EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PREMIERE TECHNOLOGIES, INC.
PTEK MERGER CORPORATION
VOICE-TEL ENTERPRISES, INC.
AND
THE STOCKHOLDERS OF VOICE-TEL ENTERPRISES, INC.
Dated as of April 2, 1997
TABLE OF CONTENTS
Page
----
PARTIES.................................................................................................................. 1
PREAMBLE................................................................................................................. 1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER............................................................................. 1
1.1 Merger..................................................................................................... 1
1.2 Time and Place of Closing.................................................................................. 1
1.3 Effective Time............................................................................................. 2
ARTICLE 2 - TERMS OF MERGER.............................................................................................. 2
2.1 Charter.................................................................................................... 2
2.2 Bylaws..................................................................................................... 2
2.3 Directors and Officers..................................................................................... 2
ARTICLE 3 - MANNER OF CONVERTING SHARES.................................................................................. 2
3.1 Conversion of Shares....................................................................................... 2
3.2 Anti-Dilution Provisions................................................................................... 4
3.3 Shares Held by VTE or Premiere............................................................................. 5
3.5 Fractional Shares.......................................................................................... 5
3.6 Stock Options.............................................................................................. 5
ARTICLE 4 - EXCHANGE OF SHARES........................................................................................... 6
4.1 Exchange Procedures........................................................................................ 6
4.2 Rights of Former VTE Stockholders.......................................................................... 7
4.3 Escrow Agreement........................................................................................... 7
4.4 Legending of Securities; Pooling Restrictions.............................................................. 8
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF VTE AND THE STOCKHOLDERS................................................... 8
5.1 Organization, Standing, and Power.......................................................................... 8
5.2 Authority of VTE; No Breach By Agreement................................................................... 9
5.3 Authority of Stockholders; No Breach By Agreement.......................................................... 10
5.4 Capital Stock.............................................................................................. 10
5.5 VTE Subsidiaries........................................................................................... 11
5.6 Financial Statements....................................................................................... 12
5.7 Absence of Undisclosed Liabilities......................................................................... 12
5.8 Absence of Certain Changes or Events....................................................................... 12
5.9 Tax Matters................................................................................................ 12
5.10 Assets..................................................................................................... 14
5.11 Intellectual Property...................................................................................... 15
5.12 Environmental Matters...................................................................................... 17
5.13 Compliance with Laws....................................................................................... 17
5.14 Labor Relations............................................................................................ 18
5.15 Employee Benefit Plans..................................................................................... 18
5.16 Material Contracts......................................................................................... 20
5.17 Legal Proceedings.......................................................................................... 21
5.18 Reports.................................................................................................... 21
5.19 Franchise Matters.......................................................................................... 21
5.20 VTE Products and Services.................................................................................. 24
5.21 System Performance......................................................................................... 25
5.22 Statements True and Correct................................................................................ 26
5.23 Accounting and Regulatory Matters.......................................................................... 26
5.24 State Takeover Laws........................................................................................ 26
5.25 Charter Provisions......................................................................................... 26
5.26 Investment Intention....................................................................................... 26
5.27 Board Recommendation....................................................................................... 27
5.28 Amway Matters.............................................................................................. 27
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF PREMIERE................................................................... 28
6.1 Organization, Standing, and Power.......................................................................... 28
6.2 Authority; No Breach By Agreement.......................................................................... 28
6.3 Capital Stock.............................................................................................. 29
6.4 Premiere Subsidiaries...................................................................................... 30
6.5 SEC Filings; Financial Statements.......................................................................... 30
6.6 Absence of Undisclosed Liabilities......................................................................... 31
6.7 Absence of Certain Changes or Events....................................................................... 31
6.8 Compliance With Laws....................................................................................... 31
6.9 Legal Proceedings.......................................................................................... 32
6.10 Statements True and Correct................................................................................ 32
6.11 Accounting, and Regulatory Matters......................................................................... 33
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION..................................................................... 33
7.1 Affirmative Covenants of VTE............................................................................... 33
7.2 Negative Covenants of VTE.................................................................................. 33
7.3 Covenants of Premiere...................................................................................... 35
7.4 Adverse Changes in Condition............................................................................... 35
7.5 Reports.................................................................................................... 36
ARTICLE 8 - ADDITIONAL AGREEMENTS........................................................................................ 36
8.1 [Reserved]................................................................................................. 36
8.2 Exchange Listing........................................................................................... 36
8.3 Applications; Antitrust Notification....................................................................... 36
8.4 Filings with State Offices................................................................................. 36
8.5 Agreement as to Efforts to Consummate...................................................................... 37
8.6 Investigation and Confidentiality.......................................................................... 37
8.7 Press Releases............................................................................................. 37
8.8 Certain Actions............................................................................................ 38
8.9 Stockholder Releases....................................................................................... 38
8.10 Accounting Treatment....................................................................................... 38
8.11 State Takeover Laws........................................................................................ 39
8.12 Charter Provisions......................................................................................... 39
8.14 NonCompetition, Nonsolicitation and Nondisclosure.......................................................... 39
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE............................................................ 41
9.1 Conditions to Obligations of Each Party.................................................................... 41
9.2 Conditions to Obligations of Premiere...................................................................... 43
9.3 Conditions to Obligations of VTE and the Stockholders...................................................... 44
ARTICLE 10 - INDEMNIFICATION............................................................................................. 45
10.1 Agreement of Indemnitors to Indemnify...................................................................... 45
10.2 Procedures for Indemnification............................................................................. 46
10.3 Third Party Claims......................................................................................... 47
10.4 Limitations as to Amount................................................................................... 48
10.5 Tax Effect and Insurance................................................................................... 49
10.6 Subrogation................................................................................................. 49
10.7 Arbitration................................................................................................. 49
10.8 Exclusivity................................................................................................ 50
ARTICLE 11 - TERMINATION................................................................................................. 50
11.1 Termination................................................................................................ 50
11.2 Effect of Termination...................................................................................... 51
ARTICLE 12 - MISCELLANEOUS............................................................................................... 51
12.1 Definitions................................................................................................ 51
12.2 Expenses................................................................................................... 64
12.3 Brokers and Finders........................................................................................ 64
12.4 Entire Agreement........................................................................................... 64
12.5 Amendments................................................................................................. 64
12.6 Waivers.................................................................................................... 64
12.7 Assignment................................................................................................. 65
12.8 Notices.................................................................................................... 65
12.9 Governing Law.............................................................................................. 66
12.10 Counterparts................................................................................................ 66
12.11 Captions; Articles and Sections............................................................................. 67
12.12 Interpretations............................................................................................. 67
12.13 Enforcement of Agreement.................................................................................... 67
12.14 Severability................................................................................................ 67
12.15 Survival.................................................................................................... 67
SIGNATURES............................................................................................................... 68
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of April 2, 1997, by and among PREMIERE TECHNOLOGIES, INC.
("Premiere"), a Georgia corporation; PTEK MERGER CORPORATION ("Sub"), a Delaware
corporation and wholly-owned subsidiary of Premiere; VOICE-TEL ENTERPRISES, INC.
("VTE"), a Delaware corporation; and the stockholders of VTE set forth on the
signature pages hereof (each a "Stockholder" and collectively the
"Stockholders").
PREAMBLE
--------
This Agreement provides for the acquisition of VTE by Premiere
pursuant to the merger of Sub with and into VTE. At the effective time of such
merger, the outstanding shares of the capital stock of VTE shall be converted
into shares of the common stock of Premiere (except as provided herein). As a
result, stockholders of VTE shall become stockholders of Premiere and VTE shall
continue to conduct its business and operations. The transactions described in
this Agreement are subject to the expiration of the required waiting period
under the HSR Act and the satisfaction of certain other conditions described in
this Agreement. It is the intention of the parties to this Agreement that the
Merger for federal income tax purposes shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code, and for
accounting purposes shall qualify for treatment as a pooling of interests.
Certain terms used in this Agreement are defined in Section 121 of
this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
--------------------------------
1.1 MERGER. Subject to the terms and conditions of this Agreement, at
------
the Effective Time, Sub shall be merged with and into VTE in accordance with the
provisions of Section 251 of the DGCL and with the effect provided in Section
259 of the DGCL (the "Merger"). VTE shall be the Surviving Corporation resulting
from the Merger and shall continue to be governed by the Laws of the State of
Delaware. The Merger shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the respective Boards of
Directors of VTE, Sub and Premiere.
1.2 TIME AND PLACE OF CLOSING. The closing of the transactions
-------------------------
contemplated hereby (the "Closing") will take place at 9:00 A.M. on the date
that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their authorized officers, may mutually agree. The Closing
shall be held at the offices of Xxxxxx & Bird LLP, Atlanta, Georgia, or at such
other location as may be mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated
--------------
by this Agreement shall become effective on the date and at the time the
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Delaware (the "Effective Time").
1.4 TAX-FREE REORGANIZATION. The Parties intend to adopt this
-----------------------
Agreement as a tax-free plan of reorganization and to consummate the Merger in
accordance with the provisions of Sections 368(a)(1)(A) and 368(a)(2)(E) of the
Code. In this regard, Premiere represents that it currently intends, and that
on the Effective Date it will intend, to continue VTE's historic business or use
a significant portion of VTE's business assets in a business within the meaning
of Treasury Regulation Section 1.368-1(d).
ARTICLE 2
TERMS OF MERGER
---------------
2.1 CHARTER. The Certificate of Incorporation of VTE in effect
-------
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until duly amended or repealed.
2.2 BYLAWS. The Bylaws of VTE in effect immediately prior to the
------
Effective Time shall be the Bylaws of the Surviving Corporation until duly
amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of VTE in office
----------------------
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of VTE in office immediately prior to
the Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
---------------------------
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article
--------------------
3, at the Effective Time, by virtue of the Merger and without any action on the
part of Premiere, VTE, or the stockholders of the foregoing, the shares of the
following corporations shall be converted as follows:
-2-
(a) Each share of Premiere Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) Each share of Sub Common Stock issued and outstanding immediately
prior to the Effective time shall cease to be outstanding and shall be
converted into one share of VTE Common Stock.
(c) Each share of VTE Common Stock (excluding shares held by any VTE
Entity or any Premiere Entity, and excluding shares held by stockholders who
perfect their statutory dissenters' rights as provided in Section 3.4) issued
and outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for:
(i) the number of shares of Premiere Common Stock (rounded to
the nearest hundredth of a share) determined by dividing the product of
(A) either (1) .77 if the Amway Convertible Note is converted or (2) .71
if the Amway Convertible Note is not converted and (B) the Per Share
Purchase Price, by the Average Closing Price (the "Firm Exchange Ratio");
(ii) (subject to the provisions of Section 4.3) the number of
shares of Premiere Common Stock (rounded to the nearest hundredth of a
share) determined by dividing the product of .1 and the Per Share
Purchase Price by the Average Closing Price (the "General Escrow Exchange
Ratio");
(iii) (subject to the provisions of Section 4.3) the number of
shares of Premiere Common Stock (rounded to the nearest hundredth of a
share) determined by dividing the product of (A) either (1) .13 if the
Amway Convertible Note is converted or (2) .19 if the Amway Convertible
Note is not converted and (B) the Per Share Purchase Price, by the
Average Closing Price (the "Specific Escrow Exchange Ratio" and, together
with the Firm Exchange Ratio and the General Exchange Ratio, the
"Exchange Ratio").
(d) For purposes of the calculation under 3.1(c):
(i) the Per Share Purchase Price shall mean that value obtained
by dividing the VTE Purchase Price by the number of shares of VTE Common
Stock issued and outstanding immediately prior to the Effective Time;
(ii) the VTE Purchase Price shall mean $17,750,000 , less (A) the
---------- ----
positive amount, if any, by which the aggregate level of Consolidated
Indebtedness of VTE at November 30, 1996 (excluding the Amway Convertible
Note, but including the $110,000 balance on VTE's line of credit with
National City Bank) exceeds $8,491,000, (B) the positive amount, if any,
by which the aggregate amount expended, incurred or committed by VTE to
purchase or redeem any shares of VTE
-3-
Common Stock after November 30, 1996 (including purchases and redemptions
contemplated in Section 9.2(k)) exceed $1,347,000, (C) the positive
amount, if any, by which the aggregate amounts expended, incurred or
committed by VTE and VTNLP or any of their Subsidiaries from May 1, 1995
though and including the Effective Time for fees and expenses of
attorneys, accountants, investment bankers, and other consultants and
travel, entertainment, printing and other out of pocket costs associated
with the actions taken and transactions considered pursuant to the
engagement by VTE of Salomon Brothers Inc. described on Schedule 3.1(d)
of the VTE Disclosure Memorandum, including, without limitation, the
transactions contemplated with the parties described on Schedule 3.1(d)
of the VTE Disclosure Memorandum, exceed $1,500,000, (D) except to the
extent specifically reflected in the adjustments to the VTE Purchase
Price pursuant to clauses (B) or (C) above or to the extent specifically
reflected in the adjustments to the VTN Purchase Price under Section
3.1(d) of the VTN Merger Agreement, the aggregate amount paid, payable or
otherwise incurred or to be incurred in connection with satisfying the
obligations of VTE and the Stockholders or the conditions precedent to
the obligation of Premiere, in each case, whether contained in this
Agreement or in any agreement, certificate or instrument entered into or
delivered in connection herewith, including, without limitation,
satisfying the conditions set forth in Section 9.2(i) and resolving the
claim referred to in Section 9.2(m), and (E) .77 times the aggregate
principal balance of the Amway Convertible Note if the Amway Convertible
Note is not converted; and
(iii) the Average Closing Price shall mean the average of the
daily last sale prices for the shares of Premiere Common Stock for the
twenty (20) consecutive trading days on which such shares are actually
traded as over-the-counter securities and quoted on the Nasdaq National
Market (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source selected by Premiere) ending at
the close of trading on the second trading day immediately preceding the
Closing Date); provided, that for purposes of this calculation, the
Average Closing Price shall be deemed to equal (i) $30.50 in the event
the Average Closing Price is greater than $30.50 or (ii) $22.50 in the
event the Average Closing Price is less than $22.50 (together, $30.50 and
$22.50 are referred to as the "Average Closing Price Limitations").
3.2 ANTI-DILUTION PROVISIONS. In the event Premiere changes the number of
------------------------
shares of Premiere Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend, or similar recapitalization
with respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be after the
Exchange Ratio has been determined in accordance with Section 3.1(c). In that
event, prior to the Effective Time, (i) the Exchange Ratio and the Average
Closing Price Limitations shall be proportionately adjusted to the effect of the
stock split, stock dividend or recapitalization on the outstanding shares of
Premiere Common Stock, and (ii) if necessary, the anticipated Effective Time
shall be postponed for an appropriate period of time agreed upon by the parties
in order for
-4-
the Average Closing Price to reflect the market effect of such stock split,
stock dividend, or similar recapitalization. Notwithstanding the foregoing,
Premiere covenants not to effect a stock split, stock dividend or
recapitalization prior to the Effective Time.
3.3 SHARES HELD BY VTE OR PREMIERE. Each of the shares of VTE Common
------------------------------
Stock held by any VTE Entity or by any Premiere Entity shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.4 [RESERVED]
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of this
-----------------
Agreement, each holder of shares of VTE Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of Premiere Common Stock (after taking into account all certificates delivered
by such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Premiere Common Stock
multiplied by the Average Closing Price used to establish the Exchange Ratio..
No such holder will be entitled to dividends, voting rights, or any other rights
as a stockholder in respect of any fractional shares.
3.6 STOCK OPTIONS.
-------------
(a) As of the Effective Time, each of the stock options listed in Section
5.4(b) of the VTE Disclosure Memorandum (the "VTE Stock Options") which is
outstanding as of the date hereof and has not expired as of the Effective Time
shall be assumed by Premiere and converted into an option (or a new substitute
option shall be granted) to purchase the number of shares of Premiere Common
Stock (rounded down to the nearest whole share) equal to the number of shares of
VTE Common Stock subject to the VTE Stock Option multiplied by the Exchange
Ratio at an exercise price per share of Premiere Common Stock (rounded to the
nearest xxxxx) equal to the former exercise price per share of VTE Common Stock
under such option immediately prior to the Effective Time divided by the
Exchange Ratio; provided, however, that in the case of any VTE Stock Option to
-------- -------
which Section 421 of the Code applies by reason of its qualification under
Section 422 of the Code, the conversion formula shall be adjusted, if necessary,
to comply with Section 424(a) of the Code, provided however, no adjustment shall
be made which could, in the reasonable opinion of Xxxxxx Xxxxxxxx LLP, preclude
pooling of interests accounting treatment for the Merger. Except as provided
above, the converted or substituted options for Premiere Common Stock shall be
subject to substantially the same terms and conditions (including, without
limitation, expiration date, vesting and exercise provisions) as were applicable
to VTE Stock Options immediately prior to the Effective Time. Premiere
acknowledges that all outstanding VTE Stock Options specifically disclosed
herein will become fully vested immediately prior to the Effective Time in
accordance with the terms of the agreements relating thereto, except to the
-------------
extent that any such vesting would preclude pooling of interest accounting
--------------------------------------------------------------------------
treatment for the Merger.
------------------------
(b) Premiere agrees that (i) within fifteen (15) days after the Effective
Time it will cause to be filed one or more registration statements on Form S-8
under the Securities Act, or amendments
-5-
to its existing registration statements on Form S-8 or amendments to such other
registration statements as may be available, in order to register the Premiere
Common Stock issuable upon exercise of the aforesaid converted VTE Stock Options
(the "Underlying Stock"), provided, however, that no such Form S-8 is required
to be filed if Premiere has registered sufficient shares under its current S-8
to cover all the Underlying Stock plus all shares underlying stock options
currently outstanding and issuable not otherwise exempt from registration, and
(ii) at or prior to the Effective Time, Premiere shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Premiere
Common Stock for delivery upon exercise of the options substituted pursuant to
this Section 3.6. The consummation of the Merger shall not be treated as a
termination of employment for purposes of the VTE Option Plans.
ARTICLE 4
EXCHANGE OF SHARES
------------------
4.1 EXCHANGE PROCEDURES. At the Effective Time, Premiere and VTE shall
-------------------
cause SunTrust, as the exchange agent selected by Premiere (the "Exchange
Agent") to mail to each holder of record of a certificate or certificates which
represented shares of VTE Common Stock immediately prior to the Effective Time
(the "Certificates") or, at the election of the respective Stockholders, deliver
to the Stockholder or his or its duly appointed representative at the Closing
appropriate transmittal materials and instructions (which shall specify that
delivery shall be effected, and risk of loss and title to such Certificates
shall pass, only upon proper delivery of such Certificates to the Exchange
Agent). The Certificate or Certificates of VTE Common Stock so delivered shall
be duly endorsed as the Exchange Agent may require. In the event of a transfer
of ownership of shares of VTE Common Stock represented by Certificates that are
not registered in the transfer records of VTE, the consideration provided in
Section 3.1 may be issued to a transferee if the Certificates representing such
shares are delivered to the Exchange Agent, accompanied by all documents
required to evidence such transfer and by evidence reasonably satisfactory to
the Exchange Agent that any applicable stock transfer taxes have been paid. If
any Certificate shall have been lost, stolen, mislaid or destroyed, upon receipt
of (i) an affidavit of that fact from the holder claiming such Certificate to be
lost, mislaid, stolen or destroyed, (ii) such bond, security or indemnity as
Premiere and the Exchange Agent may reasonably require and (iii) any other
documents necessary to evidence and effect the bona fide exchange thereof, the
Exchange Agent shall issue to such holder the consideration into which the
shares represented by such lost, stolen, mislaid or destroyed Certificate shall
have been converted. The Exchange Agent may establish such other reasonable and
customary rules and procedures in connection with its duties as it may deem
appropriate. On or promptly following the Effective Time, each holder of shares
of VTE Common Stock (other than shares to be canceled pursuant to Section 3.3 or
as to which statutory dissenters' rights have been perfected as provided in
Section 3.4) issued and outstanding at the Effective Time shall surrender the
Certificate or Certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof (and at the Closing if so requested by the
Stockholder) receive in exchange therefor the consideration provided in Section
3.1, together with all undelivered dividends or distributions in respect of such
shares (without interest thereon) pursuant to Section 4.2. To the extent
required by Section 3.5, each holder of shares of VTE Common Stock issued and
outstanding at the Effective Time also shall receive,
-6-
upon surrender of the Certificate or Certificates, cash in lieu of any
fractional share of Premiere Common Stock to which such holder may be otherwise
entitled (without interest). Premiere shall not be obligated to deliver the
certificates for or other consideration to which any former holder of VTE Common
Stock is entitled as a result of the Merger until such holder surrenders such
holder's Certificate or Certificates for exchange as provided in this Section
4.1. Any other provision of this Agreement notwithstanding, neither Premiere nor
the Exchange Agent shall be liable to a holder of VTE Common Stock for any
amounts paid or property delivered in good faith to a public official pursuant
to any applicable abandoned property, escheat or similar Law. Adoption of this
Agreement by the stockholders of VTE shall constitute ratification of the
appointment of the Exchange Agent.
4.2 RIGHTS OF FORMER VTE STOCKHOLDERS. At the Effective Time, the stock
---------------------------------
transfer books of VTE shall be closed as to holders of VTE Common Stock
immediately prior to the Effective Time and no transfer of VTE Common Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1, each Certificate
theretofore representing shares of VTE Common Stock (other than shares to be
canceled pursuant to Sections 3.3 and 3.4) shall from and after the Effective
Time represent for all purposes only the right to receive the consideration
provided in Sections 3.1 and 3.5 in exchange therefor,. To the extent permitted
by Law, former stockholders of record of VTE shall be entitled to vote after the
Effective Time at any meeting of Premiere stockholders the number of whole
shares of Premiere Common Stock into which their respective shares of VTE Common
Stock are converted, regardless of whether such holders have exchanged their
Certificates for certificates representing Premiere Common Stock in accordance
with the provisions of this Agreement. Whenever a dividend or other distribution
is declared by Premiere on the Premiere Common Stock, the record date for which
is at or after the Effective Time, the declaration shall include dividends or
other distributions on all shares of Premiere Common Stock issuable pursuant to
this Agreement, but no dividend or other distribution payable to the holders of
record of Premiere Common Stock as of any time subsequent to the Effective Time
shall be delivered to the holder of any Certificate until such holder surrenders
such Certificate for exchange as provided in Section 4.1. However, upon
surrender of such Certificate, both the Premiere Common Stock certificate
(together with all such undelivered dividends or other distributions without
interest) and any undelivered dividends and cash payments payable hereunder
(without interest) shall be delivered and paid with respect to each share
represented by such Certificate.
4.3 ESCROW AGREEMENT. In connection with the Closing, Premiere and the
----------------
Stockholders shall have executed and delivered to the other an escrow agreement
(the "General Escrow Agreement"), which shall be in the form of Exhibit 1 and
another escrow agreement (the "Specific Escrow Agreement"), which shall be in
the form of Exhibit 2. The shares of Premiere Common Stock to be issued
pursuant to Section 3.1(c)(ii) shall be issued and held by SunTrust, as escrow
agent pursuant to the terms of the General Escrow Agreement, and the shares of
Premiere Common Stock to be issued pursuant to Section 3.1(c)(iii) shall be
issued and held by SunTrust, as escrow agent pursuant to the terms of the
Specific Escrow Agreement.
-7-
4.4 LEGENDING OF SECURITIES; POOLING RESTRICTIONS. Each certificate for
---------------------------------------------
Premiere Common Stock to be issued to the Stockholders as part of the Purchase
Price shall bear the following legend:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, and may not be offered, sold, transferred
or otherwise disposed of unless registered with the Securities and Exchange
Commission of the United States and the securities regulatory authorities of
applicable states or unless an exemption from such registration is
available."
Because the Merger will be accounted for using the pooling-of-interests method
of accounting, each Stockholder agrees that such Stockholder will not sell,
transfer or otherwise reduce such Stockholder's risks relative to the shares of
VTE Common Stock held by such Stockholder, except as contemplated by this
Agreement and will not sell, transfer or otherwise reduce such Stockholder's
risk relative to the shares of Premiere Common Stock to be received by each
Stockholder upon consummation of the Merger until such time as Premiere notifies
the undersigned that the requirements of SEC Accounting Series Release Nos. 130
and 135 ("ASR 130 and 135") have been met. Each Stockholder understands that
ASR 130 and 135 relate to publication of financial results of post-Closing
combined operations of Premiere and VTE covering a period of at least 30 days of
post-Closing combined operating results. Premiere agrees that it will publish
such results within 45 days after the end of the first fiscal quarter of
Premiere containing the required period of post-Closing combined operations and
that it will notify the undersigned promptly following such publication.
Premiere shall be entitled to place restrictive legends on the shares of
Premiere Common Stock issued to the Stockholders pursuant to the Merger to
enforce the foregoing restrictions.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF VTE AND THE STOCKHOLDERS
----------------------------------------------------------
The Stockholders and VTE, jointly and severally, hereby represent and
warrant to Premiere as follows (provided that Amway, as a Stockholder of VTE,
makes only the representations and warranties in Section 5.28 and unless
otherwise noted, for purposes of this Article 5, the term "Stockholder" does not
include Amway):
5.1 ORGANIZATION, STANDING, AND POWER. VTE is a corporation duly
---------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Assets. VTE is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a VTE Material Adverse Effect. The minute book and other
organizational documents for VTE have been made available to Premiere for its
review and, except as disclosed in Section 5.1 of the VTE Disclosure Memorandum,
are true and complete in
-8-
all material respects as in effect as of the date of this Agreement and
accurately reflect in all material respects all amendments thereto and all
proceedings of the Board of Directors and stockholders thereof.
5.2 AUTHORITY OF VTE; NO BREACH BY AGREEMENT.
----------------------------------------
(a) VTE has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part
of VTE, subject to the approval of this Agreement by the holders of a
majority of the outstanding shares of VTE Common Stock, which is the only
stockholder vote required for approval of this Agreement and consummation of
the Merger by VTE. Subject to such requisite stockholder approval, this
Agreement represents a legal, valid, and binding obligation of VTE,
enforceable against VTE in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
may be brought).
(b) Neither the execution and delivery of this Agreement by VTE, nor
the consummation by VTE of the transactions contemplated hereby, nor
compliance by VTE with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of VTE's Certificate of Incorporation
or Bylaws or the certificate or articles of incorporation or bylaws of any
VTE Subsidiary or any resolution adopted by the board of directors or the
stockholders of any VTE Entity, or (ii) except as disclosed in Section 5.2 of
the VTE Disclosure Memorandum, constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any VTE Entity under, any Contract or Permit of any VTE Entity,
where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a VTE Material
Adverse Effect, or, (iii) subject to receipt of the requisite Consents
referred to in Section 91(b), constitute or result in a Default under, or
require any Consent pursuant to, any Law or Order applicable to any VTE
Entity or any of their respective material Assets (including any Premiere
Entity or any VTE Entity becoming subject to or liable for the payment of any
Tax or any of the Assets owned by any Premiere Entity or any VTE Entity being
reassessed or revalued by any Taxing authority).
(c) Other than notices under the HSR Act and a Certificate of Merger
with the Secretary of State of the State of Delaware, no notice to, filing
with, or Consent of, any public body or authority is necessary for the
consummation by VTE of the Merger and the other transactions contemplated in
this Agreement.
-9-
5.3 AUTHORITY OF STOCKHOLDERS; NO BREACH BY AGREEMENT.
-------------------------------------------------
(a) Each of the Stockholders has the absolute and unrestricted right,
power, authority, and capacity to execute and deliver this Agreement and the
Stockholders' Closing Documents and to perform its obligations under this
Agreement and the Stockholders' Closing Documents. This Agreement represents
a legal, valid, and binding obligation of each Stockholder, enforceable
against each Stockholder in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
may be brought). Upon the execution and delivery by the Stockholders of the
Stockholders' Closing Documents, the Stockholders' Closing Documents will
constitute the legal, valid, and binding obligations of each Stockholder,
enforceable against each Stockholder in accordance with their respective
terms.
(b) Neither the execution and delivery of this Agreement by any
Stockholder, nor the consummation by any Stockholder of the transactions
contemplated hereby, nor compliance by any Stockholder with any of the
provisions hereof, will (i) conflict with or result in a breach of any
provision of VTE's Certificate of Incorporation or Bylaws or the certificate
or articles of incorporation or bylaws of any VTE Subsidiary or the governing
instruments of any Stockholder that is not a natural person, or (ii) except
as disclosed in Section 5.3 of the VTE Disclosure Memorandum, constitute or
result in a Default under, or require any Consent pursuant to, or result in
the creation of any Lien on any Asset of any VTE Entity under, any Contract
or Permit of any VTE Entity, where such Default or Lien, or any failure to
obtain such Consent, is reasonably likely to have, individually or in the
aggregate, a VTE Material Adverse Effect, or, (iii) subject to receipt of the
requisite Consents referred to in Section 9.1(b), violate any Law or Order
applicable to any Stockholder or to any VTE Entity or any of their respective
material Assets.
(c) Other than notices under the HSR Act, no notice to, filing with,
or Consent of, any public body or authority is necessary for the consummation
by the Stockholders of the transactions contemplated in this Agreement.
5.4 CAPITAL STOCK.
-------------
(a) The authorized capital stock of VTE consists of 3,000 shares of
VTE Common Stock, of which (i) 2,500 are designated as Class A shares and of
which 330 shares are issued and outstanding as of the date of this Agreement
and not more than 425.75 shares (assuming the VTE Options are not exercised
before the Effective Time) will be issued and outstanding at the Effective
Time, and (ii) 500 shares are designated as Class B shares and of which 37.5
shares are issued and outstanding as of the date of this Agreement and not
more than 37.5 shares will be issued and outstanding at the Effective Time.
All of the issued and outstanding shares of capital stock of VTE are duly and
validly issued and outstanding and are fully paid and nonassessable. None
of the outstanding shares of capital
-10-
stock of VTE has been issued in violation of any preemptive rights of the
current or past stockholders of VTE or of the Securities Laws or any state
blue sky or securities Laws.
(b) Except as set forth in Section 5.4(a) or as disclosed in Section
5.4(b) of the VTE Disclosure Memorandum, there are no shares of capital stock
or other equity securities of VTE outstanding and no outstanding Equity
Rights relating to the capital stock of VTE. Each of the Stockholders is the
owner of all right, title and interest (legal and beneficial) in and to that
number or amount of Shares set forth next to his name in Section 5.4(a) of
the VTE Disclosure Memorandum, free and clear of all Liens. Collectively,
the Stockholders own all right, title and interest (legal and beneficial) in
and to all of the issued and outstanding shares of VTE's capital stock.
Except as specifically contemplated by this Agreement, no Person has any
Contract or any right or privilege (whether pre-emptive or contractual)
capable of becoming a Contract for the purchase from the Stockholders of any
of the Shares, or any Contract or Equity Right for the purchase, subscription
or issuance of any securities of VTE.
5.5 VTE SUBSIDIARIES. VTE has disclosed in Section 5.5 of the VTE
----------------
Disclosure Memorandum all of the VTE Subsidiaries that are corporations
(identifying its jurisdiction of incorporation, each jurisdiction in which it is
qualified and/or licensed to transact business, and the number of shares owned
and percentage ownership interest represented by such share ownership) and all
of the VTE Subsidiaries that are general or limited partnerships, limited
liability companies, or other non-corporate entities (identifying the Law under
which such entity is organized, each jurisdiction in which it is qualified
and/or licensed to transact business, and the amount and nature of the ownership
interest therein). Except as disclosed in Section 5.5 of the VTE Disclosure
Memorandum, VTE or one of its wholly-owned Subsidiaries owns all of the issued
and outstanding shares of capital stock (or other equity interests) of each VTE
Subsidiary. No capital stock (or other equity interest) of any VTE Subsidiary is
or may become required to be issued (other than to another VTE Entity) by reason
of any Equity Rights, and there are no Contracts by which any VTE Subsidiary is
bound to issue (other than to another VTE Entity) additional shares of its
capital stock (or other equity interests) or Equity Rights or by which any VTE
Entity is or may be bound to transfer any shares of the capital stock (or other
equity interests) of any VTE Subsidiary (other than to another VTE Entity).
There are no Contracts relating to the rights of any VTE Entity to vote or to
dispose of any shares of the capital stock (or other equity interests) of any
VTE Subsidiary. All of the shares of capital stock (or other equity interests)
of each VTE Subsidiary held by a VTE Entity are fully paid and nonassessable and
are owned by the VTE Entity free and clear of any Lien. Except as disclosed in
Section 5.5 of the VTE Disclosure Memorandum, each VTE Subsidiary is a
corporation, and each such Subsidiary is duly organized, validly existing, and
(as to corporations) in good standing under the Laws of the jurisdiction in
which it is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each VTE Subsidiary is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of the
United States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
VTE Material Adverse Effect. The minute book and
-11-
other organizational documents for each VTE Subsidiary have been made available
to Premiere for its review, and, except as disclosed in Section 5.5 of the VTE
Disclosure Memorandum, are true and complete in all material respects as in
effect as of the date of this Agreement and accurately reflect in all material
respects all amendments thereto and all proceedings of the Board of Directors
and stockholders thereof.
5.6 FINANCIAL STATEMENTS. Each of the VTE Financial Statements
--------------------
(including, in each case, any related notes) was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements), and fairly
presented in all material respects the consolidated financial position of VTE
and its Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring year-
end adjustments which were not or are not expected to be material in amount or
effect.
5.7 ABSENCE OF UNDISCLOSED LIABILITIES. No VTE Entity has any Liabilities
----------------------------------
that are reasonably likely to have, individually or in the aggregate, a VTE
Material Adverse Effect, except Liabilities which are accrued or reserved
against in the consolidated balance sheet of VTE as of December 31, 1996
included in the VTE Financial Statements delivered prior to the date of this
Agreement or reflected in the notes thereto. No VTE Entity has incurred or paid
any Liability since December 31, 1996, except for such Liabilities incurred or
paid (i) in the ordinary course of business consistent with past business
practice and which are not reasonably likely to have, individually or in the
aggregate, a VTE Material Adverse Effect or (ii) in connection with the
transactions contemplated by this Agreement. Except as disclosed in Section 5.7
of the VTE Disclosure Memorandum, no VTE Entity is directly or indirectly
liable, by guarantee, indemnity, or otherwise, upon or with respect to, or
obligated, by discount or repurchase agreement or in any other way, to guarantee
or assume any Liability of any Person for any amount in excess of $10,000.
5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1996, except
------------------------------------
as disclosed in the VTE Financial Statements delivered prior to the date of this
Agreement or as disclosed in Section 5.8 of the VTE Disclosure Memorandum, (i)
there have been no events, changes, or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a VTE Material
Adverse Effect, and (ii) the VTE Entities have not taken any action, or failed
to take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result in
a material breach or violation of any of the covenants and agreements of VTE
provided in Article 7.
5.9 TAX MATTERS.
-----------
(a) All Tax Returns required to be filed by or on behalf of any of
the VTE Entities have been timely filed (including without limitation Tax
Returns filed in accordance with extensions granted) or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1996, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time, and all Tax
-12-
Returns filed are complete and accurate in all material respects. All Taxes
shown on filed Tax Returns have been paid. As of the date of this Agreement,
there is no audit examination, deficiency, or refund Litigation with respect
to any Taxes, except as reserved against in the VTE Financial Statements
delivered prior to the date of this Agreement or as disclosed in Section 5.9
of the VTE Disclosure Memorandum. VTE's federal income Tax Returns have been
audited by the IRS and accepted through December 31, 1991. All Taxes and
other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid. There are no Liens with respect to
Taxes upon any of the Assets of the VTE Entities, except for any such Liens
which are not reasonably likely to have a VTE Material Adverse Effect.
(b) None of the VTE Entities has executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax due
(excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) The provision for any Taxes due or to become due for any of the
VTE Entities for the period or periods through and including the date of the
most recent VTE Financial Statements that has been made and is reflected on
such VTE Financial Statements is sufficient to cover all such Taxes.
(d) Deferred Taxes of the VTE Entities have been provided for in
accordance with GAAP.
(e) None of the VTE Entities is a party to any Tax allocation or
sharing agreement and none of the VTE Entities has been a member of an
affiliated group filing a consolidated federal income Tax Return (other than
a group the common parent of which was VTE) has any Liability for Taxes of
any Person (other than VTE and its Subsidiaries) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign Law) as
a transferee or successor or by Contract or otherwise.
(f) Each of the VTE Entities is in compliance with, and its records
contain all information and documents (including properly completed IRS Forms
W-9) necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state, and local Tax Laws.
(g) Except as disclosed in Section 5.9 of the VTE Disclosure
Memorandum, none of the VTE Entities has made any payments, is obligated to
make any payments, or is a party to any Contract that could obligate it to
make any payments that could be disallowed as a deduction under Section 280G
or 162(m) of the Code.
(h) Except as disclosed in Section 5.9 of the VTE Disclosure
Memorandum, no VTE Entity has or has had in any foreign country a permanent
establishment, as defined in any applicable tax treaty or convention between
the United States and such foreign country.
-13-
5.10 ASSETS.
------
(a) Except as disclosed in Section 5.10 of the VTE Disclosure
Memorandum or as disclosed or reserved against in the VTE Financial
Statements delivered prior to the date of this Agreement, the VTE Entities
have good and marketable title, free and clear of all Liens, to all of their
respective Assets, except for any such Liens or other defects of title which
are not reasonably likely to have a VTE Material Adverse Effect. All
tangible properties used in the businesses of the VTE Entities are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with VTE's past practices.
(b) All items of inventory of the VTE Entities reflected on the most
recent balance sheet included in the VTE Financial Statements delivered prior
to the date of this Agreement and prior to the Effective Time consisted and
will consist, as applicable, of items of a quality and quantity usable and
saleable in the ordinary course of business and conform to generally accepted
standards in the industry in which the VTE Entities are a part.
(c) The accounts receivable of the VTE Entities as set forth on the
most recent balance sheet included in the VTE Financial Statements delivered
prior to the date of this Agreement or arising since the date thereof are
valid and genuine; have arisen solely out of bona fide sales and deliveries
of goods, performance of services and other business transactions in the
ordinary course of business consistent with past practice; are not subject to
valid defenses, set-offs or counterclaims; and are collectible within 90 days
after billing at the full recorded amount thereof less, in the case of
accounts receivable appearing on the most recent balance sheet included in
the VTE Financial Statements delivered prior to the date of this Agreement,
the recorded allowance for collection losses on such balance sheet. The
allowance for collection losses on such balance sheet has been determined in
accordance with GAAP.
(d) All Assets which are material to VTE's business on a consolidated
basis, held under leases or subleases by any of the VTE Entities, are held
under valid Contracts enforceable in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceedings may be
brought), and each such Contract is in full force and effect.
(e) The VTE Entities currently maintain insurance similar in amounts,
scope, and coverage to that maintained by other peer organizations. None of
the VTE Entities has received notice from any insurance carrier that (i) any
policy of insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such policies of
insurance will be substantially increased. There are presently no claims for
amounts exceeding in any individual case $10,000 pending under such policies
of insurance
-14-
and no notices of claims in excess of such amounts have been given by
any VTE Entity under such policies.
(f) The Assets of the VTE Entities include all Assets
required to operate the business of the VTE Entities as presently
conducted.
5.11 INTELLECTUAL PROPERTY
---------------------
(a) Section 5.11(a)(i) of the VTE Disclosure Memorandum
sets forth (i) a brief description of each VTE Intellectual Property
Right, and (ii) with respect to each VTE Intellectual Property Right
registered or capable of registration with any Regulatory Authority or
for which an application for registration has been filed with any
Regulatory Authority, the names of the jurisdictions covered by the
applicable registration or application, if any. Section 5.11(a)(ii) of
the VTE Disclosure Memorandum identifies and provides a brief
description of each Intellectual Property Right licensed to any VTE
Entity by any Person (except for any Intellectual Property Right that is
licensed to any VTE Entity under any third party software license
generally available to the public at a cost of less than Ten Thousand
Dollars ($10,000)), and identifies the license agreement under which
such Intellectual Property Right is being licensed to such VTE Entity.
No VTE Entity is in Default under any such license agreements. Except as
set forth in Section 5.11(a)(iii) of the VTE Disclosure Memorandum, the
VTE Entities have, and following consummation of the transactions
contemplated hereby, shall have valid and marketable title to all VTE
Intellectual Property Rights used in or reasonably necessary for the
conduct of their business free and clear of all liens and other
encumbrances, except for third party Intellectual Property Rights
licensed to any such VTE Entity, as to which it has a valid right to use
with respect to such VTE Intellectual Property Rights. No present or
former employee or owner of any VTE Entity and no other Person owns or
has any proprietary, financial or other interest, direct or indirect, in
whole or in part, in any Intellectual Property Right which any VTE
Entity owns, possesses or uses in its operations as now or heretofore
conducted. All personnel, including employees, agents, consultants, and
contractors, who have contributed to or participated in the conception
and development of any VTE Intellectual Property Right (i) have been
party to a "work-for-hire" relationship with a VTE Entity that has
accorded the VTE Entity full, effective, and exclusive original
ownership of all tangible and intangible property thereby arising with
respect to such VTE Intellectual Property Right, and/or (ii) have
executed appropriate instruments of assignment or license in favor of a
VTE Entity as assignee that have conveyed to a VTE Entity full,
effective, and exclusive ownership or use of all tangible and intangible
property thereby arising with respect to such VTE Intellectual Property
Right. Except as set forth in Section 5.11(a)(iv) of the VTE Disclosure
Memorandum, no VTE Entity is obligated to make any material payment to
any Person for the use of any VTE Intellectual Property Right. Except as
set forth in Section 5.11(a)(v) of the VTE Disclosure Memorandum, no VTE
Entity has developed jointly with any other Person any VTE Intellectual
Property Right with respect to which such other Person has any rights.
Each VTE Entity is the owner of or has a license to any Intellectual
Property Right sold or licensed to a third party by such VTE Entity in
connection with such VTE
-15-
Entity's business operations, and such VTE Entity has the right to
convey by sale or license any Intellectual Property Rights so conveyed.
(b) Except as set forth in Section 5.11(b) of the VTE
Disclosure Memorandum, each VTE Entity has taken all reasonable and
customary measures and precautions necessary to protect and maintain the
confidentiality and secrecy of all VTE Intellectual Property Rights
(except VTE Intellectual Property Rights whose value would be unimpaired
by public disclosure) and otherwise to maintain and protect the value of
all VTE Intellectual Property Rights. Except as set forth in Section
5.11(b) of the VTE Disclosure Memorandum, no VTE Entity has disclosed or
delivered, or permitted the disclosure or delivery to any Person of the
source code, or any portion or aspect of the source code, of any VTE
Intellectual Property Rights.
(c) No VTE Entity is infringing, misappropriating or making
any unlawful use of, and no VTE Entity has at any time infringed,
misappropriated or made any unlawful use of, and, except as set forth in
Section 5.11(c) of the VTE Disclosure Memorandum, no VTE Entity has
received any notice or other communication (in writing or otherwise) of
any actual, alleged, possible or potential infringement,
misappropriation or unlawful use of, any Intellectual Property Right
owned or used by any other Person. To the Knowledge of VTE, no other
Person is infringing, misappropriating or making any unlawful use of,
and no Intellectual Property Right owned or used by any other Person
infringes or conflicts with, any VTE Intellectual Property Right.
(d) The VTE Intellectual Property Rights constitute all the
Intellectual Property Rights reasonably deemed necessary to enable any
VTE Entity to conduct its business in the manner in which such business
has been and is being conducted. No VTE Entity has licensed any of the
VTE Intellectual Property Rights to any Person on an exclusive basis
and, except as set forth in Section 5.11(d) of the VTE Disclosure
Memorandum, no VTE Entity has entered into any covenant not to compete
or Contract limiting its ability to exploit fully any of the VTE
Intellectual Property Rights or to transact business in any market or
geographical area or with any Person.
(e) Except as disclosed in Section 5.11(e) of the VTE
Disclosure Memorandum, every officer, director, or employee of any VTE
Entity is a party to a Contract which requires such officer, director or
employee to assign any interest in any Intellectual Property Right to
any VTE Entity and to keep confidential any trade secrets, proprietary
data, customer information, or other business information of any VTE
Entity, and no such officer, director or employee is party to any
Contract with any Person other than a VTE Entity which requires such
officer, director or employee to assign any interest in any Intellectual
Property Right to any Person other than a VTE Entity or to keep
confidential any trade secrets, proprietary data, customer information,
or other business information of any Person other than a VTE Entity.
Except as disclosed in Section 5.11(e) of the VTE Disclosure Memorandum,
no officer, director or employee of any VTE Entity is party to any
Contract which restricts or prohibits such officer, director or employee
from engaging in activities competitive with any Person, including any
VTE Entity.
-16-
5.12 ENVIRONMENTAL MATTERS.
---------------------
(a) Each VTE Entity, its Participation Facilities, and its
Operating Properties are, and have been, in compliance with all
Environmental Laws, except for violations which are not reasonably
likely to have, individually or in the aggregate, a VTE Material Adverse
Effect.
(b) There is no Litigation pending or, to the Knowledge of
VTE, threatened before any court, governmental agency, or authority or
other forum in which any VTE Entity or any of its Operating Properties
or Participation Facilities (or VTE in respect of such Operating
Property or Participation Facility) has been or, with respect to
threatened Litigation, may be named as a defendant (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release, discharge, spillage, or disposal into
the environment of any Hazardous Material, whether or not occurring at,
on, under, adjacent to, or affecting (or potentially affecting) a site
owned, leased, or operated by any VTE Entity or any of its Operating
Properties or Participation Facilities, except for such Litigation
pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a VTE Material Adverse Effect, nor is
there any reasonable basis for any Litigation of a type described in
this sentence, except such as is not reasonably likely to have,
individually or in the aggregate, a VTE Material Adverse Effect.
(c) During the period of (i) any VTE Entity's ownership or
operation of any of their respective current properties, (ii) any VTE
Entity's participation in the management of any Participation Facility,
or (iii) any VTE Entity's holding of a security interest in a Operating
Property, there have been no releases, discharges, spillages, or
disposals of Hazardous Material in, on, under, adjacent to, or affecting
(or potentially affecting) such properties, except such as are not
reasonably likely to have, individually or in the aggregate, a VTE
Material Adverse Effect. Prior to the period of (i) any VTE Entity's
ownership or operation of any of their respective current properties,
(ii) any VTE Entity's participation in the management of any
Participation Facility, or (iii) any VTE Entity's holding of a security
interest in a Operating Property, there were no releases, discharges,
spillages, or disposals of Hazardous Material in, on, under, or
affecting any such property, Participation Facility or Operating
Property, except such as are not reasonably likely to have, individually
or in the aggregate, a VTE Material Adverse Effect.
5.13 COMPLIANCE WITH LAWS. Except as disclosed in Section
----------------------
5.13 of the VTE Disclosure Memorandum, since January 1, 1986, each VTE Entity
has had in effect all Permits necessary for it to own, lease, or operate its
material Assets and to carry on its business as it has been, and as it is
currently, conducted, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a VTE Material
Adverse Effect, and there has occurred no Default under any such Permit, other
than Defaults which are not reasonably likely to have, individually or in the
aggregate, a VTE Material Adverse Effect. Except as disclosed in Section 5.13 of
the VTE Disclosure Memorandum, none of the VTE Entities:
-17-
(a) is in Default under any of the provisions of its
Certificate of Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except
for Defaults which are not reasonably likely to have, individually or in
the aggregate, a VTE Material Adverse Effect; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i)
asserting that any VTE Entity is not in compliance with any of the Laws
or Orders which such governmental authority or Regulatory Authority
enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a VTE Material Adverse Effect, (ii)
threatening to revoke any Permits, the revocation of which is reasonably
likely to have, individually or in the aggregate, a VTE Material Adverse
Effect, or (iii) requiring any VTE Entity to enter into or consent to
the issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or to adopt any Board
resolution or similar undertaking.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to
Premiere.
5.14 LABOR RELATIONS. No VTE Entity is the subject of any
---------------
Litigation asserting that it or any other VTE Entity has committed an unfair
labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other VTE Entity to bargain
with any labor organization as to wages or conditions of employment, nor is any
VTE Entity party to any collective bargaining agreement, nor is there any strike
or other labor dispute involving any VTE Entity, pending or threatened, or to
the Knowledge of VTE, is there any activity involving any VTE Entity's employees
seeking to certify a collective bargaining unit or engaging in any other
organization activity.
5.15 EMPLOYEE BENEFIT PLANS.
----------------------
(a) VTE has disclosed in Section 5.15 of the VTE Disclosure
Memorandum, and has delivered or made available to Premiere prior to the
execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus, or other
incentive plan, all other written employee programs, arrangements, or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit
plans, including "employee benefit plans" as that term is defined in
Section 3(3) of ERISA, currently adopted, maintained by, sponsored in
whole or in part by, or contributed to by any VTE Entity or ERISA
Affiliate thereof for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries and
under which employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries are eligible to
participate (collectively, the "VTE Benefit Plans"). Any
-18-
of the VTE Benefit Plans which is an "employee pension benefit plan," as
that term is defined in Section 3(2) of ERISA, other than those plans
described in Section 201(2) of ERISA, is referred to herein as a "VTE
ERISA Plan." No VTE ERISA Plan is subject to Title IV of ERISA. Section
5.15 of the VTE Disclosure Memorandum sets forth a list and brief
description of each VTE Benefit Plan, including a designation of whether
such VTE Benefit Plan is a VTE ERISA Plan.
(b) Except as described in Section 5.15(b) of the VTE
Disclosure Memorandum, all VTE Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws the breach or violation of which are reasonably likely
to have, individually or in the aggregate, a VTE Material Adverse
Effect. Each VTE ERISA Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and VTE is not
aware of any circumstances likely to result in revocation of any such
favorable determination letter. No VTE Entity has engaged in a
transaction with respect to any VTE Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would
subject any VTE Entity to a Tax imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA.
(c) Within the six-year period preceding the Effective
Time, no Liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by any VTE Entity with respect to any
ongoing, frozen, or terminated single-employer plan or the
single-employer plan of any ERISA Affiliate, which Liability is
reasonably likely to have a VTE Material Adverse Effect. No VTE Entity
has incurred any withdrawal Liability with respect to a multiemployer
plan under Subtitle B of Title IV of ERISA (regardless of whether based
on contributions of an ERISA Affiliate), which Liability is reasonably
likely to have a VTE Material Adverse Effect. No notice of a "reportable
event," within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed
for any VTE Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof.
(d) Except as disclosed in Section 5.15 of the VTE
Disclosure Memorandum, no VTE Entity has any Liability for retiree
health and life benefits under any of the VTE Benefit Plans and there
are no restrictions on the rights of such VTE Entity to amend or
terminate any such retiree health or benefit Plan without incurring any
Liability thereunder, which Liability is reasonably likely to have a VTE
Material Adverse Effect.
(e) Except as disclosed in Section 5.15 of the VTE
Disclosure Memorandum, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (i) result in any payment (including severance, unemployment
compensation, golden parachute, or otherwise) becoming due to any
director or any employee of any VTE Entity from any VTE Entity under any
VTE Benefit Plan or otherwise, (ii) increase any benefits otherwise
payable under any VTE Benefit Plan, or (iii) result in any acceleration
of the time of payment or vesting of any such benefit, where
-19-
such payment, increase, or acceleration is reasonably likely to have,
individually or in the aggregate, a VTE Material Adverse Effect.
(f) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of
employees and former employees of any VTE Entity and their respective
beneficiaries, other than entitlements accrued pursuant to funded
retirement plans subject to the provisions of Section 412 of the
Internal Revenue Code or Section 302 of ERISA, have been fully reflected
on the VTE Financial Statements to the extent required by and in
accordance with GAAP.
5.16 CERTAIN CONTRACTS. Except as disclosed in Section 5.16 of
-----------------
the VTE Disclosure Memorandum or otherwise reflected in the VTE Financial
Statements, none of the VTE Entities, nor any of their respective Assets,
businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting,
or retirement Contract providing for aggregate payments to any Person in any
calendar year in excess of $50,000, (ii) any Contract relating to the borrowing
of money by any VTE Entity or the guarantee by any VTE Entity of any such
obligation (other than Contracts evidencing trade payables), (iii) any Contract
which prohibits or restricts any VTE Entity from engaging in any business
activities in any geographic area, line of business or otherwise in competition
with any other Person, (iv) any Contract between or among VTE Entities,
Stockholders, any director, officer or employee of any VTE Entity and/or Related
Persons, (v) any Contract involving Intellectual Property Rights (other than
Contracts entered into in the ordinary course with customers and "shrink-wrap"
software licenses), (vi) any Contract relating to the provision of data
processing, network communication, or other technical services to or by any VTE
Entity, (vii) any Contract relating to the purchase or sale of any goods or
services (other than Contracts entered into in the ordinary course of business
and involving payments under any individual Contract not in excess of $100,000),
(ix) any Contract providing VTE with the right to purchase or redeem any VTE
Common Stock or other Equity Rights in VTE, (x) any other Contract or amendment
thereto that would be required to be filed as an exhibit to a Form 10-K, if such
form were required to be filed by VTE with the SEC as of the date of this
Agreement, (xi) any Contract relating to indebtedness for borrowed money, (xii)
any Contract relating to the lease of personal property, (xiii) any Contract
relating to the lease of real property, and (xiv) any Contract relating to the
development of strategic alternatives for, raising capital for, or selling VTE
(together with all Contracts referred to in Sections 5.10, 5.15(a) and 5.19, the
"VTE Contracts"). With respect to each VTE Contract disclosed pursuant to item
(xi) of the preceding sentence, Section 5.16 of the VTE Disclosure Memorandum
sets forth, with respect to each item of indebtedness, (A) the obligee, (B) the
obligor, (C) principal amount outstanding as of the date hereof, (D) the
interest rate, (E) payment schedule, (F) the maturity date, (G) collateral
securing such indebtedness, (H) the name(s) of any third party guarantor(s), (I)
a brief description of any Defaults which have not been cured, (J) the amount of
any prepayment penalty or premium, and (K) any third party Consents to the
transactions contemplated herein which are required pursuant to the terms of
such VTE Contract. With respect to each VTE Contract disclosed pursuant to items
(xii) and (xiii) of this Section 5.16, Section 5.16 of the VTE Disclosure
Memorandum sets forth, with respect to each such lease, (R) the lessor (S) the
lessee, (T) Assets subject to such lease, (V) expiration date
-20-
of current term, (V) payment schedule, (W) the terms of any purchase option, (X)
a brief description of any Defaults which have not been cured, (Y) the amount of
any prepayment penalty or premium and (Z) any third party Consents to the
transactions contemplated herein which are required pursuant to the terms of
such VTE Contract. With respect to each Contract to which any VTE Entity is a
party or by which it is bound and except as disclosed in Section 5.16 of the VTE
Disclosure Memorandum: (i) the Contract is in full force and effect; (ii) no VTE
Entity is in Default thereunder, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a VTE Material Adverse Effect;
(iii) no VTE Entity has repudiated or waived any material provision of any such
Contract; and (iv) no other party to any such Contract is, to the Knowledge of
VTE, in Default in any respect or has repudiated or waived any material
provision thereunder. All of the indebtedness of any VTE Entity for money
borrowed is prepayable at any time by such VTE Entity without penalty or
premium.
5.17 LEGAL PROCEEDINGS. Except as set forth in Section 5.17 of
-----------------
the VTE Disclosure Memorandum, there is no Litigation instituted or pending, or,
to the Knowledge of VTE, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any VTE Entity, or against any partner,
director, employee or employee benefit plan of any VTE Entity, or against any
Asset, interest, or right of any of them, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any VTE Entity. Section 5.17 of the VTE Disclosure
Memorandum contains a summary of all Litigation as of the date of this Agreement
to which any VTE Entity is a party and which names a VTE Entity as a defendant
or cross-defendant or for which, to the knowledge of VTE, any VTE Entity has any
potential Liability.
5.18 REPORTS. Since January 1, 1993, or the date of
-------
organization if later, each VTE Entity has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with Regulatory Authorities. As of their
respective dates, each of such reports and documents, including the financial
statements, exhibits, and schedules thereto, complied in all material respects
with all applicable Laws. As of its respective date, each such report and
document did not, in all material respects, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
5.19 FRANCHISE MATTERS
-----------------
(a) Section 5.19(a) of the VTE Disclosure Memorandum
contains a true and complete copy of each form or version, currently in
effect with any Franchisee or other Person, of (i) Franchise Agreement,
(ii) SRA, and (iii) NAP Agreement.
(b) Section 5.19(b) of the VTE Disclosure Memorandum
contains a true and complete list setting forth as to each Franchise:
(i) the legal name of the Franchise; (ii) the date of the Franchise
Agreement: (iii) the version of Franchise Agreement entered into with
respect to the Franchise and a description of any material
-21-
variances to such version contained in the Franchise Agreement in effect
for such Franchise; (iv) the geographic boundaries of Protected
Territory provided under the Franchise Agreement; (v) the number of
Sales Territories in effect for such Franchise; (vi) the location of
each VTE Center owned and/or operated pursuant to such Franchise; (vii)
the royalty rate in effect for such Franchise; (viii) the legal name of
the holder of any SRA related to the Franchise; (ix) whether a NAP
Agreement is in effect for the Franchise; (x) whether the Franchise was
previously owned by another Person and, if so, the name of the prior
owner and the date of transfer to the current Franchisee; (xi) whether
the Franchisee or any other Person has requested Consent to transfer the
Franchise and, if so, the date of such request and the identity of the
proposed transferee; and (xii) whether, at any time since January 1,
1994, the Franchisee (A) has received from VTE a notice of financial or
other Default under the Franchise Agreement, and if so, the date and
nature of such notice, or (B) has notified VTE that it considers VTE in
Default under the Franchise Agreement or otherwise in violation of any
Contract or Law related to the Franchise, and, if so, the date and the
nature of such notice.
(c) Section 5.19(c) of the VTE Disclosure Memorandum
contains a true and complete list of each Person that has proposed to
purchase from VTE or, to the Knowledge of VTE, from another Franchisee,
a Franchise, setting forth, with respect thereto, a description of the
relevant Franchise, including the Protected Territory (other than
proposals that have been consummated or terminated).
(d) Section 5.19(d) of the VTE Disclosure Memorandum
contains a true and complete list of each Franchise that, at any time
since January 1, 1994, has been terminated or not renewed, setting forth
as to each such Franchise the reason for such termination or nonrenewal.
Except as set forth on Section 5.19(d) of the VTE Disclosure Memorandum,
VTE received with respect to each such termination or nonrenewal a
release from the relevant Franchisee with respect to all obligations or
Liabilities of VTE to such Franchisee.
(e) Section 5.19(e) of the VTE Disclosure Memorandum
contains a true and complete list setting forth as to each SRA: (i) the
legal name of the Person holding rights as representative under the SRA;
(ii) the date of the SRA; (iii) the version of SRA and any material
variances from such version contained in the SRA; (iv) the identity of
each Franchise covered by the SRA; (v) the rate currently in effect
under the SRA; (vi) the termination date of the SRA; (vii) whether the
SRA was previously held by another Person and, if so, the name of the
previous owner and the date of transfer to the current holder of the
SRA; and (viii) whether, at any time since January 1, 1994, the owner of
the SRA (A) has received from VTE a notice of Default under the SRA,
and, if so, the date and nature of such notice, or (B) to the Knowledge
of VTE, has received from any Franchisee serviced under the SRA a notice
of Default, and, if so, the date and nature of such notice.
(f) Section 5.19(f) of the VTE Disclosure Memorandum
identifies each Franchisee or other Person who has a Contract with VTE
for the acquisition of additional Franchise rights or the expansion of
such Franchisee's Protected Territory, which list
-22-
includes (i) the name of the Franchisee or other Person; (ii) the terms
and duration of the Contract; (iii) a description of the expansion area;
and (iv) whether such arrangement may be terminated by VTE by notice to
the other party. Except as listed or described in Section 5.19(f) of the
VTE Disclosure Memorandum, no Franchisee's Protected Territory is shared
in whole or in part with any other Franchisee.
(g) Section 5.19(g) of the VTE Disclosure Memorandum sets
forth a true and complete list and description of the terms of all
Contracts with independent sales representatives or agents with respect
to the sale or development of Franchises and all territorial
development, broker's and master franchise agreements or any other
Contracts under which VTE has authorized any Person to sell or promote
Franchises or licenses on behalf of VTE or agreed to rebate or share
amounts receivable under any Franchise Agreement. Except as set forth in
Section 5.19(g) of the VTE Disclosure Memorandum, each such Contract may
be terminated by VTE without Liability to the other party to the
Contract.
(h) Section 5.19(h) of the VTE Disclosure Memorandum
contains a true, complete and correct copy of the current form of
operating manual or other document containing all written, and an
accurate description of all other material, operating policies, codes
and requirements imposed on Franchisees by VTE pursuant to the Franchise
Agreements. Except as disclosed in Section 5.19(h) of the VTE Disclosure
Memorandum, (i) all Franchisees are operating under the form of
operating manual or other document attached to Section 5.19(h) of the
VTE Disclosure Memorandum and (ii) such operating manual and other
documents comply in all material respects with the requirements of the
related Franchise Agreements and relevant Laws and are substantially
consistent with the descriptions thereof in the relevant Franchise
Offering Circulars and related advertising and marketing material.
(i) Section 5.19(i) of the VTE Disclosure Memorandum
contains a true, complete and correct copy of: (i) the by-laws and other
organization and governance documents relating the NAP and the NAP
Board; (ii) the names, affiliations and term of office of each member of
the NAP Board; (iii) each Contract with a national account in effect
pursuant to the NAP; (iv) the balance sheet of the NAP as of December
31, 1996 and a statement of operations of the NAP for the years ended
December 31, 1996 and 1995, setting forth a full and fair description of
the Assets and Liabilities of the NAP and the results of operations of
the NAP at and for the periods presented.
(j) Except as set forth in Section 5.19(j) of the VTE
Disclosure Memorandum, VTE has complied in all material respects with
all Laws in connection with the offer and sale of Franchises or business
opportunities and, in connection therewith, has filed all necessary
notices or other documents, made all necessary disclosures and taken all
other necessary actions and has received all necessary Consents under
applicable Law. Section 5.19(j) of the VTE Disclosure Memorandum
contains a true and complete list of all jurisdictions in which VTE is
registered for the purpose of offering and selling Franchises. VTE has
heretofore made available for review by Premiere correct and complete
copies of
-23-
all registrations, advertising or promotional materials, franchise
agreements and license agreements filed with any Regulatory Authority or
otherwise used by VTE in connection with the offer, sale and operation
of Franchises or business opportunities in any jurisdiction. VTE has
not, in any of the aforementioned documents (including, without
limitation, offering circulars or disclosure documents), made any untrue
statement of a material fact, or omitted to state any fact necessary to
make the statements made by VTE, taken as a whole, not misleading, in
connection with the other or sale of any franchise or business
opportunity. Except as set forth in Section 5.19(j) of the VTE
Disclosure Memorandum, Vte did not provide earnings claims, as defined
in the Uniformed Franchise Offering Circular Guidelines, in any
franchise offering circular or disclosure document, and has no knowledge
that earnings claims were prepared by, or were provided to Franchisees
by others on behalf of VTE. Except as set forth in Section 5.19(j) of
the VTE Disclosure Memorandum, no Franchisee has alleged, orally or in
writing, to VTE that VTE has acted improperly regarding (y) disparate
treatment among Franchisees or (z) providing prospective Franchisees
with inaccurate or incorrect earnings claims that violate relevant Law.
5.20 VTE PRODUCTS AND SERVICES. Except as set forth in Section
-------------------------
5.20 of the VTE Disclosure Memorandum the VTE Products and Services conform in
all material respects with any specification, documentation, performance
standard, representation or statement made or provided with respect thereto by
or on behalf of any VTE Entity, and there has not been during the last three (3)
years any claim made against any VTE Entity by any customer of any VTE Entity
or, to the Knowledge of VTE, any customer of a Franchisee, by any Franchisee or
by any other Person alleging that any VTE Product and Service (including each
version thereof that has been licensed or otherwise made available by any VTE
Entity to any Person) does not conform in all material respects with any
specification, documentation, performance standard, representation or statement
made or provided by or on behalf of any VTE Entity, and, to the Knowledge of
VTE, there is not a reasonable basis for any such claim. Notwithstanding the
generality of the foregoing, all VTE Products and Services offered or
distributed by any VTE Entity, the NAP or VTE to each of Amway, its distributors
and customers, NAP customers and the Franchisees or any other VTE customer,
conform as of the date hereof to the current and future performance standards
and service levels applicable thereto, including without limitation, those set
forth in the Contracts listed in Section 5.20 of the VTE Disclosure Memorandum,
without imposition of any performance credits or other penalties and otherwise
in accordance with the terms of such Contracts. No product liability or warranty
claims which individually or in the aggregate could exceed the reserves therefor
on the VTE Financial Statements have been communicated in writing to or
threatened in writing against any VTE Entity. The VTE Products and Services, as
of the date hereof, during and after the calendar year 2000 A.D., include
design, function and performance capabilities such that the VTE Products and
Services shall not abnormally end and/or have invalid and/or incorrect results
from and/or performance or functional degradation because of the then-current
date. The design and function of the VTE Products and Services shall ensure year
2000 A.D. and shall include, but not be limited to, date data century
recognition, calculations that accommodate same century and multicentury
formulas and date values, and date data interface values that reflect the
century.
-24-
5.21 SYSTEM PERFORMANCE.
------------------
(a) The Network as currently equipped and maintained is
Reliably Handling an average of 70,000 messages per day (with an average
length of 120 seconds) which are transmitted from one Hub to another
("Multi-Hub Messages") in combination with an average of 100,000
messages per day which are transmitted from a Service Center to a single
Hub and back to another Service Center ("Single-Hub Messages"). The
Network as currently equipped and maintained is Reliably Handling peak
loads of 7,200 Multi-Hub Messages per hour in combination with 10,800
Single-Hub Messages per hour. The Network is capable, without additional
equipment, without an upgrade of software or hardware, and without
material degradation of delivery times or other Network performance, of
Reliably Handling an average of 280,000 Multi-Hub Messages per day in
combination with an average of 400,000 Single-Hub Messages per day, as
well as peak loads of 28,800 Multi-Hub Messages per hour in combination
with 43,200 Single-Hub Messages per hour. The Network may be improved,
at a total capital expenditure of no more than $4,500,000 based on
current prices offered by suppliers, so that it is capable of Reliably
Handling an average of 650,000 Multi-Hub Messages per day in combination
with an average of 1,000,000 Single-Hub Messages per day, as well as
peak loads of 65,000 Multi-Hub Messages per hour in combination with
100,000 Single-Hub Messages per hour.
(b) Each Service Center operated by VTE or a Franchisee as
currently equipped and maintained is capable of Reliably Handling an
average of 100 Single-Hub and Multi-Hub Messages (combined) per hour, in
combination with 700 messages per hour which are delivered from a sender
to a recipient within the same Service Center and are not transmitted to
a Hub ("Non-Hub Messages"). Twenty percent (20%) of the Service Centers
operated by VTE or its Franchisees as currently equipped and maintained
are capable of Reliably Handling an average of 300 Single-Hub and
Multi-Hub Messages (combined) per hour, in combination with 2,100
Non-Hub Messages per hour. Each Service Center equipped with one fully
loaded Centigram AIP voice mail server (with all port card slots filled
and running version 5.0 VoiceMemo software), one NIB, and one ACC Nile
Router connected to a Hub with a T1 line, is capable of Reliably
Handling an average of 400 Single-Hub and Multi-Hub Messages (combined)
per hour, in combination with 2,800 Non-Hub Messages per hour. Each
Service Center operated by VTE or a Franchisee as currently equipped and
maintained operates such that during the busiest hour of operation, nor
more than 2 out of every 100 callers will receive a busy condition or
signal referred to as "All Trunks Busy" or ATB. Each Service Center
operated by VTE or a Franchisee as currently equipped and maintained has
sufficient message storage capacity to provide the maximum number and
length of messages allowed and the number of days retained to which
every customer entitled to use the Service Center is currently entitled,
and an additional reserve storage capacity over and above that maximum
amount by 10%.
(c) The Network and Hubs as currently equipped and
maintained are capable of meeting the "Network Transmission Standards"
and the other performance requirements
-25-
set forth in the Agreement among VTELP, the NAP and VTE contained in the
Grand Solution Documents for all periods through set forth therein.
5.22 STATEMENTS TRUE AND CORRECT. No statement, certificate,
---------------------------
instrument, or other writing furnished or to be furnished by any VTE Entity or
any Affiliate thereof to Premiere pursuant to this Agreement or any other
document, agreement, or instrument delivered pursuant hereto herein contains or
will contain any untrue statement of material fact or will omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All documents that any
VTE Entity or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
5.23 ACCOUNTING AND REGULATORY MATTERS. No VTE Entity or any
---------------------------------
Stockholder or any Affiliate thereof has taken or agreed to take any action or
has any Knowledge of any fact or circumstance that is reasonably likely to (i)
prevent the Merger from qualifying for pooling-of-interests accounting
treatment, or (ii) materially impede or delay receipt of any Consents of
Regulatory Authorities referred to in Section 9.1(b) or result in the imposition
of a condition or restriction of the type referred to in the last sentence of
such Section.
5.24 STATE TAKEOVER LAWS. Each VTE Entity and each Stockholder
-------------------
has taken all necessary action to exempt the transactions contemplated by this
Agreement from, or if necessary to challenge the validity or applicability of,
any applicable "moratorium," "fair price," "business combination," "control
share," or other anti-takeover Laws (collectively, "Takeover Laws").
5.25 CHARTER PROVISIONS. Each VTE Entity and each Stockholder
------------------
has taken all action so that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated by this
Agreement do not and will not result in the grant of any rights to any Person
under the Certificate of Incorporation, Bylaws or other governing instruments of
any VTE Entity or restrict or impair the ability of Premiere or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a stockholder with
respect to, shares of any VTE Entity that may be directly or indirectly acquired
or controlled by them.
5.26 INVESTMENT INTENTION, ETC. Each Stockholder is acquiring
-------------------------
the shares of Premiere Common Stock to be issued pursuant to this Agreement for
investment only, for such Stockholder's own account and not as a nominee or
agent, and not with the view to, or for resale in connection with, any
distribution thereof or participation therein. Except as set forth in Section
5.26 of the VTE Disclosure Memorandum, each Stockholder is an "accredited
investor" as such term is defined in Rule 501(a) under the 1933 Act. Each
Stockholder has such knowledge and experience in business and financial matters
and with respect to investments in securities to enable the Stockholder to
understand and evaluate the risks of an investment in the Premiere Common Stock
to be acquired by the Stockholder in the Merger and to form an investment
decision with respect thereto and is able to bear the risk of such investment
for an indefinite period and to afford
-26-
a complete loss thereof. Each Stockholder has previously completed, executed and
delivered to Premiere an Investor Questionnaire relating to the transactions
contemplated by this Agreement. The responses contained in such Investor
Questionnaires are true and complete as of the date of the Questionnaire and the
date of this Agreement. Each Stockholder understands that the shares of Premiere
Common Stock to be issued pursuant to this Agreement have not been, and will not
be, registered under the 1933 Act in reliance upon the representations set forth
herein and in the Investor Questionnaires.
5.27 BOARD RECOMMENDATION. The Board of Directors of VTE, at a
---------------------
meeting duly called and held, has by unanimous vote of the directors present
(who constituted all of the directors then in office) (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger, taken
together, are fair to and in the best interests of the Stockholders and (ii)
resolved to recommend that the holders of the shares of VTE Common Stock approve
this Agreement.
5.28 AMWAY MATTERS.
-------------
(a) Amway is a corporation duly organized, validly existing, and
in good standing under the Laws of the State of Michigan, and has the
corporate power and authority to carry on its business as now
conducted and to own, lease and operate its Assets.
(b) Amway has the corporate power and authority to execute and
deliver this Agreement and the Amway Closing Documents and to perform
its obligations under this Agreement and the Amway Closing Documents.
This Agreement represents a legal, valid, and binding obligation of
Amway, enforceable against Amway in accordance with its terms (except
in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship,
moratorium, or similar Laws affecting the enforcement of creditors'
rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought)
and, upon the execution and delivery by Amway of the Amway Closing
Documents, the Amway Closing Documents will constitute the legal,
valid, and binding obligations of Amway, enforceable against Amway in
accordance with their respective terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar
Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the
court before which any proceeding may be brought).
(c) [Reserved]
(d) Amway is the owner of all right, title and interest (legal
and beneficial) in and to that number of shares of VTE Common Stock
set forth next to its name in Section 5.4(a) of the VTE Disclosure
Memorandum, free and clear of all Liens. Amway is the owner of all
right, title and interest (legal and beneficial) in and to the Amway
Convertible
-27-
Note, free and clear of all Liens. The Amway Convertible Note is
convertible into 95.75 Shares of VTE Common Stock and 78.25 shares of
VTN Common Stock. Other than the Amway Convertible Note, Amway does
not have any Contract or any right or privilege (whether pre-emptive
or contractual) capable of becoming a Contract or Equity Right for the
purchase, subscription or issuance of any securities of VTE.
(e) [Reserved]
(f) [Reserved]
(g) Amway is acquiring the shares of Premiere Common Stock to be
issued pursuant to this Agreement for investment only, for its own
account and not as a nominee or agent, and not with the view to, or
for resale in connection with, any distribution thereof or
participation therein. Amway is an "accredited investor" as such term
is defined in Rule 501(a) under the 1933 Act. Amway has such knowledge
and experience in business and financial matters and with respect to
investments in securities to enable Amway to understand and evaluate
the risks of an investment in the Premiere Common Stock to be acquired
by Amway in the Merger and to form an investment decision with respect
thereto and is able to bear the risk of such investment for an
indefinite period and to afford a complete loss thereof.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PREMIERE
------------------------------------------
Premiere hereby represents and warrants to VTE and the Stockholders
as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Premiere is a corporation duly
---------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Assets. Premiere is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Premiere Material Adverse Effect.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
---------------------------------
(a) Premiere has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part
of Premiere. This Agreement represents a legal, valid, and binding
obligation of Premiere, enforceable against Premiere in accordance with its
terms (except in all cases as such
-28-
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Premiere, nor the consummation by Premiere of the transactions contemplated
hereby, nor compliance by Premiere with any of the provisions hereof, will
(i) conflict with or result in a breach of any provision of Premiere's
Articles of Incorporation or Bylaws or any resolution adopted by the board
of directors or shareholders of Premiere or any of its Subsidiaries, or
(ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any
Premiere Entity under, any Contract or Permit of any Premiere Entity, where
such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Premiere Material
Adverse Effect, or, (iii) subject to receipt of the requisite Consents
referred to in Section 9.1(b), constitute or result in a Default under, or
require any Consent pursuant to, any Law or Order applicable to any
Premiere Entity or any of their respective material Assets (including any
Premiere Entity or any VTE Entity becoming subject to or liable for the
payment of any Tax or any of the Assets owned by any Premiere Entity or any
VTE Entity being reassessed or revalued by any Taxing authority).
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents,
filings, or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Premiere
Material Adverse Effect, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by Premiere of
the Merger and the other transactions contemplated in this Agreement.
6.3 CAPITAL STOCK.
-------------
(a) The authorized capital stock of Premiere consists of
(i)150,000,000 shares of Premiere Common Stock, of which 24,089,769 shares
are issued and outstanding as of March 17, 1997, and (ii) 5,000,000 shares
of Premiere Preferred Stock, of which no shares are issued and outstanding.
All of the issued and outstanding shares of Premiere Capital Stock are, and
all of the shares of Premiere Common Stock to be issued in exchange for
shares of VTE Common Stock upon consummation of the Merger, when issued in
accordance with the terms of this Agreement, will be, duly and validly
issued and outstanding and fully paid and nonassessable . None of the
outstanding shares of Premiere Capital Stock has been, and none of the
shares of Premiere Common Stock to be issued in exchange for shares of VTE
Common Stock upon consummation of the Merger will be, issued in violation
of any preemptive rights of the current or past stockholders of Premiere.
-29-
(b) Except as set forth in Section 6.3(a), or as provided
pursuant to the Premiere 1994 Stock Option Plan or the Premiere 1995 Stock
Plan or as disclosed in Section 6.3 of the Premiere Disclosure Memorandum,
there are no shares of capital stock or other equity securities of Premiere
outstanding and no outstanding Equity Rights relating to the capital stock
of Premiere.
6.4 PREMIERE SUBSIDIARIES. Premiere has disclosed in Section
---------------------
6.4 of the Premiere Disclosure Memorandum all of the Premiere Subsidiaries as of
the date of this Agreement that are corporations (identifying its jurisdiction
of incorporation, each jurisdiction in which the character of its Assets or the
nature or conduct of its business requires it to be qualified and/or licensed to
transact business, and the number of shares owned and percentage ownership
interest represented by such share ownership) and all of the Premiere
Subsidiaries that are general or limited partnerships or other non-corporate
entities (identifying the Law under which such entity is organized, each
jurisdiction in which the character of its Assets or the nature or conduct of
its business requires it to be qualified and/or licensed to transact business,
and the amount and nature of the ownership interest therein). Except as
disclosed in Section 6.4 of the Premiere Disclosure Memorandum, Premiere or one
of its wholly-owned Subsidiaries owns all of the issued and outstanding shares
of capital stock (or other equity interests) of each Premiere Subsidiary. No
capital stock (or other equity interest) of any Premiere Subsidiary are or may
become required to be issued (other than to another Premiere Entity) by reason
of any Equity Rights, and there are no Contracts by which any Premiere
Subsidiary is bound to issue (other than to another Premiere Entity) additional
shares of its capital stock (or other equity interests) or Equity Rights or by
which any Premiere Entity is or may be bound to transfer any shares of the
capital stock (or other equity interests) of any Premiere Subsidiary (other than
to another Premiere Entity). There are no Contracts relating to the rights of
any Premiere Entity to vote or to dispose of any shares of the capital stock (or
other equity interests) of any Premiere Subsidiary. All of the shares of capital
stock (or other equity interests) of each Significant Subsidiary of Premiere
held by a Premiere Entity are fully paid and nonassessable and are owned by the
Premiere Entity free and clear of any Lien. Each Premiere Subsidiary is a
corporation, and is duly organized, validly existing, and (as to corporations)
in good standing under the Laws of the jurisdiction in which it is incorporated
or organized, and has the corporate power and authority necessary for it to own,
lease and operate its Assets and to carry on its business as now conducted. Each
Premiere Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Premiere Material
Adverse Effect.
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
---------------------------------
(a) Premiere has timely filed and made available to VTE all
SEC Documents required to be filed by Premiere since March 5, 1996 (the
"Premiere SEC Reports"). The Premiere SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Laws and other applicable Laws and (ii) did not, at
-30-
the time they were filed (or, if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact
required to be stated in such Premiere SEC Reports or necessary in order to
make the statements in such Premiere SEC Reports, in light of the
circumstances under which they were made, not misleading. No Premiere
Subsidiary is required to file any SEC Documents.
(b) Each of the Premiere Financial Statements (including, in
each case, any related notes) contained in the Premiere SEC Reports,
including any Premiere SEC Reports filed after the date of this Agreement
until the Effective Time, complied as to form in all material respects with
the applicable published rules and regulations of the SEC with respect
thereto, was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to
such financial statements or, in the case of unaudited interim statements,
as permitted by Form 10-Q of the SEC), and fairly presented in all material
respects the consolidated financial position of Premiere and its
Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
material in amount or effect.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Premiere Entity has
----------------------------------
any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Premiere Material Adverse Effect, except Liabilities which are
accrued or reserved against in the consolidated balance sheet of Premiere as of
December 31, 1996, included in the Premiere Financial Statements delivered prior
to the date of this Agreement or reflected in the notes thereto and Liability
(including contingent Liabilities) described in the Premiere SEC Report. Except
as disclosed in the Premiere SEC Reports, no Premiere Entity has incurred or
paid any Liability since December 31, 1996, except for such Liabilities incurred
or paid (i) in the ordinary course of business consistent with past business
practice and which are not reasonably likely to have, individually or in the
aggregate, a Premiere Material Adverse Effect or (ii) in connection with the
transactions contemplated by this Agreement.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
------------------------------------
1996, except as disclosed in the Premiere Financial Statements delivered prior
to the date of this Agreement, as disclosed in the Premiere SEC Reports, or as
disclosed in Section 6.7 of the Premiere Disclosure Memorandum, (i) there have
been no events, changes or occurrences which have had, or are reasonably likely
to have, individually or in the aggregate, a Premiere Material Adverse Effect,
and (ii) the Premiere Entities have not taken any action, or failed to take any
action, prior to the date of this Agreement, which action or failure, if taken
after the date of this Agreement, would represent or result in a material breach
or violation of any of the covenants and agreements of Premiere provided in
Article 7.
6.8 COMPLIANCE WITH LAWS. Each Premiere Entity has in effect
--------------------
all Permits necessary for it to own, lease or operate its material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have,
-31-
individually or in the aggregate, a Premiere Material Adverse Effect, and there
has occurred no Default under any such Permit, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Premiere Material
Adverse Effect. Except as disclosed in the Premiere SEC Reports or in Section
6.8 of the Premiere Disclosure Memorandum, none of the Premiere Entities:
(a) is in Default under its Articles of Incorporation or Bylaws
(or other governing instruments); or
(b) is in Default under any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for Defaults
which are not reasonably likely to have, individually or in the aggregate,
a Premiere Material Adverse Effect; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting
that any Premiere Entity is not in compliance with any of the Laws or
Orders which such governmental authority or Regulatory Authority enforces,
where such noncompliance is reasonably likely to have, individually or in
the aggregate, a Premiere Material Adverse Effect, (ii) threatening to
revoke any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Premiere Material Adverse Effect, or
(iii) requiring any Premiere Entity to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
commitment or memorandum of understanding, or to adopt any Board resolution
or similar undertaking, which restricts materially the conduct of its
business.
6.9 LEGAL PROCEEDINGS. Except as disclosed in the Premiere SEC
-----------------
Reports, there is no Litigation instituted or pending, or, to the Knowledge of
Premiere, threatened (or unasserted but considered probable of assertion and
which if asserted would have at least a reasonable probability of an unfavorable
outcome) against any Premiere Entity, or against any director, employee or
employee benefit plan of any Premiere Entity, or against any Asset, interest, or
right of any of them, that is reasonably likely to have, individually or in the
aggregate, a Premiere Material Adverse Effect, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any Premiere Entity, that are reasonably likely to have,
individually or in the aggregate, a Premiere Material Adverse Effect.
6.10 STATEMENTS TRUE AND CORRECT. No statement, certificate,
---------------------------
instrument or other writing furnished or to be furnished by any Premiere Entity
or any Affiliate thereof to VTE pursuant to this Agreement or any other
document, agreement or instrument delivered pursuant hereto contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. All documents that any Premiere
Entity or any Affiliate thereof is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply as
to form in all material respects with the provisions of applicable Law.
-32-
6.11 ACCOUNTING AND REGULATORY MATTERS. No Premiere Entity or any
---------------------------------
Affiliate thereof has taken or agreed to take any action or has any Knowledge of
any fact or circumstance that is reasonably likely to (i) prevent the Merger
from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section. In this regard, Premiere shall execute and deliver to VTE's counsel
prior to the Effective Date a certificate substantially in the form of Exhibit 5
hereto.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
7.1 AFFIRMATIVE COVENANTS OF VTE. From the date of this Agreement
----------------------------
until the earlier of the Effective Time or the termination of this Agreement,
unless the prior written consent of Premiere shall have been obtained, and
except as otherwise expressly contemplated herein, VTE shall and shall cause
each of its Subsidiaries to (a) operate its business only in the usual, regular,
and ordinary course, (b) preserve intact its business organization and Assets
and maintain its rights and franchises, and (c) knowingly take no action which
would (i) adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentences of
Section 9.1(b) or 9.1(c), or (ii) adversely affect the ability of any Party to
perform its covenants and agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF VTE. From the date of this Agreement until
-------------------------
the earlier of the Effective Time or the termination of this Agreement, unless
the prior written consent of Premiere shall have been obtained, and except as
otherwise expressly contemplated herein, in the VTN Merger Agreement, or in the
MPI Purchase Agreement or as disclosed in Section 7.2 of the VTE Disclosure
Memorandum, VTE covenants and agrees that it will not do or agree or commit to
do, or permit any of its Subsidiaries to do or agree or commit to do, any of the
following:
(a) amend the Certificate of Incorporation, Bylaws or other
governing instruments of any VTE Entity; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a VTE Entity to another VTE
Entity) in excess of an aggregate of $25,000 (for the VTE Entities on a
consolidated basis) except in the ordinary course of the business of VTE
Subsidiaries consistent with past practices, or impose, or suffer the
imposition, on any Asset of any VTE Entity of any Lien or permit any such
Lien to exist (other than in connection with Liens in effect as of the date
hereof that are disclosed in the VTE Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any
-33-
shares, or any securities convertible into any shares, of the capital stock
of any VTE Entity, or declare or pay any dividend or make any other
distribution in respect of VTE's capital stock; or
(d) except for this Agreement, or pursuant to the exercise of
stock options outstanding as of the date hereof and pursuant to the terms
thereof in existence on the date hereof, issue, sell, pledge, encumber,
authorize the issuance of, enter into any Contract to issue, sell, pledge,
encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of VTE Common Stock or any other capital
stock of any VTE Entity, or any stock appreciation rights, or any option,
warrant, or other Equity Right; or
(e) adjust, split, combine or reclassify any capital stock of
any VTE Entity or issue or authorize the issuance of any other securities
in respect of or in substitution for shares of VTE Common Stock, or sell,
lease, mortgage or otherwise dispose of or otherwise encumber (x) any
shares of capital stock of any VTE Subsidiary (unless any such shares of
stock are sold or otherwise transferred to another VTE Entity) or (y) any
Asset other than in the ordinary course of business for reasonable and
adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any material investment,
either by purchase of stock of securities, contributions to capital, Asset
transfers, or purchase of any Assets, in any Person other than a wholly
owned VTE Subsidiary, or otherwise acquire direct or indirect control over
any Person; or
(g) grant any increase in compensation or benefits to the
employees or officers of any VTE Entity, except in accordance with past
practice or as required by Law; pay any severance or termination pay or any
bonus other than pursuant to written policies or written Contracts in
effect on the date of this Agreement; and enter into or amend any severance
agreements with officers of any VTE Entity; grant any material increase in
fees or other increases in compensation or other benefits to directors of
any VTE Entity except in accordance with past practice; or voluntarily
accelerate the vesting of any stock options or other stock-based
compensation or employee benefits or other Equity Rights; or
(h) enter into or amend any employment Contract between any VTE
Entity and any Person (unless such amendment is required by Law) that the
VTE Entity does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time
on or after the Effective Time; or
(i) adopt any new employee benefit plan of any VTE Entity or
terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any VTE Entity other than any such
change that is required by Law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax qualified status of any such
plan, or
-34-
make any distributions from such employee benefit plans, except as required
by Law, the terms of such plans or consistent with past practice; or
(j) make any significant change in any Tax or accounting methods
or systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any VTE Entity
for material money damages or restrictions upon the operations of any VTE
Entity; or
(l) enter into, modify, amend or terminate any material Contract
(including any loan Contract with an unpaid balance exceeding $10,000, any
Franchise Agreement and any SRA) or waive, release, compromise or assign
any material rights or claims.
7.3 COVENANTS OF PREMIERE. From the date of this Agreement until the
---------------------
earlier of the Effective Time or the termination of this Agreement, unless the
prior written consent of VTE shall have been obtained, and except as otherwise
expressly contemplated herein, Premiere covenants and agrees that it shall (a)
continue to conduct its business and the business of its Subsidiaries in a
manner designed, in its reasonable judgment, to enhance the long-term value of
the Premiere Common Stock and the business prospects of the Premiere Entities
and to the extent consistent therewith use all reasonable efforts to preserve
intact the Premiere Entities' core businesses and goodwill with their respective
employees, and (b) take no action which would (i) materially adversely affect
the ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the last sentences of Section 9.1(b) or 9.1(c), or (ii)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement; provided, that the foregoing shall not
prevent any Premiere Entity from acquiring any Assets or other businesses or
from discontinuing or disposing of any of its Assets or business if such action
is, in the reasonable judgment of Premiere, desirable in the conduct of the
business of Premiere and its Subsidiaries. Premiere further covenants and agrees
that it will not, without the prior written consent of VTE, which consent shall
not be unreasonably withheld, amend the Articles of Incorporation or Bylaws of
Premiere, in each case, in any manner adverse to the holders of VTE Common Stock
as compared to rights of holders of Premiere Common Stock generally as of the
date of this Agreement.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
----------------------------
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a VTE Material Adverse Effect or a Premiere Material Adverse Effect,
as applicable, or (ii) would cause or constitute a material breach of any of its
representations, warranties, or covenants contained herein, and to use its
reasonable efforts to prevent or promptly to remedy the same.
-35-
7.5 REPORTS. Each Party and its Subsidiaries shall file all reports
-------
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in stockholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material). As of their
respective dates, such reports filed with the SEC will comply in all material
respects with the Securities Laws and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
---------------------
8.1 [RESERVED]
8.2. EXCHANGE LISTING. Premiere shall use its best efforts to list,
----------------
prior to the Effective Time, on the Nasdaq National Market the shares of
Premiere Common Stock to be issued to the holders of VTE Common Stock pursuant
to the Merger, and Premiere shall give all notices and make all filings with the
NASD required in connection with the transactions contemplated herein.
8.3 APPLICATIONS; ANTITRUST NOTIFICATION. Premiere shall prepare and
------------------------------------
file, and VTE and the Stockholders shall cooperate in the preparation and, where
appropriate, filing of, applications with all Regulatory Authorities having
jurisdiction over the transactions contemplated by this Agreement seeking the
requisite Consents necessary to consummate the transactions contemplated by this
Agreement. To the extent required by the HSR Act, each of the Parties will
promptly file with the United States Federal Trade Commission and the United
States Department of Justice the notification and report form required for the
transactions contemplated hereby and any supplemental or additional information
which may reasonably be requested in connection therewith pursuant to the HSR
Act and will comply in all material respects with the requirements of the HSR
Act. The Parties shall deliver to each other copies of all filings,
correspondence and orders to and from all Regulatory Authorities in connection
with the transactions contemplated hereby.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to
--------------------------
the conditions of this Agreement, Premiere, Sub and VTE shall execute and file
the Certificate of Merger with the Secretary of State of the State of Delaware
in connection with the Closing.
-36-
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
-------------------------------------
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its 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 Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use, and
shall cause each of its Subsidiaries to use, its reasonable efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
---------------------------------
(a) Prior to the Effective Time, each Party shall keep the other
Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or
cause to be made such investigation of the business and properties of it
and its Subsidiaries and of their respective financial and legal conditions
as the other Party reasonably requests, provided that such investigation
shall be reasonably related to the transactions contemplated hereby and
shall not interfere unnecessarily with normal operations. No investigation
by a Party shall affect the representations and warranties of the other
Party.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreement, which is hereby reaffirmed and adopted, and
incorporated by reference herein each Party shall, and shall cause its
advisers and agents to, maintain the confidentiality of all confidential
information furnished to it by the other Party concerning its and its
Subsidiaries' businesses, operations, and financial positions and shall not
use such information for any purpose except in furtherance of the
transactions contemplated by this Agreement. If this Agreement is
terminated prior to the Effective Time, each Party shall promptly return or
certify the destruction of all documents and copies thereof, and all work
papers containing confidential information received from the other Party.
(c) VTE shall use its reasonable efforts to exercise its rights
under confidentiality agreements entered into with Persons which were
considering an Acquisition Proposal with respect to VTE to preserve the
confidentiality of the information relating to the VTE Entities provided to
such Persons and their Affiliates and Representatives.
8.7 PRESS RELEASES. Prior to the Effective Time, VTE and
--------------
Premiere shall consult with each other as to the form and substance of any press
release or other public disclosure materially related to this Agreement or any
other transaction contemplated hereby; provided, that nothing in this Section
8.7 shall be deemed to prohibit any Party from making any disclosure which its
outside counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law. If any such press release or other public
disclosure contains a reference to Amway or any Amway marks, then no such press
release shall be issued or other
-37-
public disclosure made without the prior written consent of Amway, which consent
shall not be unreasonably withheld.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
----------------
transactions contemplated hereby, no VTE Entity nor any Stockholder nor any
Affiliate thereof nor any Representatives thereof retained by any VTE Entity
shall directly or indirectly solicit any Acquisition Proposal by any Person.
Except to the extent the Board of Directors of VTE, after having consulted with
and considered the advice of outside counsel, reasonably determines in good
faith that the failure to take such actions would constitute a breach of
fiduciary duties of the members of such Board of Directors to VTE's stockholder
under applicable law, no VTE Entity, any Stockholder or any Affiliate or
Representative thereof shall furnish any non-public information that it is not
legally obligated to furnish, negotiate with respect to, or enter into any
Contract with respect to, any Acquisition Proposal, but VTE may communicate
information about such an Acquisition Proposal to its stockholders if and to the
extent that it is required to do so in order to comply with its legal
obligations as advised by outside counsel. Each Stockholder and/or VTE shall
promptly advise Premiere following the receipt of any Acquisition Proposal and
the details thereof, and advise Premiere of any developments with respect to
such Acquisition Proposal promptly upon the occurrence thereof. Each Stockholder
and VTE shall (i) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any of the foregoing, and (ii) direct and use its reasonable
efforts to cause all of its Affiliates and Representatives not to engage in any
of the foregoing.
8.9 STOCKHOLDER RELEASES. Except as set forth in Section 8.9 of the
--------------------
VTE Disclosure Memorandum and except, as to Amway, for matters arising under the
Amway Reseller Agreement, each Stockholder, effective upon the Closing, hereby
releases, remises, and forever discharges each VTE Entity, VTN, VTNLP and their
respective Representatives, Affiliates, and insurers, and their respective
successors and assigns, and each of them (hereinafter individually and
collectively, the "Releasees") of and from any and all claims, demands, debts,
accounts, covenants, agreements, obligations, costs, expenses, actions or causes
of action of every nature, character or description, now accrued or which may
hereafter accrue, without limitation of law, equity or otherwise, based in whole
or in part on any facts, conduct, activities, transactions, events or
occurrences known or unknown, which have or allegedly have existed, occurred,
happened, arisen or transpired from the beginning of time to the Effective Time
(the "Released Claims"). Each Stockholder represents and warrants that no
Released Claim released herein has been assigned, expressly, impliedly, or by
operation of Law, and that all Released Claims of such Stockholder released
herein are owned by such Stockholder, who has the sole authority to release
them. Each Stockholder agrees that such holder shall forever refrain and
forebear from commencing, instituting or prosecuting any lawsuit action or
proceeding, judicial, administrative, or otherwise, or otherwise attempting to
collect or enforce any Released Claims which are released and discharged herein.
8.10 ACCOUNTING TREATMENT. Each of the Parties undertakes and agrees
--------------------
to use its reasonable efforts to cause the Merger, and to take no action which
would be reasonably likely to cause the Merger not, to qualify for treatment as
a pooling of interests for accounting purposes.
-38-
8.11 STATE TAKEOVER LAWS. Each VTE Entity and each Stockholder shall
-------------------
take all necessary steps to exempt the transactions contemplated by this
Agreement from, or if necessary to challenge the validity or applicability of,
any applicable Takeover Law, including Section 203 of the DGCL.
8.12 CHARTER PROVISIONS. Each VTE Entity shall take all necessary
------------------
action to ensure that the entering into of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby do not and will not
result in the grant of any rights to any Person under the Certificate of
Incorporation, Bylaws or other governing instruments of any VTE Entity or
restrict or impair the ability of Premiere or any of its Subsidiaries to vote,
or otherwise to exercise the rights of a stockholder with respect to, shares of
any VTE Entity that may be directly or indirectly acquired or controlled by
them.
8.13 TAX RETURNS. Premiere agrees that it will not permit or cause
-----------
VTE to file an amended federal or state income Tax Return, or any other Tax
Return for which Premiere intends to seek indemnification, with respect to any
taxable year or period ending on or before the Closing Date without delivering a
copy of such amended Tax Return to the Escrow Committee at least five (5) days
prior to the proposed filing thereof.
8.14 NONCOMPETITION, NONSOLICITATION AND NONDISCLOSURE.
-------------------------------------------------
(a) VTE and each Stockholder (other than Amway) acknowledges:
(i) that each Stockholder has substantial special
expertise and experience in the Business Activities and possesses
substantial contacts with suppliers and customers of VTE, and that
such expertise, experience and contacts have been built up over a
number of years, including such Stockholder's period of ownership of
VTE Common Stock;
(ii) that each Stockholder will be well-compensated under
this Agreement for the expertise, knowledge and contacts he or she has
obtained, as well as the goodwill that he or she has built up in VTE,
and that this Section 8.14 is being executed as an integral part of
such Stockholder's sale of all of his or her VTE Common Stock to
Premiere pursuant to the Merger, an express element of which includes
the sale of the goodwill such Stockholder's ownership and service has
generated, and for which sale such Stockholder will receive
substantial remuneration hereunder;
(iii) that each Stockholder has occupied a position of
trust and responsibility with VTE in which he or she has had access to
a substantial amount of VTE Confidential Information and VTE Trade
Secrets, and that Premiere is entering into this Agreement in reliance
upon such Stockholder's agreement not to use or disclose such VTE
Trade Secrets and VTE Confidential Information, not to compete
-39-
against Premiere or any Affiliate, and not to solicit Premiere's or
any such Affiliates' customers during the time periods set forth in
this Agreement;
(iv) that each Stockholder's special experience and his or
her close identification with goodwill of VTE, the harm caused by such
Stockholder's violation of the provisions of this Section 8.14 cannot
reasonably or adequately be compensated solely by damages in an action
at law;
(v) that each Stockholder is capable of competing with
and substantially harming Premiere and its Affiliates and has more
than adequate capital, experience, customer contract, supplier
contact, name recognition and industry reputation to start a competing
business, which would deprive Premiere of all or substantially all of
its bargained for goodwill and other consideration in the transactions
contemplated in this Agreement; and
(vi) that the terms of this Section 8.14 are necessary to
protect Premiere's legitimate business interests and its rights in the
VTE Trade Secrets and VTE Confidential Information and that
Stockholder's competition with Premiere or any of its Affiliates or
other violation of the covenants set forth below would cause
substantial and irreparable harm to Premiere.
(b) For three (3) years immediately following the Effective
Time, if Premiere or any of its Affiliates continues to carry on the
Business Activities of VTE, no Stockholder (other than Amway) shall,
directly or indirectly, by himself or herself or in conjunction with any
person, firm or corporation other than Premiere, engage in Business
Activities, or help anyone else engage in the Business Activities, within
the Restricted Territory. Notwithstanding anything contained herein to the
contrary, a Stockholder may own up to two percent (2%) of the shares of a
publicly-held corporation which competes with Premiere or any of its
Affiliates, provided none of his or her other relationships with such
corporation violate the terms of this Section 8.14 (provided that this
restriction shall not apply to Amway).
(c) For three (3) years immediately following the Effective
Time, no Stockholder (other than Amway) shall, for himself or herself or on
behalf of others, use or disclose any VTE Confidential Information or VTE
Trade Secrets except in the furtherance of the business of Premiere or any
of its Affiliates. No Stockholder (other than Amway) shall use or disclose
any VTE Trade Secrets at any time while the information remains a VTE Trade
Secret. Nothing in this provision shall limit the protections available to
Premiere under any federal, state or local statute or legal principle
governing confidential information or trade secrets.
(d) If a Stockholder (other than Amway) violates any portion of
this Section 8.14, such Stockholder shall forfeit all compensation due to
such Stockholder under the General Escrow Agreement or the Specific Escrow
Agreement.
-40-
(e) Each Stockholder (other than Amway) acknowledges that his
or her agreement not to compete with Premiere or any of its Affiliates is
necessarily of a special, unique and extraordinary nature, and that the
loss arising from a breach thereof cannot reasonably be compensated by
money damages and will cause Premiere and any such Affiliate irreparable
harm. Accordingly, upon the failure of any Stockholder (other than Amway)
to comply with the terms of this Section 8.14 at any time, Premiere and any
such Affiliate shall be entitled to injunctive or other extraordinary
relief in case of such breach, such injunctive or other extraordinary
relief to be cumulative to, but not in limitation of, any other remedies to
which Premiere or any such Affiliate may be entitled.
(f) Premiere and the Stockholders (other than Amway) intend
that Premiere have the broadest possible protection from unfair competition
by the Stockholders (other than Amway) with Premiere or any of its
Affiliates, consistent with public policy. Accordingly, should any court of
competent jurisdiction determine that, consistent with the established
precedent of the forum state, the public policy of such state requires a
more limited restriction in duration, geographical area, nature of
restricted activity, or any combination thereof, it would be in furtherance
of the intentions of the parties hereto for the court to so interpret and
construe the terms of this Agreement, or to modify the Agreement, to apply
to only such more limited restrictions to an appropriate degree.
8.15 EMPLOYMENT AGREEMENT. Each Stockholder listed in Section 9.1(i)
--------------------
of the VTE Disclosure Memorandum shall execute and deliver to Premiere at
Closing the relevant Employment Agreement referred to in Section 9.1(i).
8.16 NATIONAL CITY BANK PAYMENT. Upon the Closing, Premiere will pay,
--------------------------
or cause VTE to pay, the entire balance outstanding at such time on VTE's line
of credit and demand note with National City Bank.
8.17 AMWAY CONVERTIBLE NOTE. At Closing, Amway shall convert the
----------------------
Amway Convertible Note into 95.75 shares of VTE Common Stock and 78.25 shares of
VTN Common Stock; provided, however, that if the Average Closing Price (without
regard to the Average Closing Price Limitations) is less than $19.85, Amway
shall not be required to convert the Amway Convertible Note, but, in that event,
VTE shall pay in full the Amway Convertible Note at Closing and, in either
event, Amway shall release in full any other rights or remedies that it has by
reason of the Amway Convertible Note.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
---------------------------------------
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
12.6:
-41-
(a) [RESERVED]
(b) REGULATORY APPROVALS. All waiting periods required by HSR
--------------------
shall have expired.
(c) CONSENTS AND APPROVALS. VTE shall have obtained the
----------------------
Consents required for consummation of the Merger or for the preventing of
any Default under any Contract or Permit of VTE set forth on Section 5.2(b)
of the VTE Disclosure Memorandum. No Consent so obtained which is necessary
to consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner which in the reasonable judgment of the Board of
Directors of Premiere would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement that,
had such condition or requirement been known, such Party would not, in its
reasonable judgment, have entered into this Agreement.
(d) LEGAL PROCEEDINGS. No court or governmental or regulatory
-----------------
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated by
this Agreement.
(e) EXCHANGE LISTING. The shares of Premiere Common Stock
----------------
issuable pursuant to the Merger shall have been approved for listing on the
Nasdaq National Market.
(f) POOLING LETTERS. Each of the Parties shall have received
---------------
letters, dated as of the Effective Time, addressed to Premiere, in form and
substance reasonably acceptable to Premiere, from Xxxxxx Xxxxxxxx LLP,
acting as auditors for Premiere, to the effect that the Merger will qualify
for pooling-of-interests accounting treatment. Each of the Parties also
shall have received letters, dated as of the Effective Time, addressed to
Premiere, in form and substance reasonably acceptable to Premiere, from
Xxxxxx Xxxxxxxx LLP, acting as auditors for VTE, to the effect that such
firm is not aware of any matters relating to VTE and its Subsidiaries which
would preclude the Merger from qualifying for pooling-of-interests
accounting treatment.
(g) [RESERVED]
(h) REGISTRATION RIGHTS. Premiere and each of the Stockholders,
-------------------
so desiring, shall have executed and delivered the Stock Restriction and
Registration Rights Agreement, in the form attached hereto as Exhibit
(i) VTN MERGER. Sub II and VTN shall have consummated the VTN
----------
Merger.
(j) MPI PURCHASE. Premiere shall have consummated the purchase
------------
of the Partner Interest from MPI pursuant to the MPI Purchase Agreement.
-42-
9.2 CONDITIONS TO OBLIGATIONS OF PREMIERE. The obligations of
-------------------------------------
Premiere to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Premiere pursuant to Section 12.6(a):
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
------------------------------
Section 9.2(a), the accuracy of the representations and warranties of VTE
and the Stockholders set forth in this Agreement shall be assessed as of
the date of this Agreement and as of the Effective Time with the same
effect as though all such representations and warranties had been made on
and as of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such date).
All other representations and warranties of VTE and the Stockholders
contained in this Agreement or any agreement, certificate or instrument
entered into or delivered in connection herewith shall be true and correct
in all material respects.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
---------------------------------------
the agreements and covenants of VTE and the Stockholders to be performed
and complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all material respects.
(c) CERTIFICATES. VTE shall have delivered to Premiere (i) a
------------
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions set forth in Section 9.1 as relates to VTE and in Section
9.2(a), 9.2(b) and 9.2(h) have been satisfied, (ii) certified copies of
resolutions duly adopted by VTE's Board of Directors and stockholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, all in such reasonable detail as
Premiere and its counsel shall request, and (iii) a certificate or
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, in form and
substance satisfactory to Premiere and containing such supporting
information as Premiere may request, relating to the calculation of the
adjustments, if any, to the VTE Purchase Price as contemplated in Section
3.1(d)(ii)(A)-(E).
(d) OPINIONS OF COUNSEL. Premiere shall have received an
-------------------
opinion of Benesch, Friedlander, Xxxxxx & Xxxxxxx, counsel to VTE, in form
and substance reasonably satisfactory to Premiere. Premiere shall also have
received opinions from counsel to each of the Stockholders (other than
Amway) and an opinion of counsel to Amway, each dated as of the Closing, in
each case containing customary opinions relating to organization, authority
and enforceability.
(e) [RESERVED]
(f) [RESERVED]
-43-
(g) CLAIMS LETTERS. Each of the directors and officers of VTE
--------------
and the other Persons listed in Section 9.2(g) of the VTE Disclosure
Memorandum shall have executed and delivered to Premiere letters in
substantially the form of Exhibit 7.
(h) STOCKHOLDERS' EQUITY. VTE's stockholders' equity as of the
--------------------
Closing shall not be less than VTE's stockholders' equity as of December
31, 1996, excluding for purposes of the calculation of such stockholders'
equity the effects of (i) all costs, fees and charges, including fees and
charges of VTE's accountants, counsel and financial advisors, whether or
not accrued or paid, that are related to the transactions contemplated by
this Agreement and (ii) any reductions in VTE's stockholders' equity
resulting from any actions or changes in policies of VTE taken at the
request of Premiere or actions contemplated by this Agreement to occur on
or before the Closing.
(i) OWNERSHIP AGREEMENTS. VTE shall have used its commercially
--------------------
reasonable best efforts to have each of the persons identified in Section
9.2(i) of the VTE Disclosure Memorandum execute and deliver to VTE and
Premiere agreements, in form and substance reasonably satisfactory to
Premiere, confirming in or transferring to VTE certain Intellectual
Property Rights as described in Section 9.2(i) of the VTE Disclosure
Memorandum.
(j) [RESERVED] (K) STOCK REPURCHASES. VTE shall have
-----------------
repurchased from the Persons listed on Section 5.16(ix) of the VTE
Disclosure Memorandum the outstanding VTE Common Stock held by such Persons
pursuant to rights under and in accordance with the terms of existing
Contracts for repurchase or redemption of such VTE Common Stock as
described in Section 5.16(ix) of the VTE Disclosure Memorandum.
(l) [RESERVED]
(m) [RESERVED]
(n) GRAND SOLUTION DOCUMENTS. VTE, VTNLP, NAP and the
------------------------
Franchisees shall have executed and delivered the Grand Solution Documents
in the forms attached as Exhibit 8.
(o) EMPLOYMENT, SEVERANCE AND NONCOMPETITION AGREEMENTS. Each
---------------------------------------------------
of the Persons identified in Section 9.2(o) of the VTE Disclosure
Memorandum shall have executed and delivered to Premiere, and Premiere
shall have executed and delivered to such Persons, an employment or
severance and noncompetition agreement, in form and substance reasonably
satisfactory to the Persons and Premiere (collectively, the "Employment
Agreements").
9.3 CONDITIONS TO OBLIGATIONS OF VTE AND THE STOCKHOLDERS. The
-----------------------------------------------------
obligations of VTE and the Stockholders to perform this Agreement and consummate
the Merger and the other
-44-
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by VTE pursuant to Section 12.6(b):
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
------------------------------
Section 9.3(a), the accuracy of the representations and warranties of
Premiere set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as though
all such representations and warranties had been made on and as of the
Effective Time (provided that representations and warranties which are
confined to a specified date shall speak only as of such date). The
representations and warranties of Premiere set forth in this Agreement
shall be true and correct in all material respects..
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
---------------------------------------
the agreements and covenants of Premiere to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) CERTIFICATES. Premiere shall have delivered to VTE (i) a
------------
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions set forth in Section 9.1 as relates to Premiere and in
Section 9.3(a) and 9.3(b) have been satisfied, and (ii) certified copies of
resolutions duly adopted by Premiere's Board of Directors and, if required,
Premiere's shareholders evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as VTE and its counsel shall request.
(d) OPINION OF COUNSEL. VTE shall have received an opinion of
------------------
Xxxxxx & Bird LLP, counsel to Premiere, dated as of the Effective Time,
containing customary opinions relating to organization, authority and
enforceability.
ARTICLE 10
INDEMNIFICATION
---------------
10.1 AGREEMENT OF INDEMNITORS TO INDEMNIFY. Subject to the terms and
-------------------------------------
conditions of this Article 10, Indemnitors jointly and severally agree to
indemnify, defend, and hold harmless Indemnitees, and each of them, from,
against, for and in respect of any and all Losses asserted against, or paid,
suffered or incurred by, an Indemnitee and resulting from, based upon, or
arising out of:
(a) the inaccuracy, untruth, incompleteness or breach of any
representation or warranty of (i) any Indemnitor or VTE contained in or
made pursuant to this Agreement or in any certificate, Schedule, or Exhibit
furnished by Indemnitors in connection herewith or (ii) VTN or any
Stockholder of VTN in the VTN Merger Agreement; provided that for purposes
of this Section 10.1(a) any qualification of such representations and
warranties by
-45-
reference to the materiality of matters stated therein or as
to matters having or not having a "Material Adverse Effect,", and any
limitation of such representations and warranties as being "to the
knowledge of," or "known to" or words of similar effect, shall be
disregarded, in determining any inaccuracy, untruth, incompleteness or
breach thereof;
(b) a breach of or failure to perform any covenant or agreement
of (i) Indemnitors or VTE made in this Agreement or (ii) VTN or the
Stockholders of VTN in the VTN Merger Agreement; and
(c) any claim by a current or former Franchisee (or beneficiary
of an SRA) related to the ownership, control, operation, administration or
other rights to the Network or VTNLP, including without limitation any
claim based on the sale or provision of Network services or right to
control access to the Network to the extent such claim is based on a right
purportedly in existence as of the Effective Time;.
(d) any claim arising out of or related to the matters set
forth in Sections 5.9(a) and 5.15(b) of the VTE Disclosure Memorandum and
Sections 5.9(a) and 5.15(b) of the VTN Disclosure Memorandum;
(e) any claim arising out of or related to the matters set
forth in Section 5.11(c) of the VTE Disclosure Memorandum and Section
5.11(c) of the VTN Disclosure Memorandum;
(f) any claim by an officer or director or former officer or
director of VTE for indemnification under the by-laws of VTE or any
Subsidiary of VTE or pursuant to any Contract relating to a claim brought
against such officer or director in such capacity relating to any act or
omission or alleged act or omission occurring in whole or in part on or
prior to the Effective Time; and
(g) any claim by any member of the board of directors or
trustees of the NAP or the Franchisee Association pursuant to the
indemnification letter attached as Section 10.1(g) of the VTE Disclosure
Memorandum.
10.2 PROCEDURES FOR INDEMNIFICATION.
------------------------------
(a) An Indemnification Claim shall be made by an Indemnitee by
delivery of a written notice to the Stockholder Representative requesting
indemnification and specifying the basis on which indemnification is sought
and the amount of asserted Losses and, in the case of a Third Party Claim,
containing (by attachment or otherwise) such other information as such
Indemnitee shall have concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim
the procedures set forth in Section 10.3 shall be observed by the
Indemnitee and the Stockholder Representative.
-46-
(c) If the Indemnification Claim involves a matter other than a
Third Party Claim, the Stockholder Representative shall have 30 days to
object to such Indemnification Claim by delivery of a written notice of
such objection to such Indemnitee specifying in reasonable detail the basis
for such objection. Failure to timely so object shall constitute a final
and binding acceptance of the Indemnification Claim by the Stockholder
Representative on behalf of all Indemnitors, and the Indemnification Claim
shall be paid in accordance with subsection (d) hereof. If an objection is
timely interposed by the Stockholder Representative and the dispute is not
resolved by such Indemnitee and the Stockholder Representative within 30
days from the date the Indemnitee receives such objection, such dispute
shall be resolved by arbitration as provided in Section 10.7.
(d) Upon determination of the amount of an Indemnification
Claim, whether by agreement between the Stockholder Representative and the
Indemnitee or by an arbitration award or by any other final adjudication,
the Indemnitors shall pay the amount of such Indemnification Claim within
ten days of the date such amount is determined.
10.3 THIRD PARTY CLAIMS. The obligations and liabilities of the
------------------
parties hereunder with respect to a Third Party Claim shall be subject to the
following terms and conditions:
(a) The Indemnitee shall give the Stockholder Representative
written notice of a Third Party Claim promptly after receipt by the
Indemnitee of notice thereof, and the Stockholder Representative, on behalf
of the Indemnitors, may undertake the defense, compromise and settlement
thereof by representatives of its own choosing reasonably acceptable to the
Indemnitee. The failure of the Indemnitee to notify the Stockholder
Representative of such claim shall not relieve the Indemnitors of any
liability that they may have with respect to such claim except to the
extent the Stockholder Representative demonstrates that the defense of such
claim is prejudiced by such failure. The assumption of the defense,
compromise and settlement of any such Third Party Claim by the Stockholder
Representative shall be an acknowledgment of the obligation of the
Indemnitors to indemnify the Indemnitee with respect to such claim
hereunder. If the Indemnitee desires to participate in, but not control,
any such defense, compromise and settlement, it may do so at its sole cost
and expense. If, however, the Stockholder Representative fails or refuses
to undertake the defense of such Third Party Claim within ten (10) days
after written notice of such claim has been given to the Stockholder
Representative by the Indemnitee, the Indemnitee shall have the right to
undertake the defense, compromise and settlement of such claim with counsel
of its own choosing. In the circumstances described in the preceding
sentence, the Indemnitee shall, promptly upon its assumption of the defense
of such claim, make an Indemnification Claim as specified in Section 10.2
which shall be deemed an Indemnification Claim that is not a Third Party
Claim for the purposes of the procedures set forth herein.
(b) If, in the reasonable opinion of the Indemnitee, any Third
Party Claim or the litigation or resolution thereof involves an issue or
matter which could have a material adverse effect on the business,
operations, assets, properties or prospects of the Indemnitee (including,
without limitation, the administration of the tax returns and
responsibilities under
-47-
the tax laws of the Indemnitee), the Indemnitee shall have the right to
control the defense, compromise and settlement of such Third Party Claim
undertaken by the Stockholder Representative, and the costs and expenses of
the Indemnitee in connection therewith shall be included as part of the
indemnification obligations of the Indemnitors hereunder. If the Indemnitee
shall elect to exercise such right, the Stockholder Representative shall
have the right to participate in, but not control, the defense, compromise
and settlement of such Third Party Claim at its sole cost and expense. Any
compromise or settlement of such Third Party Claim shall be subject to the
approval of the Stockholder Representative, which approval shall not be
unreasonably withheld, conditioned or delayed.
(c) No settlement of a Third Party Claim involving the
asserted liability of the Indemnitors under this Article shall be made
without the prior written consent by or on behalf of the Stockholder
Representative, which consent shall not be unreasonably withheld or
delayed. Consent shall be presumed in the case of settlements of $20,000 or
less where the Stockholder Representative has not responded within five
business days of notice of a proposed settlement. If the Stockholder
Representative assumes the defense of such a Third Party Claim, (a) no
compromise or settlement thereof may be effected by the Stockholder
Representative without the Indemnitee's consent unless (i) there is no
finding or admission of any violation of law or any violation of the rights
of any person and no effect on any other claim that may be made against the
Indemnitee, (ii) the sole relief provided is monetary damages that are paid
in full by the Indemnitors, and (iii) the compromise or settlement
includes, as an unconditional term thereof, the giving by the claimant or
the plaintiff to the Indemnitee of a release, in form and substance
satisfactory to the Indemnitee, from all liability in respect of such Third
Party Claim, and (b) the Indemnitee shall have no liability with respect to
any compromise or settlement thereof effected without its consent.
(d) In connection with the defense, compromise or settlement of
any Third Party Claim, the parties to this Agreement shall execute such
powers of attorney as may reasonably be necessary or appropriate to permit
participation of counsel selected by any party hereto and, as may
reasonably be related to any such claim or action, shall provide access to
the counsel, accountants and other representatives of each party during
normal business hours to all properties, personnel, books, tax records,
contracts, commitments and all other business records of such other party
related to the Third Party Claim and will furnish to such other party
copies of all such documents as may reasonably be requested (certified, if
requested).
10.4 LIMITATIONS AS TO AMOUNT. Indemnitors shall have no liability
------------------------
with respect to the matters described in Section 10.1 until the total of all
Losses with respect thereto exceeds $50,000, in which event Indemnitors shall be
obligated to indemnify the Indemnitees as provided in this Article 10 for all
such Losses. The Indemnitors shall not be liable for Losses relating to a claim
for indemnification under (i) Section 10.1(a) or 10.1(b) in excess of the
Escrow, as defined in the General Escrow Agreement (the "General Escrow"), on
deposit with the Escrow Agent pursuant to the General Escrow Agreement, and (ii)
Sections 10.1(c), 10.1(d), 10.1(e), 10.1(f) or 10.1(g) in excess of the Escrow,
as defined in the Specific Escrow Agreement (the "Specific Escrow"), and the
General Escrow on deposit with the Escrow Agent pursuant to the Specific
-48-
Escrow Agreement and the General Escrow Agreement (all such shares of Premiere
Common Stock included in the General Escrow and the Specific Escrow,
collectively, the "Escrow Shares"). Pursuant to the terms and conditions of the
Specific Escrow Agreement and the General Escrow Agreement, any payment of any
indemnity to any Indemnitee in accordance with this Article 10 shall be made
solely and exclusively out of, and shall be limited to, the Escrow Shares and
shall be subject to any additional provisions, including those relating to order
or priority of claims, in the Specific Escrow Agreement and the General Escrow
Agreement.
10.5 TAX EFFECT AND INSURANCE. The liability of the Indemnitors with
------------------------
respect to any Indemnification Claim shall be reduced by the tax benefit
actually or reasonably anticipated to be realized and any insurance proceeds
received by the Indemnitees as a result of any Losses upon which such
Indemnification Claim is based, and shall include any tax detriment actually
suffered by the Indemnitees as a result of such Losses. The amount of any such
tax benefit or detriment shall be determined by taking into account the effect,
if any and to the extent determinable, of timing differences resulting from the
acceleration or deferral of items of gain or loss resulting from such Losses and
shall otherwise be determined so that payment by the Indemnitors of the
Indemnification Claim, as adjusted to give effect to any such tax benefit or
detriment, will make the Indemnitee as economically whole as is reasonably
practical with respect to the Losses upon which the Indemnification Claim is
based. Any dispute as to the amount of such tax benefit or detriment shall be
resolved by arbitration as provided in Section 10.8 of this Agreement.
10.6 SUBROGATION. Upon payment in full of any Indemnification Claim,
-----------
whether such payment is effected by set-off or otherwise, or the payment of any
judgment or settlement with respect to a Third Party Claim, the Indemnitors
shall be subrogated to the extent of such payment to the rights of the
Indemnitee against any person or entity with respect to the subject matter of
such Indemnification Claim or Third Party Claim.
10.7 ARBITRATION. All disputes arising under this Article 10 (other
-----------
than claims in equity) shall be resolved by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
Arbitration shall be by a single arbitrator experienced in the matters at issue
and selected by the Stockholder Representative and Premiere in accordance with
the Commercial Arbitration Rules of the American Arbitration Association. The
arbitration shall be held in such place in Atlanta, Georgia as may be specified
by the arbitrator (or any place agreed to by the Stockholder Representative,
Premiere and the arbitrator). The decision of the arbitrator shall be final and
binding as to any matters submitted under this Article 10; provided, however, if
necessary, such decision and satisfaction procedure may be enforced by either
the Stockholder Representative or Premiere in any court of record having
jurisdiction over the subject matter or over any of the parties to this
Agreement. All costs and expenses incurred in connection with any such
arbitration proceeding (including reasonable attorneys fees) shall be borne by
the party against which the decision is rendered, or, if no decision is
rendered, such costs and expenses shall be borne equally by the Indemnitors as
one party and the Indemnitees as the other party. If the arbitrator's decision
is a compromise, the determination of which party or parties bears the costs and
expenses incurred in connection with any such arbitration proceeding shall be
made by the arbitrator on the basis of the arbitrator's assessment of the
relative merits of the parties' positions.
-49-
10.8 EXCLUSIVITY. After the Closing, to the extent permitted by Law,
the indemnities set forth in this Article 10 shall be the exclusive remedy of
the Indemnitees for any misrepresentation, breach of warranty or nonfulfillment
or failure to be performed of any covenant or agreement contained in this
Agreement, and the parties shall not be entitled to a rescission of this
Agreement or to any further rights or claims of any nature whatsoever in respect
hereof, all of which the Indemnitees hereby waive; provided, however, that
nothing herein limits, and the Indemnitees do not waive, any right or remedy
based on any claim for fraud, which liability based on any claim of fraud, if
any, shall be several and not joint.
ARTICLE 11
TERMINATION
-----------
11.1 Termination. Notwithstanding any other provision of this
-----------
Agreement, and notwithstanding the approval of this Agreement by the
stockholders of VTE or, if required, the Shareholders of Premiere, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) By mutual consent of Premiere and VTE; or
(b) By either Party (provided that the terminating Party is not
then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by
the other Party of any representation or warranty contained in this
Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such breach; or
(c) By either Party (provided that the terminating Party is not
then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by
the other Party of any covenant or agreement contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such breach; or
(d) By either Party (provided that the terminating Party is not
then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement relating to Consents of Regulatory
Authorities or approval of Stockholders) in the event any Consent of any
Regulatory Authority required for consummation of the Merger and the other
transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal; or
(e) By either Party in the event that the Merger shall not have
been consummated by June 30, 1997, if the failure to consummate the
transactions contemplated hereby on or before such date is not caused by
any breach of this Agreement by the Party electing to terminate pursuant to
this Section 11.1(e); or
-50-
(f) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant,
or other agreement contained in this Agreement) in the event that any of
the conditions precedent to the obligations of such Party to consummate
the Merger cannot be satisfied or fulfilled, or have not been waived in
writing, by the date specified in Section 11.1(e); or
(g) By either Party if the Average Closing Price is less
than $19.50, unless, in the event the terminating party is VTE,
Premiere, within forty eight (48) hours after receipt of written notice
from VTE of its election to terminate pursuant to this Section 11.1(g)
agrees to adjust the Exchange Ratio to the quotient obtained by dividing
(i) the product of (A) the Exchange Ratio determined pursuant to Section
3.1(c) (including the application of the Average Closing Price
Limitations), multiplied by (B) $19.50, by (ii) the Average Closing
Price (without application of the Average Closing Price Limitations)
(the "Adjusted Exchange Ratio"), in which event the Firm Exchange Ratio
shall be the product of (A) either (1) .77 if the Amway Convertible Note
is converted or (2) .71 if the Amway Convertible Note is not converted
and (B) the Adjusted Exchange Ratio, and the General Escrow Exchange
Ratio shall be the product of .1 and the Adjusted Exchange Ratio and the
Specific Exchange Ratio shall be the product of (C) either (3) .13 if
the Amway Convertible Note is converted or (4) .19 if the Amway
Convertible Note is not converted and (D) the Adjusted Exchange Ratio.
11.2 EFFECT OF TERMINATION. In the event of the
---------------------
termination and abandonment of this Agreement pursuant to Section 11.1, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 11.2 and Article 12 and Section 8.6(b) shall survive any such
termination and abandonment, and (ii) a termination pursuant to Sections
11.1(b), 11.1(c) or 11.1(f) shall not relieve the breaching Party from Liability
for an uncured willful breach of a representation or warranty or any breach of
any covenant or agreement contained in this Agreement, nor release the other
Party for any liability for any breach of any covenant or agreement contained in
this Agreement.
ARTICLE 12
MISCELLANEOUS
12.1 DEFINITIONS.
-----------
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as
amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"ACQUISITION PROPOSAL" with respect to a Party shall mean
any tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or assets of, or
-51-
other business combination involving the acquisition of such Party or
any of its Subsidiaries or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, such Party or
any of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such Person;
(ii) any officer, director, partner, employer, or direct or indirect
beneficial owner of any 10% or greater equity or voting interest of
such Person; or (iii) any other Person for which a Person described in
clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated
herein by reference.
"AMWAY" shall mean Amway Corporation, a Michigan
corporation and a Stockholder of VTE.
"AMWAY CLOSING DOCUMENTS" shall mean the General Escrow
Agreement, Specific Escrow Agreement and the Registration Rights
Agreement.
"AMWAY CONVERTIBLE NOTE" shall mean the Revolving Credit
Note dated December 16, 1994 made by VTE and VTNLP to Amway in the
principal amount of $5,000,000, and the related Credit Agreement dated
December 16, 1994 among VTE, VTNLP, VTN and Amway, as amended and
supplemented thereafter.
"AMWAY RESELLER AGREEMENT" shall mean the Service and
Reseller Agreement dated September 28, 1990, between Amway and VTE, as
amended by First Amendment to Service and Reseller Agreement dated
March 19, 1996 and Second Amendment to Service and Reseller Agreement
dated June 25, 1996.
"ASSETS" of a Person shall mean all of the assets,
properties, businesses and rights of such Person of every kind,
nature, character and description, whether real, personal or mixed,
tangible or intangible, accrued or contingent, or otherwise relating
to or utilized in such Person's business, directly or indirectly, in
whole or in part, whether or not carried on the books and records of
such Person, and whether or not owned in the name of such Person or
any Affiliate of such Person and wherever located.
"BUSINESS ACTIVITIES" shall mean the provision of
interactive voice messaging services.
"CERTIFICATE OF MERGER" shall mean the Certificate of
Merger to be executed by VTE and filed with the Secretary of State of
the State of Delaware relating to the Merger as contemplated by
Section 1.1.
"CLOSING DATE" SHALL mean the date on which the Closing
occurs.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
-52-
"CONFIDENTIALITY AGREEMENT" shall mean that certain
Confidentiality Agreement, dated January ,1997, between VTE and
Premiere.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONSOLIDATED INDEBTEDNESS OF VTE" shall mean the aggregate
outstanding balance of principal and accrued and unpaid interest under
funded debt and capital lease obligations of VTE and its Subsidiaries
stated on a consolidated basis in accordance with GAAP.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction,
understanding, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any
Person or its capital stock, Assets or business.
"DEFAULT" shall mean (i) any breach or violation of,
default under any Contract, Law, Order, or Permit, (ii) any occurrence
of any event that with the passage of time or the giving of notice or
both would constitute a breach or violation of, or default under any
Contract, Law, Order, or Permit, or (iii) any occurrence of any event
that with or without the passage of time or the giving of notice would
give rise to a right of any Person to exercise any remedy or obtain
any relief under, terminate or revoke, suspend, cancel, or modify or
change the current terms of, or renegotiate, or to accelerate the
maturity or performance of, or to increase or impose any Liability
under, any Contract, Law, Order, or Permit.
"DGCL" shall mean the Delaware General Corporation Law.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to
pollution or protection of human health or the environment (including
ambient air, surface water, ground water, land surface, or subsurface
strata) and which are administered, interpreted, or enforced by the
United States Environmental Protection Agency and state and local
agencies with jurisdiction over, and including common law in respect
of, pollution or protection of the environment, including the
Comprehensive Environmental Response Compensation and Liability Act,
as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq.
("RCRA"), and other Laws relating to emissions, discharges, releases,
or threatened releases of any Hazardous Material, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of any Hazardous Material.
"EQUITY RIGHTS" shall mean all arrangements, calls,
commitments, Contracts, options, rights to subscribe to, scrip,
understandings, warrants, or other binding obligations of any
character whatsoever relating to, or securities or rights convertible
into or
-53-
exchangeable for, shares of the capital stock of a Person or by which
a Person is or may be bound to issue additional shares of its capital
stock or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"EXHIBITS" 1 through 8, inclusive, shall mean the Exhibits
so marked, copies of which are attached to this Agreement. Such
Exhibits are hereby incorporated by reference herein and made a part
hereof, and may be referred to in this Agreement and any other related
instrument or document without being attached hereto.
"FRANCHISE" shall mean the rights granted by VTE relating
to the ownership and/or operation of one or more Service Centers in
one or more Sales Territories within a Protected Territory pursuant to
a Franchise Agreement.
"FRANCHISE AGREEMENT" shall mean a franchise or license
agreement and all amendments, supplements and modifications thereto
entered into by VTE with any Franchisee relating to a Franchise.
"FRANCHISE OFFERING CIRCULAR" shall mean a franchise
offering circular used by VTE to offer and sell Franchises.
"FRANCHISEE" shall mean any holder of a Franchise.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous
substance, hazardous material, hazardous waste, regulated substance,
or toxic substance (as those terms are defined by any applicable
Environmental Laws) and (ii) any chemicals, pollutants, contaminants,
petroleum, petroleum products, or oil (and specifically shall include
asbestos requiring abatement, removal, or encapsulation pursuant to
the requirements of governmental authorities and any polychlorinated
biphenyls).
"HSR ACT" shall mean Section 7A of the Xxxxxxx Act, as
added by Title II of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated
thereunder.
"HUB" shall mean a site which houses switching and routing
equipment used for accepting voice message packet data from the
Service Centers via the T1 local loop and transmitting that packet
data to other Hubs or to Service Centers. There are currently twelve
Hubs, one located in each of ten U.S. cities, plus an eleventh Hub in
Toronto, Canada and a twelfth Hub in Sydney, Australia.
-54-
"INDEMNIFICATION CLAIM" shall mean a claim for
indemnification under Article 10.
"INDEMNITEES" shall mean Premiere, VTE and their respective
officers, directors, stockholders, controlling persons, Affiliates and
Representatives.
"INDEMNITORS" shall mean the Stockholders.
"INTELLECTUAL PROPERTY RIGHT" shall mean: (a) any patent,
patent application, trademark (whether registered or unregistered),
trademark application, trade name, fictitious business name, service
xxxx (whether registered or unregistered), service xxxx application,
copyright (whether registered or unregistered), copyright application,
maskwork, maskwork application, trade secret, know-how, customer list,
system, computer software or computer program (including any source or
object codes therefor or documentation relating thereto), invention,
design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or other intellectual property right or
intangible asset; and (b) any right to use or exploit any of the
foregoing.
"INVESTOR QUESTIONNAIRES" shall mean the investor
questionnaires relating to various matters under the Securities Laws
completed by Stockholders and delivered to Premiere prior to the date
hereof.
"KNOWLEDGE" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall
mean the personal knowledge after due inquiry of those facts that are
known or should reasonably have been known after due inquiry and, as
used with respect to a Person that is a corporation or other business
entity, after due inquiry by the chairman, president, chief financial
officer, chief accounting officer, chief operating officer, general
counsel, any assistant or deputy general counsel, or any senior,
executive or other vice president of such Person and the knowledge of
any such persons obtained or which would have been obtained from a
reasonable investigation.
"LAW" shall mean any code, law (including common law),
ordinance, regulation, reporting or licensing requirement, rule, or
statute applicable to a Person or its Assets, Liabilities, or
business, including those promulgated, interpreted or enforced by any
Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or
expense (including costs of investigation, collection and defense),
claim, deficiency, guaranty or endorsement of or by any Person (other
than endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default
of title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention or other security arrangement, or
any ad-
-55-
verse right or interest, charge, or claim of any nature whatsoever of,
on, or with respect to any property or property interest, other than
(i) Liens for current property Taxes not yet due and payable, and
(iii) Liens which do not materially impair the use of or title to the
Assets subject to such Lien.
"LITIGATION" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other
proceeding relating to or affecting a Party, its business, its Assets
(including Contracts related to it), or the transactions contemplated
by this Agreement.
"LOSSES" shall mean any and all demands, claims, actions or
causes of action, assessments, losses, diminution in value, damages
(including special and consequential damages), liabilities, costs, and
expenses, including interest, penalties, cost of investigation and
defense, and reasonable attorneys' and other professional fees and
expenses.
"MATERIAL" for purposes of this Agreement shall be
determined in light of the facts and circumstances of the matter in
question; provided that any specific monetary amount stated in this
Agreement shall determine materiality in that instance.
"MPI" shall mean Merchandising Productions, Inc., a
Delaware corporation and wholly-owned subsidiary of Amway and the sole
limited partner of VTNLP.
"MPI PURCHASE AGREEMENT" shall mean the Purchase and Sale
Agreement of even date between Premiere and MPI.
"NAP AGREEMENT" shall mean an agreement executed by a
Franchisee and VTE in which the Franchisee agrees to be bound by the
bylaws of the NAP Board.
"NAP BOARD" shall mean the Board of Directors of the NAP.
"NAP" shall mean the National Accounts Program of VTE, an
Ohio unincorporated association.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"NASDAQ NATIONAL MARKET" shall mean the National Market
System of the National Association of Securities Dealers Automated
Quotations System.
"NETWORK" shall mean the digital frame relay network owned
by VTNLP and managed by VTE which includes the NIBs, the Hubs, all
equipment associated with the NIBs and Hubs, all connections between
the NIBs and the Hubs, and all connections between the Hubs.
"NIB" shall mean a Network interface box, developed by VTE
and utilized by VTE, VTN, VTNLP and the Franchisees.
-56-
"OPERATING PROPERTY" shall mean any property owned, leased,
or operated by the Party in question or by any of its Subsidiaries or
in which such Party or Subsidiary holds a security interest or other
interest (including an interest in a fiduciary capacity), and, where
required by the context, includes the owner or operator of such
property, but only with respect to such property.
"ORDER" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local or foreign or other
court, arbitrator, mediator, tribunal, administrative agency, or
Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or
property in which the Party in question or any of its Subsidiaries
participates in the management and, where required by the context,
said term means the owner or operator of such facility or property,
but only with respect to such facility or property.
"PARTNER INTEREST" shall have the meaning set forth in the
MPI Purchase Agreement.
"PARTY" shall mean either VTE or Premiere, and "Parties"
shall mean both VTE and Premiere.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal,
commercial or governmental entity, such as, but not limited to, a
corporation, general partnership, joint venture, limited partnership,
limited liability company, trust, business association, group acting
in concert, or any person acting in a representative capacity.
"PREMIERE CAPITAL STOCK" shall mean, collectively, the
Premiere Common Stock, the Premiere Preferred Stock and any other
class or series of capital stock of Premiere.
"PREMIERE COMMON STOCK" shall mean the $0.01 par value
common stock of Premiere.
"PREMIERE DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Premiere Technologies, Inc. Disclosure
Memorandum" delivered prior to the date of this Agreement to VTE
describing in reasonable detail the matters contained therein and,
with respect to each disclosure made therein, specifically referencing
each Section of this Agreement under which such disclosure is being
made. Information disclosed with respect to one Section shall not be
deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
-57-
"PREMIERE ENTITIES" shall mean, collectively, Premiere and
all Premiere Subsidiaries.
"PREMIERE FINANCIAL STATEMENTS" shall mean (i) the
consolidated balance sheets (including related notes and schedules, if
any) of Premiere as of December 31, 1996 and 1995, and the related
statements of operations, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for each of the
three fiscal years ended December 31, 1996, 1995 and 1994, as filed by
Premiere in SEC Documents, and (ii) the consolidated balance sheets of
Premiere (including related notes and schedules, if any) and related
statements of operations, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) included in SEC
Documents filed with respect to periods ended subsequent to December
31, 1996.
"PREMIERE MATERIAL ADVERSE EFFECT" shall mean an event,
change or occurrence which, individually or together with any other
event, change or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of Premiere and
its Subsidiaries, taken as a whole, or (ii) the ability of Premiere to
perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement,
provided that "Material Adverse Effect" shall not be deemed to include
the impact of (a) changes in Laws of general applicability or
interpretations thereof by courts or governmental authorities, (b)
changes in generally accepted accounting principles, (c) actions and
omissions of Premiere (or any of its Subsidiaries) taken with the
prior informed written Consent of VTE in contemplation of the
transactions contemplated hereby, and (d) the direct effects of
compliance with this Agreement on the operating performance of
Premiere, including expenses incurred by Premiere in consummating the
transactions contemplated by this Agreement.
"PREMIERE PREFERRED STOCK" shall mean the $0.01 par value
preferred stock of Premiere.
"PREMIERE STOCK PLANS" shall mean the existing stock option
and other stock-based compensation plans of Premiere designated as
follows: Premiere Technologies, Inc. 1994 Stock Option Plan and
Premiere Technologies, Inc. Amended and Restated 1995 Stock Plan.
"PREMIERE SUBSIDIARIES" shall mean the Subsidiaries of
Premiere, which shall include the Premiere Subsidiaries described in
Section 6.4 and any corporation or other organization acquired as a
Subsidiary of Premiere in the future and held as a Subsidiary by
Premiere at the Effective Time.
"PROTECTED TERRITORY" shall mean the territory in which a
Franchisee solicits and provides services and products to customers
for digital voice messaging services as such territory is defined in
the applicable Franchise Agreement.
"PROXY STATEMENT" shall mean the proxy statement used by
VTE to solicit the approval of its stockholders of the transactions
contemplated by this Agreement.
-58-
"RELIABLY HANDLING" as used in this section shall mean
delivering a complete voice mail message to electronic storage at the
Service Center which hosts the voice messaging service of the intended
recipient of the message so that the intended recipient may listen to
the message within an average of forty-five (45) minutes of the time
the message was recorded by the sender.
"REGULATORY AUTHORITIES" shall mean, collectively, the SEC,
the NASD, the Federal Trade Commission, the United States Department
of Justice, and all other federal, state, county, local or other
governmental or regulatory agencies, authorities (including self-
regulatory authorities), instrumentalities, commissions, boards or
bodies having jurisdiction over the Parties and their respective
Subsidiaries.
"RELATED PERSON" shall mean, with regard to any Stockholder
or any director, officer or employee of any VTE Entity, his or her
spouse, parent, sibling, child, aunt, uncle, niece, nephew, in-law,
grandparent and grandchild (including by adoption or remarriage) and
any trustees or other fiduciaries for the benefit of such relatives.
"REPRESENTATIVE" shall mean any investment banker,
financial advisor, attorney, accountant, consultant, or other
representative engaged by a Person.
"RESTRICTED TERRITORY" shall mean the geographic area
consisting of the territory within a fifty (50) mile radius of each
Service Center operated by VTE or a Franchisee immediately prior to
the execution of this Agreement. The Parties further agree that the
"Restricted Territory" extends only to the area in which VTE is doing
business directly, or has licensed a Franchisee to do business, at the
time of this Agreement and is only as broad as necessary to protect
the interest of Premiere in the business of VTE.
"SALES TERRITORY" shall mean the geographic areas into
which a Protected Territory is divided under the relevant Franchise
Agreement.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents
filed, or required to be filed, by a Party or any of its Subsidiaries
with any Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act,
the Investment Company Act of 1940, as amended, the Investment
Advisors Act of 1940, as amended, the Trust Indenture Act of 1939, as
amended, and the rules and regulations of any Regulatory Authority
promulgated thereunder.
"SERVICE CENTER" shall mean a site owned or operated by a
VTE Entity or a Franchisee which houses one or more Centigram voice
mail servers used to store messages for retrieval by users within the
local service area of the Service Center, as well as one or more NIBs
and routers used to transmit voice message packet data to a Hub via
the T1 local loop.
-59-
"SRA" shall mean a service representative agreement
executed by VTE and a service representative relating to the provision
of services on behalf of VTE with respect to certain Franchises.
"STOCKHOLDERS' REPRESENTATIVE shall mean the Escrow
Committee established under the General Escrow Agreement and the
Specific Escrow Agreement
"STOCKHOLDERS' CLOSING DOCUMENTS" shall mean the General
Escrow Agreement, the Specific Escrow Agreement, the Employment
Agreements, the Releases, and the Noncompetition Agreements.
"STOCKHOLDERS' MEETING" shall mean the meeting of the
stockholders of VTE to be held pursuant to Section 8.1, including any
adjournment or adjournments thereof.
"SUB COMMON STOCK" shall mean the no par value common stock
of Sub.
"SUBSIDIARIES" shall mean all those corporations,
associations, or other business entities of which the entity in
question either (i) owns or controls 50% or more of the outstanding
equity securities either directly or through an unbroken chain of
entities as to each of which 50% or more of the outstanding equity
securities is owned directly or indirectly by its parent (provided,
there shall not be included any such entity the equity securities of
which are owned or controlled in a fiduciary capacity), (ii) in the
case of partnerships, serves as a general partner, (iii) in the case
of a limited liability company, serves as a managing member, or (iv)
otherwise has the ability to elect a majority of the directors,
trustees or managing members thereof.
"SURVIVING CORPORATION" shall mean VTE as the surviving
corporation resulting from the Merger.
"SUNTRUST" shall mean SunTrust Bank of Atlanta, as Exchange
Agent or as Escrow Agent under the General Escrow Agreement and the
Specific Escrow Agreement, as applicable.
"SYSTEM" as used in this section shall mean the entire
voice messaging system currently operated by VTE, VTN, VTNLP and the
Franchisees, including but not limited to the Network, all of the
Service Centers, and all connections between the Network and the
Service Centers.
"TAX RETURN" shall mean any report, return, information
return, or other information required to be supplied to a taxing
authority in connection with Taxes, including any return of an
affiliated or combined or unitary group that includes a Party or its
Subsidiaries.
"TAX" OR "TAXES" shall mean any federal, state, county,
local, or foreign taxes, however denominated, including income, gross
receipts, excise, employment, sales, use, transfer, license, payroll,
franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties,
capital stock, paid-up
-60-
capital, profits, withholding, Social Security, single business and
unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever,
imposes or required to be withheld by the United States or any state,
county, local or foreign government or subdivision or agency thereof,
including any interest, penalties, and additions imposed thereon or
with respect thereto.
"THIRD PARTY CLAIM" shall mean any Litigation that is
initiated against an Indemnitee by a Person other than an Indemnitor
and which, if prosecuted, could result in a Loss for which the
Indemnitee is entitled to indemnification under Article 10.
"UNIFORM FRANCHISE OFFERING CIRCULAR GUIDELINES" shall mean
the written guidelines for the preparation of franchise offering
circulars as adopted by the North American Securities Administrator
Association on April 25, 1993.
"VTE COMMON STOCK" shall mean the no par value common stock
of VTE.
"VTE CONFIDENTIAL INFORMATION" means information, other
than VTE Trade Secrets, which relates to VTE, VTE's business, or VTE's
suppliers or customers that is not generally known by persons not
employed by VTE and which Stockholder has learned as a consequence of
his or her relationship to VTE. Such information includes, without
limitation, to the extent it is not considered a VTE Trade Secret,
financial information, strategic plans and forecasts, marketing plans
and forecasts, franchisee lists, customer lilts including NAP
customers, customer pricing and order data, supplier lists, or
technical information relating to the VTE's products or services. "VTE
Confidential Information" shall not include information which has
become generally available to the public by the act of one who has the
right to disclose such information without violating a legal right of
Premiere or VTE.
"VTE DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Voice-Tel Enterprises, Inc. Disclosure
Memorandum" delivered prior to the date of this Agreement to Premiere
describing in reasonable detail the matters contained therein and,
with respect to each disclosure made therein, specifically referencing
each Section of this Agreement under which such disclosure is being
made. Information disclosed with respect to one Section shall not be
deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"VTE ENTITIES" shall mean, collectively, VTE and all VTE
Subsidiaries.
"VTE FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of VTE
as of December 31, 1996, and 1995, and the related statements of
income, changes in stockholders' equity, and cash flows (including
related notes and schedules, if any) for each of the three fiscal
years ended December 31, 1996, 1995 and 1994, and (ii) the
consolidated balance sheets of VTE (including related notes and
schedules, if any) and related statements of income, changes in
-61-
stockholders' equity, and cash flows (including related notes and
schedules, if any) with respect to periods ended subsequent to
December 31, 1996.
"VTE INTELLECTUAL PROPERTY RIGHT" shall mean any
Intellectual Property Right used by any VTE Entity in the course of
its business.
"VTE MATERIAL ADVERSE EFFECT" shall mean an event, change
or occurrence which, individually or together with another event,
change or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of VTE and its
Subsidiaries, taken as a whole, or (ii) the ability of VTE to perform
its obligations under this Agreement or to consummate the Merger or
the other transactions contemplated by this Agreement, provided that
"VTE Material Adverse Effect: shall not be deemed to include the
impact of (a) changes in Laws of general applicability or
interpretations thereof by courts or governmental authorities, (b)
changes in generally accepted accounting principles, (c) actions and
omissions of VTE (or any of its Subsidiaries) taken with the prior and
informed written Consent of Premiere in contemplation of the
transactions contemplated hereby, and (d) the direct effects of
compliance with this Agreement on the operating performance of VTE,
including expenses incurred by VTE in consummating the transactions
contemplated by this Agreement.
"VTE PRODUCTS AND SERVICES" shall mean the interactive
voice messaging services and related equipment provided by the VTE
Entities to customers in the course of their business operations.
"VTE STOCK PLAN" shall mean the existing stock option plan
of VTE designated as follows: 1991 Non-Qualified and Incentive Stock
Option Plan of Voice-Tel Enterprises, Inc.
"VTE SUBSIDIARIES" shall mean the Subsidiaries of VTE,
which shall include the VTE Subsidiaries described in Section 5.5 and
any corporation or other organization acquired as a Subsidiary of VTE
in the future and held as a Subsidiary by VTE at the Effective Time.
"VTE TRADE SECRETS" shall mean all secret, proprietary or
confidential information regarding VTE or its business, including any
and all information not generally known to, or ascertainable by,
persons not employed by VTE, the disclosure or knowledge of which
would permit those persons to derive actual or potential economic
value therefrom or to cause economic or financial harm to VTE. "VTE
Trade Secrets" shall not including information that has become
generally available to the public by the act of one who has the right
to disclose such information without violating a legal right of
Premiere or VTE.
"VTN" shall mean VTN, Inc., an Ohio corporation and the
sole general partner of VTNLP.
"VTNLP" shall mean Voice-Tel Network Limited Partnership, a
Delaware limited partnership.
-62-
"VTN MERGER" shall be the merger of PTEK Merger Corporation
II ("Sub II") with and into VTN pursuant to the VTN Merger Agreement.
"VTN MERGER AGREEMENT" shall mean the Agreement and Plan of
Merger of even date herewith among Premiere, Sub II and VTN.
"VTN PURCHASE PRICE" shall have the meaning set forth in
the VTN Merger Agreement.
(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
Average Closing Price Section 3.1(c)
Closing Section 1.2
Per Share Purchase Price Section 3.1(c)
Takeover Laws Section 5.23
Average Closing Price Limitations Section 3.1(c)
Base Exchange Ratio Section 3.1(c)
Effective Time Section 1.3
Employment Agreements Section 9.1(k)
ERISA Affiliate Section 5.15(b)
Escrow Shares Section 10.4
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(c)
Firm Exchange Ratio Section 3.1(c)
General Escrow Section 10.4
General Escrow Agreement Section 4.3
General Escrow Exchange Ratio Section 3.1(c)
Merger Section 1.1
Noncompetition Agreements Section 9.2(k)
Premiere SEC Reports Section 6.5(a)
Specific Escrow Section 10.4
Specific Escrow Agreement Section 4.3
Specific Escrow Exchange Ratio Section 3.1(c)
Tax Opinion Section 9.1(h)
Voting Agreements Section 5.25
VTE Benefit Plans Section 5.15
VTE Contracts Section 5.16
VTE ERISA Plan Section 5.15
VTE Stock Options Section 3.6
VTE Pension Plan Section 5.15
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
-63-
12.2 EXPENSES.
--------
(a) Except as otherwise provided in this Section 12.2,
each of the Parties shall bear and pay all direct costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel.
(b) Nothing contained in this Section 12.2 shall
constitute or shall be deemed to constitute liquidated damages for the willful
breach by a Party of the terms of this Agreement or otherwise limit the rights
of the nonbreaching Party.
12.3 BROKERS AND FINDERS. Except for Salomon Brothers Inc.
--------------------
as to VTE and except for Xxxxxxxxx, Xxxxxxxx & Company as to Premiere, each of
the Parties represents and warrants that neither it nor any of its officers,
directors, employees, or Affiliates has employed any broker or finder or
incurred any Liability for any financial advisory fees, investment bankers'
fees, brokerage fees, commissions, or finders' fees in connection with this
Agreement or the transactions contemplated hereby. In the event of a claim by
any broker or finder based upon his or its representing or being retained by or
allegedly representing or being retained by VTE or any Stockholder or by
Premiere, each of VTE and the Stockholders and Premiere, as the case may be,
agrees to indemnify and hold the other Party harmless of and from any Liability
in respect of any such claim.
12.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
----------------
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
8.6(b), for the Confidentiality Agreement). Nothing in this Agreement expressed
or implied, is intended to confer upon any Person, other than the Parties or
their respective successors, any rights, remedies, obligations, or liabilities
under or by reason of this Agreement.
12.5 AMENDMENTS. To the extent permitted by Law, this Agreement
----------
may be amended by a subsequent writing signed by each of the Parties upon the
approval of each of the Parties, whether before or after stockholder approval of
this Agreement has been obtained; provided, that after any such approval by the
holders of VTE Common Stock, there shall be made no amendment that reduces or
modifies in any material respect the consideration to be received by holders of
VTE Common Stock, to the extent that Section 251(d) of the DGCL requires further
approval by such stockholders, without the further approval of such
stockholders.
12.6 WAIVERS.
-------
(a) Prior to or at the Effective Time, Premiere, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by VTE or the Stockholders, to waive
-64-
or extend the time for the compliance or fulfillment by VTE or the Stockholders
of any and all of its obligations under this Agreement, and to waive any or all
of the conditions precedent to the obligations of Premiere under this Agreement,
except any condition which, if not satisfied, would result in the violation of
any Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Premiere.
(b) Prior to or at the Effective Time, VTE, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of this
Agreement by Premiere, to waive or extend the time for the compliance or
fulfillment by Premiere of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of VTE
and the Stockholders under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of VTE.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
12.7 ASSIGNMENT. Except as expressly contemplated hereby,
----------
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
12.8 Notices. All notices or other communications which are
-------
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
VTE or
any Stockholder
(other than Amway): Voice-Tel Enterprises, Inc.
Four Commer Park Sq., No 800
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxx 00000
Telecopy Number: (216} 360-4410
Attention: Xxxx X. Xxxxxx, Chairman
-65-
Copy to Counsel: Benesch, Friedlander, Xxxxxx & Aronoff
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Telecopy Number: (000 000-0000
Attention: Xxxxxxx Xxxxx, Esq.
Amway: Amway Corporation
0000 Xxxxxx Xxxxxx Xxxx
Xxx, Xxxxxxxx 00000-0000
Attention: Xxx Xxxxxxx
Copy to Counsel: Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Premiere: Premiere Technologies, Inc.
The Xxxxx Xxxxxxxx, Xxxxx 000
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, President
Copy to Counsel: Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
12.9 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the Laws of the State of Georgia, without regard to
any applicable conflicts of Laws.
12.10 COUNTERPARTS. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
-66-
12.11 CAPTIONS; ARTICLES AND SECTIONS. The captions contained in
-------------------------------
this Agreement are for reference purposes only and are not part of this
Agreement. Unless otherwise indicated, all references to particular Articles or
Sections shall mean and refer to the referenced Articles and Sections of this
Agreement.
12.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty
---------------
or ambiguity herein shall be construed or resolved against any party, whether
under any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
12.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
12.14 SEVERABILITY. Any term or provision of this Agreement which
------------
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
12.15 SURVIVAL. All representations, warranties and agreements
--------
contained in this Agreement or in any certificate delivered pursuant to this
Agreement shall survive the Closing notwithstanding any investigation conducted
with respect thereto or any knowledge acquired as to the accuracy or inaccuracy
of any such representation or warranty.
-67-
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed on its behalf by its duly authorized officers as of the day and
year first above written.
PREMIERE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Senior Vice President
PTEK MERGER CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Senior Vice President
VOICE-TEL ENTERPRISES, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Chairman
By: /s/ Xxxxxx X. Xxxxxxxxxx
--------------------------------
President
[SIGNATURES CONTINUED ON NEXT PAGE]
THE STOCKHOLDERS:
AMWAY CORPORATION,
a Michigan corporation
By: /s/ Xxx Xxxxxxx
-------------------------------------
Title: Vice President-Corporate
Marketing
VOICE-TEL OF OHIO,
an Ohio general partnership
By: Xxxxxx Voice, Inc.
an Ohio corporation, general
partner
By: /s/ Xxxxxx X. Xxxxxx XX
-------------------------------------
Title: President
By: Xxxxxxx Enterprises, Inc.
an Ohio corporation, general
partner
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Title: President
VIRGINIA VOICE, INC.
a Virginia corporation,
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Title: President
/s/ Xxxxxxx X. Xxxxx (SEAL)
---------------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxxxxx (SEAL)
---------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx (SEAL)
---------------------------------------
Xxxxxxx X. Xxxxxxxx
EXHIBIT 1
GENERAL ESCROW AGREEMENT
This GENERAL ESCROW AGREEMENT (the "General Escrow Agreement"), dated as of
April __, 1997, is made and entered into by and among Premiere Technologies,
Inc., a Georgia corporation ("Premiere"); Voice-Tel Enterprises, Inc., a
Delaware corporation ("VTE"); VTN, Inc., an Ohio corporation ("VTN"); and the
holders of all classes of common stock of VTE and VTN executing this Agreement
(the "Stockholders" and, individually, a "Stockholder"), __________________,
__________________, and ______________, as attorneys-in-fact, representatives
and agents (collectively, the "Escrow Committee") of each of the Stockholders;
and [SunTrust Bank of Atlanta, a Georgia bank] (the "Escrow Agent").
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Acquisition Agreements (as defined below).
RECITALS
--------
A. Premiere, VTE, the stockholders of VTE and PTEK Merger Corporation, a
wholly owned subsidiary of Premiere ("Sub"), are parties to an Agreement and
Plan of Merger dated as of March __, 1997 (the "VTE Agreement"), pursuant to
which Sub will merge with and into VTE (the "VTE Merger"), with Sub surviving
the VTE Merger and continuing the business operations of VTE as a wholly owned
subsidiary of Premiere. Pursuant to Section 3.1(c)(ii) of the VTE Agreement,
the stockholders of VTE (other than any VTE Entity, any Premiere Entity and
stockholders who perfect their statutory dissenters' rights) will, by virtue of
the VTE Merger, receive, in exchange for each share of VTE Common Stock,
________ shares of Premiere Common Stock , or an aggregate of _______ shares of
Premiere Common Stock. Pursuant to the terms of Section 4.3 of the VTE
Agreement, shares of Premiere Common Stock to be issued pursuant to Section
3.1(c)(ii) of the VTE Agreement will be held and disbursed by the Escrow Agent
in accordance with the terms and conditions hereof.
B. Premiere, VTN, the stockholders of VTN and Sub are parties to an
Agreement and Plan of Merger dated as of March __, 1997 (the "VTN Agreement" and
collectively with the VTE Agreement, the "Acquisition Agreements"), pursuant to
which Sub will merge with and into VTN (the "VTN Merger"), with Sub surviving
the VTN Merger and continuing the business operations of VTN as a wholly owned
subsidiary of Premiere. Pursuant to Section 3.1(c)(ii) of the VTN Agreement,
the stockholders of VTN (other than any VTN Entity, any Premiere Entity and
stockholders who perfect their statutory dissenters' rights) will, by virtue of
the VTN Merger, receive, in exchange for each share of VTE Common Stock,
________ shares of Premiere Common Stock, or an aggregate of _______ shares of
Premiere Common Stock. Pursuant to the terms of Section 4.3 of the VTN
Agreement, shares of Premiere Common Stock to be issued pursuant to Section
3.1(c)(ii) of the VTN Agreement will be held and disbursed by the Escrow Agent
in accordance with the terms and conditions hereof.
C. Former holders of VTE Common Stock and former holders of VTN Common
Stock will be jointly and severally liable for Losses (as defined below), and
any such liability will be satisfied solely from the Escrow Shares (as defined
below).
D. The Escrow Committee has been constituted as agent for and on behalf
of the Stockholders, to undertake certain obligations herein.
E. The parties hereto desire to set forth the terms and conditions
relating to the Escrow Shares (the "Escrow").
F. Pursuant to Section 3.1(c)(iii) of the Acquisition Agreements,
additional shares of Premiere Common Stock to be issued pursuant to the
Acquisition Agreements have contemporaneously herewith been deposited with the
Escrow Agent pursuant to the Specific Escrow Agreement (as defined in the
Acquisition Agreements) (the "Specific Escrow").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Acquisition Agreements, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
AGREEMENT
---------
1. Establishment of Escrow. Pursuant to the Acquisition Agreements, on
-----------------------
the Closing Date Premiere shall deposit in escrow with the Escrow Agent on
behalf of the Stockholders a single stock certificate representing ________
shares of Premiere Common Stock, equal to ten percent (10%) of the shares
otherwise allocable to the Stockholders pursuant to the VTE Agreement and the
VTN Agreement (the "Escrow Shares"), which shall be registered in the name of
the Escrow Agent as nominee for the beneficial owners of such shares. The
Escrow Agent shall deliver a receipt therefor to the Escrow Committee. The
parties hereto agree and acknowledge that the Stockholders are the beneficial
owners of the Escrow Shares and that the aforementioned stock certificate is
registered in the name of the Escrow Agent only as a matter of administrative
convenience. The Escrow Shares shall be held and distributed by the Escrow
Agent in accordance with the terms and conditions of this General Escrow
Agreement. A list showing the pro rata interest of the Stockholders in the
Escrow Shares is set forth in Exhibit A attached hereto.
---------
2. Escrow Period. The Escrow shall commence on the Closing Date and,
-------------
subject to the provisions of Section 5(c), shall terminate on the date that is
the earlier of (i) one year from the date of the Effective Time or (ii) the date
of issuance of the first independent auditors' report on the consolidated
financial statements of Premiere which reflect at least thirty (30) days of
post-merger combined results of Premiere, VTE and VTN subsequent to the
Effective Time (the "Escrow Period").
3. Application of Escrow Shares to Claims.
--------------------------------------
(a) If Premiere shall have suffered any Losses for which it is
entitled to indemnification from the Stockholders, VTE or VTN pursuant to
Sections 10.1(a), 10.1(b), 10.1(c), 10.1(d), 10.1(e), 10.1(f) or 10.1(g) of any
of the Acquisition Agreements ("Losses"), it shall promptly give written notice
of the Indemnification Claim to the Escrow Committee in accordance with Section
10.2 of the appropriate Acquisition Agreement, with a duplicate copy delivered
to the Escrow Agent. If the Indemnification Claim involves a Third Party Claim,
the procedures set forth in Section 10.3 of the appropriate Acquisition
Agreement shall be observed by Premiere and the Escrow Committee. If the
Indemnification Claim involves a matter other than a Third Party Claim and no
objection is made by the Escrow Committee pursuant to Section 3(b)
-2-
below, the Escrow Agent shall deliver out of the Escrow to Premiere within ten
(10) calendar days after the expiration of the thirty (30) calendar day notice
period set forth in Section 3(b) below a number of Escrow Shares (rounded up to
the nearest whole number) equal to the amount of the Losses set forth in such
notice of claim divided by the Average Closing Price (as such term is defined in
the Acquisition Agreements; provided that such Average Closing Price shall be
appropriately adjusted upon the occurrence of any of the events described in
Section 6 of this Agreement).. Notwithstanding anything to the contrary in this
Escrow Agreement, (i) the Escrow Agent shall not make any payment to Premiere
from the Escrow until claims by Premiere for Losses under this General Escrow
Agreement and the Specific Escrow Agreement that are due and payable exceed
$50,000, in which event the Escrow Agent shall satisfy all such claims from the
Escrow without regard to such limitation, and (ii) the Escrow Agent shall not
make any payment to Premiere from the Escrow for a claim under Section 10.1(e)
of the Acquistion Agreements until all amounts available for satisfaction of
such a claim under the Specific Escrow have been used to satisfy the claim.
(b) If the Escrow Committee objects to the validity of any claim for
Losses it shall give written notice to Premiere within thirty (30) calendar days
following receipt of notice of such claim, with a duplicate copy to the Escrow
Agent, that it does not consent to the delivery of any of the Escrow Shares out
of Escrow to Premiere for application to such claim. In such case, the Escrow
Agent shall continue to hold the Escrow Shares in Escrow until the rights of
Premiere and the Stockholders with respect thereto have been agreed upon among
the Escrow Committee and Premiere or until such rights are finally determined in
accordance with Section 3(c) below. The Escrow Agent may rely on (1) any
memorandum of Premiere and the Escrow Committee or (ii) any determination by any
arbitration panel as provided in Section 3(c) below. In any such resolution to
determine the number of Escrow Shares to be delivered out of Escrow, the Escrow
Agent shall, as soon as practicable following receipt of a copy of such
determination, deliver Escrow Shares from the Escrow in accordance with the
terms thereof.
(c) In case the Escrow Committee shall so object in writing to any
claim or claims by Premiere, Premiere and the Escrow Committee shall attempt for
thirty (30) calendar days to agree upon the rights of the respective parties
with respect to such claim. If the Escrow Committee and Premiere should so
agree, a memorandum setting forth such agreement shall be prepared and signed by
the Escrow Committee and a duly authorized representative of Premiere and shall
be furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on
any such memorandum signed by such parties and shall distribute Escrow Shares
from the Escrow in accordance with the terms thereof. If no such agreement can
be reached within such thirty (30) day period, either Premiere or a majority of
the Escrow Committee may, by written notice to the other, demand arbitration of
the matter unless the amount of the Losses is at issue in pending litigation
with a third party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration; and in either such
event the matter shall be settled by arbitration conducted by a single
arbitrator experienced in the matters at issue and selected by the Escrow
Committee and Premiere in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. The arbitration shall be held in such
place in Atlanta, Georgia as may be specified by the arbitrator (or any place
agreed to by the Escrow Committee, Premiere and the arbitrator). The decision
of the arbitrator shall be final and binding as to any matters submitted under
this Section 3(c); provided, however, if necessary, such decision and
satisfaction procedure may be enforced by either the Escrow Committee or
Premiere in any court of record having jurisdiction over the subject matter or
over any of the parties to this Agreement. All costs and expenses incurred in
connection with any such arbitration proceeding (including reasonable
-3-
attorneys' fees) shall be borne by the party against which the decision is
rendered, or, if no decision is rendered, such costs and expenses shall be borne
equally by the Stockholders as one party and Premiere as the other party. If the
arbitrator's decision is a compromise, the determination of which party or
parties bear the costs and expenses incurred in connection with any such
arbitration proceeding shall be made by the arbitrator on the basis of the
arbitrator's assessment of the relative merits of the parties' positions.
4. Escrow Committee.
----------------
(a) Upon consummation of the transactions contemplated by the
Acquisition Agreements and in consideration of the issuance of the Escrow
Shares, each Stockholder shall be deemed to have irrevocably appointed the
Escrow Committee as his or its attorneys-in-fact to give and receive notices and
communications, to authorize delivery to Premiere of Escrow Shares from the
Escrow in satisfaction of claims by Premiere, to object to such deliveries, to
negotiate, enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to such
claim, and to take all actions necessary or appropriate in the judgment of the
Escrow Committee for the accomplishment of the foregoing. No further
documentation shall be required to evidence such appointment, and such power of
attorney shall be coupled with an interest, thereby confirming such appointment
as irrevocable. Notices or communications to or from the Escrow Committee shall
constitute notice to or from each Stockholder. A decision, act, consent or
instruction of the Escrow Committee shall constitute a decision of all
Stockholders for whom shares of Premiere Common Stock otherwise issuable to them
are deposited in the Escrow and shall be final, binding and conclusive upon each
such Stockholder, and the Escrow Agent and Premiere may rely upon any "properly
authorized" decision, act, consent or instruction of the Escrow Committee as
being the decision, act, consent or instruction of each and every such
Stockholder. The Escrow Agent and Premiere are hereby relieved from any
liability to any person for any acts done by them in accordance with such
properly authorized decision, act, consent or instruction of the Escrow
Committee. The Escrow Committee shall be empowered to act by majority vote with
respect to all matters arising under this Escrow Agreement during the term of
this Escrow Agreement, and for the purposes of this Agreement, a "properly
authorized" decision, act, consent or instruction of the Escrow Committee is one
that is approved by at least a majority of the members of the Escrow Committee.
No bond shall be required of the Escrow Committee, and members of the Escrow
Committee shall receive no compensation for their services.
(b) Neither the Escrow Committee nor any member thereof shall be
liable to anyone whatsoever by reason of any error of judgment or for any act
done or step taken or omitted by them in good faith or for any mistake of fact
or law for anything which he may do or refrain from doing in connection herewith
unless caused by or arising out of his own gross negligence or willful
misconduct, and any act done or omitted pursuant to the advice of counsel shall
be conclusive evidence of such good faith. The Stockholders shall indemnify and
hold the Escrow Committee and each member thereof harmless from any and all
liability and expense (including, without limitation, attorneys' fees) which may
arise out of any action taken or omitted by them or any one of them as an Escrow
Committee member in accordance with this Escrow Agreement including, without
limitation, any claims, demands, suits, investigations, proceedings or actions
by a third party, as the same may be amended, modified or supplemented, except
such liability and expense as may result from the gross negligence or willful
misconduct of the Escrow Committee.
-4-
(c) The Escrow Committee may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed to be genuine
and to have been signed or presented by the proper party or parties.
(d) Except as provided herein, the Escrow Committee is hereby
authorized and directed to disregard any and all notices and warnings that may
be given by any person, corporation or entity except the final order, judgment
or decree of any court or arbitration panel made, filed, entered or issued,
whether with or without jurisdiction, from which no further appeal may be taken
and the Escrow Committee is hereby authorized to comply with and obey any and
all such final orders, judgments and decrees of any court or arbitration panel
made, filed, entered or issued, whether with or without jurisdiction.
(e) If any member of the Escrow Committee shall die, become disabled
or otherwise be unable to fulfill its responsibilities hereunder, the remaining
member or members of the Escrow Committee shall select a replacement member or
members from among the Stockholders.
(f) The Escrow Committee shall have reasonable access to information
about Premiere, VTE, VTN and VTNLP and reasonable assistance of their officers,
directors, partners and employees for purpose of performing its duties and
exercising its rights hereunder, provided that the Escrow Committee shall treat
confidentially and not disclose any nonpublic information from or about
Premiere, VTE and VTN to anyone (except on a need-to-know basis to individuals
who agree to treat such information confidentially).
(g) The Escrow Committee shall be deemed to be the "Stockholder
Representative" under each of the Acquisition Agreements.
5. The Escrow Agent. The reasonable fees and expenses of the Escrow Agent
----------------
in connection with its execution and performance of this Escrow Agreement as set
forth on Exhibit B hereto shall be borne by Premiere and the Stockholders
---------
equally. The Escrow Agent shall be entitled to such rights and shall perform
such duties of the Escrow Agent as set forth herein, including but not limited
to the following (collectively, the "Duties"):
(a) The Escrow Agent shall hold and safeguard the Escrow during the
Escrow Period, shall treat such Escrow as an escrow fund in accordance with the
terms of this Escrow Agreement and not as the property of Premiere, and shall
hold and dispose of the Escrow only in accordance with the terms of this Escrow
Agreement.
(b) The Escrow Agent shall distribute to the Stockholders all
material relating to a vote of holders of Premiere Common Stock that the Escrow
Agent receives from the Premiere or any third party, and the Stockholders shall,
in such Stockholder's sole discretion, vote such shares and execute such
documents as may be necessary to permit such shares to be voted by the
Stockholders in accordance with their respective beneficial interests. The
Escrow Agent shall have no right to vote the Escrow Shares, except to the extent
so directed to do so by the beneficial owner of the respective shares.
(c) Promptly following termination of the Escrow Period as set forth
in Section 2 hereof, the Escrow Agent shall deliver to SunTrust Bank, Atlanta,
Trust Company Tower, 00 Xxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000 Attn: Xxxxxxx
Xxxxxxx, the transfer agent of the
-5-
Premiere Common Stock (the "Transfer Agent"), the certificate representing the
Escrow Shares with instructions for the Transfer Agent to issue to each
Stockholder a new certificate, subject to Section 5(d) hereof, in the name of
each Stockholder representing each Stockholder's pro rata portion of the Escrow
Shares at the time of such distribution based on Exhibit A to this Escrow
---------
Agreement, provided, however, that in the event that there are claims by
Premiere for Losses outstanding at the time of the termination of the Escrow
Period, the Escrow Agent shall retain an amount of such Escrow Shares sufficient
in the reasonable judgment of Premiere, subject to the objection of the Escrow
Committee and subsequent resolution of the matter in the manner provided in
Section 3 above, to satisfy any unsatisfied claims for Losses specified in any
notice by Premiere theretofore delivered to the Escrow Committee and Escrow
Agent prior to termination of the Escrow Period with respect to facts and
circumstances existing prior to expiration of the Escrow Period, and to pay
expenses as provided in this Escrow Agreement. As soon as all such claims have
been fully resolved, the Escrow Agent shall deliver to the Stockholders any and
all of the Escrow Shares and other property remaining in the Escrow and not
required to satisfy such claims and expenses. Each Stockholder shall receive
that number of Escrow Shares which bears the same relationship to the total
number of Escrow Shares in the Escrow and available for distribution as the
number of Escrow Shares set forth opposite the name of each such Stockholder on
Exhibit A hereto bears to the total number of Escrow Shares on Exhibit A as
--------- ---------
calculated by the Escrow Agent.
(d) The Stockholders shall have no right to receive, and the Escrow
Agent shall not distribute to the Stockholders, fractional Escrow Shares. In
the event that the distribution of any Stockholder's pro rata share of the
Escrow Shares would, but for this Section 5(d), result in such Stockholder
receiving fractional shares of Premiere Common Stock, (i) the Escrow Agent shall
instruct the Transfer Agent to issue a certificate in such Stockholder's name
for his or pro rata share of Escrow Shares rounded down to the nearest whole
share, (ii) the Escrow Agent shall instruct the Transfer Agent to issue an
additional certificate representing, in the aggregate, all fractional share
interests at the time of such distribution and the Escrow Agent shall thereupon
deliver such certificate to Premiere, (iii) Premiere shall deliver to the Escrow
Agent an amount of cash representing, the aggregate market value (based on the
closing sale price of Premiere Common Stock on the day of the termination of the
Escrow Period or, if such day is not a business day, the business day immediate
preceding such date, as reported in the Wall Street Journal) of such fractional
share interests as of the time of such distribution, and (iv) the Escrow Agent
shall deliver to each applicable Stockholder cash or a check representing such
Stockholder's fractional share interest. Premiere agrees to cause all necessary
Form 1099 information reports to be filed and hereby indemnifies the Escrow
Agent against all costs resulting from the failure to file such reports.
6. Replacement of Escrow Shares. Premiere shall promptly notify the
----------------------------
Escrow Agent of any fundamental corporate change that will result in the
elimination of the Premiere Common Stock.
(a) Distribution. Any cash dividends, dividends payable in securities
------------
or other distributions of any kind (but excluding any shares of Premiere Common
Stock received upon a stock split or stock dividend accounted for as a stock
split) shall be distributed promptly by the Escrow Agent to the beneficial
holder of the Escrow Shares to which such distribution relates. Any shares of
Premiere Common Stock received by the Escrow Agent upon a stock split or stock
dividend accounted for as a stock split made in respect of any securities in the
Escrow shall be added to the Escrow and become a part thereof. Any provision
hereof or in the Acquisition Agreements concerning the distribution of Premiere
Common Stock shall be adjusted to
-6-
appropriately reflect any stock split or reverse stock split or stock dividend
accounted for as a stock split.
(b) All Cash or All Stock Merger or Consolidation or Share Exchange.
---------------------------------------------------------------
If, prior to the distribution of all Escrow Shares from the Escrow, the Escrow
Agent receives notice from Premiere that Premiere intends to merge, consolidate
or engage in a share exchange with another corporation which is not an affiliate
of Premiere in a merger or consolidation involving a payment to stockholders of
Premiere (including the Stockholders) of an amount payable either entirely in
cash or entirely in capital stock of the surviving corporation or the parent of
the surviving corporation (the surviving corporation being an entity other than
Premiere) or an exchange of shares, and the Premiere Common Stock will no longer
be outstanding following the effective time of such merger or consolidation
(because Premiere is not the surviving corporation) or the Premiere Common Stock
is owned by the acquiring corporation as a result of such share exchange, as the
case may be, then the Escrow Agent shall treat the amounts received by it (as
the recordholder of the Escrow Shares) as follows:
(i) If the consideration received is cash, the Escrow Agent
shall retain in escrow and invest in investments as directed by the Escrow
Committee the cash received pursuant to transaction described in subparagraph
(b) of this Section 6; or
(ii) If the consideration received is capital stock of the
surviving company, the shares of capital stock received pursuant to the
transactions described in subparagraph (b) of this Section 6 will be retained in
escrow.
(c) Other Transactions. In the event there occurs at any time or from
------------------
time to time prior to the distribution of all shares of Premiere Common Stock
from the Escrow any fundamental corporate change that affects the outstanding
shares of Premiere Common Stock, other than the transaction described in
subparagraph (b) above (including, without limitation, a merger or consolidation
involving a payment to Stockholders of a combination of cash and capital stock
of the surviving corporation), then the Escrow Agent shall hold the amounts
received by it (as the record holder of the Escrow Shares) until it receives
written direction from the Escrow Committee and Premiere (or its successors) as
to the appropriate disposition of such amounts so received. In addition, for
purposes of this Escrow Agreement, in the event of a fundamental corporate
change resulting in the elimination of the Premiere Common Stock, defined terms
relating to or derived from the Premiere Common Stock shall relate to or derive
from the security or other assets replacing such Premiere Common Stock.
7. Ownership of Escrow Shares. The Stockholders shall have all indicia of
--------------------------
ownership of the Escrow Shares while they are held in Escrow, including the
right to vote the Escrow Shares, the right to receive dividends (subject to the
limitations set forth in Section 6) and the obligation to pay all taxes,
assessments, and charges with respect thereto, but excluding the right to sell,
transfer, pledge or hypothecate or otherwise dispose of any Escrow Shares.
Except as contemplated hereunder, no Escrow Shares or any beneficial interest
therein may be pledged, sold, assigned or transferred, including by operation of
law, other than by will or by the laws of descent or distribution in the event
of the death of a Stockholder, by a Stockholder or be taken or reached by any
legal or equitable process in satisfaction of any debt or other liability of
such Stockholder, prior to the delivery to the Stockholder of the Escrow Shares
by the Escrow Agent.
8. Exculpatory Provisions of Escrow Agent.
--------------------------------------
-7-
(a) The Escrow Agent shall be obligated only for the performance of
such Duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed to be genuine and to have been signed or presented by the proper party
or parties. The Escrow Agent shall not be liable for other parties' forgeries
or fraudulent acts. The Escrow Agent shall not be liable for any act done or
omitted hereunder as escrow agent except for breach of this Escrow Agreement,
gross negligence or misconduct. The Escrow Agent shall, in no case or event be
liable for any representations or warranties of VTN or VTE or the Stockholders.
Any act done or omitted pursuant to the advice or opinion of counsel shall be
conclusive evidence of the good faith of the Escrow Agent.
(b) The Escrow Agent is hereby authorized and directed to disregard
any and all notices and warnings that may be given by any person, firm or
corporation except the final order, judgment or decree of any court or
arbitration panel made, filed, entered or issued, whether with or without
jurisdiction, from which no further appeal may be taken and the Escrow Agent is
hereby authorized to comply with and obey any and all such final orders,
judgments and decrees of any court or arbitration panel made, filed, entered or
issued, whether with or without jurisdiction. If the Escrow Agent shall comply
with or obey any such order, judgment or decree of any court, the Escrow Agent
shall not be liable to any of the parties hereto, or to any other person, firm
association or corporation, by reason of any such compliance or obedience even
if any such order, judgment or decree may be subsequently revised, modified,
annulled, set aside or vacated.
(c) The Escrow Agent shall not be liable for the outlawing of any
rights under any statute of limitations with respect to the Acquisition
Agreements or any documents deposited with the Escrow Agent.
9. Resignation and Removal of the Escrow Agent. The Escrow Agent may
-------------------------------------------
resign as Escrow Agent at any time with or without cause by giving at least
thirty (30) calendar days' prior written notice to each of Premiere and the
Escrow Committee, such resignation to be effective thirty calendar (30) days
following the date such notice is given. In addition, Premiere and the Escrow
Committee may jointly remove the Escrow Agent as escrow agent at any time with
or without cause, by an instrument (which may be executed in counterparts) given
to the Escrow Agent, which instrument shall designate the effective date of such
removal. In the event of any such resignation or removal a successor escrow
agent shall be appointed by the Escrow Committee and Premiere. Any such
successor escrow agent shall deliver to Premiere and the Escrow Committee a
written instrument accepting such appointment and thereupon it shall succeed to
all the rights and duties of the escrow agent hereunder and shall be entitled to
receive the assets in the Escrow.
10. Further Instruments. If the Escrow Agent reasonably requires other or
-------------------
further instruments in connection with performance of the Duties, the necessary
parties hereto agree to furnish such instruments.
11. Disputes. It is understood and agreed that should any dispute arise
--------
with respect to the delivery and/or ownership or right of possession of the
securities or funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed to act in accordance with and in reliance upon, the
terms hereof. The Escrow Agent may hold all documents and funds and may wait
for settlement of any dispute by final appropriate proceedings. Furthermore,
the Escrow Agent may in its reasonable judgment, file an action of interpleader
requiring the parties hereto to
-8-
answer and litigate any claims and right among themselves, in which case, the
Escrow Agent is authorized to deposit with the clerk of the court all documents,
securities and funds held in Escrow, except that the Escrow Agent may withhold
all reasonable costs, reasonable expenses, reasonable charges and reasonable
attorney fees incurred by the Escrow Agent due to the interpleader action. Upon
initiating such interpleader action, tile Escrow Agent shall be fully released
and discharged of and from all obligations of this Escrow Agreement.
12. Indemnification. Through the Escrow or otherwise, in consideration of
---------------
the Escrow Agent's acceptance of this appointment, the other parties hereto,
jointly and severally, agree to indemnify and hold the Escrow Agent harmless as
to any liability incurred by it to any person, firm or corporation by reason of
its having accepted such appointment or in carrying out the terms hereof and the
Acquisition Agreements, and to reimburse the Escrow Agent for all its reasonable
costs and expenses, including, among other things, attorneys' fees and expenses,
incurred by reason of any matter as to which an Indemnity is paid; provided,
--------
however, that no indemnity need be paid in case of the Escrow Agent's gross
-------
negligence, willful misconduct or breach of this Escrow Agreement.
13. Notices. Any notice or other communication required or permitted
-------
hereunder shall be in writing, and shall be given by registered mail, postage
prepaid, personal delivery, telecopier (confirmed by mail as aforesaid) or
courier service such as Federal Express addressed as follows:
If to Premiere, to:
Premiere Technologies, Inc.
The Xxxxx Xxxxxxxx, Xxxxx 000
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, President
with a copy to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
If to VTE or VTN, to:
Voice-Tel
Enterprises, Inc.
Four Commerce Square, Suite 800
23200 Chagrin Xxxxxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxxx, President
-9-
With a copy to:
Benesch, Friedlander, Xxxxxx & Xxxxxxx
0000 XX Xxxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
If to the Escrow Committee, to:
______________________________
______________________________
______________________________
Attn: ________________________
With a copy to:
______________________________
______________________________
______________________________
Attn: _________________
If to Escrow Agent to:
[SunTrust Bank]
___________________
___________________
___________________
Attn: ______________
Each of the parties hereto shall be entitled to specify a different address by
giving notice as aforesaid. Such notices and communications shall be deemed
effective (i) three (3) business days after being sent, if sent by registered
mail (postage prepaid) from one location in the United States to another
location therein, (ii) on the date delivered, if delivered personally or
transmitted by confirmed facsimile or (iii) one (1) business day after being
sent if sent by overnight courier service.
14. Headings. Section headings are not to be considered part of this
--------
Escrow Agreement, are included solely for convenience and reference and are not
intended to be full or accurate descriptions of the contents of Sections to
which they relate.
15. Governing Law. The validity, construction and interpretation of this
-------------
Escrow Agreement shall be governed by the laws of the State of Georgia
applicable to contracts made in and to be performed wholly within that state.
16. Counterparts. This Escrow Agreement may be executed simultaneously in
------------
two or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
-10-
17. Amendments. This Escrow Agreement may only be amended by an
----------
instrument in writing signed by each of the parties hereto.
18. Business Day. For purposes of this Escrow Agreement a "business day"
------------
is a day on which the Escrow Agent is open for business and shall not include a
Saturday, Sunday, or legal holiday. Notwithstanding anything to the contrary in
this Escrow Agreement no action shall be required of the Escrow Agent, Premiere,
or any party receiving notice pursuant to the terms of this Escrow Agreement
except on a business day and in the event an action is required on a day which
is not a business day, such action shall be required to be performed on the next
succeeding day which is a business day.
PREMIERE:
PREMIERE TECHNOLOGIES, INC.,
a Georgia corporation
By:__________________________________
Name:_____________________________
Title:____________________________
VTE:
VOICE-TEL ENTERPRISES, INC., a
Delaware corporation
By:__________________________________
Name:_____________________________
Title:____________________________
VTN:
VTN, Inc., an Ohio corporation
By:__________________________________
Name:_____________________________
Title:____________________________
STOCKHOLDERS
-11-
EXHIBIT A
PRO RATA INTERESTS OF STOCKHOLDERS
Name # of Escrow Shares Pro Rata Interest
------ ------------------
EXHIBIT 2
SPECIFIC ESCROW AGREEMENT
This SPECIFIC ESCROW AGREEMENT (the "Specific Escrow Agreement"), dated as
of April __, 1997, is made and entered into by and among Premiere Technologies,
Inc., a Georgia corporation ("Premiere"); Voice-Tel Enterprises, Inc., a
Delaware corporation ("VTE"); VTN, Inc., an Ohio corporation ("VTN"); and the
holders of all classes of common stock of VTE and VTN executing this Agreement
(the "Stockholders" and, individually, a "Stockholder"), __________________,
__________________, and ______________, as attorneys-in-fact, representatives
and agents (collectively, the "Escrow Committee") of each of the Stockholders;
and [SunTrust Bank of Atlanta, a Georgia bank] (the "Escrow Agent").
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Acquisition Agreements (as defined below).
RECITALS
--------
A. Premiere, VTE, the stockholders of VTE and PTEK Merger Corporation, a
wholly owned subsidiary of Premiere ("Sub"), are parties to an Agreement and
Plan of Merger dated as of March __, 1997 (the "VTE Agreement"), pursuant to
which Sub will merge with and into VTE (the "VTE Merger"), with VTE surviving
the VTE Merger and continuing the business operations of VTE as a wholly owned
subsidiary of Premiere. Pursuant to Section 3.1(c)(iii) of the VTE Agreement,
the stockholders of VTE (other than any VTE Entity, any Premiere Entity and
stockholders who perfect their statutory dissenters' rights) will, by virtue of
the VTE Merger, receive, in exchange for each share of VTE Common Stock,
________ shares of Premiere Common Stock, or an aggregate of ________ shares of
Premiere Common Stock. Pursuant to the terms of Section 4.3 of the VTE
Agreement, shares of Premiere Common Stock to be issued pursuant to Section
3.1(c)(iii) of the VTE Agreement will be held and disbursed by the Escrow Agent
in accordance with the terms and conditions hereof.
B. Premiere, VTN, the stockholders of VTN and Sub are parties to an
Agreement and Plan of Merger dated as of March __, 1997 (the "VTN Agreement" and
collectively with the VTE Agreement, the "Acquisition Agreements"), pursuant to
which Sub will merge with and into VTN (the "VTN Merger"), with VTE surviving
the VTN Merger and continuing the business operations of VTN as a wholly owned
subsidiary of Premiere. Pursuant to Section 3.1(c)(iii) of the VTN Agreement,
the stockholders of VTN (other than any VTN Entity, any Premiere Entity and
stockholders who perfect their statutory dissenters' rights) will, by virtue of
the VTN Merger, each receive, in exchange for each share of VTN Common Stock,
________ shares of Premiere Common Stock, or an aggregate of ________ shares of
Premiere Common Stock. Pursuant to the terms of Section 4.3 of the VTN
Agreement, shares of Premiere Common Stock to be issued pursuant to Section
3.1(c)(iii) of the VTN Agreement will be held and disbursed by the Escrow Agent
in accordance with the terms and conditions hereof.
C. Former holders of VTE Common Stock and former holders of VTN Common
Stock will be jointly and severally liable for Losses (as defined below), and
any such liability will be satisfied solely from the Escrow Shares (as defined
below).
D. The Escrow Committee has been constituted as agent for and on behalf
of the Stockholders, to undertake certain obligations herein.
E. The parties hereto desire to set forth the terms and conditions
relating to the Escrow Shares (the "Escrow").
F. Pursuant to Section 3.1(c)(ii) of the Acquisition Agreements
additional shares of Premiere Common Stock to be issued pursuant to the
Acquisition Agreements have contemporaneously herewith been deposited with the
Escrow Agent pursuant to the General Escrow Agreement (as defined in the
Acquisition Agreements) (the "General Escrow").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Acquisition Agreements, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
AGREEMENT
---------
1. Establishment of Escrow. Pursuant to the Acquisition Agreements, on
-----------------------
the Closing Date Premiere shall deposit in escrow with the Escrow Agent on
behalf of the Stockholders a single stock certificate representing ________
shares of Premiere Common Stock, equal to ______ percent (______%) of the shares
otherwise allocable to the Stockholders pursuant to the VTE Agreement and the
VTN Agreement (the "Escrow Shares"), which shall be registered in the name of
the Escrow Agent as nominee for the beneficial owners of such shares. The
Escrow Agent shall deliver a receipt therefor to the Escrow Committee. The
parties hereto agree and acknowledge that the Stockholders are the beneficial
owners of the Escrow Shares and that the aforementioned stock certificate is
registered in the name of the Escrow Agent only as a matter of administrative
convenience. The Escrow Shares shall be held and distributed by the Escrow
Agent in accordance with the terms and conditions of this Specific Escrow
Agreement. A list showing the pro rata interest of the Stockholders in the
Escrow Shares is set forth in Exhibit A attached hereto.
---------
2. Escrow Period. The Escrow shall commence on the Closing Date and,
-------------
subject to the provisions of Sections 5(c), 5(d),and5(e), shall terminate on the
third anniversary of the date of this Agreement (the "Escrow Period").
3. Application of Escrow Shares to Claims.
--------------------------------------
(a) If Premiere shall have suffered any Losses for which it is entitled to
indemnification from the Stockholders, VTE, or VTN pursuant to Section 10.1(c),
10.1(d), 10.1(e), 10.1(f) or 10.1(g) of any of the Acquisition Agreements
("Losses"), it shall promptly give written notice of the Indemnification Claim
to the Escrow Committee in accordance with Section 10.2 of the appropriate
Acquisition Agreement, with a duplicate copy delivered to the Escrow Agent. If
the Indemnification Claim involves a Third Party Claim, the procedures set forth
in Section 10.3 of the appropriate Acquisition Agreement shall be observed by
Premiere and the Escrow Committee. If the Indemnification Claim involves a
matter other than a Third Party Claim and no objection is made by the Escrow
Committee pursuant to Section 3(b) below, the Escrow Agent shall deliver out of
the Escrow to Premiere the following within ten (10) calendar days after the
expiration of the thirty (30) calendar day notice period set forth in Section
3(b) below a number of Escrow Shares (rounded up to the nearest whole number)
equal to the amount of the Losses set
-2-
forth in such notice of claim divided by the Average Closing Price (as such term
is defined in the Acquisition Agreements; provided that such Average Closing
Price shall be appropriately adjusted upon the occurrence of any of the events
described in Section 6 of this Agreement). Notwithstanding anything to the
contrary in this Escrow Agreement, the Escrow Agent shall not make any payment
to Premiere from the Escrow until claims by Premiere for Losses under this
Specific Escrow Agreement and the General Escrow Agreement that are due and
payable exceed $50,000, in which event the Escrow Agent shall satisfy all such
claims from the Escrow without regard to such limitation.
(b) If the Escrow Committee objects to the validity of any claim for
Losses it shall give written notice to Premiere within thirty (30) calendar days
following receipt of notice of such claim, with a duplicate copy to the Escrow
Agent, that it does not consent to the delivery of any of the Escrow Shares out
of Escrow to Premiere for application to such claim. In such case, the Escrow
Agent shall continue to hold the Escrow Shares in Escrow until the rights of
Premiere and the Stockholders with respect thereto have been agreed upon among
the Escrow Committee and Premiere or until such rights are finally determined in
accordance with Section 3(c) below. The Escrow Agent may rely on (1) any
memorandum of Premiere and the Escrow Committee or (ii) any determination by any
arbitration panel as provided in Section 3(c) below. In any such resolution to
determine the number of Escrow Shares to be delivered out of Escrow, the Escrow
Agent shall, as soon as practicable following receipt of a copy of such
determination, deliver Escrow Shares from the Escrow in accordance with the
terms thereof.
(c) In case the Escrow Committee shall so object in writing to any
claim or claims by Premiere, Premiere and the Escrow Committee shall attempt for
thirty (30) calendar days to agree upon the rights of the respective parties
with respect to such claim. If the Escrow Committee and Premiere should so
agree, a memorandum setting forth such agreement shall be prepared and signed by
the Escrow Committee and a duly authorized representative of Premiere and shall
be furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on
any such memorandum signed by such parties and shall distribute Escrow Shares
from the Escrow in accordance with the terms thereof. If no such agreement can
be reached within such thirty (30) day period, either Premiere or a majority of
the Escrow Committee may, by written notice to the other, demand arbitration of
the matter unless the amount of the Losses is at issue in pending litigation
with a third party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration; and in either such
event the matter shall be settled by arbitration conducted by a single
arbitrator experienced in the matters at issue and selected by the Escrow
Committee and Premiere in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. The arbitration shall be held in such
place in Atlanta, Georgia as may be specified by the arbitrator (or any place
agreed to by the Escrow Committee, Premiere and the arbitrator). The decision
of the arbitrator shall be final and binding as to any matters submitted under
this Section 3(c); provided, however, if necessary, such decision and
satisfaction procedure may be enforced by either the Escrow Committee or
Premiere in any court of record having jurisdiction over the subject matter or
over any of the parties to this Agreement. All costs and expenses incurred in
connection with any such arbitration proceeding (including reasonable attorneys'
fees) shall be borne by the party against which the decision is rendered, or, if
no decision is rendered, such costs and expenses shall be borne equally by the
Stockholders as one party and Premiere as the other party. If the arbitrator's
decision is a compromise, the determination of which party or parties bear the
costs and expenses incurred in connection with any such arbitration proceeding
shall be made by the arbitrator on the basis of the arbitrator's assessment of
the relative merits of the parties' positions.
-3-
4. Escrow Committee.
----------------
(a) Upon consummation of the transactions contemplated by the
Acquisition Agreements and in consideration of the issuance of the Escrow
Shares, each Stockholder shall be deemed to have irrevocably appointed the
Escrow Committee as his or its attorneys-in-fact to give and receive notices and
communications, to authorize delivery to Premiere of Escrow Shares from the
Escrow in satisfaction of claims by Premiere, to object to such deliveries, to
negotiate, enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to such
claim, and to take all actions necessary or appropriate in the judgment of the
Escrow Committee for the accomplishment of the foregoing. No further
documentation shall be required to evidence such appointment, and such power of
attorney shall be coupled with an interest, thereby confirming such appointment
as irrevocable. Notices or communications to or from the Escrow Committee shall
constitute notice to or from each Stockholder. A decision, act, consent or
instruction of the Escrow Committee shall constitute a decision of all
Stockholders for whom shares of Premiere Common Stock otherwise issuable or
payable to them are deposited in the Escrow and shall be final, binding and
conclusive upon each such Stockholder, and the Escrow Agent and Premiere may
rely upon any "properly authorized" decision, act, consent or instruction of the
Escrow Committee as being the decision, act, consent or instruction of each and
every such Stockholder. The Escrow Agent and Premiere are hereby relieved from
any liability to any person for any acts done by them in accordance with such
properly authorized decision, act, consent or instruction of the Escrow
Committee. The Escrow Committee shall be empowered to act by majority vote with
respect to all matters arising under this Escrow Agreement during the term of
this Escrow Agreement, and for the purposes of this Agreement, a "properly
authorized" decision, act, consent or instruction of the Escrow Committee is one
that is approved by at least a majority of the members of the Escrow Committee.
No bond shall be required of the Escrow Committee, and members of the Escrow
Committee shall receive no compensation for their services.
(b) Neither the Escrow Committee nor any member thereof shall be
liable to anyone whatsoever by reason of any error of judgment or for any act
done or step taken or omitted by them in good faith or for any mistake of fact
or law for anything which he may do or refrain from doing in connection herewith
unless caused by or arising out of his own gross negligence or willful
misconduct, and any act done or omitted pursuant to the advice of counsel shall
be conclusive evidence of such good faith. The Stockholders shall indemnify and
hold the Escrow Committee and each member thereof harmless from any and all
liability and expense (including, without limitation, attorneys' fees) which may
arise out of any action taken or omitted by them or any one of them as an Escrow
Committee member in accordance with this Escrow Agreement including, without
limitation, any claims, demands, suits, investigations, proceedings or actions
by a third party, as the same may be amended, modified or supplemented, except
such liability and expense as may result from the gross negligence or willful
misconduct of the Escrow Committee.
(c) The Escrow Committee may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed to be genuine
and to have been signed or presented by the proper party or parties.
(d) Except as provided herein, the Escrow Committee is hereby
authorized and directed to disregard any and all notices and warnings that may
be given by any person, corporation or entity except the final order, judgment
or decree of any court or arbitration panel
-4-
made, filed, entered or issued, whether with or without jurisdiction, from which
no further appeal may be taken and the Escrow Committee is hereby authorized to
comply with and obey any and all such final orders, judgments and decrees of any
court or arbitration panel made, filed, entered or issued, whether with or
without jurisdiction.
(e) If any member of the Escrow Committee shall die, become disabled
or otherwise be unable to fulfill its responsibilities hereunder, the remaining
member or members of the Escrow Committee shall select a replacement member or
members from among the Stockholders.
(f) The Escrow Committee shall have reasonable access to information
about Premiere, VTE, VTN and VTNLP and the reasonable assistance of their
officers, directors, partners and employees for purpose of performing its duties
and exercising its rights hereunder, provided that the Escrow Committee shall
treat confidentially and not disclose any nonpublic information from or about
Premiere, VTE, VTN and VTNLP to anyone (except on a need-to-know basis to
individuals who agree to treat such information confidentially).
(g) The Escrow Committee shall be deemed to be the "Stockholder
Representative" under each of the Acquisition Agreements.
5. The Escrow Agent. The reasonable fees and expenses of the Escrow
----------------
Agent in connection with its execution and performance of this Escrow Agreement
as set forth on Exhibit B hereto shall be borne by Premiere and the Stockholders
---------
equally. The Escrow Agent shall be entitled to such rights and shall perform
such duties of the Escrow Agent as set forth herein, including but not limited
to the following (collectively, the "Duties"):
(a) The Escrow Agent shall hold and safeguard the Escrow during the
Escrow Period, shall treat such Escrow as an escrow fund in accordance with the
terms of this Escrow Agreement and not as the property of Premiere, and shall
hold and dispose of the Escrow only in accordance with the terms of this Escrow
Agreement.
(b) The Escrow Agent shall distribute to the Stockholders all
material relating to a vote of holders of Premiere Common Stock that the Escrow
Agent receives from the Premiere or any third party, and the Stockholders shall,
in such Stockholder's sole discretion, vote such shares and execute such
documents as may be necessary to permit such shares to be voted by the
Stockholders in accordance with their respective beneficial interests. The
Escrow Agent shall have no right to vote the Escrow Shares, except to the extent
so directed to do so by the beneficial owner of the respective shares.
(c) If at any time following the date of execution of this Agreement
and prior to the expiration of the Escrow Period all claims arising out of or
related to the matters set forth in Section 5.11(c) of the VTE Disclosure
Memorandum shall have been resolved to Premiere's satisfaction and all claims
for Losses in respect thereof shall have been distributed to Premiere in
accordance with Section 3, then the Escrow Agent shall distribute to each of the
Stockholders the number of Escrow Shares (rounded up to the nearest whole
number) equal to (i) the sum of (A) $3,000,000 multiplied by such Stockholder's
pro rata interest in the Escrow Shares, less (B) the Distributed Value with
respect to claims for Losses asserted by Premiere prior to the event giving rise
to the rights under this Section 5(d) multiplied by such Stockholder's pro rata
interest in the
-5-
Escrow Shares, divided by (ii) the Average Closing Price; provided, however,
that the amount distributed shall be reduced by the amount of any outstanding
and unresolved claims by Premiere for Losses (which amounts shall be determined
in a manner consistent with, and shall be subject to later distribution in a
manner consistent with, the provisions of Section 5(e)), multiplied by such
Stockholder's pro rata interest in the Escrow Shares, divided by (ii) the
Average Closing Price. "Distributed Value" shall mean the number of Escrow
Shares distributed to Premiere in accordance with Section 3 multiplied by the
Average Closing Price.
(d) [RESERVED]
(e) Promptly following termination of the Escrow Period as set forth
in Section 2 hereof, the Escrow Agent shall deliver to SunTrust Bank, Atlanta,
Trust Company Tower, 00 Xxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000 Attn: Xxxxxxx
Xxxxxxx, the transfer agent of the Premiere Common Stock (the "Transfer Agent"),
the certificate representing the Escrow Shares with instructions for the
Transfer Agent to issue to each Stockholder a new certificate, subject to
Section 5(f) hereof, in the name of each Stockholder representing each
Stockholder's pro rata portion of the Escrow Shares at the time of such
distribution based on Exhibit A to this Escrow Agreement, provided, however,
---------
that in the event that there are claims by Premiere for Losses outstanding at
the time of the termination of the Escrow Period, the Escrow Agent shall retain
an amount of such Escrow Shares sufficient in the reasonable judgment of
Premiere, subject to objection of the Escrow Committee and the subsequent
resolution of the matter in the manner provided in Section 3 above, to satisfy
any unsatisfied claims for Losses specified in any notice by Premiere
theretofore delivered to the Escrow Committee and Escrow Agent prior to
termination of the Escrow Period with respect to facts and circumstances
existing prior to expiration of the Escrow Period, and to pay expenses as
provided in this Escrow Agreement. As soon as all such claims have been fully
resolved, the Escrow Agent shall deliver to the Stockholders any and all of the
Escrow Shares and other property remaining in the Escrow and not required to
satisfy such claims and expenses. Each Stockholder shall receive that number of
Escrow Shares which bears the same relationship to the total number of Escrow
Shares in the Escrow and available for distribution as the number of Escrow
Shares set forth opposite the name of each such Stockholder on Exhibit A hereto
---------
bears to the total number of Escrow Shares on Exhibit A as calculated by the
---------
Escrow Agent.
(f) The Stockholders shall have no right to receive, and the Escrow
Agent shall not distribute to the Stockholders, fractional Escrow Shares. In
the event that the distribution of any Stockholder's pro rata share of the
Escrow Shares would, but for this Section 5(f), result in such Stockholder
receiving fractional shares of Premiere Common Stock, (i) the Escrow Agent shall
instruct the Transfer Agent to issue a certificate in such Stockholder's name
for his or pro rata share of Escrow Shares rounded down to the nearest whole
share, (ii) the Escrow Agent shall instruct the Transfer Agent to issue an
additional certificate representing, in the aggregate, all fractional share
interests at the time of such distribution and the Escrow Agent shall thereupon
deliver such certificate to Premiere, (iii) Premiere shall deliver to the Escrow
Agent an amount of cash representing, the aggregate market value (based on the
closing sale price of Premiere Common Stock on the day of the termination of the
Escrow Period or, if such day is not a business day, the business day immediate
preceding such date, as reported in the Wall Street Journal) of such fractional
share interests as of the time of such distribution, and (iv) the Escrow Agent
shall deliver to each applicable Stockholder cash or a check representing such
Stockholder's fractional share interest. Premiere agrees to cause all necessary
Form 1099 information reports to be filed and
-6-
hereby indemnifies the Escrow Agent against all costs resulting from the failure
to file such reports.
6. Replacement of Escrow Shares. Premiere shall promptly notify the
----------------------------
Escrow Agent of any fundamental corporate change that will result in the
elimination of the Premiere Common Stock.
(a) Distribution. Any cash dividends, dividends payable in securities or
------------
other distributions of any kind (but excluding any shares of Premiere Common
Stock received upon a stock split or stock dividend accounted for as a stock
split) shall be distributed promptly by the Escrow Agent to the beneficial
holder of the Escrow Shares to which such distribution relates. Any shares of
Premiere Common Stock received by the Escrow Agent upon a stock split or stock
dividend accounted for as a stock split made in respect of any securities in the
Escrow shall be added to the Escrow and become a part thereof. Any provision
hereof or in the Acquisition Agreements concerning the distribution of Premiere
Common Stock shall be adjusted to appropriately reflect any stock split or
reverse stock split or stock dividend accounted for as a stock split.
(b) All Cash or All Stock Merger or Consolidation or Share Exchange. If,
---------------------------------------------------------------
prior to the distribution of all Escrow Shares from the Escrow, the Escrow
Agent receives notice from Premiere that Premiere intends to merge, consolidate
or engage in a share exchange with another corporation which is not an affiliate
of Premiere in a merger or consolidation involving a payment to stockholders of
Premiere (including the Stockholders) of an amount payable either entirely in
cash or entirely in capital stock of the surviving corporation or the parent of
the surviving corporation (the surviving corporation being an entity other than
Premiere) or an exchange of shares, and the Premiere Common Stock will not
longer be outstanding following the effective time of such merger or
consolidation (because Premiere is not the surviving corporation) or the
Premiere Common Stock is owned by the acquiring corporation as a result of such
share exchange, as the case may be, then the Escrow Agent shall treat the
amounts received by it (as the recordholder of the Escrow Shares) as follows:
(i) If the consideration received is cash, the Escrow Agent shall
retain in escrow and invest in investments as directed by the Escrow Committee
the cash received pursuant to transaction described in subparagraph (b) of this
Section 6; or
(ii) If the consideration received is capital stock of the surviving
company, the shares of capital stock received pursuant to the transactions
described in subparagraph (b) of this Section 6 will be retained in escrow.
(c) Other Transactions. In the event there occurs at any time or from
------------------
time to time prior to the distribution of all shares of Premiere Common Stock
from the Escrow any fundamental corporate change that affects the outstanding
shares of Premiere Common Stock, other than the transaction described in
subparagraph (b) above (including, without limitation, a merger or consolidation
involving a payment to Stockholders of a combination of cash and capital stock
of the surviving corporation), then the Escrow Agent shall hold the amounts
received by it (as the record holder of the Escrow Shares) until it receives
written direction from the Escrow Committee and Premiere (or its successors) as
to the appropriate disposition of such amounts so received. In addition, for
purposes of this Escrow Agreement, in the event of a fundamental corporate
change resulting in the elimination of the Premiere Common Stock, defined terms
relating
-7-
to or derived from the Premiere Common Stock shall relate to or derive from the
security or other assets replacing such Premiere Common Stock.
7. Ownership of Escrow Shares. The Stockholders shall have all indicia
--------------------------
of ownership of the Escrow Shares while they are held in Escrow, including the
right to vote the Escrow Shares, the right to receive dividends (subject to the
limitations set forth in Section 6) and the obligation to pay all taxes,
assessments, and charges with respect thereto, but excluding the right to sell,
transfer, pledge or hypothecate or otherwise dispose of any Escrow Shares.
Except as contemplated hereunder, no Escrow Shares or any beneficial interest
therein may be pledged, sold, assigned or transferred, including by operation of
law, other than by will or by the laws of descent or distribution in the event
of the death of a Stockholder, by a Stockholder or be taken or reached by any
legal or equitable process in satisfaction of any debt or other liability of
such Stockholder, prior to the delivery to the Stockholder of the Escrow Shares
by the Escrow Agent.
8. Exculpatory Provisions of Escrow Agent.
--------------------------------------
(a) The Escrow Agent shall be obligated only for the performance of
such Duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed to be genuine and to have been signed or presented by the proper party
or parties. The Escrow Agent shall not be liable for other parties' forgeries
or fraudulent acts. The Escrow Agent shall not be liable for any act done or
omitted hereunder as escrow agent except for breach of this Escrow Agreement,
gross negligence or misconduct. The Escrow Agent shall, in no case or event be
liable for any representations or warranties of VTN or , VTE or the
Stockholders. Any act done or omitted pursuant to the advice or opinion of
counsel shall be conclusive evidence of the good faith of the Escrow Agent.
(b) The Escrow Agent is hereby authorized and directed to disregard
any and all notices and warnings that may be given by any person, firm or
corporation except the final order, judgment or decree of any court or
arbitration panel made, filed, entered or issued, whether with or without
jurisdiction, from which no further appeal may be taken and the Escrow Agent is
hereby authorized to comply with and obey any and all such final orders,
judgments and decrees of any court or arbitration panel made, filed, entered or
issued, whether with or without jurisdiction. If the Escrow Agent shall comply
with or obey any such order, judgment or decree of any court, the Escrow Agent
shall not be liable to any of the parties hereto, or to any other person, firm
association or corporation, by reason of any such compliance or obedience even
if any such order, judgment or decree may be subsequently revised, modified,
annulled, set aside or vacated.
(c) The Escrow Agent shall not be liable for the outlawing of any
rights under any statute of limitations with respect to the Acquisition
Agreements or any documents deposited with the Escrow Agent.
9. Resignation and Removal of the Escrow Agent. The Escrow Agent may
-------------------------------------------
resign as Escrow Agent at any time with or without cause by giving at least
thirty (30) calendar days' prior written notice to each of Premiere and the
Escrow Committee, such resignation to be effective thirty calendar (30) days
following the date such notice is given. In addition, Premiere and the Escrow
Committee may jointly remove the Escrow Agent as escrow agent at any time with
or without cause, by an instrument (which may be executed in counterparts) given
to the Escrow Agent, which instrument shall designate the effective date of such
removal. In the event of any such resignation or removal a successor escrow
agent shall be appointed by the Escrow Committee
-8-
and Premiere. Any such successor escrow agent shall deliver to Premiere and the
Escrow Committee a written instrument accepting such appointment and thereupon
it shall succeed to all the rights and duties of the escrow agent hereunder and
shall be entitled to receive the assets in the Escrow.
10. Further Instruments. If the Escrow Agent reasonably requires other or
-------------------
further instruments in connection with performance of the Duties, the necessary
parties hereto agree to furnish such instruments.
11. Disputes. It is understood and agreed that should any dispute arise
--------
with respect to the delivery and/or ownership or right of possession of the
securities or funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed to act in accordance with and in reliance upon, the
terms hereof. The Escrow Agent may hold all documents and funds and may wait
for settlement of any dispute by final appropriate proceedings. Furthermore,
the Escrow Agent may in its reasonable judgment, file an action of interpleader
requiring the parties hereto to answer and litigate any claims and right among
themselves, in which case, the Escrow Agent is authorized to deposit with the
clerk of the court all documents, securities and funds held in Escrow, except
that the Escrow Agent may withhold all reasonable costs, reasonable expenses,
reasonable charges and reasonable attorney fees incurred by the Escrow Agent due
to the interpleader action. Upon initiating such interpleader action, tile
Escrow Agent shall be fully released and discharged of and from all obligations
of this Escrow Agreement.
12. Indemnification. Through the Escrow or otherwise, in consideration of
---------------
the Escrow Agent's acceptance of this appointment, the other parties hereto,
jointly and severally, agree to indemnify and hold the Escrow Agent harmless as
to any liability incurred by it to any person, firm or corporation by reason of
its having accepted such appointment or in carrying out the terms hereof and the
Acquisition Agreements, and to reimburse the Escrow Agent for all its reasonable
costs and expenses, including, among other things, attorneys' fees and expenses,
incurred by reason of any matter as to which an Indemnity is paid; provided,
--------
however, that no indemnity need be paid in case of the Escrow Agent's gross
-------
negligence, willful misconduct or breach of this Escrow Agreement.
13. Notices. Any notice or other communication required or permitted
-------
hereunder shall be in writing, and shall be given by registered mail, postage
prepaid, personal delivery, telecopier (confirmed by mail as aforesaid) or
courier service such as Federal Express addressed as follows:
If to Premiere, to:
Premiere Technologies, Inc.
The Xxxxx Xxxxxxxx, Xxxxx 000
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, President
-9-
with a copy to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
If to VTE or VTN to:
Voice-Tel Enterprises, Inc.
Four Commerce
Square, Suite 800
23200 Chagrin Xxxxxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxxx, President
With a copy to:
Benesch, Friedlander, Xxxxxx & Xxxxxxx
0000 XX Xxxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
If to the Escrow Committee, to:
___________________
___________________
___________________
Attn: _____________
With a copy to:
___________________
___________________
___________________
Attn: _____________
If to Escrow Agent to:
[SunTrust Bank]
___________________
___________________
___________________
Attn: _____________
Each of the parties hereto shall be entitled to specify a different address by
giving notice as aforesaid. Such notices and communications shall be deemed
effective (i) three (3) business days
-10-
after being sent, if sent by registered mail (postage prepaid) from one location
in the United States to another location therein, (ii) on the date delivered, if
delivered personally or transmitted by confirmed facsimile or (iii) one (1)
business day after being sent if sent by overnight courier service.
14. Headings. Section headings are not to be considered part of this
--------
Escrow Agreement, are included solely for convenience and reference and are not
intended to be full or accurate descriptions of the contents of Sections to
which they relate.
15. Governing Law. The validity, construction and interpretation of this
-------------
Escrow Agreement shall be governed by the laws of the State of Georgia
applicable to contracts made in and to be performed wholly within that state.
16. Counterparts. This Escrow Agreement may be executed simultaneously in
------------
two or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
17. Amendments. This Escrow Agreement may only be amended by an
----------
instrument in writing signed by each of the parties hereto.
18. Business Day. For purposes of this Escrow Agreement a "business day"
------------
is a day on which the Escrow Agent is open for business and shall not include a
Saturday, Sunday, or legal holiday. Notwithstanding anything to the contrary in
this Escrow Agreement no action shall be required of the Escrow Agent, Premiere,
or any party receiving notice pursuant to the terms of this Escrow Agreement
except on a business day and in the event an action is required on a day which
is not a business day, such action shall be required to be performed on the next
succeeding day which is a business day.
PREMIERE:
PREMIERE TECHNOLOGIES, INC.,
a Georgia corporation
By:_____________________________________
Name:________________________________
Title:_______________________________
VTE:
VOICE-TEL ENTERPRISES, INC., a
Delaware corporation
By:_____________________________________
Name:________________________________
Title:_______________________________
-11-
VTN:
VTN, Inc., an Ohio corporation
By:_____________________________________
Name:________________________________
Title:_______________________________
-12-
EXHIBIT A
PRO RATA INTERESTS OF STOCKHOLDERS
Name # of Escrow Shares Pro Rata Interest
---- ------------------
EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of ____________, 1997, by and among Premiere Technologies, Inc., a
Georgia corporation (the "Company"), those stockholders of Voice-Tel
Enterprises, Inc., a Delaware corporation ("VTE"), appearing as signatories
hereto, those shareholders of VTN, Inc., an Ohio corporation ("VTN"), appearing
as signatories hereto (each of the stockholders of VTE and shareholders of VTN,
a "VTE/VTN Stockholder" and collectively, the "VTE/VTN Stockholders"), and those
stockholders or other equity owners of franchisees of VTE ("Franchisees") that
execute Adoption Agreements in the form attached hereto as Exhibit A (each such
stockholder or owner, a "Franchisee Stockholder" and collectively, the
"Franchisee Stockholders" and collectively with the VTE/VTN Stockholders, the
"Stockholders").
R E C I T A L S
---------------
WHEREAS, pursuant to the terms of an Agreement and Plan of Merger, dated as
of April __, 1997 (as the same may be amended, the "VTE Acquisition Agreement"),
by and among the Company, PTEK Merger Corporation, a Delaware corporation
("Sub"), VTE, and the stockholders of VTE, Sub shall be merged with and into VTE
(the "VTE Acquisition"), with the result that each of the outstanding shares of
no par value common stock of VTE ("VTE Common Stock") will be converted into the
right to receive shares of the $0.01 par value common stock of the Company (the
"Company Common Stock");
WHEREAS, pursuant to the terms of an Agreement and Plan of Merger, dated as
of April __, 1997 (as the same may be amended, the "VTN Acquisition Agreement"),
by and among the Company, PTEK Merger Corporation II, an Ohio corporation ("Sub
II"), VTN and the shareholders of VTN, Sub II will be merged with and into VTN
(the "VTN Acquisition"), with the result that each of the outstanding shares of
the no par value common stock of VTN ("VTN Common Stock") will be converted into
the right to receive shares of Company Common Stock (the VTE Acquisition and the
VTN Acquisition are collectively called the "Acquisition" and the VTE
Acquisition Agreement and the VTN Acquisition Agreement are collectively called
the "Acquisition Agreement");
WHEREAS, the Company has agreed, as a condition precedent to VTE's and
VTN's obligations under the Acquisition Agreement, to grant the VTE/VTN
Stockholders certain registration rights; and
WHEREAS, the Company has agreed to acquire certain Franchisees pursuant to
the terms a Transfer Agreement between each such Franchisee, the stockholders or
other equity owners of such Franchisee and the Company (collectively, the
"Franchisee Acquisition Agreements"); and
WHEREAS, the Company has agreed, as a condition precedent to the
consummation of the transactions contemplated in the Franchisee Acquisition
Agreements, to grant the Franchisee Stockholders certain registration rights;
and
WHEREAS, the Company and the Stockholders desire to define the
aforementioned registration rights on the terms and subject to the conditions
herein set forth.
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the parties hereby agree as follows:
1. DEFINITIONS
-----------
As used in this Agreement, the following terms have the respective meanings
set forth below:
Affiliate: shall mean, for any Person, (i) any other Person controlling,
---------
controlled by or under common control with such Person and (ii) any partner of
any such Person which is a partnership.
Amway Entity: shall mean Amway Corporation and any Affiliate thereof.
------------
Commission: shall mean the Securities and Exchange Commission or any other
----------
federal agency at the time administering the Securities Act;
Effective Date: shall mean the date on which the Acquisition is
--------------
consummated;
Exchange Act: shall mean the Securities Exchange Act of 1934, as amended;
------------
Holder: shall mean any holder of Registrable Securities;
------
Initiating Holder: shall mean any Amway Entity or any other Holder or
------------------
Holders who in the aggregate are Holders of more than 10% of the then
outstanding Registrable Securities;
Other Stockholders: shall mean Persons who, by virtue of an agreement with
------------------
the Company, are entitled to include their Securities in any registration
effected under Section 3.
Person: shall mean an individual, partnership, joint stock company, limited
------
liability company, corporation, trust or unincorporated organization, and a
government or agency or political subdivision thereof;
register, registered and registration: shall mean a registration effected
-------- ---------- ------------
by preparing and filing a registration statement in compliance with the
Securities Act (and any post-effective amendments filed or required to be filed)
and the declaration or ordering of effectiveness of such registration statement;
Registrable Securities: shall mean (A) the shares of Company Common Stock
----------------------
issued to the Stockholders under the Acquisition Agreement and the Franchisee
Acquisition Agreements, and (B) any securities of the Company issued as a
dividend or other distribution with respect to, or in exchange for or in
replacement of, the shares of Company Common Stock referred to in clause (A);
provided, that Registrable Securities shall not include (i) securities with
respect to which a registration statement with respect to the sale of such
securities has become effective under the Securities Act and all such securities
have been disposed of in accordance with such registration statement, (ii) such
securities as are actually sold pursuant to Rule 144, or (iii) such securities
as are acquired by the Company or any of its subsidiaries;
Registration Expenses: shall mean all expenses incurred by the
---------------------
Company in compliance with Sections 3(a), (b), (c) and (d) hereof, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company, fees and expenses of one counsel
for all the Holders, blue sky fees and expenses and the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of the Company, which shall be paid in any
event by the Company);
Rule 144: shall mean Rule 144 (or any successor provision thereto) under
--------
the Securities Act.
Rule 145: shall mean Rule 145 (or any successor provision thereto) under
--------
the Securities Act.
Security, Securities: shall have the meaning set forth in Section 2(1) of
--------------------
the Securities Act;
-2-
Securities Act: shall mean the Securities Act of 1933, as amended; and
--------------
Selling Expenses: shall mean all underwriting discounts and selling
-----------------
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for each of the Holders other than fees and expenses of
one counsel for all the Holders.
2. [Reserved]
----------
3. REGISTRATION RIGHTS
-------------------
(a) Requested Registration.
----------------------
(i) Request for Registration. If the Company shall receive from
------------------------
an Initiating Holder, at any time (x) after July 15, 1997 and (y) before the end
of the nine month period following the Effective Time (the "Demand Period"), a
written request (a "Registration Request") that the Company effect any
registration with respect to Registrable Securities held by such Initiating
Holder, the Company shall:
(A) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(B) use its commercially reasonable efforts to effect such
registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act) as
may be so requested as soon as practicable, but in any event no later than
ninety (90) days from the date of the request and as would permit or
facilitate the sale and distribution of all such Registrable Securities as
are specified in such request, together with (i) all of the Registrable
Securities of any Stockholder joining in such request as specified in a
written request received by the Company within twenty (20) business days
after written notice from the Company is given under Section 3(a)(i)(A)
above; provided, however, that no registration requested under this Section
3(a) shall become effective unless and until financial results covering at
least thirty (30) days of combined operations of the Company, VTE and the
Franchisees have been published within the meaning of Section 201.01 of the
Commission's Codification of Financial Reporting Policies; provided
further, that the Company shall not be obligated to effect, or take any
action to effect, any such registration pursuant to this Section 3(a):
(u) Other than by means of an underwriting in
accordance with Section 3(a)(ii);
(v) Other than pursuant to a registration statement on
Form S-3;
(w) Unless the Company has received audited financial
statements with respect to any business acquired or to be acquired to
the extent required by Rule 3-05 of Regulation S-X for so long as it
takes to obtain such statements, provided that the Company shall use
all commercially reasonable efforts to obtain such statements;
(x) If the Company, within ten (10) business days of
the receipt of the request of the Initiating Holders, gives notice of
its bona fide intention to effect the filing of a registration
statement with the Commission and to cause such registration statement
to become effective within ninety (90) days of receipt of such
request, provided that the Company actively employs, in good faith,
all commercially reasonable efforts to cause such registration
statement to become effective within such ninety (90) day period;
provided,
--------
-3-
however, that the periods during which the Company shall not be
-------
required to effect a registration in accordance with this Section 3(a)
together with any periods of suspension under Section 3(g) hereof may
not exceed ninety (90) days in the aggregate;
(y) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance,
unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act or applicable
rules or regulations thereunder;
(z) After the Company has effected one (1) such
registration in accordance with this Section 3(a) (in the aggregate
for all Holders) and such registration has been declared or ordered
effective and the sales of such Registrable Securities thereunder
shall have closed.
Notwithstanding any other provision of this Agreement,
provided any Registration Request is made at any time during the Demand Period,
a postponement or deferral of such requested registration in accordance with
Sections 3(a)(i) or 3(g) shall only postpone or defer the requested
registration, regardless of the expiration of the Demand Period.
(ii) Underwriting. The Holders whose shares are to be
------------
included in a registration in accordance with this Section 3(a) and the Company
shall enter into underwriting and related agreements in customary form with the
representative of the underwriter or underwriters selected for such underwriting
by the Initiating Holders and reasonably acceptable to the Company. Such
underwriting agreement shall contain representations and warranties by the
Company and other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions. The Company
shall cooperate fully with the Holders and the underwriters in connection with
any underwritten offering.
If any Holder or holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. Any securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration.
(iii) Cut-Back. Notwithstanding any other provision of this
--------
Section 3(a), if the managing underwriter advises the Company and the Holders in
writing that marketing factors require a limitation on the number of shares to
be underwritten, the securities of the Company held by Other Stockholders shall
be excluded from such registration to the extent so required by such limitation,
unless and to the extent prohibited by the terms of any registration rights or
other agreement in effect with such Other Stockholder. If, after the exclusion
of such shares, still further reductions are still required, the number of
shares included in the registration by each Holder shall be reduced on a pro
rata basis (based on the number of shares held by such Holder), by such minimum
number of shares as is necessary to comply with such request; provided, that
there shall be no reduction in the number of shares included in the registration
by any Holder until all shares of Other Stockholders have been excluded from
such registration, unless and to the extent prohibited by the terms of any
registration rights or other agreement in effect with such Other Stockholder. No
Registrable Securities or any other securities excluded from the underwriting by
reason of the underwriter's marketing limitation shall be included in such
registration. If any Other Stockholder who has requested inclusion in such
registration as provided above disapproves of the terms of the underwriting,
such person may elect to withdraw therefrom by written notice to the Company,
the underwriter and the Initiating Holder. The securities so withdrawn shall
also be withdrawn from registration. If the managing underwriter has not limited
the number of Registrable Securities or other securities to be underwritten, the
Company and officers and directors of the Company may include its or their
securities for its or their own account in such registration if the managing
underwriter so agrees and if the number of Registrable Securities and other
securities which would otherwise have been included in such registration and
underwriting will not thereby be limited.
-4-
(iv) Demand Registration Rights of Other Persons. In the
-------------------------------------------
event the Company, directly or indirectly, grants any right to, or alters any
existing right of, any Person or Persons, by agreement, arrangement or
understanding, which enables such Person or Persons to exercise during the
Demand Period rights requiring the Company to prepare, or cause to be prepared,
on behalf of such Person or Persons or in cooperation with such Person or
Persons, a registration statement the form of which is, under the rules and
regulations of the Commission, suitable for the sale of any of the Company's
securities in a registered public offering, the Company shall notify the Holders
of the terms and conditions of such rights granted to such Person. Following
receipt of such notification from the Company, if requested by Holders of a
majority of the Registrable Securities, in their sole discretion, the Company
shall enter into a written agreement with the Holders, which agreement shall
amend this Agreement to permit the Holders to exercise during the Demand Period
demand registration rights on any more favorable terms and conditions which have
been granted to any such Person by the Company.
(b) Company Registration.
--------------------
(i) Notice of Registration. If at any time prior to the
----------------------
first anniversary of the date of this Agreement (the "Piggyback Period") the
Company shall determine to register any of its equity securities, either for its
own account or for the account of a security holder or holders, other than (A) a
registration relating solely to employee benefit plans, or (B) a registration
relating solely to a Rule 145 transaction, the Company shall:
(A) promptly give to each Holder written notice
thereof; and
(B) include in such registration (and any related
qualification laws or other compliance), and related underwriting, if any, all
the Registrable Securities specified in a written request or requests, made
within twenty (20) days after mailing of such written notice from the Company to
any Holder.
(ii) Underwriting. If the registration of which the
------------
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 3(b)(i). In such event the right of any Holder
to registration in accordance with Section 3(b) shall be conditioned upon such
Holder's participation in such underwriting, and the inclusion of Registrable
Securities in the underwriting shall be limited to the extent provided herein.
All Holders proposing to distribute their securities through such underwriting
shall (together with the Company and the other holders distributing their
securities though such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company.
(iii) Cut-Back. Notwithstanding any other provision of this
--------
Section 3(b), if the managing underwriter advises the Company and the Holders in
writing that marketing factors require a limitation on the number of shares to
be underwritten, the number of shares included in the registration by each
Holder and any other holder of securities of the Company whose shares are
requested to be included in a registration proposed to be filed by the Company
shall be reduced on a pro rata basis (based on the number of shares held by such
Holder and other security holder) by such minimum number of shares as is
necessary to comply with such request; subject to the terms of any registration
rights or other agreement in effect with any Other Stockholder. No Registrable
Securities or any other securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
If any Other Stockholder who has requested inclusion in such registration as
provided above disapproves of the terms of the underwriting, such person may
elect to withdraw therefrom by written notice to the Company and the
underwriter. The securities so withdrawn shall also be withdrawn from
registration.
(iv) Piggyback Registration Rights of Other Persons. In
----------------------------------------------
the event the Company grants any rights, or alters any existing right, to any
Person or Persons by agreement, arrangement or
-5-
understanding which enables such Person to exercise during the Piggyback Period
piggyback registration rights, the Company shall, in writing, notify, within ten
(10) calendar days of such action by the Company, the Holders of the terms and
conditions of such rights granted to such Person. Notwithstanding anything
contained in this Agreement to the contrary, the Company shall not grant during
the Piggyback Period any piggyback rights to any Person or Persons, directly or
indirectly, by agreement, arrangement or understanding that provide, in the
context of any cut back in the number of shares to be included in accordance
with piggyback registration rights, that such cut back be made on a pro rata
basis other than as provided in Section 3(b)(iii).
(v) Right to Terminate Registration. The Company shall
-------------------------------
have the right to terminate or withdraw any registration initiated by it under
this Section 3(b) prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration.
(c) Expenses of Registration. Registration Expenses incurred in
------------------------
connection with any registration, qualification or compliance in accordance with
this Section 3 shall be borne by the Company, and all Selling Expenses shall be
borne by the Holders of the securities registered pro rata on the basis of the
number of their shares so registered.
(d) Registration Procedures. In the case of each registration
-----------------------
effected by the Company pursuant to this Section 3, the Company will keep the
Holders, as applicable, advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense, the Company
shall:
(i) keep such registration effective for a period of
forty five (45) days or until the Holders, as applicable, have
completed the distribution described in the registration statement
relating thereto, whichever first occurs;
(ii) in the event of any underwritten public offering,
enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriters
of such offering;
(iii) furnish to each Holder, and to any underwriter before
filing with the Commission, copies of any registration statement
(including all exhibits) and any prospectus forming a part thereof and
any amendments and supplements thereto (including all documents
incorporated or deemed incorporated by reference therein prior to the
effectiveness of such registration statement and including each
preliminary prospectus, any summary prospectus or any term sheet (as
such term is used in Rule 434 under the Securities Act)) and any other
prospectus filed under Rule 424 under the Securities Act, which
documents, other than documents incorporated or deemed incorporated by
reference, will be subject to the review of the Holders and any such
underwriter for a period of at least five business days, and the
Company shall not file any such registration statement or such
prospectus or any amendment or supplement to such registration
statement or prospectus to which any Holder or any such underwriter
shall reasonably object within five business days after the receipt
thereof; a Holder or such underwriters, if any, shall be deemed to
have reasonably objected to such filing only if the registration
statement, amendment, prospectus or supplement, as applicable, as
proposed to be filed, contains a material misstatement or omission;
(iv) furnish to each Holder and to any underwriter, such
number of conformed copies of the applicable registration statement
and of each amendment and supplement thereto (in each case including
all exhibits) and such number of copies of the prospectus forming a
part of such registration statement (including each preliminary
prospectus, any summary prospectus or any term sheet (as such term is
used in Rule 434 under the Securities Act)) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents,
including without limitation documents incorporated or deemed to be
-6-
incorporated by reference prior to the effectiveness of such
registration, as each of the Holders or any such underwriter, from
time to time may reasonably request;
(v) to the extent practicable, promptly prior to the
filing of any document that is to be incorporated by reference into
any registration statement or prospectus forming a part thereof
subsequent to the effectiveness thereof, and in any event no later
than the date such document is filed with the Commission, provide
copies of such document to the Holders, if requested, and to any
underwriter, and make representatives of the Company available for
discussion of such document and other customary due diligence matters,
and include in such document prior to the filing thereof such
information as any Holder or any such underwriter reasonably may
request;
(vi) make available at reasonable times for inspection by
the Holders, any underwriter participating in any disposition pursuant
to such registration and any attorney or accountant retained by the
Holders or any such underwriter, all financial and other records,
pertinent corporate documents and properties of the Company and cause
the officers, directors and employees of the Company to supply all
information reasonably requested by the Holders and any such
underwriters, attorneys or accountants in connection with such
registration subsequent to the filing of the applicable registration
statement and prior to the effectiveness of the applicable
registration statement;
(vii) use its commercially reasonable efforts (x) to
register or qualify all Registrable Securities and other securities
covered by such registration under such other securities or blue sky
laws of such States of the United States of America where an exemption
is not available and as the sellers of Registrable Securities covered
by such registration shall reasonably request, (y) to keep such
registration or qualification in effect for so long as the applicable
registration statement remains in effect, and (z) to take any other
action which may be reasonably necessary or advisable to enable such
sellers to consummate the disposition in such jurisdictions of the
securities to be sold by such sellers, except that the Company shall
not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction where it is not
so qualified, or to subject itself to taxation in any such
jurisdiction, or to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the
Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act or applicable rules or
regulations thereunder;
(viii) use its commercially reasonable efforts to cause all
Registrable Securities covered by such registration statement to be
registered with or approved by such other federal or state
governmental agencies or authorities as may be necessary in the
opinion of counsel to the Company and counsel to the Holders of
Registrable Securities to enable the Holders thereof to consummate the
disposition of such Registrable Securities;
(ix) subject to Section 3(g) hereof, promptly notify each
Holder of Registrable Securities covered by a registration statement
(A) upon discovery that, or upon the happening of any event as a
result of which, the prospectus forming a part of such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
(B) of the issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of
proceedings for that purpose, (C) of any request by the Commission for
(1) amendments to such registration statement or any document
incorporated or deemed to be incorporated by reference in any such
registration statement, (2) supplements to the prospectus forming a
part of such registration statement or (3) additional information, or
(D) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of
any of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose, and at the request of
any such Holder promptly prepare and furnish to it a reasonable
-7-
number of copies of a supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter delivered to the purchasers
of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(x) use its commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of any such
registration, or the lifting of any suspension of the qualification
(or exemption from qualification) of any of the Registrable Securities
for sale in any jurisdiction;
(xi) if requested by any Initiating Holder, or any
underwriter, promptly incorporate in such registration statement or
prospectus, pursuant to a supplement or post effective amendment if
necessary, such information as the Initiating Holder and any
underwriter may reasonably request to have included therein,
including, without limitation, information relating to the "plan of
distribution" of the Registrable Securities, information with respect
to the principal amount or number of shares of Registrable Securities
being sold to such underwriter, the purchase price being paid therefor
and any other terms of the offering of the Registrable Securities to
be sold in such offering and make all required filings of any such
prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be
incorporated in such prospectus supplement or post effective
amendment;
(xii) furnish to the Holders, addressed to them, an opinion
of counsel for the Company, dated the date of the closing under the
underwriting agreement, if any, or the date of effectiveness of the
registration statement if such registration is not an underwritten
offering, and use its commercially reasonable efforts to furnish to
the Holders, addressed to them, a "cold comfort" letter signed by the
independent certified public accountants who have certified the
Company's financial statements included in such registration, covering
substantially the same matters with respect to such registration (and
the prospectus included therein) and, in the case of such accountants'
letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to underwriters
in underwritten public offerings of securities and such other matters
as the Holders may reasonably request;
(xiii) otherwise use its commercially reasonable efforts to
comply with all applicable rules and regulations of the Commission,
and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least 12
months, but not more than 18 months, beginning with the first full
calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 promulgated
thereunder;
(xiv) provide promptly to the Holders upon request any
document filed by the Company with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange Act; and
(xv) use its commercially reasonable efforts to cause all
Registrable Securities included in any registration pursuant hereto to
be listed on each securities exchange on which securities of the same
class are then listed, or, if not then listed on any securities
exchange, to be eligible for trading in any over-the-counter market or
trading system in which securities of the same class are then traded.
-8-
(e) Indemnification.
---------------
(i) The Company will indemnify each of the Holders, as
applicable, each of its officers, directors, members and partners, and each
person controlling each of the Holders, with respect to each registration which
has been effected pursuant to this Section 3, and each underwriter, if any, and
each person who controls any underwriter, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or any violation by the Company of the
Securities Act or the Exchange Act or any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each of the Holders, each of its officers, directors, members
and partners, and each person controlling each of the Holders, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
the Holders or underwriter and stated to be specifically for use therein.
(ii) Each of the Holders will, if Registrable Securities held
by it are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter, each Other Stockholder and each of their
officers, directors, members and partners, and each person controlling such
Other Stockholder against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document made by such Holder,
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements by such Holder therein,
in light of the circumstances under which they were made, not misleading, and
will reimburse the Company and such Other Stockholders, directors, officers,
partners, members, persons, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein; provided, however, that the
obligations of each of the Holders hereunder and under clause (vi) below shall
be limited to an amount equal to the net proceeds to such Holder of securities
sold as contemplated herein.
(iii) Each party entitled to indemnification under this Section
3(d) (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld) and the Indemnified Party
may participate in such defense at such party's expense (unless the Indemnified
Party shall have reasonably concluded that there may be a conflict of interest
between the Indemnifying Party and the Indemnified Party in such action, in
which case the fees and expenses of one such counsel for all Indemnified Parties
shall be at the expense of the Indemnifying Party), and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 3 unless
the
-9-
Indemnifying Party is materially prejudiced thereby. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party (which consent shall not be unreasonably withheld or
delayed), consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 3(d)
is held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue (or alleged untrue) statement of a material fact or the
omission (or alleged omission) to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(v) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with any underwritten public offering
contemplated by this Agreement are in conflict with the foregoing provisions,
the provisions in such underwriting agreement shall be controlling.
(vi) The foregoing indemnity agreement of the Company and
Holders is subject to the condition that, insofar as they relate to any loss,
claim, liability or damage made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the Commission at the time the
registration statement in question becomes effective or the amended prospectus
filed with the Commission pursuant to Commission Rule 424(b) (the "Final
Prospectus"), such indemnity or contribution agreement shall not inure to the
benefit of any underwriter or Holder (but only if such Holder was required to
deliver such Final Prospectus) if a copy of the Final Prospectus was furnished
to the underwriter and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act.
(f) Information by the Holders. Each of the Holders holding
--------------------------
securities included in any registration shall furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Section 3.
(g) Holdback Agreement; Postponement. Notwithstanding the provisions
--------------------------------
of Section 3(a), if the Company shall furnish to the Initiating Holder(s) a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company it would be seriously
detrimental to the Company and its stockholders for a registration statement to
be filed, the Company's obligation to use commercially reasonable efforts to
register, qualify or comply under Section 3(a) shall be deferred for a period
not to exceed ninety (90) days from the date the Company received the
Registration Request.
(h) Assignment. The registration rights set forth in Section 3 hereof
----------
may be assigned, in whole or in part, to any transferee of Registrable
Securities (who shall be considered thereafter to be a Holder (provided that any
transferee who is not an affiliate of Stockholder shall be a Holder only with
-10-
respect to such Registrable Securities so acquired and any stock of the Company
issued as a dividend or other distribution with respect to, or in exchange for
or in replacement of, such Registrable Securities) and shall be bound by all
obligations and limitations of this Agreement).
4. RULE 144 REPORTING
------------------
With a view to making available the benefits of certain rules and
regulations of the Commission which may permit the sale of restricted securities
to the public without registration, the Company agrees to:
(i) make and keep public information available (as those terms are
understood and defined in Rule 144) at all times;
(ii) use its commercially reasonable efforts to file with the
Commission in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange
Act; and
(iii) so long as there are outstanding any Registrable Securities,
furnish to each Holder, upon request, a written statement by the
Company as to its compliance with the reporting requirements of
Rule 144 and of the Securities Act and the Exchange Act, a copy
of the most recent annual or quarterly report of the Company, and
such other reports and documents so filed as such Holder may
reasonably request in availing itself of any rule or regulation
of the Commission allowing such Holder to sell any such
securities without registration.
5. INTERPRETATION OF THIS AGREEMENT
--------------------------------
(a) Directly or Indirectly. Where any provision in this
----------------------
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person.
(b) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Georgia.
(c) Section Headings. The headings of the sections and
----------------
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
6. MISCELLANEOUS
-------------
(a) Notices.
-------
(i) All communications under this Agreement shall be in
writing and shall be delivered by facsimile or by hand or mailed by overnight
courier or by registered or certified mail, postage prepaid: .
(A) if to the Company, to Premiere Technologies,
Inc., The Lenox Building, Suite 400, 0000 Xxxxxxxxx Xxxx, X.X., Xxxxxxx, Xxxxxxx
00000, Telecopy (000) 000-0000, Attention: Xxxxxx X. Xxxxx, President, or at
such other address as it may have furnished in writing to the Stockholders;
(B) if to the VTE/VTN Stockholders, at the addresses
listed on Schedule I hereto, or at such other addresses as may have been
furnished to the Company in writing; and
-11-
(C) if to the Franchisee Stockholders, at the
addresses listed in the appropriate Adoption Agreement, or at such other
addresses as may have been furnished to the Company in writing.
(ii) Any notice so addressed shall be deemed to be given:
if delivered by hand, on the date of such delivery; if mailed by courier, on the
first business day following the date of such mailing; and if mailed by
registered or certified mail, on the third business day after the date of such
mailing.
(b) Reproduction of Documents. This Agreement and all documents
-------------------------
relating thereto, including, without limitation, any consents, waivers and
modifications which may hereafter be executed may be reproduced by the
Stockholder by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and the Stockholders may destroy any
original document so reproduced. The parties hereto agree and stipulate that any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the Stockholders in
the regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
(c) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the
parties.
(d) Entire Agreement; Amendment and Waiver. This Agreement
--------------------------------------
constitutes the entire understanding of the parties hereto and supersedes all
prior understanding among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only with) the
written consent of the Company and the Holders of a majority of the then
outstanding Registrable Securities.
(e) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(f) No Inconsistent Agreements. The Company will not hereafter
--------------------------
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the Holders of Registrable Securities in this
Agreement.
(g) Remedies. Each Holder of Registrable Securities, in addition
--------
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(h) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended and understood that all of the rights and
privileges of each of the Holders shall be enforceable to the fullest extent
permitted by law.
-12-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
PREMIERE TECHNOLOGIES, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
VTE/VTN STOCKHOLDERS:
_____________________________________
Name:________________________________
_____________________________________
Name:________________________________
_____________________________________
Name:________________________________
_____________________________________
Name:________________________________
-13-
EXHIBIT A
ADOPTION AGREEMENT
Reference is made to that certain Stock Restriction and Registration Rights
Agreement entered into as of ____________, 1997, by and among Premiere
Technologies, Inc. ("Premiere"), those stockholders of Voice-Tel Enterprises,
Inc. ("VTE") appearing as signatories thereto, those stockholders of VTN, Inc.
appearing as signatories thereto and those stockholders or other equity owners
of franchisees of VTE that execute Adoption Agreements in the form hereof (the
"Registration Rights Agreement").
WHEREAS, the undersigned is the holder of ______ shares of the common
stock, $.01 par value per share, of Premiere (the "Shares"); and
WHEREAS, Premiere has agreed to grant to the undersigned registration
rights with respect to the Shares on the terms and subject to the conditions set
forth in the Registration Rights Agreement.
NOW, THEREFORE, the undersigned hereby agrees to become a party to and be
bound by the terms and conditions of the Registration Rights Agreement,
effective as of the date hereof.
Date:________________________ _____________________________________
Name:
Address:__________________________
__________________________
__________________________
Acknowledged and Agreed:
PREMIERE TECHNOLOGIES, INC.
_____________________________
By:__________________________
Its:_________________________
EXHIBIT 7
______________, 1997
Premiere Technologies, Inc.
The Xxxxx Xxxxxxxx, Xxxxx 000
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx 00000
Re: VTN, Inc.
Gentlemen:
This letter is delivered pursuant to Section 9.(g) of the Agreement
and Plan of Merger (the "Merger Agreement"), dated as of ______, 1997, by and
among Premiere Technologies, Inc. ("Premiere"), PTEK Merger Corporation, II
("Sub") and VTN, Inc. ("VTN").
In connection with the proposed acquisition of VTN by Premiere by
means of the merger of Sub into VTN (the "Merger") and concerning claims which I
may have against VTN or any of its Subsidiaries or Affiliates, in my capacity
as an officer or director prior to the Merger, I hereby affirm the following:
(a) VTN shall retain all liability (to the extent VTN was so
liable) for claims for salaries, wages or other compensation, employee
benefits, reimbursement of expenses or worker's compensation arising out of
employment through the effective date of the Merger;
(b) In my capacity as an officer or a director, I do not have,
and am not aware of, any claims I might have (other than those referred to
in paragraph (a) above) against VTN or any of its Subsidiaries or
Affiliates; and
(c) I hereby release VTN, and any of its Subsidiaries and
Affiliates, from any and all claims which I may now or hereafter possess
against VTN in my capacity as an officer or a director, other than those
referred to in paragraph (a) above and in Section 10.1(f) of the Merger
Agreement.
By executing this letter on behalf of Premiere, you shall acknowledge
the retention by VTN of the liabilities described in paragraph (a) above.
Sincerely,
________________________________________
Signature of Officer or Director
________________________________________
Name of Officer or Director
On behalf of Premiere, I hereby acknowledge receipt of this letter as
of this ______ day of ______, 19__.
PREMIERE TECHNOLOGIES, INC.
By:_____________________________________
-2-
Exhibit 8
Exhibit E
---------
VTE, VTNLP, the NAP and each Franchisee Company shall have entered into
the "Grand Solution" agreements substantially in the form attached hereto and as
reasonably satisfactory to Premiere which shall provide, among other terms and
conditions, that:
1. VTE owned service centers shall be included as "Participating
Franchisees" for purposes of electing the NAP Board of Directors and
otherwise be deemed a "Participating Franchisee" as defined in the
NAP by-laws, the Franchisee Representatives currently serving on the
Board of Directors of the NAP whose franchise rights are acquired by
Premiere shall have resigned from the NAP Board of Directors
effective upon the Closing, and the Chairman of the NAP Board of
Directors will be elected by the Board of Directors and will not be
required to be a Franchisee Representative.
2. In partial consideration for the Participating Franchisee's execution
of the Grand Solution documents, the Participating Franchisee shall
receive the opportunity to be appointed as a non-exclusive reseller
of Premiere products and services within the Participating
Franchisee's Protected Territory (which products and services
Premiere currently distributes within the Franchisee's Protected
Territory) and such Participating Franchisee shall be entitled to a
commission of ten percent (10%) on revenues actually received (less
applicable taxes). The commission will not be subject to any
royalties or system marketing fund fees.
3. Except as specifically set forth in the Franchisee's Franchise
Agreement and its Franchise NAP agreement, each Participating
Franchisee shall acknowledge and agree that it has no right to be the
exclusive reseller of VTE/VTNLP network messaging or non-messaging
services within its Protected Territory and shall otherwise have no
right to receive a royalty on non-messaging services sold or
distributed by VTE or VTNLP.
4. The parties will acknowledge and agree that as of March 31, 1997, the
Intermin Development Loan owed by the NAp to the Participating
Franchisees is $122,639; the Advance owed by the NAP to VTE equals
$500,661; and the amount to be paid by VTN to the NAP equals
$740,000.
