ASSET PURCHASE AGREEMENT
BETWEEN
COMDIAL CORPORATION,
AMERICAN PHONE CENTERS, INC.
AND
KING TECHNOLOGIES, INC.
Dated as of May 4, 2001
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of
May , 2001, is made between COMDIAL CORPORATION, a Delaware corporation
("Comdial"), AMERICAN PHONE CENTERS, INC., a Delaware corporation which is a
wholly-owned subsidiary of Comdial ("Subsidiary") (Comdial and Subsidiary are
collectively referred to as the "Seller"), and KING TECHNOLOGIES, INC., a
Tennessee corporation ("Buyer").
RECITALS
WHEREAS, Comdial desires to sell, directly or through
Subsidiary certain inventory related to the repair and maintenance of telephones
and keysystems, certain equipment related to the repair and maintenance of such
telephones and keysystems, certain discontinued and obsolete telephone and
keysystems inventory and Seller's rights and goodwill in the trade names and
service marks associated therewith (the "Business"); and
WHEREAS, Buyer desires to purchase certain assets relating to
the Business in accordance with the terms and conditions set forth in this
Agreement; and
WHEREAS, simultaneously with the execution of this Agreement,
Seller and Buyer are entering into a Repair Agreement (as herein defined) and a
Discontinued Product Agreement (as defined herein).
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements herein contained, the parties agree
as follows:
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the
following meanings:
"Closing" has the meaning set forth in Section 8.1.
"Closing Date" has the meaning set forth in Section 8.1.
"Discontinued Product Agreement" is an agreement between
the parties, a copy of which is attached hereto as Exhibit A, and is described
in Section 2.1.
"Encumbrances" has the meaning set forth in Section 3.6.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended.
"Legal Action" has the meaning set forth in Section 9.2.
"Liabilities" shall mean, as to any Person, all debts,
adverse claims, liabilities, commitments, responsibilities, and obligations of
any kind or nature whatsoever, direct, indirect, absolute or contingent, of such
Person, whether accrued, vested or otherwise, whether know or unknown and
whether or not actually reflected, or required to be reflected, in such Person's
balance sheets or other books and records.
"Person" shall mean an individual, a partnership, a
joint venture, a corporation, a business trust, a limited liability company, a
trust, an unincorporated organization, a joint stock company, a labor union, an
estate, a governmental entity or any other entity.
"Purchased Assets" has the meaning set forth in Section
2.1.
"Purchased Intellectual Property Rights" has the meaning
set forth in Section 2.1
"Purchase Price" has the meaning set forth in Section
2.4.
"Repair Agreement" is an agreement between the parties,
a copy of which is attached hereto as Exhibit B, and is described in Section 2.1
"Security Agreement" is an agreement between the Buyer
and Comdial, a copy of which is attached hereto as Exhibit C, in which the Buyer
grants Comdial a security interest in certain assets of the Buyer
"Survival Date" has the meaning set forth in Section
9.4.
"Tax" or "Taxes" shall mean any federal, state, county,
local, foreign and other income, profits, gains, net worth, sales and use, ad
valorem, gross receipts, business and occupation, license, estimated, stamp,
custom duties, occupation, property (real or personal), franchise, capital
stock, license, excise, value added, payroll, employees, income withholding,
social security, unemployment or other tax, any penalty, addition to tax and
interest on the foregoing.
"Transfer Tax" or "Transfer Taxes" shall mean any
federal, state, county, local foreign and other sales, use, transfer,
conveyance, documentary transfer, recording or other similar tax, fee or charge
imposed upon the sale, transfer or assignment of property or any interest
therein or the recording thereof, and any penalty, addition to tax or interest
with respect thereto, but such term shall not include any tax on, based upon or
measured by, the net income, gains or profits from such sale, transfer or
assignment of the property or any interest therein.
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ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale of Assets. Subject to the terms set
forth below, Seller agrees to sell to Buyer, and Buyer agrees to purchase from
Seller the following assets (the "Purchased Assets"):
(a) Certain inventory consisting of raw materials and
components necessary for the phone and keysystem repair and maintenance which
inventory is described by type and quantity on Schedule 2.1(a) attached hereto
(the "Purchased Inventory");
(b) Certain equipment related to the repair and
maintenance of such phones and keysystems which equipment is listed on Schedule
2.1(b) attached hereto (the "Purchased Equipment");
(c) Certain inventory of discontinued and/or obsolete
phones and keysystems which inventory is by type and quantity on Schedule 2.1(c)
attached hereto (the "Purchased Q Stock"); and
(d) All registered and unregistered trademarks, trade
names, service marks, service names and applications therefore relating to or
associated with "American Phone Center" together with the goodwill of the
Business represented by that xxxx and name, and any and all customer lists,
"toll free" telephone numbers and domain names used in the business or
associated with "American Phone Company," all of which are listed on Schedule
2.1(d) (the "Purchased Intellectual Property").
Certain of the Purchased Assets will be used by Buyer to
repair and maintain and/or provide in warranty and out of warranty services for
certain telephones and keysystems provided by Seller pursuant a repair agreement
of even date herewith executed by the parties hereto (the "Repair Agreement").
Further, Seller agrees to provide certain discontinued and obsolete telephones
and keysystems to Buyer subsequent to Closing pursuant to a discontinued product
agreement of even date herewith executed by the parties hereto ("the
"Discontinued Product Agreement") (the Repair Agreement and Discounted Product
Agreement shall collectively be referred to as the "Service Agreements").
2.2 Time of purchase. Buyer will purchase all of the Purchased
Assets at Closing.
2.3 Purchase Price. The total purchase price ("Purchase
Price") for the Purchased Assets is One Million Four Hundred Thousand and 00/100
Dollars ($1,400,000.00), and the Purchase Price shall be allocated among the
Purchased Assets as follows:
(a) One Hundred Fifty Thousand and 00/100 Dollars
($150,000.00) of the Purchase Price shall be allocated to the Purchased
Inventory;
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(b) One Hundred Thirty-Seven Thousand and 00/100
Dollars ($137,000.00) of the Purchase Price shall be allocated to the Purchased
Equipment;
(c) One Million Sixty-Three Thousand and 00/100 Dollars
($1,063,000.00) of the Purchase Price shall be allocated to the Purchased Q
Stock; and
(d) Fifty Thousand and 00/100 Dollars ($50,000.00) of
the Purchase Price shall be allocated to the Purchased Intellectual Property.
2.4 Payment of Purchase Xxxxx.Xxx Million One Hundred Fifty
Thousand and 00/100 Dollars ($1,150,000.00) of the Purchase Price shall be paid
by the Buyer by delivery of a secured promissory note of the Buyer substantially
in the form of Exhibit D hereto (the "Note"). The balance of the Purchase Price
shall be paid by the Buyer to the Seller by wire transfer of immediately
available funds in the aggregate amount equal to Two Hundred Fifty Thousand and
00/100 Dollars ($250,000.00) (the "Cash Purchase Price") .
2.5 Shipment Terms. Buyer shall pay for the cost of shipping
the Purchased Assets. All items shall be shipped F.O.B. Seller's
Charlottesville, Virginia facility.
2.6 Removal of Purchased Assets. Buyer shall take control of
the Purchased Assets immediately following Closing and shall, on or before May
4, 2001 remove the Purchased Assets from the Seller's facility. Buyer shall only
be obligated to cap the electrical lines, gas lines and all compressor lines, if
any, at the machine disconnect. Buyer shall not be responsible for cleaning the
Seller's facility or for removal of any items not included in the Purchased
Assets. Buyer shall also not be responsible for damages to Seller resulting from
Buyer's failure to remove the Purchased Assets from Seller's facility on or
before May 4, 2001 if such failure is the result of actions outside of Buyer's
control. Buyer shall be liable for any damages caused to any building, facility
or surrounding docks, land, or structure as a result of Buyer's or Buyer's
agents negligence in the removal of the Purchased Assets.
2.7 Excluded Liabilities. Except as otherwise set forth in
this Agreement, Buyer shall not assume, and shall be deemed not to have assumed,
any Liabilities, and Seller shall be solely and exclusively liable with respect
to all Liabilities of Seller (collectively, the "Excluded Liabilities"),
including, but not limited to, those Liabilities set forth below:
(a) Any Liabilities which arise, whether before, on or
after the Closing which do not relate to the Business;
(b) Any Liabilities resulting from any agreement,
contract with any vendor or supplier, unless Buyer expressly assumes such
liability in writing;
(c) Any Liabilities under any real or personal property
leases;
(d) Any Liabilities arising out of or in connection
with any indebtedness of Seller to any lender or to any vendors of goods and
services delivered or furnished to Seller;
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(e) Any Liabilities attributable, to incurred in
connection with, arising from, or relating to, any collective bargaining
agreement, or any bonus, incentive, deferred compensation, medical, health, life
or other insurance, welfare, fringe benefit, severance, vacation pay, sick pay,
termination, retention, consulting, change of control, employment, stock option,
stock appreciation right, stock purchase, phantom stock or other equity-based,
performance, pension, retirement or any other incentive, compensation or benefit
plan, program, policy agreement or arrangement (including, but not limited to,
any "employee benefit plan" as defined in Section 3(3) of ERISA), sponsored,
maintained, contributed to or required to be contributed to at any time by
Seller or any trade or business which together with Seller would be deemed (or
at any time would have been) a "single employer" within the meaning of Section
4001 of ERISA (each, an "ERISA Affiliate"), for the benefit of any current or
former employee, officer, director, agent or consultant of Seller, or any ERISA
Affiliate, whether formal or informal and whether legally binding or not; and
(f) Any Liabilities for income Taxes of Seller and any
other Taxes of Seller, including, but not limited to, all Taxes attributable to,
incurred in connection with or arising out of the operation of the Business
including those which are not due or assessed until after the Closing but which
are attributable to any period (or portion thereof) ending on or before the
Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer the following:
3.1 Organization; Qualification. Each Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has corporate power and authority to own its assets and
conduct its business as currently conducted. Subsidiary is the wholly-owned
subsidiary of Comdial. Subsidiary is qualified to transact business in the State
of Virginia. Comdial is the sole owner of all issued and outstanding capital
stock of the Subsidiary, and no Person has the right to acquire any interest in
the capital stock of the Subsidiary. There are not any existing options,
warrants, calls, subscriptions or other rights or agreements obligating
Subsidiary to issue or sell any equity ownership interest in the Subsidiary.
3.2 Authority Relative to this Agreement. Each Seller has
corporate power and authority to execute and deliver this Agreement and the
Service Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by each Seller of this Agreement and the
Service Agreements and the consummation by it of the transactions contemplated
hereby and thereby, have been duly authorized by the Board of Directors of each
Seller and no other corporate proceedings on the part of each Seller are
necessary with respect thereto. This Agreement has been duly executed and
delivered by each Seller and this Agreement and the Service Agreements when
executed and delivered by each Seller, will constitute valid and binding
obligations of each Seller, enforceable against each Seller in accordance with
their terms.
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3.3 No Violation. The execution and delivery by Seller of this
Agreement and the Service Agreements and the consummation of the transactions
contemplated hereby and thereby, will not (i) violate or result in a breach of
any provision of the Certificate of Incorporation or Bylaws of either Seller,
(ii) result in a default, or give rise to any right of termination, modification
or acceleration, or the imposition of an Encumbrance on any of the Purchased
Assets, under the terms or provisions of any agreement or other instrument or
obligation to which either Seller is a party or by which either Seller or any of
the Purchased Assets are bound except for the lien of Bank of American, N.A.
(the "Bank") pursuant to the Amended and Restated Credit Agreement dated as of
November 22, 2000 and related loan documents (the "Loan Documents"), which
Seller will cause to be released at or prior to Closing, or (iii) violate any
law or regulation, or any judgment, order or decree of any court, governmental
body, commission, agency or arbitrator applicable to either Seller or any of the
Purchased Assets. The Seller has not violated, is not subject to any claim based
on, has no knowledge of any action or threat of action arising under or any
employee's right to exercise such employee's rights under the Family and Medical
Leave Act of 1993 ("FMLA"), or the Consolidated Omnibus Budget Reconstruction
Act of 1985 ("COBRA"). No employees or former employees of Subsidiary have
exercised their rights under COBRA except Xxxxx X. Xxx, Xxxxx Xxxxx, Xxxxxxx
Xxxxxxx, Xxxxx Xxxxx, and Xxxxx Xxxx (collectively, the "COBRA Individuals"). No
employee or former employee of Subsidiary is currently, or to the Seller's
knowledge likely to be, out, on leave, or otherwise not performing his or her
duties as a result of FMLA or any xxxxxxx'x compensation claim.
3.4 Consents and Approvals. There is no requirement applicable
to either Seller to make any filing with, or to obtain any consent or approval
from any Person, as a condition to the consummation of the transactions
contemplated by this Agreement or the Service Agreements except for the consent
of the Bank under the Loan Documents which the Seller will obtain prior to
Closing.
3.5 Litigation. Except as set forth in Schedule 3.5, there are
no actions, suits, claims, investigations, orders, judgments, decrees or
proceedings pending or, to the knowledge of Seller, threatened against Seller,
before any court, governmental body, commission, agency or arbitrator, which if
decided adversely to Seller could in any way challenge the consummation of this
transaction.
3.6 Title to Purchased Assets. Seller holds good and
marketable title to all of the Purchased Assets, free and clear of liens,
mortgages, changes, security interests or other defects in title
("Encumbrances"), except for the lien of the Bank under the Loan Documents,
which Seller shall cause to be released at or prior to Closing.
3.7 No Finder. Neither Seller nor any Person acting on its
behalf has paid or become obligated to pay any broker, finder or intermediary
for or on account of the transactions contemplated by this Agreement or the
Service Agreements.
3.8 Disclaimer. The representations and warranties provided in
this Article III set forth all the representations and warranties of the Seller,
and except as expressly stated herein, BUYER ACCEPTS THE PURCHASED ASSETS "AS
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IS," AND SELLER EXPRESSLY DISCLAIMS AND BUYER WAIVES ALL OTHER REPRESENTATIONS
AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR ARISING BY COURSE OF DEALING OR
PERFORMANCE, CUSTOM, USAGE IN THE TRADE OR OTHERWISE, INCLUDING WITHOUT
LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR USE.
3.9 Intellectual Property.
(a) Schedule 2.1(d) constitutes a true, correct,
current and complete list of all of the Purchased Intellectual Property.
(b) To Seller's knowledge, none of the Purchased Assets
violate any license or infringe any intellectual property right of another. To
the best of Seller's knowledge, there are no pending or threatened proceedings
or litigation or other adverse claims (i) affecting the Purchased Intellectual
Property; (ii) which claim the Purchased Intellectual Property infringes upon
any person's licenses, trade names, trademark (registered or common law), trade
name or trademark registrations and applications, service marks (registered or
common law), service xxxx registrations and applications; or (iii) which claim
the Purchased Intellectual Property violates the Anticybersquatting Consumer
Protection Act (codified at 15 U.S.C. ss.1125 et. seq.), nor is there any
reasonable basis upon which such a claim may be asserted. The Buyer
acknowledges, subject to Section 5.10, that trademarks for "American Phone
Centers" and design, Registration No. 1,879,362 has technically expired for
failure to file a Declaration of Continuing Use. The Buyer acknowledges that
trademarks for "American Phone Centers" and design, S/N, 79/190,898 and
"American Phone Centers" and design, S/N 79/190,898 have been abandoned,
"American Phone Centers" and design, Registration No. 1,291,520 has been
canceled, and that the Seller owns only common law rights in such trademarks.
3.10 Subsidiary Not Insolvent. The Subsidiary is solvent, and
will not be rendered insolvent as a result of the consummation of the transfer
contemplated by this Agreement, and is and will continue to be is able to meet
all of its obligations in accordance with their terms.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller the following:
4.1 Corporate Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Tennessee. Buyer has all requisite power and authority to execute and deliver
this Agreement and the Service Agreements and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Buyer of this
Agreement and the Service Agreements and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by the
Directors of Buyer and no other corporate proceedings on the part of Buyer are
necessary with respect thereto. This Agreement has been duly executed and
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delivered by Buyer, and this Agreement and the Service Agreements, when executed
and delivered by Buyer, will constitute, valid and binding obligations of Buyer,
enforceable in accordance with their terms except as their terms may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting creditors' rights generally or (ii) general principles of equity,
whether considered in a proceeding in equity or at law.
4.2 Consents and Approvals. There is no requirement applicable
to Buyer to make any filing with, or to obtain any consent or approval of any
Person as a condition to the consummation of the transactions contemplated by
this Agreement.
4.3 No Violation. The execution and delivery by Buyer of this
Agreement and the Service Agreements does not and will not (i) violate or result
in a breach of any provision of the Articles of Incorporation or Bylaws of
Buyer, (ii) result in a default, or give rise to any right of termination,
modification or acceleration under the terms, conditions or provisions of any
agreement or other instrument or obligation to which Buyer is a party or by
which Buyer may be bound, or (iii) violate any law or regulation, or judgment,
order or decree of any court, governmental body, commission, agency or
arbitrator applicable to Buyer.
4.4 No Finder. Neither Buyer nor any Person acting on its
behalf has paid or become obligated to pay any broker, finder or intermediary
for or on account of the transactions contemplated by this Agreement or the
Service Agreements
4.5 Litigation. Except as set forth in Schedule 3.5, there are
no actions, suits, claims, investigations, orders, judgments, decrees or
proceedings pending or, to the knowledge of Buyer, threatened against Buyer,
before any court, governmental body, commission, agency or arbitrator, which if
decided adversely to Buyer could in any way challenge the consummation of this
transaction.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Confidentiality.
(a) The information which Buyer has or will acquire
about Seller as a result of the transactions contemplated by this Agreement is
termed "Evaluation Material." Buyer agrees that neither it, nor any of its
representatives will (i) use any such material for any purpose not related to
the transactions contemplated by this Agreement or the Supply Agreement or (ii)
disclose any such material to anyone except its representatives who may need
such information to perform their respective duties and have been informed of
its confidential nature and directed to treat it confidentially. If the
transactions contemplated by this Agreement are not consummated, Buyer agrees
that it and its representatives will return any written Evaluation Material in
their possession, or will destroy and will not retain any such material, any
copies thereof or any notes or memoranda made using such material.
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(b) The confidentiality agreement contained herein will
terminate upon the earlier of three years after the date hereof or upon
consummation of the transactions contemplated hereby.
(c) The parties agree that monetary damages alone would
not be a satisfactory remedy for a breach of that portion of the confidentiality
agreement contained herein which relates to any proprietary information held by
Seller, including, but not limited to, any proprietary process employed by
Seller in its manufacturing operations, and that if that provision is breached,
Seller is entitled to injunctive relief as well as monetary damages.
(d) Notwithstanding the foregoing, Buyer and its
representatives may use and disclose Evaluation Material and information
obtained from the Evaluation Material to the extent that (i) they acquired such
information on a non-confidential basis prior to receipt thereof from Seller,
(ii) such information has become generally available to the public, or (iii)
such information is provided to the Person using or disclosing it by a Person
who obtained such information other than as a result of a breach of this
Agreement. Furthermore, Buyer and its representatives may disclose such
information to the extent that they are required to do so to comply with a
governmental or judicial order or decree, but upon receiving notice that any
such order or decree has been issued or is being sought, they will promptly
notify Seller and will, at the expense of Seller, if Seller wants such
information to continue to be treated confidentially, cooperate with Seller's
efforts to contest the issuance of such order or decree.
5.2 Taxes and Recording Fees. All Transfer Taxes incurred in
connection with the acquisition of the Purchased Assets will be borne by Buyer.
5.3 Expenses. Except as otherwise provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the party incurring such costs
and expenses.
5.4 Public Announcements. Except as required by law, the
parties will consult with each other before issuing any press releases or making
any public statements with respect to this Agreement and will not issue any such
press release or make any such public statement without the consent of the
other. After Closing, Buyer may, without Seller's consent, promote and advertise
the business in Buyer's sole discretion.
5.5 Efforts to Consummate. Subject to the terms and conditions
herein provided, each of the parties agrees to use its reasonable best efforts
to take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable to consummate, as promptly as practicable,
the transactions contemplated hereby, including, but not limited to, the
obtaining of all necessary consents, waivers or approvals of third parties,
whether private or governmental, required of it to enable it to comply with the
conditions precedent to consummating the transactions contemplated by this
Agreement. Each party agrees to cooperate fully with the other in assisting it
to comply with the provisions of this Section, and Seller agrees to take such
steps as may be necessary to remove any Encumbrances (other than imperfections
of title permitted by this Agreement) which affect the Purchased Assets.
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Notwithstanding the foregoing, no party hereto shall be required to initiate any
litigation, make any substantial payment or incur any material economic burden,
except for a payment otherwise then required of it, to obtain any consent,
waiver, or approval, and if, despite its efforts, any party is unable to obtain
any consent, waiver or approval, the other party may terminate this Agreement
and shall have no liability therefor except as is provided in Article X.
5.6 Outstanding Purchase Orders. Prior to purchasing inventory
directly from any third party vendor, Buyer will use commercially reasonable
efforts to purchase inventory under outstanding purchase orders of Seller with
Seller's vendors as identified on Schedule 5.6.
5.7 Access. From the date hereof until the Closing, Seller
shall allow Buyer's employees, agents and representative during regular business
hours to make such investigation of the business and Seller's books and records
related thereto, as Buyer reasonably deems necessary or advisable, and Seller
shall instruct its employees to cooperate in any such investigation. From and
after the Closing, so long as any books, records or other files relating to the
Purchased Assets or operation of the business, to the extent that they pertain
to such operations prior to the Closing, remain in existence and available, each
party (at its expense) shall have the right, upon reasonable notice, to inspect
and to make copies of the same at any time during regular business hours for any
purpose, including, without limitation, in connection with any third-party claim
in respect of which a party may have Liability hereunder.
5.8. Employee Matters. The fifty-three (53) employees of the
Seller designated on Schedule 5.8 ("Continuing Employees") shall, commencing on
the Closing Date, become employees of the Buyer, and thereupon, the Buyer shall
have full responsibility for all matters affecting such Continuing Employees,
including, without limitation, the institution of new benefit plans and
severance practices. With respect to periods prior to the Closing Date, the
Seller shall pay all obligations relating to the employees, including but not
limited to any obligations relating to the COBRA Individuals. Notwithstanding
anything herein to the contrary, Buyer shall not be obligated to retain any
Continuing Employee for any specified period of time after the Closing.
5.9. Name Change. The Subsidiary shall execute and file the
necessary documentation to change the name it has qualified to do business under
in Virginia from "American Phone Centers, Inc." to another name, which is in no
way similar to "American Phone Centers, Inc."
5.10 Declaration of Continuation. Prior to the Closing, the
Seller shall have filed a "Declaration of Continuing Use" with the United States
Patent and Trademark Office for "American Phone Centers" and related design,
Registration Number 1,879, 362.
ARTICLE VI
CONDITIONS TO OBLIGATION OF BUYER
The obligation of Buyer to consummate the transactions
contemplated by this Agreement is subject, to the extent not waived, to the
following conditions.
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6.1 Representations and Warranties. Except for changes
contemplated by this Agreement, each of the representations and warranties of
Seller contained in this Agreement (which representations and warranties include
the information in the schedules corresponding thereto) shall be true and
correct in all material respects as of the date of Closing, and Seller shall
have delivered to Buyer a certificate to that effect signed by its duly
authorized officer.
6.2 Performance of this Agreement. Seller shall have complied
in all material respects with all of its obligations under this Agreement and
shall have delivered to Buyer a certificate to that effect signed by its duly
authorized officer.
6.3 Corporate Authorization. All corporate action required to
be taken by Seller in connection with the transactions contemplated by this
Agreement shall have been taken, all documents incident thereto shall be
reasonably satisfactory in substance and form to Buyer, and Buyer shall have
received such originals or copies of such documents as it may reasonably request
that are related to this Agreement.
6.4 Bank Release. The Seller shall have caused the Bank to
release any and all liens on and security interests in the Purchased Assets on
or prior to the Closing ("Release"). The Bank shall have executed and delivered
all documents which the Buyer believes are reasonably necessary to consummate
the foregoing Release or committed to do so in writing.
ARTICLE VII
CONDITIONS TO OBLIGATION OF SELLER
The obligation of Seller to consummate the transactions
contemplated by this Agreement is subject, to the extent not waived, to the
following conditions.
7.1 Representations and Warranties. Each of the
representations and warranties of Buyer contained in this Agreement shall be
true and correct as of the date of Closing, and Buyer shall have delivered to
Seller a certificate to that effect signed by its duly authorized officer.
7.2 Corporate Authorization. All action required to be taken
by Buyer in connection with the transactions contemplated by this Agreement
shall have been taken, all documents incident thereto shall be reasonably
satisfactory in substance and form to Seller, and Seller shall have received
such originals or copies of such documents as it may reasonably request that are
related to this Agreement.
7.3 Consent of Lender. Seller shall have received the approval
and consent of the Bank under the Loan Documents.
ARTICLE VIII
CLOSING
8.1 Time and Place of Closing. The closing (the "Closing")
shall take place at the offices of Comdial Corporation in Charlottesville,
Virginia at 10:00 AM local time on the latter of (i) the next business day after
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the last of the conditions to Closing is fulfilled or waived or (ii) such other
date as may be agreed upon by the parties (either of which dates is referred to
in this Agreement as the "Closing Date"). If the Closing takes place, the
Closing and all of the transactions contemplated by this Agreement shall be
deemed to have occurred simultaneously and become effective as of 12:01 AM on
the Closing Date.
8.2 Deliveries by Seller. At the Closing Seller shall deliver
to Buyer the following:
(i) a Xxxx of Sale and such other documents as may be
necessary to transfer to Buyer the Purchased Assets to be purchased by
Buyer at Closing, all of which shall be in form satisfactory to Buyer;
(ii) the Certificates of the duly authorized officer
of Seller required by Sections 6.1 and 6.2;
(iii) evidence that the corporate action described in
Section 6.3 has been taken;
(iv) a certificate from the Secretary of State of
Delaware of Seller's good standing as of the most recent date
obtainable;
(v) the documents executed by the Bank to consummate
the Release in accordance with Section 6.4; and
(vi) such additional documents as Buyer may
reasonably request.
8.3 Deliveries by Buyer. At the Closing Buyer shall deliver to
Seller the following:
(i) the Cash Purchase Price in immediately available
funds;
(ii) duly executed copies of the Note and Security
Agreement;
(iii) the Certificate of the duly authorized officer
of Buyer required by Section 7.1;
(iv) evidence that the corporate action described in
Section 7.2 has been taken;
(v) a certificate from the State of Tennessee as to
the good standing of Buyer in the State of Tennessee as of the most
recent date obtainable;
(vi) such additional documents as Seller may
reasonably request.
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8.4 Deliveries by Seller and Buyer. At the Closing Seller and
Buyer shall each execute and deliver to the other the Repair and Discontinued
Product Agreements.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Seller and Buyer. Subject to the
limitations contained in this Article, Seller and Buyer will indemnify and hold
each other harmless from any damage, loss, liability or expense (including,
without limitation, reasonable expenses of investigation and litigation and
reasonable attorneys', accountants' and other professional fees) arising out of:
(i) a breach of any representation or warranty made
by the other party in this Agreement; and
(ii) a breach of any agreement of the other party
contained with this Agreement (but not the Repair and Discontinued
Product Agreements, which will stand on their own).
9.2 Third-Party Claims. The obligation of Seller and Buyer to
indemnify one another under the provisions of this Article with respect to
claims resulting from the assertion of liability by those not parties to this
Agreement (including governmental claims for penalties, fines and assessments)
shall be subject to the following terms and conditions:
(i) The party against whom a claim by a third party
has been made (the "Indemnitee") shall give prompt written notice to
the other party hereto (the "Indemnitor") of any assertion of liability
by a third party which might give rise to a claim for indemnification,
which notice shall state the nature and basis of the assertion and the
amount thereof, to the extent known; provided, however, that no delay
on the part of the Indemnitee in giving notice shall relieve the
Indemnitor of any obligation to indemnify unless (and then solely to
the extent that) the Indemnitor is prejudiced by such delay.
(ii) If any action, suit or proceeding (a "Legal
Action") is brought against the Indemnitee with respect to which the
Indemnitor may have an obligation to indemnify the Indemnitee, the
Legal Action shall be defended by the Indemnitor and such defense to
include all proceedings for appeal or review which counsel for the
Indemnitee shall reasonably deem appropriate.
(iii) Notwithstanding the provisions of the previous
subsection of this Article, until the Indemnitor shall have assumed the
defense of any such Legal Action, the defense shall be handled by the
Indemnitee. Furthermore, (A) if the Indemnitee shall have reasonably
concluded that there are likely to be defenses available to it that are
different from or in addition to those available to the Indemnitor; (B)
if the Indemnitor fails to provide the Indemnitee with evidence
reasonably acceptable to the Indemnitee that the Indemnitor has
sufficient financial resources to defend and fulfill its
indemnification obligation with respect to the Legal Action; (C) if the
Legal Action involves other than money damages and seeks injunctive or
other equitable relief; or (D) if a judgment against the Indemnitee
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will, in the good faith opinion of the Indemnitee, establish a custom
or precedent which will be materially adverse to the best interests of
its continuing business, the Indemnitor shall not be entitled to assume
the defense of the Legal Action and the defense shall be handled by the
Indemnitee. If the defense of the Legal Action is handled by the
Indemnitee under the provisions of this subsection, the Indemnitor
shall pay all legal and other expenses reasonably incurred by the
Indemnitee in conducting such defense.
(iv) In any Legal Action initiated by a third party
and defended by the Indemnitor (A) the Indemnitee shall have the right
to be represented by advisory counsel and accountants, at its own
expense, (B) Seller shall keep the Indemnitee fully informed as to the
status of such Legal Action at all stages thereof, whether or not the
Indemnitee is represented by its own counsel, (C) the Indemnitor shall
make available to the Indemnitor and its attorneys, accountants and
other representatives, all books and records of the Indemnitor relating
to such Legal Action and (D) the parties shall render to each other
such assistance as may be reasonably required in order to ensure the
proper and adequate defense of the Legal Action.
(v) In any Legal Action initiated by a third party
and defended by the Indemnitor, the Indemnitor shall not make
settlement of any claim without the written consent of the Indemnitee,
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 involving injunctive or other
equitable relief against the Indemnitee or its assets, employees or
business, or relief which the Indemnitee reasonably believes could
establish a custom or precedent which will be materially adverse to the
best interests of its continuing business.
9.3 Limitations on Indemnification.
(a) Notwithstanding the foregoing provisions of this
Article except for Sections 3.6, 3.7 and 4.4 and Excluded Liabilities with
respect to which no Deductible (as defined below) shall apply, neither party
shall be liable to the other party under this Article unless and until the
aggregate amount of its liability exceeds $50,000 (the "Deductible"), and
thereafter the party seeking indemnification shall be entitled to
indemnification thereunder only for the aggregate amount of such liability in
excess of the Deductible. Additionally, the aggregate limit for all claims under
this Article, except for claims under Sections 3.6, 3.7 and 4.4 and those
relating to Excluded Liabilities, shall be $550,000.
(b) All damages to which either party may be entitled
pursuant to the provisions of this Article shall be net of any insurance
proceeds actually received with respect thereto.
(c) EXCEPT AS EXPRESSLY PROVIDED HEREIN, UNDER NO
CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER UNDER ANY CONTRACT,
STRICT LIABILITY, NEGLIGENCE OR OTHER LEGAL OR EQUITABLE THEORY, FOR ANY
INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR FOR COSTS OF
PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES OR FOR LOSS OF DATA OR LOST PROFITS
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IN CONNECTION WITH THE SUBJECT MATTER OR THE TERMINATION OF THIS AGREEMENT
SUBJECT TO THE FOLLOWING CONDITIONS: (1) THIS LIMITATION DOES NOT APPLY TO
CLAIMS FOR BODILY INJURY OR DAMAGE TO REAL OR TANGIBLE PERSONAL PROPERTY CAUSED
BY THE NEGLIGENCE OF EMPLOYEES OR REPRESENTATIVES OF SELLER OR BUYER; AND (2) IF
A THIRD PARTY MAKES RECOVERY AGAINST SELLER OR BUYER AS A RESULT OF THE
PERFORMANCE OR FAILURE TO PERFORM BY THE OTHER PARTY HERETO, SUCH RECOVERED
DAMAGES SHALL BE TREATED TO THE FULLEST EXTENT AS DIRECT DAMAGES AND SHALL BE
RECOVERABLE AS SUCH BY SELLER OR BUYER UNDER THIS AGREEMENT.
9.4 Survival; Investigation. The representations and
warranties of either party contained in this Agreement shall survive any
investigation by the other party and shall not terminate 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 under this Article
shall survive the Survival Date if written notice, given in good faith, of a
specific breach thereof is given to the other party prior to the Survival Date,
whether or not liability has actually been incurred.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(i) by mutual consent of Seller and Buyer;
(ii) by Buyer if any condition to Buyer's closing has
not been fulfilled by May 15, 2001 (unless such failure is the result
of action by Buyer); or
(iii) by Seller if any condition to Seller's closing
has not been fulfilled by May 15, 2001 (unless such failure is the
result of action by Seller);
10.2 Effect of Termination. If this Agreement is terminated as
provided above, it shall become wholly void and of no further force and effect,
and there shall be no further liability or obligation on the part of either
party except to pay such expenses as are required of it and to comply with the
confidentiality provisions of Section 5.1, but such termination shall not
constitute a waiver by either party of any claim it may have for damages caused
by reason of a material breach of a representation, warranty or agreement made
by the other party.
10.3 Amendment. This Agreement and the Schedules hereto may be
amended, provided that any such amendment is approved in writing by each of the
parties. All representations and warranties that are true and correct, as
modified and approved, shall be deemed true and correct for the purposes of
Sections 6.1 and 7.1.
15
ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. All notices and other communications given
hereunder shall be in writing. Notices shall be effective when delivered, if
delivered personally. Otherwise, they shall be effective when sent to the
parties at the addresses or numbers listed below, as follows: (i) on the
business day delivered (or the next business day following delivery if not
delivered on a business day) if sent by a local or long distance courier,
prepaid telegram, telefax or other facsimile means, or (ii) three days after
mailing if mailed by registered or certified U.S. mail, postage prepaid and
return receipt requested.
If to Seller to:
Comdial Corporation
000 Xxxxxxxxx Xx.
Xxxxxxxx, XX 00000
Attention: Chief Financial Officer
Telefax No.: (000) 000.0000
With a copy to:
Attention : SVP and General Counsel
If to Buyer to:
King Technologies, Inc.
000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Mr. Xxxxxx Xxxx
Telefax No.: (000) 000-0000
With a copy to:
Xxxxxxxx X. Xxxx, Esq.
Xxxxxx & Xxxxxx LLP
1000 Volunteer Building
000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Telefax No.: (000) 000-0000
Any Person may change the address or number to which notices are to be delivered
to him, her or it by giving the other Persons named above notice of the change
in the manner set forth above.
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11.2 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Tennessee without regard to its choice of
law rules. Any dispute, controversy, or claim arising out of or relating to this
Agreement, or the breach, termination or invalidity thereof shall be finally
settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association in effect on the date of this Agreement by
one (1) arbitrator appointed in accordance with said Rules. The appointing
authority shall be the American Arbitration Association. The place of
arbitration shall be Atlanta, Georgia. The arbitral award may be enforced in any
court of competent jurisdiction.
11.3 Schedules. The information contained in any Schedule
which is referred to in any section of this Agreement shall be deemed to have
been disclosed in connection with, and to be incorporated into, that particular
section only, and shall not be deemed a part of any other section.
11.4 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of the Agreement.
11.5 Counterparts. This 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.
11.6 Miscellaneous. This Agreement (i) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof;
(ii) is not intended to and shall not confer upon any Person, other than the
parties hereto, any rights or remedies; and (iii) shall not be assigned by
operation of law or otherwise.
[Signature Page Follows]
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IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed and their corporate seals to be hereto affixed and
attested by their duly authorized officers.
ATTEST: COMDIAL CORPORATION
___________________________________ By:________________________________
Secretary Title:_____________________________
AMERICAN PHONE CENTERS, INC.
___________________________________ By:________________________________
Secretary Title:_____________________________
ATTEST: KING TECHNOLOGIES, INC.
___________________________________ By:________________________________
Secretary Title:_____________________________
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Exhibit A
DISCONTINUED PRODUCT AGREEMENT
19
Exhibit B
REPAIR AGREEMENT
20
Exhibit C
SECURITY AGREEMENT
21
Exhibit D
SECURED PROMISSORY NOTE
22
Schedule 2.1(a)
PURCHASED INVENTORY
Certain inventory consisting of raw materials necessary for
the phone and key system repair and maintenance. Items will be identified by
type and quantity by the Seller and the Buyer.
23
Schedule 2.1(b)
PURCHASED EQUIPMENT
24
Schedule 2.1(c)
PURCHASED Q STOCK
25
Schedule 2.1(d)
PURCHASED INTELLECTUAL PROPERTY
26
Schedule 3.5
LITIGATION
None.
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