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Exhibit 10.6
LOAN AND GUARANTY AGREEMENT
THIS AGREEMENT, dated this 11th day of January 2001 is by and between
Z-Tel Technologies, Inc. ("Z-Tel"), a Delaware corporation having its principal
place of business at 000 Xxxxx Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx,
Xxxxxxx 00000, and Xxxxx X. Kitchen (the "Employee").
BACKGROUND STATEMENT
Z-Tel is a publicly held company the common stock of which is traded
on NASDAQ. The Employee is employed by Z-Tel Communications, Inc., a
wholly-owned subsidiary corporation of Z-Tel and Z-Tel's principal operating
company. The Employee is indebted to Xxxxxx Xxxxxx Partners ("Xxxxxx") in the
principal amount of approximately $900,000 pursuant to a margin loan contract
in connection with account 781-14340 (the "Loan"). Substantially all the
collateral for the Loan consists of shares of Z-Tel Technologies, Inc. common
stock. The value of such collateral has become insufficient to support the
Loan. Without additional collateral Xxxxxx will be required to foreclose upon
and liquidate such shares to repay the Loan. Z-Tel believes it is in its best
interests and the best interests of its shareholders to prevent the liquidation
of such shares because (i) the Employee provides valuable services to Z-Tel and
Z-Tel deems ownership of such stock by the Employee to be an important
incentive and motivational factor and (ii) sale of such shares might tend to
depress the market price for shares of Z-Tel's common stock and thus be
detrimental to Z-Tel's future capital raising needs.
NOW THEREFORE, in reliance upon the forgoing background statement,
Z-Tel and the Employee agree to the following terms and conditions.
TERMS AND CONDITIONS
1. Guaranty. Promptly after the execution of this Agreement,
Z-Tel will deposit funds in an account with Xxxxxx in an amount equal or
exceeding the principal amount of the Loan (the "Account"). Moreover,
contemporaneously therewith Z-Tel will enter into a guaranty with Bear Xxxxxxx
& Co. (Xxxxxx'x clearing house) in substantially the same form as the Guarantee
of Account attached hereto as Exhibit A (the "Guaranty"). Z-Tel will maintain
the Account and the Guaranty until March 31, 2001. Z-Tel will have no
obligation with respect to the Employee in connection with the Account or the
Guaranty beyond such date.
2. Promissory Note. Simultaneously with the execution of this
Agreement, the Employee will execute and deliver to Z-Tel a promissory note in
substantially the same form as the Promissory Note attached hereto as Exhibit B
(the "Note"). To the extent any funds in the Account are foreclosed upon by
Xxxxxx to reduce or pay the Loan, such amount or amounts will be deemed
advances on the Note by Z-Tel to the Employee.
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3. Pledge and Security Agreement. Simultaneously with the
execution of this Agreement, the Employee will execute and deliver to Z-Tel a
pledge and security agreement in substantially the same form as the Pledge and
Security Agreement attached hereto as Exhibit C (the "Security Agreement").
4. Restrictive Covenant. The Employee will not engage in any
transaction that increases the balance due under the Loan, any other
indebtedness to Xxxxxx, or any other indebtedness secured by assets of the
Employee without obtaining the prior written consent of Xxxxx Xxxxx, Z-Tel's
Chief Executive Officer.
5. Construction. This Agreement was negotiated at arms'-length
and will not be construed more strongly against any party regardless of which
party was responsible for its preparation. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural will include
the singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender will include the other genders. The words "Agreement," "hereof,"
"herein" and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole, including Exhibits, and not to
any particular provision of this Agreement. Whenever the word "include,"
"includes" or "including" is used in this Agreement, it will be deemed to be
followed by the words "without limitation." The various headings contained in
this Agreement are inserted only as a matter of convenience and in no way
define, limit or extend the scope or intent of any of the provisions of this
Agreement.
6. Legal Matters. This Agreement will be governed and
interpreted under the substantive laws of the State of Florida, without
reference to its principles of conflicts of law. Venue for the purposes of any
litigation will, at the option of Z-Tel, lie solely in the Circuit Court in and
for Hillsborough County, Florida or the United States District Court in and for
the Middle District of Florida. The parties hereby consent to the jurisdiction
of the courts of the State of Florida and to service of process by regular
mail. The costs of litigation, whether incurred at the trial or appellate level
(including attorneys' fees, court costs and the costs of experts and of
paralegal, accounting, financial and other legal and investigative support
personnel), will be borne by the non-prevailing party.
7. Entire Agreement. With respect to its subject matter, this
Agreement, together with any exhibits, schedules or attachments, contains the
sole and entire agreement between the parties superseding all prior discussions
and agreements between them. Except as otherwise provided herein, this
Agreement will not be modified or amended except by an instrument in writing
signed by both parties.
8. Survival of Warranties and Representations. The warranties
and representations in this Agreement will survive the execution of this
Agreement and continue without limitation.
9. Exhibits. All exhibits, schedules and other attachments to
this Agreement are hereby incorporated by this reference as integral parts of
this Agreement.
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10. Execution and Counterparts. This Agreement may be executed in
two or more counterparts, each of which will be deemed an original, and all of
which will constitute one and the same instrument.
11. Binding Effect. This Agreement will be binding upon and inure
to the benefit of the respective successors and permitted assigns of the
parties to this Agreement.
12. Waiver. No failure or delay on the part either party to this
Agreement in the exercise of any right, power or remedy the party may have will
operate as a waiver, nor will any single or partial exercise of any right,
power or remedy by either party preclude any other or further exercise of that
right, power or remedy or the exercise of any other right, power or remedy. No
express waiver or assent by any party to any breach of or default in any term
or condition of this Agreement will constitute a waiver of or assent to any
succeeding breach of or default in the same or any other term or conditions of
this Agreement.
13. Time of the Essence. Time is essential to the respective
responsibilities of the parties to this Agreement.
14. Fax Signatures. Signed facsimile copies of this Agreement,
addenda, attachments and exhibits will legally bind the parties to the same
extent as original documents.
15. No Contravention. The Employee warrants and represents to
Z-Tel that the execution and delivery of this Agreement, the performance by the
Employee of his obligations under this Agreement and the exercise by the
Employee of the rights created by this Agreement do not (i) constitute a breach
of or a default under any agreement or instrument to which he is a party or by
which he or his assets are bound or (except as described in this Agreement)
result in the creation of a mortgage, security interest or other encumbrance
upon his assets; (ii) violate a judgment, decree or order of any court or
administrative tribunal which is binding on the Employee or the his assets; or
(iii) violate any Federal or state law, rule or regulation by which the
Employee is bound.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
EMPLOYEE
/s/ Xxxxx X. Kitchen
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Xxxxx X. Kitchen
Z-Tel Technologies, Inc.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, As Treasurer
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