Exchange Agent
will, pursuant to irrevocable instructions from VIALOG, deliver the Exchange
Merger Consideration to be issued pursuant to Section 2.1(a) out of the Exchange
Fund to holders of Shares upon transmittal of Certificates for exchange as
provided therein and in Section 2.2(b). The Exchange Fund will not be used for
any other purposes. Any interest, dividends or other income earned by the
Exchange Fund will be for the account of VIALOG.
(b) As soon as reasonably practicable after the date as of which
the Stockholders act to approve and adopt this Agreement, the Merger and the
Transactions, the Company will notify VIALOG thereof and VIALOG will promptly
instruct the Exchange Agent to deliver to the Stockholders, for the purpose of
accepting Certificates for exchange on the terms provided in Section 2.1(a) at
the Effective Time, and subject to withdrawal of Certificates by their holders
prior thereto, (i) a letter of transmittal (which will specify that delivery
will be effected, and risk of loss and title to the Certificates will pass, only
upon proper delivery of the Certificates to the Exchange Agent and will be in
such form and have such other provisions as VIALOG may reasonably specify), and
(ii) instructions to effect the surrender of the Certificates in exchange for
the Exchange Merger Consideration. Subject to the occurrence of the Effective
Time, upon surrender of a Certificate for cancellation to the Exchange Agent or
to such other agent or agents as may be appointed by VIALOG together with such
letter of transmittal, duly executed, and such other customary documents as may
be reasonably required pursuant to such instructions (collectively, the
"Transmittal Documents"), the holder of such Certificate will
6
become entitled to receive, as of the Effective Time, in exchange therefor the
Exchange Merger Consideration which such holder has the right to receive
pursuant to Sections 2.1(a) and 2.1(d), and the Certificate so surrendered will
be canceled. In the event of a transfer of ownership of Shares which is not
registered in the transfer records of the Company, the Exchange Merger
Consideration may be issued and paid in accordance with this Article to a
transferee if the Certificate evidencing such Shares is presented to the
Exchange Agent, accompanied by all documents reasonably required to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid. The Exchange Merger Consideration will be delivered by the
Exchange Agent within two business days (or such greater period not to exceed
five business days as may be customarily required by the Exchange Agent)
following the later of (i) two business days after the Public Offering Closing
Date, or (ii) surrender of a Certificate and the related Transmittal Documents,
and cash payments for fractional shares and the cash portion of the Exchange
Merger Consideration may be made by check (or, pursuant to instructions
reasonably satisfactory to the Exchange Agent, by wire transfer). No interest
will be payable on the Exchange Merger Consideration regardless of any delay in
making payments. Until surrendered as contemplated by this Section, each
Certificate will be deemed at any time after the Effective Time to evidence only
the right to receive, upon such surrender, the Exchange Merger Consideration,
without interest.
(c) If any Certificate is lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and subject to such other conditions as VIALOG may
impose, the Surviving Corporation will issue in exchange for such lost, stolen
or destroyed Certificate the Exchange Merger Consideration deliverable in
respect thereof as determined in accordance with Sections 2.1(a) and 2.1(d).
VIALOG may, in its discretion and as a condition precedent to authorizing the
issuance thereof by the Surviving Corporation, require the owner of such lost,
stolen or destroyed Certificate to provide a bond or other surety to VIALOG and
the Surviving Corporation in such sum as VIALOG may reasonably direct as
indemnity against any claim that may be made against VIALOG, VIALOG Merger
Subsidiary or the Surviving Corporation (and their Affiliates) with respect to
the Certificate alleged to have been lost, stolen or destroyed.
(d) Any portion of the Exchange Fund which remains undistributed
to the holders of the Company Stock for thirty (30) days after the Effective
Time will be delivered to VIALOG upon demand by VIALOG, and any holders of
Certificates who have not theretofore complied with this Article will thereafter
look only to VIALOG for the Exchange Merger Consideration to which they are
entitled pursuant to this Article.
(e) None of VIALOG, VIALOG Merger Subsidiary, the Company or the
Surviving Corporation will be liable to any holder of Shares for any shares of
VIALOG Stock or cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) Each of VIALOG, the Surviving Corporation and the Exchange
Agent will be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares such amounts as
VIALOG, the Surviving Corporation or the
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Exchange Agent is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by VIALOG, the Surviving
Corporation or the Exchange Agent, such withheld amounts will be treated for all
purposes of this Agreement as having been paid to the holder of the Shares in
respect of which such deduction and withholding was made by VIALOG, the
Surviving Corporation or the Exchange Agent.
2.3 Stock Transfer Books. At the Effective Time, the stock transfer
--------------------
books of the Company will be closed, and there will be no further registration
of transfers of Shares thereafter on the records of the Company other than to
VIALOG. On or after the Effective Time, any Certificate presented to the
Exchange Agent or the Surviving Corporation will be converted into the Exchange
Merger Consideration.
2.4 Option Securities and Convertible Securities; Payment Rights. At the
------------------------------------------------------------
Effective Time, (a) each outstanding Option Security and each outstanding
Convertible Security exercisable or convertible to purchase Shares as of
immediately prior to the Effective Time, will be canceled and the holder thereof
will be entitled to receive, and will receive, upon payment of the consideration
required to exercise or convert, or debit of such consideration against the
Merger Consideration otherwise due, and termination of such holder's rights to
exercise or convert, as the case may be, all other Option Securities or
Convertible Securities issued to such holder, Merger Consideration in the form
of shares of VIALOG Stock issuable and cash payable with respect to the number
of Shares issuable pursuant to such Option Security or Convertible Security so
exercised or converted, as the case may be, as provided in Section 2.1(a), plus
cash in lieu of receipt of a fractional share in an amount determined as
provided in Section 2.1(d), and (b) each Option Security outstanding not then
exercisable or exercised and the conversion rights of each Convertible Security
outstanding not then convertible or converted will be canceled.
ARTICLE
3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to, and agrees with,
VIALOG and VIALOG Merger Subsidiary as follows:
3.1 Organization and Business; Power and Authority; Effect of
---------------------------------------------------------
Transaction.
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(a) The Company:
(i) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation as set forth in Section 3.1(a) of the
Disclosure Schedule,
(ii) has all requisite power and authority (corporate and
other) to own or hold under lease its properties and
to conduct its business as
8
now conducted and as presently proposed to be
conducted, and has in full force and effect all
Governmental Authorizations and Private Authorizations
and has made all Governmental Filings, to the extent
required for such ownership and lease of its property
and conduct of its business, and
(iii) has duly qualified and is authorized to do business
and is in good standing as a foreign corporation in
each jurisdiction (a true and correct list of which is
set forth in Section 3.1(a) of the Disclosure
Schedule) in which the character of its property or
the nature of its business or operations requires such
qualification or authorization, except to the extent
the failure so to qualify or to maintain such
authorizations would not have an Adverse Effect.
(b) The Company has all requisite power and authority (corporate and
other) and has in full force and effect all Governmental Authorizations and
Private Authorizations in order to enable it to execute and deliver, and to
perform its obligations under, this Agreement and each Collateral Document
executed or required to be executed by it pursuant hereto or thereto and to
consummate the Merger and the Transactions. The execution, delivery and
performance of this Agreement and each Collateral Document executed or required
to be executed pursuant hereto or thereto have been duly authorized by all
requisite corporate or other action (other than that of the Stockholders). This
Agreement has been duly executed and delivered by the Company and constitutes,
and each Collateral Document executed or required to be executed pursuant hereto
or thereto or to consummate the Merger and the Transactions, when executed and
delivered by the Company or an Affiliate of the Company will constitute, legal,
valid and binding obligations of the Company or such Affiliate, enforceable in
accordance with their respective terms, except as such enforceability may be
subject to bankruptcy, moratorium, insolvency, reorganization, arrangement,
voidable preference, fraudulent conveyance and other similar laws relating to or
affecting the rights of creditors and except as the same may be subject to the
effect of general principles of equity. The affirmative vote or action by
written consent of 66 2/3% of the votes the holders of the outstanding shares of
the Company are entitled to cast is the only vote of the holders of any class or
series of the capital stock of the Company necessary to approve this Agreement,
the Merger and the Transactions under Applicable Law and the Company's
Organizational Documents.
(c) Except as set forth in Section 3.1(c) of the Disclosure Schedule,
neither the execution and delivery of this Agreement or any Collateral Document
executed or required to be executed pursuant hereto or thereto, nor the
consummation of the Transactions, nor compliance with the terms, conditions and
provisions hereof or thereof by the Company or any of the other parties hereto
or thereto which is Affiliated with the Company:
(i) will conflict with, or result in a breach or violation of, or
constitute a default under, any Applicable Law on the part of
the Company or any Subsidiary or will conflict with, or result
in a breach or violation of, or constitute a default under, or
permit the
9
acceleration of any obligation or liability in, or but for any
requirement of giving of notice or passage of time or both
would constitute such a conflict with, breach or violation of,
or default under, or permit any such acceleration in, any
Contractual Obligation of the Company or any Subsidiary,
(ii) will result in or permit the creation or imposition of any
Lien (except to the extent set forth in Section 3.1(c) of the
Disclosure Schedule) upon any property now owned or leased by
the Company or any such other party, or
(iii) will require any Governmental Authorization or Governmental
Filing or Private Authorization, except for filing
requirements under Applicable Law in connection with the
Merger and the Transactions and as the Securities Act and
applicable state securities laws may apply to compliance by
the Company with the provisions of this Agreement relating to
the Public Offering and registration rights provided for
hereunder and except pursuant to the HSR Act (if applicable).
(d) The Company does not have any Subsidiaries other than those listed
on Section 3.1(d) of the Disclosure Schedule. Each Subsidiary so listed is
wholly-owned, is a corporation which is duly organized, validly existing and in
good standing under the laws of the respective state of incorporation set forth
opposite its name on Section 3.1(d) of the Disclosure Schedule, and is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction (as shown in Section 3.1(d) of the Disclosure Schedule) in which
the character of its property or the nature of its business or operations
requires such qualification or authorization, with full power and authority
(corporate and other) to carry on the business in which it is engaged. Each
Subsidiary has in full force and effect all Governmental Authorizations and
Private Authorizations and has made all Governmental Filings, to the extent
required for such ownership and lease of its property and conduct of its
business. The Company owns all of the outstanding capital stock (as shown on
Section 3.1(d) of the Disclosure Schedule) of each Subsidiary, free and clear of
all Liens (except to the extent set forth in Section 3.1(d) of the Disclosure
Schedule), and all such stock has been duly authorized and validly issued and is
fully paid and non-assessable. There are no outstanding Option Securities or
Convertible Securities, or agreements or understandings with respect to any of
the foregoing, of any nature whatsoever relating to the authorized and unissued
or the outstanding capital stock of any Subsidiary.
3.2 Financial and Other Information.
-------------------------------
(a) The Company has furnished to VIALOG copies of the financial
statements of the Company and its Subsidiaries listed in Section 3.2(a) of the
Disclosure Schedule (the "Financial Statements"). The Financial Statements,
including in each case the notes thereto, have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby,
except as otherwise noted therein, are true, correct and complete, do not
10
contain any untrue statement of a material fact or omit to state a material fact
required by GAAP to be stated therein or necessary in order to make any
statements contained therein not misleading, and fairly present the financial
condition and results of operations of the Company and its Subsidiaries, on the
bases therein stated, as of the respective dates thereof, and for the respective
periods covered thereby subject, in the case of unaudited financial statements
to normal nonmaterial year-end audit adjustments and accruals.
(b) Neither the Disclosure Schedule, the Financial Statements, this
Agreement nor any Collateral Document furnished or to be furnished by or on
behalf of the Company or any of the Stockholders pursuant to this Agreement or
any Collateral Document executed or required to be executed by or on behalf of
the Company or the Stockholders pursuant hereto or thereto or to consummate the
Merger and the Transactions, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact required to be
stated in such document by its terms or necessary in order to make the
statements contained herein or therein not misleading and all such Collateral
Documents are and will be true, correct and complete in all material respects;
provided that:
(i) with respect to projections contained or referred to in the
Disclosure Schedule, the Company represents and warrants only
that such projections were prepared in good faith on the basis
of the past business of the Company and other information and
assumptions which the Company and the Principal Stockholder
believe to be reasonable,
(ii) each such Collateral Document will not be deemed misleading by
virtue of the absence of factual recitations or references not
germane thereto and necessary to the purpose thereof, and
(iii) responses to due diligence requests will not be subject to
this Section 3.2(b) except to the extent that, to the
Company's knowledge, such response is materially misleading.
(c) The Company does not own any capital stock or equity or proprietary
interest in any other Entity or enterprise, however organized and however such
interest may be denominated or evidenced, except as set forth in Sections 3.1(d)
or 3.2(c) of the Disclosure Schedule. None of the Entities, if any, so set forth
in Section 3.2(c) of the Disclosure Schedule is a Subsidiary of the Company
except as so set forth. The Company owns all of the outstanding capital stock or
equity or proprietary interests (as shown on Section 3.2(c) of the Disclosure
Schedule) of each such Entity or other enterprise, free and clear of all Liens
(except to the extent set forth in Section 3.2(c) of the Disclosure Schedule),
and all of such stock or equity or proprietary interests have been duly
authorized and validly issued and are fully paid and non-assessable. There are
no outstanding Option Securities or Convertible Securities, or agreements or
understandings with respect to any of the foregoing, of any nature whatsoever,
except as described in Section 3.2(c) of the Disclosure Schedule.
11
3.3 Changes in Condition. Since the date of the most recent financial
--------------------
statements forming part of the Financial Statements, except to the extent
specifically described in Section 3.3 of the Disclosure Schedule, there has been
no Adverse Change in the Company or the Company and its Subsidiaries taken as a
whole. There is no Event known to the Company which Adversely Affects, or in the
future might (so far as the Company or the Principal Stockholder can now
reasonably foresee) Adversely Affect, the Company or the Company and its
Subsidiaries taken as a whole, or the ability of the Company to perform any of
the obligations set forth in this Agreement or any Collateral Document executed
or required to be executed pursuant hereto or thereto except for changes in
general economic conditions and to the extent set forth in Section 3.3 of the
Disclosure Schedule.
3.4 Liabilities. At the date of the most recent balance sheet forming part
-----------
of the Financial Statements, neither the Company nor any Subsidiary had any
obligations or liabilities, past, present or deferred, accrued or unaccrued,
fixed, absolute, contingent or other, except as disclosed in such balance sheet,
or the notes thereto, and since such date neither the Company nor any Subsidiary
has incurred any such obligations or liabilities, other than obligations and
liabilities incurred in the ordinary course of business consistent with past
practice of the Company and its Subsidiaries, which do not and, to the Company's
knowledge, will not, in the aggregate, Adversely Affect the Company or the
Company and its Subsidiaries taken as a whole except to the extent set forth in
Section 3.4 of the Disclosure Schedule.
Neither the Company nor any Subsidiary has Guaranteed or is otherwise
primarily or secondarily liable in respect of any obligation or liability of any
other Person material to the Company or the Company and its Subsidiaries, except
for endorsements of negotiable instruments for deposit in the ordinary course of
business or as disclosed in the most recent balance sheet, or the notes thereto,
forming part of the Financial Statements or in Section 3.4 of the Disclosure
Schedule.
3.5 Title to Properties; Leases.
---------------------------
(a) Each of the Company and its Subsidiaries has good legal and
insurable title, with respect to all real property owned or leased (in fee
simple if owned and leasehold if leased) and marketable title if owned (in fee
simple), if any, reflected as an asset on the most recent balance sheet forming
part of the Financial Statements, or held by the Company or any of its
Subsidiaries for use in its business if not so reflected, and good indefeasible
and merchantable title to all other assets, tangible and intangible (excluding
leased property), reflected on such balance sheet, or held by the Company or any
of its Subsidiaries for use in its business if not so reflected, or purported to
have been acquired by the Company or any of its Subsidiaries since such date,
except inventory sold or depleted, or property, plant and other equipment used
up or retired, since such date, in each case in the ordinary course of business
consistent with past practice of the Company and its Subsidiaries, free and
clear of all Liens, except such as are reflected in the most recent balance
sheet, or the notes thereto, forming part of the Financial Statements or set
forth in Section 3.5(a) of the Disclosure Schedule. Except for financing
statements evidencing Liens referred to in the preceding sentence (a true,
correct and complete list and description of which is set forth in Section
3.5(a) of the Disclosure Schedule), to the
12
Company's knowledge, no financing statements under the Uniform Commercial Code
and no other filing which names the Company or any of its Subsidiaries as debtor
or which covers or purports to cover any of the property of the Company or any
of its Subsidiaries is on file in any state or other jurisdiction, and neither
the Company nor any Subsidiary has signed or agreed to sign any such financing
statement or filing or any agreement authorizing any secured party thereunder to
file any such financing statement or filing. Each Lease or other occupancy or
other agreement under which the Company or any of its Subsidiaries holds real or
personal property has been duly authorized, executed and delivered by the
Company or Subsidiary, as the case may be, and, to the Company's knowledge, by
each of the parties thereto. Each such Lease is a legal, valid and binding
obligation of the Company or a Subsidiary, as the case may be, and, to the
Company's knowledge, of each other party thereto, enforceable in accordance with
its terms. Each of the Company and its Subsidiaries has a valid leasehold
interest in and enjoys peaceful and undisturbed possession under all Leases
pursuant to which it holds any real property or tangible personal property, none
of which contains any provision which would impair the Company's ability to use
such property as it is currently used by the Company, except as described in
Section 3.5(a) of the Disclosure Schedule. All of such Leases are valid and
subsisting and in full force and effect. Neither the Company nor any of its
Subsidiaries nor, to the Company's knowledge, any other party thereto, is in
default in the performance, observance or fulfillment of any obligation,
covenant or condition contained in any such Lease.
(b) Section 3.5(b) of the Disclosure Schedule contains a true, correct
and complete description of all real estate owned or leased by the Company or
any of its Subsidiaries and all Leases and an identification of all material
items of fixed assets and machinery and equipment. None of the fixed assets and
machinery and equipment is subject to contracts of sale, and none is held by the
Company or any of its Subsidiaries as lessee or as conditional sales venue under
any Lease or conditional sales contract and none is subject to any title
retention agreement, except as set forth in Section 3.5(b) of the Disclosure
Schedule. The real property (other than land), fixtures, fixed assets and
machinery and equipment are in a state of good repair and maintenance and are in
good operating condition, reasonable wear and tear excepted.
(c) Except as set forth in Section 3.5(c) of the Disclosure Schedule:
(i) all real property owned or leased by the Company or any of
its Subsidiaries conforms to and complies with all
applicable title covenants, conditions, restrictions and
reservations and all Environmental Laws and all applicable
zoning, wetlands, land use and other Applicable Law, and
(ii) neither the Company nor any Subsidiary, nor, to the
knowledge of the Company, any landlord, tenant or other
occupant or user of any such real property, has used such
real property for the storage or disposal of Hazardous
Materials or engaged in the business of storing or disposing
of Hazardous Materials, except for use in the ordinary
course of business of the type conducted by the Company.
13
3.6 Compliance with Private Authorizations. Section 3.6 of the Disclosure
--------------------------------------
Schedule sets forth a true, correct and complete list and description of each
Private Authorization which individually is material to the Company or the
Company and its Subsidiaries taken as a whole, all of which are in full force
and effect. Each of the Company and each Subsidiary has obtained all Private
Authorizations which are necessary for the ownership by the Company or each
Subsidiary of its properties and the conduct of its business as now conducted or
as presently proposed to be conducted or which, if not obtained and maintained,
could, singly or in the aggregate, Adversely Affect the Company or the Company
and its Subsidiaries taken as a whole. Neither the Company nor any Subsidiary is
in breach or violation of, or is in default in the performance, observance or
fulfillment of, any Private Authorization, and no Event exists or has occurred,
which constitutes, or but for any requirement of giving of notice or passage of
time or both would constitute, such a breach, violation default, under any
Contractual Obligation or Private Authorization, except for such defaults,
breaches or violations, as do not and, to the Company's knowledge, will not have
in the aggregate any Adverse Effect on the Company or the Company and its
Subsidiaries taken as a whole or the ability of the Company to perform any of
the obligations set forth in this Agreement or any Collateral Document executed
or required to be executed pursuant hereto or thereto or to consummate the
Merger and the Transactions. No Private Authorization is the subject of any
pending or, to the Company's knowledge, threatened attack, revocation or
termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
--------------------------------------------------------------
(a) Section 3.7(a) of the Disclosure Schedule contains a description
of:
(i) all Legal Actions which are pending or, other than those
finally adjudicated or settled on or before December 31,
1995, in which the Company or any of its Subsidiaries, or
any of its officers or directors, is, or at any time
since its organization has been, engaged, or which
involves, or at any time during such period involved, the
business, operations or properties of the Company or any
of its Subsidiaries or, to the Company's knowledge, which
is threatened or contemplated against, or in any other
manner relating Adversely to, the Company or any of its
Subsidiaries or the business, operations or properties,
or the officers or directors, or any of them in
connection therewith; and
(ii) each Governmental Authorization to which the Company or
any Subsidiary is subject and which relates to the
business, operations, properties, prospects, condition
(financial or other), or results of operations of the
Company or the Company and its Subsidiaries taken as a
whole, all of which are in full force and effect.
(b) Each of the Company and each of its Subsidiaries has obtained
all Governmental Authorizations which are necessary for the ownership or uses of
its properties and the conduct of its business as now conducted or as presently
proposed to be conducted by the
14
Company or which, if not obtained and maintained, could singly or in the
aggregate, have any Adverse Effect on the Company or the Company and its
Subsidiaries taken as a whole. No Governmental Authorization is the subject of
any pending or, to the Company's knowledge, threatened attack, revocation or
termination. Neither the Company nor any Subsidiary nor any officer or director
(in connection with the business, operations and properties of the Company or
any Subsidiary) is or at any time since January 1, 1991 has been, or is or has
during such time been charged with, or to the knowledge of the Company, is
threatened or under investigation with respect to any material breach or
violation of, or in default in the performance, observance or fulfillment of,
any Governmental Authorization or any Applicable Law, and no Event exists or has
occurred, which constitutes, or but for any requirement of giving of notice or
passage of time or both would constitute, such a breach, violation or default,
under
(i) any Governmental Authorization or any Applicable Law,
except for such breaches, violations or defaults as do
not and, to the Company's knowledge, will not have in
the aggregate any Adverse Effect on the Company or the
Company and its Subsidiaries taken as a whole or the
ability of the Company to perform any of the
obligations set forth in this Agreement or any
Collateral Document executed or required to be
executed pursuant hereto or thereto, or to consummate
the Merger and the Transactions, or
(ii) any requirement of any insurance carrier, applicable
to its business, operations or properties,
except as otherwise specifically described in Section 3.7(b) of the Disclosure
Schedule.
(c) With respect to matters, if any, of a nature referred to in
Sections 3.7(a) or 3.7(b) of the Disclosure Schedule, all such information and
matters set forth in the Disclosure Schedule, individually and in the aggregate,
if adversely determined against the Company or any Subsidiary, will not
Adversely Affect the Company or the Company and its Subsidiaries taken as a
whole, or the ability of the Company to perform its obligations under this
Agreement or any Collateral Documents or required to be executed pursuant hereto
or thereto or to consummate the Merger and the Transactions.
3.8 Intangible Assets.
-----------------
(a) Each of the Company and each Subsidiary owns or possesses or
otherwise has the right to use all Governmental Authorizations and other
Intangible Assets necessary for the present and planned future conduct of its
business, without any known conflict with the rights of others. The present and
planned future conduct of business by the Company and each Subsidiary is not
dependent upon any one or more, or all, of such Governmental Authorizations and
other Intangible Assets or rights with respect to any of the foregoing, except
as set forth in Section 3.8(a) of the Disclosure Schedule.
(b) Section 3.8(b) of the Disclosure Schedule sets forth a true,
correct and complete description of all of such Governmental Authorizations and
other Intangible Assets or
15
rights with respect thereto, including without limitation the nature of the
Company's and each Subsidiary's interest in each and the extent to which the
same have been duly registered in the offices as indicated therein.
3.9 Related Transactions. Section 3.9 of the Disclosure Schedule sets forth
---------------------
a true, correct and complete description of any Contractual Obligation or
transaction, not fully discharged or consummated, as the case may be, on or
before the beginning of the Company's current fiscal year, between the Company
or any of its Subsidiaries and any of its officers, directors, employees,
stockholders, or any Affiliate of any thereof (other than reasonable
compensation for services as officers, directors and employees and reimbursement
for out-of-pocket expenses reasonably incurred in support of the Company's
business), now existing or which, at any time since its organization, existed or
occurred, including without limitation any providing for the furnishing of
services to or by, providing for rental of property, real, personal or mixed, to
or from, or providing for the lending or borrowing of money to or from or
otherwise requiring payments to or from, any officer, director, stockholder or
employee, or any Affiliate of any thereof. All such Contractual Obligations and
transactions were and are on terms and conditions no less favorable to the
Company or any of its Subsidiaries than would be customary for such between
Persons who are not Affiliates or upon terms and conditions on which similar
Contractual Obligations and transactions with Persons who are not Affiliates
could fairly and reasonably be expected to be entered into, except as otherwise
set forth in Section 3.9 of the Disclosure Schedule.
3.10 Insurance.
----------
(a) Section 3.10(a) of the Disclosure Schedule lists all insurance
policies maintained by the Company or any Subsidiary and includes insurers'
names, policy numbers, expiration dates, risks insured against, amounts of
coverage, the annual premiums, exclusions, deductibles and self-insured
retention.
(b) Neither the Company nor any Subsidiary is in breach or
violation of or in default under any such policy, and all premiums due thereon
have been paid, and each such policy or a comparable replacement policy will
continue to be in force and effect up to and including the Public Offering
Closing Date. The insurance policies so listed and identified are of a nature
and scope and in amounts sufficient to prevent the Company or any Subsidiary
from becoming a coinsurer within the terms of such policies. Except as set forth
in Section 3.10(a) of the Disclosure Schedule, neither the Company nor any
Subsidiary has, within the past five (5) years, been refused insurance by any
insurance carrier to which it has applied for insurance.
3.11 Tax Matters.
------------
(a) Each of the Company and each Subsidiary has in accordance with
all Applicable Laws filed all Tax Returns which are required to be filed, and
has paid, or made adequate provision for the payment of, all Taxes which have or
may become due and payable pursuant to said Returns and all other governmental
charges and assessments received to date. The Tax Returns of the Company and
each Subsidiary have been prepared in accordance with all Applicable Laws and
generally accepted principles applicable to taxation consistently applied.
16
All Taxes which the Company and each Subsidiary are required by law to withhold
and collect have been duly withheld and collected and have been paid over, in a
timely manner, to the proper Authorities to the extent due and payable. Neither
the Company nor any Subsidiary has executed any waiver to extend, or otherwise
taken or failed to take any action that would have the effect of extending, the
applicable statute of limitations in respect of any Tax liabilities of the
Company or any Subsidiary for the fiscal year prior to and including the most
recent fiscal year. Adequate provision has been made on the most recent balance
sheet forming part of the Financial Statements for all Taxes of any kind,
including interest and penalties in respect thereof, whether disputed or not,
and whether past, current or deferred, accrued or unaccrued, fixed, contingent,
absolute or other, and to the knowledge of the Company there are no transactions
or matters or any basis which might or could result in additional Taxes of any
nature to the Company or any Subsidiary for which an adequate reserve has not
been provided on such balance sheet. Each of the Company and each Subsidiary has
at all times been taxable as a Subchapter C corporation under the Code, except
as otherwise set forth in Section 3.11(a) of the Disclosure Schedule. Neither
the Company nor any Subsidiary has ever been a member of any consolidated group
(other than exclusively with the Company and its Subsidiaries) for Tax purposes,
except as set forth in Section 3.11(a) of the Disclosure Schedule.
(b) Each of the Company and each Subsidiary has paid all Taxes which
have become due pursuant to its Returns and has paid all installments (to the
extent required to avoid material underpayment penalties) of estimated Taxes due
and payable.
(c) From the end of its most recent fiscal year to the date hereof
neither the Company nor any Subsidiary has made any payment on account of any
Taxes except regular payments required in the ordinary course of business with
respect to current operations or property presently owned.
(d) The information shown on the federal income Tax Returns of the
Company and its Subsidiaries (true, correct and complete copies of which have
been furnished by the Company to VIALOG) is true, correct and complete and
fairly and accurately reflects the information purported to be shown. Federal
and state income Tax Returns of the Company and its Subsidiaries have been
audited by the IRS or applicable state Authority for the taxable periods set
forth in Section 3.11(d) of the Disclosure Schedules, and neither the Company
nor any Subsidiary has been notified regarding any pending audit, except as
shown in Section 3.11(d) of the Disclosure Schedule.
(e) Neither the Company nor any Subsidiary is a party to any tax
sharing agreement or arrangement, except as set forth in Section 3.11(e) of the
Disclosure Schedule.
(f) Neither the Company nor any Subsidiary has ever (i) filed a
consent under Section 341(f) of the Code concerning collapsible corporations or
(ii) undergone an "ownership change" within the meaning of Section 382(g) of the
Code, except as set forth in Section 3.11(f) of the Disclosure Schedule.
17
3.12 Employee Retirement Income Security Act of 1974.
------------------------------------------------
(a) Section 3.12(a) of the Disclosure Schedule sets forth a list
of all Plans and Benefit Arrangements maintained by the Company and any of its
Subsidiaries (which for purposes of this Section 3.12 will include any ERISA
Affiliate with respect to any Plan subject to Title IV of ERISA). As to all such
Plans and Benefit Arrangements, and except as disclosed in such Section 3.12(a)
of the Disclosure Schedule:
(i) all Plans and Benefit Arrangements comply currently, and have
complied in the past, in all material respects both as to form
and operation, with their terms and with all Applicable Laws,
and neither the Company nor any of its Subsidiaries has
received any outstanding notice from any Authority questioning
or challenging such compliance,
(ii) all necessary governmental approvals for each Plan and Benefit
Arrangement have been obtained; the Internal Revenue Service
has issued a favorable determination as to the tax qualified
status of each Plan intended to comply with section 401(a) of
the Code and each amendment thereto, and a recognition of
exemption from federal income taxation under Section 501(a) of
the Code of each Plan which constitutes a funded welfare plan
as defined in Section 3(1) of ERISA; and nothing has occurred
since the date of each such determination or recognition that
would adversely affect such qualification.
(iii) no Plan which is subject to Part 3 of Subtitle B of Title 1 of
ERISA or Section 412 of the Code had an accumulated funding
deficiency (as defined in Section 302(a)(2) of ERISA and
Section 412 of the Code), whether or not waived, as of the
last day of the most recently completed fiscal year of such
Plan,
(iv) there are no "prohibited transactions" (as described in
Section 406 of ERISA or Section 4975 of the Code) with respect
to any Plan for which the Company or any of its Subsidiaries
has any liability, nor are any of the assets of any Plan
invested in employer securities or employer real property,
(v) no Plan is subject to Title IV of ERISA, or if subject, there
have been no "reportable events" (as described in Section 4043
of ERISA) as to which there is any material risk of
termination of such Plan,
(vi) no material liability to the PBGC has been or is expected by
the Company to be incurred by the Company or any of its
Subsidiaries with respect to any Plan, and there has been no
event or condition
18
which presents a material risk of termination of any Plan by
the PBGC,
(vii) with respect to each Plan subject to Title IV of ERISA, the
amount for which Company or any of its Subsidiaries would be
liable pursuant to the provisions of Sections 4062, 4063 or
4064 of ERISA would be zero if such Plans terminated on the
date of this Agreement,
(viii) no notice of intent to terminate a Plan has been filed with,
nor has any Plan been terminated pursuant to the provisions of
Section 4041 of ERISA,
(ix) the PBGC has not instituted proceedings to terminate (or
appointed a trustee to administer) a Plan and no event has
occurred or condition exists which might constitute grounds
under the provisions of Section 4042 of ERISA for the
termination of (or the appointment of a trustee to administer)
any such Plan.
(x) no Plan or Benefit Arrangement covers any employee or former
employee of the Company or any of its Subsidiaries that could
give rise to the payment of any amount that would not be
deductible pursuant to the terms of section 280G of the Code,
(xi) there are no Claims (other than routine claims for benefits)
pending or threatened involving any Plan or Benefit
Arrangement or any of the assets thereof,
(xii) except as set forth in Section 3.12(a) of the Disclosure
Schedule (which entry, if applicable, will indicate the
present value of accumulated plan liabilities calculated in a
manner consistent with FAS 106 and the actual annual expense
for such benefits for each of the last two (2) years) and
pursuant to the provisions of COBRA, neither the Company nor
any of its Subsidiaries maintains any Plan that provides
benefits described in Section 3(1) of ERISA to any former
employees or retirees of the Company or any of its
Subsidiaries,
(xiii) all reports, returns and similar items required to be filed
with any Authority or distributed to employees and/or Plan
participants in connection with the maintenance or operation
of any Plan or Benefit Arrangement have been duly and timely
filed and distributed, and there have been no acts or
omissions by the Company or any of its Subsidiaries, which
have given rise to or may reasonably be expected to give rise
to fines, penalties, taxes or related charges under Sections
502(c), 502(i) or 4071 or ERISA or
19
Chapter 43 or section 6039D of the Code for which the Company
or any of its Subsidiaries may be liable,
(xiv) neither the Company nor any of its Subsidiaries nor any of its
respective directors, officers or employees has committed, nor
to the best of the Company's knowledge has any other fiduciary
committed, any breach of the fiduciary responsibility
standards imposed by ERISA that would subject the Company or
any of its Subsidiaries or any of its respective directors,
officers or employees to liability under ERISA,
(xv) to the extent that the most recent balance sheet forming part
of the Financial Statements does not include a pro rata amount
of the contributions which would otherwise have been made in
accordance with past practices for the Plan years which
include the Public Offering Closing Date, such amounts are set
forth in Section 3.12(a) of the Disclosure Schedule,
(xvi) the Company has furnished to VIALOG a copy of the three most
recently filed annual reports (IRS Form 5500) series and
accountant's opinion, if applicable, for each Plan (and the
three most recent actuarial valuation reports for each Plan,
if any, that is subject to Title IV of ERISA), and all
information provided by the Company to any actuary in
connection with the preparation of any such actuarial
valuation report was true, correct and complete in all
material respects,
(b) Neither the Company nor any of its Subsidiaries is or ever has
been a party to any Multiemployer Plan or made contributions to any such plan.
(c) Section 3.12(c) of the Disclosure Schedule sets forth the basis of
funding, and the current status of, any past service liability with respect to
each Employment Arrangement to which the same is applicable.
3.13 Absence of Sensitive Payments. The Company has not, nor has any
------------------------------
Subsidiary, or, to the Company's knowledge, any of its or any Subsidiary's
officers, directors, employees or Representatives, (a) made any contributions,
payments or gifts to or for the private use of any governmental office, employee
or agent where either the payment or the purpose of such contribution, payment
or gift is illegal under the laws of the United States or the jurisdiction in
which made, (b) established or maintained any unrecorded fund or asset for any
purpose or made any false or artificial entries on its books, or (c) made any
payments to any person with the intention or understanding that any part of such
payment was to be used for any purpose other than that described in the
documents supporting the payment.
3.14 Inapplicability of Specified Statutes. Neither the Company nor any
--------------------------------------
Subsidiary is a "holding company", or a "subsidiary company" or an "affiliate"
or a "holding company", as
20
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended, or an "investment company" or a company "controlled" by or acting on
behalf of an "investment company", as defined in the Investment Company Act of
1940, as amended.
3.15 Authorized and Outstanding Capital Stock
----------------------------------------
(a) The authorized and outstanding capital stock of the Company is
as set forth in Section 3.15(a) of the Disclosure Schedule. All of such
outstanding capital stock has been duly authorized and validly issued, is fully
paid and non-assessable and is not subject to any preemptive or similar rights.
Except as set forth in Section 3.15(a) of the Disclosure Schedule, (i) there is
neither outstanding nor has the Company or any Subsidiary agreed to grant or
issue any shares of its capital stock or any Option Security or Convertible
Security, and (ii) neither the Company nor any Subsidiary is a party to or is
bound by any agreement, put or commitment pursuant to which it is obligated to
purchase, redeem or otherwise acquire any shares of capital stock or any Option
Security or Convertible Security. Between the date of this Agreement and the
Merger Closing, the Company will not, and will not permit any Subsidiary to,
issue, sell or purchase or agree to issue, sell or purchase any capital stock or
any Option Security or Convertible Security of the Company or any Subsidiary. As
of the Effective Time, the rights of the holders of all Option Securities and
Convertible Securities issued by the Company to exercise or convert such
Securities will have been terminated pursuant to the terms thereof.
(b) All of the outstanding capital stock of the Company is owned
by the Stockholders as set forth in Section 3.15(b) of the Disclosure Schedule,
and is, to the Company's knowledge, free and clear of all Liens, except as set
forth in Section 3.15(b) of the Disclosure Schedule. To the Company's knowledge,
no Person, and no group of Persons acting in concert, owns as much as five
percent (5%) of the Company's outstanding Common Stock, and the Company is not
controlled by any other Person, except as set forth in Section 3.15(b) of the
Disclosure Schedule.
3.16 Employment Arrangements.
------------------------
(a) Neither the Company nor any Subsidiary has any obligation or
liability, contingent or other, under any Employment Arrangement (whether or not
listed in Section 3.12(a) of the Disclosure Schedule), other than those listed
or described in Section 3.16(a) of the Disclosure Schedule. Neither the Company
nor any Subsidiary is now or during the past five (5) years has been subject to
or involved in or, to the Company's knowledge, threatened with any election for
the certification of a bargaining representative for any employees, petitions
therefor or other organizational activities, including but not limited to
voluntary requests for recognition as a bargaining representative, or
organizational campaigns of any nature, except as described in Section 3.16(a)
of the Disclosure Schedule. None of the employees of the Company or any
Subsidiary are now, or during the past five (5) years have been, represented by
any labor union or other employee collective bargaining organization. Neither
the Company nor any Subsidiary are parties to any labor or other collective
bargaining agreement, and there are no pending grievances, disputes or
controversies with any union or any other employee collective bargaining
organization of such employees, or, to the Company's knowledge, threats of
strikes, work
21
stoppages or slowdowns or any pending demands for collective bargaining by any
union or other such organization. The Company and each Subsidiary have performed
all obligations required to be performed under all Employment Arrangements and
are not in breach or violation of or in default or arrears under any of the
terms, provisions or conditions thereof.
(b) Except as set forth in Section 3.16(b) of the Disclosure
Schedule, no employee will accrue or receive additional benefits, service or
accelerated rights to payments of benefits under any Employment Arrangement,
including the right to receive any parachute payment, as defined in Section 280G
of the Code, or become entitled to severance, termination allowance or similar
payments as a direct result of the transactions contemplated by this Agreement.
(c) The Company considers its and each Subsidiary's relationships
with employees to be good, and except as set forth in Section 3.16(c) of the
Disclosure Schedule, neither the Company nor any Subsidiary has experienced a
work slowdown or stoppage due to labor problems. Neither the Company nor any
Subsidiary has received notice of any claim that it has failed to comply with
any federal or state law, or is the subject of any investigation by any federal
or state agency to determine compliance with any federal or state law, relating
to the employment of labor, including any provisions relating to wages, hours,
collective bargaining, the payment of taxes, discrimination, equal employment
opportunity, employment discrimination, worker injury and/or occupational
safety, nor to the knowledge of the Company is there any basis for such a claim.
(d) Neither the Company nor any Subsidiary has conducted, and on
or prior to the Public Offering Closing Date will not conduct, a "plant closing"
or "mass layoff" of employees of the Company or any Subsidiary as defined by the
Worker Adjustment and Retraining Notification Act of 1988 ("the WARN Act"), 29
U.S.C. 2101-2109 as amended, or discharge, layoff, or reduce the hours of work,
of employees in a sufficient number or manner to trigger any state or local law
or regulation conditioning or regulating in any manner the discharge, layoff, or
reduction in hours of employees or the closing of a facility, plant, workplace,
division or department, from the date hereof or through the Public Offering
Closing Date or during the twelve-month period immediately prior thereto.
3.17 Material Agreements.
--------------------
(a) Listed on Section 3.17(a) of the Disclosure Schedule are all
Material Agreements relating to the ownership or operation of the business and
property of the Company or any Subsidiary presently held or used by the Company
or any Subsidiary or to which the Company or any Subsidiary is a party or to
which it or any 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 parties thereto (except as such enforceability
may be subject to bankruptcy, moratorium, insolvency, reorganization,
arrangement, voidable preference, fraudulent conveyance and other similar laws
22
relating to or affecting the rights of creditors and except as the same may be
subject to the effect of the general principles of equity), and the Company or
one of its Subsidiaries is validly and lawfully operating its business and
owning its property under each of the Material Agreements. The Company and each
Subsidiary have duly complied with all of the terms and conditions of each
Material Agreement and have not done or performed, or failed to do or perform
(and there is no pending or, to the knowledge of the Company, threatened Claim
that the Company or any Subsidiary has not complied, done and performed or fail
to do and perform) any act the effect of which would be to invalidate or provide
grounds for the other party thereto to terminate (with or without notice,
passage of time or both) such Material Agreement or impair the rights or
benefits, or increase the costs, of the Company or any Subsidiary, under any of
the Material Agreements.
(b) Each Material Agreement, if any, set forth in Section 3.17(a)
of the Disclosure Schedule calling for the delivery of goods or merchandise or
the performance of services can be satisfied or performed by the Company or one
of its Subsidiaries at margins providing an operating profit, except as set
forth in Section 3.17(b) of the Disclosure Schedule.
3.18 Ordinary Course of Business.
----------------------------
(a) The Company and each Subsidiary, from the earlier of the date
of the most recent balance sheet forming part of the Financial Statements or
December 31, 1995 to the date of this Agreement, and until the Public Offering
Closing Date, except as may be described on Section 3.18(a) of the Disclosure
Schedule or as may be required or permitted expressly by the terms of this
Agreement or as may be approved in writing by VIALOG:
(i) has operated, and will continue to operate, its
business in the normal, usual and customary manner in
the ordinary and regular course of business,
consistent with prior practice,
(ii) has not sold or otherwise disposed of, or contracted
to sell or otherwise dispose of, and will not sell or
otherwise dispose of or contract to sell or otherwise
dispose of, any of its properties or assets, other
than in the ordinary course of business,
(iii) except in each case in the ordinary course of business
or as detailed as transactions not in the ordinary
course in the Company's business plan set forth as
Section 3.18(a) of the Disclosure Schedule, and except
as expressly otherwise contemplated hereby,
(A) has not incurred and will not incur any
obligations or liabilities (fixed, contingent or
other),
(B) has not entered and will not enter into any
commitments, and
(c) has not canceled and will not cancel any debts or
claims,
23
(iv) has not made or committed to make, and will not make
or commit to make, any additions to its property or
any purchases of machinery or equipment, except for
normal maintenance and replacements,
(v) has not discharged or satisfied, and will not
discharge or satisfy, any Lien and has not paid and
will not pay any obligation or liability (absolute or
contingent) other than current liabilities or
obligations under contracts then existing or
thereafter entered into in the ordinary course of
business, and commitments under Leases existing on
that date or incurred since that date in the ordinary
course of business,
(vi) except in the ordinary course, has not increased and
will not increase the compensation payable or to
become payable to any of its directors, officers,
employees, advisers, consultants, salesmen or agents
or otherwise alter, modify or change the terms of
their employment or engagement,
(vii) has not suffered any material damage, destruction or
loss (whether or not covered by insurance) or any
acquisition or taking of property by any Authority,
(viii) has not waived, and will not waive, any rights of
material value without fair and adequate
consideration,
(ix) has not experienced any work stoppage,
(x) has not entered into, amended or terminated and will
not enter into, amend or terminate any Lease,
Governmental Authorization, Private Authorization,
Material Agreement, Employment Arrangement,
Contractual Obligation or transaction with any
Affiliate, except for terminations in the ordinary
course of business in accordance with the terms
thereof,
(xi) has not amended or terminated and will not amend or
terminate, and has kept and will keep in full force
and effect including without limitation renewing to
the extent the same would otherwise expire or
terminate, all insurance policies and coverage,
(xii) has not entered into, and will not enter into, any
other transaction or series of related transactions
which individually or in the aggregate is material to
the Company or the Company and its Subsidiaries taken
as a whole, except in the ordinary course of business,
and
24
(xiii) has not, nor has any affiliate (as defined in Section
517.021(1) of the Florida Statutes), transacted
business with the government of Cuba or with any
person or affiliate located in Cuba.
(b) From the end of its most recent fiscal year to the date of
this Agreement, except as described in Section 3.18(b) of the Disclosure
Schedule, neither the Company nor any Subsidiary has, or on or prior to the
Public Offering Closing Date will have, declared, made or paid, or agreed to
declare, make or pay, any Distribution.
3.19 Bank Accounts, Etc. A true and correct and complete list as of the
-------------------
date of this Agreement of all banks, trust companies, savings and loan
associations and brokerage firms in which the Company or any Subsidiary has an
account or a safe deposit box and the names of all Persons authorized to draw
thereon, to have access thereto, or to authorize transactions therein, the names
of all Persons, if any, holding powers of attorney from the Company or any
Subsidiary and a summary statement as to the terms thereof has been previously
delivered to VIALOG.
3.20 Adverse Restrictions. Neither the Company nor any Subsidiary is a
---------------------
party to or subject to, nor is any of its property subject to, any Applicable
Law, Governmental Authorization, Contractual Obligation, Employment Arrangement,
Material Agreement or Private Authorization, or any other obligation or
restriction of any kind or character, or any aggregation thereof, which impairs
the Company's or any Subsidiary's ability to conduct its business as it is
currently being conducted or which could have any Adverse Effect on the Company
or the Company and its Subsidiaries taken as a whole, except as set forth in
Section 3.20 of the Disclosure Schedule.
3.21 Broker or Finder. No Person assisted in or brought about the
-----------------
negotiation of this Agreement, the Merger or the subject matter of the
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of the Company or any Stockholder.
3.22 Personal Injury or Property Damage; Warranty Claims; Etc. Except
---------------------------------------------------------
as set forth in Section 3.22 of the Disclosure Schedule, neither the Company nor
any Subsidiary or any Person acting for or on behalf of the Company or any
Subsidiary, including without limitation any insurance carrier, has at any time
since December 31, 1995, paid, and there is not now pending or, to the knowledge
of the Company, threatened any Claim (or any basis for any such Claim) relating
to, any damages to any third party for injuries to Persons or damage to
property, or for breach of warranty, which, in the case of pending or threatened
Claims, if determined Adversely to the Company or any Subsidiary, individually
or in the aggregate (taking into account unasserted Claims of similar nature),
could have any Adverse Effect on the Company or the Company and its Subsidiaries
taken as a whole.
3.23 Environmental Matters.
----------------------
(a) Except as set forth in Section 3.23(a) of the Disclosure
Schedule, the Company and each Subsidiary:
25
(i) is in compliance in all material respects with all
Environmental Laws and has not been notified that it
is liable or potentially liable, has not received any
request for information or other correspondence
concerning any site or facility, and is not a
"responsible party" or "potentially responsible
party" under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended, the Resource Conservation Recovery Act of
1976, as amended, or any similar state law,
(ii) has not entered into or received any consent decree,
compliance order, or administrative order relating to
Environmental Requirements,
(iii) is not a party in interest or in default under any
judgment, order, writ, injunction or decree or any
final order relating to Environmental Requirements,
and
(iv) has obtained all material Governmental Authorizations
and Private Authorizations (including without
limitation all Environmental Permits) and made all
Governmental Filings which are required to be filed
by the Company and each Subsidiary for the ownership
of its property, facilities and assets and the
operation of its businesses under all Environmental
Laws, is and at all times since its organization has
been in material compliance with the terms and
conditions of all such required Governmental and
Private Authorizations and all Environmental
Requirements, and is not the subject of or, to the
Company's knowledge, threatened with any Legal Action
involving a demand for damages or any other potential
liability with respect to violations or breaches of
any Environmental Requirement.
(b) Except as set forth in Section 3.23(b) of the Disclosure
Schedule:
(i) no spill, disposal, release, burial or placement of
Hazardous Materials in the soil, air or water has
occurred on any property or facility owned, leased,
operated or occupied by the Company or any Subsidiary
during the period that such facilities and properties
were owned, leased, operated or occupied by it or, to
the knowledge of the Company, at any other time or at
any other facility or site to which Hazardous
Materials from or generated by the Company or any
Subsidiary may have been taken at any time in the
past,
(ii) there has been no spill, disposal, release, burial or
placement of Hazardous Materials, in the soil, air or
water on any property which could reasonably be
expected to result or has resulted in
26
contamination of or beneath any properties or
facilities owned, leased, operated or occupied by the
Company or any Subsidiary during the period that such
facilities and properties were owned, leased,
operated or occupied by it (or, to the knowledge of
the Company, at any other time), and
(iii) no notice has been received by the Company or any
Subsidiary and no Lien has arisen on its or any
Subsidiary's properties or facilities under
Environmental Law.
(c) Except as set forth in Section 3.23(c) of the Disclosure
Schedule, neither the Company nor any Subsidiary has any above-ground or
underground tanks on property owned, leased, operated or occupied by it for the
storage of Hazardous Materials.
(d) There has not been, and on or prior to the Public Offering
Closing Date, there will not be, any past or present Events or plans of the
Company or any Subsidiary or any of its predecessors, which, individually or in
the aggregate, constitute a breach of any Environmental Requirements or which,
individually or in the aggregate, may interfere with or prevent continued
compliance with all Environmental Requirements, or which, individually or in the
aggregate, may give rise to any common law, statutory or other legal liability,
or otherwise form the basis of any Claim, assessment or remediation cost, fine,
penalty or assessment based on or related to the transportation, transmission,
gathering, processing, distribution, use, treatment, storage, disposal or
handling, or the emission, discharge, release or threatened release into the
environment, of any Hazardous Material with respect to the Company or any
Subsidiary or any of its predecessors or its or any of their business,
operations or property which could have any Adverse Effect on the Company or the
Company and its Subsidiaries taken as a whole.
(e) Except as set forth in Section 3.23(e) of the Disclosure
Schedule, neither the Company nor any Subsidiary has used any Hazardous
Materials in the conduct of its business. To the extent that any Hazardous
Materials are so set forth, Section 3.23(e) of the Disclosure Schedule also sets
forth (i) a description of Hazardous Materials used, (ii) the annual volume of
each of the Hazardous Materials used, (iii) the years during which each of the
Hazardous Materials used occurred, and (iv) the Persons to whom such Hazardous
Materials were transferred and/or transported after such use.
(f) Section 3.23(f) of the Disclosure Schedule contains a complete
and correct description of all Hazardous Materials generated by the Company or
any Subsidiary which are not set forth in Section 3.23(e), the approximate
annual volumes of each of the Hazardous Materials, and all Persons to whom such
Hazardous Materials have been transferred and/or transported.
(g) No site assessment, audit, study, test or other investigation
has been conducted by or on behalf of the Company or any Subsidiary, nor has the
Company received any notice from any governmental agency, or financial
institution as to environmental matters at any property owned, leased, operated
or occupied by the Company or any Subsidiary, except as set forth in Section
3.23(g) of the Disclosure Schedule.
27
3.24 Materiality. The matters and items excluded from the
-----------
representations and warranties set forth in this Article by operation of the
materiality exceptions and materiality qualifications contained in such
representations and warranties, in the aggregate for all such excluded matters
and items, are not and could not reasonably be expected to be Adverse to the
Company or the Company and its Subsidiaries taken as a whole.
3.25 Solvency. As of the execution and delivery of this Agreement, the
--------
Company and the Company and its Subsidiaries taken as a whole are and, as of the
Public Offering Closing Date, will be solvent.
3.26 VIALOG Stock. The Stockholders will hold for investment the VIALOG
------------
Stock constituting the Stock Merger Consideration.
3.27 Compliance with Regulations Relating to Securities Credit. None of
---------------------------------------------------------
the borrowings, if any, of the Company were incurred or used for the purpose of
purchasing or carrying any security which at the date of its acquisitions was,
or any security which now is, margin stock or other margin security within the
meaning of Regulations T of the Margin Rules or a "security that is publicly
held," within the meaning of the Margin Rules, and the cash portion of the
proceeds from the consummation of the Transactions will not be used for the
purpose of purchasing or carrying any margin stock or other margin security, or
a "security that is publicly held", or any security issued by VIALOG, or in any
way which would involve the Company in any violation of the Margin Rules, and
neither the Company nor any Subsidiary owns any margin stock or other margin
security, or a "security that is publicly held", and neither the Company nor any
Subsidiary has any present intention of acquiring any margin stock or other
margin security, or any "security that is publicly held".
3.28 Certain State Statutes Inapplicable. The provisions of applicable
-----------------------------------
Massachusetts takeover laws, if any, will not apply to this Agreement, the
Merger or the Transactions.
3.29 Continuing Representations and Warranties. Except for those
-----------------------------------------
representations and warranties which speak as of a specific date, all of the
representations and warranties of the Company set forth in this Article will be
true and correct in all material respects on the Public Offering Closing Date
with the same force and effect as though made on and as of that date and those,
if any, which speak as a specific date will be true and correct in all material
respects as of such date.
3.30 Registration Statement. All information furnished by or on behalf
----------------------
of the Company or any Stockholder in writing for use in the Registration
Statement and all information relating to the Company in the Prospectus (a copy
of which shall be provided by VIALOG to the Company and Principal Stockholder
for their review) is true, correct and complete and does not contain any untrue
statement of material fact or omit to state any material fact necessary to make
such statements, in the light of the circumstances in which they were made, not
misleading. In the event any such information, through the occurrence or
nonoccurrence of any event or events between the date of this Agreement and the
Public Offering Closing Date, ceases to be true, correct and complete or
contains any untrue statement of material fact or omits to state any material
fact necessary to make such statements, in the light of the circumstances in
which they
28
were made, not misleading, the Company, upon discovery thereof will provide
VIALOG, in writing, sufficient information to correct such untrue statement or
omission.
3.31 Predecessor Status; etc. Set forth in Section 3.31 of the
------------------------
Disclosure Schedule is a listing of all names of all predecessor companies of
the Company and the names of any Entities from which, since December 31, 1991,
the Company previously acquired material properties or assets. Except as
disclosed in Section 3.31 of the Disclosure Schedule, the Company has never been
a Subsidiary or division of another Entity, nor a part of an acquisition which
was later rescinded. None of the Company, the Principal Stockholder or any
Subsidiary has ever owned any capital stock of VIALOG nor, except as set forth
in Section 3.31 of the Disclosure Schedule, has there been, since December 31,
1991, any sale or spin-off of material assets by the Company or any Subsidiary
other than in the ordinary course of business.
ARTICLE
4
REPRESENTATIONS AND WARRANTIES OF
THE PRINCIPAL STOCKHOLDER
The Principal Stockholder represents, warrants and covenants to, and
agrees with, VIALOG and VIALOG Merger Subsidiary as follows:
4.1 Organization. The Principal Stockholder (if other than an
------------
individual) is an Entity duly organized, validly existing and in good standing
under the laws or its jurisdiction of organization.
4.2 Power and Authority. The Principal Stockholder (if other than an
-------------------
individual) has adequate power and authority (corporate, partnership, trust or
other) and all necessary Governmental Authorizations and Private Authorizations
in order to enable it to execute and deliver, and to perform its obligations
under, this Agreement and each other Collateral Document executed or required to
be executed pursuant hereto or thereto. The execution, delivery and performance
of this Agreement and each other Collateral Document executed or required to be
executed pursuant hereto or thereto have, to the extent applicable, been duly
authorized by all requisite corporate, partnership, trust or other action,
including that, if required, of the Principal Stockholder's stockholders or
partners.
4.3 Enforceability. This Agreement has been duly executed and
--------------
delivered by the Principal Stockholder and constitutes, and each Collateral
Document executed or required to be executed by the Principal Stockholder
pursuant hereto or thereto when executed and delivered by the Principal
Stockholder will constitute legal, valid and binding obligations of the
Principal Stockholder, enforceable in accordance with their respective terms,
except as such enforceability may be subject to bankruptcy, moratorium,
insolvency, reorganization, arrangement, voidable
29
preference, fraudulent conveyance and other similar laws relating to or
affecting the rights of creditors and except as the same may be subject to the
effect of general principles of equity.
4.4 Title to Shares. Except as set forth in Section 4.4 of the
---------------
Disclosure Schedule (all of which exceptions will be removed, satisfied or
discharged no later than the Merger Closing), the Principal Stockholder owns and
has good and merchantable title to those Shares owned by the Principal
Stockholder and to be exchanged pursuant to this Agreement, free and clear or
all Liens.
4.5 No Conflict; Required Filings and Consents. Neither the execution
------------------------------------------
and delivery of this Agreement or any Collateral Document executed or required
to be executed pursuant hereto or thereto, nor the consummation of the Merger
and the Transactions, nor compliance with the terms, conditions and provisions
hereof or thereof by the Principal Stockholder:
(a) will materially conflict with, or result in a breach or
violation of, or constitute a default under, any Applicable Law on the part of
such Stockholder or will conflict with, or result in a material breach or
violation of, or constitute a material default in the performance, observance or
fulfillment of, or a material default under, or permit the acceleration of any
obligation or liability in, or, but for any requirements of notice or passage of
time or both, would constitute such a conflict with, breach or violation of, or
default under, or permit any such acceleration in, any Contractual Obligation of
the Principal Stockholder,
(b) will result in or permit the creation or imposition of any
Lien upon any property or asset of the Principal Stockholder used or now
contemplated to be used by the Company, or
(c) will require any Governmental Authorization or Governmental
Filing or Private Authorization, except for filing requirements in connection
with the Merger and the Transactions and as the Securities Act or applicable
state securities laws may apply to compliance by the Principal Stockholder with
the provisions of this Agreement relating to the Public Offering and
registration rights, pursuant to the HSR Act (if applicable) or as set forth in
Section 4.5 of the Disclosure Schedule.
ARTICLE
5
REPRESENTATIONS AND WARRANTIES OF VIALOG
AND VIALOG MERGER SUBSIDIARY
VIALOG and VIALOG Merger Subsidiary, jointly and severally, represent,
warrant and covenant to, and agree with, the Company as follows:
5.1 Organization and Qualification. VIALOG is a corporation duly
------------------------------
incorporated, validly existing and in good standing under the laws of
Massachusetts. VIALOG Merger
30
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of Delaware.
5.2 Power and Authority. Except for such consents of Authorities as
-------------------
may be necessary in connection with change-of-control transactions with respect
to Governmental Authorities listed in Section 3.1(c) of the Disclosure Schedule,
each of VIALOG and VIALOG Merger Subsidiary has all requisite power and
authority (corporate and other) and has in full force and effect all
Governmental Authorizations and Private Authorizations in order to enable it to
execute and deliver, and to perform its obligations under, this Agreement and
each Collateral Document executed or required to be executed pursuant hereto or
thereto and to consummate the Merger and the Transactions. The execution,
delivery and performance of this Agreement and each Collateral Document executed
or required to be executed pursuant hereto or thereto have been duly authorized
by all requisite corporate or other action. This Agreement has been duly
executed and delivered by each of VIALOG and VIALOG Merger Subsidiary and
constitutes, and each Collateral Document executed or required to be executed
pursuant hereto or thereto when executed and delivered by it will constitute,
legal, valid and binding obligations of VIALOG and VIALOG Merger Subsidiary,
respectively, enforceable in accordance with their respective terms, except as
such enforceability may be subject to bankruptcy, moratorium, insolvency,
reorganization, arrangement, voidable preference, fraudulent conveyance and
other similar laws relating to or affecting the rights of creditors and except
as the same may be subject to the effect of general principles of equity.
5.3 No Conflict; Required Filings and Consents. Except for such
------------------------------------------
consents of Authorities as may be necessary in connection with change-of-control
transactions with respect to Governmental Authorities listed in Section 3.1(c)
of the Disclosure Schedule, neither the execution and delivery of this Agreement
or any Collateral Document executed or required to be executed pursuant hereto
or thereto, nor the consummation of the Transactions, nor compliance with the
terms, conditions and provisions hereof or thereof by each of VIALOG and VIALOG
Merger Subsidiary:
(a) will conflict with, or result in a breach or violation of, or
constitute a default under, any Applicable Law on the part of VIALOG or VIALOG
Merger Subsidiary or will conflict with, or result in a breach or violation of,
or constitute a default under, or permit the acceleration of any obligation or
liability in, or but for any requirement of giving of notice or passage of time
or both would constitute such a conflict with, breach or violation of, or
default under, or permit any such acceleration in, any Contractual Obligation of
VIALOG or VIALOG Merger Subsidiary, or
(b) will require any Governmental Authorization or Governmental
Filing or Private Authorization, except for filing requirements under Applicable
Law in connection with the Merger and the Transactions and as the Securities Act
and applicable state securities laws may apply to compliance by VIALOG with the
provisions of this Agreement relating to the Public Offering and registration
rights and except pursuant to the HSR Act (if applicable).
31
5.4 Financing. VIALOG has or, upon consummation of the Public
---------
Offering, will have sufficient funds or available financing to enable the
Surviving Corporation to pay the Aggregate Merger Consideration for all Shares
of the Company Stock as provided in Sections 2.1(a) and 2.1(d), the
consideration for each Option Security and each Convertible Security as provided
in Section 2.4, and all fees and expenses related to the Merger and its
obligations in connection with the Public Offering.
5.5 Broker or Finder. Except for the Underwriter, the fees and
----------------
expenses of which (other than pursuant to the Underwriting Agreement) are solely
the responsibility of VIALOG, no Person assisted in or brought about the
negotiation of this Agreement or the subject matter of the Transactions in the
capacity of broker, agent or finder or in any similar capacity on behalf of
VIALOG or VIALOG Merger Subsidiary.
5.6 Prior Activities of VIALOG and VIALOG Merger Subsidiary. Neither
-------------------------------------------------------
of VIALOG or VIALOG Merger Subsidiary has incurred any liabilities or
Contractual Obligations, except those incurred in connection with its
organization and ordinary course business operations (including Employment
Arrangements), the negotiation of this Agreement and the performance of this
Agreement and of the Participating Agreements with the Other Participating
Companies, the registration of VIALOG Stock under the Securities Act, compliance
with the requirements of the HSR Act (if applicable) and the performance of all
other Governmental Filings, and the financing of the foregoing. Except as
contemplated by the foregoing, neither of VIALOG or VIALOG Merger Subsidiary has
engaged in any business activities of any type or kind whatsoever, nor entered
into any agreements or arrangements with any Person, nor is it subject to or
bound by any obligation or undertaking.
5.7 Capitalization of VIALOG and VIALOG Merger Subsidiary. The
-----------------------------------------------------
authorized and outstanding capital stock of each of VIALOG and VIALOG Merger
Subsidiary is as set forth in Section 5.7 of the Disclosure Schedule. All of
such outstanding capital stock has been duly authorized and validly issued, is
fully paid and non-assessable and is not subject to any preemptive or similar
rights. All shares of common stock of VIALOG Merger Subsidiary held by VIALOG
have been duly authorized and validly issued to VIALOG and are fully paid and
non-assessable and are not subject to any preemptive or similar rights. As of
the date of this Agreement, except for this Agreement, the Participating
Agreements, the Underwriting Agreement, and as set forth on Section 5.7 of the
Disclosure Schedule, there are not any outstanding or authorized subscriptions,
options, warrants, calls, rights, commitments or any other agreements of any
character obligating VIALOG or VIALOG Merger Subsidiary to issue any shares of
VIALOG Stock or other shares of capital stock of VIALOG or of VIALOG Merger
Subsidiary, or any other securities convertible into or evidencing the right to
subscribe for any such shares. When issued in connection with the Merger, the
VIALOG Stock will be duly authorized, validly issued, fully paid and non-
assessable and will not be subject to any preemptive or similar rights.
5.8 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
32
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus will not as of the
issue date thereof contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties contained in this Section 5.8
will not apply to statements or omissions in the Registration Statement or the
Prospectus based on information relating to the Underwriter furnished to VIALOG
in writing by the Underwriter, or based on information relating to any of the
Other Participating Companies or its stockholders furnished to VIALOG in writing
by such Participating Company or any or its stockholders, or the Company or the
Stockholders furnished to VIALOG in writing by the Company or any of the
Stockholders. VIALOG will furnish the Company with a copy of the Registration
Statement and of each amendment thereto until the Merger Closing and thereafter
will furnish the Principal Stockholder with each amendment thereto and the final
Prospectus.
5.9 Solvency. After the Effective Time, and upon the consummation of
--------
the Merger, the Participating Mergers and the Transactions, VIALOG and its
subsidiaries, individually and taken as a whole, will be solvent.
5.10 Firm Commitment. The contemplated Public Offering shall be a firm
---------------
commitment underwriting and not a best efforts underwriting and all VIALOG Stock
sold in the offering will be purchased by the Underwriter on the Effective Date
and paid for by the Underwriter on the Public Offering Closing Date.
5.11 Participating Agreements of Other Participating Companies. Except
---------------------------------------------------------
as set forth in Section 5.11 of the Disclosure Schedule or as dictated by the
structuring of any transaction with a Participating Company as a sale of assets
or stock rather than a merger or as set forth in any employment or
noncompetition agreement required to be executed as a condition to closing
pursuant to Article 7 of a Participating Agreement, each Participating Agreement
entered into among VIALOG, any Subsidiary of VIALOG, and any Other Participating
Company contains provisions substantially identical in form and substance to the
provisions contained in Articles 3 through 12 of this Agreement, including,
without limitation, the representations and warranties, covenants, termination
provisions and indemnification provisions contained in those Articles. Except as
set forth in Section 5.11 of the Disclosure Schedule or as dictated by the
structuring of any transaction with a Participating Company as a sale of assets
or stock rather than a merger or as set forth in any employment or
noncompetition agreement required to be executed as a condition to closing
pursuant to Article 7 of a Participating Agreement, no Participating Agreement
contains any material provision which is not contained in substantially
identical form in this Agreement.
5.12 Continuing Representations and Warranties. Except for those
-----------------------------------------
representations and warranties which speak as a specific date, all of the
representations and warranties of VIALOG and the VIALOG Merger Subsidiary set
forth in this Article will be true and correct in all material respects on the
Public Offering Closing Date with the same force and effect as though made on
and as of that date, and those, if any, which speak as of a specific date will
be true and correct in all material respects as of such date.
33
ARTICLE
6
ADDITIONAL COVENANTS
6.1 Access to Information; Confidentiality.
--------------------------------------
(a) The Company will afford to VIALOG and the Representatives of
VIALOG full access during normal business hours throughout the period prior to
the Effective Time to all of its (and its Subsidiaries') properties, books,
contracts, commitments and records (including without limitation Tax Returns)
and, during such period, will furnish promptly upon request (i) a copy of each
report, schedule and other document filed or received by any of them pursuant to
the requirements of any Applicable Law (including without limitation federal or
state securities laws) or filed by any of them with any Authority in connection
with the Transactions or which may have a material effect on their respective
businesses, operations, properties, prospects, personnel, condition (financial
or other), or results of operations, (ii) to the extent not provided for
pursuant to the preceding clause, (A) all financial records, ledgers, workpapers
and other sources of financial information processed or controlled by the
Company or its accountants deemed by the Accountants necessary or useful for the
purpose of performing an audit of the Company and the Company and its
Subsidiaries taken as a whole and certifying financial statements and financial
information and (B) all other information relating to the Company, its
Subsidiaries and Stockholders that VIALOG or its Representatives requires, in
either case for inclusion in or in support of the Registration Statement, and
(iii) such other information concerning any of the foregoing as VIALOG will
reasonably request. Subject to the terms and conditions of the Confidentiality
Letter (as defined below), which are expressly incorporated in this Agreement by
reference for the benefit of the parties hereto, VIALOG will hold and will use
commercially reasonable efforts to cause the Representatives of VIALOG to hold,
and the Company will hold and will use commercially reasonable efforts to cause
the Representatives of the Company to hold, in strict confidence all non-public
documents and information furnished (whether prior or subsequent hereto) to
VIALOG or to the Company, as the case may be, in connection with the
Transactions.
(b) Subject to the terms and conditions of the Confidentiality
Letter, VIALOG and the Company may disclose such information as may be necessary
in connection with seeking all Governmental and Private Authorizations or that
is required by Applicable Law to be disclosed. In the event that this Agreement
is terminated in accordance with its terms, VIALOG and the Company will each
promptly redeliver all non-public written material provided pursuant to this
Section or any other provision of this Agreement or otherwise in connection with
the Merger and the Transactions and will not retain any copies, extracts or
other reproductions in whole or in part of such written material other than one
copy thereof which will be delivered to independent counsel for such party.
(c) The Company and VIALOG acknowledge that the Company and VIALOG
have executed one or more Confidential Disclosure Agreements (collectively, the
34
"Confidentiality Letter"), which separately and as incorporated in this
Agreement will remain in full force and effect after and notwithstanding the
execution and delivery of this Agreement, and that information obtained from the
Company by VIALOG, or its Representatives or by the Company or its
Representatives from VIALOG pursuant to Section 6.1(a), the Confidentiality
Letter or otherwise will be subject to the provisions of the Confidentiality
Letter.
(d) No investigation pursuant to this Section 6.1 will affect any
representation or warranty in this Agreement of any party or any condition to
the obligations of the parties.
6.2 Agreement to Cooperate.
----------------------
(a) Each of the Parties will use commercially reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under Applicable Law to consummate the
Merger and make effective the Transactions, including using commercially
reasonable efforts (i) to prepare and file with the applicable Authorities as
promptly as practicable after the execution of this Agreement all requisite
applications and amendments thereto, together with related information, data and
exhibits, necessary to request issuance of orders approving the Merger and the
Transactions by all such applicable Authorities, each of which must be obtained
or become final in order to satisfy the conditions applicable to it set forth in
Section 7; (ii) to obtain all necessary or appropriate waivers, consents and
approvals, (iii) to effect all necessary registration, filings and submissions
(including without limitation the Registration Statement, other filings under
the Securities Act or the HSR Act and any other submissions requested by the SEC
or the Federal Trade Commission or Department of Justice) and (iv) to lift any
injunction or other legal bar to the Merger and the Transactions (and, in such
case, to proceed with the Merger and the Transactions as expeditiously as
possible), subject, however, to the requisite votes of the Stockholders. Each of
the Parties recognizes that the consummation of the Merger and the Transactions
may be subject to the pre-merger notification requirements of the HSR Act. Each
agrees that, to the extent required by Applicable Law to consummate the Merger,
it will file with the Antitrust Division of the Department of Justice and the
Federal Trade Commission a Notification and Report Form in a manner so as to
constitute substantial compliance with the notification requirements of the HSR
Act. Each covenants and agrees to use commercially reasonable efforts to achieve
the prompt termination or expiration of any waiting period or any extensions
thereof under the HSR Act.
(b) Each of the Parties agrees to take such actions as may be
necessary to obtain any Governmental Authorizations legally required for the
consummation of the Merger and the Transactions, including the making of any
Governmental Filings, publications and requests for extensions and waivers.
(c) The Company will use commercially reasonable efforts on or
prior to the Public Offering Closing Date (i) to obtain the satisfaction of the
conditions specified in Sections 7.1 and 7.2; (ii) if requested by VIALOG, to
seek the consents (to the extent required) to the continued existence in
accordance with its then-stated terms of all long-term debt of each of the
Company and each of its Subsidiaries; and (iii) to attempt to cause those key
employees of
35
the Company and its Subsidiaries designated by VIALOG that are not Stockholders
to execute and deliver non-competition agreements substantially conforming in
form and substance to the non-competition agreements currently maintained by
VIALOG with its key employees in the form attached as Exhibit 6.2(c). Each of
VIALOG and VIALOG Merger Subsidiary will use its best efforts on or prior to the
Public Offering Closing Date to obtain the satisfaction of the conditions
applicable to it specified in Sections 7.1 and 7.3. The Principal Stockholder
will use commercially reasonable efforts to obtain the satisfaction of the
conditions applicable to the Principal Stockholder in Section 7.2.
(d) The Company agrees that, except as set forth in Section 3.19
of the Disclosure Schedule, prior to the Public Offering Closing Date it will
not make or permit to be made any material change affecting any bank, trust
company, savings and loan association, brokerage firm or safe deposit box or in
the names of the Persons authorized to draw thereon, to have access thereto or
to authorize transactions therein or in such powers of attorney, or open any
additional accounts or boxes or grant any additional powers of attorney, without
in each case obtaining the prior written consent of VIALOG, which consent VIALOG
will not unreasonably withhold.
(e) The Company will take such steps as are necessary and
appropriate to obtain, and will promptly obtain, satisfaction and discharge of
all Liens set forth in Section 3.15(b) of the Disclosure Schedule.
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,
sublicensing or subleasing to the Surviving Corporation or enforcement for the
benefit of the Surviving Corporation of any and all rights of the Company or its
Subsidiaries against a third party thereto arising out of the breach or
cancellation by such third party or otherwise. Any assumption by the Surviving
Corporation of the Company's rights thereunder by operation of law in connection
with the Merger which will require the consent or approval of any third party
will be made subject to such consent or approval being obtained.
6.4 Compliance with the Securities Act. Each of VIALOG and the Company
----------------------------------
will use its commercially reasonable efforts to cause each executive officer,
each director and each other Person who is an "affiliate," as that term is
defined in paragraph (a) of Rule 144 under the Securities Act, of the Company,
or who will, upon consummation of the Merger and the Transactions become, an
"affiliate" of VIALOG, and each Stockholder of the Company, to
36
deliver to VIALOG on or prior to the Merger Closing a written agreement (the
"Registration Rights Agreement") to the effect that such Person will not offer
to sell, sell or otherwise dispose of any shares of VIALOG Stock issued pursuant
to the consummation of the Transactions, except, in each case, pursuant to an
effective registration statement or in compliance with Rule 144, or in a
transaction which, in the opinion of legal counsel for such "affiliates" (such
legal counsel to be satisfactory to legal counsel for VIALOG), as set forth in a
written opinion satisfactory in form, scope and substance to the legal counsel
of VIALOG, is exempt from registration under the Securities Act and applicable
state securities laws. The Registration Rights Agreement shall be substantially
in the form of Exhibit 6.4. Notwithstanding anything to the contrary in this
Agreement, VIALOG will have no obligation under the Registration Rights
Agreement or otherwise to register under the Securities Act or any applicable
state securities laws, or otherwise to facilitate the transfer of, shares of
VIALOG Stock received by any such Person who fails to execute the Registration
Rights Agreement as provided herein, and such Person will forfeit all "demand
registration" and other rights provided for in the Registration Rights Agreement
and all "piggyback" rights provided for in the Registration Rights Agreement.
6.6 Conduct of Business.
-------------------
(a) Prior to the Effective Time or the date, if any, on which this
Agreement is earlier terminated, the Company and its Subsidiaries will (i) use
their best efforts to preserve intact their respective business organizations
and good will, keep available the services of their respective officers and
employees as a group and maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with them, (ii)
confer on a regular and frequent basis with one or more representatives of
VIALOG to report operational matters of Materiality and the general status of
ongoing operations, and (iii) notify VIALOG of any emergency or other change in
the normal course of their business and of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) if such emergency, change, complaint, investigation or hearing
would be Material to the business, operations or financial condition of the
Company and its Subsidiaries, taken as a whole.
(b) Except as set forth in Schedule 6.5(b) (or Section 6.5(b) of
the Disclosure Schedule, as the case may be) or with the written permission of
VIALOG, the Company agrees further that the Company (i) will not make, declare
or pay any dividends or other distributions on any Shares or the stock of the
Company's Subsidiaries or redeem or repurchase or otherwise acquire any Shares
(except cancellation of options and warrants as required in this Agreement),
(ii) will not enter into or terminate any Employment Arrangement with any
director or officer, (iii) will not incur any obligation or liability (absolute
or contingent), except current liabilities incurred, and obligations under
contracts entered into, in the ordinary course of business (iv) will not
discharge or satisfy any Lien or Encumbrance or pay any obligation or liability
(absolute or contingent) other than current liabilities shown on its Financial
Statements, and current liabilities incurred since those dates in the ordinary
course of business, (v) will not mortgage, pledge, create a security interest
in, or subject to Lien or other Encumbrance any of its assets, tangible or
intangible, (vi) will not sell or transfer any of its tangible assets or cancel
any debts or claims except in each case in the ordinary course of business,
(vii) will not sell, assign, or transfer any
37
trademark, trade name, patent, or other Intangible Asset, (viii) will not waive
any right of any substantial value, (ix) will not make any material change in
the tax procedures or practices followed by the Company or any of its
Subsidiaries, (x) will not make any change in credit terms offered by the
Company or any of its Subsidiaries, (xi) will not make any capital expenditure
or Material Commitment for any additions or improvements to its or any of its
Subsidiary's property, plant or equipment, (xii) will not amend its
capitalization, or issue any stocks, bonds or other securities, except that the
Company may issue shares pursuant to outstanding Option Securities and
Convertible Securities, (xiii) will not enter into, modify or extend, or promise
any bonus or incentive compensation program that was not in place prior to June
1, 1996 and (xiv) will otherwise conduct its operation and the operations of its
Subsidiaries according to their ordinary and usual course of business.
6.6 No Solicitation. The Company will not, nor will it permit any
---------------
Subsidiary, or any of the Company's or any Subsidiary's Representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it) to, initiate, solicit or facilitate, directly or indirectly, any
inquires or the making of any proposal with respect to an Other Transaction,
engage in any discussions or negotiations concerning, or provide to any other
person any information or data relating to it or any Subsidiary for the purposes
of, or otherwise cooperate in any way with or assist or participate in, or
facilitate any inquires or 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, the Surviving Corporation
will indemnify, defend and hold harmless the present and former officers and
directors of the Company against all Claims or amounts that are paid in
settlement of, with the approval of the Surviving Corporation, or otherwise in
connection with any Claim based in whole or in part on the fact that such Person
is or was a director or officer of the Company and arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the Merger and the Transactions), in each case to the fullest extent
permitted under the BCA (and will pay any expenses in advance of the final
disposition of any such action or proceeding to each such Person to the fullest
extent permitted under the BCA, upon receipt from the Person to whom expenses
are advanced of an undertaking to repay such advances to the extent required
38
under the BCA). The Surviving Corporation will observe and comply with the
Company's obligations pursuant to the indemnification agreements, if any, listed
in Section 3.9 of the Disclosure Schedule.
(b) This Section 6.7 is intended to be for the benefit of, and
will be enforceable by, the former officers and directors of the Company, their
heirs and personal representatives and will be binding on the Surviving
Corporation and its respective successors and assigns.
(c) VIALOG will apply for directors and officers insurance in the
amount of $2,000,000 for the benefit of the directors and officers of VIALOG and
the Surviving Corporations.
6.8 Notification of Certain Matters. The Company will give prompt notice
-------------------------------
to VIALOG, and VIALOG will give prompt notice to the Company, of (a) the
occurrence or non-occurrence of any Event the occurrence or non-occurrence of
which would be likely to cause in any material respect (i) any representation or
warranty of the Company or VIALOG, as the case may be, contained in this
Agreement to be untrue or inaccurate, or (ii) in the case of the Company or the
Principal Stockholder, any change to be made in the Disclosure Schedule and (b)
any failure of the Company or VIALOG, as the case may be, to comply with or
satisfy, or be able to comply with or satisfy, any material covenant, condition
or agreement to be complied with or satisfied by it under this Agreement. The
delivery of any notice pursuant to this Section 6.8 will not limit or otherwise
affect the remedies available hereunder to the Party receiving such notice.
6.9 Public Announcements. Until the Merger Closing, or in the event of
--------------------
termination of this Agreement, the closing of the Public Offering (or its
abandonment), the Company will consult with VIALOG before issuing any press
release or otherwise making any public statements with respect to this
Agreement, the Merger or any Transaction (including the Participating Mergers or
the termination of this Agreement in such event) and will not issue any such
press release or make any such public statement without the prior consent of
VIALOG and the written advice of legal counsel to VIALOG that such press release
or such public statement will not affect the registration of VIALOG Stock under
the Securities Act or the timing of the effectiveness thereof. The Company
acknowledges and agrees that VIALOG may, without the prior consent of the
Company, issue such press release or make such public statement as may be
required by Applicable Law or any listing agreement or arrangement to which
VIALOG is a party with a national securities exchange or the National
Association of Securities Dealers, Inc. Automated Quotation System, or as
recommended by outside counsel. VIALOG will exercise commercially reasonable
efforts to furnish the Company a copy of any press release relating to Other
Participating Companies prior to its publication and will furnish a copy of any
such press release so issued as soon as practicable after its publication, but
any failure on VIALOG's part to do so will not be deemed a breach of or default
under this Agreement. VIALOG will furnish the Company with a copy of any press
release or public information of VIALOG, at a reasonable time prior to its
release for publication.
39
6.10 Conveyance Taxes. The Parties will cooperate with one another in the
----------------
preparation, execution and filing of all Returns, questionnaires, applications,
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp Taxes, any transfer, recording,
registration and other fees, and any similar Taxes which become payable in
connection with the Transactions that are required or permitted to be filed on
or before the Effective Time.
6.11 Obligations of VIALOG. VIALOG agrees to take all action necessary to
---------------------
cause VIALOG Merger Subsidiary and the Surviving Corporation to perform their
respective obligations under this Agreement and will use commercially reasonable
efforts to consummate, and cause VIALOG Merger Subsidiary to consummate, the
Merger on the terms and conditions set forth in this Agreement.
6.12 Employee Benefits; Severance Policy. VIALOG will cause the Surviving
-----------------------------------
Corporation to maintain through its fiscal year ending December 31, 1997:
(a) employee incentive compensation and fringe benefits that are
substantially equivalent to those provided to employees of the Company and its
Subsidiaries as in effect on the date of this Agreement, subject to the right of
VIALOG and the Surviving Corporation to amend or terminate such programs in
accordance with their terms, provided that after any such amendment or
termination the resulting programs continue to be substantially equivalent to
the existing programs, and
(b) employee severance pay and benefits that are substantially
equivalent to the applicable severance programs of the Company and its
Subsidiaries as in effect on the date hereof, subject to the right of VIALOG and
the Surviving Corporation to amend or terminate such programs in accordance with
their terms, provided that after any such amendment or termination, the
resulting programs continue to be substantially equivalent to the existing
programs.
Notwithstanding the foregoing, as soon as convenient after such period, the
Surviving Corporation may, in its sole discretion, substitute employee
compensation, benefit and severance programs for those of the Company as are
consistent with the programs provided to VIALOG's employees and the employees of
VIALOG's Subsidiaries.
6.13 Certain Actions Concerning Business Combinations.
------------------------------------------------
(a) Neither the Principal Stockholder nor any Representative
thereof will, during the period commencing on the date of the filing of the
Registration Statement and ending with the earlier to occur of the Merger
Closing or the termination of this Agreement in accordance with its terms,
directly or indirectly (i) solicit or initiate the submission of proposals or
offers from any Person or, (ii) participate in any discussions pertaining to, or
(iii) furnish any information to any Person other than VIALOG relating to, any
acquisition or purchase of all or a material amount of the assets of, or any
equity interest in, the Company or a merger, consolidation or business
combination of the Company or any Subsidiary (other than the Merger).
40
(b) The Company will not apply, and will not take any action
resulting in the application of, or otherwise elect to apply, the provisions of
applicable Massachusetts takeover laws, if any, with respect to or as a result
of the Merger or the Transactions.
6.14 Termination of Option Securities and Convertible Securities. The
-----------------------------------------------------------
Company will take all action necessary to terminate the exercise rights of all
outstanding Option Securities and the conversion rights of all Convertible
Securities issued by the Company as of the Effective Time to the extent such
option and conversion rights are not exercised prior to the Merger Closing, and
to provide timely notice to all holders of Option Securities and Convertible
Securities notifying them of such termination. Without the prior written consent
of VIALOG, except as set forth in Section 3.15(a) of the Disclosure Schedule,
(a) such termination or notice will not cause an acceleration of the exercise,
conversion or vesting schedule of any Option Security or of any Convertible
Security, and (b) the Company will not otherwise accelerate, or cause an
acceleration of, the exercise, conversion or vesting schedule of any Option
Security or Convertible Security. Prior to the Merger Closing, the Company will
issue Certificates to all holders of properly exercised Option Securities and
properly converted Convertible Securities. Such Certificates will accurately
represent the number of Shares to which such holder is entitled by virtue of
such exercise or conversion and the Company will amend Section 3.15(b) of the
Disclosure Schedule accordingly.
6.15 Tax Returns. The Principal Stockholder will cause all Tax Returns of
-----------
the Company and its Subsidiaries with respect to taxable periods ending on or
before the Effective Time to be prepared in a manner consistent with past
practices and VIALOG will file such Tax Returns promptly upon receipt thereof
from the Principal Stockholder or the Company. At least thirty days before the
due date (including any extensions) for any such Tax Returns, the Principal
Stockholder or the Company will provide drafts of such Tax Returns to VIALOG for
its review and comment (which reasonable comments will be incorporated into the
final Tax Returns), and VIALOG will cooperate with the Principal Stockholder and
provide the Principal Stockholder with access to any books and records
reasonably necessary for their preparation of such draft Tax Returns. VIALOG
will file no amended Tax Returns with respect to the Company and the
Subsidiaries for any taxable period ending on or before the Effective Time if
the Principal Stockholder reasonably objects thereto and furnishes VIALOG with
indemnification satisfactory in form and substance to it, including without
limitation, indemnification for all interest, penalties and Expenses resulting
from the failure to amend such Tax Returns and all proceedings in connection
therewith.
6.16 Employment and Noncompetition. On or before the Merger Closing, the
-----------------------------
Principal Stockholder will execute and deliver to VIALOG the employment
agreement contemplated by Section 7.2(s) to be effective as of the Public
Offering Closing Date. From and after the Public Offering Closing Date, the
Principal Stockholder will not compete with VIALOG or any of its Subsidiaries
except to the extent not prohibited by Exhibit 7.2(s).
--------------
41
6.17 Distributions, Liabilities, Etc.
-------------------------------
(a) The Company and VIALOG acknowledge and agree that the Company
contemplates that (i) prior to the Merger Closing it will make certain
Distributions to Stockholders, employees of and consultants to the Company, (ii)
no later than Merger Closing, it will cause certain Liens to be discharged in
their entirety (with financing statement terminations properly recorded), and
(iii) as of Merger Closing, it will indemnify VIALOG for certain liabilities
(except to the extent obligees with respect thereto release the Company and its
Affiliates therefrom), in each case as set forth in the Disclosure Schedule.
Schedule 6.17 (or Section 6.17 of the Disclosure Schedule, as the case may be)
lists each such Distribution, Lien and liability;
(b) The Company agrees that Distributions not permitted pursuant
to Section 3.18 will be made by the Company (or VIALOG or the Surviving Company
if after the Effective Date) only to the extent provided in Schedule 6.17 (or
Section 6.17 of the Disclosure Schedule, as the case may be); and
(c) The Company further agrees that, notwithstanding anything to
the contrary in Section 10.1, it will indemnify VIALOG and VIALOG Merger
Subsidiary against all Claims and Expenses incurred by VIALOG and VIALOG Merger
Subsidiary (or either of them) by virtue of any failure on the Company's part to
secure the discharges from Liens contemplated by Schedule 6.17 (or Section 6.17
of the Disclosure Schedule, as the case may be) or any damage or harm
attributable to a liability to be indemnified against as contemplated by
Schedule 6.17 (or Section 6.17 of the Disclosure Schedule, as the case may be).
6.18 Release from Personal Guarantees. On or prior to the Public Offering
--------------------------------
Closing Date, VIALOG will either obtain releases of the personal guarantees of
the Stockholders of Indebtedness or discharge or arrange for the discharge of
such Indebtedness. VIALOG will either obtain releases of the personal guarantees
of the Stockholders of Contractual Obligations which extend beyond the Public
Offering Closing Date or indemnify and hold the Stockholders harmless from such
personal guarantees.
6.19 No Significant Changes VIALOG agrees that there will be no
----------------------
"significant change" (as defined below) in the conduct of the business of the
Company for a period of two years after the Public Offering Closing Date without
the approval of a majority in interest of the Stockholders. "Significant change"
means any change in the location of the Company's facilities, a physical merging
of the Company's operations with another operation, any change in the position
of those employees who receive employment agreements pursuant to Section 7.2(s),
or a reduction in force or the termination of any employee except as related to
employee performance or the contemplated reorganization of the combined
sales/marketing staff or the accounting function.
42
6.20 Registration Statement.
----------------------
(a) The Company and the Principal Stockholder will furnish to
VIALOG all necessary information concerning the Company and the Principal
Stockholder for VIALOG to file the Registration Statement.
(b) The Company and the Principal Stockholder have reviewed or
have had reviewed on their behalf, and will be familiar with the information
concerning the Company and the Stockholders (or any of them) in the Prospectus,
which will be furnished to them by VIALOG for their review, and will have no
knowledge of any material fact, condition or information concerning the Company
and the Stockholders misstated or not disclosed in such Prospectus.
(c) VIALOG agrees to use its best efforts to prepare and file the
Registration Statement prior to February 28, 1997 and furnish to the Company and
the Principal Stockholder a copy of information concerning the Company and the
Stockholders included therein and each amendment thereto two business days prior
to such filing date.
6.21 Tax Status. VIALOG, the Company and the Principal Stockholder agree to
----------
use their best efforts to maintain the status of the Merger and the
Participating Mergers as a tax free incorporation, provided VIALOG's Accountants
so advise and provided the relative ownership rights of all parties remain the
same.
6.22 Self Dealing. VIALOG agrees that it will not and will not allow any
------------
Subsidiary to enter into contracts and business arrangements with Persons and
Entities owned in whole or in part by officers and directors of VIALOG or any
Subsidiary except on an arms length basis and with the approval of the VIALOG
Board of Directors.
ARTICLE
7
CLOSING CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
------------------------------------------------------------
respective obligations of each Party to effect the Merger will be subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
or all of which may be waived, in whole or in part, to the extent permitted by
Applicable Law:
(a) This Agreement, the Merger and the Transactions shall have
been approved and adopted in accordance with the BCA by the affirmative vote, or
to the extent permitted by Applicable Law, by written consent, of the
Stockholders holding at least the minimum number of shares of the Company Stock
then issued and outstanding as are required by Applicable Law and the Company's
Organizational Documents for such approval and adoption,
43
(b) No proceeding before any Authority or Claim by any Person
shall be pending, challenging or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or prohibit the consummation of the
Merger or the Public Offering, or seeking material damages or imposing any
Adverse conditions in connection therewith,
(c) Other than the filing of merger documents in accordance with
the BCA and the DBCL, all authorizations, consents, waivers, orders or approvals
required to be obtained, and all filings, submissions, registrations, notices or
declarations required to be made, by VIALOG or VIALOG Merger Subsidiary and the
Company prior to the consummation of the Merger and the Transactions shall have
been obtained from, and made with, all required Authorities, except for such
authorizations, consents, waivers, orders, approvals, filings, registrations,
notices or declarations the failure to obtain or make would not, assuming
consummation of the Merger, have an Adverse Effect on the Company and the
Company and its Subsidiaries taken as a whole,
(d) (i) The 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, (ii) the shares of VIALOG Stock offered in the Public
Offering shall have been sold and purchased subject only to consummation of the
Merger, the Participating Mergers and the Transactions, (iii) every condition to
closing the 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 and the Participating Mergers,
(e) The minimum number of Participating Mergers required to
prevent termination pursuant to Section 8.1(b)(ii) of this Agreement shall have
been authorized and approved in accordance with Applicable Law and the
Organizational Documents of the Other Participating Companies, in the case of
the Participating Mergers,
(f) Subject to such material amendments, if any, as shall be
proposed prior to Merger Closing by VIALOG to be effective immediately after
Merger Closing, and to the extent reasonably satisfactory to the Company and the
Other Participating Companies, the VIALOG stock option plan described in the
Registration Statement shall have been approved and adopted by all action
(corporate and other) required for implementation thereof,
(g) Each of the Persons named on Exhibit 7.1(g), including one
--------------
Person proposed by a majority of the chief executive officers of the Company and
the Other Participating Companies acting as a group, shall have been elected a
director of VIALOG, effective immediately after the Public Offering Closing
Date, and all together shall constitute the entire Board of Directors of VIALOG,
each to serve until the election of the successor to, or the earlier resignation
or termination of, such director, and
(h) VIALOG shall have delivered to the Exchange Agent that number
of shares of VIALOG Stock as determined pursuant to Section 2.1 of this
Agreement and of the
44
Participating Agreements issued in the name of the Stockholders and the
stockholders and other Persons holding equity interests in the Participating
Companies.
7.2 Conditions to Obligations of VIALOG and VIALOG Merger Subsidiary. The
----------------------------------------------------------------
obligations of VIALOG and VIALOG Merger Subsidiary to effect the Merger will be
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by Applicable Law:
(a) The Company shall have complied in all material respects with
its agreements contained in this Agreement, the certificates to be furnished to
VIALOG pursuant to this Section shall be true, correct and complete, all
Collateral Documents shall be reasonably satisfactory in form, scope and
substance to VIALOG and its counsel, and VIALOG and its counsel shall have
received all information and copies of all documents, including records of
corporate proceedings, which they may reasonably request in connection
therewith, such documents where appropriate to be certified by proper corporate
officers,
(b) The Company shall have furnished VIALOG and the Underwriters
with the favorable opinion, dated the Public Offering Closing Date of Xxxxxx,
Breed, Hart, Murphy & Xxxxxxx, P.C., which may contain limitations and
qualifications as to scope and law and rely on certifications as to facts of
officers of the Company and public officials as are reasonable and customary to
opinions delivered in the type of business transactions covered by this
Agreement, addressing the following:
(i) Due organization, valid existence and good standing of the
Company and each Subsidiary, together with an opinion as to
foreign qualifications,
(ii) Requisite corporate power and authority and all, to such
counsel's knowledge, necessary Governmental Authorizations
for the Company and each Subsidiary to own, lease and
operate its properties and to carry on its business as it
is now being conducted,
(iii) In respect of the Company and each Subsidiary, the number
of shares of capital stock or other voting securities
authorized, issued, reserved for issuance or outstanding as
of the date of this Agreement and the Effective Time and
number of Option Securities and amount of Convertible
Securities outstanding as of such dates,
(iv) Due authorization, valid issuance, full payment and non-
assessability of outstanding shares of capital stock of the
Company and each Subsidiary and (upon issuance on the terms
and conditions specified in the Option Securities and
Convertible Securities pursuant to which they are issuable)
all shares of such capital stock subject to issuance and
absence of preemptive rights with respect thereto,
45
(v) To the knowledge of counsel, (A) there are not
Contractual Obligations to repurchase, redeem or
otherwise acquire any shares of Company Stock or any
stock of any Subsidiary, or any Option Securities and
Convertible Securities, (B) the Merger will not cause
an acceleration of the exercise or vesting schedule
of any Option Securities and Convertible Securities
and (C) all outstanding shares of stock of each
Subsidiary are owned by the Company or by another
Subsidiary, free and clear of any Lien (except as set
forth in Section 3.1(d) of the Disclosure Schedule),
(vi) Corporate power and authority of the Company to
execute and deliver the Agreement and all Collateral
Documents executed or required to be executed
pursuant thereto or to consummate the Merger, to
perform its obligations thereunder and to consummate
the Merger,
(vii) Due and valid authorization by the Company and the
Principal Stockholder by all necessary corporate (and
other) action of the execution, delivery and
performance of the Agreement and all Collateral
Documents executed or required to be executed
pursuant thereto or to consummate the Merger and the
consummation by the Company of the Merger,
(viii) Due authorization and valid execution and delivery
by, and enforceability against, the Company and the
Principal Stockholder of the Agreement and all
Collateral Documents executed or required to be
executed pursuant hereto or thereto or to consummate
the Merger and the Transactions except (A) as such
enforceability may be subject to bankruptcy,
moratorium, insolvency, reorganization, arrangement,
voidable preference, fraudulent conveyance and other
similar laws relating to or affecting the rights of
creditors and as the same may be subject to the
effect of general principles of equity and (B) that
no opinion need be expressed as to the enforceability
of indemnification and noncompetition provisions
included herein;
(ix) The execution and delivery of the Agreement and all
Collateral Documents executed or required to be
executed pursuant thereto or to consummate the Merger
by the Company do not, and the performance of the
Agreement and all Collateral Documents executed or
required to be executed pursuant thereto or to
consummate the Merger and the consummation of the
Transactions by the Company will not, (i) conflict
with or violate the Organizational Documents of the
Company or any Subsidiary, (ii) conflict with or
violate any Applicable Law, or (iii) to
46
counsel's knowledge, constitute a breach or default
under, or give to others any right of termination,
amendment, acceleration, increased payments or
cancellation of, or result in the creation of a Lien
on any property or asset of the Company or any
Subsidiary pursuant to, any Material Agreement to
which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary or any property
or asset of the Company or any Subsidiary is bound or
affected,
(x) No consents from or filings with any Governmental
Authority (other than filings under the HSR Act, if
applicable, and filings of certificates of merger)
are required for the execution and delivery of the
Agreement by the Company and the performance of the
Agreement and all Collateral Documents executed or
required to be executed pursuant thereto or to
consummate the Merger and the consummation of the
Merger by the Company,
(xi) Required filings with the Secretary of State of
Massachusetts have been made,
(xii) To the knowledge of counsel, absence of pending or
threatened material Legal Action,
(xiii) Nonapplicability of Massachusetts takeover laws, and
(xiv) such other customary matters concerning the
Stockholders in connection with the Public Offering
as may reasonably be requested by the Underwriter or
its counsel,
(c) No Legal Action or other Claim shall be pending or threatened
at any time prior to or on the Public Offering Closing Date before or by any
Authority or by any other Person seeking to restrain or prohibit, or damages or
other relief in connection with, the execution and delivery of this Agreement or
the consummation of the Merger and the Transactions or which might in the
reasonable judgment of VIALOG have any Adverse Effect on the Company or the
Company and its Subsidiaries taken as a whole or, assuming consummation of the
Merger and the Participating Mergers, VIALOG and its Subsidiaries taken as a
whole,
(d) Each Principal Stockholder (other than a Principal Stockholder
executing and delivering the agreement contemplated by Section 7.2(s)) and other
Persons listed on Schedule 7.2(d) (or Section 7.2(d) of the Disclosure Schedule,
as the case may be) shall have executed and delivered to VIALOG a noncompetition
agreement, substantially in the form of Exhibit 7.2(d),
--------------
(e) The representations, warranties, covenants and agreements of the
Company contained in this Agreement or otherwise made in writing by it or on its
behalf pursuant to this Agreement or otherwise made in connection with the
Merger and the Transactions shall be true
47
and correct in all material respects at and as of the Public Offering Closing
Date with the same force and effect as though made on and as of such date except
those which speak as of a certain date which shall continue to be true and
correct in all material respects as of such date and the Public Offering Closing
Date, each and all of the agreements and conditions to be performed or satisfied
by the Company under this Agreement at or prior to the Public Offering Closing
Date shall have been duly performed or satisfied in all material respects, and
the Company shall have furnished VIALOG with such certificates and other
documents evidencing the truth of such representations, warranties, covenants
and agreements and the performance of such agreements or conditions as VIALOG
shall have reasonably requested,
(f) VIALOG shall have received from its Accountants, a certificate
or letter, dated the 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 set forth in the Registration Statement prepared by the Accountants
as contemplated by Section 6.1(a) 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 or the Company
and its Subsidiaries taken as a whole which is not described in the Registration
Statement,
(g) All actions taken by the Stockholders to approve and adopt
this Agreement, the Merger and the Transactions shall comply in all respects
with and shall be legal, valid, binding, enforceable and effective under the Law
of the jurisdiction of incorporation of the Company, its Organizational
Documents and all Material Agreements to which it or any of its Subsidiaries is
a party or by which it or any of them or any of its or any of their property or
assets is bound,
(h) The Company shall have obtained consents to the assignment and
continuation of all Material Agreements which, in the reasonable judgment of
VIALOG or its counsel, require such consents, including appropriate binders or
consents as to policies of insurance to be assigned to VIALOG or the Surviving
Corporation under this Agreement. The Company shall have obtained satisfaction
and discharge of all Liens set forth in Section 3.15(b) of the Disclosure
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,
48
(i) Between the date of this Agreement and the Public Offering
Closing Date, there shall not have occurred and be continuing any Adverse Change
affecting the Company or the Company and its Subsidiaries taken as a whole from
the condition thereof (financial and other) reflected in the Financial
Statements or in the audited financial statements prepared by the Accountants as
contemplated by Section 6.1(a) or in the most recent financial statements set
forth in the Registration Statement,
(j) The filing and waiting period requirements (if applicable) under
the HSR Act relating to the consummation of the Merger and the Participating
Mergers shall have been complied with,
(k) No Law shall have been enacted or made by or on behalf of any
Authority nor shall any legislation have been introduced and favorably reported
for passage to either House of Congress by any committee, nor shall any Legal
Action by any Authority been commenced or threatened, nor shall any decision,
order or other action of any Authority have been rendered or taken, which in
VIALOG's reasonable judgment, could have any Adverse Effect on the Company or
the Company and its Subsidiaries taken as a whole, or could restrain, prevent or
change the Merger or the Transactions or Adversely Affect the ability of the
Principal Stockholder to perform its obligations under this Agreement, or the
ability of VIALOG to continue to own, operate and conduct the business of the
Surviving Corporation, substantially on the basis heretofore owned, operated and
conducted by the Company and as proposed to be owned, operated and conducted by
the Surviving Corporation,
(l) VIALOG shall have received copies of any environmental audits
the Company has received in respect of all real property owned or leased by the
Company or any of its Subsidiaries. VIALOG, in its sole discretion and at its
sole expense, may engage an independent environmental engineer to perform such
audits and the results thereof shall not be materially inconsistent with the
representations and warranties set forth in Section 3.23,
(m) Each of the directors of the Company and each of its Subsidiaries
and each trustee under each Plan shall have submitted his or her unqualified
written resignation, dated as of the Public Offering Closing Date,
(n) The Principal Stockholder shall have delivered to VIALOG an
agreement, substantially in the form of Exhibit 7.2(n), dated the Public
--------------
Offering Closing Date, releasing the Company and its Subsidiaries from any and
all Claims against them (other than Claims arising from such Principal
Stockholder having acted as a director or officer of the Company or such
Subsidiary as contemplated by Section 6.7),
(o) The Registration Rights Agreement shall have been executed and
delivered by the Stockholders and the Executive Officers and principal
Stockholders of VIALOG.
(p) The Company shall not have suffered any material damage,
destruction or loss (whether or not covered by insurance) or any material
acquisition or taking of property by any Authority, nor shall it have
experienced any material work stoppage,
49
(q) Except for such leases and other Contractual Obligations as
are set forth on Schedule 7.2(q) (or Section 7.2(q) of the Disclosure Schedule,
as the case may be) and are executed, delivered and effective as of the
Effective Time, all Contractual Obligations set forth in Section 3.9 of the
Disclosure Schedule shall have been satisfied and discharged as of the Public
Offering Closing Date,
(r) The representations, warranties, covenants and agreements of
the Principal Stockholder contained in this Agreement or otherwise made in
writing by or on behalf of the Principal Stockholder pursuant to this Agreement
or otherwise made in connection with the Merger and the Transactions shall be
true and correct in all material respects at and as of the Public Offering
Closing Date with the same force and effect as though made on and as of such
date except those which speak as of a certain date which shall continue to be
true and correct in all material respects as of such date and on the Public
Offering Closing Date. Each and all of the agreements and conditions to be
performed or satisfied by the Principal Stockholder under this Agreement at or
prior to the Public Offering Closing Date, including without limitation the
provisions set forth in Section 6.20, shall have been duly performed or
satisfied in all material respects, and the Principal Stockholder shall have
furnished VIALOG with such certificates and other documents evidencing the truth
of such representations, warranties, covenants and agreements and the
performance of such agreements or conditions as VIALOG or its counsel shall have
reasonably requested,
(s) Xxxxxxxx Xxxxxx shall have executed and delivered to VIALOG an
employment and noncompetition agreement, substantially in the form of Exhibit
-------
7.2(s),
------
(t) The individuals listed on Schedule 7.2(t) (or Section 7.2(t) of
the Disclosure Schedule, as the case may be) shall have executed and delivered
to VIALOG an Employment Arrangement substantially in the form of Exhibit 7.2(t)
and reasonably satisfactory to VIALOG and its counsel, and
(u) VIALOG shall have received a letter from its Accountants to the
effect that the Merger and the Transactions, the Participating Mergers and the
transactions contemplated thereby, and the acquisition of stock of any Other
Participating Company by VIALOG and the transactions contemplated thereby
together qualify as a transaction to which Section 351 of the Code applies and
will not result in any taxable income or gain or deductible loss to the Company,
VIALOG or VIALOG Merger 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) VIALOG shall have furnished the Company and the Principal
Stockholder with the favorable opinion dated the Public Offering Closing Date of
Xxxxxx, X'Xxxxxxx, XxXxxxxx & Xxxxxx, LLP, counsel to VIALOG and VIALOG Merger
Subsidiary, which may contain limitations and qualifications as to scope and law
and rely on certifications as to facts of officers of VIALOG and VIALOG Merger
Subsidiary and public officials as are reasonable and
50
customary to opinions delivered in the type of business transactions covered by
this Agreement, addressing the following:
(i) Due organization, valid existence and good standing of
VIALOG and VIALOG Merger Subsidiary,
(ii) Due authorization and valid execution and delivery by,
and enforceability against, VIALOG and VIALOG Merger
Subsidiary of the Agreement except (A) as such
enforceability may be subject to bankruptcy, moratorium,
insolvency, reorganization, arrangement, voidable
preference, fraudulent conveyance and other similar laws
relating to or affecting the rights of creditors and as
the same may be subject to the effect of general
principles of equity and (B) that no opinion need be
expressed as to the enforceability of indemnification
provisions,
(iii) Due authorization, valid issuance, full payment and non-
assessability of and absence of preemptive rights with
respect to the shares of VIALOG Stock to be received by
the Stockholders,
(iv) The Registration Statement has become effective under
the Securities Act, and to such counsel's knowledge, no
stop order suspending its effectiveness has been issued
and no proceedings for that purpose have been instituted
or threatened by the SEC,
(v) The execution and delivery of the Agreement by VIALOG
and VIALOG Merger Subsidiary and all Collateral
Documents executed or required to be executed pursuant
thereto or to consummate the Merger by them do not, and
the performance of the Agreement and all Collateral
Documents executed or required to be executed pursuant
thereto or to consummate the Merger and the consummation
of the Merger by them will not, (A) conflict with or
violate the Organizational Documents of VIALOG or VIALOG
Merger Subsidiary, (B) conflict with or violate any
Applicable Law, or (C) to counsel's knowledge,
constitute a default under, or give to others any right
of termination, amendment, acceleration, increased
payments or cancellation of, or result in the creation
of a Lien on any property or assets of VIALOG or VIALOG
Merger Subsidiary pursuant to, any Material Agreement to
which either is a party or by which either or any
property or asset of either is bound or affected,
(vi) No consents from or filings with any Governmental
Authority (other than filings under the HSR Act, if
applicable, and filings of certificates of merger) are
required for the execution and delivery of the Agreement
by VIALOG and VIALOG Merger Subsidiary
51
and the performance of the Agreement and all Collateral
Documents executed or required to be executed pursuant
thereto or to consummate the Merger and the consummation
of the Merger by them, and
(vii) The required filings with the Delaware Secretary of
State and the Massachusetts Secretary of State shall
have been made, and a Certificate of Merger shall have
been issued by the Massachusetts Secretary of State for
the Merger.
(b) Each of VIALOG and VIALOG Merger Subsidiary shall have complied
in all material respects with its agreements contained in this Agreement, and
the certificates to be furnished to the Company pursuant to this Section shall
be true, correct and complete. All Collateral Documents shall be reasonably
satisfactory in form, scope and substance to the Company and its counsel, and
the Company and its counsel shall have received all information and copies of
all documents, including records of corporate proceedings, which they may
reasonably request in connection therewith, such documents where appropriate to
be certified by proper corporate officers,
(c) The representations, warranties, covenants and agreements of each
of VIALOG and VIALOG Merger Subsidiary contained in this Agreement or otherwise
made in writing by it or on its behalf pursuant to this Agreement or otherwise
made in connection with the Merger and the Transactions shall be true and
correct in all material respects at and as of the Public Offering Closing Date
with the same force and effect as though made on and as of such date except
those which speak as of a certain date which shall continue to be true and
correct in all material respects as of such date and on the Public Offering
Closing Date; each and all of the agreements and conditions to be performed or
satisfied by each of VIALOG and VIALOG Merger Subsidiary under this Agreement at
or prior to the Public Offering Closing Date shall have been duly performed or
satisfied in all material respects; and each of VIALOG and VIALOG Merger
Subsidiary shall have furnished the Company with such certificates and other
documents evidencing the truth of such representations, warranties, covenants
and agreements and the performance of such agreements or conditions as the
Company shall have reasonably requested,
(d) If executed and delivered to VIALOG by the Merger Closing, the
employment agreements contemplated by Section 7.2(s) and for those persons
listed on Schedule 7.2(t) (or Section 7.2(t) of the Disclosure Schedule, as the
case may be) shall have been executed by the Surviving Corporation and delivered
by VIALOG to the indicated person,
(e) The filing and waiting period requirements (if applicable) under
the HSR Act relating to the consummation of the Merger and the Participating
Mergers shall have been complied with,
(f) VIALOG shall have obtained the insurance set forth in Section
6.7(c),
52
(g) No Legal Action or other Claim shall be pending or threatened at
any time prior to or on the Public Offering Closing Date before or by any
Authority or by any other Person seeking to restrain or prohibit, or damages or
other relief in connection with, the execution and delivery of this Agreement or
the consummation of the Merger and the Transactions or which might in the
reasonable judgment of the Company have any Adverse Effect on VIALOG and its
Subsidiaries or the Company and its Subsidiaries taken as a whole or, assuming
consummation of the Merger and the Participating Agreements, VIALOG and its
Subsidiaries taken as a whole,
(h) The Company shall have received a letter from the Accountants to
the effect that the Merger and the Transactions qualify as a transaction to
which Section 351 of the Code applies for federal income tax purposes and the
exchange of the Shares for the Stock Merger Consideration, as contemplated
hereby, will not result in any taxable income or gain or deductible loss to the
common stockholders of the Company in their capacities as such common
stockholders to the extent of the Stock Merger Consideration, and
(i) The by-laws of VIALOG shall have been amended to remove the right
of first refusal contained therein and the Company shall have received
certification to its reasonable satisfaction that the VIALOG Stock to be issued
in the Merger will not be subject to any transfer restrictions or purchase
options under VIALOG's Certificate of Incorporation or by-laws.
ARTICLE
8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to the
-----------
Effective Time, whether before or after approval of this Agreement, the Merger
and the Transactions as follows:
(a) by mutual consent of the Company and VIALOG.
(b) by either VIALOG or the Company,
(i) if any permanent injunction, decree or judgment by any
Authority preventing the consummation of the Merger or
the Public Offering shall have become final and
nonappealable, or if the terminating party determines in
its reasonable discretion that the Merger has become
inadvisable or impracticable by reason of the
institution by any Authority or other Person of material
Legal Action, or
(ii) if the Merger Closing shall not occur on or before the
Termination Date.
(c) by the Company:
53
(i) in the event of a breach of this Agreement by VIALOG or
VIALOG Merger Subsidiary that has not been cured, or if
any representation or warranty of VIALOG or VIALOG
Merger Subsidiary shall have become untrue in any
material respect, in either case such that such breach
or untruth is incapable of being cured by the Effective
Date or will prevent or delay consummation of the Merger
by or beyond the Termination Date, or
(ii) in the event the Public Offering is not a firm
commitment in the manner and upon the terms described in
Section 5.10.
(d) by VIALOG:
(i) if the Merger and the Transactions fail to receive the
approval required by Applicable Law, by vote (or to the
extent permitted by Applicable Law, by consent) of the
Stockholders, or if any Stockholder entitled to vote (or
entitled to appraisal rights) with respect to the Merger
dissents from the Merger and the Transactions,
(ii) if it shall determine in its reasonable discretion that
the Merger or the Transactions has or have become
inadvisable or impracticable by reason of the threat by
any Authority, or any other Person of material Legal
Action or proceedings against either or both of the
Company and VIALOG (or VIALOG Merger Subsidiary, or a
Subsidiary of any of them), it being understood and
agreed that a written request by governmental
authorities for information with respect to the
Transactions, which information could be used in
connection with such Legal Action or proceedings, may be
deemed by VIALOG to be a threat of material Legal Action
or proceedings,
(iii) if arrangements reasonably satisfactory to VIALOG cannot
be made for (A) the assumption by the Surviving
Corporation substantially on the terms and conditions in
effect as of the date of this Agreement, or for the
prepayment without premium, of all outstanding
Indebtedness of the Company for borrowed money, or (B)
the Public Offering,
(iv) if the business, assets, prospects, management,
condition (financial or other) or results of operation
of the Company or the Company and its Subsidiaries taken
as a whole shall have been Adversely Affected, whether
by reason of changes or developments in the economy or
industry generally or operations in the ordinary course
of business or otherwise,
54
(v) if the Company shall not have received, without the
imposition of any burdensome condition or material cost,
all Governmental Authorizations and Private
Authorizations, or if any Authority or other Person
shall withdraw any such Governmental Authorizations or
Private Authorizations,
(vi) if the terms of this Agreement shall not have been
approved by the Underwriter,
(vii) if the Company shall have suffered any material damage,
destruction or loss (whether or not covered by
insurance) or any material acquisition or taking of
property by any Authority, or if it or any of its
Subsidiaries shall have suffered a material work
stoppage, or
(viii) in the event of a material breach of this Agreement by
the Company or the Principal Stockholder that has not
been cured, or if any representation or warranty of the
Company or the Principal Stockholder shall have become
untrue in any material respect, so that such breach or
untruth is incapable of being substantially cured by the
Effective 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.
(e) by VIALOG if (i) the Board of Directors of the Company shall
withdraw, modify or change its recommendation so that it is not in favor of this
Agreement, the Merger or the Transactions, or shall have resolved to do any of
the foregoing (it being agreed and understood that nothing in this clause (i)
obliges the Company to effect the Merger if the conditions set forth in Section
7.1 and Section 7.3 are not satisfied or limits the rights of the Company to
consent to terminate this Agreement pursuant to Section 8.1(a) or to terminate
the Agreement pursuant to Section 8.1(b) or Section 8.1(c)), (ii) the Board of
Directors of the Company shall have recommended or resolved to recommend to the
Stockholders an Other Transaction, (iii) the Company, the Board of Directors of
the Company or the Principal Stockholder shall have taken any action in
contravention of Sections 6.6 or 6.13 or (iv) the Principal Stockholder shall
fail to vote to approve and adopt this Agreement, the Merger and the
Transactions.
8.2 Effect of Termination. Except as provided in Sections 2.2(a), 2.2(d),
---------------------
6.1(b), 6.1(c), 6.9 and 8.5, in the event of the termination of this Agreement
pursuant to Section 8.1, this Agreement shall forthwith become void, there shall
be no liability on the part of any Party, or any of their respective officers or
directors, to the other and all rights and obligations of any Party shall cease;
provided, however, that such termination will not relieve any Party from
liability for the willful breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
55
8.3 Amendment. This Agreement may be amended by the Parties by action taken
---------
by or on behalf of their respective Boards of Directors and by the Principal
Stockholder at any time prior to the Effective Time; provided, however, that,
after approval of this Agreement and the Merger by the Stockholders, no
amendment, which under Applicable Law may not be made without the approval of
the Stockholders, may be made without such approval. This Agreement may not be
amended to impose any additional material obligation on a Party or to burden or
limit a material right of such Party except by an agreement in writing signed by
the Party so affected.
8.4 Waiver. At any time prior to the Effective Time, except to the extent
------
Applicable Law does not permit, either VIALOG or VIALOG Merger Subsidiary and
the Company may (a) extend the time for the performance of any of the
obligations or other acts of the other, subject, however, to the terms and
conditions of Section 8.1, (b) waive any inaccuracies in the representations and
warranties of the other contained in this Agreement or in any document delivered
pursuant to this Agreement and (c) waive compliance by the other with any of the
agreements, covenants or conditions contained in this Agreement. Any such
extension or waiver shall be valid only if set forth in an agreement in writing
signed by the Party or Parties to be bound thereby.
8.5 Fees, Expenses and Other Payments. If this Agreement is terminated,
---------------------------------
then all costs and expenses incurred by the Parties in connection with this
Agreement, the Merger and the Transactions and in connection with compliance
with Applicable Law and Contractual Obligations as a consequence hereof and
thereof, including fees and disbursements of counsel, financial advisors and
accountants, will be borne solely and entirely by the Party which has incurred
such costs and expenses (with respect to such Party, its "Expenses"). VIALOG
acknowledges and agrees that the Company has disclosed that it is obligated and
will become further obligated for Expenses (including fees and expenses of its
counsel, its independent accountants, and its financial advisor) incurred by it
in connection with this Agreement, the Merger and the Transactions. It is
understood and agreed that certain of such Expenses may be paid by the Company
prior to the execution of this Agreement, and VIALOG agrees to refrain from
taking any action which would prevent or delay the payment of reasonable
Expenses by the Company. Any Expenses incurred and not paid will constitute
liabilities of the Company. VIALOG agrees to take all action necessary to cause
the Surviving Corporation to pay promptly any of the foregoing reasonable
Expenses incurred, but not paid, by the Company prior to the Effective Time.
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.
56
ARTICLE
9
FEDERAL SECURITIES ACT AND OTHER
RESTRICTIONS ON VIALOG STOCK
9.1 Shares not Registered. The Principal Stockholder acknowledges that the
---------------------
shares of VIALOG Stock to be delivered to Stockholders pursuant to this
Agreement have not and will not be registered under the Securities Act (except
pursuant to the Registration Rights Agreement) and may not be resold except
pursuant to an effective registration statement under the Securities Act or
pursuant to an exemption from registration. The Principal Stockholder represents
and warrants that the VIALOG Stock to be acquired by the Stockholders pursuant
to this Agreement is being acquired solely for its own account, for investment
purposes only and with no present intention of distributing, selling or
otherwise disposing of it in connection with a distribution.
9.2 Economic Risk; Sophistication. The Principal Stockholder represents and
-----------------------------
warrants that the Principal Stockholder and the other Stockholders are able to
bear the economic risk of an investment in the VIALOG Stock acquired pursuant to
this Agreement and can afford to sustain a total loss on such investment and
have such knowledge and experience in financial and business matters that they
are capable of evaluating the merits and risks of the proposed investment and
therefore have the capacity to protect their own interests in connection with
the acquisition of the VIALOG Stock. The Principal Stockholder acknowledges that
prior to the Merger Closing VIALOG will have furnished a copy of the Prospectus
to the Stockholders and at the Merger Closing the Stockholders will be required
to confirm that VIALOG has responded to due diligence and information requests
made on behalf of the Company similar in extent and scope to the due diligence
requests made to the Company by VIALOG. The Principal Stockholder will at that
time confirm that the Principal Stockholder has had an adequate opportunity to
ask questions and receive answers from the officers of VIALOG (and, in the case
of the other Stockholders, to ask questions and receive answers from the
Principal Stockholder) concerning any and all matters relating to this
Agreement, the Merger, the Transactions, or Other Participating Companies, the
Participating Agreements and the Registration Statement, and have read and
understood the matters described in the copies of the Registration Statement
provided to them including, without limitation, the background and experience of
the officers and directors of VIALOG, the plans for the operations of the
business of VIALOG, the potential dilutive effects of the Public Offering and
future acquisitions and projected uses of the proceeds of the Public Offering.
The Principal Stockholder will confirm at the Merger Closing that the Principal
Stockholder has asked any and all questions in the nature described in the
preceding sentence or otherwise of interest in connection with the exchange of
VIALOG Stock for Shares as provided in this Agreement, and all questions have
been answered to the Principal Stockholder's satisfaction.
9.3 Restrictions on Resale; Legends. The Principal Stockholder agrees, and
-------------------------------
the Company will use commercially reasonable efforts to cause each other
Stockholder to agree, not to offer, sell, assign, exchange, transfer, encumber,
pledge, distribute or otherwise dispose of the VIALOG Stock to be acquired by
them pursuant to this Agreement except after full compliance
57
with all of the applicable provisions of the Securities Act and applicable state
securities Laws, and any attempt by a Stockholder to do so will be treated as
ineffective for all purposes. The certificates of VIALOG Stock issued pursuant
to Section 2.1(a) of this Agreement will bear the following legend substantially
as set forth:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY
APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD,
ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED,
DISTRIBUTED OR OTHERWISE DISPOSED OF WITHOUT (1) REGISTRATION
UNDER THE ACT AND ANY APPLICABLE STATE LAW, OR (2) AN OPINION
(SATISFACTORY TO VIALOG) OF COUNSEL (SATISFACTORY TO VIALOG)
THAT REGISTRATION IS NOT REQUIRED.
ARTICLE
10
INDEMNIFICATION
10.1 Indemnification.
---------------
(a) Except as provided in Section 11.1, the Principal
Stockholder agrees to make whole, indemnify and hold VIALOG, VIALOG Merger
Subsidiary, the Surviving Corporation, the Underwriters and their respective
Affiliates, agents, successors and assigns (collectively, the "VIALOG
Indemnified Parties") harmless as a result of, from or against:
(i) any and all Claims of the VIALOG Indemnified
Parties or other Persons based upon, attributable
to or resulting from any material inaccuracy in
or material breach of any representation or
warranty on the part of any one or more of the
Company or the Stockholders under this Agreement
or any Collateral Document;
(ii) any and all Claims of the VIALOG Indemnified
Parties or other Persons based upon, attributable
to or resulting from the material breach of any
covenant or other agreement on the part of any
one or more of the Company or the Stockholders
under this Agreement or any Collateral Document;
(iii) any and all Claims and/or Taxes incurred by the
VIALOG Indemnified Parties or other Persons with
respect to each tax year in which the Company is
not treated as an S corporation because
distributions made by the Company caused it to
violate the single
58
class of stock rule of IRC Section 1361(b)(1)(D)
and Treasury Regulation 1.1361-1(1); and
(iv) any and all other material Claims of the VIALOG
Indemnified Parties or other Persons incident to
the foregoing or to the enforcement of this
Section.
(b) Except as provided in Section 11.1, VIALOG agrees to make
whole, indemnify and hold the Principal Stockholder (and each Stockholder that
delivers the agreements contemplated by Section 6.4) and their respective
Affiliates, agents, heirs, successors and assigns (collectively, the "Company
Indemnified Parties") harmless as a result of, from or against:
(i) any and all Claims of the Company Indemnified
Parties or other Persons based upon, attributable
to or resulting from any material inaccuracy in
or material breach of any representation or
warranty on the part of VIALOG or VIALOG Merger
Subsidiary under this Agreement or any Collateral
Document;
(ii) any and all Claims of the Company Indemnified
Parties or other Persons based upon, attributable
to or resulting from the material breach of any
covenant or other agreement on the part of VIALOG
or VIALOG Merger Subsidiary; and
(iii) any and all other material Claims of the Company
Indemnified Parties or other Persons incident to
the foregoing or to the enforcement of this
Section.
(c) Except in connection with claims pursuant to Section
10.1(a)(iii), no Principal Stockholder will be required to pay to the VIALOG
Indemnified Parties an aggregate amount in excess of an amount equal to the cash
received by such Stockholder as the cash portion of the Exchange Merger
Consideration pursuant to Sections 2.1(a) and 2.4, cash received by such
Stockholder pursuant to Section 2.1(d) plus, with respect to shares of VIALOG
Stock issued to such Stockholder as the stock portion of the Exchange Merger
Consideration pursuant to Section 2.1(a) and Section 2.4, the Indemnity Value
thereof. VIALOG will not be required to pay any Company Indemnified Party an
aggregate amount in excess of the Indemnity Value of the shares of VIALOG Stock
issued to such Company Indemnified Party plus the amount of cash delivered to
such Company Indemnified Party pursuant to Section 2.1(a), Section 2.1(d) and
Section 2.4. No Claim for indemnification may be commenced beyond the period
applicable to such Claim set forth in Section 11.1.
(d) Notwithstanding the foregoing, no Principal Stockholder
will be required to pay any amount for indemnification to the VIALOG Indemnified
Parties except to the extent that (i) the claim is in connection with 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 Principal
Stockholder exceeds the greater of $100,000 or one quarter of one percent
(.0025%) of the sum of (A) the product of (x) the aggregate number or shares of
VIALOG Stock into which the Shares of the
59
Stockholders will be converted as set forth in Sections 2.1(a) and 2.4 and (y)
the Offering Price, plus (B) the total amount of cash paid to all Stockholders
pursuant to Sections 2.1(a), 2.1(d) and 2.4.
10.2 Procedures Concerning Claims by Third Parties; Payment of
---------------------------------------------------------
Damages; etc.
------------
(a) If any Legal Action is instituted or asserted by any
person other than such indemnified party in respect of which payment may be
sought hereunder, the indemnified party will reasonably and promptly cause
written notice of the assertion of any Legal Action of which it has knowledge
which is covered by the indemnities under Section 10.1 to be forwarded to the
indemnifying party. In such event, the indemnifying party will have the right,
at its sole option and expense, to be represented by counsel of its choice,
which must be reasonably satisfactory to the indemnified party, and to defend
against, negotiate, settle or otherwise deal with any Legal Action which related
to any Claims instituted or asserted by any Person other than such indemnified
party and indemnified against hereunder; provided, however, that no settlement
thereof will be made without the prior written consent of the indemnified party,
which consent will not be unreasonably withheld, conditioned or delayed. If the
indemnifying party elects to defend against, negotiate, settle or otherwise deal
with any Legal Action which related to any such Claims, it will within thirty
(30) days of receipt of said notice (or sooner, if the nature of the Legal
Action so requires) notify in writing the indemnified party of its intent to do
so. If the indemnifying party elects not to defend against, negotiate, settle or
otherwise deal with any Legal Action which relates to any such Claims, fails to
notify the indemnified party of its election as herein provided or contests its
obligation to indemnify the indemnified party for such Claims under this
Agreement, the indemnified party may defend against, negotiate, settle or
otherwise deal with such Legal Action. If the indemnified party defends any
Legal Action, then the indemnifying party will reimburse the indemnified party
for reasonable Claims incurred in defending such Legal Action upon a final
determination that the indemnified party was entitled to indemnity hereunder.
Neither the indemnifying party nor the indemnified party may settle any Legal
Action without the prior written consent of the other party, which consent will
not be unreasonably withheld, conditioned or delayed. If the indemnifying party
will assume the defense of any Legal Action instituted or asserted by any Person
other than an indemnified party, the indemnified party may participate, at such
party's own expense, in the defense of such Legal Action.
(b) After any final judgment or award will have been rendered
by a court, arbitration board (which may be engaged upon the consent of each of
the indemnifying party and the indemnified parties) or administrative agency of
competent jurisdiction and the expiration of the time in which to appeal
therefrom, or a settlement will have been consummated, or the indemnified party
and the indemnifying party will have arrived at a mutually binding agreement
with respect to a Legal Action hereunder, the indemnifying party will pay all of
the sums due and owing to the indemnified party by wire transfer of immediately
available funds, or by delivery of shares of VIALOG Stock, as permitted pursuant
to the definition of Indemnity Value in Article 12, within five business days
after the date of notice of such judgment or award conditioned, however, on the
indemnifying party having been finally determined by the parties' agreement or
60
by final court or arbitration that the indemnifying party is obligated hereunder
to make said payment and subject to the provisions of this Article 10.
(c) The failure of the indemnified party to give reasonably
prompt notice of any Legal Action instituted or asserted by any Person other
than such indemnified party and indemnified against hereunder will not release,
waive or otherwise affect the indemnifying party's obligations with respect
thereto except to the extent that the indemnifying party can demonstrate actual
loss or material prejudice as a result of such failure.
(d) No legal action to enforce a Claim for indemnity will be
stayed or dismissed for failure to join one or more indemnifying parties or to
permit an indemnifying party to cross-claim against another indemnifying party,
nor will the failure to join as indemnifying party be deemed grounds for
preventing a separate or subsequent Legal Action to enforce a Claim for
indemnification against such party, each such Legal Action being deemed a
separate and independent Claim for indemnification. A Legal Action to enforce a
Claim for indemnity may be instituted in the Commonwealth of Massachusetts, or
the jurisdiction to which each Party consents, or any other state having
jurisdiction with respect thereto.
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 and Section 3.21 until
sixty (60) days after the applicable statute of
limitations, as the same may be extended from
time to time, has terminated;
(ii) Section 3.23, until the sixth anniversary date of
this Agreement; and
(iii) all other Sections, until VIALOG (or its
successor) files an annual report pursuant to the
requirements of the Securities Exchange Act of
1934, as amended, as prescribed thereunder on
Form 10-K covering at least two full fiscal years
of operations by VIALOG, but in no event more
than thirty months after the Public Offering
Closing Date (the "Second Annual Filing Date").
61
(b) Except as set forth in Section 8.2, and except for the
representations, warranties, covenants and agreements contained in Article 3,
Article 4 and Article 5, the representations, warranties, covenants and
agreements of each Party will survive and remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any other Party,
any Person controlling any such Party or any of their respective Representatives
whether prior to or after the execution and consummation of this Agreement.
11.2 Notices. All notices and other communications given or made
-------
pursuant to this Agreement will be in writing and will be deemed to have been
duly given or made as of the date delivered or transmitted, and will be
effective upon receipt, if delivered personally, mailed by certified mail
(postage prepaid, return receipt requested) to the Parties at the following
addresses or sent by electronic transmission to the fax number specified below:
(a) If to VIALOG or VIALOG Merger Subsidiary:
VIALOG Corporation
Attention: Xxxxx Xxxxxx, President
00 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxx, X'Xxxxxxx, XxXxxxxx & Xxxxxx, LLP
Attention: Xxxxx X. Xxxxxx, Esq.
0000 Xxxx xx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
(b) If to the Company:
Xxxxxxx Square Teleconferencing, Inc.
Attention: Xxxxxxxx Xxxxxx, President
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX
Fax: 000-000-0000
with a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx, Breed, Hart, Murphy & Xxxxxxx, P.C.
00 Xxxxxx Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxx, XX 00000-0000
Fax: 000-000-0000
62
Any address for notice as herein above provided may be changed by the
party or person for whom the change is made by giving notice of said change in
the manner provided in this Section.
11.3 Headings. The headings contained in this Agreement are for
--------
reference purposes only and will not affect in any way the meaning and
interpretation of this Agreement.
11.4 Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the Transactions is not affected in any manner Adverse to any Party. Upon such
determination that any term or other provisions is invalid, illegal or incapable
of being enforced, the Parties will negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible to the fullest extent permitted by Applicable Law in an acceptable
manner to the end that the Transactions are fulfilled to the extent possible.
11.5 Entire Agreement. This Agreement (together with the Disclosure
----------------
Schedule, the Confidentiality Agreement and the other Collateral Documents
delivered in connection herewith), constitutes the entire agreement of the
Parties and supersedes all prior agreements (other than the Confidentiality
Agreement) and undertakings, both written and oral, between the Parties, or any
of them, with respect to the subject matter hereof.
11.6 Assignment. This Agreement may not be assigned by operation of
----------
law or otherwise and any purported assignment will be null and void, provided
that VIALOG may cause a wholly owned Subsidiary of VIALOG or Holding Company to
be substituted for VIALOG or VIALOG Merger Subsidiary as the party to the Merger
and may, in addition, assign the other rights, but not its obligations,
including, without limitation, its obligation for payment of the Aggregate
Merger Consideration, under this Agreement to such Subsidiary or Holding
Company.
11.7 Parties in Interest. This Agreement will be binding upon and
-------------------
inure solely to the benefit of each Party, and nothing in this Agreement,
express or implied (other than the provisions of Section 6.7, which provisions
are intended to benefit and may be enforced by the beneficiaries thereof), is
intended to or will confer upon any Person any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
11.8 Governing Law. Except to the extent that Delaware Law may be
-------------
applicable to the Merger, this Agreement will be governed by, and construed in
accordance with, the substantive laws of the Commonwealth of Massachusetts
governing contracts made and to be performed in such jurisdiction, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
11.9 Enforcement of the Agreement. Each Party recognizes and agrees
----------------------------
that each other Party's remedy at law for any breach of the provisions of this
Agreement would be inadequate and agrees that for breach of such provisions,
such Party will, in addition to such other remedies
63
as may be available to it at law or in equity or as provided in this Agreement,
be entitled to injunctive relief and to enforce its rights by an action for
specific performance to the extent permitted by Applicable Law. Each party
hereby waives any requirement for security or the posting of any bond or other
surety in connection with any temporary or permanent award of injunctive,
mandatory or other equitable relief. Nothing herein contained will be construed
as prohibiting a Party from pursuing any other remedies available to such Party
for any breach or threatened breach hereof or failure to take or refrain from
any action as required hereunder to consummate the Merger and carry out the
Transactions.
11.10 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different Parties hereto in separate counterparts, each
of which when executed will be deemed to be an original but all of which taken
together will constitute one and the same agreement.
11.11 Disclosure Supplements. From time to time prior to the Public
----------------------
Offering Closing Date, the Company will promptly supplement or amend the
Disclosure Schedule delivered in connection with this Agreement, with respect to
any matter which, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in such Disclosure
Schedule or which is necessary to correct any information in such Disclosure
Schedule which has been rendered inaccurate thereby; provided, however, that no
supplement or amendment to the Disclosure Schedule that constitutes or reflects
a Material Adverse Change to the Company may be made without the prior written
consent of VIALOG.
ARTICLE
12
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) have the following
respective meanings. Terms defined in the singular will have a comparable
meaning when used in the plural, and vice versa, and the reference to any gender
will be deemed to include all genders. Any reference to any statutory or
regulatory provision will be deemed to be a reference to any successor statutory
or regulatory provision. Unless otherwise defined or the context otherwise
clearly requires, terms for which meanings are provided in this Agreement will
have such meanings when used in the Disclosure Schedule and each Collateral
Document, notice, certificate, communication, opinion, or other document
executed or required to be executed pursuant hereto or thereto or otherwise
delivered, from time to time, pursuant hereto or thereto.
Accountants means KPMG Peat Marwick, LLP.
Adverse, Adversely, when used alone or in conjunction with other terms
(including without limitation "Affect," "Change" and "Effect") means, with
respect to the Company or any of its Subsidiaries, VIALOG or VIALOG Merger
Subsidiary, as the case may be, any Event
64
which could reasonably be expected to (a) adversely affect the validity or
enforceability of this Agreement or any Collateral Document executed or required
to be executed pursuant hereto or thereto, or (b) adversely affect the business,
operations, management, properties or the condition, (financial or other), or
results of operation of the Company or the Company and its Subsidiaries taken as
a whole, VIALOG or VIALOG Merger Subsidiary, as the case may be, or (c) impair
the Company's, VIALOG's or VIALOG Merger Subsidiary's ability to fulfill its
obligations under the terms of this Agreement or any Collateral Document
executed or required to be executed pursuant hereto or thereto, or (d) adversely
affect the aggregate rights and remedies of VIALOG or the Company under this
Agreement or any Collateral Document executed or required to be executed
pursuant hereto or thereto, in all cases, unless otherwise specifically set
forth, in a material respect or manner or to a material degree.
Affiliate or Affiliated means, with respect to any Person, (a) any
other Person at the time directly or indirectly controlling, controlled by or
under direct or indirect common control with such Person, (b) any other Person
of which such Person at the time owns, or has the right to acquire, directly or
indirectly, twenty percent (20%) or more of any class of the capital stock or
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, twenty percent (20%) or more of any
class of the capital stock or beneficial interest of such Person, (d) any
executive officer or director of such Person, (e) with respect to any
partnership, joint venture or similar Entity, any general partner thereof, and
(f) when used with respect to an individual, will include any member of such
individual's immediate family or a family trust.
Aggregate Equity means such number of shares of Company Stock as shall
equal the aggregate of (a) the Shares, and (b) all shares of Company Stock
otherwise issuable based upon the affirmative election to exercise or convert
outstanding Option Securities and/or Convertible Securities pursuant to Section
2.4.
Aggregate Merger Consideration will have the meaning given to it in
Section 2.1(a).
Aggregate Cash Merger Consideration will have the meaning given to it
in Section 2.1(a).
Aggregate Stock Merger Consideration will have the meaning given to it
in Section 2.1(a).
Agreement means this Agreement as originally in effect, including
unless the context otherwise specifically requires, all schedules, including the
Disclosure Schedule and exhibits to this Agreement, and as the same may from
time to time be supplemented, amended, modified or restated in the manner herein
or therein provided.
Applicable Law means any Law of any Authority, whether domestic or
foreign, including without limitation all federal and state securities laws and
Environmental Laws, to or by which a Person or to any of its business or
operations is subject or any of its property or assets is bound.
65
Authority means any governmental or quasi-governmental authority,
whether administrative, executive, judicial, legislative or other, or any
combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, authority, board, body, branch, bureau,
central bank or comparable agency or Entity, commission, corporation, court,
department, instrumentality, master, mediator, panel, referee, system or other
political unit or subdivision or other Entity of any of the foregoing, whether
domestic or foreign.
BCA will have the meaning given to it in the Preamble.
Benefit Arrangement means any material benefit arrangement that is not
a Plan, including (a) any employment or consulting agreement, (b) any
arrangement providing for insurance coverage or workers' compensation benefits,
(c) any incentive bonus or deferred bonus arrangement, (d) any arrangement
providing termination allowance, severance or similar benefits, (e) any equity
compensation plan, (f) any deferred compensation plan, and (g) any compensation
policy and practice.
Cash Merger Consideration will have the meaning given to it in Section
2.1(a).
Certificate will have the meaning given to it in Section 2.1(a).
Claims means any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and nature
relating thereto, and all reasonable fees, costs, expenses and disbursements
(including without limitation attorneys' fees, costs and expenses) relating to
any of the foregoing.
COBRA means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, as set forth in Section 4980B of the Code and Part 6 of Title I of
ERISA.
Code will have the meaning given to it in the Preamble.
Collateral Document means any agreement, instrument, certificate,
opinion, memorandum, schedule or other document delivered by a Party or a
Stockholder pursuant to this Agreement or in connection with the Merger and the
Transactions. For purposes of the representations, warranties, covenants and
agreements of the Company and the Principal Stockholder, on the one hand, or
VIALOG and VIALOG Merger Subsidiary on the other, under this Agreement and with
respect to opinions to be delivered pursuant to this Agreement, except to the
extent of a Party's actual knowledge, the Company and the Principal Stockholder
or VIALOG and VIALOG Merger Subsidiary, as the case may be, assume no
responsibility for the authority of or genuineness of signatures relating to the
others as counterparts or their representations, warranties, covenants and
agreements.
Company will have the meaning given to it in the Preamble.
66
Company Indemnified Parties will have the meaning given to it in
Section 10.1(b).
The Company's knowledge (including the term "to the knowledge of the
Company") means the knowledge, information or belief of any Company director,
executive officer or the Principal Stockholder; and that such director,
executive officer or Principal Stockholder, after reasonable investigation, will
have reason to believe and will believe that the subject representation or
warranty is true and accurate as stated.
Company Stock will have the meaning given to it in Section 2.1(a).
Confidentiality Letter will have the meaning given to it in Section
6.1(c).
Contract or Contractual Obligation means any term, condition,
provision, representation, warranty, agreement, covenant, undertaking,
commitment, indemnity or other obligation set forth in the Organizational
Documents of the obligee or which is outstanding or existing under any
instrument, contract, lease or other contractual undertaking (including without
limitation any instrument relating to or evidencing any Indebtedness) to which
the obligee is a party or by which it or any of its business is subject or
property or assets is bound.
Control (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, or the disposition of such Person's assets or properties,
whether through the ownership of stock, equity or other ownership, by contract,
arrangement or understanding, or as trustee or executor, by contract or credit
arrangement or otherwise.
Convertible Securities means any evidences of indebtedness, shares of
capital stock (other than common stock) or other securities directly or
indirectly convertible into or exchangeable for Shares, whether or not the right
to convert or exchange thereunder is immediately exercisable or is conditioned
upon the passage of time, the occurrence or non-occurrence or existence or
non-existence of some other Event, or both.
DBCL will have the meaning given to it in the Preamble.
Disclosure Schedule means the disclosure schedules dated as of the date
of this Agreement delivered by the Company to VIALOG and VIALOG to the Company.
Distribution means, with respect to the Company or any of its
Subsidiaries: (a) the declaration or payment of any dividend (except dividends
payable in common stock of the Company) on or in respect of any shares of any
class of capital stock of the Company or any shares of capital stock of any
Subsidiary owned by a Person other than the Company or a Subsidiary, (b) the
purchase, redemption or other retirement of any shares of any class of capital
stock of the Company or any shares of capital stock of any Subsidiary owned by a
Person other than the Company or a Subsidiary, and (c) any other distribution on
or in respect of any shares of
67
any class of capital stock of the Company or any shares of capital stock of any
Subsidiary owned by a Person other than the Company or a Subsidiary.
Effective Date means the effective date of the Registration Statement
and commencement of the Public Offering as authorized by the SEC.
Effective Time will have the meaning given to it in Section 1.4.
Employment Arrangement means, with respect to any Person, any
employment, consulting, retainer, severance or similar contract, agreement,
plan, arrangement or policy (exclusive of any which is terminable within thirty
(30) days without liability, penalty or payment of any kind by such Person or
any Affiliate), or providing for severance, termination payments, insurance
coverage (including any self-insured arrangements), workers compensation,
disability benefits, life, health, medical dental or hospitalization benefits,
supplemental unemployment benefits, vacation or sick leave benefits, pension or
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock purchase or appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or benefits, or any
collective bargaining or other labor agreement, whether or not any of the
foregoing is subject to the provisions of ERISA.
Encumber means to suffer, accept, agree to or permit the imposition of
a Lien.
Entity means any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual, business
trust, joint stock company, joint venture or other organization, entity or
business, whether acting in an individual, fiduciary or other capacity, or any
Authority.
Environmental Laws means any Law relating to or otherwise imposing
liability or standards of conduct concerning pollution or protection of the
environment or occupational health and safety, including without limitation Laws
relating to emissions, discharges, releases or threatened releases of Hazardous
Materials or other pollutants, contaminants, chemicals, noises, odors or
industrial, toxic or hazardous substances, materials or wastes, whether as
matter or energy, into the environment (including, without limitation, ambient
air, surface water, ground water, mining or reclamation or mined land, land
surface or subsurface strata) or otherwise relating to the manufacture,
processing, generation, distribution, use, treatment, storage, disposal,
cleanup, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances, materials or wastes. Environmental
Laws include the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. Section 9601 et seq.), the Hazardous Material
-- ---
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
-- ---
and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), the Federal Water
-- ---
Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42
-- ---
U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
-- ---
Section 2601 et seq.), the Occupational Safety and Health Act of 1970 (29 U.S.C.
-- ---
Section 651 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7
-- ---
U.S.C. Section 136 et seq.), and the Surface Mining Control and Reclamation Act
-- ---
of 1977 (30 U.S.C. Section 1201 et seq.), and any
-- ---
68
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 Agent will have the meaning given to it in Section 2.2(a).
Exchange Fund will have the meaning given to it in Section 2.2(a).
Exchange Merger Consideration will have the meaning given to it in
Section 2.1(a).
Expenses will have the meaning set forth in Section 8.5.
69
Final Determination (a) means with respect to federal Taxes, a
"determination" as defined in Section 1313(a) of the Code or execution of an IRS
Form 870AD and, with respect to Taxes other than federal Taxes, any final
determination of liability in respect of a Tax which, under Applicable Law, is
not subject to further appeal, review or modification through proceedings or
otherwise, including without limitation the expiration of a statute of
limitations or a period for the filing of claims for refunds, amended returns or
appeals from adverse determinations; and (b) will include the payment of Tax by
the Company or whichever Party is responsible for payment of such Tax under
Applicable Law, with respect to any item disallowed or adjusted by a Taxing
Authority, provided that the other party is notified of such payment and the
party that is responsible for such Tax under this Agreement determines that no
action should be taken to recoup such payment from such Taxing Authority.
Financial Statements will have the meaning given to it in Section
3.2(a).
GAAP means generally accepted accounting principles as in effect from
time to time in the United States of America.
Governmental Authorizations means all approvals, concessions, consents,
franchises, licenses, permits, plans, registrations and other authorizations of
each applicable Authority.
Governmental Filings means all filings, including franchise and similar
Tax filings, and the payment of all fees, assessments, interest and penalties
associated with such filings, with each applicable Authority.
Guaranty or Guaranteed means any agreement, undertaking or arrangement
by which the Company or any of its Subsidiaries, VIALOG or VIALOG Merger
Subsidiary, as the case may be, guarantees, endorses or otherwise becomes or is
liable, directly or indirectly, upon any Indebtedness of any other Person
including without limitation the payment of amounts drawn down by beneficiaries
of letters of credit (other than by endorsements of negotiable instruments for
deposit or collection in the ordinary course of business). The amount of the
obligor's obligation under any Guaranty will be deemed to be the outstanding
amount (or maximum permitted amount, if larger) of the Indebtedness directly or
indirectly guaranteed thereby (subject to any limitation set forth therein).
Hazardous Materials means any substance (in whatever state or matter):
(a) the presence of which requires investigation or remediation under any
Environmental Law; (b) that is defined as a "hazardous waste", "hazardous
material" or "hazardous substance" under any Environmental Law; (c) that is
toxic, explosive, corrosive, pollutive, contaminating, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated by
any Authority; (d) that contains or consists of petroleum or petroleum products,
or (e) that contains or consists of PCBs, asbestos, or urea formaldehyde foam
insulation.
Holding Company means a corporation established by or on behalf of
VIALOG into which VIALOG merges or assigns its rights and obligations hereunder
if the Accountants so
70
advise for purpose of a tax free incorporation of all parties provided the
relative ownership rights of all parties remain the same.
HSR Act means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976,
and the rules and regulations thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision will be deemed to be a reference to any successor statutory
or regulatory provision.
Indebtedness means, with respect to the Company or any of its
Subsidiaries or VIALOG or VIALOG Merger Subsidiary, as the case may be, (a) all
items, except items of capital stock or of surplus or of general contingency or
deferred tax reserves or any minority interest in any Subsidiary to the extent
such interest is treated as a liability with indeterminate term on the
consolidated balance sheet of the Company or VIALOG, which in accordance with
GAAP would be included in determining total liabilities as shown on the
liability side of a balance sheet of the Company or such Subsidiary or VIALOG or
VIALOG Merger Subsidiary, (b) all obligations secured by any Lien to which any
property or asset owned or held by the Company or any Subsidiary or VIALOG or
any VIALOG Merger Subsidiary is subject, whether or not the obligation secured
thereby will have been assumed, and (c) to the extent not otherwise included,
all Contractual Obligations of the Company or any Subsidiary or VIALOG or any
VIALOG Merger Subsidiary constituting capitalized leases and all obligations of
the Company or any Subsidiary or VIALOG or any VIALOG Merger Subsidiary with
respect to Leases constituting part of a sale and leaseback arrangement.
Indemnity Value means with respect to each share of VIALOG Stock issued
to a Stockholder pursuant to the Merger, the Offering Price. In satisfaction of
a Claim under this Agreement for which a stockholder is liable to VIALOG, until
the Second Annual Filing Date, and in lieu of all cash, such Stockholder may
tender shares of VIALOG Stock valued at the Offering Price and cash in a ratio
not exceeding fifty-one (51) to forty-nine (49), for all payments by such
Stockholder, and after the Second Annual Filing Date, cash and shares of VIALOG
Stock in such proportion as such Stockholder determines.
Intangible Assets means all assets and property lacking physical
properties the evidence of ownership of which must customarily be maintained by
independent registration, documentation, certification, recordation or other
means.
Law means any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation, judgment, order, ordinance,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, or 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.
71
Lease means any lease of property, whether real, personal or mixed, and
all amendments thereto.
Legal Action means any litigation or legal or other actions,
arbitrations, counterclaims, investigations, proceedings, requests for material
information by or pursuant to the order of any Authority, or suits, at law or in
arbitration, equity or admiralty commenced by any Person, whether or not
purported to be brought on behalf of a party hereto affecting such party or any
of such party's business, property or assets.
Lien means any of the following: mortgage, lien (statutory or other);
preference, priority or other security agreement, arrangement or interest;
hypothecation, pledge or other deposit arrangement; assignment; charge; levy;
executory seizure; attachment; garnishment; encumbrance (including any easement,
exception, variance, reservation or limitation, right of way, zoning
restriction, building to use restriction, and the like); conditional sale, title
retention or other similar agreement, arrangement, device or restriction;
preemptive or similar right; any financing lease involving substantially the
same economic effect as any of the foregoing; the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction; restriction on sale, transfer, assignment, disposition or other
alienation; or any option, equity, claim or right of or obligation to, any other
Person, of whatever kind and character.
Margin Rules means Regulations G, T, U or X of the Board of Governors
of the Federal Reserve System, 12 C.F.R., parts 207, 220, 221 and 224, as now in
effect.
Material or Materiality for the purposes of this Agreement, will,
unless specifically stated to the contrary, be determined without regard to the
fact that various provisions of this Agreement set forth specific dollar
amounts.
Material Agreement or Material Commitment means, with respect to the
Company or any of its Subsidiaries, or VIALOG or VIALOG Merger Subsidiary any
Contractual Obligation which (a) was not entered into in the ordinary course of
business, (b) was entered into in the ordinary course of business which (i)
involves the purchase, sale or lease of goods or materials or performance of
services aggregating more than Twenty-Five Thousand Dollars ($25,000), (ii)
extends for more than three (3) months, or (iii) is not terminable on thirty
(30) days or less notice without penalty or other payment, (c) involves
Indebtedness for money borrowed in excess of One Hundred Thousand Dollars
($100,000), (d) is or otherwise constitutes a written agency, dealer, license,
distributorship, sales representative or similar written agreement, or (e) would
account for more than five percent (5%) of purchases or sales made by the
Company and its Subsidiaries for the year ended December 31, 1996.
Merger will have the meaning given to it in the Preamble.
Merger Closing will have the meaning given to it in Section 1.3.
Merger Consideration will have the meaning given to it in Section
2.1(a).
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Multiemployer Plan means a "multiemployer plan" within the meaning of
Section 4001(a)3 of ERISA.
Net Shares will have the meaning given to it in Section 2.2(a).
Offering Price means $11.50 per share of VIALOG Stock.
Option Securities means all rights, options and warrants, all calls or
commitments evidencing the right, to subscribe for, purchase or otherwise
acquire Shares or Convertible Securities, whether or not the right to subscribe
for, purchase or otherwise acquire is immediately exercisable or is conditioned
upon the passage of time, the occurrence or non-occurrence or the existence or
non-existence of some other Event.
Organizational Documents means, with respect to a Person which is a
corporation, its charter, its by-laws, and all stockholder agreements, voting
trusts and similar arrangements applicable to any of its capital stock, and,
with respect to a Person which is a partnership, its agreement and certificate
of partnership, any agreement among partners, and any management and similar
agreements between the partnership and any general partners (or any Affiliate
thereof).
Other Participating Companies mean those companies or entities engaged
in the teleconferencing business who execute agreements and plans of
reorganization, stock purchase agreements or asset purchase agreements with
VIALOG which agreements close contemporaneously with this Agreement.
Other Transaction means a transaction or series of related transactions
(other than the Merger) resulting in (a) any change in control of the Company,
(b) any merger or consolidation of the Company or any of its Subsidiaries,
regardless of whether the Company or such Subsidiary is the surviving Entity,
(c) any tender offer or exchange offer for, or any acquisition of, any
securities of the Company, or (d) any sale or other disposition of assets of the
Company of any Subsidiary not otherwise permitted under Section 3.18.
Participating Agreement will have the meaning given to it in the
Preamble.
Participating Companies will mean the Company and the Other
Participating Companies.
Participating Mergers means the mergers of each of the Other
Participating Companies with a Subsidiary of VIALOG pursuant to a Participating
Agreement.
Participating Stockholders means the Persons receiving VIALOG Stock
pursuant to the Participating Mergers.
Party means any natural individual or any Entity that has executed this
Agreement.
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PBGC means the Pension Benefit Guaranty Corporation and any Entity
succeeding to any or all of its functions under ERISA.
Person means any natural individual or any Entity.
Plan means any "employee benefit plan" as defined in Section 3(3) of
ERISA (whether or not terminated) which is (or was in the case of a frozen or
terminated plan) maintained by the Company or any Subsidiary or VIALOG or VIALOG
Merger Subsidiary, and with respect to which the Company, such Subsidiary or
VIALOG or VIALOG Merger Subsidiary or, in the case of any such plan subject to
Title IV of ERISA, an ERISA Affiliate is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA, other than a Multiemployer Plan.
Principal Stockholder will have the meaning given to it in the
Preamble.
Private Authorizations means all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than each Authority) including without limitation those with respect to patents,
trademarks, service marks, trade names, copyrights, computer software programs,
technology and know-how.
Prospectus means the form of 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 Rights Agreement will have the meaning given to it in
Section 6.4.
Registration Statement means the registration statement (including the
Prospectus, exhibits, financial statements and schedules included therein), and
all amendments thereof (including post-effective amendments and any registration
statement filed under Rule 462(b) 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 and other representatives
of such Party.
SEC means the Securities and Exchange Commission of the United States
or any successor Authority.
Second Annual Filing Date will have the meaning given to it in Section
11.1(a)(iii).
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Securities Act means the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as from time to time in effect, or
any successor law, rules or regulations.
Shares will have the meaning given to it in Section 2.1(a).
Special Meeting will have the meaning given to it in Section 1.2(a).
Stock Merger Consideration will have the meaning given to it in Section
2.1(a).
Stockholders means the Principal Stockholder and all other Persons
entitled to Merger Consideration (or who would be entitled thereto but for their
dissent from the Merger) pursuant to Sections 2.1(a) or (to the extent Persons
holding Option Securities or Convertible Securities exercise their rights to
acquire Shares prior to the Effective Time, from and after the time they acquire
such Shares) Section 2.4.
Subsidiary means, with respect to a Person, any Entity a majority of
the capital stock ordinarily entitled to vote for the election of directors of
which, or if no such voting stock is outstanding, a majority of the equity
interests of which, is owned directly or indirectly, legally or beneficially, by
such Person or any other Person controlled by such Person.
Surviving Corporation will have the meaning given to it in Section 1.1.
Tax (and "Taxable", which means subject to Tax), means with respect to
the Company or any of its Subsidiaries or VIALOG or any VIALOG Merger
Subsidiary, (a) all taxes (domestic or foreign), including without limitation
any income (net, gross or other including recapture of any tax items such as
investment tax credits), alternative or add-on minimum tax, gross income, gross
receipts, gains, sales, use, leasing, lease, user, ad valorem, transfer,
recording, franchise, profits, property (real or personal, tangible or
intangible), fuel, license, withholding on amounts paid to or by the Company or
any of its Subsidiaries, or VIALOG or any VIALOG Merger Subsidiary, payroll,
employment, unemployment, social security, excise severance, stamp, occupation,
premium, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, levies, assessments, charges, penalties, addition to
tax or additional amount imposed by any Taxing Authority, (b) any joint or
several liability of the Company or any of its Subsidiaries or VIALOG or any
VIALOG Merger Subsidiary with any other Person for the payment of any amounts of
the type described in (a), and (c) any liability of the Company or any of its
Subsidiaries or VIALOG or any VIALOG Merger Subsidiary for the payment of any
amounts of the type described in (a) as a result of any express or implied
obligation to indemnify any other Person.
Tax Claim means any Claim which relates to Taxes, including without
limitation the representations and warranties set forth in Section 3.11.
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Tax Return or Returns means all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
Taxing Authority means any Authority responsible for the imposition of
any Tax.
Termination Date means (a) March 15, 1997 unless on or prior to that
date the Registration Statement is filed, in which case such date will
automatically be extended to June 30, 1997, or (b) such date after March 15,
1997 as to which the parties agree.
Transactions means the other transactions contemplated by this
Agreement or the Merger or by any Collateral Document executed or required to be
executed in connection herewith or therewith, but will not include the
Participating Mergers, the registration of sale of VIALOG Stock pursuant to the
Registration Statement or any credit facilities between VIALOG and any bank
described in the Registration Statement.
Transmittal Documents will have the meaning given to it in Section
2.2(b).
Underwriter means any two of Xxxxx Xxxxxx Inc., Xxxxxxx Xxxxxxxx Inc,
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation or comparable firm as lead
underwriters and any other Person who executes the Underwriting Agreement as an
underwriter of VIALOG Stock in the Public Offering.
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.
VIALOG will have the meaning given to it in the Preamble.
VIALOG Indemnified Parties will have the meaning given to it in Section
10.1(a).
VIALOG Merger Subsidiary will have the meaning given to it in the
Preamble.
VIALOG Stock will have the meaning given to it in the Preamble.
[This space is intentionally left blank.]
76
IN WITNESS WHEREOF, VIALOG, VIALOG Merger Subsidiary, the Company and
the Principal Stockholder have caused this Agreement to be executed as of the
date first written above by their respective officers thereunto duly authorized.
VIALOG CORPORATION
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
KST ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
XXXXXXX SQUARE
TELECONFERENCING, INC.
By: /s/ Xxxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: President
PRINCIPAL STOCKHOLDER:
/s/ Xxxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxxx Xxxxxx
/s/ Xxxx Xxxxxxxxxx
---------------------------------------
Name: Xxxx Xxxxxxxxxx
/s/ Xxxx Xxxxxxx
---------------------------------------
Name: Xxxx Xxxxxxx
/s/ Xxxxxx Grader
---------------------------------------
Name: Xxxxxx Grader
77
THE FOLLOWING IS A SUMMARY OF INFORMATION PROVIDED
IN THE DISCLOSURE SCHEDULE OF THE AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION. THE REGISTRANT AGREES
TO FURNISH SUPPLEMENTALY A COPY OF ANY OMITTED SCHEDULE
TO THE COMMISSION UPON REQUEST.
------------------------------
Section 3.1(a)
. Jurisdiction of Incorporation of the Company.
. Jurisdictions where qualified to do business.
Section 3.1(c)
. Exceptions to No Breach or Default, Etc., upon execution and delivery of
the Agreement or any Collateral Document.
. Exceptions to No Lien created or imposed upon execution and delivery of
the Agreement or any Collateral Document.
. Exceptions to No Governmental Authorization or Governmental Filing
Required upon execution and delivery of the Agreement or any Collateral
Document.
Section 3.1(d)
. Subsidiaries of the Company, and Jurisdictions of incorporation and
where qualified to do business.
. Capital Stock of any Subsidiary.
. Exceptions to Company's ownership of all Stock of any Subsidiary.
Section 3.2(a)
. Financial Statements of the Company and any Subsidiary, prepared in
accordance with GAAP.
Section 3.2(c)
. The Company's ownership of other Entities.
Section 3.3
. Changes and condition of the Company and any Subsidiary, since the date
of the most recent financial statements.
Section 3.4
. Exceptions to liabilities of the Company or any Subsidiary.
. Any obligations or liabilities, past, present or deferred, or accrued or
unaccrued, fixed, absolute, contingent or other, except as disclosed in
the balance sheet of the Financial Statements, or notes thereto, and any
obligations or liabilities, other than obligations and liabilities
incurred in the ordinary course of business consistent with past
practice of the Company and any Subsidiary, which will adversely affect
the Company or any of the Company's Subsidiaries.
. Guarantees or Primary or Secondary Liabilities of the Company or any
Subsidiary (except as disclosed in Financial Statements).
Section 3.5(a)
. Exceptions to No Liens with respect to all real property owned or
leased, and to all other assets, tangible and intangible.
. Financing Statements evidencing any Liens.
. Impairments to valid leasehold interests.
Section 3.5(b)
. Real estate owned or leased, and property leased by the Company and any
Subsidiary.
. Material Fixed Assets.
. Title Retention Agreements.
Section 3.5(c)
. Exceptions to compliance with title covenants and conditions and
environmental laws.
. Hazardous Materials used or stored by the Company or any Subsidiary.
Section 3.6
. Private Authorizations material to the Company or any Subsidiary.
Section 3.7(a)
. Legal actions pending, finally adjudicated or settled on or before
December 31, 1995.
Section 3.7(b)
. Breaches, violations or defaults under Governmental Authorizations or
any Applicable Law or under any requirement of any insurance carrier.
2
Section 3.8(a)
. Governmental Authorizations and Intangible Assets upon which the conduct
of business by the Company or any Subsidiary is dependent.
Section 3.8(b)
. Description of Intangible Assets and Governmental Authorizations.
Section 3.9
. Contractual obligations or transactions between the Company or any of
its Subsidiaries and any of its officers, directors, employees,
stockholders, or any Affiliate of any thereof (other than reasonable
compensation for services or out-of-pocket expenses reasonably incurred
in support of the Company's business).
Section 3.10(a)
. Insurance Policies maintained by the Company or any Subsidiary.
. Insurance Carriers which have refused the Company or any Subsidiary
insurance within the past five years.
Section 3.11(a)
. Exceptions to taxation as a Subchapter C corporation.
. Membership in a consolidated group for tax purposes.
Section 3.11(d)
. Tax audits of the Company or any Subsidiary by the IRS or any
notifications thereof.
Section 3.11(e)
. Tax Sharing Agreement or Arrangement of the Company or any Subsidiary.
Section 3.11(f)
. Consents concerning collapsible corporations under Section 341(f) of the
Code.
. Ownership changes within the meaning of Section 382(g) of the Code.
Section 3.12(a)
. ERISA plans, including, inter alia, exceptions to compliance to
----- ----
applicable laws, notices from any authority questioning compliance,
deficiencies, "prohibited transactions", any amounts of
3
liability, termination proceedings, annual reports, or any membership in
or contributions to multi-employer plans.
Section 3.12(c)
. Basis of funding and current status of any past service liability with
respect to each Employment Arrangement.
Section 3.15(a)
. Authorized and outstanding Capital Stock of the Company.
. Agreements by the Company or any Subsidiary to grant or issue any shares
of its Capital Stock or any Option Security or Convertible Security.
. Any agreement, put or commitment pursuant to which the Company or any
Subsidiary is obligated to purchase, redeem or otherwise acquire any
shares of Capital Stock or any Option Security or Convertible Security.
Section 3.15(b)
. Stockholders.
. Stock not held free and clear of all Liens.
. Persons or groups of persons owning as much as 5% of the Company's
outstanding Common Stock.
Section 3.16(a)
. Employment Arrangements of the Company or any Subsidiary.
. Collective bargaining agreements or pending grievances or labor
disputes.
Section 3.16(b)
. Accelerated payments or benefits, including parachute payments, that
will be received as a result of the transactions contemplated by this
Agreement.
Section 3.16(c)
. Any unfavorable relationships with employees of the Company or any
Subsidiary.
Section 3.17(a)
. Material Agreements relating to the ownership or operation of the
business and property of the Company or any Subsidiary presently held or
used by the Company or any Subsidiary, or to
4
which the Company or any Subsidiary is a party, or to which it or any of
its property is subject or bound.
Section 3.17(b)
. Exceptions to satisfaction or performance of Material Agreements by the
Company or any Subsidiary.
Section 3.18(a)
. Exceptions to operation of business in the ordinary course.
Section 3.18(b)
. Distributions from end of most recent fiscal year to the date of this
Agreement.
Section 3.19
. Banks, trust companies, savings and loan associations and brokerage
firms in which the Company or any Subsidiary has an account or safe
deposit box, and the names of all persons with access thereto.
Section 3.20
. Adverse restrictions which impairs the Company or any Subsidiary's
ability to conduct its business or which could have any adverse effect
on the Company or any Subsidiary.
Section 3.22
. Personal injury, warranty claims, etc., pending or threatened.
Section 3.23(a)
. Environmental matters - compliance and Governmental Authorizations and
Private Authorizations.
Section 3.23(b)
. Any actual or expected spill, disposal, release, burial or placement of
Hazardous Materials in the soil, air or water on any property or
facility owned, leased, operated or occupied by the Company or any
Subsidiary.
. Notices or Liens arising under Environmental Law.
Section 3.23(c)
. Above or underground tanks for the storage of Hazardous Materials.
5
Section 3.23(e)
. Hazardous Materials used in the conduct of business of the Company or
any Subsidiary.
. Description and annual volume of Hazardous Materials used.
. Years during which use occurred.
. Persons to whom such Hazardous Materials were transferred and/or
transported.
Section 3.23(f)
. Hazardous Materials generated.
. Annual volume.
. Persons to whom such Hazardous Materials were transferred and/or
transported.
Section 3.23(g)
. Environmental site assessments.
Section 3.31
. Predecessor entities and entities from which, since December 31, 1991,
the Company previously acquired material properties or assets.
Section 4.4
. Exceptions to good and merchantable title to Shares to be exchanged
pursuant to this Agreement.
Section 4.5(a)
. Conflicts with, breaches of, or defaults under any Contractual
Obligation of Principal Stockholder resulting from the execution and
delivery of this Agreement or any Collateral Document.
Section 4.5(b)
. Liens created or imposed upon any property or asset of Principal
Stockholder as a result of the execution and delivery of this Agreement
or any Collateral Document.
Section 4.5(c)
. Governmental Authorizations, Governmental Filing or Private
Authorizations required as a result of the execution and delivery of
this Agreement or any Collateral Document.
6
Section 5.7
. Authorized and outstanding capital stock of each of VIALOG and VIALOG
Merger Subsidiary.
. Options, warrant, calls, rights, commitments or any other agreements of
any character obligating VIALOG or VIALOG Merger Subsidiary to issue any
shares of VIALOG Stock or other shares of Capital Stock of VIALOG or
VIALOG Merger Subsidiary, or any other securities convertible into or
evidencing the right to subscribe for any such shares.
Section 5.11
. Provisions in other Participating Agreements of other Participating
Companies not substantially identical in form and substance to the
provisions contained in Articles 3 through 12 of this Agreement.
Section 6.5(b)
. Business (other than business in the ordinary course) the Company will
conduct without the written permission of VIALOG Corporation.
Section 6.17
. Distributions to Stockholders, employees and consultants contemplated to
be made prior to the Merger Closing.
. Liens to be discharged prior to the Merger Closing.
. Certain liabilities for which the Company will indemnify VIALOG as of
the Merger Closing.
Section 7.1(f)
. Awards under Stock Option Plan.
Section 7.2(d)
. Persons executing Non-Competition Agreements.
Section 7.2(n)
. Form of Agreement releasing the Company and any Subsidiary from claims
against them.
Section 7.2(q)
. Leases and Contractual Obligations not satisfied and discharged as of
the Public Offering Closing Date.
7
Section 7.2(s)
. Employment Agreement between Principal Stockholder and VIALOG
Corporation.
Section 7.2(t)
. Individuals executing and delivering Employment Arrangements for VIALOG
Corporation.
8
