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Agreement & Plan Of Merger & Reorganization

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Sectors: Telecommunications
Governing Law: Delaware, View Delaware State Laws
Effective Date: January 06, 1997
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EXHIBIT 99.1


AGREEMENT AND PLAN OF MERGER AND REORGANIZATION


BY AND AMONG


VTEL CORPORATION,


VTEL-SUB, INC.


AND


COMPRESSION LABS, INCORPORATED


DATED AS OF JANUARY 6, 1997


TABLE OF CONTENTS


Page ARTICLE I -- THE MERGER.............................................................. 2
Section 1.01. The Merger..................................................... 2
Section 1.02. The Closing.................................................... 2
Section 1.03. Effective Time................................................. 2
Section 1.04. Effect of the Merger........................................... 2
Section 1.05. Certificate of Incorporation................................... 2
Section 1.06. Bylaws......................................................... 2
Section 1.07. Directors and Officers......................................... 2
Section 1.08. Tax Consequences............................................... 3
Section 1.09. Accounting Treatment........................................... 3


ARTICLE II -- CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES...................... 3
Section 2.01. Merger Consideration: Conversion and Cancellation of Securities 3
Section 2.02. Exchange Agency; Surrender of Certificates..................... 4
Section 2.03. Stock Transfer Books........................................... 7
Section 2.04. Dissenters' Rights............................................. 7


ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................... 8
Section 3.01. Organization and Qualification: Subsidiaries................... 8
Section 3.02. Certificate of Incorporation and Bylaws........................ 9
Section 3.03. Capitalization................................................. 9
Section 3.04. Authority...................................................... 11
Section 3.05. No Conflict: Required Filings and Consents..................... 11
Section 3.06. Permits: Compliance............................................ 12
Section 3.07. Reports; Financial Statements; Undisclosed Liabilities......... 13
Section 3.08. Absence of Certain Changes or Events........................... 14
Section 3.09. Absence of Litigation.......................................... 14
Section 3.10. Employee Benefit Plans; Labor Matters.......................... 15
Section 3.11. Taxes.......................................................... 16
Section 3.12. Affiliates..................................................... 17
Section 3.13. Properties..................................................... 18
Section 3.14. Intellectual Rights............................................ 18
Section 3.15. Real Property.................................................. 19
Section 3.16. Insider Interests; Transactions with Management................ 19
Section 3.17. Contracts and Agreements....................................... 20
Section 3.18. Vote Required.................................................. 20
Section 3.19. Brokers........................................................ 20
Section 3.20. Opinion of Financial Advisor................................... 20
Section 3.21. Board Recommendations.......................................... 20
Section 3.22. Distributors, Customers, or Suppliers.......................... 21
Section 3.23. Pooling of Interests........................................... 21
Section 3.24. Rights Plan.................................................... 21
Section 3.25. Disclosure..................................................... 21


ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF THE


i

VTEL COMPANIES................................................................... 21
Section 4.01. Organization and Qualification; Subsidiaries................... 21
Section 4.02. Certificate of Incorporation and Bylaws........................ 22
Section 4.03. Capitalization................................................. 22
Section 4.04. Authority...................................................... 24
Section 4.05. No Conflict: Required Filings and Consents..................... 24
Section 4.06. Permits; Compliance............................................ 25
Section 4.07. Reports: Financial Statements.................................. 25
Section 4.08. Absence of Certain Changes or Events........................... 26
Section 4.09. Absence of Litigation.......................................... 27
Section 4.10. Intellectual Rights............................................ 27
Section 4.11. Transactions with Management................................... 28
Section 4.12. Vote Required.................................................. 28
Section 4.13. Brokers........................................................ 28
Section 4.14. Opinion of Financial Advisor................................... 29
Section 4.15. Board Recommendations.......................................... 29
Section 4.16. Distributors, Customers, or Suppliers.......................... 29
Section 4.17. Pooling of Interests........................................... 29
Section 4.18. Disclosure..................................................... 29


ARTICLE V -- COVENANTS................................................................ 29
Section 5.01. Affirmative Covenants of the Company........................... 29
Section 5.02. Affirmative Covenants of VTEL.................................. 30
Section 5.03. Negative Covenants of the Company.............................. 31
Section 5.04. Negative Covenants of VTEL..................................... 35
Section 5.05. Access and Information......................................... 36


ARTICLE VI -- ADDITIONAL AGREEMENTS................................................... 37
Section 6.01. Presentation to Stockholders................................... 37
Section 6.02. Registration Statement; Proxy Statement/Prospectus............. 38
Section 6.03. Appropriate Action: Consents; Filings.......................... 39
Section 6.04. Affiliates; Tax Treatment...................................... 40
Section 6.05. Public Announcements........................................... 41
Section 6.06. NASDAQ Listing................................................. 41
Section 6.07. State Takeover Statutes........................................ 41
Section 6.08. Charter Amendment.............................................. 42
Section 6.09. Board Seats.................................................... 42
Section 6.10. Options........................................................ 42
Section 6.11. Series C Preferred Stock Warrants.............................. 43
Section 6.12. Termination of Convertible Preferred Stock Purchase Agreement.. 43
Section 6.13. Merger Sub..................................................... 43
Section 6.14. Indemnification................................................ 43
Section 6.15. Employment Contracts........................................... 45
Section 6.16. Comfort Letters................................................ 46
Section 6.17. Sales Under Rule 145 if Applicable............................. 46


ARTICLE VII -- CLOSING CONDITIONS..................................................... 47
Section 7.01. Conditions to Obligations of Each Party Under This Agreement... 47


ii


Section 7.02. Additional Conditions to Obligations of the VTEL Companies..... 48
Section 7.03. Additional Conditions to Obligations of the Company............ 49


ARTICLE VIII -- TERMINATION, AMENDMENT AND WAIVER..................................... 50
Section 8.01. Termination.................................................... 50
Section 8.02. Effect of Termination.......................................... 52
Section 8.03. Amendment...................................................... 53
Section 8.04. Waiver......................................................... 53
Section 8.05. Fees, Expenses and Other Payments.............................. 53


ARTICLE IX -- GENERAL PROVISIONS...................................................... 54
Section 9.01. Effectiveness of Representations, Warranties and Agreements.... 54
Section 9.02. Notices........................................................ 55
Section 9.03. Certain Definitions............................................ 56
Section 9.04. Headings....................................................... 57
Section 9.05. Severability................................................... 57
Section 9.06. Entire Agreement............................................... 57
Section 9.07. Assignment..................................................... 57
Section 9.08. Parties in Interest............................................ 57
Section 9.09. Failure or Indulgence Not Waiver; Remedies Cumulative.......... 58
Section 9.10. Governing Law.................................................. 58
Section 9.11. Counterparts................................................... 58
Section 9.12. Specific Performance........................................... 58 EXHIBIT A - Stock Option Agreement EXHIBIT B - Company Affiliate Letter EXHIBIT C - Acquiror Affiliate Letter


iii


AGREEMENT AND PLAN OF MERGER AND REORGANIZATION


THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of January 6, 1997 (this "Agreement"), is by and among VTEL CORPORATION, a Delaware
--------- corporation ("VTEL"), VTEL-SUB, INC., a Delaware corporation and direct wholly
---- owned subsidiary of VTEL ("Merger Sub"), and COMPRESSION LABS, INCORPORATED, a
---------- Delaware corporation (the "Company"). VTEL and Merger Sub are sometimes
------- collectively referred to herein as the "VTEL Companies."
--------------


WHEREAS, Merger Sub, upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State of Delaware ("DGCL"), will merge with and into the Company (the "Merger");
---- ------


WHEREAS, the Board of Directors of the Company has determined that the Merger is advisable and is fair to, and in the best interests of, the Company and its stockholders, has approved and adopted this Agreement and the transactions contemplated hereby, and has recommended approval and adoption of this Agreement by the stockholders of the Company;


WHEREAS, the Board of Directors of VTEL has determined that the Merger is advisable and is fair to, and in the best interests of, VTEL and its stockholders, has approved and adopted this Agreement and the transactions contemplated hereby, and its sole stockholder, VTEL, has approved the Merger by unanimous written consent;


WHEREAS, the Board of Directors of Merger Sub has approved and adopted this Agreement and the transactions contemplated hereby, and has recommended approval and adoption of this Agreement by its stockholder;


WHEREAS, it is the intent of the respective Boards of Directors of the Company and VTEL that the Merger be structured as a strategic combination involving a "merger of equals" of the Company and VTEL and that the Surviving Corporation (as defined herein) be governed and operated on that basis;


WHEREAS, for federal income tax purposes, it is intended that the Merger will qualify as a reorganization under the provisions of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code");
----


WHEREAS, the parties intend to cause the Merger to be accounted for as a pooling of interests pursuant to APB Opinion No. 16, Staff Accounting Series Release 130, 135 and 146 and Staff Accounting Bulletins Topic Two;


WHEREAS, in furtherance of, and as a requirement of the VTEL Companies to enter into this Agreement providing for, the Merger, the Company and VTEL have entered into a Stock Option Agreement, dated of even date herewith, in the form attached as Exhibit A (the "Stock Option Agreement"); and
--------- ----------------------


NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement, the parties hereto agree as follows:


ARTICLE I
THE MERGER


Section 1.1. The Merger. Upon the terms and subject to the conditions set
---------- forth in this Agreement, and in accordance with the DGCL, at the Effective Time (as defined in Section 1.03 of this Agreement), Merger Sub shall be merged with
------------ and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the "Surviving Corporation"). The name of
--------------------- the Surviving Corporation shall continue after the Effective Time to be "Compression Labs, Incorporated."


Section 1.2. The Closing. Subject to the terms and conditions of this
----------- Agreement, the closing of the Merger (the "Closing") shall take place (a) at the
------- offices of Jenkens & Gilchrist, a Professional Corporation, 1445 Ross Avenue, Suite 3200, Dallas, Texas 75202-2799, at 9:00 am., local time, on the second business day immediately following the day on which the last to be fulfilled or waived of the conditions set forth in Article VII shall be fulfilled or waived
----------- in accordance herewith (other than conditions with respect to actions the respective parties hereto will take at the Closing), or (b) at such other time, date or place as VTEL and the Company may agree. The date on which the Closing occurs is hereinafter referred to as the "Closing Date."
------------


Section 1.3. Effective Time. As promptly as practicable after the
-------------- satisfaction or, if permissible, waiver of the conditions set forth in Article
------- VII of this Agreement, the parties hereto shall cause the Merger to be - --- consummated by filing a Certificate of Merger with the Secretary of State of the State of Delaware, in such form as is required by, and executed in accordance with the relevant provisions of, the DGCL (the date and time of the completion of such filing being the "Effective Time").
--------------


Section 1.4. Effect of the Merger . At the Effective Time, the effect of
--------------------- the Merger shall be as provided in Section 259 of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of Merger Sub and the Company shall vest in the Surviving Corporation, and all debts, obligations, liabilities and duties of each of Merger Sub and the Company shall become the debts, obligations, liabilities and duties of the Surviving Corporation.


Section 1.5 Certificate of Incorporation. At the Effective Time, the
---------------------------- Certificate of Incorporation of the Company shall be the Certificate of Incorporation of Merger Sub as in effect immediately prior to the Effective Time.


Section 1.6 Bylaws. At the Effective Time and without further action on
------ the part of the Company or VTEL, the Bylaws of the Surviving Corporation shall be the Bylaws of Merger Sub in effect as of the Effective Time.


2


Section 1.7 Directors and Officers. The directors of Merger Sub
---------------------- immediately prior to the Effective Time shall be the directors of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified.


Section 1.8 Tax Consequences . It is intended that the Merger shall
----------------- constitute a reorganization within the meaning of Section 368(a) of the Code, and that this Agreement shall constitute a "plan of reorganization" for the purposes of Section 368 of the Code.


Section 1.9 Accounting Treatment . It is intended that the Merger shall be
--------------------- treated as a pooling-of-interests for accounting purposes by VTEL and the Company.


ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES


Section 2.1 Merger Consideration: Conversion and Cancellation of
---------------------------------------------------- Securities. At the Effective Time, by virtue of the Merger and without any action on the part of the VTEL Companies, the Company or the holders of any of the Company's securities:


(a) Subject to the other provisions of this Article II, each share of common
---------- stock, par value $.001 per share, of the Company ("Company Common Stock") issued
-------------------- and outstanding immediately prior to the Effective Time (excluding any Company Common Stock described in Section 2.01(e) of this Agreement) shall be converted
--------------- into the right to receive .46 of one fully paid and nonassessable share of common stock, par value $.0l per share, of VTEL ("VTEL Common Stock") (the
----------------- "Common Stock Conversion Ratio"). - ------------------------------


(b) Subject to the other provisions of this Article II, each share of Series
---------- C Preferred Stock, par value $.001 per share, of the Company ("Series C
-------- Preferred Stock") issued and outstanding immediately prior to the Effective Time - --------------- (excluding any Series C Preferred Stock described in Section 2.01(e) of this
--------------- Agreement and any Dissenting Shares, as herein defined) shall be converted into the right to receive 3.15 fully paid and nonassessable share of VTEL Common Stock (the "Series C Preferred Stock Conversion Ratio").
-----------------------------------------


(c) Notwithstanding the foregoing, if between the date of this Agreement and the Effective Time the outstanding shares of VTEL Common Stock or Company Common Stock shall have been changed into a different number of shares or a different class, by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, the Common Stock Conversion Ratio and the Series C Preferred Stock Conversion Ratio shall be correspondingly adjusted to reflect such stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares.


3


(d) As a result of their conversion pursuant to Section 2.01(a) and Section
--------------- ------- 2.01(b), all shares of Company Common Stock and Series C Preferred Stock shall - ------- cease to be outstanding and shall automatically be canceled and retired. Each certificate previously evidencing Company Common Stock outstanding immediately prior to the Effective Time (other than Company Common Stock described in
Section 2.01(e) of this Agreement) ("Converted Common Shares") shall thereafter - -------------- ----------------------- represent, subject to Section 2.02(d) of this Agreement, the right to receive
--------------- that number of shares of VTEL Common Stock into which the shares of Company Common Stock represented by such certificate have been converted pursuant to subsection (a) of this Section 2.01 determined pursuant to the Common Stock
------------ Conversion Ratio and, if applicable, the right to receive cash pursuant to
Section 2.02(d) of this Agreement ("Common Stock Merger Consideration"). Each - --------------- certificate previously evidencing Series C Preferred Stock outstanding immediately prior to the Effective Time (other than Series C Preferred Stock described in Section 2.01(e) of this Agreement and any Dissenting Shares) (the
--------------- "Converted Series C Preferred Shares" and, together with the Converted Common - ------------------------------------ Shares, the "Converted Shares") shall thereafter represent, subject to Section
---------------- ------- 2.02(d) of this Agreement, the right to receive that number of shares of VTEL - ------- Common Stock into which the shares of Series C Preferred Stock represented by such certificate have been converted pursuant to subsection (b) of this Section
------- 2.01 determined pursuant to the Series C Preferred Stock Conversion Ratio and, - ---- if applicable, the right to receive cash pursuant to Section 2.02(d) of this
--------------- Agreement (the "Series C Preferred Stock Consideration" and, with the Common
-------------------------------------- Stock Consideration, the "Merger Consideration"). The holders of certificates
-------------------- previously evidencing Converted Shares shall cease to have any rights with respect to such Converted Shares except the right to receive the Merger Consideration applicable thereto and as otherwise provided herein or by law. Such certificates previously evidencing Converted Shares shall be exchanged for certificates evidencing whole shares of VTEL Common Stock issued in consideration therefor upon the surrender of such certificates in accordance with the provisions of Section 2.02 of this Agreement. No fractional shares of
------------ VTEL Common Stock shall be issued and, in lieu thereof, a cash payment shall be made pursuant to Section 2.02(d) of this Agreement.
---------------


(e) Notwithstanding any provision of this Agreement to the contrary, ea
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