-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IA9a7yi03q9WB8Dayvj5XMtYLDe+lem3t/CU+h57qOILf/28fnKpfXz3W0Et9i4P unEUNcElfiH6FQpzuR0nYQ== 0000914317-98-000642.txt : 19981027 0000914317-98-000642.hdr.sgml : 19981027 ACCESSION NUMBER: 0000914317-98-000642 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19981006 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981026 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIALOG CORP CENTRAL INDEX KEY: 0001016601 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 043305282 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-24689 FILM NUMBER: 98730854 BUSINESS ADDRESS: STREET 1: 10 NEW ENGLAND BUSINESS CENTER STREET 2: SUITE 160 CITY: ANDOVER STATE: MA ZIP: 01810 BUSINESS PHONE: 9789753700 MAIL ADDRESS: STREET 1: 10 NEW ENGLAND BUSINESS CENTER STREET 2: SUITE 302 CITY: ANDOVER STATE: MA ZIP: 01810 FORMER COMPANY: FORMER CONFORMED NAME: INTERPLAY CORP DATE OF NAME CHANGE: 19970117 8-K 1 VIALOG CORPORATION 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Act of 1934 Date of Report (Date of earliest event reported): October 6, 1998 VIALOG CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Massachusetts 333-44041 04-3305282 - -------------------------------------------------------------------------------- (State or other (Commission (I.R.S. Employer jurisdiction File Number) Identification No.) of incorporation) 35 New England Business Center, Suite 160 Andover, MA 01810 - -------------------------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code (978) 975-3700 -------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) Item 5. Other Events On October 6, 1998, Coast Business Credit, a division of Southern Pacific Bank ("Coast"), funded five million dollars ($5,000,000.00) of a fifteen million dollar ($15,000,000.00) asset based loan facility (the "Facility") for the subsidiaries of VIALOG Corporation ("VIALOG")--Kendall Square Teleconferencing, Inc., Conference Source International, Inc., Telephone Business Meetings, Inc., Call Points, Inc., American Conferencing Company, Inc. and Communication Development Corporation (collectively, the "Borrowers"). The Facility was guaranteed by VIALOG. All assets of the Borrowers were pledged to Coast as security for the Facility and VIALOG's obligations under its guaranty were secured by a lien on all of its assets, excluding its ownership interests in the Borrowers. The maturity date of the Facility, if not extended by the parties, is October 6, 2000 at which time all obligations to Coast will be due and payable. Termination of the Facility prior to the maturity date will require the payment of significant early termination fees (i.e. $450,000.00 on or before October 6, 1999 and $300,000.00 thereafter but before the maturity date). The Facility has three components: (1) a receivables loan of up to 80% of the Borrowers' eligible receivables, (2) a term loan in the principal amount of $1,500,000.00, and (3) an equipment acquisition term loan of up to 80% of the purchase price of new and used equipment not to exceed $4,000,000.00. The Facility is available to provide liquidity, fund future working capital requirements, fund the purchase of equipment and finance future acquisitions consistent with VIALOG's business strategy. Item 7. Financial Statements and Exhibits (c) Exhibits 10.1 Loan & Security Agreement dated as of September 30, 1998 by and between Kendall Square Teleconferencing, Inc.; Conference Source International, Inc.; Telephone Business Meetings, Inc.; Call Points, Inc.; American Conferencing Company, Inc.; and Communication Development Corporation 10.2 Secured Term Note dated September 30, 1998 in the principal amount of $4,000,000 delivered by Kendall Square Teleconferencing, Inc.; Conference Source International, Inc.; Telephone Business Meetings, Inc.; Call Points, Inc.; American Conferencing Company, Inc.; and Communication Development Corporation to Coast Business Credit, a division of Southern Pacific Bank 10.3 Secured Term Note dated September 30, 1998 in the principal amount of $1,500,000 delivered by Kendall Square Teleconferencing, Inc.; Conference Source International, Inc.; Telephone Business Meetings, Inc.; Call Points, Inc.; American Conferencing Company, Inc.; and Communication Development Corporation to Coast Business Credit, a division of Southern Pacific Bank 10.4 Security Agreement dated September 30, 1998 by and between VIALOG Corporation and Coast Business Credit, a division of Southern Pacific Bank 10.5 Continuing Guaranty dated September 30, 1998 executed by VIALOG Corporation in favor of Coast Business Credit, a division of Southern Pacific Bank SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized. VIALOG CORPORATION Date: October 15, 1998 By: /s/ Glenn D. Bolduc ------------------------- Glenn D. Bolduc, President EXHIBIT INDEX Exhibit Description ------- ----------- 10.1 Loan & Security Agreement dated as of September 30, 1998 by and between Kendall Square Teleconferencing, Inc.; Conference Source International, Inc.; Telephone Business Meetings, Inc.; Call Points, Inc.; American Conferencing Company, Inc.; and Communication Development Corporation 10.2 Secured Term Note dated September 30, 1998 in the principal amount of $4,000,000 delivered by Kendall Square Teleconferencing, Inc.; Conference Source International, Inc.; Telephone Business Meetings, Inc.; Call Points, Inc.; American Conferencing Company, Inc.; and Communication Development Corporation to Coast Business Credit, a division of Southern Pacific Bank 10.3 Secured Term Note dated September 30, 1998 in the principal amount of $1,500,000 delivered by Kendall Square Teleconferencing, Inc.; Conference Source International, Inc.; Telephone Business Meetings, Inc.; Call Points, Inc.; American Conferencing Company, Inc.; and Communication Development Corporation to Coast Business Credit, a division of Southern Pacific Bank 10.4 Security Agreement dated September 30, 1998 by and between VIALOG Corporation and Coast Business Credit, a division of Southern Pacific Bank 10.5 Continuing Guaranty dated September 30, 1998 executed by VIALOG Corporation in favor of Coast Business Credit, a division of Southern Pacific Bank EX-10.1 2 EXHIBIT 10.1 LOAN AND SECURITY AGREEMENT by and between Kendall Square Teleconferencing, Inc.; Conference Source International, Inc.; Telephone Business Meetings, Inc.; Call Points, Inc.; American Conferencing Company, Inc.; and Communication Development Corporation and COAST BUSINESS CREDIT(R), a division of Southern Pacific Bank Dated as of September 30, 1998 Coast Loan and Security Agreement Co-Borrower: Kendall Square Teleconferencing, Inc., a Massachusetts corporation Address: 1 Kendall Square, Suite 328 Cambridge, Massachusetts 02139 Co-Borrower: Conference Source International, Inc., a Georgia corporation Address: 100 Hartsfield Center Parkway, Suite 300 Atlanta, Georgia 30354 Co-Borrower: Telephone Business Meetings, Inc., a Delaware corporation Address: 1861 Wiehle Avenue Reston, Virginia 20190-5200 Co-Borrower: Call Points, Inc., a Delaware corporation Address: 1500 Hunter Loop Road Montgomery, Alabama 36108 Co-Borrower: American Conferencing Company, Inc., a Delaware corporation Address: 690 Kinderkamack Road Oradell, New Jersey 07649 Co-Borrower: Communication Development Corporation, a Connecticut corporation Address: 30 Main Street, Suite 400 Danbury, Connecticut 06810 Date: September 30, 1998 THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between COAST BUSINESS CREDIT(R), a division of Southern Pacific Bank ("Coast"), a California corporation, with offices at 12121 Wilshire Boulevard, Suite 1111, Los Angeles, California 90025, and the borrowers named above (except where expressly stated otherwise or unless the context requires a different meaning, reference to Borrower in this Loan and Security Agreement, and all documents and agreements related thereto, shall mean each of the above-referenced Borrowers, jointly and severally). The chief executive offices for each of the respective Borrowers is set forth at the above addresses ("Borrower's Address"). The Schedule to this Agreement (the "Schedule") shall for all purposes be deemed to be a part of this Agreement, and the same is an integral part of this Agreement. (Definitions of certain terms used in this Agreement are set forth in Section 1 below.) 1. DEFINITIONS. As used in this Agreement, the following terms have the following meanings: "Account Debtor" means the obligor on a Receivable or General Intangible. "Affiliate" means, with respect to any Person, a relative, partner, shareholder, director, officer, or employee of such Person, or any parent or subsidiary of such Person, or any Person controlling, controlled by or under common control with such Person. "Audit" means to inspect, audit and copy Borrower's books and records and the Collateral. "Borrower" has the meaning set forth in the introduction to this Agreement. "Borrower's Address's" has the meaning set forth in the introduction to this Agreement. "Business Day" means a day on which Coast is open for business. "Change of Control" shall be deemed to have occurred at such time as a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) (other than the current holders of the ownership interests in any Borrower) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, as a result of any single transaction, of more than twenty percent (20%) of the total voting power of all classes of stock or other ownership interests then outstanding of any Borrower normally entitled to vote in the election of directors or analogous governing body. "Closing Date" means date of the initial funding under this Agreement. "Coast" has the meaning set forth in the introduction to this Agreement. "Code" means the Uniform Commercial Code as adopted and in effect in the State of California from time to time. "Collateral" has the meaning set forth in Section 4 hereof. "Credit Limit" means the maximum amount of Loans that Coast may make to Borrower pursuant to the amounts and percentages shown on the Schedule. "Default" means any event which with notice or passage of time or both, would constitute an Event of Default. "Deposit Account" has the meaning set forth in Section 9105 of the Code. "Dollars or $" means United States dollars. "Early Termination Fee" means the amount set forth on the Schedule that Borrower must pay Coast if this Agreement is terminated by Borrower or Coast pursuant to Section 9.2 hereof. "Eligible Receivables" means Receivables arising in the ordinary course of Borrower's business from the sale of goods or rendition of services, which Coast, in its sole judgment, shall deem eligible for borrowing, based on such considerations as Coast may from time to time deem appropriate. Eligible Receivables shall not include the following: (a) Receivables that the Account Debtor has failed to pay within sixty (60) days past the due date of the invoice not to exceed ninety (90) days past the invoice date; (b) Receivables owed by an Account Debtor or its Affiliates where twenty-five percent (25%) or more of all Receivables owed by that Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above; (c) Receivables with respect to which the Account Debtor is an employee, Affiliate (including, without limitation, inter-company Receivables among Borrowers), or agent of Borrower; (d) Receivables with respect to which goods are placed on consignment, guaranteed sale, sale or return, sale on approval, bill and hold, or other terms by reason of which the payment by the Account Debtor may be conditional; (e) Receivables that are not payable in Dollars or with respect to which the Account Debtor: (i) does not maintain its chief executive office in the United States, or (ii) is not organized under the laws of the United States or any State thereof, or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof; (f) Receivables with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States (exclusive, however, of Accounts with respect to which Borrower has complied, to the satisfaction of Coast, with the Assignment of Claims Act, 31 U.S.C. ' 3727), or (ii) any State of the United States (exclusive, however, of Receivables owed by any State that does not have a statutory counterpart to the Assignment of Claims Act); (g) Receivables with respect to which the Account Debtor is a creditor of Borrower, has or has asserted a right of setoff, has disputed its liability, or has made any claim with respect to the Receivables; (h) Receivables with respect to an Account Debtor whose total obligations owing to any one Borrower exceed twenty percent (20%) of all Eligible Receivables, to the extent of the obligations owing by such Account Debtor in excess of such percentage. Notwithstanding the foregoing, Receivables due Conference Source International, Inc. from VoiceCom and WorldCom shall not be subject to the preceding percentage limitation provided that no more than ten percent (10%) of the Receivables of each such Account Debtor shall be outstanding for more than ninety (90) days past invoice date or sixty (60) days past invoice due date; (i) Receivables with respect to which the Account Debtor is subject to any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or liquidation proceeding, or becomes insolvent, or goes out of business; (j) Receivables the collection of which Coast, in its reasonable credit judgment, believes to be doubtful or uncertain by reason of the Account Debtor's financial condition; (k) Receivables with respect to which the goods giving rise to such Receivable have not been shipped and billed to the Account Debtor, the services giving rise to such Receivable have not been performed and accepted by the Account Debtor, or the Receivable otherwise does not represent a final sale; (l) Receivables with respect to which the Account Debtor is located in the states of New Jersey, Minnesota, Indiana, or West Virginia (or any other state that requires a creditor to file a Business Activity Report or similar document in order to bring suit or otherwise enforce its remedies against such Account Debtor in the courts or through any judicial process of such state), unless Borrower has qualified to do business in New Jersey, Minnesota, Indiana, West Virginia, or such other states, or has filed a Notice of Business Activities Report with the applicable division of taxation, the department of revenue, or with such other state offices, as appropriate, for the then-current year, or is exempt from such filing requirement; (m) Receivables that represent progress payments or other advance billings that are due prior to the completion of performance by Borrower of the subject contract for goods or services; and (n) Receivables of customers or Account Debtors of either American Conferencing Company, Inc. or Communication Development Corporation. "Equipment" means all of Borrower's present and hereafter acquired machinery, molds, machine tools, motors, furniture, equipment, furnishings, fixtures, trade fixtures, motor vehicles, tools, parts, dies, jigs, goods and other goods (other than Inventory) of every kind and description used in Borrower's operations or owned by Borrower and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions or improvements to any of the foregoing, wherever located. "Equipment Acquisition Loans" means the Loans described in Section 2(c) of the Schedule. "Event of Default" means any of the events set forth in Section 10.1 of this Agreement. "GAAP" means generally accepted accounting principles as in effect from time to time in the United States, consistently applied. "General Intangibles" means all general intangibles of Borrower, whether now owned or hereafter created or acquired by Borrower, including, without limitation, all choses in action, causes of action, corporate or other business records, Deposit Accounts, investment property, inventions, designs, drawings, blueprints, patents, patent applications, trademarks and the goodwill of the business symbolized thereby, names, trade names, trade secrets, goodwill, copyrights, registrations, licenses, franchises, customer lists, security and other deposits, rights in all litigation presently or hereafter pending for any cause or claim (whether in contract, tort or otherwise), and all judgments now or hereafter arising therefrom, all claims of Borrower against Coast, rights to purchase or sell real or personal property, rights as a licensor or licensee of any kind, royalties, telephone numbers, proprietary information, purchase orders, and all insurance policies and claims (including without limitation life insurance, key man insurance, credit insurance, liability insurance, property insurance and other insurance), tax refunds and claims, computer programs, discs, tapes and tape files, claims under guaranties, security interests or other security held by or granted to Borrower, all rights to indemnification and all other intangible property of every kind and nature (other than Receivables). "Inventory" means all of Borrower's now owned and hereafter acquired goods, merchandise or other personal property, wherever located, to be furnished under any contract of service or held for sale or lease (including without limitation all raw materials, work in process, finished goods and goods in transit, and including without limitation all farm products), and all materials and supplies of every kind, nature and description which are or might be used or consumed in Borrower's business or used in connection with the manufacture, packing, shipping, advertising, selling or finishing of such goods, merchandise or other personal property, and all warehouse receipts, documents of title and other documents representing any of the foregoing. "Investment Property" has the meaning set forth in Section 9115 of the Code as in effect as of the date hereof. "Loan Documents" means this Agreement, the agreements and documents listed in the Schedule, and any other agreement, instrument or document now or hereafter executed in connection herewith or therewith. "Loans" has the meaning set forth in Section 2.1 hereof. "Material Adverse Effect" means a material adverse effect on (i) the business, assets, condition (financial or otherwise) or results of operations of Borrower or any subsidiary of Borrower or any guarantor of any of the Obligations, (ii) the ability of Borrower or any guarantor of any of the Obligations to perform its obligations under this Agreement (including, without limitation, repayment of the Obligations as they come due) or (iii) the validity or enforceability of this Agreement or any other agreement or document entered into by any party in connection herewith, or the rights or remedies of Coast hereunder or thereunder. "Maturity Date" means the date that this Agreement shall cease to be effective, as set forth on the Schedule, subject to the provisions of Section 9.1 and 9.2 hereof. "Maximum Dollar Amount" has the meaning set forth in Section 2 of the Schedule. "Minimum Monthly Interest" has the meaning set forth in Section 3 of the Schedule. "Minimum Net Worth" means consolidated Owner's equity of Borrower and VIALOG, plus subordinated debt permitted hereunder. Subordinated debt permitted hereunder shall include: (a) debts of Borrower and VIALOG which are subordinated to Coast pursuant to written subordination agreements acceptable to Coast; and (b) the total outstanding balance under the $75,000,000,000 12 3/4% Senior Notes issued by VIALOG. "Obligations" means all present and future Loans, advances, debts, liabilities, obligations, guaranties, covenants, duties and indebtedness at any time owing by Borrower to Coast, whether evidenced by this Agreement or any note or other instrument or document, whether arising from an extension of credit, opening of a letter of credit, banker's acceptance, loan, guaranty, indemnification or otherwise, whether direct or indirect (including, without limitation, those acquired by assignment and any participation by Coast in Borrower's debts owing to others), absolute or contingent, due or to become due, including, without limitation, all interest, charges, expenses, fees, attorneys' fees (including attorneys' fees and expenses incurred in bankruptcy), expert witness fees, audit fees, letter of credit fees, collateral monitoring fees, closing fees, facility fees, termination fees, minimum interest charges and any other sums chargeable to Borrower under this Agreement or under any other present or future instrument or agreement between Borrower and Coast. "Permitted Liens" means the following: (a) purchase money security interests in specific items of Equipment; (b) leases of specific items of Equipment; (c) liens for taxes not yet payable; (d) additional security interests and liens consented to in writing by Coast, which consent shall not be unreasonably withheld; (e) security interests being terminated substantially concurrently with this Agreement; (f) liens of materialmen, mechanics, warehousemen, carriers, or other similar liens arising in the ordinary course of business and securing obligations which are not delinquent; (g) liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by liens of the type described above in clauses (a) or (b) above, provided that any extension, renewal or replacement lien is limited to the property encumbered by the existing lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase; or (h) liens in favor of customs and revenue authorities which secure payment of customs duties in connection with the importation of goods. Coast will have the right to require, as a condition to its consent under subparagraph (d) above, that the holder of the additional security interest or lien sign an intercreditor agreement on Coast's then standard form, acknowledge that the security interest is subordinate to the security interest in favor of Coast, and agree not to take any action to enforce its subordinate security interest so long as any Obligations remain outstanding, and that Borrower agree that any uncured default in any obligation secured by the subordinate security interest shall also constitute an Event of Default under this Agreement. "Person" means any individual, sole proprietorship, general partnership, limited partnership, limited liability partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, government, or any agency or political division thereof, or any other entity. "Prime Rate" means the actual "Reference Rate" or the substitute therefor of the Bank of America NT & SA whether or not that rate is the lowest interest rate charged by said bank. If the Prime Rate, as defined, is unavailable, "Prime Rate" shall mean the highest of the prime rates published in the Wall Street Journal on the first business day of the applicable month, as the base rate on corporate loans at large U.S. money center commercial banks. "Receivable Loans" means the Loans described in Section 2(a) of the Schedule. "Receivables" means all of Borrower's now owned and hereafter acquired accounts (whether or not earned by performance), letters of credit, contract rights, chattel paper, instruments, securities, documents, securities accounts, security entitlements, commodity contracts, commodity accounts, investment property and all other forms of obligations at any time owing to Borrower, all guaranties and other security therefor, all merchandise returned to or repossessed by Borrower, and all rights of stoppage in transit and all other rights or remedies of an unpaid vendor, lienor or secured party. "Renewal Date" shall mean the Maturity Date if this Agreement is renewed pursuant to Section 9.1 hereof, and each anniversary thereafter that this Agreement is renewed pursuant to Section 9.1 hereof. "Renewal Fee" means the fee that Borrower must pay Coast upon renewal of this Agreement pursuant to Section 9.1 hereof, in the amount set forth on the Schedule. "Senior Notes" means the $75,000,000 of 12 3/4% Series A and Series B note due 2001 issued by VIALOG and guarantied by the Borrowers. The Senior Notes are and will continue to be effectively subordinated to the Obligations of Borrower and VIALOG to Coast to the extent that assets and interests of Borrower and VIALOG are Collateral for the Obligations to Coast. Except for the effective subordination to Coast, the Senior Notes and Obligations to Coast rank pari passu in right of payment. able liability of such Person on its debts as they become absolute and "Solvent" means, with respect to any Person on a particular date, that on such date (a) at fair valuations, all of the properties and assets of such Person are greater than the sum of the debts, including contingent liabilities, of such Person, (b) the present fair salable value of the properties and assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its properties and assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts beyond such Person's ability to pay as such debts mature, and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's properties and assets would constitute unreasonably small capital after giving due consideration to the prevailing practices in the industry in which such Person is engaged. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that reasonably can be expected to become an actual or matured liability. "Term Loan" means the Loans described in Section 2(c) of the Schedule. "VIALOG" means VIALOG Corporation, a Massachusetts corporation. "Year 2000 Problem" means the risk that computer systems, software and applications used by a Person may be unable to recognize and perform properly date-sensitive functions involving certain dates prior to and any dates after December 31, 1999. "Other Terms." All accounting terms used in this Agreement, unless otherwise indicated, shall have the meanings given to such terms in accordance with GAAP. All other terms contained in this Agreement, unless otherwise indicated, shall have the meanings provided by the Code, to the extent such terms are defined therein. 2. CREDIT FACILITIES. 2.1 Loans. Coast will make loans to Borrower (the "Loans"), in amounts and in percentages to be determined by Coast in its good faith discretion, up to the Credit Limit, provided no Default or Event of Default has occurred and is continuing. In addition, Coast may create reserves against or reduce its advance rates based upon Eligible Receivables or Eligible Inventory without declaring a Default or an Event of Default if it determines that there has occurred a Material Adverse Effect. 3. INTEREST AND FEES. 3.1 Interest. All Loans and all other monetary Obligations shall bear interest at the rate shown on the Schedule, except where expressly set forth to the contrary in this Agreement. Interest shall be payable monthly, on the last day of the month. Interest may, in Coast's discretion, be charged to Borrower's loan account, and the same shall thereafter bear interest at the same rate as the other Loans. Regardless of the amount of Obligations that may be outstanding from time to time, Borrower shall pay Coast Minimum Monthly Interest during the term of this Agreement with respect to the Receivable Loans and the Inventory Loans in the amount set forth on the Schedule. 3.2 Fees. Borrower shall pay Coast the fee(s) shown on the Schedule, which are in addition to all interest and other sums payable to Coast and are deemed fully earned and are nonrefundable. 4. SECURITY INTEREST. To secure the payment and performance of all of the Obligations when due, Borrower hereby grants to Coast a security interest in all of Borrower's interest in the following, whether now owned or hereafter acquired, and wherever located: All Receivables, Inventory, Equipment, Investment Property, and General Intangibles, including, without limitation, all of Borrower's Deposit Accounts, and all money, and all property now or at any time in the future in Coast's possession (including claims and credit balances), and all proceeds of any of the foregoing (including proceeds of any insurance policies, proceeds of proceeds, and claims against third parties), all products of any of the foregoing, and all books and records related to any of the foregoing (all of the foregoing, together with all other property in which Coast may now or in the future be granted a lien or security interest, is referred to herein, collectively, as the "Collateral") 5. CONDITIONS PRECEDENT. The obligation of Coast to make the Loans is subject to the satisfaction, in the sole discretion of Coast, at or prior to the first advance of funds hereunder, of each, every and all of the following conditions: 5.1 Status of Accounts at Closing. No accounts payable shall be due and unpaid one hundred and twenty (120) days past its invoice date except for: (a) such accounts payable being contested in good faith in appropriate proceedings and for which adequate reserves have been provided; (b) account payable due and owing to Compunetics by American Conferencing Company, Inc. 5.2 Minimum Availability. Borrower shall have minimum availability immediately following the initial funding in the amount set forth on the Schedule. 5.3 Landlord Waiver. Coast shall have received duly executed landlord waivers and access agreements in form and substance satisfactory to Coast, in Coast's sole and absolute discretion, and, when deemed appropriate by Coast, in form for recording in the appropriate recording office, with respect to all leased locations where Borrower maintains any inventory or equipment. 5.4 Executed Agreement. Coast shall have received this Agreement duly executed and in form and substance satisfactory to Coast in its sole and absolute discretion. 5.5. Opinion of Borrower's Counsel. Coast shall have received an opinion of Borrower's counsel, in form and substance satisfactory to Coast in its sole and absolute discretion. 5.6 Priority of Coast's Lien. Coast shall have received the results of "of record" searches satisfactory to Coast in its sole and absolute discretion, reflecting its Uniform Commercial Code filings against Borrower indicating that Coast has a perfected, first priority lien in and upon all of the Collateral, subject only to Permitted Liens. 5.7 Insurance. Coast shall have received copies of the insurance binders or certificates evidencing Borrower's compliance with Section 8.2 hereof, including lender's loss payee endorsements. 5.8 Borrower's Existence. Coast shall have received copies of Borrower's articles or certificate of incorporation and all amendments thereto, and a Certificate of Good Standing, each certified by the Secretary of State of the state of Borrower's organization, and dated a recent date prior to the Closing Date, and Coast shall have received Certificates of Foreign Qualification for Borrower from the Secretary of State of each state wherein the failure to be so qualified could have a Material Adverse Effect. 5.9 Organizational Documents. Coast shall have received copies of Borrower's By-laws and all amendments thereto, and Coast shall have received copies of the resolutions of the board of directors of Borrower, authorizing the execution and delivery of this Agreement and the other documents contemplated hereby, and authorizing the transactions contemplated hereunder and thereunder, and authorizing specific officers of Borrower to execute the same on behalf of Borrower, in each case certified by the Secretary or other acceptable officer of Borrower as of the Closing Date. 5.10 Taxes. Coast shall have received evidence from Borrower that Borrower has complied with all tax withholding and Internal Revenue Service regulations, in form and substance satisfactory to Coast in its sole and absolute discretion. 5.11. Due Diligence. Coast shall have completed its due diligence with respect to Borrower. 5.12 Other Documents and Agreements. Coast shall have received such other agreements, instruments and documents as Coast may require in connection with the transactions contemplated hereby, all in form and substance satisfactory to Coast in Coast's sole and absolute discretion, and in form for filing in the appropriate filing office, including, but not limited to, those documents listed in Section 5 of the Schedule. 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER. In order to induce Coast to enter into this Agreement and to make Loans, Borrower represents and warrants to Coast as follows, and Borrower covenants that the following representations will continue to be true, and that Borrower will at all times comply with all of the following covenants: 6.1 Existence and Authority. Borrower is and will continue to be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Borrower is and will continue to be qualified and licensed to do business in all jurisdictions in which any failure to do so would have a Material Adverse Effect. The execution, delivery and performance by Borrower of this Agreement, and all other documents contemplated hereby (a) have been duly and validly authorized, (b) are enforceable against Borrower in accordance with their terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to creditors' rights generally), and (c) do not violate Borrower's articles or certificate of incorporation, or Borrower's by-laws, or any law or any material agreement or instrument which is binding upon Borrower or its property, and (d) do not constitute grounds for acceleration of any material indebtedness or obligation under any material agreement or instrument which is binding upon Borrower or its property. 6.2 Name; Trade Names and Styles. The name of Borrower set forth in the heading to this Agreement is its correct name. Listed on the Schedule are all prior names of Borrower and all of Borrower's present and prior trade names. Borrower shall give Coast thirty (30) days' prior written notice before changing its name or doing business under any other name. Borrower has complied, and will in the future comply, with all laws relating to the conduct of business under a fictitious business name. 6.3 Place of Business; Location of Collateral. The address set forth in the heading to this Agreement is Borrower's chief executive office. In addition, Borrower has places of business and Collateral is located only at the locations set forth on the Schedule. Borrower will give Coast at least thirty (30) days' prior written notice before opening any additional place of business, changing its chief executive office, or moving any of the Collateral to a location other than Borrower's Address or one of the locations set forth on the Schedule. 6.4 Title to Collateral; Permitted Liens. Borrower is now, and will at all times in the future be, the sole owner of all the Collateral, except for items of Equipment which are leased by Borrower. The Collateral now is and will remain free and clear of any and all liens, charges, security interests, encumbrances and adverse claims, except for Permitted Liens. Coast now has, and will continue to have, a first-priority perfected and enforceable security interest in all of the Collateral, subject only to the Permitted Liens, and Borrower will at all times defend Coast and the Collateral against all claims of others. None of the Collateral now is or will be affixed to any real property in such a manner, or with such intent, as to become a fixture. Borrower is not and will not become a lessee under any real property lease pursuant to which the lessor may obtain any rights in any of the Collateral and no such lease now prohibits, restrains, impairs or will prohibit, restrain or impair Borrower's right to remove any Collateral from the leased premises. Whenever any Collateral is located upon premises in which any third party has an interest (whether as owner, mortgagee, beneficiary under a deed of trust, lien or otherwise), Borrower shall, whenever requested by Coast, use its best efforts to cause such third party to execute and deliver to Coast, in form acceptable to Coast, such waivers and subordinations as Coast shall specify, so as to ensure that Coast's rights in the Collateral are, and will continue to be, superior to the rights of any such third party. Borrower will keep in full force and effect, and will comply with all the terms of, any lease of real property where any of the Collateral now or in the future may be located. 6.5 Maintenance of Collateral. Borrower will maintain the Collateral in good working condition, and Borrower will not use the Collateral for any unlawful purpose. Borrower will immediately advise Coast in writing of any material loss or damage to the Collateral. 6.6 Books and Records. Borrower has maintained and will maintain at Borrower's Address complete and accurate books and records, comprising an accounting system in accordance with GAAP. 6.7 Financial Condition, Statements and Reports. All financial statements now or in the future delivered to Coast have been, and will be, prepared in conformity with GAAP (except, in the case of unaudited financial statements, for the absence of footnotes and subject to normal year-end adjustments) and now and in the future will fairly reflect the financial condition of Borrower, at the times and for the periods therein stated. Between the last date covered by any such statement provided to Coast and the date hereof, there has been no Material Adverse Effect. Borrower is now and will continue to be Solvent. 6.8 Tax Returns and Payments; Pension Contributions. Borrower has timely filed, and will timely file, all tax returns and reports required by foreign, federal, state and local law, and Borrower has timely paid, and will timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions now or in the future owed by Borrower. Borrower may, however, defer payment of any contested taxes, provided that Borrower (i) in good faith contests Borrower's obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted, (ii) notifies Coast in writing of the commencement of, and any material development in, the proceedings, and (iii) posts bonds or takes any other steps required to keep the contested taxes from becoming a lien upon any of the Collateral. As of the date hereof, Borrower is unaware of any claims or adjustments proposed for any of Borrower's prior tax years which could result in additional taxes becoming due and payable by Borrower. Borrower has paid, and shall continue to pay all amounts necessary to fund all present and future pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not and will not withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any such plan which could result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. Without limiting any of Coast's other rights and remedies under this Agreement, upon the occurrence of an Event of Default, Borrower shall utilize the services of an outside payroll service providing for the automatic deposit of all payroll taxes payable by Borrower. 6.9 Compliance with Law. Borrower has complied, and will comply, in all material respects, with all provisions of all material foreign, federal, state and local laws and regulations relating to Borrower, including, but not limited to, the Fair Labor Standards Act, and those relating to Borrower's ownership of real or personal property, the conduct and licensing of Borrower's business, and environmental matters. 6.10 Litigation. Except as disclosed in the Schedule, there is no claim, suit, litigation, proceeding or investigation pending or (to best of Borrower's knowledge) threatened by or against or affecting Borrower in any court or before any governmental agency (or any basis therefor known to Borrower) which may result, either separately or in the aggregate, in a Material Adverse Effect. Borrower will promptly inform Coast in writing of any claim, proceeding, litigation or investigation in the future threatened or instituted by or against Borrower involving an amount set forth on the Schedule. 6.11 Use of Proceeds. All proceeds of all Loans shall be used solely for lawful business purposes. Borrower is not purchasing or carrying any "margin stock" (as defined in Regulation G of the Board of Governors of the Federal Reserve System) and no part of the proceeds of any Loan will be used to purchase or carry any "margin stock" or to extend credit to others for the purpose of purchasing or carrying any "margin stock." 6.12 Year 2000 Compliance. Borrower represents and warrants that with respect to the computer systems, software and applications of Borrower and its material suppliers, vendors and customers, the Year 2000 Problem will not result in a Material Adverse Effect. 7. RECEIVABLES. 7.1 Representations Relating to Receivables. Borrower represents and warrants to Coast as follows: Each Receivable with respect to which Loans are requested by Borrower shall, on the date each Loan is requested and made, represent an undisputed bona fide existing unconditional obligation of the Account Debtor created by the sale, delivery and acceptance of goods or the rendition of services in the ordinary course of Borrower's business. 7.2 Representations Relating to Documents and Legal Compliance. Borrower represents and warrants to Coast as follows: All statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Receivables are and shall be true and correct and all such invoices, instruments and other documents and all of Borrower's books and records are and shall be genuine and in all respects what they purport to be. All sales and other transactions underlying or giving rise to each Receivable shall fully comply with all applicable laws and governmental rules and regulations. All signatures and endorsements on all documents, instruments, and agreements relating to all Receivables are and shall be genuine, and all such documents, instruments and agreements are and shall be legally enforceable in accordance with their terms. 7.3 Schedules and Documents relating to Receivables. Borrower shall deliver to Coast via facsimile, unless otherwise directed by Coast, at such locations and at such intervals as Coast may request, transaction reports and loan requests, schedules of Receivables, and schedules of collections, all on Coast's standard forms; provided, however, that Borrower's failure to execute and deliver the same shall not affect or limit Coast's security interest and other rights in all of Borrower's Receivables, nor shall Coast's failure to advance or lend against a specific Receivable affect or limit Coast's security interest and other rights therein. Loan requests received after 10:30 A.M. Los Angeles, California time, will not be considered by Coast until the next Business Day. Together with each such schedule, or later if requested by Coast, Borrower shall furnish Coast with copies (or, at Coast's request, originals) of all contracts, orders, invoices, and other similar documents, and all original shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or disposition of which gave rise to such Receivables, and Borrower warrants the genuineness of all of the foregoing. Borrower shall also furnish to Coast an aged accounts receivable trial balance in such form and at such intervals as Coast shall request. In addition, Borrower shall deliver to Coast the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing or securing any Receivables, upon receipt thereof and in the same form as received, with all necessary endorsements, all of which shall be with recourse. Borrower shall also provide Coast with copies of all credit memos as and when requested by Coast. 7.4 Collection of Receivables. Borrower shall have the right to collect all Receivables, unless and until an Event of Default has occurred. Borrower shall hold all payments on, and proceeds of, Receivables in trust for Coast, and Borrower shall deliver all such payments and proceeds to Coast within one (1) Business Day after receipt by Borrower, in their original form, duly endorsed to Coast, to be applied to the Obligations in such order as Coast shall determine. Notwithstanding the foregoing, if an exceptional circumstance arises which precludes Borrower from delivering to Coast a particular item of payment or proceed of a Receivable within one (1) Business Day after receipt by Borrower, Borrower shall deliver such payment and proceed to Coast as soon as practicable, but in no event later than three (3) Business Days after receipt by Borrower. Coast may, in its discretion, require that all proceeds of Collateral be deposited by Borrower into a lockbox account, or such other "blocked account" as Coast may specify, pursuant to a blocked account agreement in such form as Coast may specify. Coast or its designee may, at any time, notify Account Debtors that Coast has been granted a security interest in the Receivables. 7.5 Remittance of Proceeds. All proceeds arising from the disposition of any Collateral shall be delivered to Coast within one (1) Business Day after receipt by Borrower, in their original form, duly endorsed to Coast, to be applied to the Obligations in such order as Coast shall determine. Notwithstanding the foregoing, if an exceptional circumstance arises which precludes Borrower from delivering to Coast proceeds obtained from the disposition of any item of Collateral within one (1) Business Day after receipt by Borrower, Borrower shall deliver such proceeds to Coast as soon as practicable, but in no event later than three (3) Business Days after receipt by Borrower. Borrower agrees that it will not commingle proceeds of Collateral with any of Borrower's other funds or property, but will hold such proceeds separate and apart from such other funds and property and in an express trust for Coast. Nothing in this Section limits the restrictions on disposition of Collateral set forth elsewhere in this Agreement. 7.6 Disputes. Borrower shall notify Coast promptly of all material disputes or claims relating to material Receivables. Borrower shall not forgive (completely or partially), compromise or settle any Receivable for less than payment in full, or agree to do any of the foregoing, except that Borrower may do so, provided that: (a) Borrower does so in good faith, in a commercially reasonable manner, in the ordinary course of business, and in arm's length transactions, which are reported to Coast on the regular reports provided to Coast; (b) no Default or Event of Default has occurred and is continuing; and (c) taking into account all such discounts settlements and forgiveness, the total outstanding Loans will not exceed the Credit Limit. Coast may, at any time after an Event of Default has occurred and is continuing, settle or adjust disputes or claims directly with Account Debtors for amounts and upon terms which Coast considers advisable in its reasonable credit judgment and, in all cases, Coast shall credit Borrower's Loan account with only the net amounts received by Coast in payment of any Receivables. 7.7 Returns. Provided no Event of Default has occurred and is continuing, if any Account Debtor returns any Inventory to Borrower in the ordinary course of its business, Borrower shall promptly determine the reason for such return and promptly issue a credit memorandum to the Account Debtor in the appropriate amount. In the event any attempted return occurs after the occurrence of any Event of Default, Borrower shall (a) hold the returned Inventory in trust for Coast, (b) segregate all returned Inventory from all of Borrower's other property, (c) conspicuously label the returned Inventory as subject to Coast's security interest, and (d) immediately notify Coast of the return of any Inventory, specifying the reason for such return, the location and condition of the returned Inventory, and on Coast's request deliver such returned Inventory to Coast. 7.8 Verification. Coast may, from time to time, verify directly with the respective Account Debtors the validity, amount and other matters relating to the Receivables, by means of mail, telephone or otherwise, either in the name of Coast or such other name as Coast may choose. 7.9 No Liability. Coast shall not under any circumstances be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of which gives rise to a Receivable, or for any error, act, omission or delay of any kind occurring in the settlement, failure to settle, collection or failure to collect any Receivable, or for settling any Receivable in good faith for less than the full amount thereof, nor shall Coast be deemed to be responsible for any of Borrower's obligations under any contract or agreement giving rise to a Receivable. Nothing herein shall, however, relieve Coast from liability for its own gross negligence or willful misconduct. 8. ADDITIONAL DUTIES OF THE BORROWER. 8.1 Financial and Other. Borrower shall at all times comply with the financial and other covenants set forth in the Schedule. 8.2 Insurance. Borrower shall, at all times insure all of the tangible personal property Collateral and carry such other business insurance, with insurers reasonably acceptable to Coast, in such form and amounts as Coast may reasonably require, and Borrower shall provide evidence of such insurance to Coast, so that Coast is satisfied that such insurance is, at all times, in full force and effect. All liability insurance policies of Borrower shall name Coast as an additional insured, and all property casualty and related insurance policies of Borrower shall name Coast as a loss payee thereon and Borrower shall cause a lender's loss payee endorsement in form reasonably acceptable to Coast. Upon receipt of the proceeds of any such insurance, Coast shall apply such proceeds in reduction of the Obligations as Coast shall determine in its sole discretion, except that, provided no Default or Event of Default has occurred and is continuing, Coast shall release to Borrower insurance proceeds with respect to Equipment totaling less than the amount set forth in Section 8 of the Schedule, which shall be utilized by Borrower for the replacement of the Equipment with respect to which the insurance proceeds were paid. Coast may require reasonable assurance that the insurance proceeds so released will be so used. If Borrower fails to provide or pay for any insurance, Coast may, but is not obligated to, obtain the same at Borrower's expense. Borrower shall promptly deliver to Coast copies of all reports made to insurance companies. 8.3 Reports. Borrower, at its expense, shall provide Coast with the written reports set forth in Section 8 of the Schedule, and such other written reports with respect to Borrower (including budgets, sales projections, operating plans and other financial documentation), as Coast shall from time to time reasonably specify. 8.4 Access to Collateral, Books and Records. At reasonable times but under ordinary circumstances not more frequently than quarterly and on one (1) Business Day's notice, Coast, or its agents, shall have the right to perform Audits. Coast may conduct more frequent Audits if Coast, in its good faith discretion, deems the same to be necessary or appropriate. Coast shall take reasonable steps to keep confidential all confidential information obtained in any Audit, but Coast shall have the right to disclose any such information to its auditors, regulatory agencies, and attorneys, and pursuant to any subpoena or other legal process. The Audits shall be at Borrower's expense and the charge for the Audits shall be Seven Hundred Fifty Dollars ($750) per person per day (or such higher amount as shall represent Coast's then current standard charge for the same), plus reasonable out-of-pocket expenses. Borrower will not enter into any agreement with any accounting firm, service bureau or third party to store Borrower's books or records at any location other than Borrower's Address, without first notifying Coast of the same and obtaining the written agreement from such accounting firm, service bureau or other third party to give Coast the same rights with respect to access to books and records and related rights as Coast has under this Loan Agreement. Borrower shall also take all necessary steps to assure that its material accounting and software, systems and applications, and those of its accounting firm, service bureau or any other third party vendor or supplier, will, on a timely basis, adequately and completely address the Year 2000 Problem in all material aspects. 8.5 Negative Covenants. Borrower shall not, without Coast's prior written consent, do any of the following: (a) merge or consolidate with another entity, except in a transaction in which (i) the owners of the Borrower hold at least fifty percent (50%) of the ownership interest in the surviving entity immediately after such merger or consolidation, and (ii) the Borrower is the surviving entity; (b) acquire any assets, except (i) in the ordinary course of business, or (ii) in a transaction or a series of transactions not involving the payment of an aggregate amount in excess of the amount set forth in Section 8 of the Schedule; (c) enter into any other transaction outside the ordinary course of business; (d) sell or transfer any Collateral, except for the sale of finished Inventory in the ordinary course of Borrower's business, and except for the sale of obsolete or unneeded Equipment in the ordinary course of business; (e) store any Inventory or other Collateral with any warehouseman or other third party; (f) sell any Inventory on a sale-or-return, guaranteed sale, consignment, or other contingent basis; (g) make any loans of any money or other assets, except (i) advances to customers or suppliers in the ordinary course of business, (ii) travel advances, employee relocation loans and other employee loans and advances in the ordinary course of business, and (iii) loans to employees, officers and directors for the purpose of purchasing equity securities of the Borrower; (h) incur any debts, except to VIALOG, outside the ordinary course of business, which would have a Material Adverse Effect; (i) guarantee or otherwise become liable with respect to the obligations of another party or entity; (j) pay or declare any dividends or distributions on the ownership interests in Borrower except for (i) dividends or distributions payable solely in stock form of ownership interests in Borrower and (ii) dividends to VIALOG if, when and to the extent required by VIALOG in order to make regularly-scheduled payments of principal and interest on the $75,000,000.00, 12 3/4% Senior Notes issued by VIALOG, provided such dividends or payments on the 12 3/4% Senior Notes would not result in a Default or Event of Default by Borrower or VIALOG with respect to any of their respective obligations to Coast. Borrower may make loans, advances and transfers to VIALOG provided (i) the Borrower is and will continue to be able to generally pay its obligations as and when due; and (ii) VIALOG owns all of the outstanding ownership interests in Borrower as of the time of the loan, advance or transfer. Neither Borrower nor VIALOG shall, without the prior written consent of Coast, which consent may be granted or withheld by Coast in its sole and absolute discretion, redeem, purchase or retire all or any portion of the Senior Notes prior to November 15, 2001, unless such redemption, purchase or retirement is (i) funded by the proceeds of an equity offering or (ii) the proceeds of a debt offering where the debt offering is subordinated in all respects to Coast including, but not limited to Coast`s claims, Coast's rights to payment, and Coast's Collateral. (k) make any change in Borrower's capital structure which would have a Material Adverse Effect; or (l) dissolve or elect to dissolve. Transactions permitted by the foregoing provisions of this Section are only permitted if no Default or Event of Default is continuing or would occur as a result of such transaction. 8.6 Litigation Cooperation. Should any third-party suit or proceeding be instituted by or against Coast with respect to any Collateral or relating to Borrower, Borrower shall, without expense to Coast, make available Borrower and its officers, employees and agents and Borrower's books and records, to the extent that Coast may deem them reasonably necessary in order to prosecute or defend any such suit or proceeding. 8.7 Further Assurances. Borrower agrees, at its expense, on request by Coast, to execute all documents and take all actions, as Coast, may deem reasonably necessary or useful in order to perfect and maintain Coast's perfected security interest in the Collateral, and in order to fully consummate the transactions contemplated by this Agreement. 9. TERM. 9.1 Maturity Date. This Agreement shall continue in effect until the Maturity Date; provided that the Maturity Date shall automatically be extended, and this Agreement shall automatically and continuously renew, for successive additional terms of one year each, unless one party gives written notice to the other, not less than ninety (90) days prior to the Maturity Date or the next Renewal Date, that such party elects to terminate this Agreement effective on the Maturity Date or such next Renewal Date. If this Agreement is renewed under this Section 9.1, Borrower shall pay to Coast a Renewal Fee in the amount shown in Section 3 of the Schedule. The Renewal Fee shall be due and payable on the Renewal Date and thereafter shall bear interest at a rate equal to the rate applicable to the Receivable Loans. 9.2 Early Termination. This Agreement may be terminated prior to the Maturity Date as follows: (a) by Borrower, effective three (3) Business Days after written notice of termination is given to Coast; or (b) by Coast at any time after the occurrence of an Event of Default, without notice, effective immediately. If this Agreement is terminated by Borrower or by Coast under this Section 9.2, Borrower shall pay to Coast an Early Termination Fee in the amount shown in Section 3 of the Schedule. The Early Termination Fee shall be due and payable on the effective date of termination and thereafter shall bear interest at a rate equal to the rate applicable to the Receivable Loans. 9.3 Payment of Obligations. On the Maturity Date or on any earlier effective date of termination, Borrower shall pay and perform in full all Obligations, whether evidenced by installment notes or otherwise, and whether or not all or any part of such Obligations are otherwise then due and payable. Notwithstanding any termination of this Agreement, all of Coast's security interests in all of the Collateral and all of the terms and provisions of this Agreement shall continue in full force and effect until all Obligations have been paid and performed in full; provided that, without limiting the fact that Loans are subject to the discretion of Coast, Coast may, in its sole discretion, refuse to make any further Loans after termination. No termination shall in any way affect or impair any right or remedy of Coast, nor shall any such termination relieve Borrower of any Obligation to Coast, until all of the Obligations have been paid and performed in full. Upon payment and performance in full of all the Obligations and termination of this Agreement, Coast shall promptly deliver to Borrower termination statements, requests for reconveyances and such other documents as may be required to fully terminate Coast's security interests. 9.4 Revivor. Notwithstanding Section 9.3 or any other provision contained in any of the Loan Documents to the contrary, if any claim is ever made upon Coast by any claimant (except for lender liability or like claims by VIALOG and/or the Borrower), for repayment or recovery of any amount or amounts received by Coast in payment of or on account of any of the Indebtedness or because of any claim that any such payment constituted a preferential transfer or fraudulent conveyance, or for any other claim of any kind, and Coast repays all or part of said amount by reason of any judgment, decree or order of any court or administrative body having jurisdiction over Coast or any of its property, or by reason of any settlement or compromise of any such claim effected by Coast with any such claimant, then and in any such event, Borrower agrees that any such judgment, decree, order, settlement or compromise shall be binding upon Borrower, notwithstanding any prior release of Borrower or any Guarantor or the cancellation of any note or other instrument evidencing any of the Indebtedness, or any release of any of the Indebtedness, and Borrower shall be and remain liable to Coast hereunder for the amount so repaid or recovered, to the same extent as if such amount had never originally been received by Coast (the Revived Obligations"). The Revived Obligations of Borrower hereunder shall be immediately due and payable, shall bear interest at the rate herein provided and secured by the Collateral. 10. EVENTS OF DEFAULT AND REMEDIES. 10.1 Events of Default. The occurrence of any of the following events shall constitute an "Event of Default" under this Agreement, and Borrower shall give Coast immediate written notice thereof: (a) Any warranty, representation, statement, report or certificate made or delivered to Coast by Borrower or any of Borrower's officers, employees or agents, now or in the future, shall be untrue or misleading and results in a Material Adverse Effect; or (b) Borrower shall fail to pay when due any Loan or any interest thereon or any other monetary Obligation; or (c) the total Loans and other Obligations outstanding at any time shall exceed the Credit Limit; or (d) Borrower shall fail to deliver the proceeds of Collateral to Coast as provided in Section 7.5 above, or shall fail to give Coast access to its books and records or Collateral as provided in Section 8.4 above, or shall breach any negative covenant set forth in Section 8.5 above; or (e) Borrower shall fail to comply with the financial covenants (if any) set forth in the Schedule or shall fail to perform any other non-monetary Obligation which by its nature cannot be cured; or (f) Borrower shall fail to perform any other non-monetary Obligation, which failure is not cured within ten (10) Business Days after the date due; or (g) Any levy, assessment, attachment, seizure, lien or encumbrance (other than a Permitted Lien) is made on all or any part of the Collateral which is not cured within fifteen (15) days after the occurrence of the same; or (h) any default or event of default occurs under any obligation secured by a Permitted Lien, which is not cured within any applicable cure period or waived in writing by the holder of the Permitted Lien; or (i) Borrower breaches any material contract or obligation including, but not limited to, the Senior Notes, which has or may reasonably be expected to have a Material Adverse Effect; or (j) Dissolution, termination of existence, insolvency or business failure of Borrower or any guarantor of any of the Obligations; or appointment of a receiver, trustee or custodian, for all or any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding by Borrower or any guarantor of any of the Obligations under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect; or (k) the commencement of any proceeding against Borrower or any guarantor of any of the Obligations under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect, which is (i) not timely controverted, or (ii) not cured by the dismissal thereof within forty-five (45) days after the date commenced; or within any applicable grace period; or (l) revocation or termination of, or limitation or denial of liability upon, any guaranty of the Obligations or any attempt to do any of the foregoing, or commencement of proceedings by any guarantor of any of the Obligations under any bankruptcy or insolvency law; or (m) revocation or termination of, or limitation or denial of liability upon, any pledge of any certificate of deposit, securities or other property or asset of any kind pledged by any third party to secure any or all of the Obligations, or any attempt to do any of the foregoing, or commencement of proceedings by or against any such third party under any bankruptcy or insolvency law; or (n) Borrower or any guarantor of any of the Obligations makes any payment on account of any indebtedness or obligation which has been subordinated to the Obligations, other than as permitted in the applicable subordination agreement, or if any Person who has subordinated such indebtedness or obligations terminates or in any way limits his subordination agreement; or (o) Except as permitted under Section 8.5(a), Borrower shall suffer or experience any Change of Control without Coast's prior written consent, which consent shall be in the discretion of Coast in the exercise of its reasonable business judgment; or (p) Borrower shall generally not pay its debts as they become due, or Borrower shall conceal, remove or transfer any part of its property, with intent to hinder, delay or defraud its creditors, or make or suffer any transfer of any of its property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or (q) there shall be any Material Adverse Effect. Coast may cease making any Loans or extending any credit hereunder during any of the above cure periods. 10.2 Remedies. Upon the occurrence, and during the continuance, of any Event of Default, Coast, at its option, and without notice or demand of any kind (all of which are hereby expressly waived by Borrower), may do any one or more of the following: (a) Cease making Loans or otherwise extending credit to Borrower under this Agreement or any other document or agreement; (b) Accelerate and declare all or any part of the Obligations to be immediately due, payable and performable, notwithstanding any deferred or installment payments allowed by any instrument evidencing or relating to any Obligation; (c) Take possession of any or all of the Collateral wherever it may be found, and for that purpose Borrower hereby authorizes Coast without judicial process to enter onto any of Borrower's premises without interference to search for, take possession of, keep, store or remove any of the Collateral, and remain on the premises or cause a custodian to remain on the premises in exclusive control thereof, without charge for so long as Coast deems it reasonably necessary in order to complete the enforcement of its rights under this Agreement or any other agreement; provided, however, that should Coast seek to take possession of any of the Collateral by Court process, Borrower hereby irrevocably waives: (i) any bond and any surety or security relating thereto required by any statute, court rule or otherwise as an incident to such possession; (ii) any demand for possession prior to the commencement of any suit or action to recover possession thereof; and (iii) any requirement that Coast retain possession of, and not dispose of, any such Collateral until after trial or final judgment; (d) Require Borrower to assemble any or all of the Collateral and make it available to Coast at places designated by Coast which are reasonably convenient to Coast and Borrower, and to remove the Collateral to such locations as Coast may deem advisable; (e) Complete the processing, manufacturing or repair of any Collateral prior to a disposition thereof and, for such purpose and for the purpose of removal, Coast shall have the right to use Borrower's premises, vehicles, hoists, lifts, cranes, equipment and all other property without charge. Coast is hereby granted a license or other right to use, without charge, Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and Borrower's rights under all licenses and all franchise agreements shall inure to Coast's benefit; (f) Sell, lease or otherwise dispose of any of the Collateral, in its condition at the time Coast obtains possession of it or after further manufacturing, processing or repair, at one or more public and/or private sales, in lots or in bulk, for cash, exchange or other property, or on credit, and to adjourn any such sale from time to time without notice other than oral announcement at the time scheduled for sale. Coast shall have the right to conduct such disposition on Borrower's premises without charge, for such time or times as Coast deems reasonable, or on Coast's premises, or elsewhere and the Collateral need not be located at the place of disposition. Coast may directly or through any affiliated company purchase or lease any Collateral at any such public disposition, and if permissible under applicable law, at any private disposition. Any sale or other disposition of Collateral shall not relieve Borrower of any liability Borrower may have if any Collateral is defective as to title or physical condition or otherwise at the time of sale; (g) Demand payment of, and collect any Receivables and General Intangibles comprising Collateral and, in connection therewith, Borrower irrevocably authorizes Coast to endorse or sign Borrower's name on all collections, receipts, instruments and other documents, to take possession of and open mail addressed to Borrower and remove therefrom payments made with respect to any item of the Collateral or proceeds thereof, and, in Coast's sole discretion, to grant extensions of time to pay, compromise claims and settle Receivables and the like for less than face value; (h) Demand and receive possession of any of Borrower's federal and state income tax returns and the books and records utilized in the preparation thereof or referring thereto; and (i) Require all payments representing Coast's Collateral and the proceeds therefrom, be paid to Coast and not to the Senior Notes. All reasonable attorneys' fees, expenses, costs, liabilities and obligations incurred by Coast (including reasonable attorneys' fees and expenses incurred in connection with bankruptcy) with respect to the foregoing shall be due from the Borrower to Coast on demand. Coast may charge the same to Borrower's loan account, and the same shall thereafter bear interest at the same rate as is applicable to the Receivable Loans. Without limiting any of Coast's rights and remedies, from and after the occurrence and during the continuance of any Event of Default, the interest rate applicable to the Obligations shall be increased by an additional three percent per annum. 10.3 Standards for Determining Commercial Reasonableness. Borrower and Coast to the maximum extent permitted by law agree that a sale or other disposition (collectively, "Sale") of any Collateral which complies with the following standards will conclusively be deemed to be commercially reasonable: (a) Notice of the sale is given to Borrower at least seven (7) days prior to the sale, and, in the case of a public sale, notice of the sale is published at least seven (7) days before the sale in a newspaper of general circulation in the county where the sale is to be conducted; (b) Notice of the sale describes the collateral in general, non-specific terms; (c) The sale is conducted at a place designated by Coast, with or without the Collateral being present; (d) The sale commences at any time between 8:00 a.m. and 6:00 p.m. Los Angeles, California time; (e) Payment of the purchase price in cash or by cashier's check or wire transfer is required; and (f) With respect to any sale of any of the Collateral, Coast may (but is not obligated to) direct any prospective purchaser to ascertain directly from Borrower any and all information concerning the same. Coast shall be free to employ other methods of noticing and selling the Collateral, in its discretion, if they are commercially reasonable. 10.4 Power of Attorney. Borrower grants to Coast an irrevocable power of attorney coupled with an interest, authorizing and permitting Coast (acting through any of its employees, attorneys or agents) at any time, at its option, but without obligation, with or without notice to Borrower, and at Borrower's expense, to do any or all of the following, in Borrower's name or otherwise, but Coast agrees to exercise the following powers in a commercially reasonable manner: (a) Execute on behalf of Borrower any documents that Coast may, in its sole discretion, deem advisable in order to perfect and maintain Coast's security interest in the Collateral, or in order to exercise a right of Borrower or Coast, or in order to fully consummate all the transactions contemplated under this Agreement, and all other present and future agreements; (b) Upon the occurrence, and during the continuance of any Event of Default, execute on behalf of Borrower any document exercising, transferring or assigning any option to purchase, sell or otherwise dispose of or to lease (as lessor or lessee) any real or personal property which is part of Coast's Collateral or in which Coast has an interest; (c) Upon the occurrence, and during the continuance of any Event of Default, execute on behalf of Borrower, any invoices relating to any Receivable; (d) Execute on behalf of Borrower, any draft against any Account Debtor and any notice to any Account Debtor, any proof of claim in bankruptcy, any Notice of Lien, claim of mechanic's, materialman's or other lien, or assignment or satisfaction of mechanic's, materialman's or other lien; (e) Take control in any manner of any cash or non-cash items of payment or proceeds of Collateral; endorse the name of Borrower upon any instruments, or documents, evidence of payment or Collateral that may come into Coast's possession; (f) Endorse all checks and other forms of remittances received by Coast; (g) Pay, contest or settle any lien, charge, encumbrance, security interest and adverse claim in or to any of the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; (h) Upon the occurrence, and during the continuance, of any Event of Default, grant extensions of time to pay, compromise claims and settle Receivables and General Intangibles for less than face value and execute all releases and other documents in connection therewith; (i) Pay any sums required on account of Borrower's taxes or to secure the release of any liens therefor, or both, which Coast, in the exercise of its good faith discretion and judgment deems necessary or appropriate to protect its rights, interests, or priorities; (j) Settle and adjust, and give releases of, any insurance claim that relates to any of the Collateral and obtain payment therefor; (k) Instruct any third party having custody or control of any books or records belonging to, or relating to, Borrower to give Coast the same rights of access and other rights with respect thereto as Coast has under this Agreement; and (l) Take any action or pay any sum required of Borrower pursuant to this Agreement and any other present or future agreements. Any and all sums paid and any and all reasonable costs, expenses, liabilities, obligations and reasonable attorneys' fees incurred by Coast (including reasonable attorneys' fees and expenses incurred pursuant to bankruptcy) with respect to the foregoing shall be added to and become part of the Obligations, and shall be payable on demand. Coast may charge the foregoing to Borrower's loan account and the foregoing shall thereafter bear interest at the same rate applicable to the Receivable Loans. In no event shall Coast's rights under the foregoing power of attorney or any of Coast's other rights under this Agreement be deemed to indicate that Coast is in control of the business, management or properties of Borrower. Borrower shall pay, indemnify, defend, and hold Coast and each of its officers, directors, employees, counsel, agents, and attorneys-in-fact (each, an "Indemnified Person") harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, and damages, and all attorneys fees and disbursements and other costs and expenses actually incurred in connection therewith (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them in connection with or as a result of or related to the execution, delivery, enforcement, performance, and administration of this Agreement and any other Loan Documents or the transactions contemplated herein, and with respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event or circumstance in any manner related thereto (all the foregoing, collectively, the "Indemnified Liabilities"). Borrower shall have no obligation to any Indemnified Person hereunder with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person. This provision shall survive the termination of this Agreement and the repayment of the Obligations. 10.5 Application of Proceeds. All proceeds realized as the result of any sale of the Collateral shall be applied by Coast first to the reasonable costs, expenses, liabilities, obligations and reasonable attorneys' fees incurred by Coast in the exercise of its rights under this Agreement, second to the interest due upon any of the Obligations, and third to the principal of the Obligations, in such order as Coast shall determine in its sole discretion. Any surplus shall be paid to Borrower or other persons legally entitled thereto; Borrower shall remain liable to Coast for any deficiency. If, Coast, in its sole discretion, directly or indirectly enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Coast shall have the option, exercisable at any time, in its sole discretion, of either reducing the Obligations by the principal amount of purchase price or deferring the reduction of the Obligations until the actual receipt by Coast of the cash therefor. 10.6 Remedies Cumulative. In addition to the rights and remedies set forth in this Agreement, Coast shall have all the other rights and remedies accorded a secured party in equity, under the Code, and under all other applicable laws, and under any other instrument or agreement now or in the future entered into between Coast and Borrower, and all of such rights and remedies are cumulative and none is exclusive. Exercise or partial exercise by Coast of one or more of its rights or remedies shall not be deemed an election, nor bar Coast from subsequent exercise or partial exercise of any other rights or remedies. The failure or delay of Coast to exercise any rights or remedies shall not operate as a waiver thereof, but all rights and remedies shall continue in full force and effect until all of the Obligations have been indefeasibly paid and performed. 11. GENERAL PROVISIONS. 11.1 Interest Computation. In computing interest on the Obligations, all checks, wire transfers and other items of payment received by Coast (including proceeds of Receivables and payment of the Obligations in full) shall be deemed applied by Coast on account of the Obligations three (3) Business Days after receipt by Coast of immediately available funds, and, for purposes of the foregoing, any such funds received after 10:30 AM Los Angeles, California time, on any day shall be deemed received on the next Business Day. Coast shall be entitled to charge Borrower's account for such three (3) Business Days of "clearance" or "float" at the rate(s) set forth in Section 3 of the Schedule on all checks, wire transfers and other items received by Coast, regardless of whether such three (3) Business Days of "clearance" or "float" actually occur, and shall be deemed to be the equivalent of charging three (3) Business Days of interest on such collections. This across-the-board three (3) Business Day clearance or float charge on all collections is acknowledged by the parties to constitute an integral aspect of the pricing of Coast's financing of Borrower. Except for cash payments, Coast shall not, however, be required to credit Borrower's account for the amount of any item or form of payment which is unsatisfactory to Coast in its sole discretion, and Coast may charge Borrower's loan account for the amount of any item of payment which is returned to Coast unpaid. 11.2 Application of Payments. Subject to Section 7.5 hereof, all payments with respect to the Obligations may be applied, and in Coast's sole discretion reversed and re-applied, to the Obligations, in such order and manner as Coast shall determine in its sole discretion. 11.3 Charges to Accounts. Coast may, in its discretion, require that Borrower pay monetary Obligations in cash to Coast, or charge them to Borrower's Loan account, in which event they will bear interest from the date due to the date paid at the same rate applicable to the Loans. 11.4 Monthly Accountings. Coast shall provide Borrower monthly with an account of advances, charges, expenses and payments made pursuant to this Agreement. Such account shall be deemed correct, accurate and binding on Borrower and an account stated (except for reverses and reapplications of payments made and corrections of errors discovered by Coast), unless Borrower notifies Coast in writing to the contrary within thirty (30) days after each account is rendered, describing the nature of any alleged errors or omissions. 11.5 Notices. All notices to be given under this Agreement shall be in writing and shall be given either personally or by reputable private delivery service or by regular first-class mail, facsimile or certified mail return receipt requested, addressed to Coast at the addresses shown in the heading to this Agreement, or to Borrower c/o VIALOG, 35 New England Business Center, Suite 160, Hanover, MA 01810, or at any other address designated in writing by one party to the other party. Notices to Coast shall be directed to the Commercial Finance Division, to the attention of the Division Manager or the Division Credit Manager. All notices shall be deemed to have been given upon delivery in the case of notices personally delivered, faxed (at time of confirmation of transmission), or at the expiration of one (1) Business Day following delivery to the private delivery service, or two (2) Business Days following the deposit thereof in the United States mail, with postage prepaid. 11.6 Severability. Should any provision of this Agreement be held by any court of competent jurisdiction to be void or unenforceable, such defect shall not affect the remainder of this Agreement, which shall continue in full force and effect. 11.7 Integration. This Agreement and such other written agreements, documents and instruments as may be executed in connection herewith are the final, entire and complete agreement between Borrower and Coast and supersede all prior and contemporaneous negotiations and oral representations and agreements, all of which are merged and integrated in this Agreement. There are no oral understandings, representations or agreements between the parties which are not set forth in this Agreement or in other written agreements signed by the parties in connection herewith. 11.8 Waivers. The failure of Coast at any time or times to require Borrower to strictly comply with any of the provisions of this Agreement or any other present or future agreement between Borrower and Coast shall not waive or diminish any right of Coast later to demand and receive strict compliance therewith. Any waiver of any Default shall not waive or affect any other Default, whether prior or subsequent, and whether or not similar. None of the provisions of this Agreement or any other agreement now or in the future executed by Borrower and delivered to Coast shall be deemed to have been waived by any act or knowledge of Coast or its agents or employees, but only by a specific written waiver signed by an authorized officer of Coast and delivered to Borrower. Borrower waives demand, protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, instrument, account, General Intangible, document or guaranty at any time held by Coast on which Borrower is or may in any way be liable, and notice of any action taken by Coast, unless expressly required by this Agreement. 11.9 No Liability for Ordinary Negligence. Neither Coast, nor any of its directors, officers, employees, agents, attorneys or any other Person affiliated with or representing Coast shall be liable for any claims, demands, losses or damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower or any other party through the ordinary negligence of Coast, or any of its directors, officers, employees, agents, attorneys or any other Person affiliated with or representing Coast, but nothing herein shall relieve Coast from liability for its own gross negligence or willful misconduct. 11.10 Amendment. The terms and provisions of this Agreement may not be waived or amended, except in a writing executed by Borrower and a duly authorized officer of Coast. 11.11 Time of Essence.. Time is of the essence in the performance by Borrower of each and every obligation under this Agreement. 11.12 Attorneys Fees, Costs and Charges. Borrower shall reimburse Coast for all reasonable attorneys' fees (including reasonable attorneys' fees and expenses incurred pursuant to bankruptcy) and all filing, recording, search, title insurance, appraisal, audit, and other reasonable costs incurred by Coast, pursuant to, or in connection with, or relating to this Agreement (whether or not a lawsuit is filed), including, but not limited to, any reasonable attorneys' fees and costs (including reasonable attorneys' fees and expenses incurred pursuant to bankruptcy) Coast incurs in order to do the following: prepare and negotiate this Agreement and the documents relating to this Agreement; obtain legal advice in connection with this Agreement or Borrower; enforce, or seek to enforce, any of its rights; prosecute actions against, or defend actions by, Account Debtors; commence, intervene in, or defend any action or proceeding; initiate any complaint to be relieved of the automatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy claim, third-party claim, or other claim; examine, audit, copy, and inspect any of the Collateral or any of Borrower's books and records; protect, obtain possession of, lease, dispose of, or otherwise enforce Coast's security interest in, the Collateral; and otherwise represent Coast in any litigation relating to Borrower. If either Coast or Borrower files any lawsuit against the other predicated on a breach of this Agreement, the prevailing party in such action shall be entitled to recover its reasonable costs and attorneys' fees (including reasonable attorneys' fees and expenses incurred pursuant to bankruptcy), including (but not limited to) reasonable attorneys' fees and costs incurred in the enforcement of, execution upon or defense of any order, decree, award or judgment. Borrower shall also pay Coast's standard charges for returned checks and for wire transfers, in effect from time to time. All reasonable attorneys' fees, costs and charges (including reasonable attorneys' fees and expenses incurred pursuant to bankruptcy) and other fees, costs and charges to which Coast may be entitled pursuant to this Agreement may be charged by Coast to Borrower's loan account and shall thereafter bear interest at the same rate as the Receivable Loans. 11.13 Benefit of Agreement. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of Borrower and Coast; provided, however, that Borrower may not assign or transfer any of its rights under this Agreement without the prior written consent of Coast, and any prohibited assignment shall be void. No consent by Coast to any assignment shall release Borrower from its liability for the Obligations. Coast may assign its rights and delegate its duties hereunder without the consent of Borrower. Coast reserves the right to syndicate all or a portion of the transaction created herein or sell, assign, transfer, negotiate, or grant participations in all or any part of, or any interest in Coast's rights and benefits hereunder. In connection with such syndication, assignment or participation, Coast may disclose all documents and information which Coast now or hereafter may have relating to Borrower or Borrower's business, subject to Coast taking reasonable steps to cause such potential assignees, participants or syndication parties to keep confidential all confidential information relating to Borrower or its business. To the extent that Coast assigns its rights and obligations hereunder to a third Person, Coast thereafter shall be released from such assigned obligations to Borrower. 11.14 Paragraph Headings; Construction. Paragraph headings are only used in this Agreement for convenience. Borrower and Coast acknowledge that the headings may not describe completely the subject matter of the applicable paragraph, and the headings shall not be used in any manner to construe, limit, define or interpret any term or provision of this Agreement. The term "including", whenever used in this Agreement, shall mean "including but not limited to." This Agreement has been fully reviewed and negotiated between the parties and no uncertainty or ambiguity in any term or provision of this Agreement shall be construed strictly against Coast or Borrower under any rule of construction or otherwise. 11.15 Governing Law; Jurisdiction; Venue. This Agreement and all acts and transactions hereunder and all rights and obligations of Coast and Borrower shall be governed by the internal laws of the State of California, without regard to its conflicts of law principles. As a material part of the consideration to Coast to enter into this Agreement, Borrower (a) agrees that all actions and proceedings relating directly or indirectly to this Agreement shall, at Coast's option, be litigated in courts located within California, and that the exclusive venue therefor shall be Los Angeles County; (b) consents to the jurisdiction and venue of any such court and consents to service of process in any such action or proceeding by personal delivery or any other method permitted by law; and (c) waives any and all rights Borrower may have to object to the jurisdiction of any such court, or to transfer or change the venue of any such action or proceeding. 11.16 Mutual Waiver of Jury Trial. BORROWER AND COAST EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN COAST AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF COAST OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH COAST OR BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. BORROWER: KENDALL SQUARE TELECONFERENCING, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Courtney P. Snyder --------------------- Title President CONFERENCE SOURCE INTERNATIONAL By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title President TELEPHONE BUSINESS MEETINGS, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title Vice President CALL POINTS, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title President AMERICAN CONFERENCING COMPANY, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title President COMMUNICATION DEVELOPMENT CORPORATION By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title Vice President COAST: COAST BUSINESS CREDIT(R), a division of Southern Pacific Bank By /s/Robert D. Peters ------------------- Title: Vice President Coast SCHEDULE TO LOAN AND SECURITY AGREEMENT Co-Borrower: Kendall Square Teleconferencing, Inc., a Massachusetts corporation Address: 1 Kendall Square, Suite 328 Cambridge, Massachusetts 02139 Co-Borrower: Conference Source International, Inc., a Georgia corporation Address: 100 Hartsfield Center Parkway, Suite 300 Atlanta, Georgia 30354 Co-Borrower: Telephone Business Meetings, Inc., a Delaware corporation Address: 1861 Wiehle Avenue Reston, Virginia 20190-5200 Co-Borrower: Call Points, Inc. Address: 1500 Hunter Loop Road Montgomery, Alabama 36108 Co-Borrower: American Conferencing Company, Inc., a Delaware corporation Address: 690 Kinderkamack Road Oradell, New Jersey 07649 Co-Borrower: Communication Development Corporation, a Connecticut corporation Address: 30 Main Street, Suite 400 Danbury, Connecticut 06810 Date: September 30, 1998 This Schedule forms an integral part of the Loan and Security Agreement between Coast Business Credit(R), a division of Southern Pacific Bank, and the above-borrower of even date. SECTION 2 - CREDIT FACILITIES Section 2.1 - Credit Limit: Loans in a total amount at any time outstanding not to exceed the lesser of a total of Fifteen Million Dollars ($15,000,000.00) at any one time outstanding (the Maximum Dollar Amount), or the sum of (a), (b) and (c) below: (a) Receivable Loans up to eighty percent (80%) of the amount of Borrower's Eligible Receivables (as defined in Section 1 of the Agreement). The advance rate on the Receivable Loans may be increased, in Coast's sole and absolute discretion, to an amount not to exceed eighty-five percent (85%) of Borrower's Eligible Receivables if Coast, in it sole and absolute discretion, determines that dilution of Receivables has been and is, in Coast's opinion, likely to continue at a rate that is five percent (5%) or less; plus (b) Term Loan (the "Term Loan") in a principal amount of One Million Five Hundred Dollars ($1,500,000). The principal of the Term Loan shall be repaid in equal monthly installments based on a thirty-six (36) month amortization period, commencing on October 31, 1998 and continuing on the last day of each month thereafter. The unpaid principal balance together with accrued interest and other charges shall be fully due and payable on the earlier of (I) the Maturity Date as provided in Section 9.1 of the Loan Agreement or (ii) the effective date of termination as provided in Section 9.2 of the Loan Agreement. (c) Equipment Acquisition Loans in a total amount not to exceed the lesser of: (1) Eighty percent (80%) of the purchase price of new and used Equipment, less installation charges and taxes (subject to confirmation by appraisers selected by or otherwise acceptable to Coast that the advance rate for the particular used item(s) of Equipment being acquired is reasonable); in addition, equipment that was purchased after December 1997 to the date of Closing will be considered eligible for advances at initial funding provided such equipment was new when purchased and such consideration will be on a case by case basis; or (2) Four Million Dollars ($4,000,000.00). Each advance of principal hereunder shall be repaid in equal monthly installments based on a thirty-six (36) month amortization period, commencing on the last day of the first full calendar month following such advance and continuing on the last day of each month thereafter. Each advance shall be added to the aggregate principal balance and the aggregate monthly principal payments shall be increased by the monthly principal amortization payment relating to each additional advance. The unpaid principal balance together with accrued interest and other charges shall be fully due and payable on the earlier of (I) the Maturity Date as provided in Section 9.1 of the Loan Agreement or (ii) the effective date of termination as provided in Section 9.2 of the Loan Agreement. SECTION 3 - INTEREST AND FEES Section 3.1 - Interest Rate: A rate equal to the Prime Rate plus 1.5 % per annum, calculated on the basis of a 360-day year for the actual number of days elapsed. The interest rate applicable to all Loans shall be adjusted monthly as of the first day of each month, and the interest to be charged for each month shall be based on the highest Prime Rate in effect during the prior month, but in no event shall the rate of interest charged on any Loans in any month be less than seven percent (7%) per annum. Section 3.1 - Minimum Monthly Interest: Based on minimum daily outstanding principal loan balance of the greater of (a) Five Million ($5,000,000.00) or (b) thirty-three percent (33%) of the Credit Limit in effect from time to time. Section 3.2 - Loan Fee: One Hundred and Fifty Thousand Dollars ($150,000.00) fully earned on the Closing Date. The Loan Fee shall be payable in equal quarterly installments of Eighteen Thousand Seven Hundred and Fifty Dollars ($18,750) each, commencing on the Closing Date and thereafter, on the end of each calendar quarter (i.e., March 31, June 30, September 30, and December 31). Any unpaid Loan Fee at the Maturity Date shall be due and payable in full. Section 3.2 - Facility Fee: $500.00 per month for each entity being monitored. Section 9.1 - Renewal Fee: 0.5% of the Maximum Dollar Amount per year for each renewal subsequent to the initial Maturity Date. Section 9.2 - Early Termination Fee: An amount equal to three percent (3%) of the Maximum Dollar Amount (as defined in the Schedule), if termination occurs on or before the first anniversary of the effective date of this Agreement; and two percent (2%) of the Maximum Dollar Amount, if termination occurs after the first anniversary and before the Maturity Date (including any extensions of the Maturity Date pursuant to Section 9.1 or otherwise). SECTION 5 - CONDITIONS PRECEDENT Section 5.2 - Minimum Availability: Borrower and VIALOG shall have unencumbered cash and minimum borrowing availability at funding totaling an amount of not less than Five Million Dollars ($5,000,000). Section 5.12 - Other Documents and Agreements: At or prior to Closing, Borrower shall provide or Coast shall have received, in form and content acceptable to Coast, such other and further Loan Documents, agreements and other papers and such other and further actions shall be taken as specified by Coast to carry out the intent and purposes of this Agreement and to grant, perfect and protect the rights and interests of Coast as contemplated herein. SECTION 6 - REPRESENTATIONS, WARRANTIES AND COVENANTS Section 6.2 - Prior Names of Borrower: Kendall Square Teleconferencing, Inc.: 1. Teleconversant, Ltd.; The Conference Center Conference Source International, Inc.: 1. CSI Telephone Business Meetings, Inc.: 1. Access Teleconferencing International Call Points, Inc.: 1. Call Points Acquisition Corporation American Conferencing Company, Inc.: 1. Communication Development Corporation: 1. None Section 6.2 - Prior Trade Names of Borrower: Kendall Square Teleconferencing, Inc.: 1. Teleconversant, Ltd. Conference Source International, Inc.: 1. None. Telephone Business Meetings, Inc.: 1. Access Conference Call Service Call Points, Inc.: 1. Call Points American Conferencing Company, Inc.: 1. Communication Development Corporation: 1. None Section 6.2 - Existing Trade Names of Borrower: Kendall Square Teleconferencing, Inc.: 1. The Conference Center Conference Source International, Inc.: 1. CSI Telephone Business Meetings, Inc. : 1. Access Teleconferencing International; 2. Access Conference Call Service Call Points, Inc.: 1. None. American Conferencing Company, Inc.: 1. Communication Development Corporation: 1. None Section 6.3 - Other Locations and Addresses: Kendall Square Teleconferencing, Inc.: 1. None. Conference Source International, Inc.: 1. None. Telephone Business Meetings, Inc. : 1. None. Call Points, Inc.: 1. 3613 Eastern Boulevard, Montgomery, Alabama 36116 2. 202 East Hardaway, Union Springs, Alabama 36089 American Conferencing Company, Inc.: 1. Communication Development Corporation: 1. None. Section 6.10 - Material Adverse Litigation: Kendall Square Teleconferencing, Inc.: 1. None. Conference Source International, Inc.: 1. None. Telephone Business Meetings, Inc. : 1. None. Call Points, Inc.: 1. None. American Conferencing Company, Inc.: 1. None. Communication Development Corporation: 1. None. Section 6.10 - Future Claims and Litigation: Borrower will promptly inform Coast in writing of any claim, proceeding, litigation or investigation in the future threatened or instituted by or against Borrower involving any single claim of Fifty Thousand Dollars ($50,000.00) or more, or involving One Hundred Thousand Dollars ($100,000.00) or more in the aggregate. As of closing, Borrower represents that the only future claim is as follows: A former employee of Conference Source International, Inc. ("CSI") has claimed that he may be entitled to 5% of the stock of CSI based on an unsigned paper outlining possible employment terms. CSI's position is that the only agreements with such employee were set forth in two successive executed employment agreements, each of which had a specific provision that such agreement was inclusive as to the terms of employment. CSI believes that such claim is without merit. SECTION 8 - ADDITIONAL DUTIES OF BORROWER Section 8.1 - Other Provisions: 1. With the exception of: (a) an existing account payable of American Conferencing Company, Inc. to Compunetics; and (b) any other accounts payable hereafter approved in writing by Coast, no accounts payable shall be over one hundred and twenty (120) days past invoice date at funding. 2. All applicable taxes shall be current at funding and on an going forward basis. 3. Coast shall, at all times, have a perfected security interest in all presently-owned and after-acquired tangible and intangible assets and interests of Borrower, wherever located. Except for Permitted Liens, Coast's security interests shall be senior in priority to all other liens and security interests. 4. Borrower may not purchase assets outside the ordinary course of business for purchase price of or in excess of Fifty Thousand Dollars ($50,000.00) without consent of Coast. 5. Borrower and VIALOG shall maintain ongoing Minimum Net Worth of not less than Fifty Million Dollars ($50,000,000.00). The computation of Minimum Net Worth shall be defined as shareholders equity plus the sum of (a) subordinated debt and (b) the total outstanding balance under the $75,000,000 12 3/4% Senior Notes issued by VIALOG. Subordinated debt shall include debts of Borrower which are subordinated to Coast pursuant to written subordination agreements acceptable to Coast. 6. Coast shall obtain pro-forma consolidated and consolidating balance sheet of Borrower, for VIALOG and all Borrowers as of December 31, 1997 reflecting the acquisition of all Borrowers by VIALOG, and the same must be satisfactory to Coast. 7. Coast shall perform credit searches of Borrower and the same must be satisfactory to Coast. 8. A Landlord's Waiver and similar agreements in form and content specified or approved by Coast shall be obtained with respect to any facility designated by Coast including, without limitation, the Borrower's leased facilities located at: (a) 1 Kendall Square, Suite 328, Cambridge, Massachusetts 02139; (b) 100 Hartsfield Center Parkway, Atlanta, Georgia 30354; (c) 1861 Wiehle Avenue, Reston, Virginia 20190; (d) 1500 Hunter Loop Road, Montgomery, Alabama 36108; (e) 3613 Eastern Boulevard, Montgomery, Alabama 36116; (f) 202 East Hardaway, Union Springs, Alabama 36089; (g) 690 Kinderkamack Road, Oradell, New Jersey 07649; and (h) 30 Main Street, Suite 400, Danbury, Connecticut 06810. 9. Borrower's Receivables shall be collected by a lockbox account and directed to a blocked concentration account or similar arrangement acceptable to Coast, which accounts shall be controlled by Coast. Each Borrower represents that VIALOG will be managing the advances made by Coast hereunder for the benefit of Borrower. In order to avoid conflicting instructions and requests, Borrower hereby designates VIALOG as the sole and exclusive representative of Borrower to make requests for advances from Coast, to receive such advances for Borrower, to disburse such advances and to otherwise participate in the administration of the credit facilities as VIALOG and Borrower deem appropriate. Coast shall not be obligated to honor any advance request or other instruction from Borrower without the express written consent from VIALOG. Coast shall have no liability and shall have no responsibility for any claims, loss or damage that any Borrower may have arising out of or relating to the acts and omissions of VIALOG in the administration of the credit facilities for and on behalf of Borrower. Borrower, for itself and on behalf of its officers, directors, employees, shareholders, representatives and agents, hereby agrees, at Borrower's sole cost and expense, to defend (with counsel of Coast's choice) and hold Coast harmless from and against all claims of every kind and nature arising out of or relating to VIALOG's administration of the credit facilities for and on behalf of Borrower. 10. At all times during the term of this loan, Borrower shall maintain a Debt Service Coverage ratio of not less than 1.2:1 on a monthly basis. "Debt Service Coverage" shall be defined as monthly EBITDA of the prior month and the cash balance as of the end of the prior month, less cash expenditures for capital assets and taxes owed in the current month divided by all monthly obligations to be paid in the current month for principal and interest payments (excluding trade accounts payable and other accruals incurred in the ordinary course of the Borrower's business) and capital lease payments, based on the loan and capital lease balances as of the beginning of the current month. 11. Borrower shall provide Coast with internally prepared annual financial statement, balance sheets, income statements, and cash flows for the year ended December 31, 1997, which statements and information shall be satisfactory to Coast. Section 8.2 - Insurance: Subject to the limitations set forth in Section 8.2 of the Agreement, Coast shall release to Borrower insurance proceeds with respect to Equipment totaling less than One Hundred Thousand Dollars ($100,000.00). Section 8.3 - Reporting: Borrower shall provide Coast with the following: 1. Monthly Receivable agings, aged by invoice date, within ten (10) business days after the end of each month. 2. Monthly accounts payable agings, aged by invoice date, and outstanding or held check registers, within ten (10) days after the end of each month. 3. Monthly internally prepared financial statements, as soon as available, and in any event within thirty (30) days after the end of each month. 4. Quarterly internally prepared financial statements, as soon as available, and in any event within forty-five (45) days after the end of each fiscal quarter of Borrower. 5. Quarterly customer lists, including customer name, address, and phone number. 6. Annual financial statements, as soon as available, and in any event within ninety (90) days following the end of Borrower's fiscal year, containing the unqualified opinion of, and certified by, an independent certified public accountant acceptable to Coast. 7. Copies of all filings made by Borrower or VIALOG with the Securities Exchange Commission as and when filed. 8. Monthly representation from an officer of VIALOG representing that (a) VIALOG and the Borrowers are in compliance with the Senior Notes and (b) neither VIALOG or the Borrowers have violated any obligations or restrictions hereunder respecting the Senior Notes. SECTION 9 - TERM Section 9.1 - Maturity Date: Two (2) years from the Closing Date, subject to automatic renewal as provided in Section 9.1 of the Agreement, and early termination as provided in Section 9.2 of the Agreement. BORROWER: KENDALL SQUARE TELECONFERENCING, INC. By /s/John J. Dion ---------------- Title Vice President - Finance By /s/Courtney P. Snyder --------------------- Title President CONFERENCE SOURCE INTERNATIONAL By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title Vice President TELEPHONE BUSINESS MEETINGS, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title Vice President [SIGNATURES CONTINUED ON THE NEXT PAGE] CALL POINTS, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title President AMERICAN CONFERENCING COMPANY, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title President COMMUNICATION DEVELOPMENT CORPORATION By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title Vice President COAST: COAST BUSINESS CREDIT(R), a division of Southern Pacific Bank By /s/Robert D. Peters ------------------- Title: Vice President EX-10.2 3 Coast Secured Term Note (Equipment Acquisition Loans) Co-Borrower: Kendall Square Teleconferencing, Inc., a Massachusetts corporation Address: 1 Kendall Square, Suite 328 Cambridge, Massachusetts 02139 Co-Borrower: Conference Source International, Inc., a Georgia corporation Address: 100 Hartsfield Center Parkway Atlanta, Georgia 30354 Co-Borrower: Telephone Business Meetings, Inc., a Delaware corporation Address: 1861 Wiehle Avenue Reston, Virginia 20190-5200 Co-Borrower: Call Points, Inc., a Delaware corporation Address: 1500 Hunter Loop Road Montgomery, Alabama 36108 Co-Borrower: American Conferening Company, Inc., a Delaware corporation Address: 690 Kinderkamack Road Oradell, New Jersey 07649 Co-Borrower: Communication Development Corporation, a Connecticut corporation Address: 30 Main Street, Suite 400 Danbury, Connecticut 06810 Date: September 30, 1998 $4,000,000.00 FOR VALUE RECEIVED, the undersigned Borrowers jointly and severally (except where expressly stated otherwise or unless the context requires a different meaning, reference to "Borrower" in this Secured Term Note, and all documents, agreements related thereto, shall mean each of the above-referenced Borrowers, jointly and severally), promise to pay to the order of Coast Business Credit(R), a division of Southern Pacific Bank ("Coast"), at 12121 Wilshire Boulevard, Suite 1111, Los Angeles, California, or at such other address as the holder of this Note shall direct, the principal sum of Four Million Dollars ($4,000,000.00), or such lesser sum as may be advanced from time to time hereunder. Advances to Borrower shall be in increments of at least One Hundred Thousand Dollars ($100,000.00) each, based on invoices supporting the advances pursuant to the terms hereof. The advances shall be based upon a rate of 80% of the purchase price of new or used equipment hereafter acquired by Borrower less any and all sales and other taxes and installation charges and expenses (subject to confirmation by appraisers selected by or otherwise acceptable to Coast that the advance rate for the particular used item(s) of equipment being acquired is reasonable); in addition, equipment that was purchased after December 1997 to the date of Closing will be considered eligible for advances at initial funding provided such equipment was new when purchased and such consideration will be on a case by case basis. At Coast's option, any used equipment acquired by Borrower shall be subject to confirmation by appraisers selected by or otherwise acceptable to Coast that the advance rate for the particular used item(s) of equipment being acquired is reasonable. Each advance of principal hereunder shall be repaid in equal monthly installments based on a thirty six (36) month amortization, commencing on the last day of the first full calendar month following such advance and continuing on the last day of each month thereafter. Each advance shall be added to the aggregate principal balance and the aggregate monthly principal payments shall be increased by the monthly principal amortization payment relating to each additional advance. The unpaid principal balance together with accrued interest and other charges shall be fully due and payable on the earlier of (i) the Maturity Date as provided in Section 9.1 of the Loan and Security Agreement dated as of the date hereof between Borrower and Coast or (ii) the effective date of termination as provided in Section 9.2 of the Loan and Security Agreement between Borrower and Coast of even date herewith (the Loan and Security Agreement and all documents and agreements relating thereto are collectively referred to as the "Loan Documents"). Interest shall accrue at a rate equal to the "Prime Rate" plus one and a half percent (1.5%) per annum, calculated on the basis of a 360-day year for the actual number of days elapsed. The interest rate shall be adjusted monthly as of the first day of each month, and the interest to be charged for each month shall be based on the highest "Prime Rate" in effect during said month. Interest shall be payable monthly, on the last day of the month. "Prime Rate" means the actual "Reference Rate" or the substitute therefor of Bank of America NT & SA whether or not that rate is the lowest interest rate charged by said bank. If the Prime Rate, as defined, is unavailable, "Prime Rate" shall mean the highest of the prime rates published in the Wall Street Journal on the first business day of the month, as the base rate on corporate loans at large U.S. money center commercial banks. Principal of, and interest on, this Note shall be payable in lawful money of the United States of America. If a payment hereunder becomes due and payable on a Saturday, Sunday or legal holiday, the due date thereof shall be extended to the next succeeding business day, and interest shall be payable thereon during such extension. In the event any payment of principal or interest on this Note is not paid in full when due, or if any other Event of Default occurs under the Loan Documents or any other present or future instrument, document, or agreement between Borrower and Coast, Coast may, at its option, at any time, declare the entire unpaid principal balance of this Note plus all accrued interest to be immediately due and payable, without notice or demand. Without limiting the foregoing, and without limiting Coast's other rights and remedies, from and after the occurrence of any Event of Default, the interest rate applicable to the principal balance of this Note shall be increased by an additional five percent (5%) per annum. The acceptance of any installment of principal or interest by Coast after the time when it becomes due, as herein specified, shall not be held to establish a custom, or to waive any rights of Coast to enforce payment when due of any further installments or any other rights, nor shall any failure or delay to exercise any rights be held to waive the same. All payments hereunder are to be applied first to costs and fees referred to herein, second to the payment of accrued interest and the remaining balance to principal. Any principal prepayment hereunder shall be applied against principal payments in the inverse order of maturity. Coast shall have the continuing and exclusive right to apply or reverse and reapply any and all payments hereunder in its sole discretion. Borrower agrees to pay all reasonable costs and expenses (including, without limitation, attorneys' fees) incurred by Coast in connection with or related to this Note, or its enforcement, whether or not suit be brought. Borrower, to the maximum extent permitted by law, hereby further waives presentment, demand for payment, notice of dishonor, notice of nonpayment, protest, notice of protest, and any and all other notices and demands in connection with the delivery, acceptance, performance, default, or enforcement of this Note. This Note is secured by the "Collateral" as described in the Loan Documents and all other present and future security that may be provided by Borrower to Coast. Nothing herein shall be deemed to limit any of the terms or provisions of the Loan Documents, or any other present or future document, instrument or agreement, between Borrower and Coast, and all of Coast's rights and remedies hereunder and thereunder are cumulative. All capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Loan Agreement unless the context requires a different meaning. In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable, the same shall not affect any other provision of this Note and the remaining provisions of this Note shall remain in full force and effect. No waiver or modification of any of the terms or provisions of this Note shall be valid or binding unless set forth in a writing signed by a duly authorized officer of Coast, and then only to the extent therein specifically set forth. EACH BORROWER AND THE HOLDER OF THIS NOTE HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS NOTE; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN COAST AND BORROWER UNLESS OTHERWISE EXPRESSLY AGREED TO IN WRITING; OR (iii) ANY CONDUCT, ACTS OR OMISSIONS OF COAST OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH COAST OR BORROWER. This Note is payable in, and shall be governed by the internal laws of, the State of California. Co-Borrower: KENDALL SQUARE TELECONFERENCING, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Courtney P. Snyder --------------------- Title President Co-Borrower: CONFERENCE SOURCE INTERNATIONAL By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title President Co-Borrower: TELEPHONE BUSINESS MEETINGS, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title Vice President [SIGNATURES CONTINUED ON NEXT PAGE] Co-Borrower: CALL POINTS, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title President Co-Borrower: AMERICAN CONFERENCING COMPANY, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title President Co-Borrower: COMMUNICATION DEVELOPMENT CORPORATION By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title Vice President EX-10.3 4 EXHIBIT 10.3 Coast Secured Term Note (Term Loan) (Co-Borrowers, Joint and Several) Co-Borrower: Kendall Square Teleconferencing, Inc., a Massachusetts corporation Address: 1 Kendall Square, Suite 328 Cambridge, Massachusetts 02139 Co-Borrower: Conference Source International, Inc., a Georgia corporation Address: 100 Hartsfield Center Parkway, Suite 300 Atlanta, Georgia 30354 Co-Borrower: Telephone Business Meetings, Inc., a Delaware corporation Address: 1861 Wiehle Avenue Reston, Virginia 20190-5200 Co-Borrower: Call Points, Inc., a Delaware corporation Address: 1500 Hunter Loop Road Montgomery, Alabama 36108 Co-Borrower: American Conferencing Company, Inc., a Delaware corporation Address: 690 Kinderkamack Road Oradell, New Jersey 07649 Co-Borrower: Communication Development Corporation, a Connecticut corporation Address: 30 Main Street, Suite 400 Danbury, Connecticut 06810 Date: September 14, 1998 $1,500,000.00 FOR VALUE RECEIVED, the undersigned Borrowers jointly and severally (except where expressly stated otherwise or unless the context requires a different meaning, reference to "Borrower" in this Secured Term Note, and all documents and agreements related thereto, shall mean each of the above-referenced Borrowers, jointly and severally) promise to pay to the order of COAST BUSINESS CREDIT(R), a division of Southern Pacific Bank ("Coast"), at 12121 Wilshire Boulevard, Suite 1111, Los Angeles, California, or at any such other address as the holder of this Secured Term Note (this "Note") shall direct, the principal sum ("Principal") of One Million Five Hundred Thousand Dollars ($1,500,000.00), plus interest and other charges as hereinafter provided. Principal hereunder shall be repaid in equal monthly installments of Forty One Thousand Six Hundred Sixty Six Dollars and Sixty Seven Cents ($41,666.67), with the first payment commencing on October 31, 1998 and continuing on the last day of each month thereafter. The unpaid Principal balance together with accrued interest and other charges shall be fully due and payable on the earlier of (i) the Maturity Date as provided in Section 9.1 of the Loan and Security Agreement between Borrower and Coast dated as of the date hereof (the "Loan Agreement"), or (ii) the effective date of termination as provided in Section 9.2 of the Loan Agreement (the Loan Agreement and all documents and agreements relating thereto are collectively referred to as the "Loan Documents"). Interest shall accrue at a rate equal to the "Prime Rate" plus one and a half percent (1.5%) per annum, calculated on the basis of a 360-day year for the actual number of days elapsed or such different interest rate as provided in the Loan Documents. The interest rate shall be adjusted monthly as of the first day of each month, and the interest to be charged for each month shall be based on the highest "Prime Rate" in effect during said month. Interest shall be payable monthly, on the last day of the month. "Prime Rate" means the actual "Reference Rate" or the substitute therefor of Bank of America NT & SA whether or not that rate is the lowest interest rate charged by said bank. If the Prime Rate, as defined, is unavailable, "Prime Rate" shall mean the highest of the prime rates published in the Wall Street Journal on the first business day of the month, as the base rate on corporate loans at large U.S. money center commercial banks. Principal of, and interest on, this Note shall be payable in lawful money of the United States of America. If a payment hereunder becomes due and payable on a Saturday, Sunday or legal holiday, the due date thereof shall be extended to the next succeeding business day, and interest shall be payable thereon during such extension. In the event Borrower fails to pay any payment of Principal or interest on this Note, or if any Event of Default occurs under the Loan Documents or any other present or future instrument, document, or agreement between Borrower and Coast, Coast may, at its option, at any time, declare the entire unpaid Principal balance of this Note plus all accrued interest and other charges to be immediately due and payable, without notice or demand. Without limiting the foregoing, and without limiting Coast's other rights and remedies, from and after the occurrence of any event of default, the interest rate applicable to the principal balance of this Note shall be increased by an additional five percent (5%) per annum. The acceptance of any installment of Principal or interest by Coast after the time when it becomes due, as herein specified, shall not be held to establish a custom, or to waive any rights of Coast to enforce payment when due of any further installments or any other rights, nor shall any failure or delay to exercise any rights be held to waive the same. All payments hereunder are to be applied first to costs and fees referred to herein, second to the payment of accrued interest and the remaining balance to Principal. Any Principal prepayment hereunder shall be applied against Principal payments in the inverse order of maturity. Coast shall have the continuing and exclusive right to apply or reverse and reapply any and all payments hereunder in its sole discretion. Borrower agrees to pay all reasonable costs and expenses (including without limitation attorneys' fees and costs) incurred by Coast in connection with or related to this Note, or its enforcement, whether or not suit be brought. Borrower, to the maximum extent permitted by law, hereby further waives presentment, demand for payment, notice of dishonor, notice of nonpayment, protest, notice of protest, and any and all other notices and demands in connection with the delivery, acceptance, performance, default, or enforcement of this Note. This Note is secured by the "Collateral" as described in the Loan Agreements, the Loan Documents and all other present and future security that may be provided by Borrower to Coast. Nothing herein shall be deemed to limit any of the terms or provisions of the Loan Agreement, the Loan Documents, or any other present or future document, instrument or agreement, between Borrower and Coast, and all of Coast's rights and remedies hereunder and thereunder are cumulative. All capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Loan Agreement unless the context requires a different meaning. In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable, the same shall not affect any other provision of this Note and the remaining provisions of this Note shall remain in full force and effect. No waiver or modification of any of the terms or provisions of this Note shall be valid or binding unless set forth in a writing signed by a duly authorized officer of Coast, and then only to the extent therein specifically set forth. EACH BORROWER AND THE HOLDER OF THIS NOTE HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS NOTE; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN COAST AND BORROWER UNLESS OTHERWISE EXPRESSLY AGREED TO IN WRITING; OR (iii) ANY CONDUCT, ACTS OR OMISSIONS OF COAST OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH COAST OR BORROWER. This Note is payable in, and shall be governed by the internal laws of, the State of California. Co-Borrower: KENDALL SQUARE TELECONFERENCING, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Courtney P. Snyder --------------------- Title President Co-Borrower: CONFERENCE SOURCE INTERNATIONAL By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title President Co-Borrower: TELEPHONE BUSINESS MEETINGS, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title Vice President Co-Borrower: CALL POINTS, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title President [SIGNATURES CONTINUED ON NEXT PAGE] Co-Borrower: AMERICAN CONFERENCING COMPANY, INC. By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title President Co-Borrower: COMMUNICATION DEVELOPMENT CORPORATION By /s/John J. Dion --------------- Title Vice President - Finance By /s/Glenn D. Bolduc ------------------ Title Vice President EX-10.4 5 EXHIBIT 10.4 Coast Security Agreement THIS SECURITY AGREEMENT ("Agreement") is entered into on the day of September, 1998, by and between COAST BUSINESS CREDIT(R), a division of Southern Pacific Bank, a California corporation ("Coast"), with offices at 12121 Wilshire Boulevard, Suite 1111, Los Angeles, California 90025, and VIALOG Corporation, a Massachusetts corporation ("VIALOG"), with offices at 35 New England Business Center, Suite 160, Andover, Massachusetts 01810. All capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Loan and Security Agreement dated as of the date hereof (the "Loan Agreement") between Coast and the following corporations which are wholly-owned subsidiaries of VIALOG: Kendall Square Teleconferencing, Inc., a Massachusetts corporation; Conference Source International, Inc., a Georgia corporation; Telephone Business Meetings, Inc., a Delaware corporation; Call Points, Inc., a Delaware corporation; American Conferencing Company, Inc., a Delaware corporation; and Communication Development Corporation, a Connecticut corporation ("Borrower" or "Borrowers"). 1. THE OBLIGATIONS Coast is concurrently entering into the Loan Agreement and related documents (collectively, the "Loan Documents") for the financing of the Borrowers. VIALOG is providing a Continuing Guaranty, guaranteeing the obligations of Borrowers to Coast. 2. SECURITY INTEREST. To secure the payment and performance of all obligations of VIALOG under the Continuing Guaranty when due, VIALOG hereby grants to Coast a security interest in all of VIALOG's interest in the following, whether now owned or hereafter acquired, and wherever located: All Receivables, Inventory, Equipment, Investment Property and General Intangibles (as these terms are defined in the Loan Agreement), and all proceeds of any of the foregoing (including proceeds of any insurance policies, proceeds of proceeds, and claims against third parties), all products of any of the foregoing, and all books and records related to any of the foregoing all to the extent that the same arise from, relate to or are used by Vialog (all of the foregoing, together with all other property in which Coast may now or in the future be granted a lien or security interest, is referred to herein, collectively, as the "Collateral"). Notwithstanding the generality of the foregoing, the Collateral shall not include the stock of Borrower. 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER. In order to induce Coast to enter into this Agreement and to make Loans, VIALOG represents and warrants to Coast as follows, and VIALOG covenants that the following representations will continue to be true, and that VIALOG will at all times comply with all of the following covenants: 3.1 Title to Collateral; Permitted Liens. VIALOG is now, and will at all times in the future be, the sole owner of all the Collateral, except for items of Equipment (as defined in the Loan Agreement) which are leased by VIALOG. The Collateral now is and will remain free and clear of any and all liens, charges, security interests, encumbrances and adverse claims, except for Permitted Liens (as defined in the Loan Agreement). Coast now has, and will continue to have, a first-priority perfected and enforceable security interest in all of the Collateral, subject only to the Permitted Liens, and VIALOG will at all times defend Coast and the Collateral against all claims of others (other than holders of Permitted Liens). None of the Collateral now is or will be affixed to any real property in such a manner, or with such intent, as to become a fixture. VIALOG is not and will not become a lessee under any real property lease pursuant to which the lessor may obtain any rights in any of the Collateral and no such lease now prohibits, restrains, impairs or will prohibit, restrain or impair VIALOG's right to remove any Collateral from the leased premises. Whenever any Collateral is located upon premises in which any third party has an interest (whether as owner, mortgagee, beneficiary under a deed of trust, lien or otherwise), VIALOG shall, whenever requested by Coast, use its best efforts to cause such third party to execute and deliver to Coast, in form acceptable to Coast, such waivers and subordinations as Coast shall specify, so as to ensure that Coast's rights in the Collateral are, and will continue to be, superior to the rights of any such third party (other than holders of Permitted Liens). VIALOG will keep in full force and effect, and will comply with all the terms of, any lease of real property where any of the Collateral now or in the future may be located. 3.2 Maintenance of Collateral. VIALOG will maintain the Collateral in good working condition, and VIALOG will not use the Collateral for any unlawful purpose. VIALOG will immediately advise Coast in writing of any material loss or damage to the Collateral. 3.3 Insurance. VIALOG shall, at all times insure all of the tangible personal property Collateral and carry such other business insurance, with insurers reasonably acceptable to Coast, in such form and amounts as Coast may reasonably require, and VIALOG shall provide evidence of such insurance to Coast, so that Coast is satisfied that such insurance is, at all times, in full force and effect. All liability insurance policies of VIALOG shall name Coast as an additional insured, and all property casualty and related insurance policies of VIALOG shall name Coast as a loss payee thereon and VIALOG shall cause a lenders loss payee endorsement to be added in form reasonably acceptable to Coast. All such insurance shall provide that the same may not be canceled without thirty (30) days prior written notice to Coast. Upon receipt of the proceeds of any such insurance, Coast shall apply such proceeds in reduction of the obligations of the Borrowers to Coast, as Coast shall determine in its sole discretion, except that, provided no Default or Event of Default has occurred and is continuing under the Loan Documents, Coast shall release to VIALOG such insurance proceeds which shall be utilized by VIALOG for the replacement of the Equipment with respect to which the insurance proceeds were paid. Coast may require reasonable assurance that the insurance proceeds so released will be so used. If VIALOG fails to provide or pay for any insurance, Coast may, but is not obligated to, obtain the same at VIALOG's expense. VIALOG shall promptly deliver to Coast copies of all reports made to insurance companies. 3.4 Access to Collateral, Books and Records. At reasonable times, and with reasonable notice under the circumstances, Coast, or its agents, shall have the right to inspect, audit and copy VIALOG's books and records and the Collateral. Coast shall take reasonable steps to keep confidential all confidential information, but Coast shall have the right to disclose any such information to its auditors, regulatory agencies, and attorneys, and pursuant to any subpoena or other legal process. 3.5 Further Assurances. VIALOG agrees, at its expense, on request by Coast, to execute all documents and take all actions as Coast may deem reasonably necessary or useful in order to perfect and maintain Coast's perfected security interest in the Collateral, and in order to fully consummate the transactions contemplated by this Agreement. 3.6 Dividends By Vialog or Subsidiaries. VIALOG shall not, without the prior written consent of Coast, pay or declare any dividends or distributions on the ownership interests in Vialog except for dividends or distributions payable solely in the form of stock ownership interests in Vialog. Borrowers shall not, without the prior written consent of Coast pay or declare any dividends or distributions on the ownership interests in any Borrower except for (i) dividends or distributions payable solely in stock form of ownership interests in Borrower and (ii) dividends to Vialog if, when and to the extent required by Vialog in order to make regularly-scheduled payments of principal and interest on the $75,000,000.00, 12 3/4% Senior Notes issued by Vialog, provided such dividends or payments on the 12 3/4% Senior Notes would not result in a Default or Event of Default by Borrower or Vialog with respect to any of their respective obligations to Coast. Borrower may make loans, advances and transfers to VIALOG provided (i) the Borrower is and will continue to be able to generally pay its obligations as and when due; and (ii) VIALOG owns all of the outstanding ownership interests in Borrower as of the time of the loan, advance or transfer. 3.7 Ordinary Course Transactions. VIALOG will not, without the prior written consent of Coast, (a) merge or consolidate with another entity other than one that is a wholly-owned subsidiary and VIALOG is the surviving entity, (b) enter into any transaction outside the ordinary course of business, (c) incur any debts, outside the ordinary course of business, which would have a Material Adverse Effect, (d) guarantee or otherwise become liable with respect to the obligations of another party or entity, (e) make any change in VIALOG's capital structure which would have a Material Adverse Effect, (f) redeem, prior to maturity, any of the $75,000,000.00, 12 3/4% Senior Notes issued by Vialog unless funded by the proceeds of an equity offering or the proceeds of a debt offering where the debt offering is subordinated in all respects to Coast including, but not limited to Coast`s claims, Coast's rights to payment, and Coast's Collateral, (g) dissolve or elect to dissolve, or (h) acquire any assets or interests except (i) in the ordinary course of business, (ii) in a transaction or a series of transactions not involving the payment of an aggregate amount in excess of Five Hundred Thousand Dollars ($500,000), or (iii) the acquisition of A Business Conference-Call, Inc. ("ABCC") provided (A) the acquisition is funded entirely by the proceeds of an equity offering and (B) the assets of ABCC are pledged as collateral security for the obligations of the Borrowers and Vialog to Coast. With respect to any other proposed acquisitions the same shall require Coast's approval which approval shall not be unreasonably withheld. 4. EVENTS OF DEFAULT AND REMEDIES. The occurrence of any Event of Default under the Continuing Guaranty and other related documents and agreements shall constitute an Event of Default hereunder. If there is an Event of Default, Coast shall have the option of enforcing its various default remedies provided in the Continuing Guaranty and other related documents and agreements with respect to the Collateral, which remedies are incorporated herein by this reference as though set forth herein in full. Without limiting the generality of the foregoing, all rights and remedies of Coast under the Loan Agreement with Borrowers are incorporated herein by this reference with respect to Coast's rights and remedies against VIALOG and the Collateral pledged by VIALOG to Coast should there be an Event of Default under the Continuing Guaranty, this Agreement and any other documents and agreements by VIALOG in favor of Coast. 5. NOTICES. All notices to be given under this Agreement shall be in writing and shall be given either personally or by reputable private delivery service or by regular first-class mail, or certified mail return receipt requested, addressed to Coast or VIALOG at the addresses shown above in the heading to this Agreement, or at any other address designated in writing by one party to the other party. Notices to Coast shall be directed to the Commercial Finance Division, to the attention of the Division Manager or the Division Credit Manager. All notices shall be deemed to have been given upon delivery in the case of notices personally delivered, or at the expiration of one (1) Business Day following delivery to the private delivery service, or three (3) Business Days following the deposit thereof in the United States mail, with postage prepaid. 6. MISCELLANEOUS 6.1 Integration. This Agreement and such other written agreements, documents and instruments as may be executed in connection herewith are the final, entire and complete agreements between VIALOG and Coast and supersede all prior and contemporaneous negotiations and oral representations and agreements, all of which are merged and integrated in this Agreement. There are no oral understandings, representations or agreements between the parties which are not set forth in this Agreement or in other written agreements signed by the parties in connection herewith. 6.2 Waivers. The failure of Coast at any time or times to require VIALOG to strictly comply with any of the provisions of this Agreement or any other present or future agreement between VIALOG and Coast shall not waive or diminish any right of Coast later to demand and receive strict compliance therewith unless agreed to otherwise expressly in writing. Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar. None of the provisions of this Agreement or any other agreement now or in the future executed by VIALOG and delivered to Coast shall be deemed to have been waived by any act or knowledge of Coast or its agents or employees, but only by a specific written waiver signed by an authorized officer of Coast and delivered to VIALOG or otherwise agreed to in writing by Coast. VIALOG waives, to the maximum extent permitted by law, demand, protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, instrument, account, General Intangible, document or guaranty at any time held by Coast on which VIALOG is or may in any way be liable, and notice of any action taken by Coast, unless expressly required by this Agreement. 6.3 Amendment. The terms and provisions of this Agreement may not be waived or amended, except in writing executed by VIALOG and a duly authorized officer of Coast. 6.4 Attorneys Fees, Costs and Charges. VIALOG shall reimburse Coast for all reasonable attorneys' fees and all reasonable filing, recording, search, title insurance, appraisal, audit, and other reasonable costs incurred by Coast, pursuant to, or in connection with, or relating to this Agreement (whether or not a lawsuit is filed), including, but not limited to, any reasonable attorneys' fees and costs Coast incurs in order to do the following: prepare and negotiate this Agreement and the documents relating to this Agreement; obtain legal advice in connection with this Agreement; enforce, or seek to enforce, any of its rights; prosecute actions against, or defend actions of VIALOG; commence, intervene in, or defend any action or proceeding; initiate any complaint to be relieved of the automatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy claim, third-party claim, or other claim; examine, audit, copy, and inspect any of the Collateral or VIALOG's books and records (up to twice a year); protect, obtain possession of, lease, dispose of, or otherwise enforce Coast's security interest in, the Collateral; and otherwise represent Coast in any litigation relating to VIALOG. If either Coast or VIALOG files any lawsuit against the other predicated on a breach of this Agreement, the prevailing party in such action to the maximum extent permitted by law, shall be entitled to recover its reasonable costs and attorneys' fees, including, but not limited to, reasonable attorneys' fees and costs incurred in the enforcement of, execution upon or defense of any order, decree, award or judgment. VIALOG shall also pay Coast's standard charges for returned checks and for wire transfers, in effect from time to time. All attorneys' fees, costs and charges to which Coast may be entitled pursuant to this Paragraph may be charged by Coast to Borrowers' loan account and shall thereafter bear interest at the same rate as the Receivable Loans (as defined in the Loan Agreement). 6.5 Benefit of Agreement. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of VIALOG and Coast, provided, however, that VIALOG may not assign or transfer any of its rights under this Agreement without the prior written consent of Coast, and any prohibited assignment shall be void. No consent by Coast to any assignment shall release Borrowers from their liability for the obligations under the Loan Documents. 6.6 Governing Law; Jurisdiction; Venue. This Agreement and all acts and transactions hereunder and all rights and obligations of Coast and VIALOG shall be governed by the laws of the State of California. As a material part of the consideration to Coast to enter into this Agreement, VIALOG (i) agrees that all actions and proceedings relating directly or indirectly to this Agreement shall, at Coast's option, be litigated in courts located within California, and that the exclusive venue therefor shall be Los Angeles County; (ii) consents to the jurisdiction and venue of any such court and consents to service of process in any such action or proceeding by personal delivery or any other method permitted by law; and (iii) waives any and all rights VIALOG may have to object to the jurisdiction of any such court, or to transfer or change the venue of any such action or proceeding. 6.7 Mutual Waiver of Jury Trial. VIALOG AND COAST EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN COAST AND VIALOG UNLESS OTHERWISE EXPRESSLY AGREED TO IN WRITING, OR ANY CONDUCT, ACTS OR OMISSIONS OF COAST OR VIALOG OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH COAST OR VIALOG, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. VIALOG CORPORATION, a COAST BUSINESS CREDIT(R), a division of Massachusetts corporation Southern Pacific Bank, a California corporation By /s/John J. Dion By /s/Robert D. Peters --------------- ------------------- Its Vice President - Finance Its Vice President EX-10.5 6 Coast Continuing Guaranty Co-Borrower: Kendall Square Teleconferencing, Inc., a Massachusetts corporation Address: 1 Kendall Square, Suite 328 Cambridge, Massachusetts 02139 Co-Borrower: Conference Source International, Inc., a Georgia corporation Address: 100 Hartsfield Center Parkway Atlanta, Georgia 30354 Co-Borrower: Telephone Business Meetings, Inc., a Delaware corporation Address: 1861 Wiehle Avenue Reston, Virginia 20190-5200 Co-Borrower: Call Points, Inc., a Delaware corporation Address: 1500 Hunter Loop Road Montgomery, Alabama 36108 Co-Borrower: American Conferencing Company, Inc., a Delaware corporation Address: 690 Kinderkamack Road Oradell, New Jersey 07649 Co-Borrower: Communication Development Corporation, a Connecticut corporation Address: 30 Main Street, Suite 400 Danbury, Connecticut 06810 Guarantor: VIALOG Corporation 35 New England Business Center, Suite 160 Andover, Massachusetts 01810 Date: September 30, 1998 This Continuing Guaranty is executed by the above-named guarantor ("Guarantor"), as of the above date, in favor of COAST BUSINESS CREDIT(R), a division of Southern Pacific Bank ("Coast"), a California corporation, with offices at 12121 Wilshire Boulevard, Suite 1111, Los Angeles, California 90025, with respect to the Indebtedness of the above-referenced Co-Borrowers jointly and severally (except where expressly stated otherwise or unless the context requires a different meaning, reference to "Borrower" in this Continuing Guaranty, and all documents and agreements related thereto, shall mean each of the above-referenced Co-Borrowers, jointly and severally). All capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Loan and Security Agreement dated as of the date hereof between Borrower and Coast (the "Loan Agreement"). 1. Continuing Guaranty. Guarantor hereby unconditionally guarantees and promises to pay on demand to Coast, which demand shall be made by Coast only after the occurrence of an Event of Default under the Loan Agreement, at the address indicated above, or at such other address as Coast may direct, in lawful money of the United States, and to perform for the benefit of Coast, all Indebtedness of Borrower now or hereafter owing to or held by Coast. As used herein, the term "Indebtedness" is used in its most comprehensive sense and shall mean and include without limitation: (a) any and all debts, duties, obligations, liabilities, representations, warranties and guaranties of Borrower or any one or more of them, heretofore, now, or hereafter made, incurred, or created, whether directly to Coast or acquired by Coast by assignment or otherwise, or held by Coast on behalf of others, however arising, whether voluntary or involuntary, due or not due, absolute or contingent, liquidated or unliquidated, certain or uncertain, determined or undetermined, monetary or nonmonetary, written or oral, and whether Borrower may be liable individually or jointly with others, and regardless of whether recovery thereon may be or hereafter become barred by any statute of limitations, discharged or uncollectible in any bankruptcy, insolvency or other proceeding, or otherwise unenforceable; and (b) any and all amendments, modifications, renewals and extensions of any or all of the foregoing, including without limitation amendments, modifications, renewals and extensions which are evidenced by any new or additional instrument, document or agreement; and (c) any and all reasonable attorneys' fees, court costs, and collection charges incurred in endeavoring to collect or enforce any of the foregoing against Borrower, Guarantor, or any other person liable thereon (whether or not suit be brought) and any other expenses of, for or incidental to collection thereof. As used herein, the term "Borrower" shall include any successor to substantially all the business and assets of Borrower, and shall also include Borrower in its capacity as a debtor or debtor in possession under the federal Bankruptcy Code, and any trustee, custodian or receiver for Borrower or any of its assets, should Borrower hereafter become the subject of any bankruptcy or insolvency proceeding, voluntary or involuntary; and all indebtedness, liabilities and obligations incurred by any such person shall be included in the Indebtedness guaranteed hereby. This Guaranty is given in consideration for credit and other financial accommodations which may, from time to time, be given by Coast to Borrower in Coast's sole discretion, but Guarantor acknowledges and agrees that acceptance by Coast of this Guaranty shall not constitute a commitment of any kind by Coast to extend such credit or other financial accommodation to Borrower or to permit Borrower to incur Indebtedness to Coast. All sums due under this Guaranty shall bear interest from the date due until the date paid at the highest rate charged with respect to any of the Indebtedness. 2. Waivers. Guarantor, to the maximum extent permitted by law, hereby waives: (a) presentment for payment, notice of dishonor, protest, and notice thereof as to any instrument, and all other notices and demands to which Guarantor might be entitled, including without limitation notice of all of the following: the acceptance hereof; the creation, existence, or acquisition of any Indebtedness; the amount of the Indebtedness from time to time outstanding; disposition of any property which secures any or all of the Indebtedness or which secures the obligations of any other guarantor of any or all of the Indebtedness; any adverse change in Borrower's financial position; any other fact which might increase Guarantor's risk; any default, partial payment or non-payment of all or any part of the Indebtedness; the occurrence of any other Event of Default (as hereinafter defined); any and all agreements and arrangements between Coast and Borrower and any changes, modifications, or extensions thereof, and any revocation, modification or release of any guaranty of any or all of the Indebtedness by any person (including without limitation any other person signing this Guaranty); (b) any right to require Coast to institute suit against, or to exhaust its rights and remedies against, Borrower or any other person, or to proceed against any property of any kind which secures all or any part of the Indebtedness, or to exercise any right of offset or other right with respect to any reserves, credits or deposit accounts held by or maintained with Coast or any indebtedness of Coast to Borrower, or to exercise any other right or power, or pursue any other remedy Coast may have; (c) any defense arising by reason of any disability or other defense of Borrower or any other guarantor or any endorser, co-maker or other person, or by reason of the cessation from any cause whatsoever of any liability of Borrower or any other guarantor or any endorser, co-maker or other person, with respect to all or any part of the Indebtedness, or by reason of any act or omission of Coast or others which directly or indirectly results in the discharge or release of Borrower or any other guarantor or any other person or any Indebtedness or any security therefor, whether by operation of law or otherwise; (d) any defense arising by reason of any failure of Coast to obtain, perfect, maintain or keep in force any security interest in, or lien or encumbrance upon, any property of Borrower or any other person; (e) any defense based upon any failure of Coast to give Guarantor notice of any sale or other disposition of any property securing any or all of the Indebtedness, or any defects in any such notice that may be given, or any failure of Coast to comply with any provision of applicable law in enforcing any security interest in or lien upon any property securing any or all of the Indebtedness including, but not limited to, any failure by Coast to dispose of any property securing any or all of the Indebtedness in a commercially reasonable manner; (f) any defense based upon or arising out of any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against Borrower or any other guarantor or any endorser, co-maker or other person, including without limitation any discharge of, or bar against collecting, any of the Indebtedness (including without limitation any interest thereon), in or as a result of any such proceeding; and (g) the benefit of any and all statutes of limitation with respect to any action based upon, arising out of or related to this Guaranty. Until all of the Indebtedness has been paid, performed, and discharged in full, nothing shall discharge or satisfy the liability of Guarantor hereunder except the full performance and payment of all of the Indebtedness. If any claim is ever made upon Coast for repayment or recovery of any amount or amounts received by Coast in payment of or on account of any of the Indebtedness, because of any claim that any such payment constituted a preferential transfer or fraudulent conveyance, or for any other reason whatsoever, and Coast repays all or part of said amount by reason of any judgment, decree or order of any court or administrative body having jurisdiction over Coast or any of its property, or by reason of any settlement or compromise of any such claim effected by Coast with any such claimant (including without limitation the Borrower), then and in any such event, Guarantor agrees that any such judgment, decree, order, settlement and compromise shall be binding upon Guarantor, notwithstanding any revocation or release of this Guaranty or the cancellation of any note or other instrument evidencing any of the Indebtedness, or any release of any of the Indebtedness, and the Guarantor shall be and remain liable to Coast under this Guaranty for the amount so repaid or recovered, to the same extent as if such amount had never originally been received by Coast, and the provisions of this sentence shall survive, and continue in effect, notwithstanding any revocation or release of this Guaranty. Until all of the Indebtedness has been irrevocably paid and performed in full, Guarantor hereby expressly and unconditionally waives all rights of subrogation, reimbursement and indemnity of every kind against Borrower, and all rights of recourse to any assets or property of Borrower, and all rights to any collateral or security held for the payment and performance of any Indebtedness, including (but not limited to) any of the foregoing rights which Guarantor may have under any present or future document or agreement with any Borrower or other person, and including (but not limited to) any of the foregoing rights which Guarantor may have under any equitable doctrine of subrogation, implied contract, or unjust enrichment, or any other equitable or legal doctrine. Neither Coast, nor any of its directors, officers, employees, agents, attorneys or any other person affiliated with or representing Coast shall be liable for any claims, demands, losses or damages, of any kind whatsoever, made, claimed, incurred or suffered by Guarantor or any other party through the ordinary negligence of Coast, or any of its directors, officers, employees, agents, attorneys or any other person affiliated with or representing Coast. 3. Consents. Guarantor hereby consents and agrees, to the maximum extent permitted by law, that, without notice to or by Guarantor and without affecting or impairing in any way the obligations or liability of Guarantor hereunder, Coast may, from time to time before or after revocation of this Guaranty, do any one or more of the following in Coast's sole and absolute discretion: (a) accelerate, accept partial payments of, compromise or settle, renew, extend the time for the payment, discharge, or performance of, refuse to enforce, and release all or any parties to, any or all of the Indebtedness; (b) grant any other indulgence to Borrower or any other person in respect of any or all of the Indebtedness or any other matter; (c) accept, release, waive, surrender, enforce, exchange, modify, impair, or extend the time for the performance, discharge, or payment of, any and all property of any kind securing any or all of the Indebtedness or any guaranty of any or all of the Indebtedness, or on which Coast at any time may have a lien, or refuse to enforce its rights or make any compromise or settlement or agreement therefor in respect of any or all of such property; (d) substitute or add, or take any action or omit to take any action which results in the release of, any one or more endorsers or guarantors of all or any part of the Indebtedness, including, without limitation one or more parties to this Guaranty, regardless of any destruction or impairment of any right of contribution or other right of Guarantor; (e) amend, alter or change in any respect whatsoever any term or provision relating to any or all of the Indebtedness, including the rate of interest thereon; (f) apply any sums received from Borrower, any other guarantor, endorser, or co-signer, or from the disposition of any collateral or security, to any indebtedness whatsoever owing from such person or secured by such collateral or security, in such manner and order as Coast determines in its sole discretion, and regardless of whether such indebtedness is part of the Indebtedness, is secured, or is due and payable; (g) apply any sums received from Guarantor or from the disposition of any collateral or security securing the obligations of Guarantor, to any of the Indebtedness in such manner and order as Coast determines in its sole discretion, regardless of whether or not such Indebtedness is secured or is due and payable. Guarantor, to the maximum extent permitted by law, consents and agrees that Coast shall be under no obligation to marshal any assets in favor of Guarantor, or against or in payment of any or all of the Indebtedness. Guarantor further consents and agrees that any and all duties and responsibilities imposed on Coast by operation of law or otherwise with respect to any property securing any or all of the Indebtedness shall be deemed waived to the extent such duties or responsibilities may be waived by consent or agreement of the parties. Without limiting the generality of the foregoing, Coast shall have no obligation to monitor, verify, audit, examine, or obtain or maintain any insurance with respect to, any property securing any or all of the Indebtedness. 4. Account Stated. Coast's books and records showing the account between it and the Borrower shall be admissible in evidence, to the maximum extent permitted by law, in any action or proceeding as prima facie proof of the items therein set forth. Coast's monthly statements rendered to the Borrower shall be binding upon the Guarantor (whether or not the Guarantor receives copies thereof), and shall constitute an account stated between Coast and the Borrower, unless Coast receives a written statement of the Borrower's exceptions within 30 days after the statement was mailed to the Borrower. The Guarantor assumes full responsibility for obtaining copies of such monthly statements from the Borrower, if the Guarantor desires such copies. 5. Exercise of Rights and Remedies; Foreclosure of Trust Deeds. Guarantor, to the maximum extent permitted by law, consents and agrees that, without notice to or by Guarantor and without affecting or impairing in any way the obligations or liability of Guarantor hereunder, Coast may, from time to time, before or after revocation of this Guaranty, exercise any right or remedy it may have with respect to any or all of the Indebtedness or any property securing any or all of the Indebtedness or any guaranty thereof, including without limitation judicial foreclosure, nonjudicial foreclosure, exercise of a power of sale, and taking a deed, assignment or transfer in lieu of foreclosure as to any such property, and Guarantor, to the maximum extent permitted by law, expressly waives any defense based upon the exercise of any such right or remedy, notwithstanding the effect thereof upon any of Guarantor's rights, including without limitation, any destruction of Guarantor's right of subrogation against Borrower and any destruction of Guarantor's right of contribution or other right against any other guarantor of any or all of the Indebtedness or against any other person, whether by operation of Sections 580a, 580d or 726 of the California Code of Civil Procedure, or any comparable provisions of the laws of any other jurisdiction, or any other statutes or rules of law or decisional law now or hereafter in effect, or otherwise ("Comparable Law"). Without limiting the generality of the foregoing, to the maximum extent permitted by law, (a) Guarantor waives all rights and defenses arising out of an election of remedies by Coast, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for any of the Indebtedness, has destroyed the Guarantor's rights of subrogation and reimbursement against the principal by the operation of Section 580d of the Code of Civil Procedure or Comparable Law; (b) Guarantor further waives all rights and defenses arising out of an election of remedies by Coast, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for any of the Indebtedness, has destroyed the Guarantor's rights of subrogation, reimbursement and contribution against any other guarantor of the guaranteed obligation, by the operation of Section 580d of the Code of Civil Procedure or Comparable Law; (c) Guarantor understands that if Coast forecloses any present or future trust deed, which secures any or all of the Indebtedness or which secures any other guaranty of any or all of the Indebtedness, by nonjudicial foreclosure, Guarantor may, as a result, have a complete defense to liability under this Guaranty, based on the legal doctrine of estoppel and Sections 580a, 580d or 726 of the California Code of Civil Procedure or Comparable Law, and Guarantor hereby expressly waives all such defenses. (d) Guarantor understands and agrees that, in the event Coast in its sole discretion forecloses any trust deed now or hereafter securing any or all of the Indebtedness, by nonjudicial foreclosure, Guarantor will remain liable to Coast for any deficiency, even though Guarantor will lose his right of subrogation against the Borrower, and even though Guarantor will be unable to recover from the Borrower the amount of the deficiency for which Guarantor is liable, and even though Guarantor may have retained his right of subrogation against Borrower if Coast had foreclosed said trust deed by judicial foreclosure as opposed to nonjudicial foreclosure, and even though absent the waivers set forth herein Guarantor may have had a complete defense to any liability for any deficiency hereunder; (e) Guarantor understands and agrees that, in the event Coast in its sole discretion forecloses any trust deed now or hereafter securing any other guaranty of any or all of the Indebtedness, by nonjudicial foreclosure, Guarantor will remain liable to Coast for any deficiency, even though Guarantor will lose his right of subrogation or contribution against the other guarantor, and even though Guarantor will be unable to recover from the other guarantor any part of the deficiency for which Guarantor is liable, and even though Guarantor may have retained his right of subrogation or contribution against the other guarantor if Coast had foreclosed said trust deed by judicial foreclosure as opposed to nonjudicial foreclosure, and even though absent the waivers set forth herein Guarantor may have had a complete defense to any liability for any deficiency hereunder. 6. Acceleration. Notwithstanding the terms of all or any part of the Indebtedness, the obligations of the Guarantor hereunder to pay and perform all of the Indebtedness shall, at the option of Coast, immediately become due and payable, without notice, and without regard to the expressed maturity of any of the Indebtedness, in the event: (a) any warranty, representation, statement, report, or certificate made or delivered to Coast by Borrower or Guarantor, or any of their respective officers, partners, employees, or agents, is incorrect, false, untrue, or misleading when given in any material respect, or (b) Borrower or Guarantor shall fail to pay or perform when due all or any part of the Indebtedness; or (c) Guarantor shall fail to pay or perform within 5 days after the same is due any indebtedness or obligation of Guarantor to Coast or to any parent, subsidiary or corporate affiliate of Coast, whether under this Guaranty or any other instrument, document, or agreement heretofore or hereafter entered into; or (d) there occurs in Coast's good faith exercise of reasonable judgment a material impairment of the prospect of payment or performance of any or all of the Indebtedness; or (e) any event shall occur which does result in the acceleration of the maturity of any indebtedness of Borrower or Guarantor to others in excess of $25,000 (regardless of any requirement of notice, opportunity to cure or other condition prior to the exercise of any right of acceleration); or (f) Borrower or Guarantor shall fail promptly to perform or comply with any term or condition of any agreement with any third party which does or could result in a material adverse effect on the business of Borrower or Guarantor unless timely cured or waived in writing by such third party; or (g) there shall be made or exist any levy, assessment, attachment, seizure, lien, or encumbrance for any cause or reason whatsoever upon all or any material part of the property of Borrower or Guarantor (unless discharged by payment, release or bond not more than ten days after such event has occurred); or (h) there shall occur the dissolution, termination of existence, insolvency, or business failure of Borrower or Guarantor, or the appointment of a receiver, trustee or custodian for Borrower or Guarantor or all or any part of the property of either of them, or the assignment for the benefit of creditors by Borrower or Guarantor, or the commencement of any proceeding by or against Borrower or Guarantor under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, now or hereafter in effect which, if commenced by or against Borrower or Guarantor, is not dismissed within thirty (30) days; or (i) Borrower or Guarantor shall be deceased or declared incompetent by any court or a guardian or conservator shall be appointed for either of them or for the property of either of them; or (j) Guarantor or Borrower shall generally not pay their respective debts as they become due or shall enter into any agreement (whether written or oral), or offer to enter into any such agreement, with all or a significant number of its creditors regarding any moratorium or other indulgence with respect to its debts or the participation of such creditors or their representatives in the supervision, management, or control of the business of either of them; or (k) Borrower or Guarantor shall conceal, remove or permit to be concealed or removed any part of its property, with intent to hinder, delay or defraud its creditors, or make or suffer any transfer (unless it is permitted by the Loan Agreement) of any of its property which would be fraudulent under any bankruptcy, fraudulent conveyance or similar law, or shall make any transfer (not permitted by law) of its property to or for the benefit of any creditor at a time when other creditors similarly situated have not been paid; or (l) the board of directors or shareholders of Borrower or Guarantor shall adopt any resolution or plan for its dissolution or the liquidation of all or substantially all of its assets; or (m) Guarantor shall revoke this Guaranty or contest or deny liability under this Guaranty. All of the foregoing are hereinafter referred to as "Events of Default". 7. Right to Attachment Remedy. Guarantor agrees that, notwithstanding the existence of any property securing any or all of the Indebtedness, Coast shall have all of the rights of an unsecured creditor of Guarantor, including without limitation the right to obtain a temporary protective order and writ of attachment against Guarantor with respect to any sums due under this Guaranty. Guarantor further agrees that in the event any property secures the obligations of Guarantor under this Guaranty, to the extent that Coast, in its sole and absolute discretion, determines prior to the disposition of such property that the amount to be realized by Coast therefrom may be less than the indebtedness of the Guarantor under this Guaranty, Coast shall have all the rights of an unsecured creditor against Guarantor, including without limitation the right of Coast, prior to the disposition of said property, to obtain a temporary protective order and writ of attachment against Guarantor. Guarantor, to the maximum extent permitted by law, waives the benefit of Section 483.010(b) of the California Code of Civil Procedure or Comparable Law and of any and all other statutes and rules of law now or hereafter in effect requiring Coast to first resort to or exhaust all such collateral before seeking or obtaining any attachment remedy against Guarantor. Coast shall have no liability to Guarantor as a result thereof, whether or not the actual deficiency realized by Coast is less than the anticipated deficiency on the basis of which Coast obtains a temporary protective order or writ of attachment. 8. Indemnity. Guarantor hereby agrees to indemnify Coast and hold Coast harmless from and against any and all claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, costs and expenses (including without limitation attorneys' fees), of every nature, character and description, which Coast may sustain or incur based upon or arising out of any of the Indebtedness, any actual or alleged failure to collect and pay over any withholding or other tax relating to Borrower or its employees, any relationship or agreement between Coast and Borrower, any actual or alleged failure of Coast to comply with any writ of attachment or other legal process relating to Borrower or any of its property, or any other matter, cause or thing whatsoever occurred, done, omitted or suffered to be done by Coast relating in any way to Borrower or the Indebtedness (except any such amounts sustained or incurred as the result of the gross negligence or willful misconduct of Coast or any of its directors, officers, employees, agents, attorneys, or any other person affiliated with or representing Coast). Notwithstanding any provision in this Guaranty to the contrary, the indemnity agreement set forth in this Section shall survive any termination or revocation of this Guaranty and shall for all purposes continue in full force and effect. 9. Subordination. Any and all debts, liabilities and obligations owing from Borrower to Guarantor including any security for and guaranties of any such obligations, whether now existing or hereafter arising, are hereby subordinated in right of payment to the prior payment in full of all of the Indebtedness. Except as permitted in that certain Subordination Agreement between Guarantor and Coast dated as of the date hereof, and any written amendments there, no payment in respect of any such subordinated obligations shall at any time be made to or accepted by Guarantor if at the time of such payment any Indebtedness is outstanding unless Coast, in its sole discretion, agrees to such payment in writing. The agreement by Coast to a payment on account of subordinated debt shall not constitute an agreement to the payment of any other subordinated debt. If any Event of Default has occurred, all debts, liabilities and obligations owing form Borrower to Guarantor shall be subordinated, Borrower and any assignee, trustee in bankruptcy, receiver, or any other person having custody or control ever any or all of Borrower's property are hereby authorized and directed to pay to Coast the entire unpaid balance of the Indebtedness before making any payments whatsoever to Guarantor, whether as a creditor, shareholder, or otherwise; and insofar as may be necessary for that purpose, Guarantor hereby assigns and transfers to Coast all rights to any and all debts, liabilities and obligations owing from Borrower to Guarantor, including any security for and guaranties of any such obligations, whether now existing or hereafter arising, including without limitation any payments, dividends or distributions out of the business assets of Borrower. Any amounts received by Guarantor in violation of the foregoing provisions shall be received and held as trustee for the benefit of Coast and shall forthwith be paid over to Coast to be applied to the Indebtedness in such order and sequence as Coast shall in its sole discretion determine, without limiting or affecting any other right or remedy which Coast may have hereunder or otherwise and without otherwise affecting the liability of Guarantor hereunder. Guarantor hereby expressly waives any right to set-off or assert any counterclaim against Borrower. 10. Revocation. This is a Continuing Guaranty relating to all of the Indebtedness, including Indebtedness arising under successive transactions which from time to time continue the Indebtedness or renew it after it has been satisfied. Guarantor, to the maximum extent permitted by law, waives all benefits of California Civil Code Section 2815 and Comparable Law, and agrees that the obligations of Guarantor hereunder may not be terminated or revoked in any manner except by giving written notice of revocation to Coast at its address above by registered first-class U.S. mail, postage prepaid, return receipt requested, and only as to new loans made by Coast to Borrower after actual receipt of such written notice by Coast. No termination or revocation of this Guaranty shall be effective until actual receipt or, if properly delivered to Coast in accordance herewith and Coast wrongfully or without just cause refuses to accept delivery, of said written notice of revocation by Coast. Notwithstanding such written notice of revocation or any other act of Guarantor or any other event or circumstance, Guarantor agrees that this Guaranty and all consents, waivers and other provisions hereof shall continue in full force and effect as to any and all Indebtedness which is outstanding on or before the day following actual receipt or, if properly delivered to Coast in accordance herewith and Coast wrongfully or without just cause refuses to accept delivery, of said written notice of revocation by Coast, and all extensions, renewals and modifications of said Indebtedness (including without limitation amendments, extensions, renewals and modifications which are evidenced by new or additional instruments, documents or agreements executed before receipt of revocation), and all attorneys' fees, court costs and collection charges, incurred before or after receipt of revocation, in endeavoring to collect or enforce any of the foregoing against Borrower, Guarantor or any other person liable thereon (whether or not suit be brought) and any other expenses of, for or incidental to collection thereof. 11. Independent Liability. Guarantor hereby agrees that one or more successive or concurrent actions may be brought hereon against Guarantor, in the same action in which Borrower may be sued or in separate actions, as often as deemed advisable by Coast. The liability of Guarantor hereunder is exclusive and independent of any other guaranty of any or all of the Indebtedness whether executed by Guarantor or by any other guarantor (including without limitation any other persons signing this Guaranty). The liability of Guarantor hereunder shall not be affected, revoked, impaired, or reduced by any one or more of the following: (a) the fact that the Indebtedness exceeds the maximum amount of Guarantor's liability, if any, specified herein or elsewhere (and no agreement specifying a maximum amount of Guarantor's liability shall be enforceable unless set forth in a writing signed by Coast or set forth in this Guaranty); or (b) any direction as to the application of payment by Borrower or by any other party; or (c) any other continuing or restrictive guaranty or undertaking or any limitation on the liability of any other guarantor (whether under this Guaranty or under any other agreement); or (d) any payment on or reduction of any such other guaranty or undertaking; or (e) any revocation, amendment, modification or release of any such other guaranty or undertaking; or (f) any dissolution or termination of, or increase, decrease, or change in membership of any Guarantor which is a partnership. Guarantor hereby expressly represents that he was not induced to give this Guaranty by the fact that there are or may be other guarantors either under this Guaranty or otherwise, and Guarantor agrees that any release of any one or more of such other guarantors shall not release Guarantor from his obligations hereunder either in full or to any lesser extent. 12. Financial Condition of Borrower. Guarantor is fully aware of the financial condition of Borrower and is executing and delivering this Guaranty at Borrower's request and based solely upon his own independent investigation of all matters pertinent hereto, and Guarantor is not relying in any manner upon any representation or statement of Coast with respect thereto. Guarantor represents and warrants that he is in a position to obtain, and Guarantor hereby assumes full responsibility for obtaining, any additional information concerning Borrower's financial condition and any other matter pertinent hereto as Guarantor may desire, and Guarantor is not relying upon or expecting Coast to furnish to him any information now or hereafter in Coast's possession concerning the same or any other matter. By executing this Guaranty, Guarantor knowingly accepts the full range of risks encompassed within a contract of continuing guaranty, which risks Guarantor acknowledges include without limitation the possibility that Borrower will incur additional Indebtedness for which Guarantor will be liable hereunder after Borrower's financial condition or ability to pay such Indebtedness has deteriorated and/or after bankruptcy or insolvency proceedings have been commenced by or against Borrower. Guarantor shall have no right to require Coast to obtain or disclose any information with respect to the Indebtedness, the financial condition or character of Borrower, the existence of any collateral or security for any or all of the Indebtedness, the filing by or against Borrower of any bankruptcy or insolvency proceeding, the existence of any other guaranties of all or any part of the Indebtedness, any action or non-action on the part of Coast, Borrower, or any other person, or any other matter, fact, or occurrence. 13. Reports and Financial Statements of Guarantor. Guarantor shall, at its sole cost and expense, at any time and from time to time, prepare or cause to be prepared, and provide to Coast upon Coast's request (i) such financial statements and reports concerning Guarantor for such periods of time as Coast may designate as are customarily prepared by Guarantor or which are required by the Loan Agreement and any other related document or agreement, (ii) any other information concerning Guarantor's business, financial condition or affairs as Coast may in the exercise of its good faith business judgment request, and (iii) copies of any and all foreign, federal, state and local tax returns and reports of or relating to Guarantor as Coast may from time to time request and Coast shall take reasonable steps to keep confidential all tax returns and reports obtained by Coast, but Coast shall have the right to disclose such documents and information contained therein to its auditors, regulatory agencies, and attorneys, and pursuant to any subpoena or other legal process. Guarantor hereby intentionally and knowingly waives any and all rights and privileges it may have not to divulge or deliver said tax returns, reports and other information which are requested by Coast hereunder or in any litigation in which Coast may be involved relating directly or indirectly to Borrower or to Guarantor. Guarantor further agrees immediately to give written notice to Coast of any material adverse change in Guarantor's financial condition and of any condition or event which constitutes an Event of Default under this Guaranty. All reports and information furnished to Coast hereunder shall be complete, accurate and correct in all respects. Whenever requested, Guarantor shall further deliver to Coast a certificate signed by Guarantor (and, if Guarantor is a partnership, by all general partners of Guarantor, in their individual capacities, and, if Guarantor is a corporation, by an officer of Guarantor approved by Coast) warranting and representing that all reports, financial statements and other documents and information delivered or caused to be delivered to Coast under this Guaranty, are complete, correct and thoroughly and accurately present the financial condition of Guarantor, and that there exists on the date of delivery of said certificate to Coast no condition or event which constitutes an Event of Default under this Guaranty. 14. Representations and Warranties. Guarantor hereby represents and warrants that (i) it is in Guarantor's direct interest to assist Borrower in procuring credit, because Borrower is an affiliate of Guarantor, furnishes goods or services to Guarantor, purchases or acquires goods or services from Guarantor, and/or otherwise has a direct or indirect corporate or business relationship with Guarantor, and Guarantor has a financial interest and investment in Borrower, (ii) this Guaranty has been duly and validly authorized, executed and delivered and constitutes the valid and binding obligation of Guarantor, enforceable in accordance with its terms, and (iii) the execution and delivery of this Guaranty does not violate or constitute a default under (with or without the giving of notice, the passage of time, or both) any order, judgment, decree, instrument or agreement to which Guarantor is a party or by which it or its assets are affected or bound. 15. Costs. Whether or not suit be instituted, Guarantor agrees to reimburse Coast on demand for all reasonable attorneys' fees and all other reasonable costs and expenses incurred by Coast in enforcing this Guaranty, or arising out of or relating in any way to this Guaranty, or in enforcing any of the Indebtedness against Borrower, Guarantor, or any other person, or in connection with any property of any kind securing all or any part of the Indebtedness. Without limiting the generality of the foregoing, and in addition thereto, Guarantor shall reimburse Coast on demand for all reasonable attorneys' fees and costs Coast incurs in any way relating to Guarantor, Borrower or the Indebtedness, in order to: obtain legal advice; enforce or seek to enforce any of its rights; commence, intervene in, respond to, or defend any action or proceeding; file, prosecute or defend any claim or cause of action in any action or proceeding (including without limitation any probate claim, bankruptcy claim, third-party claim, secured creditor claim, reclamation complaint, and complaint for relief from any stay under the Bankruptcy Code or otherwise); protect, obtain possession of, sell, lease, dispose of or otherwise enforce any security interest in or lien on any property of any kind securing any or all of the Indebtedness; or represent Coast in any litigation with respect to Borrower's or Guarantor's affairs. In the event either Coast or Guarantor files any lawsuit against the other predicated on a breach of this Guaranty, to the maximum extent permitted by law, the prevailing party in such action shall be entitled to recover its attorneys' fees and costs of suit from the non-prevailing party. 16. Notices. Any notice which a party shall be required or shall desire to give to the other hereunder (except for notice of revocation, which shall be governed by Section 10 of this Guaranty) shall be given by personal delivery or by telecopier or by depositing the same in the United States mail, first class postage pre-paid, addressed to Coast at its address set forth in the heading of this Guaranty and to Guarantor at his address set forth under his signature hereon, and such notices shall be deemed duly given on the date of personal delivery or one day after the date telecopied or 3 business days after the date of mailing as aforesaid. Coast and Guarantor may change their address for purposes of receiving notices hereunder by giving written notice thereof to the other party in accordance herewith. Guarantor shall give Coast immediate written notice of any change in his address. 17. Claims. Guarantor agrees that any claim or cause of action by Guarantor against Coast, or any of Coast's directors, officers, employees, agents, accountants or attorneys, based upon, arising from, or relating to this Guaranty, or any other present or future agreement between Coast and Guarantor or between Coast and Borrower, or any other transaction contemplated hereby or thereby or relating hereto or thereto, or any other matter, cause or thing whatsoever, whether or not relating hereto or thereto, occurred, done, omitted or suffered to be done by Coast, or by Coast's directors, officers, employees, agents, accountants or attorneys, whether sounding in contract or in tort or otherwise, shall be barred unless asserted by Guarantor by the commencement of an action or proceeding in a court of competent jurisdiction within Los Angeles County, California, by the filing of a complaint within one year after the first act, occurrence or omission upon which such claim or cause of action, or any part thereof, is based and service of a summons and complaint on an officer of Coast or any other person authorized to accept service of process on behalf of Coast, within 30 days thereafter. Guarantor agrees that such one year period is a reasonable and sufficient time for Guarantor to investigate and act upon any such claim or cause of action. The one year period provided herein shall not be waived, tolled, or extended except by a specific written agreement of Coast. This provision shall survive any termination of this Guaranty or any other agreement. 18. Construction; Severability. If more than one person has executed this Guaranty or hereafter executes this or a Guaranty of the obligations of Borrower (all or less than all Borrowers), the term "Guarantor" as used herein shall be deemed to refer to all and any one or more such persons and their obligations hereunder shall be joint and several. Without limiting the generality of the foregoing, if more than one person has executed this Guaranty, this Guaranty shall in all respects be interpreted as though each person signing this Guaranty had signed a separate Guaranty, and references herein to "other guarantors" or words of similar effect shall include without limitation other persons signing this Guaranty. As used in this Guaranty, the term "property" is used in its most comprehensive sense and shall mean all property of every kind and nature whatsoever, including without limitation real property, personal property, mixed property, tangible property and intangible property. Words used herein in the masculine gender shall include the neuter and feminine gender, words used herein in the neuter gender shall include the masculine and feminine, words used herein in the singular shall include the plural and words used in the plural shall include the singular, wherever the context so reasonably requires. If any provision of this Guaranty or the application thereof to any party or circumstance is held invalid, void, inoperative or unenforceable, the remainder of this Guaranty and the application of such provision to other parties or circumstances shall not be affected thereby, the provisions of this Guaranty being severable in any such instance. 19. General Provisions. Coast shall have the right to seek recourse against Guarantor to the full extent provided for herein and in any other instrument or agreement evidencing obligations of Guarantor to Coast, and against Borrower to the full extent of the Indebtedness. No election in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Coast's right to proceed in any other form of action or proceeding or against any other party. The failure of Coast to enforce any of the provisions of this Guaranty at any time or for any period of time shall not be construed to be a waiver of any such provision or the right thereafter to enforce the same. All remedies hereunder shall be cumulative and shall be in addition to all rights, powers and remedies given to Coast by law or under any other instrument or agreement. Time is of the essence in the performance by Guarantor of each and every obligation under this Guaranty. If Borrower is a corporation, partnership or other entity, Guarantor hereby agrees that Coast shall have no obligation to inquire into the power or authority of Borrower or any of its officers, directors, partners, or agents acting or purporting to act on its behalf, and any Indebtedness made or created in reliance upon the professed exercise of any such power or authority shall be included in the Indebtedness guaranteed hereby. This Guaranty is the entire and only agreement between Guarantor and Coast with respect to the guaranty of the Indebtedness of Borrower by Guarantor, and all representations, warranties, agreements, or undertakings heretofore or contemporaneously made, which are not set forth herein, are superseded hereby. No course of dealings between the parties, no usage of the trade, and no parol or extrinsic evidence of any nature shall be used or be relevant to supplement or explain or modify any term or provision of this Guaranty. There are no conditions to the full effectiveness of this Guaranty. The terms and provisions hereof may not be waived, altered, modified, or amended except in a writing executed by Guarantor and a duly authorized officer of Coast. All rights, benefits and privileges hereunder shall inure to the benefit of and be enforceable by Coast and its successors and assigns and shall be binding upon Guarantor and his heirs, executors, administrators, personal representatives, successors and assigns. Neither the death of Guarantor nor notice thereof to Coast shall terminate this Guaranty as to his estate, and, notwithstanding the death of Guarantor or notice thereof to Coast, this Guaranty shall continue in full force and effect with respect to all Indebtedness, including without limitation Indebtedness incurred or created after the death of Guarantor and notice thereof to Coast. Section headings are used herein for convenience only. Guarantor acknowledges that the same may not describe completely the subject matter of the applicable Section, and the same shall not be used in any manner to construe, limit, define or interpret any term or provision hereof. 20. One Satisfaction. Notwithstanding any other provision of this Continuing Guaranty to the contrary, nothing herein shall permit Coast to receive more payments than which, in the aggregate, would be required under the Loan Agreement and all related documents and agreements as they may be modified, amended or supplemented from time to time, to indefeasibly satisfy, in full, any and all Obligations of Borrower to Coast. 21. Governing Law; Venue and Jurisdiction. This instrument and all acts and transactions pursuant or relating hereto and all rights and obligations of the parties hereto shall be governed, construed, and interpreted in accordance with the internal laws of the State of California. In order to induce Coast to accept this Guaranty, and as a material part of the consideration therefor, Guarantor (i) agrees that all actions or proceedings relating directly or indirectly hereto shall, at the option of Coast, be litigated in courts located within Los Angeles County, California, (ii) consents to the jurisdiction of any such court and consents to the service of process in any such action or proceeding by personal delivery or any other method permitted by law; and (iii) waives any and all rights Guarantor may have to transfer or change the venue of any such action or proceeding. 22. Mutual Waiver of Right to Jury Trial. COAST AND GUARANTOR HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION, CLAIM, LAWSUIT OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS GUARANTEE OR ANY SUPPLEMENT OR AMENDMENT THERETO; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN COAST AND GUARANTOR UNLESS OTHERWISE EXPRESSLY AGREED TO IN WRITING ; OR (iii) ANY BREACH, CONDUCT, ACTS OR OMISSIONS OF COAST OR GUARANTOR OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSON AFFILIATED WITH OR REPRESENTING COAST OR GUARANTOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. 23. Unless and until the Indebtedness being guaranteed hereby is indefeasibly paid and satisfied in full, Guarantor will not, without the prior express written consent of Coast, pay or declare any dividends or distributions on the ownership interests in Guarantor except for (a) dividends or distributions payable solely in stock form of ownership interests in Guarantor and (b) dividends to Guarantor if, when and to the extent required by Guarantor in order to make regularly-scheduled payments of principal and interest on the 12 3/4% $75,000,000.00 Senior Notes issued by Guarantor, provided such dividends or payments on the 12 3/4% Senior Notes would not result in a Default or Event of Default by Borrower or Guarantor with respect to any of their respective obligations to Coast. 23. Receipt of Copy. Guarantor acknowledges receipt of a copy of this Guaranty. VIALOG CORPORATION By /s/John J. Dion --------------- John J. Dion Title Vice President - Finance Address: 35 New England Business Center Suite 160 Andover, Massachusetts 01810 Attention: John Dion Agreed: COAST BUSINESS CREDIT(R), a division of Southern Pacific Bank By /s/Robert D. Peters ------------------- Robert D. Peters Title Vice President Address: 12121 Wilshire Boulevard Suite 1111 Los Angeles, California 90025 Attention: Edit Kondorosi Sr. Vice President STATE OF Massachusetts ) ) ss. COUNTY OF Essex ) On October 1, 1998, before me, Therese J. LaPrade Commission expires May 28, 2004, Notary Public, personally appeared John Dion, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. /s/Therese J. LaPrade ------------------------------- Therese J. LaPrade (Seal) -----END PRIVACY-ENHANCED MESSAGE-----