Stock Purchase Agreement
Stock Purchase Agreement (the "Agreement"), dated as of March 5, 1996,
among Comdial Corporation, a Delaware corporation ("Buyer"); ▇▇▇▇ ▇▇▇▇▇▇▇
("Branica"); and ▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"). Branica and ▇▇▇▇▇▇ are sometimes
referred to herein collectively as the "Sellers" and individually as a
"Seller."
The Recitals
The Board of Directors of Buyer deems it advisable and in its best
interests and the best interests of its stockholders that Buyer acquire Key
Voice Technologies, Inc. ("KVT"); and Sellers, who own all of the issued and
outstanding capital stock of KVT, deem it in their best interests and the best
interests of KVT that KVT be acquired by Buyer, in order to advance the long-
term business interests of Buyer and KVT. The acquisition by Buyer of KVT
shall be accomplished in accordance with the terms of this Agreement, pursuant
to which Buyer will purchase all of the issued and outstanding shares of the
capital stock of KVT (the "KVT Stock") from the Sellers (the "Acquisition").
The Agreement
Now, Therefore, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth below, the parties agree as
follows:
Article 1
Purchase and Sale of KVT Stock
Section 1.1 Purchase and Sale of KVT Stock. At the Closing, Sellers
agree to sell the KVT Stock to Buyer, and Buyer agrees to purchase the KVT
Stock from Sellers, for the considerations hereinafter set forth in this
Agreement.
Section 1.2 Base Purchase Price. The base purchase price (the "Base
Purchase Price") for the KVT Stock, which shall be paid in the manner set forth
in Section 1.4, shall be the sum of (i) $16,250,000.00, plus (ii) the net book
value of Certain Accounts of KVT on the Closing Date. The term "Certain
Accounts" as used herein shall mean (i) the sum of the cash and accounts
receivable of KVT net of KVT's reserve for doubtful accounts, less (ii) the
accounts payable and accrued expenses of KVT, all determined on a basis
consistent with the manner in which the KVT Financial Statements were prepared,
and determined by reference solely to those accounts of KVT that are included
in Exhibit A to this Agreement. At the Closing, Buyer will pay Sellers the
amount (the "Estimated Base Purchase Price") of $1,528,193.57, being the amount
of the Certain Accounts shown on KVT's balance sheet as at February 29, 1996,
and reflected on Exhibit A, subject to adjustments to reflect known variances
as may be mutually agreeable to the parties. The Estimated Base Purchase Price
shall be paid in the manner hereinafter set forth in Section 1.4.
Section 1.3 Adjustment to the Base Estimated Purchase Price. As promptly
as practical, but in no event more than 30 days after the Closing, Sellers
shall deliver to Buyer a balance sheet for KVT (the "Closing Date Balance
Sheet"), prepared on a basis consistent with the basis on which the KVT
Financial Statements have been prepared. As promptly as practical, but in no
event more than 90 days after the Closing, Buyers shall cause Deloitte &
Touche, llp (the "Buyer's Auditors") to prepare and deliver to the parties a
draft of a schedule of the Current Accounts of KVT as of the commencement of
business on the Closing Date (the "Preliminary Closing Date Schedule"), which
shall reflect the value of the Certain Accounts as of such date, together with
a draft of their report stating without qualification that the Preliminary
Closing Date Schedule has been prepared in conformity with the basis on which
the Seller Financial Statements and the Seller Interim Financial Statements
have been prepared.
(1) Prior to the Closing, Sellers and Sellers' auditors may review
the manner in which Buyer's Auditors plan to prepare the Preliminary Closing
Date Schedule, including, but not limited to, the nature and extent of the
procedures to be applied in preparing the schedule.
(2) During the five (5) business days following the receipt by
Sellers of the draft of the Preliminary Closing Date Schedule and the report of
Buyer's Auditors with respect thereto, Sellers or Sellers' auditors shall be
permitted to review the working papers of Buyer's Auditors relating to the
draft of the Preliminary Closing Date Schedule, and shall have such access to
Buyer's Auditor's personnel as may be reasonably necessary to permit them to
review in detail the manner in which the draft was prepared. Buyer and Buyer's
Auditors shall cooperate with Seller and Sellers' auditors in facilitating such
review. Sellers or Sellers' auditors shall give any comments or objections
they have with respect to the draft of the Preliminary Closing Date Schedule to
Buyer and Buyer's Auditors. Such comments or objections, insofar as they
relate to the valuation of any assets or liabilities, shall be resolved by
Buyer, and a final schedule reflecting the values of Certain Accounts of KVT as
of the commencement of business on the Closing Date (the "Final Closing Date
Schedule") delivered to the Sellers pursuant to the provisions of the next
paragraph shall reflect such resolution.
(3) Within three (3) business days after the expiration of such five
(5) business day period, Buyer's Auditors shall deliver to Sellers the Final
Closing Date Schedule accompanied by a definitive report of Buyer's Auditors
with respect thereto. Within three (3) business days after receipt of such
schedule and report, Sellers shall deliver a letter to Buyer stating whether
they concur with such report and their exceptions thereto, if any, together
with the reasons therefor. If such objections cannot be resolved between Buyer
and Sellers within five (5) business days after delivery of such letter by
Buyer's Auditors, the question or questions in dispute shall then be submitted,
as soon as practicable, to a mutually acceptable firm of independent public
accountants of recognized standing, the decision of which as to such question
or questions in dispute shall be final and binding upon Sellers and Buyer.
(4) If the Final Closing Date Schedule, after the resolution of all
disputes, indicates that the amount of the Certain Accounts of KVT included in
the Estimated Base Purchase Price was less than the amount of the Certain
Accounts of KVT reflected in the Final Closing Date Schedule, Buyer shall
promptly pay to Seller, in immediately available funds, but without interest,
the amount of the difference. If the Final Closing Date Schedule, after the
resolution of all disputes, indicates that the amount of the Certain Accounts
of KVT included in the Estimated Base Purchase Price exceeded the amount of the
Certain Accounts of KVT reflected in the Final Closing Date Schedule, Sellers
shall promptly pay to Buyer, in immediately available funds, but without
interest, the amount of such excess.
(5) The fees of Buyer's Auditors incurred in connection with the
preparation of the Preliminary and Final Closing Date Schedules shall be borne
by Buyer, and the fees of Sellers' auditors incurred in connection with their
review of the work done in connection with the preparation of such schedules
shall be borne by Sellers. The fees of any independent accounting firm
appointed pursuant to Section 1.3(3) shall be borne equally by Sellers and
Buyer.
Section 1.4 Payment of Base Purchase Price. The Base Purchase Price
shall be paid to Sellers as set forth below.
(1) At the Closing, the Estimated Base Purchase Price shall be paid
to Sellers as follows:
(i) $7,000,000.00 shall be paid by delivery to Sellers of
Buyer's installment promissory note in that face amount (the
"Secured/Subordinated Promissory Note"), substantially in the form of the
promissory note attached to this Agreement as Exhibit B, and secured by a
security agreement (the "Security Agreement") substantially in the form of
the security agreement attached to this Agreement as Exhibit C; and
(ii) $2,250,000.00 shall be paid by delivery to Sellers of
243,097 shares of the common stock, par value $0.01 per share, of Buyer
(the "Buyer Common Stock"), which shares of Buyer Common Stock will be
fully paid and non-assessable and will be subject to, and entitled to the
benefits of, the provisions set forth in Section 5.8 and Article 6 of
this Agreement; and
(iii) $7,000,000.00 (the "Cash Payment") shall be paid to
Sellers in immediately available funds by wire transfer to an account at
a banking or other financial institution designated in writing by Sellers;
and
(iv) The balance of the Estimated Base Purchase Price (the
"Cash Balance") shall be paid to Sellers in immediately available funds by
wire transfer to an account at a banking or other financial institution
designated in writing by Sellers.
(2) Within two (2) business days after the Final Closing Date Cash
Working Capital Schedule is agreed between Sellers and Buyer, or becomes
binding on Sellers and Buyer in accordance with the provisions of Section 1.3,
Buyer shall pay to Sellers or Sellers shall pay to Buyer, as the case may be,
in immediately available funds but without interest, the amount of any
adjustment determined to be due in accordance with the provisions of said
section.
Section 1.5 Contingent Purchase Price.
(1) In addition to the Base Purchase Price set forth in Sections 1.2
and 1.3 and subject to the conditions set forth herein, Buyer shall pay to the
Sellers 216,086 additional shares of the Buyer Common Stock (the "Contingent
Shares"), which shares will be fully paid and non-assessable and will be
subject to, and entitled to the benefits of, the provisions set forth in
Sections 5.8 and Article 6 of this Agreement. One third (1/3) of the
Contingent Shares shall be issuable to Sellers on each of the dates set forth
below, provided that for the most recently completed fiscal year KVT meets the
applicable annual sales target ("Sales Target") set forth below for sales of
its enabling device for voice processing software ("Key Units"):
Fiscal Contingent Shares Issuance Key Unit Sales Target
Year Ended Annual Cumulative Date Annual Cumulative
------------- -------- ---------- ----------- -------- ----------
Dec 31, 1996 72,029 72,029 Mar 31, 1997 5,150 5,150
Dec 31, 1997 72,029 144,058 Mar 31, 1998 6,540 11,690
Dec 31, 1998 72,030 216,088 Mar 31, 1999 8,300 19,990
(2) In the event the Sales Target is not achieved for any one or
more of the fiscal years ended December 31, 1996, 1997 or 1998, the following
provisions shall apply, as applicable:
(i) If (A) the Sales Target is met for the fiscal year ended
December 31, 1996, the number of Contingent Shares issuable on March 31, 1997
shall be 72,029, or (B) the Sales Target is not met for the fiscal year ended
December 31, 1996, the number of Contingent Shares issuable on March 31, 1997
shall be the number of shares determined by multiplying 72,029 shares by the
percentage of the Sales Target actually achieved, and ignoring any fractional
share that might result. For example, if KVT sells 3,090 Key Unites in the
fiscal year ended December 31, 1996 (i.e., 60% of the Sales Target of 5,150 Key
Units), then Sellers would receive 43,217 Contingent Shares (i.e., 60% of the
72,029 Contingent Shares).
(ii) If (A) the Sales Target is achieved for both of the fiscal
years ended December 31, 1996 and 1997, the number of Contingent Shares
issuable on March 31, 1998 shall be 72,029, or (B) the Sales Target is not
achieved for either of the fiscal years ended December 31, 1996 or 1997, the
number of Contingent Shares issuable on March 31, 1998 shall be the number of
shares (but not less than zero) determined by multiplying 144,058 shares by the
percentage of the cumulative Sales Target actually achieved for both fiscal
years (but not in excess of 100%), ignoring any fractional share that might
result, and subtracting the number of Contingent Shares previously issued to
the Sellers for the preceding fiscal year. In no event will Sellers be
obligated to return any Contingent Shares previously issued to them for an
earlier year. For example, if KVT sold 8,183 Key Unites in the fiscal years
ended December 31, 1996 and 1997 (i.e., 70% of the cumulative Sales Target of
11,690 Key Units), then Sellers would receive 100,840 Contingent Shares (i.e.,
70% of the 144,058 Contingent Shares), less the number of Contingent Shares
issued to Sellers on March 31, 1997.
(iii) If the Sales Target is not achieved for any one or more
of the fiscal years ended December 31, 1996, 1997 or 1998, the number of
Contingent Shares issuable on March 31, 1999 shall be the number of shares
(but not less than zero) determined by multiplying 216,088 shares by the
percentage of the cumulative Sales Target actually achieved for all such
fiscal years (but not in excess of 100%), ignoring any fractional share that
might result, and subtracting the number of Contingent Shares previously
issued to the Sellers for the preceding two fiscal years. In no event will
Sellers be obligated to return any Contingent Shares previously issued to
them for an earlier year. For example, if KVT sold 15,992 Key Units in the
fiscal years ended December 31, 1996, 1997 and 1998 (i.e., 80% of the
cumulative Sales Target of 19,990 Key Units), then Sellers would receive
172,870 Contingent Shares (i.e., 80% of the 216,088 Contingent Shares), less
the aggregate number of Contingent Shares issued to Sellers on March 31,
1997 and 1998.
(3) During the period ending December 31, 1998, Buyer will not
intentionally take any actions intended to inhibit or delay sales of Key
Units for the purpose of reducing the number of Contingent Shares issuable
to Sellers pursuant to the provisions of this Section 1.5. During the same
period, all Key Units sold, licensed, leased or otherwise rented for value
by any third party which derives rights in or to such Key Units directly or
indirectly from Buyer, including without limitation sales under licesne or
sales as successor or transferree of Buyer, shall be treated as sales of Key
Units for purposes of this Section 1.5.
(4) Notwithstanding the foregoing, Buyer shall have the right
at any time and from time to time, in lieu of issuing Contingent Shares
hereunder, to pay Sellers an amount in cash equal to the number of Contingent
Shares otherwise issuable to Sellers multiplied by the average closing price
of Buyer Common Stock as reported by the Nasdaq National Market for each day
on which it trades during the ten (10) trading days preceding the date on
which such cash payment in lieu of Contingent Shares is made.
(5) The obligation of Buyer to pay the Contingent Shares to
Sellers pursant to this Seciton 1.5 is absolute, and is not dependent upon
the employment or continued employment by Buyer of the Sellers as provided
for in this Agreement.
Section 1.6 Anti-Dilution Provisions. If, after the date of this
Agreement and prior to the Closing, Buyer declares or pays any stock
dividend to the holders of its common stock as of a record date prior to the
Closing, or otherwise splits, combines, exchanges, reclassifies or otherwise
adjusts its shares of common stock, then then shares of Buyer Common Stock
and the Contingent Shares payable to Sellers hereunder shall be appropriately
adjusted to give effect to such stock dividend, stock split, combination,
exchange, reclassification or adjustment.
Article 2
Related Agreements
Section 2.1 Related Agreements. In connection with the Acquisition
contemplated by this Agreement, Sellers and Buyer will enter into the following
listed agreements at the Closing:
(i) an employment agreement in substantially the form
attached hereto as Exhibit D, pursuant to which Branica will be an
employee of Buyer for a period of time; and
(ii) an employment agreement in substantially the form
attached hereto as Exhibit E, pursuant to which ▇▇▇▇▇▇ will be an employee
of Buyer for a period of time.
(iii) a tax agreement in substantially the form attached
hereto as Exhibit F, pursuant to which Sellers and Buyer will agree (A) to
make certain tax elections with respect to the Acquisition, (B) the
preparing and filing of certain tax returns for KVT, and (C) the alloca-
tion of liability for certain taxes attributable to the income or loss of
KVT.
The foregoing agreements are hereinafter referred to collectively as the
"Related Agreements."
Article 3
Representations and Warranties of Sellers
Sellers represent and warrant to Buyer that the statements contained in
this Article III are true and correct, except as set forth in the disclosure
schedule delivered by Sellers to Buyer on or before the date of this Agreement
(the "KVT Disclosure Schedule"). The KVT Disclosure Schedule shall be arranged
in items corresponding to the numbered and lettered sections contained in this
Article III, and the disclosure in any item shall qualify only the
corresponding section in this Article III and any other section in which a
cross reference to such item is made.
Section 3.1 Organization and Qualification of KVT. KVT is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power to own,
lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the failure to be so qualified would have a material adverse effect on the
business, assets (including intangible assets), financial condition or results
of operations ("Material Adverse Effect") of KVT. Sellers have heretofore
delivered to Buyer complete and correct copies of the Articles of Incorporation
and Bylaws of KVT, as currently in effect. KVT does not own, directly or
indirectly, any equity or similar interest in, or any interest convertible into
or exchangeable or exercisable for, any corporation, partnership, limited
liability company, joint venture, or other organization.
Section 3.2 KVT Capital Structure.
(1) The authorized capital stock of KVT consists of 1,000 shares of
common stock (the "KVT Common Stock"). As of the date of this Agreement, (i)
200 shares of KVT Common Stock are issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and owned of record and
beneficially as set forth in Item 3.2(a) of the KVT Disclosure Schedule, and
(ii) no shares of KVT Common Stock were held in the treasury of KVT or by
subsidiaries of KVT. There are no obligations, contingent or otherwise, of KVT
to repurchase, redeem or otherwise acquire any shares of KVT Common Stock or
make any investment (in the form of a loan, capital contribution or otherwise)
in any corporation, partnership, limited liability company, joint venture, or
other organization.
(2) With the exception of the KVT Common Stock, there are no equity
securities of any class of KVT, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. There are no options, warrants, equity securities, calls, rights,
commitments or agreements of any character to which KVT is a party or by which
it is bound obligating KVT to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of KVT or obligating KVT
to grant, extend, accelerate the vesting of or enter into any such option,
warrant, equity security, call, right, commitment or agreement. To the best
knowledge of Sellers, there are no voting trusts, proxies or other agreements
or understandings with respect to the voting of the shares of capital stock of
KVT, except for that certain stockholder agreement among KVT, Branica and
▇▇▇▇▇▇ dated February 28, 1995, a complete and correct copy of which has
heretofore been delivered to Buyer, as currently in effect.
Section 3.3 Consents and Approvals. There is no requirement applicable to
Sellers or to KVT to make any filing with, or to obtain any permit,
authorization, consent or approval of any public body as a condition to the
lawful consummation of the transactions contemplated by this Agreement. There
is no requirement that any party to any contract, lease, license or permit for
the use of Intellectual Property (as defined in Section 3.13) or loan agreement
to which Sellers or KVT is a party or by which either of them is bound, consent
to the execution of this Agreement by Sellers or the consummation of the
transactions contemplated by this Agreement.
Section 3.4 Non-Contravention. The execution and delivery by Seller of
this Agreement does not, and the consummation of the transactions contemplated
by this Agreement will not, (i) violate or result in a breach of any provision
of the Articles of Incorporation or Bylaws of the KVT, (ii) result in a default
(or give rise to any right of termination, cancellation or acceleration) under
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, agreement, lease or other instrument or obligation to which Sellers or
KVT is a party or by which Sellers, KVT or the KVT Stock may be bound, or (iii)
to the best knowledge of Sellers, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Sellers, KVT or the KVT Stock.
Section 3.5 Financial Statements. Sellers have previously furnished Buyer
with true and complete copies of unaudited and unreviewed financial statements
of KVT for the years ended December 31, 1994 and 1995, and have also furnished
Buyer with true and complete copies of the unaudited and unreviewed interim
financial statements of KVT for the two-month period ending February 29, 1996.
Except as may be indicated therein or in the notes thereto, such financial
statements (collectively, the "KVT Financial Statements") present fairly the
financial position of KVT as of such dates and the results of its operations
and changes in financial position for such periods and have been prepared in
accordance with reasonable accounting principles applied on a consistent basis
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein and
to the absence of certain footnote disclosures. As used in this Agreement, the
term "KVT Balance Sheet" refers to the unaudited interim and unreviewed balance
sheet of KVT as of February 29, 1996 included in the KVT Financial Statements.
Section 3.6 No Undisclosed Liabilities. KVT does not have any
liabilities, either accrued or contingent, and whether due or to become due,
which individually or in the aggregate, would be reasonably likely to have a
Material Adverse Effect on KVT other than (i) liabilities reflected in the KVT
Balance Sheet, (ii) liabilities specifically described in this Agreement or
Item 3.6 of the KVT Disclosure Schedule, and (iii) normal or recurring
liabilities incurred since September 30, 1995 in the ordinary course of
business consistent with past practices.
Section 3.7 Absence of Certain Changes or Events. Since February 29,
1996, KVT has conducted its business only in the ordinary course and in a
manner consistent with past practice and, since such date, there has not been
(i) any material adverse change in the financial condition, results of
operations or business of KVT having a Material Adverse Effect on KVT; (ii)
any damage, destruction or loss (whether or not covered by insurance) with
respect to KVT having a Material Adverse Effect on KVT; (iii) any material
change by KVT in its accounting methods, principles or practices to which Buyer
has not previously consented in writing; (iv) any revaluation by KVT of any of
its assets, including, without limitation, writing down the value of
capitalized software or inventory or writing off notes or accounts receivable,
unless Buyer has previously consented in writing; or (v) except as disclosed in
Item 3.7 of the KVT Disclosure Schedule, any other action or event that would
have required the consent of Buyer pursuant to Section 5.1 of this Agreement
had such action or event occurred after the date of this Agreement and that
would be reasonably likely to have a Material Adverse Effect on KVT.
Section 3.8 Taxes.
(1) For the purposes of this Agreement, a "Tax" or, collectively,
"Taxes," means any and all federal, state, local and foreign taxes, assessments
and other governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise, withholding,
payroll, recapture, employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts and any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
entity.
(2) To the best knowledge of Sellers, KVT has accurately prepared
and timely filed all federal, state, local and foreign returns, estimates,
information statements and reports required to be filed at or before the
Closing ("Returns") relating to any and all Taxes concerning or attributable to
KVT or any of its subsidiaries or to their operations, and such Returns are
true and correct in all material respects and have been completed in all
material respects in accordance with applicable law.
(3) As of the Closing KVT will have (i) paid all Taxes it is
required to pay prior to the Effective Time, and (ii) withheld with respect to
its employees all federal and state income taxes, FICA, FUTA and other Taxes
required to be withheld, except where any failure to make such payment or
withholding would not be reasonably likely to have a Material Adverse Effect on
KVT.
(4) To the best knowledge of Sellers, there is no Tax deficiency
outstanding, proposed or assessed against KVT that is not reflected as a
liability on the KVT Balance Sheet. KVT has not executed any waiver of any
statute of limitations on, or any agreement extending the period for, the
assessment or collection of any Tax. KVT has not executed any power of
attorney authorizing any person to represent it in connection with any Tax
matter.
(5) KVT does not have any material liabilities for unpaid federal,
state, local and foreign Taxes that have not been accrued for or reserved on
KVT Balance Sheet, whether asserted or unassented, contingent or otherwise.
(6) KVT is and has been an "S" corporation within the meaning of
Section 1361(a) of the Internal Revenue Code of 1986, as amended (the "1986
Code") for each taxable year it has been in existence, and no circumstance
exists that would cause its status as an "S" corporation to terminate prior to
the Closing.
Section 3.9 Properties. Item 3.9 of the KVT Disclosure Schedule contains
a true and complete list of all real property owned by KVT and real property
leased by KVT pursuant to leases providing for the occupancy, in each case, of
not less than 1,000 square feet ("Material Lease(s)"), and the name of the
lessor, the date of the Material Lease and each amendment to the Material Lease
and the aggregate annual rental or other fee payable under any such Material
Lease. All such Material Leases are in good standing, valid and effective in
accordance with their respective terms, and KVT is not in default under any of
such leases, except where the lack of such good standing, validity and
effectiveness or the existence of such default would not be reasonably likely
to have a Material Adverse Effect on KVT. Except as disclosed in Item 3.9 of
the KVT Disclosure Schedule, KVT has, and at the Effective Time will have, good
and marketable title to all of its properties, real and personal, free and
clear of all mortgages, liens, pledges, security interests, restrictions or
encumbrances of any nature whatsoever.
Section 3.10 Accounts Receivable. A correct and complete list of the
accounts receivable for KVT as of February 29, 1996, has previously been
furnished by Sellers to the Buyer. Such accounts receivable and those acquired
by KVT subsequent to the date of such list furnished to the Buyer and prior to
the Closing (and not collected prior to the Closing) have and will have arisen
in the ordinary course of business and to the best knowledge of Sellers, will
have been collected or be collectible in amounts not less than the aggregate
amount thereof (net of reserves established in accordance with prior practice)
carried on the books of KVT. Each of such accounts receivable, and those
acquired subsequent to the date of such list furnished to the Buyer, is not and
will not be the subject of a pledge or assignment, is and will be free of any
and all liens, encumbrances and charges whatsoever, and has not been and will
not be placed for collection with any attorney, collection agency or similar
individual or firm, without the prior written consent of Buyer.
Section 3.11 Maintenance of Tangible Personal Property. The tangible
personal property which belongs to KVT has been maintained in good repair in
accordance with the usual practices in the United States of businesses which
are similar to the business conducted by KVT, in good condition, ordinary wear
and tear excepted, and is usable in the ordinary course of the business of KVT
as it is presently being conducted.
Section 3.12 Insurance. Item 3.12 of the KVT Disclosure Schedule sets
forth a list of insurance policies maintained by KVT. KVT is not in default in
any respect under any provision of any such policy nor has it failed to give
notice or present any claim thereunder in a timely manner so as to bar recovery
of any valid claim.
Section 3.13 Intellectual Property.
(1) KVT owns, or is licensed or otherwise possesses legally
enforceable rights to use, all patents, trademarks, trade names, service marks,
copyrights and mask works, any applications for and registrations of such
patents, trademarks, trade names, service marks, copyrights and mask works, and
all processes, formulae, methods, schematics, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material that are necessary to conduct the business of KVT as
currently conducted, or planned to be conducted (the "KVT Intellectual Property
Rights"). Item 3.13 of the KVT Disclosure Schedule lists (i) all patents and
patent applications and all trademarks, registered copyrights, trade names and
service marks, which KVT considers to be material to its business and included
in the KVT Intellectual Property Rights, including the jurisdictions in which
each such KVT Intellectual Property Right has been issued or registered or in
which any such application for such issuance and registration has been filed,
(ii) all licenses, sublicenses, distribution agreements and other agreements as
to which KVT is a party and pursuant to which any person is authorized to use
any KVT Intellectual Property Rights or has the right to manufacture,
reproduce, market or exploit any KVT product or any adaptation, translation or
derivative work based on an KVT product or any portion thereof, (iii) all
licenses, sublicenses and other agreements as to which KVT is a party and
pursuant to which KVT is authorized to use any third party patents, trademarks
or copyrights, including software ("KVT Third Party Intellectual Property
Rights") which are incorporated in, are, or form a part of any KVT product, and
(iv) all joint development agreements as to which KVT is a party.
(2) KVT is not, nor will it be as a result of the consummation of
the transactions contemplated by this Agreement, in breach of any license,
sublicense or other agreement relating to the KVT Intellectual Property Rights
or KVT Third Party Intellectual Property Rights.
(3) All patents, registered trademarks, service marks and copyrights
listed in Item 3.13 of the KVT Disclosure Schedule are valid and subsisting.
Except as set forth on Item 3.13 of the KVT Disclosure Schedule, KVT (i) has
not been sued in any suit, action or proceeding which involves a claim of
infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party;
and (ii) has no knowledge that the manufacturing, marketing, licensing or sale
of its products infringes any patent, trademark, service ▇▇▇▇, copyright, trade
secret or other proprietary right of any third party.
Section 3.14 Agreements, Contracts and Commitments. Item 3.14 of the KVT
Disclosure Schedule sets forth a complete and correct list of each existing
contract, agreement or commitment of KVT, other than Material Leases:
(1) upon which any substantial part of its business is dependent or
which, if breached, would be reasonably likely to have a Material Adverse
Effect on KVT;
(2) which provides for aggregate future payments of more than
$5,000, except for purchase orders or sale orders arising in the ordinary and
usual course of business, in which case they are listed only if any party
thereto is obligated to make payments pursuant thereto aggregating more than
$25,000;
(3) which extends for more than one hundred eighty (180) days from
the date hereof and is not cancelable by either party on 30 days' notice or
less;
(4) which provides for the sale, after the date hereof and other
than in the ordinary course of business, of any of its assets;
(5) which relates to the employment, compensation, retirement or
termination of the services of any officer or employee or former officer or
employee, including bonus, incentive, pension, profit-sharing, hospitalization,
insurance, deferred compensation, retirement, stock option or stock purchase
plans or similar plans providing employee benefits for or with respect to any
officer or employee;
(6) which contains covenants pursuant to which any person or entity
has agreed not to compete with the business of any other person or entity or
not to disclose to others information concerning such other person or entity;
(7) which relates to the sale or other disposition of goods or
services and which (A) involve terms or quantities exceeding normal commitments
or in the ordinary course of business or (B) contain most favored pricing or
other special pricing terms or other provisions which would prohibit or limit
the ability of Buyer to effect price increases;
(8) pursuant to which title to any assets of KVT may be encumbered;
or
(9) which relates to any partnership, joint venture or other
arrangement involving a sharing of profits from any enterprise. Each of the
foregoing is referred to in this Agreement as a "Material Contract." Except as
set forth in Item 3.14 of the KVT Disclosure Schedule, each Material Contract
is in full force and effect and there has not occurred, with respect to any
such Material Contract, any default or event of default, which, with or without
due notice or with the lapse of time, or both, would constitute a default or
event of default on the part of KVT, or, to the best knowledge of Sellers, any
other party thereto, except where such default or event of default would not
have a Material Adverse Effect on KVT. Complete copies of each Material
Contract have been delivered to Buyer.
Section 3.15 Litigation. Except as set forth in Item 3.15 of the KVT
Disclosure Schedule, there are no actions, suits, claims, investigations or
proceedings (legal, administrative or arbitrative) pending or, to the best
knowledge of Sellers, threatened, against KVT or any of its Affiliates (as de-
fined herein), whether at law or in equity and whether civil or criminal in
nature, before any federal, state, municipal or other court, arbitrator,
governmental department, commission, agency or instrumentality, domestic or
foreign, nor are there any judgments, decrees or orders of any such court,
arbitrator, governmental department, commission, agency or instrumentality
outstanding against KVT or any of its Affiliates which have, or if adversely
determined, would be reasonably likely to have a Material Adverse Effect on
KVT, or which seek specifically to prevent, restrict or delay consummation of
the transactions contemplated by this Agreement or fulfillment of any of the
conditions of this Agreement. As used herein, the term "Affiliate" means (i)
any officer or director of KVT, (ii) any person or entity beneficially owning
10% or more of any class of equity securities of KVT, and (iii) any other
person or entity that directly, or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
KVT.
Section 3.16 Environmental Matters.
(1) As of the date hereof, no underground storage tanks are present
under any property that KVT has at any time owned, operated, occupied or
leased. As of the date hereof, except as set forth in Item 3.16 of the KVT
Disclosure Schedule, no material amount of any substance that has been
designated by any Governmental Entity or by applicable federal, state or local
law to be radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to such laws (a "Hazardous Material"), are present as a
result of the actions of KVT or any of its subsidiaries, or, to the best of
KVT's knowledge, any actions of any third party or otherwise, in, on or under
any property, including the land and the improvements, ground water and surface
water, that KVT has at any time owned, operated, occupied or leased, where the
presence of such Hazardous Material is reasonably likely to have a Material
Adverse Effect on KVT.
(2) At no time has KVT transported, stored, used, manufactured,
disposed of, released or exposed its employees or others to Hazardous Materials
in violation of any law in effect on or before the Closing Date, nor has KVT or
any of its subsidiaries disposed of, transported, sold, or manufactured any
product containing a Hazardous Material (collectively, "Hazardous Materials
Activities") in violation of any rule, regulation, treaty or statute
promulgated by any Governmental Entity to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity which has had or is
reasonably likely to have a Material Adverse Effect on KVT.
(3) KVT currently holds all environmental approvals, permits,
licenses, clearances and consents (the "Environmental Permits") necessary for
the conduct of its Hazardous Material Activities and other businesses of KVT as
such activities and businesses are currently being conducted, the absence of
which would be reasonably likely to have a Material Adverse Effect on KVT.
(4) No action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending or, to the best knowledge of
Sellers, threatened concerning any Environmental Permit or any Hazardous
Materials Activity of KVT or any of its subsidiaries. There are no facts or
circumstances which could involve KVT in any environmental litigation or impose
upon KVT any environmental liability which would be reasonably likely to have a
Material Adverse Effect on KVT.
Section 3.17 Employee Benefit Plans.
(1) KVT has set forth on Item 3.17 of the KVT Disclosure Schedule
all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus,
stock option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar employee benefit plans, and all
unexpired severance agreements, written or otherwise, for the benefit of, or
relating to, any current or former employee of KVT or any trade or business
(whether or not incorporated) which is a member or which is under common
control with KVT within the meaning of Section 414 of the Code (an "ERISA
Affiliate") (together, the "KVT Employee Plans").
(2) With respect to each KVT Employee Plan and to the best knowledge
of Sellers, Sellers have made available to Buyer a true and correct copy of (i)
the most recent annual report (Form 5500) filed with the Internal Revenue
Service ("IRS"), (ii) such KVT Employee Plan, (iii) each trust agreement and
group annuity contract, if any, relating to such KVT Employee Plan, and (iv)
the most recent actuarial report or valuation relating to a KVT Employee Plan
subject to Title IV of ERISA.
(3) With respect to the KVT Employee Plans, individually and in the
aggregate, no event has occurred, and to the best knowledge of Sellers, there
exists no condition or set of circumstances in connection with which KVT could
be subject to any liability that is reasonably likely to have a Material
Adverse Effect on KVT under ERISA, the Code or any other applicable law.
(4) With respect to the KVT Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with generally accepted accounting principles, on the financial
statements of KVT, which obligations are reasonably expected to have a Material
Adverse Effect on KVT.
(5) Except as set forth in Item 3.17 of the KVT Disclosure Schedule,
KVT is not a party to any oral or written (i) union or collective bargaining
agreement, (ii) agreement with any officer or other key employee of KVT, the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving KVT of the nature contemplated
by this Agreement, (iii) agreement with any officer of KVT providing any term
of employment or compensation guarantee extending for a period longer than one
year from the date hereof or for the payment of compensation in excess of
$30,000 per annum, or (iv) agreement or plan, including any stock option plan,
stock appreciation right plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement.
Section 3.18 Compliance with Laws. To the best knowledge of Sellers, KVT
has complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state or local statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for failures to comply or violations which
would not individually or in the aggregate have a Material Adverse Effect on
KVT. KVT has all federal, state and local governmental licenses, permits,
approvals and authorizations (collectively, "Permits") that are material to the
conduct of its business, and such Permits are in full force and effect and will
remain in full force and effect after the Effective Time. Item 3.18 of the KVT
Disclosure Schedule contains and true and complete list of all such Permits.
Section 3.19 Interested Party Transactions. Except as listed in Item
3.19 of the KVT Disclosure Schedule, no officer, director or other Affiliate of
KVT (i) competes with or is involved in or has a direct or indirect interest in
any business entity which competes with the business conducted by KVT, (ii) has
any agreement with KVT other than an employment agreement listed on Item
3.14(e) of the KVT Disclosure Schedule, or (iii) has any interest, direct or
indirect, in any property, real or personal, tangible or intangible, including,
without limitation, KVT Intellectual Property, used in or pertaining to the
business of KVT.
Section 3.20 Full Disclosure. None of the information supplied or to be
supplied by Sellers at the date such information is supplied, and none of the
representations and warranties of Sellers which are made in this Agreement (a
representation and warranty being deemed to include the information contained
in any schedule hereto or furnished in connection herewith), contains an
untrue statement of a material fact or, taken as a whole, omits to state a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
Article 4
Representations and Warranties of Buyer
Buyer represents and warrants to KVT that the statements contained in this
Article IV are true and correct, except as set forth in the disclosure schedule
delivered by Buyer to KVT on or before the date of this Agreement (the "Buyer
Disclosure Schedule"). The Buyer Disclosure Schedule shall be arranged in
items corresponding to the numbered and lettered sections contained in this
Article IV and the disclosure in any item shall qualify only the corresponding
section in this Article IV and any other section in which a cross reference to
such item is made.
Section 4.1 Organization of the Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power to own,
lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the failure to be so qualified would have a Material Adverse Effect on Buyer
and its consolidated subsidiaries, taken as a whole.
Section 4.2 Buyer Capital Structure.
(1) The authorized capital stock of Buyer consists of 30,000,000
shares of Buyer Common Stock and 2,000,000 shares Preferred Stock, par value
$10.00 per share, issuable in one or more series at such time or times, and for
such consideration or considerations as the board of directors of Buyer may
determine ("Buyer Preferred Stock"). As of the date of this Agreement,
(i) 8,136,618 shares of Buyer Common Stock are issued and outstanding, all of
which are validly issued, fully paid and nonassessable, and (ii) no shares of
Buyer Preferred Stock are issued and outstanding. There are no obligations,
contingent or otherwise, of Buyer to repurchase, redeem or otherwise acquire
any shares of Buyer Common Stock or make any investment (in the form of a loan,
capital contribution or otherwise) in any corporation, partnership, limited
liability company, joint venture, or other organization.
(2) Except as set forth in this Section 4.2, there are no equity
securities of any class of Buyer, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except as set forth in this Section 4.2, and except with respect
to stock options issued pursuant to Buyer's stock incentive plans, descriptions
of which are set forth in the SEC Filings (as defined in Section 4.5 below),
there are no options, warrants, equity securities, calls, rights, commitments
or agreements of any character to which Buyer is a party or by which it is
bound obligating Buyer to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of Buyer or obligating
Buyer to grant, extend, accelerate the vesting of or enter into any such
option, warrant, equity security, call, right, commitment or agreement.
Section 4.3 Authority; No Conflict; Required Filings and Consents.
(1) Buyer has all requisite corporate power and authority to enter
into this Agreement and to consummate the Acquisition contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation
of the Acquisition contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of Buyer. This Agreement has been
duly executed and delivered by Buyer, and constitutes the valid and binding
obligation of Buyer, enforceable in accordance with its terms except as such
enforceability may be limited by (i) bankruptcy laws and other similar laws
affecting creditors' rights generally and (ii) general principles of equity,
regardless of whether asserted in a proceeding in equity or at law.
(2) Except as disclosed in Item 4.3 of the Buyer Disclosure Schedule,
the execution and delivery of this Agreement by Buyer does not, and the
consummation of the Acquisition contemplated by this Agreement will not,
(i) conflict with, or result in any violation or breach of any provision of the
Articles of Incorporation or Bylaws of Buyer, (ii) result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of any material benefit) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which Buyer or any of
its consolidated subsidiaries is a party or by which any of them or any of
their properties or assets may be bound, or (iii) conflict or violate any
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Buyer or any of its properties or
assets, except in the case of (ii) and (iii) for any such conflicts,
violations, defaults, terminations, cancellations or accelerations which would
not be reasonably likely to have a Material Adverse Effect on Buyer and its
consolidated subsidiaries, taken as a whole.
Section 4.4 Validity of Shares to be Issued. The shares of Buyer Common
Stock and the Contingent Shares to be issued to the Sellers in connection with
the Acquisition have or will have been duly authorized and, upon delivery
thereof pursuant to the provisions of this Agreement, will be validly issued,
fully paid and non-assessable and not subject to any preemptive rights.
Section 4.5 Reports; Current Information. Buyer has previously made
available to KVT (i) a true and complete copy of each document filed by it with
the Securities Exchange Commission pursuant to Section 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934 since January 1, 1993 (the "SEC
Filings"), and (ii) each communication sent by Buyer to its stockholders
generally since that date, and will continue to make such filings and
communications available to Sellers until the Closing. At the time of filing,
mailing, or delivery thereof, none of such documents or information contained
or will contain an untrue statement of a material fact or omitted or will omit
to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Item 4.5 of the Buyer Disclosure Schedule sets forth a list of all
agreements and instruments filed as exhibits to the SEC Filings, which are all
of the agreements and instruments required to be filed as exhibits thereto.
Buyer will, upon request of Sellers, furnish to Sellers copies of any of such
agreements and instruments.
Section 4.6 Financial Statements. Except as may be indicated therein or
in the notes thereto, Buyer's financial statements included in the SEC Filings
present fairly the consolidated financial position of Buyer and its
consolidated subsidiaries, taken as a whole, as of the respective dates of such
financial statements and the results of their consolidated operations and
consolidated changes in financial position for the respective periods covered
by such financial statements and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis subject,
in the case of the unaudited interim financial statements, to normal year-end
and audit adjustments and any other adjustments described therein and to the
absence of certain footnote disclosures.
Section 4.7 Absence of Certain Changes or Events. Since December 31,
1994, except as disclosed in the SEC Filings, Buyer has conducted its business
only in the ordinary course and in a manner consistent with past practice and,
since such date, except as disclosed in the SEC Filings, there has not been (i)
any change in financial condition, results of operations or business of Buyer
having a Material Adverse Effect on Buyer and its consolidated subsidiaries,
taken as a whole; (ii) any damage, destruction or loss (whether or not covered
by insurance) with respect to Buyer and its consolidated subsidiaries having a
Material Adverse Effect on Buyer and its consolidated subsidiaries, taken as a
whole; (iii) any material change by Buyer in its accounting methods, principles
or practices which has not previously been disclosed in writing to Sellers; or
(iv) any material revaluation by Buyer or its consolidated subsidiaries of any
of their assets, including, without limitation, writing down the value of
capitalized software or inventory or writing off notes or accounts receivable,
which has not previously been disclosed in writing to Sellers.
Section 4.8 Full Disclosure. None of the information supplied or to be
supplied by Buyer at the date such information is supplied, and none of the
representations and warranties of Buyer which are made in this Agreement (a
representation and warranty being deemed to include the information contained
in any schedule hereto or furnished in connection herewith), contains an untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
Article 5
Additional Agreements
Section 5.1Directors and Officers. Immediately after the Closing, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ shall
be the directors of KVT, each to hold office in accordance with the Certificate
of Incorporation and Bylaws of KVT, and the officers of KVT immediately prior
to the Closing shall be the officers of KVT after the Closing, in each case
until their respective successors are duly elected or appointed.
Section 5.2 Organizational Matters. Following the Closing, Buyer may
cause KVT to become incorporated under the laws of the State of Delaware and
have a Certificate of Incorporation substantially in the form of certificate of
incorporation attached to this Agreement as Exhibit G; and cause the Bylaws of
KVT to be amended to be substantially as the form of bylaws attached to this
Agreement as Exhibit H.
Section 5.3 Business In Ordinary Course; Restrictions. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing, Sellers will cause KVT to carry
on its business in the usual, regular and ordinary course in substantially the
same manner as previously conducted, to pay its debts and taxes when due,
subject to good faith disputes over such debts or taxes, to pay or perform its
other obligations when due, and, to the extent consistent with such business,
to use all reasonable efforts consistent with past practices and policies to
(i) peserve intact its present business organization, (ii) keep available the
services of its present officers and key employees and (iii) preserve its
relationships with customers, suppliers, distributors, licensors, licensees,
and others having business dealings with it. Sellers shall promptly notify
Buyer of any event or occurrence not in the ordinary course of business of KVT
where such event or occurrence would result in a breach of any covenant of
Sellers set forth in this Agreement or cause any representation or warranty
Sellers set forth in this Agreement to be untrue as of the date of, or giving
effect to, such event or occurrence. Except as expressly contemplated by this
Agreement, Sellers shall not permit KVT to take any actions, without the prior
written consent of Buyer, which would:
(1) accelerate, amend or change the period of exercisability
of options or restricted stock granted under any employee stock plan of KVT or
authorize cash payments in exchange for any options granted under any of such
plans except as required by the terms of such plans or any related agreements
in effect as of the date of this Agreement;
(2) transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the KVT Intellectual Property Rights
other than in the ordinary course of business consistent with past practices;
(3) declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or purchase or otherwise
acquire, directly or indirectly, any shares of its capital stock;
(4) issue, deliver or sell or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or securities
convertible into shares of its capital stock, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities;
(5)acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership or other business organization or division, or otherwise acquire or
agree to acquire any assets other than acquisitions involving aggregate
consideration of not more than $20,000;
(6) sell, lease, license or otherwise dispose of any of its
properties or assets, except for transactions entered into in the ordinary
course of business;
(7) (A) increase or agree to increase the compensation payable
or to become payable to its officers or employees, (B) grant any additional
severance or termination pay to, or enter into any employment or severance
agreements with, officers, (C) grant any severance or termination pay to, or
enter into any employment or severance agreement, with any employee, (D) enter
into any collective bargaining agreement, (E) establish, adopt, enter into or
amend in any material respect any bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
(8) revalue any of its assets, including writing down the value
of inventory or writing off notes or accounts receivable;
(9) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities or guarantee any debt securities of others, other
than indebtedness incurred under outstanding lines of credit consistent with
past practice;
(10) amend or propose to amend its Certificate of Incorporation
or Bylaws, except as contemplated by this Agreement;
(11) incur or commit to incur any individual capital
expenditure for the purchase of property or equipment having a useful life of
more than one (1) year in excess of $20,000, or aggregate capital expenditures
fur such items in excess of $50,000;
(12) acquire or agree to acquire, directly or indirectly, any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any corporation, partnership, limited liability company,
joint venture, or other organization; or
(13) take, or agree in writing or otherwise to take, any of the
actions described in Sections (i) through (xii) above, or any action which is
reasonably likely to make any of KVT's representations or warranties contained
in this Agreement untrue or incorrect in any material respect on the date made
(to the extent so limited) or as of the Closing.
Section 5.4 Agreements Regarding KVT Employees. Following the Closing,
the officers and other employees of KVT will be entitled to receive or
participate in Buyer employee benefits and benefit plans, including pension
plans, health and welfare plans, vacation and severance arrangements, and stock
incentive plans to the same extent as other officers and employees of Buyer and
its consolidated subsidiaries.
Section 5.5 Access to Information.
(1) Upon reasonable notice, Sellers will, and will cause KVT to,
afford to the officers, employees, accountants, counsel and other
representatives of Buyer who have a need to know in connection with the
transaction contemplated by this Agreement, access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records and, during such period, to furnish
promptly to Buyer all other information concerning its business, properties and
personnel as Buyer may reasonably request.
(2) Buyer agrees that all confidential information furnished by
Sellers or KVT to Buyer, will be held and treated by Buyer and its Affiliates
in strict confidence and will be used by Buyer solely for the purposes and in
connection with the transactions contemplated by this Agreement. Any
confidential information furnished to Buyer in written or other tangible form
will be returned to Sellers or KVT promptly upon request, including all copies,
summaries, analyses and extracts thereof, in the event this Agreement is
terminated and the transactions contemplated hereby abandoned prior to Closing.
Nothing herein shall be deemed to restrict Buyer's use or disclosure of any
information which (i) is or becomes generally available to the public other
than as a result of a breach of Buyer's obligations under this Agreement, (ii)
is rightfully received by Buyer from a third party without the breach of any
confidentiality obligation to KVT, or (iii) was available to Buyer on a
nonconfidential basis prior to its disclosure to Buyer by KVT.
(3) No information or knowledge obtained in any investigation
pursuant to this Section 6.4 shall affect or be deemed to modify any
representation or warranty contained in this Agreement or the conditions to the
obligations of the parties to consummate the transactions contemplated by this
Agreement.
Section 5.6 Third Party Consents. Sellers shall use all reasonable
efforts to obtain, and to cause KVT to obtain, all necessary consents, waivers
and approvals under any of KVT's Material Contracts and Material Leases as may
be necessary or advisable to consummate the Acquisition and transactions
contemplated by this Agreement.
Section 5.7 Cooperation With Buyer. From the date hereof until the
Closing, Sellers will cause the management of KVT to confer with Buyer on a
regular and frequent basis to report operational matters of materiality and the
general status of ongoing operations, and promptly to provide Buyer or its
counsel with copies of all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby.
Section 5.8 Private Placement. Sellers understand and acknowledge that
the shares of Buyer Common Stock and the Contingent Shares (collectively, the
"Shares") will not be registered under the Securities Act of 1933, as amended
(the "1933 Act") or under any applicable state laws on the ground that the
offering and sale of the Shares is exempt from registration pursuant to Section
4(2) of the 1933 Act and Rule 505 of Regulation D thereunder and comparable
exemptions from registration or qualification under any applicable state laws.
Accordingly, the Shares will be issued to Sellers in reliance upon an exemption
from the registration requirements of the 1933 Act and applicable state laws,
and the Shares may not be sold unless they are registered under such securities
laws or are sold pursuant to an applicable exemption from registration,
including Rule 144 of the Rules and Regulations of the Securities and
Exchange Commission.
(1) As a condition of its delivery of the certificates for the Shares
to the holder thereof (the "Holders"), the Buyer may require the Sellers
(including the transferee of the Shares in whose name the Shares are to be
registered) to deliver to Buyer, in writing, representations regarding the
Holders' sophistication, investment intent, acquisition for their own account
and such other matters as are reasonable and customary for purchasers of
unregistered securities in an unregistered private offering, and Buyer may
place conspicuously upon each certificate representing the Shares a legend
substantially in the following form the terms of which are agreed to by the
Holders (including such transferees):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR TRANSFERRED
IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
FOR THE HOLDERS SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
(2) Neither of the Sellers will take any action which would adversely
affect the availability with respect to the Shares of the exemptions from
registration under the 1933 Act under Section 4(2) and Regulation D or under
any
applicable state laws.
Section 5.9 No Solicitation. Pending the consummation of the transactions
contemplated by this Agreement and until this Agreement is terminated pursuant
to Article 10, 10.1, Seller will not, and will not permit the management of KVT
to, directly or indirectly, (i) solicit, initiate, encourage the submission of,
or accept any offer or proposal or submit any offer or proposal to any person
or entity, other than Buyer and Buyer's Affiliates, that constitutes, or could
reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, sale of substantial assets, sale of shares
of capital stock (including without limitation by way of a tender offer) or
similar transactions involving KVT, other than the transactions contemplated by
this Agreement (any of the foregoing inquiries or proposals being referred to
in this Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions concerning, or provide any non-public information to any person or
entity relating to, any Acquisition Proposal, or (iii) agree to, approve or
recommend any Acquisition Proposal. KVT shall notify Buyer no later than 24
hours after receipt by KVT (or its advisors) of any Acquisition Proposal or any
request for nonpublic information in connection with an Acquisition Proposal or
for access to the properties, books or records of KVT by any person or entity
that informs KVT that it is considering making, or has made, an Acquisition
Proposal. Such notice shall be made orally and in writing and shall indicate
in reasonable detail the identity of the offeror and the terms and conditions
of such proposal, inquiry or contact.
Section 5.10 Fees and Expenses. All fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, whether or not the transactions
contemplated by this Agreement are consummated. Notwithstanding the foregoing,
KVT may pay the expenses of Sellers, provided such expenses are paid prior to
the Closing and are reflected in the account balances reported on the Closing
Date Balance Sheet.
Section 5.11 Public Disclosure. Buyer and Sellers shall consult with each
other before issuing any press release or otherwise making any public statement
with respect to this Agreement or the transactions contemplated by this
Agreement, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or by
the rules of the National Association of Securities Dealers, Inc.
Section 5.12 Subsequent Events. If any event shall occur prior to the
Closing which, had it occurred prior to the execution of this Agreement, should
have been disclosed by a party to this Agreement, in a representation and
warranty or otherwise, then upon the happening of such event, such party shall
promptly disclose the happening of such event to the other party hereto.
Section 5.13 Brokers or Finders. Except for ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, Inc.,
which has been engaged by Buyer and whose fees will be paid by Buyer, each of
Buyer and Sellers represents, as to themselves and their respective Affiliates,
that no agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement, and each of Buyer and KVT agrees to indemnify
and hold the other harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such party or its Affiliate.
Section 5.14 Further Assurances. Subject to the terms and conditions of
this Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including cooperating fully with the other party. In case at any time after the
Closing any further action is necessary or desirable to carry out the purposes
of this Agreement, each party to this Agreement shall take all such necessary
action.
Article 6
Sellers' Registration Rights
Section 6.1 Piggyback Registration Rights. If Buyer at any time proposes
to register any of its securities under the Securities Act of 1933, as amended
(the "Securities Act"), in connection with the public offering of such
securities, solely for cash, whether or not for sale for its own account, on a
form which would permit registration of shares of Buyer Common Stock issued to
Sellers pursuant to Sections 1.4, 1.5 and 1.6 of this Agreement (together with
any other shares of Buyer Common Stock as to which Buyer has granted piggy-back
or demand registration rights, the "Registrable Shares") for sale to the public
under the Securities Act, it will each such time give written notice to each of
the Sellers of its intention to do so, describing such securities and
specifying the form and manner of the intended distribution thereof and the
other relevant facts involved in such proposed registration, and upon the
written request of any such Seller delivered to Buyer within five (5) business
after receipt of any such notice (which request specifies the number of
Registrable Shares intended to be disposed of by such Seller and the intended
method of disposition thereof), Buyer will use its best efforts as a part of
its filing to effect the registration under the Securities Act of all
Registrable Shares which Buyer has been so requested to register, to the extent
requisite to permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Shares so to be registered, provided
that:
(1) if (i) the registration so proposed by Buyer involves an
underwritten offering of the securities so being registered, whether or not for
sale for the account of Buyer, and (ii) the managing underwriter of such
underwritten offering shall advise Buyer in writing that, in its reasonable
opinion, the distribution of all or a specified portion of such Registrable
Shares concurrently with the securities being distributed by such underwriters
will adversely affect the distribution of such securities by such underwriters,
then Buyer will promptly furnish each such holder of Registrable Shares with a
copy of such opinion and may require, by written notice to each such holder
accompanying such opinion, that the distribution of all or a specified portion
of such Registrable Shares as indicated in such opinion be deferred (such
portion to be allocated between Sellers and all other persons (other than
Buyer) having the right and proposing to include Registrable Shares in the
registration in proportion to the respective numbers of Registrable Shares
requested to be registered by such holders) until the completion of the
distribution of such securities by such underwriters, but in no event for a
period of more than one hundred eighty (180) days after the effective date of
such registration, provided that such registration remains effective during
such period of deferral and for sixty (60) days thereafter; and
(2) Buyer shall not be obligated to effect any registration of
Registrable Shares under this Section 6.1, (i) incidental to the registration
of any of its securities primarily in connection with mergers, acquisitions,
exchange offers, dividend reinvestment plans or stock option or other employee
benefit plans, (ii) incidental to the registration of any debt securities or
other securities not constituting capital stock, (iii) as to which the holder
thereof would be free immediately to sell such Registrable Shares under Rule
144 or other similar Commission rule exempting such Registrable Shares from
registration, under circumstances in which the purchaser thereof would
thereafter be free to sell, without further restrictions, on the Nasdaq Stock
Market or another recognized exchange, or (iv) after December 31, 2004.
Section 6.2 Demand Registration Rights.
(1) At any time after January 1, 1999, upon receiving written notice
from either Seller requesting that Buyer effect the registration under the
Securities Act of all or part of the Registrable Shares held by such Seller and
specifying the intended method or methods of disposition thereof, Buyer will
use its best efforts to effect the registration, under the Securities Act, of
the Registrable Shares that Buyer has been so requested to register by such
Seller, to the extent requisite to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable Shares so to be
registered.
(2) Notwithstanding the foregoing:
(i) Buyer shall not be obligated to effect a registration
pursuant to this Section 6.2 during the period starting with a date sixty
(60) days prior to Buyer's estimated date of filing of, and ending on a
date six (6) months following the effective date of, a registration
statement pertaining to an underwritten public offering of securities
solely for the account of Buyer, provided that Buyer is actively employing
in good faith all reasonable efforts to cause such registration statement
to become effective and that Buyer's estimate of the date of filing such
registration statement is made in good faith;
(ii) if Buyer shall furnish to such Seller a certificate
signed by the Chief Financial Officer of Buyer stating that in the good
faith judgment of Buyer it would be seriously detrimental to Buyer for a
registration statement to be filed in the near future, then Buyer's
obligation to use its best efforts to file a registration statement shall
be deferred for a period not to exceed six (6) months;
(iii) the demand registration right provided for herein shall
be exercisable only during the first calendar quarter of 1999, or, if not
then exercised, then during the first calendar quarter of each year
thereafter;
(iv) no Seller shall have the right to demand the registration
of any Registrable Shares during the one hundred eighty day period
following any date on which such Seller shall have declined an opportunity
to exercise piggy-back registration rights pursuant to Section 6.1 hereof;
and
(v) Buyer shall not be obligated to effect any registration of
Registrable Shares under this Section 6.2, (i) as to which the holder
thereof would be free immediately to sell such Registrable Shares under
Rule 144 or other similar Commission rule exempting such Registrable
Shares from registration, under circumstances in which the purchaser
thereof would thereafter be free to sell, without further restrictions, on
the Nasdaq Stock Market on another recognized exchange, or (ii) after
December 31, 2004.
Section 6.3 Registration Procedures.
(1) If and whenever Buyer is required to use its best efforts to
effect the registration of any Registrable Shares under the Securities Act as
provided in Sections 6.1 or 6.2 hereof, Buyer will as expeditiously as
possible:
(i) prepare and (in the case of a registration pursuant to
Section 6.2 hereof, within ninety (90) days after the end of the period
within which the request for registration may be delivered to Buyer) file
with the Securities and Exchange Commission (the "Commission") a
registration statement with respect to such Registrable Shares on any form
for which Buyer then qualifies and which form shall be available for the
sale of the Registrable Shares in accordance with the intended method of
distribution thereof, and use its best efforts to cause such registration
statement to become effective;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Shares and other
securities covered by such registration statement until such time as all
of such Registrable Shares have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth
in such registration statement, but in no event for a period of more than
ninety (90) days after such registration statement becomes effective;
(iii) furnish to each Seller of such Registrable Shares such
number of copies of such registration statement, each such amendment and
supplement thereto (in each case including all exhibits, except that Buyer
shall not be obligated to furnish any such seller with more than two
copies of such exhibits other than incorporated documents), the prospectus
included in such registration statement (including each preliminary
prospectus and any summary prospectus) in conformity with the requirements
of the Securities Act, such documents incorporated by reference in such
registration statement or prospectus, and such other documents as such
Seller may reasonably request in order to facilitate the disposition of
his Registrable Shares covered by such registration statement;
(iv) use its best efforts to register or qualify such
Registrable Shares under such securities or blue sky laws of such
jurisdictions as each Seller shall reasonably request (not to exceed an
aggregate cost to Buyer of $5,000.00) maintain such registrations and
qualifications in effect for the period specified in clause (ii) above,
and do any and all other acts and things which may be necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of his Registrable Shares covered by such registration
statement; provided, however, that Buyer shall not for any such purpose be
required register such Registrable Shares in a jurisdiction that would
result in Buyer becoming subject to franchise, income or other significant
taxation in such jurisdiction in an amount in excess of $10,000.00, if it
is not then already subject to such taxation in such taxation; and
(v) immediately notify each Seller of Registrable Shares
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and at the
request of such Seller prepare and furnish to such Seller a reasonable
number of copies of a supplement to or an amendment of such prospectus as
may be necessary so that, as thereafter delivered to the purchasers of
such Registrable Shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
(2) Buyer may require each Seller of Registrable Shares as to which
any registration is being effected to furnish Buyer such information regarding
such Seller and the distribution of such securities as Buyer may from time to
time reasonably request in writing and which shall be required by law or by the
Commission in connection therewith.
(3) If Buyer at any time proposes to register any of its securities
under the Securities Act (other than pursuant to a request for registration
under Section 6.2 hereof), whether or not for sale for its own account, and
such securities are to be distributed by or through one or more underwriters,
Buyer will make reasonable efforts, if requested by any Seller who requests
registration of Registrable Shares in connection therewith pursuant to Section
6.1 hereof, to arrange for such underwriters to include such Registrable Shares
among those securities to be distributed by or through such underwriters,
provided that, for purposes of this Section 6.3(3), reasonable efforts shall
not require Buyer to reduce the amount or sale price of such securities
proposed to be distributed by or through such underwriters nor to include such
Registrable Shares among those securities to be distributed by or through such
underwriters if the managing underwriter of such underwritten offering shall
advise Buyer in writing that, in its opinion, the inclusion of such Registrable
Shares in the underwritten offering would materially and adversely affect the
distribution of such securities by such underwriters. The Seller or Sellers on
whose behalf Registrable Shares are to be distributed by such underwriters
shall be parties to any such underwriting agreement.
(4) In connection with the preparation and filing of each
registration statement registering Registrable Shares under the Securities Act,
Buyer will give any Seller on whose behalf such Registrable Shares are to be so
registered and their counsel and accountants, a reasonable opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of Buyer with its
officers and the independent public accountants who have certified its
financial statement as shall be necessary, in the opinion of such Sellers or
their respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act.
(5) Buyer shall promptly advise each Seller of Registrable Shares
covered by each registration statement relating to such Registrable Shares as
to each of the following: (i) the time at which such registration statement or
any amendments thereto shall have become effective, the time at which any
amendment of or supplement to any prospectus is filed with the Commission, and
the time at which the offering and sale of such Registrable Shares may commence
pursuant to the registration statement; (ii) any request or suggestion by the
Commission for any amendment to such registration statement or any prospectus
or for additional information and the nature and substance thereof; and (iii)
the issuance by the Commission or any other federal or state governmental
authority of any order or similar process suspending the effectiveness of such
registration statement or the suspension of the qualification of such
Registrable Shares for sale in any jurisdiction, or of the initiation or
threatening of any proceedings for that purpose, and Buyer shall use its best
efforts to prevent the issuance of any such order or process or, if such an
order or process shall be issued, to obtain the withdrawal thereof as soon as
possible.
(6) Buyer shall pay all expenses related to the preparation, filing
and printing of the registration statement and a reasonable number of
prospectuses and any amendments and supplements thereto, including, without
limitation, all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements
of counsel in connection with blue sky qualifications), NASD fees, rating
agency fees, printing expenses, messenger and delivery expenses, internal
expenses (including, without limitation, all salaries and expenses of Buyer's
officers and employees performing legal or accounting duties), listing fees and
expenses, fees and disbursement of counsel for Buyer and its independent
certified public accountants (including the expenses of any special audit or
comfort letters required by or incident to such performance), and securities
acts liability insurance (if Buyer elects to obtain such insurance), but not
including any underwriting discounts or sales commissions attributable to the
sale of any of the Sellers' Registrable Shares in connection with an
underwritten offering. Sellers requesting to register Registrable Shares
hereunder shall pay all other expenses directly related to the offer and sale
of the Registrable Shares by them, including, without limitation, the expenses
of their counsel, and underwriting discounts and sales commissions.
Section 6.4 Indemnification and Contribution.
(1) In the event of any registration of any Registrable Shares under
the Securities Act pursuant to Section 6.1 or 6.2 hereof, Buyer will, and
hereby does, indemnify and hold harmless the Seller selling such Registrable
Shares and each other person who participates, on behalf of such Seller, as an
underwriter, broker or dealer in the offering or sale of such securities
against any losses, claims, damages or liabilities, joint or several, to which
such Seller or participating person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
or incorporated by reference in any registration statement for such securities
as originally filed under the Securities Act, any preliminary prospectus or
final prospectus included therein or filed with the Commission, or any related
summary prospectus, or any amendment or supplement thereto, or any document
incorporated by reference therein, or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and will reimburse such Seller and
each such participating person, as incurred, for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding,
excluding amounts paid in settlement of any litigation, commenced or
threatened, if such settlement is consummated without the written consent of
Buyer, provided that (i) Buyer shall not be liable to any such indemnified
party in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with written
information specifically stating that it is for use in the preparation thereof
furnished to Buyer by such indemnified party, and (ii) such indemnity with
respect to any preliminary prospectus shall not inure to the benefit of any
underwriter (or any person controlling such underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the Registrable
Shares which are the subject thereof is such person did not receive a copy of
the final prospectus at or prior to the confirmation of the sale of such
Registrable Shares to such person in any case where such delivery or omission
of a material fact contained in such preliminary prospectus was corrected in
the final prospectus. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any such
partner, advisory committee member, director, officer, participating person or
controlling person, shall survive the transfer of such securities by such
seller, and shall be in addition to any liability that Buyer may otherwise
have.
(2) Buyer may require, as a condition to including any Registrable
Shares in any registration statement filed pursuant to Section 6.3(3) hereof,
that Buyer shall have received an undertaking satisfactory to it from the
prospective Seller of such securities, and each other person who participates
on behalf of such Seller as an underwriter, to indemnify and hold harmless (in
the same manner and to the same extent as set forth in Section 6.4(1) hereof,
but excluding amounts paid in settlement of any litigation, commenced or
threatened, if such settlement is consummated without the written consent of
such indemnifying party) Buyer, each director of Buyer, each officer of Buyer
who shall sign such registration statement and each other person, if any, who
controls Buyer within the meaning of the Securities Act, with respect to any
statement in or omission from such registration statement, any preliminary
prospectus or final prospectus included therein or filed with the Commission,
or any amendment or supplement thereto, if such statement or omission was made
in reliance upon and in conformity with written information furnished to Buyer
by such indemnifying party specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of Buyer or any such director, officer or controlling person, shall
survive the transfer of such securities by or through such indemnifying party,
shall be in addition to any liability that such indemnifying party may
otherwise have, and shall not exceed the amount of the net proceeds received by
such seller from the sale of its Registrable Shares hereunder.
(3) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim of the type referred
to in Section 6.4(1) or 6.4(2) such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action, provided that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Section 9, except
to the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party; and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof; provided, however, that if the defendants
in any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that there may
be legal defenses available to it and/or other indemnified parties which are
difference from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
defend such action on behalf of such indemnified party or parties, and the
indemnifying party shall be liable for the expenses of one such separate
counsel reasonably satisfactory to it. The indemnifying party will not consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(4) If the indemnification provided for in Section 6.4(1) or 6.4(2)
hereof is unavailable to a party that would have been an indemnified party
under such section in respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to therein, then the
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and such indemnified party on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof). The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or such indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 6.4(4) shall include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim (which shall be limited as provided in
Section 6.4(3) hereof if the indemnifying party has assumed the defense of any
such action in accordance with the provisions thereof). No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(5) Without by implication limiting the scope of the other provisions
of this Section 6.4, it is agreed that indemnification or, if appropriate,
contribution, similar to that specified in the preceding subsections of this
Section 6.4 (with appropriate modifications) shall be given by Buyer, each
Seller of Registrable Shares and each underwriter with respect to losses,
claims, damages or liabilities under, in addition to the Securities Act, the
Securities Exchange Act of 1934 or other federal or state statutory law or
regulation, or common law or other applicable principles.
Section 6.5 Lockup Agreement. In consideration for Buyer's agreement to
its obligations under Sections 6.1 through 6.4 hereof, each Seller agrees in
connection with any registration of Buyer's securities that, upon the request
of Buyer or the underwriters managing such underwritten offering, such Seller
will not sell, make any short sale of, loan, grant any option for the purchase
of, or otherwise dispose of any Registrable Shares (other than those included
in the registration) without the prior written consent of Buyer or such
underwriters, as the case may be, for a period of time (not to exceed one
hundred eighty (180) days) from the effective date of such registration as
Buyer or the underwriters may specify.
Article 7
Conditions to Closing
Section 7.1 Conditions to Each Party's Obligation to Closing. The
respective obligations of each party to this Agreement to close the
transactions contemplated by this Agreement shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(1) Approvals. All authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations of waiting periods imposed by,
any Governmental Entity the failure of which to obtain would be reasonably
likely to have a Material Adverse Effect on Buyer or KVT shall have been filed,
occurred or been obtained.
(2) Consents. All consents required to be obtained from third
parties (which consents are set forth in this Agreement or in the KVT
Disclosure Schedule or the Buyer Disclosure Schedule) the failure of which to
obtain would be reasonably likely to have a Material Adverse Effect on Buyer or
KVT shall have been obtained.
(3) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the transactions contemplated by
this Agreement or limiting or restricting Buyer's conduct or operation of the
business of Buyer after the Closing shall have been issued, nor shall any
proceeding brought by a domestic administrative agency or commission or other
domestic Governmental Entity, seeking any of the foregoing be pending; nor
shall there be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the transactions
contemplated by this Agreement which makes the consummation of such
transactions illegal.
Section 7.2 Additional Conditions to Obligations of Buyer. The
obligations of Buyer to effect the transactions contemplated by this Agreement
are subject to the satisfaction of each of the following conditions, any of
which may be waived in writing exclusively by Buyer:
(1) Representations and Warranties. The representations and
warranties of Sellers set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date, except (i) for
changes contemplated by this Agreement, and (ii) where the failure to be true
and correct would not be reasonably likely to have a Material Adverse Effect on
KVT or a material adverse effect upon the consummation of the transactions
contemplated hereby; and Buyer shall have received a certificate signed by the
Sellers to such effect.
(2) Performance of Obligations of Sellers. Sellers shall have, and
shall have caused KVT to have, performed in all material respects all
obligations required to be performed by them, or either of them, under this
Agreement at or prior to the Closing Date; and Buyer shall have received a
certificate signed by the Sellers to such effect.
(3) Opinion of Sellers' Counsel. Buyer shall have received a written
opinion from Burgess, Harrell, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, p.a., counsel to Sellers, dated
as of the Closing Date, substantially in the form attached hereto as Exhibit I.
(4) Completion of Due Diligence. Buyer shall have completed and
shall have been satisfied in its sole discretion with the results of its
examination and review of the properties, books, contracts, commitments and
records of KVT, including all matters disclosed in the KVT Disclosure Schedule.
(5) Board Approval. The Board of Directors of Buyer shall have
approved this Agreement and the transactions contemplated hereby, and shall
have authorized the officers of Buyer to consummate the transactions
contemplated by this Agreement in accordance with the terms hereof.
(6) Employment of Key Personnel. Branica shall have executed and
delivered to Buyer an employment agreement substantially in the form attached
hereto as Exhibit D, and ▇▇▇▇▇▇ shall have executed and delivered to Buyer an
employment agreement substantially in the form attached hereto as Exhibit E.
(7) Tax Agreement. Sellers shall have executed and delivered to
Buyer a tax agreement substantially in the form attached hereto as Exhibit F.
Section 7.3 Additional Conditions to Obligations of Sellers. The
obligation of Sellers to effect the transactions contemplated by this Agreement
is subject to the satisfaction of each of the following conditions, any of
which may be waived, in writing, exclusively by Sellers:
(1) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to the
extent such representations speak as of an earlier date) as of the Closing Date
as though made on and as of the Closing Date, except for (i) changes
contemplated by this Agreement and (ii) where the failure to be true and
correct would not be reasonably likely to have a Material Adverse Effect on
Buyer or a material adverse effect upon the consummation of the transactions
contemplated hereby; and Sellers shall have received a certificate signed on
behalf of Buyer by the chief executive officer and the chief financial officer
of Buyer to such effect.
(2) Performance of Obligations of Buyer. Buyer shall have performed
in all material respects all obligations required to be performed by them under
this Agreement at or prior to the Closing Date; and Sellers shall have received
a certificate signed on behalf of Buyer by the Chief Executive Officer and the
Chief Financial Officer of Buyer to such effect.
(3) Opinion of Buyer's Counsel. Seller shall have received a written
opinion from ▇▇▇▇▇▇▇, ▇▇▇▇▇ Battle and ▇▇▇▇▇▇, llp, counsel to Buyer, dated as
of the Closing Date, substantially in the form attached hereto as Exhibit J.
Article 8
The Closing
Section 8.1 Time and Place of Closing. The Closing (the "Closing") shall
take place at the offices of McGuire, Woods, Battle & ▇▇▇▇▇▇, llp in
Charlottesville, Virginia, at 10:00 a.m. local time on the latter of (i) ▇▇▇▇▇
▇▇, ▇▇▇▇, (▇▇) the next business day after which the last of the Closing
Conditions is fulfilled or waived, or (iii) such date as may be agreed upon by
the Parties (the "Closing Date").
Section 8.2 Deliveries by Sellers. At the Closing Sellers shall deliver
to the Buyer the following:
(i) the certificates representing the KVT Stock duly endorsed
or with stock powers attached thereto duly signed;
(ii) all of the books and records (whether or not computerized)
of KVT including without limitation its minute books, tax returns,
stockholder records, and any associated software and documentation
relating to its business and employees;
(iii) the certificates required by Sections 7.2(1) and 7.2(2);
(iv) the Opinion of Counsel required by Section 7.2(3); and
(v) such additional documents as Buyer may reasonably request.
Section 8.3 Deliveries by Buyer. At the Closing Buyer shall deliver to
Sellers the following:
(i) the Secured/Subordinated Promissory Note duly executed on
behalf of Buyer;
(ii) Security Agreement duly executed on behalf of Buyer;
(iii) the certificates representing two hundred forty-three
thousand ninety-seven (243,097) shares of the Buyer Common Stock;
(iv) the Cash Payment in immediately available funds;
(v) the Cash Balance in immediately available funds;
(vi) the certificate required by Section 7.3(1);
(vii) the Opinion of Counsel required by Section 7.3(3); and
(viii) such additional documents as Sellers may reasonably
request.
Section 8.4 Deliveries by Sellers and Buyer. At the Closing, Sellers and
Buyer shall each execute and deliver to the other copies of the Related
Agreements.
Article 9
Indemnification
Section 9.1 Indemnification By the Parties. Subject to the limitations
contained in this Article 9, each party (the "Indemnifying Party") will
indemnify, defend and hold the other party (the "Indemnified Party") harmless
from and against all losses, claims, damages, costs, expenses (including
reasonable attorneys' and other advisors' fees), liabilities, concessions, or
judgments or amounts that are paid in settlement of or in connection with any
claim, action, suit, proceeding or investigation based in whole or in part on
or arising in whole or in part out of any breach by the Indemnifying Party of
any representation, warranty, or covenant made in or pursuant to this
Agreement. For purposes of this Article 9, Buyer and Sellers are the parties
hereto.
Section 9.2 Limitation on Amount. Notwithstanding the foregoing, no
claim made by the Indemnified Party against the Indemnifying Party for
indemnification pursuant to Section 9.1 shall result in any liability to the
Indemnifying Party unless the aggregate of all such claims made by the
Indemnified Party pursuant to Section 9.1 exceeds $100,000, and then only to
the extent of such excess.
Section 9.3 Procedure for Indemnification. The Indemnified Party shall
follow the procedures set forth in this Section 9.3 in order to be entitled to
indemnification with respect to claims resulting from the assertion of
liability by persons or entities other than the Indemnified Party, including
claims by Governmental Entities for penalties, fines and assessments.
(1) In the event that any action, suit or proceeding (hereinafter,
a "Legal Action") is brought against the Indemnified Party or any claim or
demand is made by any person or entity, including any Governmental Entity (a
"Third Party Claim"), in respect of which the Indemnified Party desires to make
a claim against the Indemnifying Party pursuant to this Section 9.3, the
Indemnified Party shall give prompt written notice to the Indemnifying Party of
the institution of such Legal Action or the making of such Third Party Claim,
such notice to identify the amount, nature of, and other circumstances
surrounding such claim.
(2) Upon the written agreement of the Indemnifying Party that it is
obligated to indemnify hereunder, the Indemnifying Party may (and if so
requested by the Indemnified Party shall) participate in such Legal Action or
Third Party Claim or assume the defense thereof, with counsel satisfactory to
the Indemnified Party; provided, however, that the Indemnified Party shall in
any event have the right to participate at its own expense in the defense of
any such Legal Action or Third Party Claim, and provided further that in no
event may the Indemnifying Party settle or compromise a Legal Action or Third
Party Claim without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld. Without limiting the generality of
the foregoing, it shall not be deemed unreasonable to withhold consent to a
settlement or compromise involving injunction or other equitable relief against
the Indemnified Party or any of its assets, employees or business.
Section 9.4 Survival; Investigation. Except for the representations and
warranties of the Indemnifying Party contained in Section 3.8 (relating to
Taxes), which shall survive this Agreement indefinitely subject to applicable
statutes of limitations under the 1986 Code or other applicable tax statute,
the representations and warranties of parties contained in this Agreement shall
survive the Closing until the second anniversary of the Closing (the "Survival
Date") at which time they shall lapse. Notwithstanding the provisions of the
preceding sentence, any representation or warranty in respect of which
indemnification may be sought by an Indemnified Party pursuant to this Article
9 shall survive the Survival Date if written notice, given in good faith, of
the specific breach thereof is given to the Indemnifying Party prior to the
Survival Date, whether or not liability has actually been sustained.
Article 10
Termination and Amendment
Section 10.1 Termination. This Agreement may be terminated at any time
prior to the Closing (with respect to Sections 10.1(3) and 10.1(4), by written
notice by the terminating party to the other party):
(1) by mutual written consent of Buyer and Sellers; or
(2) by either Buyer or Sellers if the Acquisition shall not have been
consummated by May 30, 1996, (provided that the right to terminate this
Agreement under this Section 10.1(2) shall not be available to a party if its
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Acquisition to occur on or before such date); or
(3) by either Buyer or Sellers if a court of competent jurisdiction
or other Governmental Entity shall have issued a nonappealable final order,
decree or ruling or taken any other action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, except if the party relying on such order,
decree or ruling or other action has not complied with its obligations under of
this Agreement with respect to such matter; or
(4) by Buyer or Sellers, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the other party
set forth in this Agreement, which breach (A) causes the conditions set forth
in Sections 7.2(1) or 7.2(2) (in the case of termination by Buyer) or Sections
7.3(1) or 7.3(2) (in the case of termination by Sellers) not to be satisfied,
and (B) shall not have been cured within 10 business days following receipt by
the breaching party of written notice of such breach from the other party.
Section 10.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 10, 10.1, there shall be no liability or
obligation on the part of Sellers or Buyer, or its officers, directors,
stockholders or Affiliates, except to the extent that such termination results
from the breach by a party of any of its representations, warranties, covenants
or agreements set forth in this Agreement; provided that, the provisions of
Section 5.5(2) of this Agreement shall remain in full force and effect and
survive any termination of this Agreement.
Section 10.3 Amendment. This Agreement may be amended by the parties
hereto but only by an instrument in writing signed on behalf of each of the
parties hereto.
Section 10.4 Extension; Waiver. At any time prior to the Closing, the
parties hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party.
Article 11
Miscellaneous Provisions
Section 11.1 Survival of Representations, Warranties and Agreements.
Except as otherwise provided in Article 9, the representations, warranties and
agreements in this Agreement and in any instrument delivered pursuant to this
Agreement shall survive the Closing.
Section 11.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(1) if to Buyer, to
Comdial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
` Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
McGuire, Woods, Battle & ▇▇▇▇▇▇, l.l.p.
P. O. Box 1288
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(2) if to Sellers, to:
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇ ▇▇▇▇▇▇
Key Voice Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Burgess, Harrell, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, p.a.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 11.3 Legal Fees. If a legal proceeding is brought by one party
against the other party based on this Agreement, the prevailing party shall be
entitled to its reasonable attorney and paralegal fees and costs from the
non-prevailing party through all appeals.
Section 11.4 Interpretation. When a reference is made in this Agreement
to a section, such reference shall be to a section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in
this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available. The phrases "the date of this Agreement", "the date hereof," and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to March 5, 1996.
Section 11.5 Counterpart Copies. This Agreement may be executed in two or
more counterpart copies, all of which shall be considered one and the same
agreement and shall become binding on the parties when a counterpart copy has
been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart copy.
Section 11.6 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) is not intended to confer upon any person or
entity other than the parties hereto any rights or remedies hereunder.
Section 11.7 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard
to any applicable conflicts of law.
Section 11.8 No Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
In Witness Whereof, Buyer and Sellers have executed this Agreement as of
the date first written above.
COMDIAL CORPORATION
By:___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
________________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
______________________________________
▇▇▇▇ ▇▇▇▇▇▇
List of Exhibits:
Exhibit A - Schedule of Certain Accounts
Exhibit B - Form of Secured/Subordinated Promissory Note
Exhibit C - Form of Security Agreement
Exhibit D - Form of Branica Employment Agreement
Exhibit E - Form of ▇▇▇▇▇▇ Employment Agreement
Exhibit F - Form of Tax Agreement
Exhibit G - Form of Certificate of Incorporation
Exhibit H - Form of Bylaws
Exhibit I - Form of Sellers' Counsel Legal Opinion
Exhibit J - Form of Buyer's Counsel Legal Opinion
Exhibit A
Schedule of Certain Accounts
----------------------------
Schedule of Certain Accounts
As of February 29, 1996
Checking - General $637,274.56
Checking - Northern Trust 56.76
Accounts Receivable 962,347.63 $1,599,678.95
-----------
Minus:
Accounts Payable 171,162.75
Inventory Purchase Receiving 108,055.25
Customer Deposits 15,526.72
Federal Withholding Payable 18,549.63
FICA Payable - Employee 8,464.76
FICA Payable - Employer 8,464.76
FUTA Payable 1,225.96
SUTA Payable 4,634.39 336,084.22
----------- --------------
1,263,594.73
Plus:
Inventory Accounts Payable Items 156,543.59
Inventory Purchase Receiving 108,055.25 264,598.84
----------- --------------
$ 1,528,193.57
--------------
--------------
Exhibit B
Form of Secured/Subordinated Promissory Note
--------------------------------------------
SUBORDINATED PROMISSORY NOTE
$7,000,000 Charlottesville, Virginia
March 20, 1996
FOR VALUE RECEIVED, COMDIAL CORPORATION, a Delaware
corporation (hereinafter referred to as the "undersigned" or
"Comdial"), promises to pay to the order of ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇ (thereinafter collectively referred to as "Holder"),
Holder's heirs, successors and assigns, at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or at such other place as Holder may
designate in writing delivered or mailed to the undersigned, in
lawful money of the United States of America the principal sum of
Seven Million & No/100 Dollars ($7,000,000.00), together with
interest from the date hereof on the outstanding principal
balance at the annual rate equal to the prime rate of interest
published in the Wall Street Journal from time to time, without
offset, as follows:
1. Payment. The principal shall be due and payable in
five (5) equal annual installments of One Million Four Hundred
Thousand and No/100 Dollars ($1,400,000.00) each, commencing one
(1) year from the date hereof, with subsequent payments due on
the same day each year thereafter until paid in full. Each
annual principal payment shall be accompanied by all accrued
interest. All remaining principal and interest shall be due and
payable five (5) years from the date hereof. Each payment
hereunder shall be credited first to interest then due and the
remainder shall be applied to reduce the principal balance.
2. Prepayment. This Note may be prepaid in whole or in
part at any time and from time to time without premium or
penalty. Partial prepayments shall be applied to the
installments in the inverse order of their maturity.
3. Default. If the undersigned (i) fails to make any
payment hereunder when due; (ii) liquidates or dissolves; (iii)
becomes insolvent or becomes the subject of an application for
the appointment of a receiver, the filing of a petition under any
federal bankruptcy law, the making of an assignment for the
benefit of creditors; or (iv) otherwise defaults hereunder or
under any instrument by which this Note is or may hereafter be
secured; then subject to the provisions of Section 10 hereof,
such event or default shall be deemed a default hereunder and
under all of the aforementioned instruments, and, at the option
of Holder hereof, all the unpaid principal and all the interest
then accrued thereon shall become immediately due and payable
without demand or notice, time being of the essence. If any
principal or interest is not paid when due, including but not
limited to payments due upon acceleration, interest shall be due
and payable on the whole of the unpaid balance of said principal
sum at an annual rate of interest equal to the prime rate
published in the Wall Street Journal from time to time plus two
percent (2%) until paid.
4. Waiver of Rights. Except as otherwise provided herein,
the undersigned and each person liable hereon, whether maker,
endorser or otherwise, hereby waives (i) presentment, demand,
protest, notice of protest, notice of dishonor, notice of
nonpayment, diligence in collection, and all other requirements
necessary to hold each of them liable hereon, (ii) any right to
be released by reason of any extension of time or change in terms
of payment or any change, alteration or release of any security
given for the payment hereof, and (iii) the right to require
Holder to proceed against the undersigned or any of them, or to
pursue any other remedy in Holder's power.
5. Costs and Attorneys Fees. The undersigned shall pay
all costs, including without limitation, reasonable attorneys'
fees through all appeal stages, incurred by Holder in enforcing
any right or remedy hereunder, including without limitation for
collection.
6. Remedies Cumulative and Nonwaiver. The remedies of
Holder hereof, as provided herein or in any other instrument
incorporated or referenced herein, shall be cumulative and
concurrent and may be pursued singularly, successively or
together, at the sole discretion of Holder hereof, and may be
exercised as often as occasion therefor shall arise. No act of
omission or commission of Holder, including specifically any
failure to exercise any right, remedy or recourse, shall be
deemed to be a waiver or release of the same, such waiver or
release to be effected only through a written document executed
by Holder and then only to the extent specifically recited
therein. A waiver or release with reference to any one event
shall not be construed as continuing, as a bar to, or as a waiver
or release of, any subsequent right, remedy or recourse as to a
subsequent event.
7. Usury. It is the intention of the parties hereto to
comply with all applicable usury laws; accordingly,
notwithstanding any contrary provision contained herein, or in
any other documents securing payment hereof or otherwise relating
hereto, in no event shall this Note or such other documents
require the payment or permit the collection of interest in
excess of the maximum amount permitted by such laws.
8. Modification Waiver. No provision hereof may be
modified or waived except in a writing signed by the party sought
to be held thereto.
9. Collateral. This Note is secured by a certain Security
Agreement, dated of even date herewith (the "KVT Security
Agreement"), executed and delivered by Key Voice Technologies,
Inc., a Delaware corporation ("KVT"), encumbering certain
personal property of KVT (such personal property and those
proceeds realized from the sale thereof (but excluding proceeds
generated or realized from sales of licenses of such property in
the ordinary course of business) being hereinafter referred to as
the "KVT Collateral").
10. Subordination. Holder, by his acceptance hereof,
covenants and agrees that the payment of the principal of,
interest on, and all other amounts owing under, this Note is
subordinated, to the extent and in the manner provided in this
Section 10, to the prior payment in full, in cash or cash
equivalents, of all Senior Debt (as hereinafter defined). This
Section 10 shall constitute a continuing agreement between Holder
and all holders of Senior Debt, and such provisions are made for
the benefit of all holders of Senior Debtor each of whom is made
a beneficiary of this Section 10 and may enforce the provisions
hereof.
10.1 Definitions. For the purposes of this Note, the
following terms shall have the following meanings:
"Indebtedness" - all loans, advances, indebtedness,
obligations, liabilities, covenants and duties at any time
owed by Comdial, whether voluntary or involuntary and
however arising, direct or indirect, absolute or contingent,
liquidated or unliquidated, determined or undetermined,
secured or unsecured, due or to become due, including all
interest, fees, costs, expenses and attorneys' fees for
which Comdial is now or hereafter becomes liable to pay
under any agreement or by law, including, without
limitation, indebtedness of a Subsidiary of Comdial which is
guaranteed by Comdial.
"Senior Debt" - means, at any date, the principal of,
premium (if any) and interest on (including interest
accruing after the occurrence of an event of default under
the Senior Debt, or after the filing of petition initiating
any proceedings under any state or federal bankruptcy or
other insolvency law at a rate per annum equal to the
applicable default rate, if any, for such Senior Debt), and
all fees, charges, expenses, attorneys' fees and other
Indebtedness related to, any loans or other financial
accommodations (or any combination thereof) made pursuant
to, or other Indebtedness incurred under, a Senior Loan
Agreement, and all reimbursement and other Indebtedness
owing by Comdial or any of its Subsidiaries under a Senior
Loan Agreement with respect to any letters of credit issued
for the account of Comdial or any of its Subsidiaries
thereunder, whether outstanding on the date of this Note or
hereafter incurred.
"Senior Debt Default" - means (a) any default in the
payment of principal of, premium (if any) and interest on or
other amounts owing in connection with, any of the Senior
Debt beyond any applicable grace period with respect thereto
whether at stated maturity or as a result of acceleration or
otherwise, or (b) any other default the occurrences of which
entitles one or more holders of Senior Debt to accelerate
the maturity of any Senior Debt.
"Senior Loan Agreement" - means the credit agreement
entered into on February 1, 1994 by Comdial and its
Subsidiaries, as borrowers, and Fleet Capital Corporation
(f/k/a Shawmut Capital Corporation and the successor by
assignment from Barclays Business Credit, Inc.), as senior
lender, as in effect on the date of this Note, and as the
same may be amended, restated, supplemented or otherwise
modified from time to time, and including any agreement with
the same or other lenders increasing, extending the maturity
of, or refinancing, restructuring or replacing all or any
portion of the Indebtedness under, the credit facilities
extended to Comdial and its Subsidiaries thereunder.
"Subsidiary" - any corporation of which Comdial owns,
directly or indirectly through one or more intermediaries,
more than fifty percent (50%) of the capital stock at the
time of determination.
10.2 Payment Over of Proceeds Upon Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding or any receivership, liquidation, insolvency,
reorganization or other similar case or proceeding in connection
therewith, relative to Comdial, or to its assets, or (b) any
liquidation, dissolution or other winding up of Comdial, whether
voluntary or involuntary and whether or not involving insolvency
or bankruptcy, or (c) any assignment for the benefit of creditors
or any other marshaling of any assets or liabilities of Comdial,
then and in such event
(i) The holders of Senior Debt shall thereupon be
entitled to receive payment in full, in cash or cash
equivalents, of all Senior Debt, or provision shall
thereupon be made for such payment, before Holder shall be
entitled to receive any further payment or distribution of
any kind or character (excluding (A) the KVT Collateral and
(B) securities of Comdial or any other corporation provided
for by a plan of reorganization or readjustment that are
equity securities or are subordinated in right of payment to
all Indebtedness of Comdial issued to the holders of Senior
Debt in such plan of reorganization or readjustment to
substantially the same extent as, or to a greater extent
than, this Note is subordinated as provided in this Section
10 (such equity securities or subordinated securities being
herein called "Permitted Junior Securities")) on account of
principal of, premium (if any) or interest or other amounts
owing on this Note;
(ii) Any further payment or distribution of assets of
Comdial of any kind or character, whether in cash, property
or securities (excluding Permitted Junior Securities and the
KVT Collateral), by setoff or otherwise, to which Holder
would be entitled but for the provisions of this Section 10
shall be paid by the liquidating trustee or agent or other
person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Senior Debt ratably
according to the aggregate amounts remaining unpaid on
account of the Senior Debt held or represented by each, to
the extent necessary to make payment in full, in cash or
cash equivalents, of all Senior Debt remaining unpaid, after
giving effect to any concurrent payment or distribution to
for the holders of Senior Debt; and
(iii) In the event that, notwithstanding the
foregoing provisions of this Section 10.2, Holder shall
receive any further payment or distribution of assets of
Comdial of any kind or character, whether in cash, property
or securities, in respect of principal, premium (if any) or
interest or other amounts owing on this Note before all
Senior Debt is paid in full, in cash or cash equivalents, or
payment thereof provided for, then and in such event such
further payment or distribution (excluding Permitted Junior
Securities and the KVT Collateral) shall be paid over or
delivered forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other
person making payment or distribution of assets of Comdial
for application to the payment of all Senior Debt remaining
unpaid, to the extent necessary to pay all Senior Debt in
full, in cash or cash equivalents, after giving effect to
any concurrent payment or distribution to for the holders of
Senior Debt.
10.3 Prohibited Payments and Actions. Except as
otherwise provided in Sections 10.4 and 10.5 below, Holder agrees
that, until all Senior Debt shall have been paid in full, in cash
or cash equivalents, and all outstanding commitments of the
holders of Senior Debt for the incurring of additional Senior
Debt shall have been terminated in writing, Holder will not:
(a) Ask, demand, ▇▇▇ for, take or receive from or on
behalf of Comdial or any of its Subsidiaries, including,
without limitation, KVT, by setoff or in any other manner,
payment of the whole or any part of the Indebtedness
evidenced by this Note;
(b) Initiate, commence or participate with others in
any suit, action or proceeding against Comdial or any of its
Subsidiaries, including, without limitation, KVT, or
otherwise take action against Comdial, KVT or any of
Comdial's other Subsidiaries, or any of their respective
assets, to enforce payment of or to collect the whole or any
part of the Indebtedness evidenced by this Note; or
(c) Ask, demand, take or receive any security from
Comdial or KVT or any of Comdial's other Subsidiaries for
any of the Indebtedness evidenced by this Note, except for
the KVT Collateral.
If Holder in violation of the provisions of this Section 10
shall commence, prosecute or participate in any suit, action or
proceeding against Comdial or any of its Subsidiaries, Comdial or
any holder of Senior Debt may interpose as a defense or plea the
provisions of this Section 10 and any holder of Senior Debt may
intervene and interpose such defense in its name or in the name
of Comdial or any of its Subsidiaries, and Comdial or any holder
of Senior Debt may by virtue of the provisions of this Section 10
restrain the enforcement thereof in the name of Comdial or any of
its Subsidiaries or any holder of Senior Debt.
10.4 Permitted Payments. Notwithstanding the
provisions of Section 10.3 hereof, until such time as a Senior
Debt Default shall occur and any holder of Senior Debt shall give
Holder written notice (a "Blockage Notice") in the manner set
forth in Section 12 hereof of the occurrence thereof, Comdial may
pay to Holder, and Holder may demand, accept and retain from
Comdial, annual payments of the principal of, and interest on,
this Note on their respective due dates as set forth in Section 1
of this Note. Upon the giving of a Blockage Notice by any holder
of Senior Debt, the subordination provisions of Section 10.3
shall govern and control until the earlier to occur of:
(a) The Senior Debt Default giving rise to the
Blockage Notice shall have been cured or waived in writing
by the holder of Senior Debt giving such Blockage Notice or
shall have ceased to exist; or
(b) all Senior Debt shall have been paid in full, in
cash or cash equivalents, and all outstanding commitments of
each holder of Senior Debt for the incurring of Senior Debt
shall have been terminated in writing;
after which, in the case of the foregoing clause (a), Comdial
shall resume making all payments then due or thereafter becoming
due and owing on this Note, and in the case of the foregoing
clause (b), the provisions of this Section 10 shall be of no
further force and effect.
10.5 Permitted Enforcement of KVT Security Agreement.
Notwithstanding any contrary provision herein contained, Holder
may (i) accelerate the maturity of this Note and (ii)enforce his
lien in and security interest upon the KVT Collateral in
accordance with the provisions of the KVT Security Agreement and
applicable law upon the earliest to occur of one or more of the
following events:
(a) All Senior Debt shall have been paid in full, in
cash or cash equivalents, and all commitments of the holders
of Senior Debt for the incurring of additional Senior Debt
shall have been terminated in writing;
(b) Comdial or KVT shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, shall consent to the entry
of an order for relief in an involuntary case under any such
law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee,
custodian or similar official of Comdial or KVT or
substantially all of its respective assets, or Comdial or
KVT shall make a general assignment for the benefit of its
respective creditors;
(c) A proceeding shall have been instituted in a court
having jurisdiction seeking an order for relief in respect
of Comdial of KVT in an involuntary case under applicable
bankruptcy, insolvency or other similar law now or hereafter
in effect, or for the appointment of a receiver, liquidator,
assignee, custodian, trustee or similar official of Comdial
or KVT or substantially all of its respective assets, and
such proceeding shall remain undismissed or unstayed and in
effect for a period of sixty (60) days or such court shall
enter an order granting the relief sought in such
proceeding;
(d) The acceleration by any of the holders of Senior
Debt of the Senior Debt owing to such holder or the
commencement by any of the holders of Senior Debt of
foreclosure or similar action pursuant to the provisions of
a Senior Loan Agreement or applicable law; or
(e) (i) Comdial shall fail to make any payment of the
principal or interest on this Note when such payment is due
(whether as a result of a Blockage Notice or otherwise);
(ii) Holder shall give Comdial and the holders of Senior
Debt written notice of the failure of Comdial to make such
payment in the manner set forth in Section 12 hereof, and
(iii) within 90 days after the due date of such missed
payment, Comdial or the holders of Senior Debt on behalf of
Comdial shall not make such missed payment;
provided, however, that any further collection or enforcement
action beyond acceleration of the maturity hereof and enforcement
by Holder of the liens in the KVT Collateral shall be subject to
the provisions of Section 10.3 hereof.
10.6 Turnover of Prohibited Payments. Except for (a)
payments permitted to be made pursuant to this Section 10, (b)
Permitted Junior Securities and (c) the KVT Collateral, should
any payment, distribution or security or the proceeds thereof be
collected or received by Holder upon or with respect to the
Indebtedness evidenced by this Note prior to the payment in full
of all Senior Debt, in cash or cash equivalents, and the
termination in writing of all commitments of the holders of
Senior Debt for the incurring of additional Senior Debt, Holder
shall receive and hold the same in trust, as trustee for the
benefit of the holders of Senior Debt, and shall forthwith
deliver the same to the holders of Senior Debt in precisely the
same form received (except for the endorsement or assignment of
Holder where necessary) for application to the Senior Debt,
ratably as to each holder of Senior Debt to the extent necessary
to make payment in full or all Senior Debt remaining unpaid,
after giving effect to any concurrent payment or distribution ro
or for the holders of Senior Debt.
10.7 Subrogation. After all Senior Debt is paid in full
in cash or cash equivalents, and until this Note is paid in full,
Holder shall be subrogated to the rights of the holders of Senior
Debt to receive payments and distributions applicable to Senior
Debt, to the extent payments or distributions otherwise payable
to Holder have been applied to the payment of Senior Debt in
accordance with the provisions of this Section 10. For purposes
of such subrogation, no payments or distributions to the holders
of Senior Debt of any cash, property or securities to which
Holder would be entitled except for the provisions of this
Section 10, and no payments over pursuant to the provisions of
this Section 10 to the holders of Senior Debt by Holder, shall,
as among Comdial, its creditors other than holders of Senior
Debt, and Holder, be deemed to be a payment or distribution by
Comdial to on account of the Senior Debt.
10. Provisions Solely to Define Relative Rights. The
provisions of this Section 10 are and are intended solely for the
purpose of defining the relative rights of Holder on the one hand
and the holders of Senior Debt on the other hand. Nothing
contained in this Section 10 or elsewhere in this Note is
intended to shall (a) impair, as between Comdial and Holder, the
obligation of Comdial, which is absolute and unconditional, to
pay to Holder the principal of, and interest on this Note in
accordance with its terms, or (b) except as specifically
otherwise provided elsewhere in this Section 10, prevent Holder
from exercising all remedies otherwise permitted by applicable
law upon the occurrence of an default under this Note, subject to
the rights of the holders of Senior Debt to receive payments and
distributions otherwise payable to Holder.
10.9 No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any
Senior Debt to enforce the subordination of the Indebtedness
evidenced by this Note shall at any time or in any way be
prejudiced or impaired by any act or failure to act on the
part of Comdial or by any act or failure to act by any such
holder, or by any non-compliance by Comdial with the terms,
provisions and covenants of this Note, regardless of any
knowledge thereof any such holder may have or be otherwise
charged with;
(b) Without in any way limiting the generality of
subsection (a) of this Section 10.9, the holders of Senior
Debt may, at any time and from time to time, without the
consent of or notice to Holder, without incurring
responsibility to Holder and without impairing or releasing
the subordination provided in this Section 10 or the
obligations hereunder of Holder, do any one or more of the
following;
(i) Increase, change the manner, place or terms
of payment or extend the time of payment of, or refund
or refinance, or renew or alter, Senior Debt, or
change, modify or amend the terms of a Senior Loan
Agreement or any other instrument evidencing the Senior
Debt or any agreement under which Senior Debt is
outstanding;
(ii) Sell, exchange, release or otherwise deal
with any property pledged, mortgaged or otherwise
securing Senior Debt;
(iii) Release any person liable in any manner
for the collection of Senior Debt;
(iv) Exercise or refrain from exercising any
rights against Comdial or any of its Subsidiaries or
any other person; and
(v) Take any other action which might otherwise
constitute a defense available to, or a discharge of,
Holder in respect of his obligations to the holder of
Senior Debt under this Section 10.
10.10 Waiver of Holder. Holder by his acceptance
hereof shall be deemed to acknowledge and agree that the
provisions of this Section 10 are, and are intended to be, an
inducement and a consideration to each holder of Senior Debt,
whether such Senior Debt was created or acquired before or after
the issuance of this Note, to acquire, hold, or to continue to
hold, such Senior Debt and each holder of Senior Debt shall be
deemed conclusively to have relied upon the provisions of this
Section 10, and Holder expressly waives all notice of the
acceptance by the holders of Senior Debt of the provisions of
this Section 10, notice of the incurring of Senior Debt from time
to time and all other notices not specifically required pursuant
to the terms of this Note or by law, and reliance by the holders
of Senior Debt upon the provisions of this Section 10.
10.11 Reinstatement. The provisions of this
Section 10 shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Senior
Debt is rescinded or must otherwise be disgorged by the holders
thereof upon the insolvency, bankruptcy or reorganization of
Comdial or any of its Subsidiaries or otherwise, all as though
such payment had not been made.
10.12 Grant of Authority. Until all of the Senior
Debt is paid in full, in cash or cash equivalents, and all
outstanding commitments of the holders of Senior Debt for the
incurring of additional Senior Debt are terminated in writing,
Holder hereby irrevocably authorizes and empowers each holder of
Senior Debt, in the event any proceeding referred to in Section
10.2 above is commenced by or against Comdial, to:
(a) Collect and receive every payment or distribution
referred to in Section 10.2 above (other than payments
permitted by Section 10.4 hereof, Permitted Junior
Securities or the KVT Collateral) and give acquittance
therefor;
(b) File claims and proofs of claim in such proceeding
in respect of the Indebtedness evidenced by this Note in its
name, or in the name of Holder or otherwise, as such holder
of Senior Debt may deem reasonably necessary or advisable
for the exercise or enforcement of any other rights of such
holder of Senior Debt under the provisions of this Section
10; and
(c) Take such action as may be reasonably requested at
any time and from time to time by such holder of Senior Debt
to file appropriate claims and proofs of claim in respect of
the Indebtedness evidenced by this Note in order, under the
circumstances set forth in and in accordance with the terms
of this Section 10, to enable such holder of Senior Debt to
enforce any and all claims upon or in respect of the
Indebtedness evidenced by this Note and to receive any and
all payments or distributions which may be payable or
deliverable at any time upon or in respect of this Note.
11. Governing Law. This Note shall be enforced and
governed by reference to Florida Law.
12. Notices. Any notice, demand or other communication
required or permitted under the terms of this Note shall be in
writing and shall be made by facsimile transmitter, overnight air
courier, or certified or registered mail, return receipt
requested, and shall be deemed to be received by the addressee
one (1) business day after sending if sent by facsimile
transmitter or overnight air courier, and three (3) business days
after mailing, if sent by certified or registered mail. Notices
shall be addressed as follows:
(a) If to Comdial: Comdial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. 804/978-2512
(b) If to Holder: ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(c) If to the
holders of
Senior Debt: Fleet Capital Corporation
▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. 704/553-6738
or at such other address as any party may designate by notice to
the other parties in accordance with the provisions hereof.
IN WITNESS WHEREOF, the undersigned caused this instrument
to be executed and delivered as of the date first above-written.
COMDIAL CORPORATION
A Delaware corporation
By:________________________________
Title:________________________
THE UNDERSIGNED guarantees payment, performance and
collection of this Note.
KEY VOICE TECHNOLOGIES, INC.
A Delaware corporation
By:________________________________
Title:________________________
Exhibit C
Form of Security Agreement
--------------------------
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made this 20th day of March,
1996, by KEY VOICE TECHNOLOGIES, INC., a Delaware corporation
("KVT"), for value received, in favor of and granting to ▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ (collectively, the "Secured Party"), a
security interest in all of KVT's right, title and interest in
and to the following property, whether now owned or hereafter
acquired or developed by KVT:
(a) All Verbatim/▇▇▇▇▇ (including Screen Saver),
Small Office and Visual Call Management computer
software (the "Software");
(b) All computer programs and codes relating to
the Software;
(c) All upgrades, enhancements, modifications and
derivations of the Software;
(d) All patents, copyrights, tradenames, trade
marks, service marks and intellectual property rights
relating to the Software;
(e) All increases, accessories, parts, accessions
and replacements of the Software; and
(f) All other proceeds of the foregoing,
(collectively, the "Collateral") to secure the payment of that
certain indebtedness evidenced by that certain Subordinated
Promissory Note executed by Comdial Corporation, a Delaware
corporation ("Comdial") and guaranteed by KVT in the original
principal amount of Seven Million & No/100 Dollars
($7,000,000.00) (the "Note"), of even date herewith and any and
all extensions or renewals thereof (hereinafter called the
"Obligations").
KVT hereby warrants and agrees that:
1. Nature of Security Interest in Collateral. The
Collateral is acquired or used primarily for business uses and,
is being indirectly acquired with the proceeds of the loan
provided for in or secured by this Agreement.
2. Location of Collateral. For so long as any of the
Obligations secured hereunder remain outstanding, Secured Party
shall be permitted to retain a copy of the source codes for the
Collateral; provided, (a) Secured Party uses reasonable care and
diligence in the safekeeping of the source codes and shall not
make any additional copies of the same; (b) Secured Party shall
provide each of KVT and Comdial with an exact duplicate of all
such source codes retained by Secured Party; and (c) upon
satisfaction of the Obligations secured hereunder, Secured Party
shall return to KVT all copies of source codes in its possession.
Notwithstanding any provision herein to the contrary, upon demand
by KVT, Secured Party agrees to negotiate in good faith with KVT
the terms of an escrow arrangement pursuant to which such source
codes shall be held, and upon entering into such an escrow
arrangement, Secured Party shall deliver to the escrow agent
thereunder copies of all source codes for the Collateral in its
possession.
3. Place of Business of KVT. The chief place of business
of KVT is: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and KVT
will immediately notify Secured Party in writing of any change in
KVT's chief place of business.
4. Ownership. Except for the security interest granted
hereby and a second security interest in favor of Fleet Capital
Corporation ("Fleet"), its successors and assigns and any
replacement lenders refinancing all or any portion of the
indebtedness owing to Fleet (the "Senior Lenders"), KVT is the
owner of the Collateral free from any adverse lien, security
interest, or encumbrance; and KVT will defend the Collateral
against all claims and demands of all persons at any time
claiming the same or any interest thereon.
5. Perfection of First Security Interest. No Financing
Statement covering any Collateral or any proceeds thereof is on
file in any public office except in favor of Secured Party and in
favor of the Senior Lenders. KVT authorizes Secured Party to
file, in jurisdictions where this authorization will be given
effect, a Financing Statement signed only by the Secured Party
describing the Collateral in the same manner as it is described
herein; and from time to time at the request of Secured Party,
execute one or more Financing Statements and such other documents
(and pay the cost of filing or recording the same in all public
offices deemed necessary or desirable by Secured Party and do
such other acts and things, all as the Secured Party may request
to establish and maintain a valid first security interest in the
Collateral (free of all other liens and claims whatsoever except
those permitted hereby) to secure the payment of the Obligations.
All costs and expenses associated with this paragraph shall be
borne by KVT.
6. Disposition Prohibited; Subordination of Others. KVT
will not sell, transfer, license, lease or otherwise dispose of
any interest in any of the Collateral or any interest therein, or
offer so to do without the prior written consent of Secured
Party, except for licensing the Collateral in the current manner
in the ordinary course of business. Notwithstanding any contrary
provision contained herein, all permitted uses of the Collateral
shall be subordinated to Secured Party's rights in the
Collateral, and KVT shall cause any and all permitted uses to so
provide in documentation relating thereto except for licenses in
the manner currently granted to KVT's customers in the ordinary
course of KVT's business.
7. Insurance. KVT shall name Secured Party as an
additional insured on all policies which KVT maintains on the
Collateral. Each such policy shall provide that loss thereunder
and proceeds payable thereunder shall be payable to Secured Party
as its interest may appear (and Secured Party may apply any
proceeds of such insurance which may be received by Secured Party
toward payment of the Obligations, whether or not due, in such
order of application as Secured Party may determine). KVT shall
provide Secured Party with copies of any such policies.
8. Protection and Preservation. KVT shall at all times
keep the Collateral free from any adverse lien, security
interest, or encumbrance except in favor of the Secured Party and
the Senior Lenders. KVT shall at all times keep the Collateral
in good order and repair and will not waste or destroy the
Collateral or any part thereof; and KVT will not use the
Collateral in violation of any statute or ordinance; and Secured
Party may examine and inspect the Collateral at any time,
wherever located, during normal business hours with reasonable
advance notice. KVT shall be permitted, but not required, to
defend any trademark actions relating to the use of the ▇▇▇▇
"Verbatim" and if electing not to so defend, Secured Party shall
be permitted, but not required, to undertake such defense, at its
own cost and expense.
9. Taxes and Assessments. KVT will pay promptly when due
all taxes and assessments upon the Collateral or for its use or
operation or upon this Agreement or upon any note or notes
evidencing the Obligations, or any of them.
10. Secured Party Protection and Preservation. At its
option, Secured Party may discharge taxes, liens, or security
interest or other encumbrances at any time levied or placed on
the Collateral, may pay for insurance on the Collateral, and may
pay for the maintenance and preservation of the Collateral. KVT
agrees to reimburse Secured Party on demand for any payment made,
or any expense incurred, by Secured Party, pursuant to the
foregoing authorization. Until default, KVT may have possession
of the Collateral and use it in any lawful manner not
inconsistent with this Agreement.
11. Events of Default. KVT shall be in default under this
Agreement upon the happening of any of the following events or
conditions: (a) failure or omission to pay when due any
Obligation (or any installment thereof or interest thereon), or
default in the payment or performance of any obligation,
covenants, agreement, or liability contained or referred to
herein; (b) any warranty, representation, or statement made or
furnished to Secured Party by or on behalf of KVT proves to have
been false in any material respect when made or furnished; (c)
loss, theft, substantial damage, destruction, sale, or
encumbrance to or of any of the Collateral, or the making of any
levy, seizure, or attachment thereof or thereon; (d) any Obligor
(which term, as used herein, shall mean each KVT and each other
party primarily or secondarily or contingently liable on any of
the Obligations) becomes insolvent or unable to pay debts as they
mature or makes an assignment for the benefit of creditors, or
any proceeding is instituted by or against any Obligor alleging
that such Obligor is insolvent or unable to pay debts as they
mature; (e) entry of any judgment against any Obligor unsatisfied
or not fully bonded within 90 days of entry, which when
aggregated with all such judgments represents at least 10% of
such Obligor's book net worth; (f) dissolution, merger or
consolidation, or transfer of a substantial party of the property
of any Obligor which is a corporation or a partnership; (g)
appointment of a receiver for the Collateral; or (h) a failure of
Comdial to pay under the Note.
12. Remedy for Default. Upon the occurrence of any such
default or at any time thereafter, Secured Party may, at its
option, subject to the provisions of Section 10 of the Note,
declare all Obligations secured hereby, or any of them
(notwithstanding any provisions thereof), immediately due and
payable without demand or notice of any kind and the same
thereupon shall immediately become and be due and payable without
demand or notice (but with such adjustments, if any, with respect
to interest or other charges as may be provided for in the
promissory note or other writing evidencing such liability), and
Secured Party shall have and may exercise from time to time any
and all rights and remedies of a Secured Party under the Uniform
Commercial Code and any and all rights and remedies available to
it under any other applicable law; and upon request or demand of
Secured Party, KVT shall, at its expense, assemble the Collateral
and make it available to the Secured Party at a convenient place
acceptable to Secured Party; and KVT shall promptly pay all costs
of the Secured Party of collection of any and all of the
Obligations, and enforcement of rights hereunder, including
reasonable attorneys' fees and legal expenses. Unless the
Collateral is perishable or threatens to decline speedily in
value or is a type customarily sold on a recognized market,
Secured Party will give KVT reasonable notice of the time and
place of any public sale thereof or of the time after which any
private sale or any other intended disposition thereof is to be
made. The requirements of reasonable notice shall be met if such
notice is mailed, postage prepaid, to KVT at least ten (10) days
before the time of the sale or disposition. Expenses of
retaking, holding, preparing for sale, selling, or the like,
shall include Secured Party's reasonable attorneys' fees and
legal expenses. Secured Party may purchase the Collateral at any
such public sale. Upon disposition of any Collateral after the
occurrence of any default hereunder, KVT shall be and remain
liable for any deficiency; and Secured Party shall account to KVT
for any surplus, but Secured Party shall have the right to apply
all or any part of such surplus (or to hold the same as a reserve
against) all or any of the Obligations, whether or not they, or
any of them, be then due, and in such order of application as
Secured Party may from time to time elect.
13. Waiver; Remedies Cumulative. No waiver by Secured
Party of any default shall operate as a waiver of any other
default or of the same default on a future occasion. No delay or
omission on the part of Secured Party in exercising any right or
remedy shall operate as a waiver thereof, and no single or
partial exercise by Secured Party of any right or remedy shall
preclude any other or further exercise thereof or the exercise of
any other right or remedy. The provisions of this Agreement are
cumulative and in addition to the provisions of any note secured
by this Agreement, and Secured Party shall have all the benefits,
rights and remedies of and under any note secured hereby.
14. Successors; Joint and Several Liability. All rights of
Secured Party hereunder shall inure to the benefit of its
successors and assigns; and all Obligations of KVT shall bind the
heirs, executors, administrators, successors and assigns of KVT.
15. Modification and Waiver. No amendment, modification or
waiver of any term or provision hereof shall be valid unless in
writing and signed by the party sought to be held thereto.
16. Interpretation. This Agreement has been delivered in
the State of Virginia but shall be construed in accordance with
Florida laws. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law,
such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement. To
the singular pronoun, when used herein, shall include the plural.
Captions and headings herein are for convenience of reference
only and shall not effect the interpretation hereof. This
Agreement shall not be construed more strongly against a party
because of such party's participation in the preparation hereof.
17. Notices. Any notice hereunder shall be in writing and
either delivered in person or mailed, postage prepaid, first
class mail to the parties as follows: If to KVT to ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ with a copy to Comdial
Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and if to Secured Party to ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. A Notice mailed
shall be deemed received three days after mailing.
18. Timing. Time is of the essence of this Agreement.
This Agreement shall become effective as of the date of this
Agreement.
19. Limitation as to Remedies of Secured Party. The
remedies of Secured Party set forth herein are restricted and
limited to the extent and in the manner provided in the Note.
IN WITNESS WHEREOF, the undersigned executed and delivered
this Agreement effective as of the date first above-written.
WITNESS: KVT:
KEY VOICE TECHNOLOGIES, INC.
a Delaware Corporation
_______________________ By:__________________________
___________(Print Name) _______________(Print Name)
As______________(Title)
________________________
___________(Print Name)
Exhibit D
Form of Branica Employment Agreement
------------------------------------
Employment Agreement
This Employment Agreement is made and entered into as of
_____________, 1996, by and between Comdial Corporation, a Delaware
corporation ("Comdial") and ▇▇▇▇ ▇▇▇▇▇▇▇, an individual residing at
_________________________________________________________
("Executive").
Recitals
Comdial, Executive, and ▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") are parties to
a certain Stock Purchase Agreement dated as of March [ ], 1996
(the "Stock Purchase Agreement") pursuant to which Comdial has
agreed to purchase from Executive and ▇▇▇▇▇▇ all of the issued and
outstanding capital stock of Key Voice Technologies, Inc., a
Florida corporation ("KVT"). Capitalized terms used herein
without definition shall have the meanings ascribed to such terms
in the Stock Purchase Agreement. The obligation of Comdial to
effect the transactions contemplated by the Stock Purchase
Agreement is conditioned upon, among other things, Executive's
execution and delivery to Comdial of this Agreement providing for
Executive's employment by Comdial after the Closing.
Now, Therefore, in consideration of the premises and the mutual
covenants herein contained, the continued employment of Executive,
and other good and valuable consideration, Comdial and Executive
agree as follows:
1. Employment; Term. On the terms and conditions hereinafter
set forth, Comdial hereby employs Executive, and Executive hereby
accepts exclusive full-time employment with Comdial. Such
employment shall commence at the Effective Time and shall continue
until terminated in accordance with the provisions of Section 10 of
this Agreement. The period during which Executive is employed
hereunder shall be referred to as the "Employment Term."
2. Duties. During the Employment Term, Executive shall serve
as ____________ of KVT and shall have such powers, duties and
responsibilities as are consistent with such offices and prescribed
from time to time by KVT's bylaws or the Board of Directors of KVT
(the "Board"). From time to time, Comdial may assign Executive
additional duties and responsibilities of an executive nature for
the benefit of Comdial or its other subsidiaries. Executive agrees
faithfully to discharge such duties and responsibilities and,
generally, to perform such other functions consistent with such
offices for Comdial and its subsidiaries. The compensation herein
provided to be paid to Executive shall cover and include all
services and functions performed by Executive for Comdial, KVT, and
Comdial's other subsidiaries. Executive's employment shall be in
accordance with the policies established by Comdial as to working
facilities, vacation, sick leave and all other benefits for, and
restrictions upon, its senior executives and Executive shall comply
at all times with the procedures established by the Board or by
Comdial relating to the conduct of the senior executives of Comdial
and its subsidiaries, as in effect from time to time during the
Employment Term.
3. Extent of Services; Place of Employment. Executive agrees
that, during the Employment Term, he will devote substantially all
of his working time (except for vacations and periods of illness),
attention and best efforts to the business and interests of KVT,
that he will perform all duties and responsibilities assigned to
him and that he will do his utmost to enhance and develop the
business, interests and welfare of KVT and Comdial generally and
shall not, without the prior written consent of the Board, work for
any other employer or take any other position or undertake any
activity (whether or not compensated) not related to his employment
that would in the aggregate require any substantial portion of his
working time or otherwise adversely affect his ability to perform
hereunder. Executive shall perform his duties at the principal
office of KVT in Sarasota, Florida, except to the extent that
Executive may be required to travel and render services in
different locations from time to time incident to the performance
of such duties. Executive shall be reimbursed for travel and other
business expenses in accordance with Comdial's standard policies
for such reimbursements.
4. Salary; Benefits. Executive's compensation, including
base salary, bonus, and other fringe benefits, is set forth on
Schedule 1 attached hereto and made a part hereof. In addition,
Executive shall be eligible to participate in all employee and
fringe benefit plans, programs and arrangements available to senior
executives in accordance with the terms thereof and as the same may
from time to time be amended from time to time during the
Employment Term. Notwithstanding the foregoing, the Board may
increase Executive's compensation at any time during the Employment
Term.
5. Termination.
(a) Five-Year Term. Subject to the provisions of
Sections 5(b), 5(c) and 5(d), the term of this Agreement shall
extend from the Effective Time until the fifth anniversary of the
Effective Time.
(b) Death or Disability. This Agreement shall be
terminated automatically upon Executive's death and may be
terminated at the discretion of the Board if Executive shall be
rendered substantially unable to perform his services hereunder for
three consecutive months because of a medically determined physical
or mental disability. A condition of disability under this
Agreement shall be determined by the Board on the basis of
competent medical advice. A written opinion of a licensed
physician certified in his field of specialization and acceptable
to the Board, or Executive's receipt of or entitlement to
disability benefits under any insurance policy, benefit plan, or
under federal social security laws shall be conclusive evidence of
disability.
(c) Termination for Cause. The Board may, at any time,
upon written notice to Executive, terminate Executive's employment
for Cause. For purposes of this Section 5(c), the term "Cause"
shall mean (i) a material failure by Executive to perform his duties
as provided in Sections 2 and 3 hereof or to comply with his obligations
under Sections 7 and 8 hereof, (ii) any misappropriation by Executive
of the funds, properties or assets of Comdial or any of its subsidiaries,
(iii) any intentional or negligent act or omission by Executive
resulting in material damage to or destruction of the properties or
assets of Comdial or any of its subsidiaries; (iv) any falsification
by Executive of any books, records, documents or systems of Comdial
or any of its subsidiaries; or (v) the commission of any act by
Executive involving moral turpitude or constituting a felony under the laws
of the United States, any state or any political subdivision
thereof.
(d) Voluntary Resignation. Executive may, at any time,
upon thirty (30) days' written notice to Comdial, terminate the
Employment Term for any reason, with or without cause.
6. Effect of Termination. Upon the termination of the
Employment Term, Comdial's obligations under Sections 1 and 4 of
this Agreement shall immediately expire, but all other rights and
obligations of the parties hereto, including, without limitation,
the obligation of Comdial to pay compensation accrued pursuant to
Section 4 through the termination date and the obligations of
Executive under Sections 7, 8, 9, and 12 of this Agreement shall
continue in full force and effect.
7. Noncompetition.
(a) Executive acknowledges that his relationship with
Comdial and its affiliates will give him access to valuable
confidential and proprietary information and expertise not
generally known in the industry in which Comdial and its affiliates
are engaged (including information conceived, originated,
discovered or developed by Executive) relating to the telecommuni-
cations, telephone systems, computer telephony, and voice messaging
products and businesses of Comdial and its affiliates
(collectively, the "Business"), including, without limitation, the
following: technical know-how; lists of previous, present and
prospective venture partners, investors, and lenders; credit
information; sources of supply; business plans, proposals and
summaries; private processes, techniques and formulae; research and
development activities and data; inventions; and other aspects of
the affairs and business operations of Comdial and its affiliates
as they exist on the date hereof (or as they may from time to time
exist during the term of this Agreement). If used to the benefit
of a company engaging in a business similar to the Business, such
information would prejudice the interests of Comdial.
(b) In view of the foregoing, as a material inducement
to Comdial to enter into this Agreement, Executive hereby agrees
that neither Executive nor any entity controlled by or otherwise
affiliated with Executive shall, during the Employment Term and
thereafter during the Post Employment Period (defined in Section
7(c) of this Agreement), except for duties to be performed by
Executive as an employee of Comdial, in any manner, directly or
indirectly, own, manage, operate, control, be employed by, consult
with, participate in or be connected in any manner with the
ownership, management, operation or control of any sole
proprietorship, partnership, corporation or other entity (A) which
competes with Comdial or any of its affiliates in the development,
manufacture or sale of (1) voice messaging products or services, or
(2) any other product or service as to which Executive was
materially involved during the Employment Term, or (B) which calls
upon, solicits, diverts or takes away any of the then existing
customers or patrons of Comdial or any of its affiliates for the
purpose of causing or attempting to cause any such person to
purchase products sold or services rendered by Comdial or any of
its affiliates from any person other than Comdial or its
affiliates, or otherwise diverts or attempts to divert business
from Comdial. Nothing contained in the foregoing sentence shall be
construed as preventing Executive from owning, solely for passive
investment, less than five percent (5%) of the stock of any entity
registered on a recognized stock exchange. Executive agrees that
the specified duration of the covenants set forth in this Section
7 shall be extended by and for the term of any period during which
Executive is in violation of any such covenant.
(c) For purposes of this Section 7, the term "Post
Employment Period" shall mean a period of time commencing as of the
date the Employment Term expires and ending on the later to occur
of the following: (i) the fifth anniversary of the date of this
Agreement, or (ii) the second anniversary of the date the
Employment Term expires.
8. Confidentiality Agreement; Assignment of Inventions.
Executive agrees to execute and deliver to Comdial, at the
Effective Time, Comdial's standard Employee Confidentiality
Agreement and Assignment, a copy of which is attached to this
Agreement as Schedule 2. The Executive shall be bound by the
provisions of the Employee Confidentiality Agreement and Assignment
throughout the Employment Term. In the event the Executive's
employment is terminated for any reason, Executive shall continue
to be bound by the provisions of the Employee Confidentiality
Agreement and Assignment, in accordance with its terms; provided,
however, that if Comdial is in default under any of its obligations
to Executive set forth in the Stock Purchase Agreement, the
Secured/Subordinated Promissory Note (including a deferral of a
payment deferred or delayed due to the subordination provisions in
said note). or the Security Agreement (a "Default"), and such
Default shall have continued unabated for a period of sixty (60)
days after written notice thereof is received by Comdial, Executive
may terminate his employment hereunder and the provisions of the
Employee Confidentiality Agreement and Assignment shall no longer
apply to the collateral subject to the Security Agreement.
9. Copyrights. Executive specifically agrees that all
copyrightable materials generated or developed by Executive which
relate to the business of Comdial or any of its affiliates,
including, but not limited to, computer programs and documentation,
shall be considered works made for hire under the copyright laws of
the United States and shall, upon creation, be owned exclusively by
Comdial. To the extent that any such materials, under applicable
law, may not be considered works made for hire, Executive hereby
assigns to Comdial the ownership of all copyrights to such
materials, without the necessity of any further consideration, and
Comdial shall be entitled to register and hold in its own name all
copyrights in respect of such materials.
10. Application of Agreement. In the event that any court
shall finally hold that any provision stated in this Agreement
constitutes an unreasonable restriction upon Executive, the parties
hereby expressly agree that the provisions of this Agreement shall
not be rendered void but shall apply as to time and territory or to
such other extent as such court may judiciously determine or
indicate constitutes a reasonable restriction under the
circumstances involved.
11. Injunctive Relief. It is understood and agreed that it
may be impossible to measure in money the damages that will accrue
to Comdial in the event that Executive breaches the provisions of
Sections 7, 8 or 9 above, and that Comdial's remedy at law in the
event of such a breach would not be adequate. Therefore, it is
agreed that Comdial shall be entitled, in the event of such a
breach, to an injunction and other equitable remedies as a matter
of right. However, recourse to any remedy hereunder shall not
constitute an election by Comdial, but Comdial may resort to other
remedies or a combination of remedies as it may choose.
12. Executive's Representation. Executive represents and
warrants to Comdial that he has the full power and right to enter
into and perform this Agreement without the consent or approval of
any other person, including any present or previous employer; and
that his execution, delivery and performance of this Agreement will
not violate or cause a breach of any existing employment or other
agreement or any other duty by which he is bound, or any
outstanding covenant or promise, including covenants not to
compete, given by him to any other person. Executive agrees to
indemnify Comdial against any damages, expenses or claims,
including attorney's fees, by reason of any breach of these
representations or any other part of this Agreement.
13. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered
personally or transmitted by telecopy or telegram or mailed by
registered or certified mail (return receipt requested) to the
parties at the addresses set forth below (or at such other address
for a party as shall be specified by like notice):
If to Comdial:
Comdial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
McGuire, Woods, Battle & ▇▇▇▇▇▇, LLP
P. O. Box 1288
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Executive:
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
c/o Key Voice Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Burgess, Harrell, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
14. Interpretation. When a reference is made in this
Agreement to a section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation."
15. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the
same agreement and shall become effective when two or more
counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not
sign the same counterpart.
16. Employee Policies. The Executive shall be subject to
Comdial's standard employee policies applicable generally to
employees holding similar positions and having similar
responsibilities. The Executive agrees to execute, at the
Effective Time, such standard forms and documents as any employee
of similar rank would sign and execute, acknowledging receipt of
copies of Comdial's standard employee policies.
17. Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to
herein) (a) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, and (b) is
not intended to confer upon any person or entity other than the
parties hereto any rights or remedies hereunder.
18. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of
Virginia without regard to any applicable conflicts of law.
19. Binding Effect. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their
respective successors and assigns. This Agreement is personal with
Executive and may not be assigned by him. Comdial shall have the
right to assign this Agreement to any affiliate of Comdial or to a
successor to all or substantially all of the business or assets of
Comdial or any division or part of Comdial with which Executive
shall be employed.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
COMDIAL CORPORATION
By: ___________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
__________________________
▇▇▇▇ ▇▇▇▇▇▇▇
Schedule 1 to Employment Agreement
Compensation
----------------------------------
Base Salary: $140,000.00 per annum
Schedule 2
Employee Confidentiality Agreement and Assignment
-------------------------------------------------
Name:_______________________________________ Employee No.________________
Department:_________________ Place:________________ Date_________________
COMDIAL CORPORATION and its subsidiary corporations (hereinafter
collectively called "Company") are engaged or may be engaged in certain
fields of business, including but not limited to the fields of telephony,
data processing, communications and electronics. The Company pursues
research and development work, engages in design, manufacture and production
of products, and further maintains accounting, cost, product, sales and
other records, as well as lists of customers, and other proprietary
information.
In consideration of my employment and the remuneration paid me by the
Company and as a condition of my employment or of my continued employment,
I hereby acknowledge and agree to the following matters.
1. I will devote all my time and best efforts in the fields
of business, work or investigation of the Company and for its
sole benefit.
2. I agree to maintain in confidence, both during my employment
and thereafter, all proprietary information developed by me or
learned by virtue of my employment by the Company ("Proprietary
Information"), whether developed or learned before or after signing
this agreement. For this purpose, Proprietary Information includes,
but is not limited to, any secret process, method of operation,
trade secret, engineering and technical data, business plan,
customer list, price list, or other information not generally
known by the public. I will not disclose any Proprietary
Information to others or use it to my own advantage or that of
any third person.
3. I will fully, completely and promptly disclose in writing to
the Company any inventions, ideas, concepts, discoveries,
improvements or other creations, whether patentable or not,
conceived by me during and within the scope of my employment
and relating to the fields of business, work or
investigation of the Company.
4. Subject to the exclusions set forth in the next sentence,
I agree to assign and transfer to the Company (and I do hereby
assign and transfer to the Company by means of this agreement)
all right, title and interest to all inventions, discoveries or
improvements, patentable or unpatentable, conceived or made
by me, either alone or with others, during the period of my
employment and for one year thereafter. This assignment and
agreement applies to all such items except for (i) any item as
to which the Company agrees in writing that such item was not
suggested by and did not result from any work performed on
behalf of, or at the request of, the Company, and (ii) any
item which does not fall within or arise out of the fields of
business, work or investigation of the Company. I further
agree to make and maintain such written records of the foregoing
(if any) as the Company may require, which shall be and remain
the property of and available to the Company at all times.
5. I agree to execute any and all instruments and do all things
which the Company deems necessary to vest and maintain and protect
and enforce in the Company (and the Company's nominees) the entire
right, title and interest to all such inventions, discoveries and
improvements in any and all countries, at the request and expense of
the Company, but without additional remuneration to me.
6. Except as my duties for the Company may require, I will not
remove from the property of the Company any documents, files,
notebooks, records, correspondence, or models relating to the fields of
business, work or investigation of the Company, or make copies thereof,
all such items or copies whether made by me or by others being
recognized by me to be the property of the Company and not to
be used for my own or another's benefit, or delivered or communicated
to another, at any time, without the written consent of the Company.
7. The Company shall be entitled to an injunction in any court having
jurisdiction in the event of any threatened or actual violation of
any of the provisions of this agreement.
8. Whenever the phrase "fields of business, work or investigation of
the Company" is used herein it shall be deemed to include, without
limitation, any present or future fields of business, work or
investigation of the Company or any present or future subsidiary of
the Company, and any field in which the Company (or any such
subsidiary) has granted patent licenses or other rights to others.
9. This agreement is for the benefit of successors and assigns of
the Company (as well as for the benefit of the Company), and is
binding upon my heirs, assigns, administrators and representatives.
10. The enforcement of any of my obligations under this agreement
shall not depend upon the enforcement of any other obligation
hereunder. The expiration or termination of my employment
shall not relieve me of any of my obligations as set forth in
paragraphs 1 through 9 of this agreement. The Company
may enforce any and all of its rights under this agreement for
a period of three years after the expiration or termination of
my employment.
11. This agreement as of the date hereof replaces all prior
similar agreements and may be altered only in a writing
signed by the Company.
12. I further represent that except as listed below, I have no
agreements with or obligations to others relating to the fields
of business, work or investigation of the Company which are in
conflict with this agreement:
Obligations Excluded From This Agreement:
13. I further represent that the list below contains a complete
list of all inventions and patents which I have made heretofore
in the fields of business, work or investigation of the Company,
and which I desire to be excluded from this agreement.
Name of Excluded Invention Description of Excluded Invention
-------------------------- ---------------------------------
WITNESS the following signatures as of the date first written above.
WITNESS: ACCEPTED AND AGREED:
________________________________ ____________________________________
Signature of Witness Signature (Sign name in full)
Exhibit E
Form of ▇▇▇▇▇▇ Employment Agreement
-----------------------------------
Employment Agreement
This Employment Agreement is made and entered into as of
_____________, 1996, by and between Comdial Corporation, a Delaware
corporation ("Comdial") and ▇▇▇▇ ▇▇▇▇▇▇, an individual residing at
_________________________________________________________
("Executive").
Recitals
Comdial, Executive, and ▇▇▇▇ ▇▇▇▇▇▇▇ ("Branica") are parties
to a certain Stock Purchase Agreement dated as of March [ ],
1996 (the "Stock Purchase Agreement") pursuant to which Comdial has
agreed to purchase from Executive and Branica all of the issued and
outstanding capital stock of Key Voice Technologies, Inc., a
Florida corporation ("KVT"). Capitalized terms used herein without
definition shall have the meanings ascribed to such terms in the
Stock Purchase Agreement. The obligation of Comdial to effect the
transactions contemplated by the Stock Purchase Agreement is
conditioned upon, among other things, Executive's execution and
delivery to Comdial of this Agreement providing for Executive's
employment by Comdial after the Effective Time.
Now, Therefore, in consideration of the premises and the mutual
covenants herein contained, the continued employment of Executive,
and other good and valuable consideration, Comdial and Executive
agree as follows:
1. Employment; Term. On the terms and conditions hereinafter
set forth, Comdial hereby employs Executive, and Executive hereby
accepts exclusive full-time employment with Comdial. Such
employment shall commence at the Effective Time and shall continue
until terminated in accordance with the provisions of Section 10 of
this Agreement. The period during which Executive is employed
hereunder shall be referred to as the "Employment Term."
2. Duties. During the Employment Term, Executive shall serve
as ____________ of KVT and shall have such powers, duties and
responsibilities as are consistent with such offices and prescribed
from time to time by KVT's bylaws or the Board of Directors of KVT
(the "Board"). From time to time, Comdial may assign Executive
additional duties and responsibilities of an executive nature for
the benefit of Comdial or its other subsidiaries. Executive agrees
faithfully to discharge such duties and responsibilities and,
generally, to perform such other functions consistent with such
offices for Comdial and its subsidiaries. The compensation herein
provided to be paid to Executive shall cover and include all
services and functions performed by Executive for Comdial, KVT, and
Comdial's other subsidiaries. Executive's employment shall be in
accordance with the policies established by Comdial as to working
facilities, vacation, sick leave and all other benefits for, and
restrictions upon, its senior executives and Executive shall comply
at all times with the procedures established by the Board or by
Comdial relating to the conduct of the senior executives of Comdial
and its subsidiaries, as in effect from time to time during the
Employment Term.
3. Extent of Services; Place of Employment. Executive agrees
that, during the Employment Term, he will devote substantially all
of his working time (except for vacations and periods of illness),
attention and best efforts to the business and interests of KVT,
that he will perform all duties and responsibilities assigned to
him and that he will do his utmost to enhance and develop the
business, interests and welfare of KVT and Comdial generally and
shall not, without the prior written consent of the Board, work for
any other employer or take any other position or undertake any
activity (whether or not compensated) not related to his employment
that would in the aggregate require any substantial portion of his
working time or otherwise adversely affect his ability to perform
hereunder. Executive shall perform his duties at the principal
office of KVT in Sarasota, Florida, except to the extent that
Executive may be required to travel and render services in
different locations from time to time incident to the performance
of such duties. Executive shall be reimbursed for travel and other
business expenses in accordance with Comdial's standard policies
for such reimbursements.
4. Salary; Benefits. Executive's compensation, including
base salary, bonus, and other fringe benefits, is set forth on
Schedule 1 attached hereto and made a part hereof. In addition,
Executive shall be eligible to participate in all employee and
fringe benefit plans, programs and arrangements available to senior
executives in accordance with the terms thereof and as the same may
from time to time be amended from time to time during the
Employment Term. Notwithstanding the foregoing, the Board may
increase Executive's compensation at any time during the Employment
Term.
5. Termination.
(a) Five-Year Term. Subject to the provisions of
Sections 5(b), 5(c) and 5(d), the term of this Agreement shall
extend from the Effective Time until the fifth anniversary of the
Effective Time.
(b) Death or Disability. This Agreement shall be
terminated automatically upon Executive's death and may be
terminated at the discretion of the Board if Executive shall be
rendered substantially unable to perform his services hereunder for
three consecutive months because of a medically determined physical
or mental disability. A condition of disability under this
Agreement shall be determined by the Board on the basis of
competent medical advice. A written opinion of a licensed
physician certified in his field of specialization and acceptable
to the Board, or Executive's receipt of or entitlement to
disability benefits under any insurance policy, benefit plan, or
under federal social security laws shall be conclusive evidence of
disability.
(c) Termination for Cause. The Board may, at any time,
upon written notice to Executive, terminate Executive's employment
for Cause. For purposes of this Section 5(c), the term "Cause"
shall mean (i) a material failure by Executive to perform his
duties as provided in Sections 2 and 3 hereof or to comply with his
obligations under Sections 7 and 8 hereof, (ii) any
misappropriation by Executive of the funds, properties or assets of
Comdial or any of its subsidiaries, (iii) any intentional or
negligent act or omission by Executive resulting in material damage
to or destruction of the properties or assets of Comdial or any of
its subsidiaries, (iv) any falsification by Executive of any books,
records, documents or systems of Comdial or any of its
subsidiaries; or (v) the commission of any act by Executive
involving moral turpitude or constituting a felony under the laws
of the United States, any state or any political subdivision
thereof.
(d) Voluntary Resignation. Executive may, at any time,
upon thirty (30) days' written notice to Comdial, terminate the
Employment Term for any reason, with or without cause.
6. Effect of Termination. Upon the termination of the
Employment Term, Comdial's obligations under Sections 1 and 4 of
this Agreement shall immediately expire, but all other rights and
obligations of the parties hereto, including, without limitation,
the obligation of Comdial to pay compensation accrued pursuant to
Section 4 through the termination date and the obligations of
Executive under Sections 7, 8, 9, and 12 of this Agreement shall
continue in full force and effect.
7. Noncompetition.
(a) Executive acknowledges that his relationship with
Comdial and its affiliates will give him access to valuable
confidential and proprietary information and expertise not
generally known in the industry in which Comdial and its affiliates
are engaged (including information conceived, originated,
discovered or developed by Executive) relating to the telecommuni-
cations, telephone systems, computer telephony, and voice messaging
products and businesses of Comdial and its affiliates
(collectively, the "Business"), including, without limitation, the
following: technical know-how; lists of previous, present and
prospective venture partners, investors, and lenders; credit
information; sources of supply; business plans, proposals and
summaries; private processes, techniques and formulae; research and
development activities and data; inventions; and other aspects of
the affairs and business operations of Comdial and its affiliates
as they exist on the date hereof (or as they may from time to time
exist during the term of this Agreement). If used to the benefit
of a company engaging in a business similar to the Business, such
information would prejudice the interests of Comdial.
(b) In view of the foregoing, as a material inducement
to Comdial to enter into this Agreement, Executive hereby agrees
that neither Executive nor any entity controlled by or otherwise
affiliated with Executive shall, during the Employment Term and
thereafter during the Post Employment Period (defined in Section
7(c) of this Agreement), except for duties to be performed by
Executive as an employee of Comdial, in any manner, directly or
indirectly, own, manage, operate, control, be employed by, consult
with, participate in or be connected in any manner with the
ownership, management, operation or control of any sole
proprietorship, partnership, corporation or other entity (A) which
competes with Comdial or any of its affiliates in the development,
manufacture or sale of (1) voice messaging products or services, or
(2) any other product or service as to which Executive was
materially involved during the Employment Term, or (B) which calls
upon, solicits, diverts or takes away any of the then existing
customers or patrons of Comdial or any of its affiliates for the
purpose of causing or attempting to cause any such person to
purchase products sold or services rendered by Comdial or any of
its affiliates from any person other than Comdial or its
affiliates, or otherwise diverts or attempts to divert business
from Comdial. Nothing contained in the foregoing sentence shall be
construed as preventing Executive from owning, solely for passive
investment, less than five percent (5%) of the stock of any entity
registered on a recognized stock exchange. Executive agrees that
the specified duration of the covenants set forth in this Section
7 shall be extended by and for the term of any period during which
Executive is in violation of any such covenant.
(c) For purposes of this Section 7, the term "Post
Employment Period" shall mean a period of time commencing as of the
date the Employment Term expires and ending on the later to occur
of the following: (i) the fifth anniversary of the date of this
Agreement, or (ii) the second anniversary of the date the
Employment Term expires.
8. Confidentiality Agreement; Assignment of Inventions.
Executive agrees to execute and deliver to Comdial, at the
Effective Time, Comdial's standard Employee Confidentiality
Agreement and Assignment, a copy of which is attached to this
Agreement as Schedule 2. The Executive shall be bound by the
provisions of the Employee Confidentiality Agreement and Assignment
throughout the Employment Term. In the event the Executive's
employment is terminated for any reason, Executive shall continue
to be bound by the provisions of the Employee Confidentiality
Agreement and Assignment, in accordance with its terms; provided,
however, that if Comdial is in default under any of its obligations
to Executive set forth in the Stock Purchase Agreement, the
Secured/Subordinated Promissory Note (including a deferral of a
payment deferred or delayed due to the subordination provisions in
said note). or the Security Agreement (a "Default"), and such
Default shall have continued unabated for a period of sixty (60)
days after written notice thereof is received by Comdial, Executive
may terminate his employment hereunder and the provisions of the
Employee Confidentiality Agreement and Assignment shall no longer
apply to the collateral subject to the Security Agreement.
9. Copyrights. Executive specifically agrees that all
copyrightable materials generated or developed by Executive which
relate to the business of Comdial or any of its affiliates,
including, but not limited to, computer programs and documentation,
shall be considered works made for hire under the copyright laws of
the United States and shall, upon creation, be owned exclusively by
Comdial. To the extent that any such materials, under applicable
law, may not be considered works made for hire, Executive hereby
assigns to Comdial the ownership of all copyrights to such
materials, without the necessity of any further consideration, and
Comdial shall be entitled to register and hold in its own name all
copyrights in respect of such materials.
10. Application of Agreement. In the event that any court
shall finally hold that any provision stated in this Agreement
constitutes an unreasonable restriction upon Executive, the parties
hereby expressly agree that the provisions of this Agreement shall
not be rendered void but shall apply as to time and territory or to
such other extent as such court may judiciously determine or
indicate constitutes a reasonable restriction under the
circumstances involved.
11. Injunctive Relief. It is understood and agreed that it
may be impossible to measure in money the damages that will accrue
to Comdial in the event that Executive breaches the provisions of
Sections 7, 8 or 9 above, and that Comdial's remedy at law in the
event of such a breach would not be adequate. Therefore, it is
agreed that Comdial shall be entitled, in the event of such a
breach, to an injunction and other equitable remedies as a matter
of right. However, recourse to any remedy hereunder shall not
constitute an election by Comdial, but Comdial may resort to other
remedies or a combination of remedies as it may choose.
12. Executive's Representation. Executive represents and
warrants to Comdial that he has the full power and right to enter
into and perform this Agreement without the consent or approval of
any other person, including any present or previous employer; and
that his execution, delivery and performance of this Agreement will
not violate or cause a breach of any existing employment or other
agreement or any other duty by which he is bound, or any
outstanding covenant or promise, including covenants not to
compete, given by him to any other person. Executive agrees to
indemnify Comdial against any damages, expenses or claims,
including attorney's fees, by reason of any breach of these
representations or any other part of this Agreement.
13. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered
personally or transmitted by telecopy or telegram or mailed by
registered or certified mail (return receipt requested) to the
parties at the addresses set forth below (or at such other address
for a party as shall be specified by like notice):
If to Comdial:
Comdial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
McGuire, Woods, Battle & ▇▇▇▇▇▇, LLP
P. O. Box 1288
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Executive:
▇▇. ▇▇▇▇ ▇▇▇▇▇▇
c/o Key Voice Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Burgess, Harrell, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
14. Interpretation. When a reference is made in this
Agreement to a section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation."
15. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the
same agreement and shall become effective when two or more
counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not
sign the same counterpart.
16. Employee Policies. The Executive shall be subject to
Comdial's standard employee policies applicable generally to
employees holding similar positions and having similar
responsibilities. The Executive agrees to execute, at the
Effective Time, such standard forms and documents as any employee
of similar rank would sign and execute, acknowledging receipt of
copies of Comdial's standard employee policies.
17. Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to
herein) (a) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, and (b) is
not intended to confer upon any person or entity other than the
parties hereto any rights or remedies hereunder.
18. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of
Virginia without regard to any applicable conflicts of law.
19. Binding Effect. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their
respective successors and assigns. This Agreement is personal with
Executive and may not be assigned by him. Comdial shall have the
right to assign this Agreement to any affiliate of Comdial or to a
successor to all or substantially all of the business or assets of
Comdial or any division or part of Comdial with which Executive
shall be employed.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
COMDIAL CORPORATION
By: ____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
____________________________
▇▇▇▇ ▇▇▇▇▇▇
Schedule 1 to Employment Agreement
Compensation
----------------------------------
Base Salary: $140,000.00 per annum
Schedule 2 to Employment Agreement
Employee Confidentiality Agreement and Assignment
-------------------------------------------------
Name:_______________________________________ Employee No.________________
Department:_________________ Place:________________ Date_________________
COMDIAL CORPORATION and its subsidiary corporations (hereinafter
collectively called "Company") are engaged or may be engaged in certain
fields of business, including but not limited to the fields of telephony,
data processing, communications and electronics. The Company pursues
research and development work, engages in design, manufacture and production
of products, and further maintains accounting, cost, product, sales and
other records, as well as lists of customers, and other proprietary
information.
In consideration of my employment and the remuneration paid me by the
Company and as a condition of my employment or of my continued employment,
I hereby acknowledge and agree to the following matters.
1. I will devote all my time and best efforts in the fields
of business, work or investigation of the Company and for its
sole benefit.
2. I agree to maintain in confidence, both during my employment
and thereafter, all proprietary information developed by me or
learned by virtue of my employment by the Company ("Proprietary
Information"), whether developed or learned before or after signing
this agreement. For this purpose, Proprietary Information includes,
but is not limited to, any secret process, method of operation,
trade secret, engineering and technical data, business plan,
customer list, price list, or other information not generally
known by the public. I will not disclose any Proprietary
Information to others or use it to my own advantage or that of
any third person.
3. I will fully, completely and promptly disclose in writing to
the Company any inventions, ideas, concepts, discoveries,
improvements or other creations, whether patentable or not,
conceived by me during and within the scope of my employment
and relating to the fields of business, work or
investigation of the Company.
4. Subject to the exclusions set forth in the next sentence,
I agree to assign and transfer to the Company (and I do hereby
assign and transfer to the Company by means of this agreement)
all right, title and interest to all inventions, discoveries or
improvements, patentable or unpatentable, conceived or made
by me, either alone or with others, during the period of my
employment and for one year thereafter. This assignment and
agreement applies to all such items except for (i) any item as
to which the Company agrees in writing that such item was not
suggested by and did not result from any work performed on
behalf of, or at the request of, the Company, and (ii) any
item which does not fall within or arise out of the fields of
business, work or investigation of the Company. I further
agree to make and maintain such written records of the foregoing
(if any) as the Company may require, which shall be and remain
the property of and available to the Company at all times.
5. I agree to execute any and all instruments and do all things
which the Company deems necessary to vest and maintain and protect
and enforce in the Company (and the Company's nominees) the entire
right, title and interest to all such inventions, discoveries and
improvements in any and all countries, at the request and expense of
the Company, but without additional remuneration to me.
6. Except as my duties for the Company may require, I will not
remove from the property of the Company any documents, files,
notebooks, records, correspondence, or models relating to the fields of
business, work or investigation of the Company, or make copies thereof,
all such items or copies whether made by me or by others being
recognized by me to be the property of the Company and not to
be used for my own or another's benefit, or delivered or communicated
to another, at any time, without the written consent of the Company.
7. The Company shall be entitled to an injunction in any court having
jurisdiction in the event of any threatened or actual violation of
any of the provisions of this agreement.
8. Whenever the phrase "fields of business, work or investigation of
the Company" is used herein it shall be deemed to include, without
limitation, any present or future fields of business, work or
investigation of the Company or any present or future subsidiary of
the Company, and any field in which the Company (or any such
subsidiary) has granted patent licenses or other rights to others.
9. This agreement is for the benefit of successors and assigns of
the Company (as well as for the benefit of the Company), and is
binding upon my heirs, assigns, administrators and representatives.
10. The enforcement of any of my obligations under this agreement
shall not depend upon the enforcement of any other obligation
hereunder. The expiration or termination of my employment
shall not relieve me of any of my obligations as set forth in
paragraphs 1 through 9 of this agreement. The Company
may enforce any and all of its rights under this agreement for
a period of three years after the expiration or termination of
my employment.
11. This agreement as of the date hereof replaces all prior
similar agreements and may be altered only in a writing
signed by the Company.
12. I further represent that except as listed below, I have no
agreements with or obligations to others relating to the fields
of business, work or investigation of the Company which are in
conflict with this agreement:
Obligations Excluded From This Agreement:
13. I further represent that the list below contains a complete
list of all inventions and patents which I have made heretofore
in the fields of business, work or investigation of the Company,
and which I desire to be excluded from this agreement.
Name of Excluded Invention Description of Excluded Invention
-------------------------- ---------------------------------
WITNESS the following signatures as of the date first written above.
WITNESS: ACCEPTED AND AGREED:
________________________________ ____________________________________
Signature of Witness Signature (Sign name in full)
Exhibit F
Form of Tax Agreement
---------------------
Tax Agreement
This Tax Agreement (this "Tax Agreement") is made as of March 20,
1996, between and among Comdial Corporation, a Delaware corporation
("Buyer"), and ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ (collectively, the
"Sellers" and individually, a "Seller").
Recitals
Buyer and Sellers are parties to a Stock Purchase Agreement
dated as of March 5, 1996 (the "Stock Purchase Agreement"),
pursuant to which Comdial has agreed to purchase from Sellers all
of the issued and outstanding capital stock of Key Voice
Technologies, Inc., a Florida Corporation ("KVT"). The Stock
Purchase Agreement provides, among other things, that the parties
will enter into this tax Agreement.
Now, Therefore, in consideration of the premises and the mutual
covenants here contained, the consummation of the transactions
contemplated in the Stock Purchase Agreement, and other good and
valuable consideration, the parties agree as follows:
1. Certain Definitions. Capitalized terms not otherwise
defined in this Tax Agreement shall have the meaning ascribed to
them in the Stock Purchase Agreement; the singular shall be deemed
to include the plural and vice-versa; and the following terms shall
have the following meanings:
"Buyer Tax Liabilities" shall have the meaning given to
it in Paragraph 2.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Current Tax Year" means the accounting period for tax
purposes that includes the Closing Date.
"Other Tax Related Amounts" shall have the meaning given
to it in Paragraph 5(a)(1).
"Post-Closing Operations" means all activities of KVT
other than Pre-Closing Operations.
"Pre-Closing Operations" means all activities
attributable to, or conducted by, the Sellers, or KVT during
any period ending on or before the Closing Date. The term
"Pre-Closing Operations" includes the deemed sale of KVT's
assets pursuant to the Section 338(h)(10) Election.
"Pre-Closing Tax Returns" means all Tax Returns for KVT
for any taxable period that ends on or before the Closing
Date.
"Section 338 Forms" means all returns, documents,
statements and other forms that are required to be submitted
to any federal, state, county, or other governmental authority
in connection with the Section 338(h)(10) Election, including
(i) any "Statement of Section 338 Election" and U.S. Internal
Revenue Service Form 8023 (together with any schedules or
attachments thereto) that are required pursuant to Treasury
Regulation Section 1.338-1T or Treasury Regulation Section
1.338(h)(10)-1T, (ii) any "regular exclusion election," if
any, filed with respect to pursuant to Treasury Section
1.338-5T(c)(2), (iii) any comparable or similar state, local
or other governmental submissions, and (iv) any submissions
required by any state, local or other governmental authority
by reason of the fact that such an authority does not
recognize the Section 338(h)(10) Election.
"Section 338(h)(10) Election" means an election for
federal income tax purposes described in Section 338(h)(10) of
the Code with respect to the stock purchase described in the
Stock Purchase Agreement, including any elections under
Section 338(g) of the Code that Buyer is required to make
under applicable law when making the Section 338(h)(10)
Election, as well as any comparable election provided for
under state or local law..
"Seller Tax Liabilities" shall have the meaning given to
it in Paragraph 2.
"Tax or Taxes" means all federal, state, local, and
foreign taxes or assessments, including, without limitation,
those relating to net income, gross receipts, gross income,
capital stock, franchise, unitary, profits, employees and
payroll, withholding, foreign withholding, social security,
unemployment, disability, real property, personal property,
intangibles, stamp, excise, sales, use, transfer, value added,
customs, premium, windfall profits, alternative minimum or
estimated taxes, together with any interest, penalties or
additions to tax or additional amounts with respect to the
foregoing, whether disputed or not.
"Tax Return" means any declaration, report, claim for
refund, information return, return or statement relating to
Taxes, including any schedules or attachments as well as any
amendments (whether submitted on a consolidated, combined,
separate or unitary basis).
2. Liability for Taxes. The Sellers shall be responsible for
and pay all Taxes resulting from Pre-Closing Operations (including
without limitation all transfer Taxes arising out of this
transaction) (collectively "Seller Tax Liabilities"). Buyer shall
be responsible for and pay all Taxes resulting from Post-Closing
Operations ("Buyer Tax Liabilities").
(a) For purposes of this Paragraph 2, Seller Tax
Liabilities shall include the following:
(i) All liability for Taxes attributable to
operations of KVT or in the ordinary course of business for
the period ending on the Closing Date;
(ii) The liability of the Sellers for Taxes
directly resulting from the recognition of gain or loss by KVT
in connection with the sale of the shares of stock of KVT, as
a result of any Section 338(h)(10) Election and all similar
elections made under state, local, or other law; and
(iii) Any item of Tax the liability for which
properly accrues on or before the Closing Date, regardless of
when such Tax is properly due and payable, including without
limitation sales taxes, tangible personal property taxes and
gross receipts or license taxes.
(b) Computations. The amount of taxable income, gain,
loss and any Tax thereon that is considered attributable to
Pre-Closing Operations and to Post-Closing Operations shall be
determined by (a) assuming that KVT's taxable year (including the
taxable year of ) ends as of the Closing, immediately after the
deemed sale of assets pursuant to the Section 338(h)(10) Election;
(b) closing on an actual basis the books of KVT and as of the
close of such date; and (c) preparing a Tax Return based on the
income, gain, deductions and losses as so determined under an
accurate and appropriate accounting method and, to the extent
permissible, on a basis consistent with the methodology and
elections employed in prior years; provided, however, that nothing
contained in this Paragraph 2(b) shall limit in any way the rights
of Buyer or KVT to be indemnified by the Sellers or the right of
Sellers to be indemnified by Buyer under any provision of this Tax
Agreement or of the Stock Purchase Agreement.
3. Pre-Closing and Post-Closing Date Returns and Taxes.
(a) Pre-Closing Date Return and Taxes. The Sellers
shall be responsible for preparing and filing all Pre-Closing Tax
Returns on or before the due date (including extensions) and for
the payment of all Tax due with respect to such Pre-Closing Tax
Returns. Except as previously consented to in writing by Buyer
(which consent shall not be unreasonably withheld), every position
taken on a Pre-Closing Tax Return shall be consistent with the
methodology and elections employed in prior years. Buyer shall not
amend, or take any similar action with respect to, any Pre-Closing
Tax Returns without the prior written consent of the Sellers, which
consent shall not unreasonably be withheld.
(b) Review of Return. Not less than twenty-five (25)
days before the earlier of the due date of any Pre-Closing Tax
Return (including amended Tax Returns and refund claims) of KVT or
the date on which such Tax Returns are filed, the Sellers shall
furnish a draft of such Tax Return (or the portions relating to
KVT) to Buyer for its review. Not less than ten (10) days before
the earlier of the due date of such Tax Return or the date on which
such Tax return is filed, Buyer shall forward to the Sellers any
comments it may have relating to such Tax Return.
(c) Post-Closing Date Returns and Taxes. Buyer shall be
responsible for preparing and filing all Tax Returns other than
Pre-Closing Tax Returns and for paying all Buyer Tax Liabilities
with respect to such returns.
(d) Straddle Returns and Taxes. Notwithstanding
Paragraphs 3(a) and 3(c) of this Tax Agreement, with respect to any
tax period that includes Pre-Closing Operations and Post-Closing
Operations and for which the Sellers do not file returns and pay
Taxes because the applicable tax period does not end on or before
the Closing Date, or with respect to any other reason that Buyer
incurs liability for Taxes that are attributable to activities,
operations or assets of KVT, KVT or Buyer shall file the
applicable Tax Returns and pay the Tax due with respect to such
returns. Not less than twenty-five (25) days before the earlier of
the due date of any such Tax return (including amended Tax returns
and refund claims) or the date on which such Tax return is filed,
KVT or Buyer shall furnish a draft of such Tax return (or the
portions relating to KVT of a consolidated federal income Tax
return or a state, local or other consolidated, combined, or
unitary Tax return that includes KVT) to the Sellers for their
review. Not less than ten (10) days before the earlier of the due
date of such Tax return or the date on which such Tax return is
filed, the Sellers shall forward to Buyer any comments they may
have relating to such Tax return. The Sellers shall be responsible
for and pay to KVT five (5) days before the due date of such Tax
Return any Seller Tax Liabilities with respect to such Tax Return.
(e) Cooperation. The Sellers and Buyer shall cooperate
fully with each other in connection with the preparation and filing
of all Tax Returns or any audit examinations for any period,
including, but not limited to, the furnishing or making available
of records, books of account and any other information necessary
for the preparation of the Tax Returns, as well as making employees
available on a mutually convenient basis to provide additional
information and explanation. If The Sellers are required to file
a Pre-Closing Tax Return after the Closing Date, Buyer shall cause
KVT to permit the Sellers to sign such Pre-Closing Return on behalf
of KVT under a limited power of attorney. The Sellers and Buyer
shall each use their best efforts to obtain any certificates or
other documents from any governmental authority or any other
persons as may be necessary or helpful to mitigate, reduce or
eliminate any Taxes that would otherwise be imposed with respect to
the transactions contemplated by the Stock Purchase Agreement or
this Tax Agreement and which do not adversely affect any party to
this Tax Agreement.
(f) Record Retention.
(i) Buyer shall cause KVT to retain all books,
records, returns, schedules, documents and other papers
relating to its federal, state, foreign or other Tax
liability, for any taxable year or portion thereof ending on
or before the Closing Date, for the longer of three years from
the date hereof or the full period of the applicable statutes
of limitation, including extensions, for the period to which
such Taxes relate. Buyer shall give, and shall cause KVT to
give, the Sellers and their professional advisers reasonable
access, during normal business hours, to the books, files and
records of KVT (and the right to make copies thereof) existing
as of or prior to the Closing Date as the Sellers shall from
time to time reasonably request. Prior to destroying or
disposing of any books and records that may be useful to the
Sellers in connection with any such matters, Buyer shall give
ninety (90) days notice to the Sellers of the intended
destruction or disposition, and the Sellers shall have the
right to take possession of the same or to make copies of the
same at the expense of the Sellers. The Sellers shall use
reasonable efforts to preserve the confidentiality of all such
materials, subject to the need of the Sellers to disclose such
materials in connection with any actions or proceedings or any
investigation of claims under or in connection with the Stock
Purchase Agreement (including the prosecution or defense of
claims for indemnification).
(ii) The Sellers shall retain all books, records,
Tax Returns, schedules, documents and other papers relating to
the federal, state, foreign or other Tax liability, for any
taxable year or portion thereof during which they owned KVT
for the longer of three years from the date hereof or the full
period of the applicable statutes of limitation, including
extensions, for the periods to which such Taxes relate. The
Sellers shall give Buyer and KVT and their officers, employees
and professional advisors reasonable access, during normal
business hours, to the books, files and records of the Sellers
(and the right to make copies thereof) as Buyer shall from
time to time reasonably request. Prior to destroying or
disposing of any books and records that may be useful to Buyer
in connection with any such matters, the Sellers shall give
ninety (90) days notice to Buyer of the intended destruction
or disposition, and Buyer shall have the right to take
possession of the same or to make copies of the same at the
expense of Buyer. Buyer shall use reasonable efforts to
preserve the confidentiality of all such materials, subject to
the need of Buyer to disclose such materials in connection
with any actions or proceedings or any investigation of claims
under or in connection with the Stock Purchase Agreement
(including the prosecution or defense of claims for
indemnification).
(g) Contests.
(i) With respect to any Pre-Closing Tax Return, the
Sellers and their duly appointed representatives shall have
the sole right, at their expense, to supervise or otherwise
coordinate any examination process and to negotiate, resolve,
settle or contest any asserted Tax deficiencies or assert and
prosecute any claims for refund. The foregoing
notwithstanding, without the express written consent of Buyer,
which consent shall not be unreasonably withheld, the Sellers
shall not file any amended Tax Return, enter into any
agreement, settle any Tax claim or assessment, surrender any
right to claim a refund of Tax, consent to any extension or
waiver of the limitation periods applicable to any Tax claim
or assessment, or take any other action if any such action
would have the effect of increasing Buyer Tax Liabilities,
unless such action is required to comply with applicable law.
(ii) With respect to any other Tax Return, Buyer
and its duly appointed representatives shall have the sole
right, at its expense, to supervise or otherwise coordinate
any examination process and to negotiate, resolve, settle or
contest any asserted Tax deficiencies or assert and prosecute
any claims for refund. The foregoing notwithstanding, without
the express written consent of the Sellers, which consent
shall not be unreasonably withheld, Buyer shall not file any
amended Tax Return, enter into any agreement, settle any Tax
claim or assessment, surrender any right to claim a refund of
Tax, consent to any extension or waiver of the limitations
period applicable to any Tax claim or assessment, or take any
other action if any such action would have the effect of
increasing the Seller Tax Liabilities, unless such action is
required to comply with applicable law.
(iii) Each party hereto shall, within twenty (20)
days (unless action is required sooner, then as soon as
practicable), notify the other of the assertion of any claim
or the commencement of any suit, action, proceeding,
investigation or audit with respect to the operations of KVT
that is the subject of this Paragraph 3(g)(iii), and shall
provide the other party with copies (subject to deletion of
irrelevant information) of all correspondence relating to such
contest.
(h) Allocation of Refunds. If an audit, amended Tax
Return or other action results in a refund of Taxes, such refund
(including any interest paid thereon) shall be paid: (i) to the
Sellers if the deduction, loss, or other item that gives rise to
the refund is attributable to Pre-Closing Operations and the
refunded Tax was actually paid by the Sellers; and (ii) to Buyer in
all other events. The parties shall lend mutual assistance to each
other in taking such action as may be necessary to procure a
refund, including the preparation, filing and processing of any
requisite amended return or other documents.
4. Section 338(h)(10) Election Matters.
(a) Section 338(h)(10) Election. At Buyer's sole option
and upon written notice given by Buyer to Sellers at least thirty
(30) days prior to the last day prescribed by law for making an
election, Buyer and the Sellers will make timely, effective and
irrevocable Section 338(h)(10) Elections as set forth in this Tax
Agreement, and will file such elections in accordance with
applicable regulations. The Sellers shall cooperate with Buyer in
completing and filing all Section 338 Forms required to effect such
Elections. The provisions of this Tax Agreement shall also apply
to any such elections that Buyer or KVT makes for state or local
Tax purposes.
(b) Sellers' Representations. The Sellers represent
that KVT is an S corporation within the meaning of Section 1361(a)
of the Code for the Current Tax Year. Buyer and the Sellers shall
make or cause to be made the Section 338(h)(10) Elections with
respect to KVT following the procedures set forth in this Tax
Agreement. Buyer and the Sellers agree to report transactions
under the Stock Purchase Agreement consistent with the Section
338(h)(10) Elections, and shall take no position contrary thereto
unless required to do so pursuant to a final determination by any
taxing authority or judicial proceeding.
(c) Indemnification by Sellers. The Sellers shall pay
and indemnify and hold Buyer and KVT harmless from any and all
liability of the Sellers for Taxes directly arising from the
recognition of gain or loss by KVT in connection with the sale of
the shares of stock of KVT by the Sellers, as a result of any
Section 338(h)(10) Election, provided, further, that the Sellers
shall pay and indemnify and hold Buyer and KVT harmless from any
and all liability for Taxes resulting from the failure of the
Sellers to timely execute and file the Section 338 Forms required
to be filed by the Sellers in connection with the Section
338(h)(10) Election, which Section 338 Forms shall include the
applicable information relating to KVT and the Sellers, provided
that Buyer shall previously have provided such Forms for the
Sellers' review in accordance with Paragraph 4(c) hereof and shall
have executed and delivered such Forms to the Sellers no later than
five (5) business days prior to the due date thereof.
(d) Indemnification by Buyer. If a Section 338(h)(10)
Election is made pursuant to Paragraph 4(a), Buyer and KVT shall
pay and indemnify and hold the Sellers harmless from any increase
in Taxes directly resulting from such Section 338(h)(10) Election.
For purposes of this Paragraph (d), the increase in Taxes from a
Section 338(h)(10) Election shall be equal to the amount by which
Taxes payable by the Sellers on the sale of KVT stock solely by
reason of such Election exceeds the amount of such Taxes that would
have been payable had such Election not been made. No later than
June 1, 1996, the Sellers shall provide Buyer with a schedule
showing the estimated computation of the maximum amount of
increase in Taxes, if any, for which Buyer would be required to
make indemnification hereunder, so that Buyer may determine whether
to make such Election. Buyer and KVT shall cooperate with the
Sellers and their tax advisors in preparing the schedule described
in the preceding sentence.
(e) Returns. Unless otherwise required by relevant law,
Buyer shall be responsible for preparing and filing all Section 338
Forms in accordance with the terms of this Tax Agreement. Buyer
shall furnish copies of the Section 338 Forms to the Sellers for
the Sellers' review and execution at least twenty-five (25)
business days before the date such Section 338 Forms are required
to be filed. The Sellers shall execute and deliver to Buyer such
documents or forms as Buyer may reasonably request to complete
properly the Section 338 Forms, provided that such documents or
forms have been provided previously to the Sellers for their review
as described above and are delivered to the Sellers at least five
(5) business days before the date such Section 338 Forms are
required to be filed. The Sellers shall file the Section 338 Forms
required to be filed by them in order to effect the Section
338(h)(10) Election.
(f) Allocations. Buyer and the Sellers agree that the
deemed sale price of the assets shall be determined by Deloitte &
Touche LLP in accordance with Treasury Regulation Section
1.338(h)(10)-1T(f) and the parties will file the forms required
under the Code and the regulations thereunder in a manner
substantially consistent with such determination.
(g) Sellers' Expenses. Buyer or KVT shall reimburse the
Sellers for their reasonable costs incurred solely in connection
with discharging their obligations under this paragraph.
5. Indemnification.
(a) Indemnification of Buyer.
(i) The Sellers shall indemnify, protect, save and
keep harmless Buyer and its affiliates (collectively, the
"Indemnified Buyer Group") against (A) any and all Seller Tax
Liabilities and (B) any damage, loss, liability or expense
(including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees) arising out of
any Seller Tax Liabilities or any breach of a covenant or
agreement made by the Sellers in this Tax Agreement (the items
in this (B) collectively are referred to as "Other Tax Related
Amounts"). The Sellers shall promptly pay to the Indemnified
Buyer Group in immediately available funds such amount as will
indemnify and hold harmless the Indemnified Buyer Group (on an
after-tax basis) with respect to any such Seller Tax
Liabilities or Other Tax Related Amounts.
(ii) If the Indemnified Buyer Group receives any
written claim or demand for any Tax for which the Indemnified
Buyer Group is or would be indemnified by the Sellers, Buyer
shall, as required by Paragraph 3(e) of this Tax Agreement,
promptly notify the Sellers of such Tax claim or demand. If
Buyer's failure to give such prompt notice has materially and
adversely affected the Sellers' rights to contest the asserted
Tax claim or demand in both the administrative and judicial
forums, then the Sellers shall not be liable hereunder to the
Indemnified Buyer Group with respect to such asserted Tax
claim or demand.
(b) Indemnification of the Sellers.
(i) Buyer shall indemnify, protect, save and keep
harmless the Sellers against any and all Buyer Tax Liabilities
and any damage, loss, liability, or expense (including,
without limitation, reasonable expenses of investigation and
reasonable attorneys' fees) arising out of any Buyer Tax
Liabilities. Buyer shall promptly pay to the Sellers in
immediately available funds such amount as will indemnify and
hold harmless the Sellers (on an after-tax basis) with respect
to such Buyer Tax Liabilities and any damage, loss, liability,
or expense (including, without limitation, reasonable expenses
of investigation and reasonable attorneys' fees) arising out
of any Buyer Tax Liabilities.
(ii) If the Sellers receive any written claim or
demand for any Tax for which the Sellers are or would be
indemnified by Buyer, the Sellers shall, as required by
Paragraph 3(e) of this Tax Agreement, promptly notify Buyer of
such Tax claim or demand. If the Sellers' failure to give
such prompt notice has materially and adversely affected
Buyer's right to contest the asserted Tax claim or demand in
both the administrative and judicial forums, then Buyer shall
not be liable hereunder to the Sellers with respect to such
asserted Tax claim or demand.
(c) Right of Set-Off.
(i) The Sellers hereby authorize Buyer and KVT, at
any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all amounts
owed by any of them to, or any indebtedness at any time owing
by any of them to, the Sellers against any and all of the
obligations of the Sellers to Buyer and KVT under this Tax
Agreement. The rights of Buyer and KVT under this Paragraph
5(c) are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that they may
have against the Sellers. Buyer and KVT agree to notify the
Sellers promptly after either of them exercises any such right
of set-off.
(ii) In the event of any set-off under this
Paragraph 5(c), Buyer and KVT, as the case may be, shall pay
or apply such withheld or set-off amount against
indemnification obligations of the Sellers hereunder, and to
the extent that such withheld or set-off amount exceeds the
amount of the indemnification obligations of the Sellers
hereunder, such excess shall be promptly returned and paid
over to the Sellers.
(iii) If any amount withheld under this Paragraph
5(c) is determined by agreement of Buyer, KVT, and the Sellers
to exceed the actual amount as to which Buyer or KVT is
entitled to have set off pursuant to Paragraph 5(c), then
Buyer or KVT, as the case may be, shall pay such excess to the
Sellers together with interest thereon from the original due
date thereof to the date of payment, at the annual rate of one
per cent (1%) plus the prime rate (the base rate on corporate
loans at large U.S. money center commercial banks) published
in the "Money Rates" section of The Wall Street Journal,
immediately before the date of payment.
6. Certain Tax Elections.
(a) Except as required by the Code or the regulations
promulgated thereunder and except for the Section 338(h)(10)
Elections, without the prior written consent of Buyer, neither the
Sellers nor KVT shall make any new election or change any existing
election, change an annual accounting period or adopt or change any
accounting method if any such election, adoption or change would
have the effect of increasing Buyer Tax Liabilities, provided, that
Buyer will waive such objection on payment by the Sellers of the
amount necessary to hold Buyer harmless.
(b) Except as required by the Code or the regulations
promulgated thereunder and except for the Section 338(h)(10)
Election, without the prior written consent of the Sellers neither
Buyer nor KVT shall make any election, change an annual accounting
period or adopt or change any accounting method if any such
election, adoption or change would have the effect of increasing
Seller Tax Liabilities, provided, that the Sellers will waive such
objection on payment by Buyer of the amount necessary to hold the
Sellers harmless.
7. Survival; Limitation on Indemnification. Notwithstanding
anything in this Tax Agreement or the Stock Purchase Agreement to
the contrary, (i) the liability of the parties to indemnify each
other for breach of the representations and warranties made by the
parties in this Tax Agreement regarding Taxes and in any other
certificates and documents delivered in connection with them, and
the provisions of Paragraph 5 shall survive until the date on which
the full period of all applicable statutes of limitations,
including extensions, expires; provided, however, that any claims
that have been made before such date shall survive until final
resolution thereof.
8. Notices. All notices, requests, demands and other
communications that are required or may be given under this Tax
Agreement shall be considered to be properly given and received
when made in accordance with the provisions of the Stock Purchase
Agreement.
9. Successors. This Tax Agreement shall inure to the benefit
of and be binding upon the parties and their respective successors
and assigns.
10. Governing Law. This Tax Agreement shall be governed in
all respects by the laws of the Commonwealth of Virginia, without
regard to its laws or regulations relating to conflicts of laws.
11. Counterparts. This Tax Agreement may be executed in two
or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
12. Conflicts. This Tax Agreement shall supersede any
conflicting provision concerning Taxes in the Stock Purchase
Agreement.
In Witness Whereof, the parties by their duly authorized officers
have caused this Tax Agreement to be executed as of the date above
first written.
COMDIAL CORPORATION
By ________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
___________________________
▇▇▇▇ ▇▇▇▇▇▇▇
___________________________
▇▇▇▇ ▇▇▇▇▇▇
Exhibit G
Form of Certificate of Incorporation
------------------------------------
CERTIFICATE OF INCORPORATION
OF
1. The name of the corporation is ________________
_____________________________ (the "Corporation").
2. The address of its registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, County
of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The name of its registered
agent at such address is the Corporation Trust Company.
3. The nature of the business or purposes to be conducted
or promoted is:
To engage in any lawful act or activity for which
corporations may be organized under the General Corporation
Law of Delaware.
4. The total number of shares of stock which the
Corporation shall have the authority to issue is one hundred
(100) shares of Common Stock with a par value of one cent ($.01)
per share.
5. The name and mailing address of the sole incorporator
is as follows:
NAME MAILING ADDRESS
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. McGuire, Woods, Battle &
▇▇▇▇▇▇, L.L.P.
Court Square Building
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
6. The Corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers
conferred by statute, the board of directors is expressly
authorized to make, alter and repeal the Bylaws of the
Corporation.
8. Meetings of stockholders may be held within or without
the State of Delaware, as the Bylaws may provide. The books of
the Corporation may be kept (subject to any provisions contained
in the statutes) outside the State of Delaware at such place or
places as may be designated from time to time by the board of
directors or in the Bylaws of the Corporation. Elections of
directors need not be by written ballot unless the Bylaws of the
Corporation shall so provide.
9. Whenever a compromise or arrangement is proposed
between the Corporation and its creditors or any class of them
and/or between the Corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the
Corporation under the provisions of section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for the Corporation under
the provisions of section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of the Corporation, as
the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in
value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any
reorganization of the Corporation as a consequence of such
compromise or arrangement, the said compromise or arrangement of
the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the
creditors or class of creditors, and/or all the stockholders or
class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
10. The Corporation reserves the right to amend, alter,
change or repeal any provisions contained in this certificate of
incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
THE UNDERSIGNED, being the sole incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the
General Corporation Law of the State of Delaware, does make this
certificate, hereby declaring and certifying that this act and
deed and the facts herein stated are true, and accordingly has
hereunto set his hand this ____ day of February, 1996.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Incorporator
Exhibit H
Form of Bylaws
--------------
B Y L A W S
OF
_____________________________________
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such
other places both within and without the State of Delaware as the
board of directors may from time to time determine or the business
of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held at the principal office of the corporation
or at such place as may be fixed from time to time by the board of
directors, or at such other place either within or without the
State of Delaware as shall be designated from time to time by the
board of directors and stated in the notice of the meeting.
Meetings of the stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as
shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on
the fifteenth day of February if not a legal holiday, and if a
legal holiday, then on the next secular day following, at 10 A.M.,
or at such other date and time as shall be designated from time to
time by the board of directors and stated in the notice of the
meeting, at which they shall elect by a plurality vote a board of
directors, and transact such other business as may properly be
brought before the meeting.
Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor
more than sixty days before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall
be specified in the notice the of meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder who
is present.
Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by
the certificate of incorporation, may be called by the president
and shall be called by the president or secretary at the request in
writing of a majority of the board of directors, or at the request
in writing of stockholders owning a majority in amount of the
entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes
of the proposed meeting.
Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be given not less than ten nor
more than sixty days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of
stockholders for the transaction of business except as otherwise
provided by statute or by the certificate of incorporation. If,
however, such quorum shall not be present or represented at any
meeting of the stockholders, the stockholders entitled to vote
thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a
quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the
meeting.
Section 9. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which
by express provision of the statutes or of the certificate of
incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such
question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each
share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted on after three years from
its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt
notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the
whole board shall be between two and seven. The directors shall be
elected at the annual meeting of the stockholders, except as
provided in Section 2 of this Article, and each director elected
shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
Section 2. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the
directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in
office, then an election of directors may be held in the manner
provided by statute. If, at the time of filling any vacancy or any
newly created directorship, the directors then in office shall
constitute less than a majority of the whole board as constituted
immediately prior to any such increase, the Court of Chancery may,
upon application of any stockholder or stockholders holding at
least ten percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the
directors then in office.
Section 3. The business of the corporation shall be managed
by or under the direction of its board of directors which may
exercise all such powers of the corporation and do all such lawful
acts and things as are not by statute or by the certificate of
incorporation or by the Bylaws directed or required to be exercised
or done by the stockholders.
Meetings of the Board of Directors
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the
State of Delaware.
Section 5. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by
the vote of the stockholders at the annual meeting and no notice of
such meeting shall be necessary to the newly elected directors in
order legally to constitute the meeting, provided a quorum shall be
present. In the event of the failure of the stockholders to fix
the time or place of such first meeting of the newly elected board
of directors, or in the event such meeting is not held at the time
and place so fixed by the stockholders, the meeting may be held at
such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the board of
directors, or as shall be specified in a written waiver signed by
all of the directors.
Section 6. Regular meetings of the board of directors may be
held without notice at such time and at such place as shall from
time to time be determined by the board.
Section 7. Special meetings of the board may be called by the
president on five days notice to each director, if given orally
(either by telephone or in person), or by telegraph, or upon not
less than ten days notice if given by depositing in the United
States mails, postage prepaid; special meetings shall be called by
the president or secretary in like manner and on like notice on the
written request of two directors.
Section 8. At all meetings of the board, a majority of
directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting
at which there is a quorum shall be the act of the board of
directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall
not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until
a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these Bylaws, any action required or permitted to
be taken at any meeting of the board of directors may be taken
without a meeting if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board or
committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these Bylaws, members of the board of directors,
or any committee designated by the board of directors, may
participate in a meeting of the board of directors, or any
committee, by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and such
participation shall constitute present in person at the meeting.
Committees of Directors
Section 11. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees,
each committee to consist of one or more directors of the
corporation. The board may designate one or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the
absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act
at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the
resolution of the board of directors, shall have and may exercise
all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may
authorize the seal of the corporation to be affixed to all papers
which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of
incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all
or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation
or a revocation of a dissolution of the corporation or a revocation
of a dissolution, or amending the Bylaws of the corporation; and,
unless the resolution or the certificate of incorporation expressly
so provide, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of
directors.
Section 12. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when
required.
Compensation of Directors
Section 13. Unless otherwise restricted by the certificate of
incorporation or these Bylaws, the board of directors shall have
the authority to fix the compensation of directors. The directors
may be paid their expenses, if any, of attendance at each meeting
of the board of directors and may be paid a fixed sum for
attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
Removal of Directors
Section 14. Unless otherwise restricted by the certificate of
incorporation or Bylaws, any director or the entire board of
directors may be removed, with or without cause, by the holders of
a majority of shares entitled to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or
of the certificate of incorporation or of these Bylaws, notice is
required to be given to any director or stockholder, it shall not
be construed to mean personal notice, but such notice may be given
in writing, by mail, addressed to such director or stockholder, at
his address as it appears on the records of the corporation, with
postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of
incorporation or of these Bylaws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by
the board of directors and shall be a chief executive officer, a
president, a vice-president, a secretary and a treasurer. The
board of directors may also choose additional vice-presidents, and
one or more assistant secretaries and assistant treasurers. Any
number of offices may be held by the same person, unless the
certificate of incorporation or these Bylaws otherwise provide.
Section 2. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a president, one
or more vice-presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office
until their successors are appointed and qualify. Any officers
elected or appointed by the board of directors may be removed at
any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
The Chief Executive Officer
Section 6. The chief executive officer of the corporation
shall report directly to the board of directors. Except in such
instances as the board of directors may confer powers in particular
transactions upon any other officer, and subject to the control and
direction of the board of directors, the chief executive officer
shall supervise, manage and direct the business of the corporation
and shall communicate to the board of directors and any committee
thereof, reports, proposals and recommendations for their
respective consideration or action. He may do and perform all acts
on behalf of the corporation and sign contracts and other documents
in the name of the corporation. He shall, when present, preside at
meetings of the stockholders.
The President
Section 7. Subject to such supervisory powers as may be given
by the board of directors to the chief executive officer, the
president shall have such powers and perform such duties as the
board of directors shall from time to time prescribe and shall
report directly to the board of directors. His principal function
shall be to support, advise and assist the chief executive officer.
In the absence of the chairman of the board, or chief executive
officer, the president shall preside at all meetings of the board
of directors. The president shall have such other duties as may be
prescribed by the board of directors.
The Vice-Presidents
Section 8. In the absence of the president or in the event of
his inability or refusal to act, the vice-president (or in the
event there by more than one vice-president, the vice-presidents in
the order designated by the directors, or in the absence of any
designation, then in the order of their election) shall perform the
duties of the president, and when so acting shall have all the
powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and
have such other powers as the board of directors may from time to
time prescribe.
The Secretary and Assistant Secretary
Section 9. The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and record
all the proceedings of the meetings of the corporation and of the
board of directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. He
shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board
of directors or president, under whose supervision he shall be. He
shall have custody of the corporate seal of the corporation and he,
or an assistant secretary, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board
of directors (or if there be no such determination, then in the
order of their election) shall, in the absence of the secretary or
in the event of his inability or refusal to act, perform the duties
and exercise the powers of the secretary and shall perform such
other duties and have such other powers as the board of directors
may from time to time prescribe.
The Treasurer and Assistant Treasurers
Section 11. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
accounts of all receipts and disbursements in books belonging to
the corporation and shall deposit all moneys or other valuable
effects in the name and to the credit of the corporation in such
depositories as be designated by the board of directors.
Section 12. He shall disburse funds of the corporation as may
be ordered by the board of directors, taking proper vouchers for
such disbursements, and shall render to the president and the board
of directors, at its regular meetings, or when the board of
directors so requires, an account of all his transactions as
treasurer and of the financial condition of the corporation.
Section 13. If required by the board of directors, he shall
give the corporation a bond (which shall be renewed every six
years) in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance
of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his
control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be
more than one, the assistant treasurers in the order determined by
the board of directors (or if there be no such determination, then
in the order of their election), shall, in the absence of the
treasurer or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the
corporation by, the chairman or vice-chairman of the board of
directors, or the president or a vice-president and the treasurer
or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, certifying the number of shares owned
by him in the corporation.
Section 2. Any of or all the signatures on the certificate
may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by
the corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
Lost Certificates
Section 3. The board of directors may direct a new
certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation
alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such issue
of a new certificate or certificates, the board of directors may,
in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to
give the corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Transfers of Stock
Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignation or
authority to transfer, it shall be the duty of the corporation to
issue a new certificate to the person entitled thereto, cancel the
old certificate and record the transaction upon its books.
Fixing Record Date
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent or
corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange or stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a
record date, which shall not be more than sixty or less than ten
days before the date of such meeting, not more than sixty days
prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
Registered Stockholders
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of
shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books
as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws
of Delaware.
ARTICLE VII
INDEMNIFICATION
Section 1. The corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason of
the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect
to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action,
suit, or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good
faith and in a manner in which he reasonably believed to be in or
not opposed to the best interests of the corporation, and with
respect to any criminal action or proceedings, had reasonable cause
to believe that his conduct was unlawful.
Section 2. The corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in
a manner he reasonably believed to be not opposed to the best
interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless
and only to the extent that the Court of Chancery or the court in
which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view
of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
Section 3. To the extent that a director, officer, employee
or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to
in Sections 1 or 2 of this Article VII or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him
in connection therewith.
Section 4. Any indemnification under Sections 1 or 2 of this
Article VII (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in Sections 1 or 2 of
this Article VII. Such determination shall be made (a) by the
board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceedings,
or (b) if such a quorum is not obtainable, or, even if obtainable
a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (c) by the stockholders.
Section 5. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding
as authorized by the board of directors in the specific case upon
receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount unless it shall ultimately
be determined that he is entitled to be indemnified by the
corporation as authorized in this section.
Section 6. The indemnification provided by this section shall
not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another
capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 7. The corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent or agent of the corporation,
or is or was serving at the request of the corporation, as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under the provisions of this section.
ARTICLE VIII
GENERAL PROVISIONS
Dividends
Section 1. Dividends upon the capital stock of the
corporation subject to the provisions of the certificate of
incorporation, if any, may be declared by the board of directors at
any regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before the declaration of any dividend, there may
be set aside out of any funds of the corporation available for
dividends such sum or sums as the directors from time to time, in
their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, of for repairing
or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
Annual Statement
Section 3. The board of directors shall present at each
annual meeting, and at any special meeting of the stockholders when
called for by vote of the stockholders, a full and clear statement
of the business and condition of the corporation.
Checks
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such
other person or persons as the board of directors may from time to
time designate.
Fiscal Year
Section 5. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Seal
Section 6. The corporate seal shall have inscribed thereon
name of the corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or
a facsimile thereof to be impressed or affixed or otherwise
reproduced.
ARTICLE IX
AMENDMENTS
Section 1. These Bylaws may be altered, amended or repealed
or new Bylaws may be adopted by the stockholders or by the board of
directors, when such power is conferred upon the board of directors
by the certificate of incorporation at any regular meeting of the
stockholders or of the board of directors or at any special meeting
of the stockholders or of the board of directors if notice of such
alteration, amendment, repeal or adoption of new Bylaws be
contained in the notice of such special meeting. If the power to
adopt, amend or repeal Bylaws is conferred upon the board of
directors by the certificate of incorporation it shall not divest
or limit the power of the stock holders to adopt, amend or repeal
bylaws.
Exhibit I
Form of Sellers' Counsel Legal Opinion
--------------------------------------
[ Letterhead of Burgess, Harrell, ▇▇▇▇▇▇▇ & ▇▇▇▇▇]
< closing date >
Comdial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Stock Purchase Agreement Dated March __, 1996,
Among Comdial Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel for ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
("Sellers") and Key Voice Technologies, Inc., a Florida corporation
("KVT") in connection with the transactions contemplated by a Stock
Purchase Agreement dated March __, 1996 (the "Agreement"), among
Comdial Corporation, a Delaware corporation ("Buyer") and Sellers,
pursuant to which, among other things, Sellers have agreed to sell
and Buyer has agreed to buy all of Sellers' stock of KVT. This
opinion is rendered pursuant to the provisions of Section 7.2(3) of
the Agreement. All terms used herein, and not otherwise defined
herein, shall have the meanings they have in the Agreement unless
the context requires otherwise.
In so acting, we have examined such certificates of
public officials, certificates of officers of KVT, and the
originals (or copies thereof, certified to our satisfaction) of
such corporate documents and records of Sellers and KVT, and such
other documents, records and papers as we have deemed relevant in
order to give the opinions hereinafter set forth. In this
connection, we have assumed the genuineness of signatures, the
authenticity of all documents submitted to us as originals and the
conformity to authentic original documents of all documents
submitted to us as certified, conformed, facsimile or photostatic
copies. In addition, we have relied, to the extent that we deem
such reliance proper, upon certificates of Sellers and officers of
KVT with respect to the accuracy of certain factual matters
relevant to the opinions contained herein.
Based upon the foregoing, it is our opinion that:
1. KVT is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida. The
chief executive officer of KVT has submitted to us a certificate,
a copy of which is attached hereto as Appendix 1, with respect to
qualification as a foreign corporation in other jurisdictions. We
have no knowledge that any of the information contained in such
certificate is incorrect in any material respect. To the best of
our knowledge, KVT has no subsidiaries.
2. KVT has all corporate power and authority to own all
of its properties and assets and to carry on its business as now
being conducted, except as may be indicated on the certificate
referenced in paragraph 1 above..
3. Each of Sellers has the capacity and authority to
execute and deliver the Agreement and to consummate the
transactions contemplated thereby. The Agreement has been duly executed
and delivered by each of Sellers and constitutes the valid and
binding obligation of Sellers, enforceable against each of them in
accordance with its terms. Our opinion is subject to the qualifications
that the enforceability of the Agreement against Sellers
may be limited by (i) applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally, (ii) equitable
principles of general applicability (regardless of whether
considered in a proceeding in equity or at law) and (iii) the
requirement that the parties act with reasonableness and in good
faith to the extent required by applicable law.
4. To the best of our knowledge, each of Sellers and KVT
has made all filings with, and obtained all permits, authorizations,
consents or approvals of public bodies required of it as a
condition to the lawful consummation of the transactions
contemplated by the Agreement.
5. (a) Immediately prior to the Closing, the authorized
capital stock of KVT consists of 1,000 shares of KVT Common Stock,
of which (i) 200 shares of KVT Common Stock are issued and
outstanding and owned of record and beneficially by Sellers, free
of any lien, claim or other encumbrance, (ii) no shares of KVT
Common Stock are held in the treasury of KVT, (iii) no shares of
KVT Common Stock are reserved for future issuance in connection
with the KVT Employee Plans, and (iv) no shares of KVT Common Stock
are reserved for future issuance or subject to any stock warrants
or options. All shares of KVT Common Stock held by Sellers are
duly authorized, validly issued, fully paid and nonassessable. To
the best of our knowledge, there are no obligations, contingent or
otherwise, of KVT to repurchase, redeem or otherwise acquire any
shares of KVT Common Stock or make any investment (in the form of
a loan, capital contribution or otherwise) in any corporation,
partnership, limited liability company, joint venture or other
organization.
(b) To the best of our knowledge, except as set forth in
Paragraph 5(a), (i) there are no equity securities of any class of
KVT, or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance or outstanding,
and (ii) there are no options, warrants, equity securities, calls,
rights, commitments or agreements of any character to which KVT is
a party or by which it is bound obligating KVT to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares
of capital stock of KVT or obligating KVT to grant, extend,
accelerate the vesting of or enter into any such option, warrant,
equity security, call, right, commitment or agreement. To the best
our knowledge, there are no voting trusts, proxies or other
agreements or understandings with respect to the shares of capital
stock of KVT[, except for that certain stockholder agreement among
KVT and Sellers and dated __________, 19__].
6. The execution and delivery by Sellers of the
Agreement and the consummation of the transactions contemplated
thereby does not and will not violate or result in a breach of any
provision of the Certificate of Incorporation or Bylaws of KVT or,
to the best of our knowledge, (i) result in a default (or give rise
to any right of termination, cancellation or acceleration) under
the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement, lease or other instrument or
obligation known to us (including, but not limited to, any license
or other agreement related to KVT Intellectual Property Rights) to
which KVT or either of the Sellers is a party or by which KVT or
either of the Sellers or the business conducted by it or either of
them may be bound, or (ii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to KVT or either of
the Sellers or to the business conducted by it or either of them.
7. In the course of our engagement to represent or
advise KVT or either of the Sellers professionally, we have not
become aware of any pending legal proceeding before, or investigation
by, any court or administrative agency or authority or any
arbitration tribunal nor have we devoted substantive attention in
the form of legal representation or consultation to any overtly
threatened litigation against KVT, either of the Sellers, or any of
their respective properties or assets, or with respect to the
transactions contemplated by the Agreement. In expressing the
foregoing opinion, we have endeavored, to the extent we have
believed necessary, to determine from lawyers currently in our firm
who have performed legal services for KVT or the Sellers whether
such services involved substantive attention in the form of legal
consultation concerning pending or overtly threatened litigation.
Beyond that (and except for due inquiry of the chief executive and
financial officers of KVT), we have not made any review of KVT's
transactions or other matters as a basis for the opinion expressed
herein.
The opinions expressed herein are limited to matters governed
by the laws of the State of Florida. This letter is furnished to
Buyer and is solely for Buyer's benefit and for the benefit of
Fleet Financial Corporation or any financial institution lending
funds to Buyer for the purpose of consummating the transactions
contemplated by the Agreement. No other persons are entitled to
rely on this letter without our prior written consent.
Very truly yours,
Appendix 1
CERTIFICATE OF OFFICER
The undersigned officer of Key Voice Technologies, Inc., a
Florida corporation (the "Corporation"), hereby certifies the
following in connection with the Stock Purchase Agreement dated
March __, 1996 between Comdial Corporation, a Delaware corporation
("Buyer"), and ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ ("Sellers"), pursuant
to which Sellers have agreed to sell, and Buyer has agreed to buy,
all of the issued and outstanding shares of the Corporation:
1. The Corporation is incorporated in the State of Florida.
2. The Corporation is not qualified as a foreign corporation
in any jurisdiction.
3. The Corporation does not own, lease, license or use any
real or personal property or other assets outside the State of
Florida; however, the Corporation sells product throughout the
United States through independent dealers and, in addition, has one
employee engaged in sales in each of the States of California and
Michigan.
4. The Corporation has received no notice or other communi-
cation from any State (i) inquiring as to its activities within such
State, (ii) requesting or demanding that it qualify as a foreign
corporation in such State or (iii) requesting or demanding that it
pay any registration, franchise, income or other tax or fee or file
any type of form or return with respect thereto.
IN WITNESS WHEREOF, I have hereunder set my hand this ___ day
of March, 1996.
KEY VOICE TECHNOLOGIES, INC.
By:____________________________
Title:__________________________
Exhibit J
Form of Buyer's Counsel Legal Opinion
-------------------------------------
[ Letterhead of McGuire, Woods, Battle & ▇▇▇▇▇▇ llp]
< closing date >
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇ ▇▇▇▇▇▇
c/o Key Voice Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Stock Purchase Agreement Dated _______, 1996
Among Comdial Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
Dear Messrs. Branica and ▇▇▇▇▇▇:
We have acted as counsel for Comdial Corporation, a Delaware
corporation ("Buyer") in connection with the transactions contemplated
by a Stock Purchase Agreement dated ___________, 1996 (the
"Agreement"), among Buyer, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ ("Sellers") and
Key Voice Technologies, Inc., a Florida corporation
("KVT"), pursuant to which, among other things, Sellers have agreed
to sell and Buyer has agreed to buy all of Sellers' stock of KVT.
This opinion is rendered pursuant to the provisions of Section
7.3(3) of the Agreement. All terms used herein, and not otherwise
defined herein, shall have the meanings they have in the Agreement
unless the context requires otherwise.
In so acting, we have examined such certificates of
public officials, certificates of officers of Buyer, and the
originals (or copies thereof, certified to our satisfaction) of
such corporate documents and records of Buyer, and such other
documents, records and papers as we have deemed relevant in order
to give the opinions hereinafter set forth. In this connection, we
have assumed the genuineness of signatures, the authenticity of all
documents submitted to us as originals and the conformity to
authentic original documents of all documents submitted to us as
certified, conformed, facsimile or photostatic copies. In
addition, we have relied, to the extent that we deem such reliance
proper, upon certificates of officers of Buyer with respect to the
accuracy of certain factual matters relevant to the opinions
contained herein.
Based upon the foregoing, it is our opinion that:
1. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware.
2. Buyer has the corporate power and authority to
execute and deliver the Agreement and to consummate the
transactions contemplated thereby. The execution and delivery by Buyer of
the Agreement and the consummation of the transactions contemplated
thereby have been duly authorized by the Board of Directors of
Buyer and no other corporate proceedings on the part of Buyer are
necessary with respect thereto.
3. The Agreement has been duly executed and delivered by
Buyer and constitutes the valid and binding obligation of Buyer,
enforceable against it in accordance with its terms. Our opinion
is subject to the qualifications that the enforceability of the
Agreement against Buyer may be limited by (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally, (ii) equitable principles of general applicability
(regardless of whether considered in a proceeding in equity or
at law) and (iii) the requirement that the parties act with
reasonableness and in good faith to the extent required by
applicable law.
4. The Buyer Common Stock issued to the Sellers is duly
authorized, validly issued, fully paid and nonassessable.
The opinions expressed herein are limited to matters governed
by the laws of the Commonwealth of Virginia and General Corporation
Law of the State of Delaware. This letter is furnished to Sellers
and is solely for Sellers' benefit. No other persons are entitled
to rely on this letter without our prior written consent.
Very truly yours,
