EXHIBIT 4.6
COMPANY AFFILIATE AGREEMENT
(Series C Preferred Stock)
AGREEMENT (hereinafter referred to as the "Agreement") entered into as of
January 6, 1997, between VTEL Corporation, a Delaware corporation (hereinafter
referred to as the "Acquiror"), Compression Labs, Incorporated, a Delaware
corporation (the "Company"), and the undersigned stockholders (the
"Stockholders") of the Company.
W I T N E S S E T H:
WHEREAS, the Acquiror, the Company and VTEL-Sub, Inc., a Delaware
corporation (hereinafter referred to as the "Subsidiary"), propose to enter, or
have entered into an Agreement and Plan of Merger and Reorganization expected to
be dated, or dated January 6, 1997 (hereinafter referred to as the "Merger
Agreement"), pursuant to which the Subsidiary, which is wholly-owned by the
Acquiror, will be merged into the Company (the "Merger") and the Company will
become a wholly-owned subsidiary of the Acquiror;
WHEREAS, upon the consummation of the Merger and in connection therewith,
the Stockholders will become the owners of shares of Common Stock of Acquiror
(hereinafter referred to as the "Acquiror Shares"); and
WHEREAS, it is intended that the transactions contemplated by the Merger
Agreement will be treated as a "pooling of interests" in accordance with
generally accepted accounting principles and the applicable General Rules and
Regulations published by the Securities and Exchange Commission (the
"Commission").
NOW, THEREFORE, in consideration of the promises and the mutual agreements,
provisions and covenants set forth in the Merger Agreement, and hereinafter in
this Agreement, it is hereby agreed as follows:
1. Each of the Stockholders hereby severally agree that:
(a) It may be deemed to be an "affiliate" of the Company within the
meaning of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), and Accounting Series Release No. 130, as amended, of the
Commission.
(b) It will not surrender for conversion or otherwise attempt to
convert any shares of the Company's Series C Preferred Stock (or any part
thereof) into shares of common stock of the Company during the period commencing
on the date hereof through the Effective Time, as defined in the Merger
Agreement, of the Merger.
(c) It will not sell, contract to sell or otherwise agree to sell or
otherwise transfer any capital stock of the Company or any part thereof or any
Acquiror Shares or any part thereof or otherwise reduce its risk relative to any
of such shares of capital stock of the Company or any Acquiror Shares until such
time after the Effective Time, as defined in the Merger Agreement, of the
Merger as financial results covering at least thirty (30) days of the post-
Effective Time combined operations of Acquiror and the Company have been, within
the meaning of said Accounting Series Release No. 130, as amended, filed by the
Acquiror with the Commission in the Current Report on Form 8-K called for by
Section 2(a) hereof; provided, however, the foregoing shall not restrict any
such holder from engaging in any sale, transfer, exchange or hedging
transactions with respect to such shares effected at least sixty (60) days prior
to the Effective Time, unless the Acquiror shall determine that any sale,
transfer, exchange or hedge transaction within such sixty (60) day period
preceding the Effective Time would not cause the Merger to be subject to any
accounting treatment other than pooling of interests accounting treatment and
the Acquiror shall consent thereto in a writing delivered to the Stockholders;
provided, further, the Stockholders agree that they will not sell, transfer or
exchange any such shares that they might otherwise be permitted to sell,
transfer or exchange pursuant to the preceding proviso unless the Acquiror is
notified in writing of such sale, transfer or exchange and the transferor
Stockholder shall have caused the transferee to assume and be bound by the
restrictions and agreements contained herein pursuant to a written instrument,
in form and substance reasonably satisfactory to the Acquiror and the Company,
delivered to the Acquiror and the Company prior to effecting such sale, transfer
or exchange, notwithstanding anything in the preceding proviso to the contrary.
(d) It agrees to the provisions of the Merger Agreement providing for
the conversion of each share of Series C Preferred Stock into the right to
receive 3.15 Acquiror Shares (subject to adjustments for stock splits,
recapitalizations and other events specified in the Merger Agreement) in
accordance with and pursuant to the Series C Preferred Stock Conversion Ratio,
as therein defined (which Series C Conversion Ratio may not be amended without
the written consent of the Stockholders), and irrevocably agrees to vote all
shares of Series C Preferred Stock and common stock of the Company held by the
undersigned at the special meeting of the Company's stockholders called to
consider and to vote all such shares for the approval of the Merger Agreement
and the Merger.
(e) It hereby waives and relinquishes its right of first refusal to
purchase shares of common stock of the Company set forth in Section 3.18 of the
Convertible Preferred Stock Purchase Agreement, dated as of October 24, 1996,
between the Company, Infinity Investors, Ltd. and Seacrest Capital Limited and
waives any violation or breach thereof arising by virtue of the execution,
delivery and performance of the Stock Option Agreement by the Company pursuant
to the Merger Agreement, affording the Acquiror the option to purchase up to
3,120,500 shares of the Company's Common Stock, and/or by virtue of the exercise
by the Acquiror of any rights therein granted (provided, however, such waiver
and relinquishment shall apply solely to the execution, delivery and performance
of the Stock Option Agreement and the exercise of the rights therein granted,
and shall not extend to any other transaction entered into by the Company
subsequent thereto with respect to which such right is applicable).
(f) Subject in any event to paragraph (c) of this Section 1, it agrees
not to offer, sell, pledge, transfer or otherwise dispose of any of the Acquiror
Shares unless at that time either:
(i) such transaction shall be permitted pursuant to the
provisions of Rule 145(d) under the Securities Act;
(ii) counsel representing the applicable Stockholder,
satisfactory to the Acquiror, shall have advised the Acquiror in a written
opinion letter satisfactory to the Acquiror and the Acquiror's counsel and upon
which the Acquiror and its counsel may rely, that no registration under the
Securities Act would be required in connection with the proposed sale, transfer
or other disposition;
(iii) a registration statement under the Securities Act covering
the Acquiror Shares proposed to be sold, transferred or otherwise disposed of,
describing the manner and terms of the proposed sale, transfer or other
disposition, and containing a current prospectus under the Securities Act, shall
be effective under the Securities Act; or
(iv) an authorized representative of the Commission shall have
rendered written advice to the applicable Stockholder (sought by such
Stockholder or counsel to such Stockholder, with a copy thereof and of all other
related communications delivered to the Acquiror) to the effect that the
Commission would take no action, or that the staff of the Commission would not
recommend that the Commission take action, with respect to the proposed sale,
transfer or other disposition if consummated.
(g) (1) Until the financial results described in paragraph (c) of
this Section 1 have been filed or published as described therein, and until a
public sale of the Acquiror Shares represented by such certificate has been made
in compliance with one of the alternative conditions set forth in the
subparagraphs of paragraph (f) of this Section 1, all certificates representing
the Acquiror Shares deliverable to the Stockholders pursuant to the Merger
Agreement and in connection with the Merger and any certificates subsequently
issued with respect thereto or in substitution therefor shall bear a legend
substantially as follows:
"The shares represented by this certificate may not be offered, sold,
pledged, transferred or otherwise disposed of except in accordance
with paragraph (d) of Rule 145 promulgated by the Securities and
Exchange Commission, and the other conditions specified in the Company
Affiliate Agreement dated as of January 6, 1997, between VTEL
Corporation, the Company and the registered holder, a copy of which
Company Affiliate Agreement may be inspected by the holder of this
certificate at the offices of VTEL Corporation or VTEL Corporation
will furnish a copy thereof to the holder of this certificate upon
written request and without charge."
Acquiror, at its discretion, may cause stop transfer orders to be placed with
its transfer agent(s) with respect to the certificates for the Acquiror Shares
but not as to the certificates for any part of the Acquiror Shares as to which
said legend is no longer appropriate as hereinabove provided.
(2) Notwithstanding paragraph (g)(1) of this Section 1, at any time after
the financial results described in paragraph (c) of this Section 1 have been
filed or published as described therein, any or all certificates representing
the Acquiror Shares shall, at the written request of such Stockholder and upon
surrender of such certificates to the transfer agent for Acquiror Shares, be
replaced by stock certificates representing the Acquiror Shares bearing only the
following legend:
"The shares represented by this certificate may not be offered, sold,
pledged, transferred or otherwise disposed of except in compliance
with paragraph (d) of Rule 145 promulgated by the Securities and
Exchange Commission."
The reference in the foregoing legend to Rule 145 shall not preclude, however,
the alternative of a transaction in compliance with subparagraphs (ii), (iii) or
(iv) of paragraph (f) of this Section 1. Acquiror shall, or shall cause its
counsel to, promptly deliver to Acquiror's transfer agent customary letters or
opinion letters necessary to authorize such transfer agent to deliver
certificates without restrictive legend to a purchaser of Acquiror Shares sold
by a Stockholder in compliance with Rule 144 and Rule 145 upon receipt of
written request from a Stockholder of such sale(s).
(h) Each Stockholder will observe and comply with the Securities Act
and the General Rules and Regulations thereunder, as now in effect and as from
time to time amended and including those hereafter enacted or promulgated, in
connection with any offer, sale, pledge or transfer or other disposition of the
Acquiror Shares or any part thereof.
2. Acquiror covenants and agrees with each of the Stockholders as
follows:
(a) As soon as practicable following the expiration of the first full
calendar month that commences after the Effective Time of the Merger (but in any
event no later than the end of the fourteenth day following the expiration of
the first full calendar month commencing after the Effective Time of the
Merger), the Acquiror will file a Current Report on Form 8-K which includes
combined sales and net income of the Company and the Acquiror.
(b) As soon as practicable after the financial results described in
paragraph (c) of Section 1 have been filed as described in paragraph (a) of this
Section 2, the Acquiror, at its expense, shall file a Form S-3 registration
statement registering for public sale the Acquiror Shares acquired in the Merger
by the Stockholders and the Acquiror Shares issuable upon exercise of the Series
C Preferred Stock Warrants, as that term is defined in the Merger Agreement, and
shall use its best efforts to cause such registration to become effective within
forty-five (45) days after the filing of the financial results described in
paragraph (c) of Section 1 as described in paragraph (a) of this Section 2, and
to remain effective for a period of not less than three years (unless prior to
the expiration of such three year period, all of the Series C Preferred Stock
Warrants are exercised, in which case the registration statement shall not be
required to remain effective so long as one year has elapsed from the date of
the filing of such registration statement); provided, however, that at such time
that none of the Series C Preferred Warrants remain outstanding, Acquiror shall
not be obligated to maintain the effectiveness of any registration statement
filed pursuant to this paragraph 2 if either (i) the combined holdings of
Acquiror Shares held by the Stockholders represent less than 2% of the total
issued and outstanding Acquiror Shares, or (ii) if the volume restrictions under
Rule 145 would not materially impair the ability of the Stockholders to sell
such shares in the public market in reliance upon Rule 145 during a period not
exceeding thirty (30) days. The Acquiror and the Stockholders shall in good
faith negotiate a mutually acceptable agreement governing the registration
rights herein granted prior to the Effective Time, containing terms and
conditions customary for contractual shelf registrations such as this, and
taking into account customary shelf registration procedures, covenants and
indemnities, but excluding any required registrations other than as contained in
this Section and
excluding piggyback registrations. Pending the occurrence of the Effective Time,
the Stockholders agree not to assert any claims against the Company for
liquidated damages under Section 6 of that Registration Rights Agreement, dated
as of October 24, 1996 among the Company and the Stockholders (the "Registration
Rights Agreement"), and at the Effective Time, the Registration Rights Agreement
shall terminate and be of no further force or effect and neither the Company nor
the Acquiror shall be liable for liquidated or other damages thereunder, all of
which claims shall be waived as of the Effective Time; provided, if the Merger
Agreement shall be terminated, the Registration Rights Agreement shall continue
in full force and effect and thereafter the Stockholders may assert such claims
for liquidated damages as may be permitted by such Registration Rights
Agreement.
3. The Company covenants and agrees with each of the Stockholders that if
the Merger Agreement is terminated for any reason whatsoever, it will pay to the
Stockholders a flat expense reimbursement fee of $400,000 (allocated among the
Stockholders in such manner as directed by the Stockholders in writing to the
Company), payable at the sole discretion of the Company in either cash or common
stock of the Company (in the case of common stock of the Company, based on the
average closing sale price of the Company's common stock as reported by
Bloomberg LP on the NASDAQ Stock Market for the five business days preceding the
date that such fee shall become due); provided, however, if the Merger, as
defined in the Merger Agreement, is consummated, no fee shall be due or owing to
the Stockholders by the Company. The Stockholders confirm that Acquiror shall
have no liability or obligation whatsoever with respect to such fee, and that
there are no other fees or payments that are or will become due to the
Stockholders from the Company or Acquiror in connection with or relating to the
Stockholders' execution, delivery and performance of this Agreement. The
Company further agrees that (unless the fee set forth above has otherwise been
paid upon a prior termination of the Merger Agreement) upon the occurrence of
the Expiration Date, it will deposit the $400,000 fee into an escrow account
with an escrow depository reasonably acceptable to the Stockholders to be held
by the escrow depository and disbursed to (i) the Stockholders if the Merger
Agreement is terminated or (ii) to the Company upon occurrence of the Effective
Time. The expense of such escrow shall be paid by the Company.
4. From and after the Effective Time of the Merger and for so long as
necessary in order to permit the Stockholders to sell the Acquiror Shares
pursuant to Rule 145 and, to the extent applicable, Rule 144 under the
Securities Act, Acquiror will use its best efforts to file on a timely basis all
reports required to be filed by it pursuant to Section 13 of the Securities
Exchange Act of 1934, referred to in paragraph (c)(1) of Rule 144 under the
Securities Act (or, if applicable, Acquiror will use its best efforts to make
publicly available the information regarding itself referred to in paragraph
(c)(2) of Rule 144) in order to permit the Stockholders to sell, pursuant to the
terms and conditions of Rule 145 and the applicable provisions of Rule 144, the
Acquiror Shares.
5. Each of the Stockholders severally agrees that it will not perfect any
dissenter's appraisal rights under the Delaware General Corporation Law.
6. The provisions of this Agreement may be terminated from and after the
Expiration Date (as hereinafter defined) by written notice given by the
Stockholders to Acquiror and the Company if the Effective Time of the Merger
shall not have occurred on or prior to the Expiration Date; provided, however if
the Effective Time shall have occurred on or prior to the Expiration Date,
then this Agreement shall continue in full force and effect notwithstanding any
such notice given by the Stockholders. As used herein, the term "Expiration
Date" shall mean June 30, 1997; provided, however, if the Effective Time shall
not have occurred on or prior to June 30, 1997 due to any action or inaction of
any Governmental Entity (as defined in the Merger Agreement) [including, but not
limited to, the failure of the Commission to declare the Acquiror's Registration
Statement on Form S-4 relating to the Merger effective (as long as the initial
filing of such Registration Statement shall be made by March 31, 1997) or the
failure of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, to be terminated (so long as the initial
filing thereof shall be made by March 31, 1997)], the Expiration Date shall
automatically be extended to such later date as is necessary to permit the
Effective Time to occur prior to the occurrence of the Expiration Date (which
extension shall include sufficient time to permit the occurrence of the special
meetings of the stockholders of the Acquiror and the Company as contemplated by
the Merger Agreement), in which case this Agreement shall continue in full force
and effect; provided further, that if the Effective Time shall not have occurred
by September 30, 1997, then this Agreement may thereafter be terminated upon
written notice by the Stockholders to the Acquiror and the Company, whereupon
delivery of such notice this Agreement shall be of no further force or effect,
notwithstanding anything herein to the contrary.
7. Each Stockholder represents that it knows of no plan (written or oral)
pursuant to which the stockholders of the Company intend to sell or otherwise
dispose of any Acquiror Shares to be received by them pursuant to the Merger
Agreement which would reduce the holdings of such Acquiror Shares to an amount
having in the aggregate a value at the time of the Merger of less than 50% of
all Common Stock of the Company outstanding prior to the Merger.
8. No waiver by any party hereto of any condition or of any breach of any
provision of this Agreement shall be effective unless in writing.
9. All notices, requests, demands or other communications which are
required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed to have been duly given if delivered by hand or
(except where receipt thereof is specifically required for purposes of this
Agreement) mailed by registered or certified mail, postage prepaid, as follows:
If to a Stockholder, at the address set forth below such Stockholder's
signature at the end hereof.
If to Acquiror:
To: Copies to:
VTEL Corporation Jenkens & Gilchrist
108 Wild Basin Road 1445 Ross Avenue, Suite 3200
Austin, Texas 78746 Dallas, Texas 75202
Attn: L. Steven Leshin, Esq.
If to the Company:
To: Copies to:
Compression Labs, Incorporated Shearman & Sterling
350 East Plumeria Drive 555 California Street
San Jose, CA 85134 San Francisco, CA 94104
Attn: Michael J. Kennedy
or to such other address as any party hereto or any Stockholder may designate
for itself by notice given as herein provided
10. For the convenience of the parties hereto this Agreement may be
executed by facsimile and in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document. This Agreement shall be enforceable by, and shall inure to the
benefit of and be binding upon, the parties hereto and their respective
successors and assigns.
11. This Agreement shall be governed by and construed, interpreted and
enforced in accordance with the laws of the State of Delaware.
12. If a court of competent jurisdiction determines that any provision of
this Agreement is unenforceable or enforceable only if limited in time and/or
scope, this Agreement shall continue in full force and effect with such
provision stricken or so limited.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
Stockholders:
INFINITY INVESTORS LIMITED
By: HW Finance Partners, L.P.,
Investment Advisor
By: HW Finance, L.L.C.,
its General Partner
By: /s/ Clark K. Hunt
-------------------------------
Clark K. Hunt, Vice President
and a Manager
27 Wellington Road
Cork, Ireland
With copies to:
HW Finance Partners, L.P.
4000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
and
Victor Zanetti, Esq.
Arter & Hadden
1717 Main Street, Suite 4100
Dallas, Texas 75201
SEACREST CAPITAL LIMITED
By: Sandera Capital Management, L.P.,
Investment Advisor
By: Sandera Capital, L.L.C.,
its General Partner
By: /s/ Clark K. Hunt
-------------------------------
Clark K. Hunt, Vice President
and a Manager
27 Wellington Road
Cork, Ireland
With copies to:
HW Finance Partners, L.P.
4000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
and
Victor Zanetti, Esq.
Arter & Hadden
1717 Main Street, Suite 4100
Dallas, Texas 75201
Accepted and agreed to as of
______________, 1997.
Acquiror:
VTEL CORPORATION
By: /s/ Rodney S. Bond
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Rodney S. Bond, Vice President
The Company:
COMPRESSION LABS, INCORPORATED
By: /s/ Gary Trimm
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Name:
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Title:
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