_______________________________________________
TRI-LINK TECHNOLOGIES INC.
AND
TELTRONICS, INC.
AGREEMENT OF PURCHASE AND SALE
OF
VORTEX TECHNOLOGY
_______________________________________________
OTOBER 31, 2002
TABLE OF CONTENTS
Page
----
ARTICLE I REPRESENTATIONS AND WARRANTIES OF TRI-LINK..........................2
1.01. Organization................................................2
1.02. Authority...................................................2
1.03. No Violation................................................2
1.04. No Conflict.................................................2
1.05. Capital Structure of Tri-Link...............................2
1.06. Ownership of the Existing Vortex Technology.................2
1.07. Financial Statements........................................3
1.08. Regulatory Authorities......................................3
1.09. No Filings or Consents Required.............................3
1.10. Litigation..................................................4
ARTICLE II REPRESENTATIONS AND WARRANTIES OF TELTRONICS.......................4
2.01. Organization................................................4
2.02. No Violation................................................4
2.03. No Conflict.................................................4
2.04. Financial Statements........................................4
2.05. Regulatory Authorities......................................5
2.06. No Filings or Consents Required.............................5
2.07. Litigation..................................................5
ARTICLE III CERTAIN TRI-LINK RESPONSIBILITIES AND COMMITMENTS.................5
3.01. Shareholder Approval........................................5
3.02. Board Representation........................................6
3.03. MIKET License Extension.....................................6
ARTICLE IV PURCHASE OF The Purchased Assets...................................6
4.01. Purchase of the Purchased Assets............................6
4.02. Purchase Price and Payment..................................6
4.03. Security....................................................7
4.04. Technology Escrow...........................................7
4.05. Conversion Option...........................................7
4.06. Royalty Commitment..........................................7
4.07. Tri-Link Employees..........................................8
ARTICLE V CONDITIONS TO PERFORMANCE...........................................9
5.01. Conditions to Obligations of Each Party.....................9
5.02. Conditions to Obligations of Teltronics.....................9
5.03. Conditions to Obligations of Tri-Link......................10
ARTICLE VI INDEMNIFICATION AND LIMITATIONS ON LIABILITY......................11
6.01. Indemnity for Pre-Agreement Actions........................11
6.02. Indemnity under this Agreement.............................11
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6.03. Procedure..................................................12
6.04. Limitation on Liability....................................12
6.05. Sole Remedies..............................................12
ARTICLE VII CONFIDENTIAL INFORMATION; PUBLICITY..............................13
7.01. Confidential Information...................................13
7.02. Confidentiality of Agreement; Publicity....................14
ARTICLE VIII CONCILIATION AND ARBITRATION OF DISPUTES........................14
8.01. Conciliation...............................................14
8.02. Arbitration................................................14
8.03. Provisional Remedies.......................................15
ARTICLE IX TERM AND TERMINATION..............................................15
9.01. Term.......................................................15
9.02. Termination................................................15
9.03. Effect of Termination......................................16
ARTICLE X MISCELLANEOUS......................................................16
10.01. Amendments and Waivers.....................................16
10.02. Nonassignability...........................................16
10.03. No Third Party Beneficiaries...............................16
10.04. Rules of Construction......................................16
10.05. Choice of Law..............................................16
10.06. Severability of Provisions.................................16
10.07. Counterparts; Delivery.....................................17
10.08. Entire Agreement...........................................17
10.09. Last Day for Performance Other Than a Business Day.........17
10.10. Notices....................................................17
10.11. Waiver of Jury Trial.......................................18
10.12. Expenses...................................................18
10.13. Further Assurances.........................................18
10.14. Force Majeure..............................................18
10.15. Brokers and Finders........................................18
10.16. Relationship of Parties....................................18
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EXHIBITS
EXHIBIT EXHIBIT NO.
------- -----------
DEFINITIONS A
EXISTING VORTEX TECHNOLOGY B
DEVELOPED VORTEX TECHNOLOGY C
VORTEX TECHNOLOGY ASSETS D
TRI-LINK CAPITAL STRUCTURE E
TRI-LINK SECURED CREDITORS F
TRI-LINK FINANCIAL STATEMENTS G
TELTRONICS FINANCIAL STATEMENTS H
FORM OF TELTRONICS NOTE I
TELTRONICS SECURITY AGREEMENT J
JOINT ESCROW INSTRUCTIONS K
CONVERSION PROVISIONS L
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AGREEMENT OF PURCHASE AND SALE OF VORTEX TECHNOLOGY
This AGREEMENT OF PURCHASE AND SALE (the "Agreement"), made as
of the 31st day of October 2002, is by and between
TRI-LINK TECHNOLOGIES INC., a corporation incorporated under
the Canada Business Corporations Act with its principal office located in
Burnaby, British Columbia, Canada (Tri-Link"); and
TELTRONICS, INC., a corporation incorporated under the
laws of the State of Delaware with its principal office located in Sarasota,
Florida ("Teltronics").
Capitalized terms used herein without definition shall have
the meanings ascribed to them in Exhibit A attached hereto. All currency amounts
specified herein are designated in United States Dollars.
R E C I T A L S
WHEREAS, Tri-Link has developed and is the sole and exclusive
owner of, inter alia, certain proprietary technology that enables telephony to
be implemented over a standard Ethernet local area network (the "Existing Vortex
Technology"). The specifications for the Existing Vortex Technology are set
forth on Exhibit B attached hereto; and
WHEREAS, Tri-Link is currently making further developments to
the Existing Vortex Technology with a view to making it commercially viable and
meeting the specifications set forth on Exhibit C attached hereto; and
WHEREAS, Teltronics desires to purchase from Tri-Link, on the
terms and conditions herein specified, all of Tri-Link's right, title and
interest in, under and to (a) the Existing Vortex Technology, (b) the Developed
Vortex Technology (as defined herein) (to the extent that it is not already
owned by Teltronics), and (c) all tangible and intangible assets associated with
the Existing Vortex Technology and the Developed Vortex Technology (the "Vortex
Technology Assets"). The Vortex Technology Assets are set forth on Exhibit D
attached hereto. The Existing Vortex Technology, the Developed Technology Assets
and the Vortex Technology Assets are collectively referred to herein as the
"Purchased Assets;" and
WHEREAS, Tri-Link desires to sell the Purchased Assets to
Teltronics on the terms and conditions herein specified.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Teltronics and Tri-Link hereby agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF TRI-LINK
Tri-Link represents and warrants to Teltronics as follows:
1.01. Organization. Tri-Link is a corporation duly organized,
validly existing and in good standing under the laws of Canada and has all
requisite power and authority to conduct its business as it is currently being
conducted and to own and use its properties.
1.02. Authority. Tri-Link has all requisite corporate power
and authority to execute and deliver this Agreement and each of the other
Operative Documents to which it is a party and to perform its obligations
hereunder and thereunder. Such execution, delivery, performance and consummation
have been duly authorized by all necessary corporate action on the part of Tri-
Link. This Agreement has been duly executed and delivered by Tri-Link by its
duly authorized officers, and constitutes a valid and legally binding obligation
of Tri-Link, enforceable against it in accordance with its terms, except as the
same may be limited by (i) applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws from time to time in effect affecting
creditors' rights generally or (ii) equitable principles of general application.
1.03. No Violation. Tri-Link is not, and its execution of this
Agreement will not cause it to be, in violation of any term of any of its
organizational documents or any agreement or instrument to which it is a party,
any Law, or any applicable Order, which violation could reasonably be expected
to have a Material Adverse Effect on its ability to enter into, execute, deliver
or perform its obligations under this Agreement or any of the Operative
Documents.
1.04. No Conflict. The execution and delivery of this
Agreement and the other Operative Documents and the consummation of the
transactions contemplated herein and therein do not and will not violate or
constitute a breach or default under Tri-Link's organizational documents or
under the terms and conditions of any documents, agreements or other writings to
which it is a party or by which any of its properties or assets might be bound,
which violation, breach or default could reasonably be expected to have a
Material Adverse Effect on Tri-Link.
1.05. Capital Structure of Tri-Link. The shareholders of Tri-
Link and the number(s) and class(es) of shares held of record by each of them
and the holders of options and share purchase warrants of Tri-Link and the
number(s) and class(es) of shares of Tri-Link which each of them is entitled to
purchase are set forth in Exhibit E attached hereto.
1.06. Ownership of the Existing Vortex Technology. Tri-Link
owns all right, title and interest in, under and to the Existing Vortex
Technology, free of any liens or other encumbrances, except as specified in this
Section 1.06 and except for such security interests therein as have been granted
to those of its creditors specified in Exhibit F attached hereto (the "Tri-Link
Secured Creditors"), as well as all other Intellectual Property that is or has
been used or exploited in the Existing Vortex Technology, or that may be
necessary for such further development of the Existing Vortex Technology in
order to render it commercially viable as the Developed Vortex Technology. All
of Tri-Link's rights in, under and to the Existing Vortex
2
Technology are and all of the Intellectual Property licensed, used or exploited
by Tri-Link in connection with the Existing Vortex Technology is valid and
subsisting and in full force and effect, and no such rights have been and no
such Intellectual Property has been cancelled, expired or abandoned. Xxxxxxx
Tsiroulnikov (d/b/a MIKET DSP Solutions) is the owner of the Source Code and
algorithms for the signal processing component of the Existing Vortex Technology
(except the Acoustic Echo Canceller comprised therein), and all such Object Code
as may be derived therefrom, and has granted to Tri-Link an irrevocable,
perpetual, worldwide, royalty-free license (the "MIKET License") to embed and
use in its existing and future products such Source Code and algorithms and all
such Object Code as may be derived therefrom (a true copy of such Source Code
and Object Code has been delivered to and received by Teltronics), which license
is transferable with the consent of Xxxxxxx Tsiroulnikov, which may not be
unreasonably withheld. Xxxxxx Xxxxxxxx and Xxxxxx Xxxxx are the owners of the
operating system comprised in and used by the Existing Vortex Software and have
granted to Tri-Link an irrevocable, perpetual, worldwide, royalty-free license
(the "Operating System License") to embed and use in its existing and future
products such operating system (a true copy of such operating system has been
delivered to and received by Teltronics), which license is transferable without
consent. The Existing Vortex Technology does not infringe, misappropriate,
dilute or violate the Intellectual Property rights of any third party and, to
the best of Tri-Link's knowledge, no third party is infringing,
misappropriating, diluting or violating the Existing Vortex Technology. Upon the
purchase of the Purchased Assets by Teltronics pursuant to Section 4.01 hereof,
Teltronics will acquire the sole and exclusive ownership of all Intellectual
Property comprised of the Vortex Technology including all rights to perfect such
ownership through the application for patent protection, free of claims or
opposition from any person who now owns or may acquire any of the other assets
or properties of Tri-Link.
1.07. Financial Statements. The balance sheet of Tri-Link as
at December 31, 2001, and the related statement of cash flow for the fiscal year
then ended, certified by KPMG LLP, a copy of which is attached hereto as Exhibit
G (the "Tri-Link Financial Statements"), fairly present the financial condition
of Tri-Link as at such date and the results of operations of Tri-Link for the
year then ended, all in accordance with Canadian GAAP, consistently applied,
and, since December 31, 2001, there has been no material adverse change in any
such condition or operations.
1.08. Regulatory Authorities. Tri-Link possesses all licenses
and permits and other authorizations by Regulatory Authorities necessary to the
conduct of its business and to provide to Teltronics the benefits afforded by
this Agreement and the other Operative Documents, except those the lack of which
would not have a Material Adverse Effect on its business or its ability to
provide such benefits. Tri-Link has not received notice from any Regulatory
Authority indicating that such Regulatory Authority would oppose or not grant or
issue its Consent, if required, with respect to the transactions contemplated by
this Agreement and the other Operative Documents.
1.09. No Filings or Consents Required. No action of, or filing
or registration with or notification of, or Consent of, any Regulatory Authority
or any other third party, except the consents of the Tri-Link Secured Creditors
and of Xxxxxxx Tsiroulnikov (d/b/a MIKET DSP Solutions) to Tri-Link executing,
delivering and performing this Agreement, each of which has been obtained by
Tri-Link, is required by Tri-Link to authorize, or is otherwise required in
3
connection with, the execution, delivery and performance by Tri-Link of this
Agreement or any of the other Operative Documents.
1.10. Litigation. There is no litigation relating to Tri-
Link's business or any of its properties or assets, its funding capabilities or
any of its joint venture relationships that is pending, or threatened, in or
before any court, commission, arbitration tribunal, or judicial, governmental or
administrative department, body, agency, administrator or official, grand jury
or any other forum for the resolution of grievances, against Tri-Link which
would reasonably be required to be disclosed to Tri-Link's auditors under
Canadian GAAP in connection with an audit of the financial statements of Tri-
Link, except for a potential claim related to a breach of Tri-Link's Shareholder
Agreement, as specified in Note 11 to the Tri-Link Financial Statements
(attached hereto as Exhibit G) and potential actions that may be taken by unpaid
trade suppliers.
OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY MADE IN THIS AGREEMENT
OR IN THE OTHER OPERATIVE DOCUMENTS, TRI-LINK MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER OPERATIVE DOCUMENTS.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TELTRONICS
Teltronics represents and warrants to Tri-Link as follows:
2.01. Organization. Teltronics is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite power and authority to conduct its business as it
is currently being conducted and to own and use its properties.
2.02. No Violation. Teltronics is not, and execution of this
Agreement will not cause it to be, in violation of any term of any of its
organizational documents or any agreement or instrument to which it is a party,
any Law, or any applicable Order, which violation could reasonably be expected
to have a Material Adverse Effect on its ability to enter into, execute, deliver
or perform its obligations under this Agreement.
2.03. No Conflict. The execution and delivery of this
Agreement and the other Operative Documents and the consummation of the
transactions contemplated herein and therein do not violate or constitute a
breach or default under the organizational documents of Teltronics or under the
terms and conditions of any documents, agreements or other writings to which
Teltronics is a party or by which any of its properties or assets might be
bound, which violation, breach or default could reasonably be expected to have a
Material Adverse Effect on Teltronics.
2.04. Financial Statements. The consolidated balance sheet of
Teltronics and its consolidated Subsidiaries as at December 31, 2001, and the
related consolidated statement of cash flows and consolidated statement of
changes in financial position of Teltronics and its consolidated Subsidiaries
for the fiscal year then ended, certified by Ernst & Young, LLP, independent
public accountants, a copy of which is attached hereto as Exhibit H, fairly
present
4
the financial condition of Teltronics and its consolidated Subsidiaries as at
such date and the consolidated results of operations of Teltronics and its
consolidated Subsidiaries for the year then ended, all in accordance with U.S.
GAAP, consistently applied, and, since December 31, 2001, there has been no
material adverse change in any such condition or operations.
2.05. Regulatory Authorities. Teltronics possesses all
licenses and permits and other authorizations by Regulatory Authorities
necessary to the conduct of its business and to provide the services anticipated
to be provided by it under the Operative Documents except those licenses,
permits and authorizations the lack of which would not have a Material Adverse
Effect on its business or its ability to provide such services. Teltronics has
not received notice from any Regulatory Authority indicating that such
Regulatory Authority would oppose or not grant or issue its Consent, if
required, with respect to the transactions contemplated by this Agreement and
the other Operative Documents.
2.06. No Filings or Consents Required. No action of, or filing
or registration with or notification of, or Consent of, any Regulatory Authority
or any other third party is required by Teltronics to authorize, or is otherwise
required by Teltronics in connection with, the execution, delivery and
performance by Teltronics of this Agreement or any of the other Operative
Documents.
2.07. Litigation. There is no litigation relating to
Teltronics' business or any of its properties or assets, its funding
capabilities or any of its joint venture relationships that is pending, or
threatened, in or before any court, commission, arbitration tribunal, or
judicial, governmental or administrative department, body, agency, administrator
or official, grand jury or any other forum for the resolution of grievances,
against Teltronics which would reasonably be required to be disclosed to
Teltronics' auditors under U.S. GAAP in connection with an audit of the
consolidated financial statements of Teltronics.
OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY MADE IN THIS AGREEMENT
OR IN THE OTHER OPERATIVE DOCUMENTS, TELTRONICS MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER OPERATIVE DOCUMENTS.
ARTICLE III
CERTAIN TRI-LINK RESPONSIBILITIES AND COMMITMENTS
3.01. Shareholder Approval. Notwithstanding that such
approvals are not otherwise required to be obtained in order for Tri-Link to be
permitted to consummate the transactions contemplated by this Agreement, Tri-
Link shall cause separate meetings of the holders of each class of its
outstanding shares to be held not later than January 1, 2003, at which meetings
the holders of each class of Tri-Link's outstanding shares shall be asked to
consider and, if thought fit, approve, as a class, by a special resolution
requiring at least 2/3 of the votes cast in respect thereof to be cast in favour
thereof, the consummation by Tri-Link of the transactions contemplated by this
Agreement.
5
3.02. Board Representation. Tri-Link shall, forthwith after
execution of this Agreement, cause the board of directors of Tri-Link to create
a vacancy and fill it with a representative designated by Teltronics. Teltronics
shall be entitled to a single seat on the board of directors of Tri-Link until
the Closing Time.
3.03. MIKET License Extension. Tri-Link shall, at or before
the Closing, procure an amendment of the MIKET License which extends the license
of the software and algorithms covered thereby to include all of the signal
processing software and algorithms owned by Xxxxxxx Tsiroulnikov (d/b/a MIKET
DSP Solutions) that are to be included in or covered by the Developed Vortex
Technology.
ARTICLE IV
PURCHASE OF THE PURCHASED ASSETS
4.01. Purchase of the Purchased Assets. Teltronics shall
purchase from Tri-Link and Tri-Link shall sell, assign transfer and convey to
Teltronics, at the Closing Time, all right, title and interest in, under and to
the Purchased Assets, upon the terms set forth in this Article IV and subject to
such other conditions as are set forth herein. Until the Closing Time, Tri-Link
shall retain exclusive ownership of all right, title and interest, including all
Intellectual Property Rights, in and to the Vortex Technology and the Vortex
Technology Assets and Teltronics shall not, prior to the Closing Time, acquire
any Rights in or to the Vortex Technology and/or the Vortex Technology Assets.
4.02. Purchase Price and Payment. The purchase price for
the Purchased Assets (the "Purchase Price") shall be Two Million Five Hundred
Thousand Dollars ($2,500,000), which shall be paid:
(a) $250,000 in immediately available funds at the
Closing; and
(b) $2,250,000 in twelve equal quarterly principal
installments of $187,500, plus accrued interest, with first payment
being due on the first Business Day of the third month following the
month in which the Closing occurs and with subsequent installments of
principal and interest being payable on the first Business Day of each
third month thereafter, until the entirety of the Purchase Price has
been paid.
The unpaid portion of the Purchase Price from time to time remaining unpaid
shall bear interest at the rate of Six and One Half Percent (6.5%) per annum.
Such interest as has accrued thereon up to the end of the month preceding the
month in which each installment of the Purchase Price is required to be paid
pursuant to Section 4.02(b) shall be paid at the time that such installment of
the Purchase Price is required to be paid. The obligations of Teltronics to so
pay the said balance of the Purchase Price and interest so accrued thereon shall
be evidenced by a promissory note in the form set out in Exhibit I attached
hereto (as the same may be re-issued from time to time as provided herein, the
"Teltronics Note"), which Teltronics shall execute and deliver to Tri-Link at
the Closing.
6
4.03. Security. As security for payment of the balance of the
Purchase Price from time to time remaining unpaid and such interest as shall
from time to time have accrued thereon and remain unpaid, Teltronics shall at
the Closing grant to Tri-Link a priority security interest in the Vortex
Technology (as it may be constituted from time to time) and the Vortex
Technology Assets and a junior security interest in all of the other property
and assets of Teltronics, subordinate in all respects to all present and future
bank and other institutional indebtedness of Teltronics, including all
obligations of Teltronics to Xxxxxx Corporation and Finova Mezzanine Capital,
Inc. (as they may be constituted from time to time), each substantially in
accordance with (a) the Teltronics Security Agreement (in the form of Exhibit J
attached hereto) and sufficient to perfect a security interest in such
collateral in each of the states of the United States and each of the provinces
of Canada in which such collateral might be located and (b) such other
agreements as may be required to effect the specified priorities among the
security interests then existing in such collateral in each case reasonably
acceptable to the parties hereto.
4.04. Technology Escrow. At the Closing, Teltronics and Tri-
Link shall deliver joint escrow instructions to Xxxxx & Lardner (the
"Escrowholder") in the form of Exhibit K attached hereto (the "Joint Escrow
Instructions"), pursuant to which Teltronics shall, inter alia, until all of its
obligations under the Teltronics Note have been satisfied, deliver to the
Escrowholder, on the first Business Day of each calendar quarter, a true copy of
the Source Code for the Vortex Software, as then constituted, a true copy of the
Vortex Documentation, as then constituted, as has not theretofore been delivered
to the Escrowholder, and true copies (on or in whatever media the originals
thereof are embodied) of the Vortex Technical Information, as then constituted,
as has not theretofore been delivered to the Escrowholder, and pursuant to which
the Escrowholder shall, in the event of an uncured default by Teltronics
hereunder, deliver to Tri-Link all of the materials so delivered, and,
otherwise, upon all of the obligations of Teltronics under the Teltronics Note
having been satisfied, return to Teltronics all of the materials so delivered,
in each case unless prevented from doing so by an Order of a court of competent
jurisdiction, pursuant to an interpleader action initiated by the Escrowholder
or otherwise.
4.05. Conversion Option. Tri-Link shall be entitled, at its
sole option, to convert, at any time and from time to time, in accordance with
and subject to the Conversion Provisions specified in Exhibit L attached hereto,
increments of not less than $250,000 of the balance of the Purchase Price then
remaining unpaid into shares of Teltronics' voting common stock, at the rate of
$1.00 per share (as the same may be adjusted from time to time as herein
provided, the "Conversion Price"), so long as the total of all amounts
theretofore so converted and then to be so converted does not exceed Seven
Hundred and Fifty Thousand Dollars ($750,000). Upon any such conversion being
effected, each installment amount thereafter payable in respect of the Purchase
Price shall be reduced, to be equal to: (a) such installment amount as would
otherwise have been payable in respect thereof, less (b) the amount in respect
of which such conversion was effected divided by the number of installment
payments remaining to be made at the time such conversion was effected.
Teltronics covenants that all of the securities that are issued to Tri-Link upon
conversion being effected hereunder will be duly and validly issued and will be
fully paid and non-assessable.
4.06. Royalty Commitment. For the period commencing on the
closing and ending on the fifth anniversary thereof, Teltronics shall pay to
Tri-Link royalties as follows:
7
(a) Four percent (4%) of "Net Revenue" derived from
following components of the Vortex Technology: Vortex S.E. Controller Software,
Vortex S.E. QSAP, SLIC and POTS, PC-Phone and Analog PSTN Gateway, all as
defined in Exhibit C attached hereto;
(b) Two percent (2%) of "Net Revenue" derived from
the following components of the Vortex Technology: Digital PSTN Gateway, H.323
WAN Gateway and BRI Gateway, all as defined in Exhibit C attached hereto.
For purposes of this Agreement "Net Revenue" means
monies actually received by Teltronics in connection with the sale, licensing,
distribution or other exploitation of the Vortex Technology (as delineated in
Sections 4.06 (a) and (b) above), but shall exclude sales and use taxes,
returns, refunds, rebates, and separately stated shipping and handling costs or
separately stated maintenance, support, and engineering fees. The term "Net
Revenue" shall not include any monies received by Teltronics in connection with
the sale, licensing, distribution or other exploitation of its own products and
services (including those products and services that interface, integrate or are
compliant with the Vortex Technology), whether in existence as of the date
hereof or developed in the future, provided that such products or services do
not incorporate, use or comprise (otherwise than by way of interfacing,
integrating or being compliant with) the Vortex Technology (or any portion or
portions thereof). Teltronics presently has no intention of offering the Vortex
Technology as part of an integrated system with any of its products or services,
however, in the event that Teltronics proposes to offer the Vortex Technology as
part of an integrated system, it will do so pursuant to a published price list
with a separate line item designation for the Vortex Technology component of the
system. In the event Tri-Link disagrees with the pricing allocations reflected
in such price list, the dispute resolution provisions of Article VIII shall
apply. Teltronics shall maintain adequate records to verify all reports and
payments to be made to Tri-Link pursuant to this Section 4.06 for a period of
two (2) years following the date of its termination. Tri-Link shall have the
right to select an independent certified public accountant mutually agreeable to
the parties to inspect no more frequently than annually the records of
Teltronics on reasonable notice and during regular business hours to verify the
reports and payments required hereunder. If such inspection should disclose any
underreporting, Teltronics shall pay Tri-Link such amount within thirty (30)
days of the conclusion of such inspection. The entire cost of such inspection
shall be borne by Tri-Link; provided however, that if Teltronics is determined
by such inspection to have underpaid royalties by five percent (5%) or more,
then the cost of such audit shall be borne by Teltronics. Each royalty payment
shall be accompanied by a statement setting forth in sufficient detail the basis
upon which royalties were calculated.
4.07. Tri-Link Employees. Teltronics shall assume and be
liable for the accrued vacation pay and other statutory obligations owed by Tri-
Link to its employees from August 1, 2002 through the Closing Time. In the event
Teltronics fails to purchase the Purchased Assets in accordance with Section
4.01 hereof, Teltronics shall not, prior to May 1, 2004, solicit or seek to
employ any person who was an employee of Tri-Link at any time during the term of
this Agreement.
8
ARTICLE V
CONDITIONS TO PERFORMANCE
5.01. Conditions to Obligations of Each Party. The
obligations of each party to be performed under this Agreement and consummate
the transactions contemplated hereby are subject to the condition, unless waived
pursuant to Section 10.01 of this Agreement, that no court or Regulatory
Authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, materially restricts or
makes illegal consummation of any of the transactions contemplated by this
Agreement or any of the other Operative Documents.
5.02. Conditions to Obligations of Teltronics. The obligations
of Teltronics to be performed under this Agreement and consummate the
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Teltronics pursuant to Section 10.01 of
this Agreement:
(a) Representations and Warranties of Tri-Link. Each and
every warranty and representation of Tri-Link contained in this
Agreement shall be true and correct as of the date hereof and an
executive officer of Tri-Link shall have delivered a certificate to
Teltronics to such effect upon the execution of this Agreement, in a
form reasonably acceptable to Teltronics (the "Initial Tri-Link
Certificate"), and each and every warranty and representation of Tri-
Link contained in this Agreement shall be true and correct as of the
Closing Time;
(b) Consents and Approvals. There shall be appended to and
incorporated by reference in the Initial Tri-Link Certificate the
consents of the Tri-Link Secured Creditors to the execution, delivery
and performance of this Agreement by Tri-Link and the consent of Xxxxxxx
Tsiroulnikov to the assignment and transfer of the MIKET Licence to
Teltronics at the Closing Time. Tri-link shall, by January 1, 2003, have
obtained the approval of the holders of each class of its outstanding
shares, by special resolution, to consummate the transactions
contemplated by this Agreement;
(c) Closing Documentation. Tri-Link shall have tendered to
Teltronics at the Closing:
(i) a certificate of an executive officer of Tri-Link
certifying that each and every warranty and
representation of Tri-Link contained in this
Agreement is true and correct as of the Closing
Time, in a form reasonably acceptable to
Teltronics, having appended thereto and
incorporated by reference therein certified true
copies of the special resolutions of the holders
of each class of shares of Tri-Link approving the
consummation by Tri-Link of the transactions
contemplated by this Agreement, together with a
certification that each such resolution was duly
passed as a special resolution at a duly called
and constituted meeting of the holders of the
applicable class of shares and has not prior to
the Closing Time been amended
9
or varied in any way or rescinded and is full
force and effect as of the Closing Time;
(ii) the Joint Escrow Instructions, duly executed by
Tri-Link;
(iii) the consent of Xxxxxxx Tsiroulnikov (d/b/a MIKET
DSP Solutions) to the assignment of the MIKET
License, as amended pursuant to Section 3.03,
to Teltronics;
(iv) the amendment of the MIKET License made pursuant
to Section 3.03 hereof;
(v) true copies, on the same media as that on which
the originals are recorded, of all documents and
other items that comprise the Developed Vortex
Technical Information; and
(d) Other Documents. All other instruments and documents
required by this Agreement and the other Operative Documents to be
provided by Tri-Link, and such other instruments and documents as
Teltronics and/or its counsel may reasonably request Tri-Link to
provide, consistent with the provisions hereof and thereof, shall have
been provided by Tri-Link.
5.03. Conditions to Obligations of Tri-Link. The obligations
of Tri-Link to be performed under this Agreement and consummate the transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Tri-Link pursuant to Section 10.01 of this Agreement:
(a) Representations and Warranties of Teltronics. Each and
every warranty and representation of Teltronics contained in this
Agreement shall be true and correct as of the date hereof and an
executive officer of Teltronics shall have delivered a certificate to
Tri-Link to such effect upon the execution of this Agreement, in a form
reasonably acceptable to Tri-Link, and each and every warranty and
representation of Teltronics contained in this Agreement shall be true
and correct as of the Closing Time; and
(b) Closing Documentation. Teltronics shall have tendered to
Tri-Link at the Closing:
(i) a certificate of an executive officer of
Teltronics certifying that each and every warranty
and representation of Teltronics contained in
this Agreement is true and correct as of the
Closing Time, in a form reasonably acceptable to
Tri-Link;
(ii) a bank draft or cashier's check payable to Tri-
Link in the amount of Two Hundred and Fifty
Thousand Dollars ($250,000.00);
(iii) the Teltronics Note;
10
(iv) the Teltronics Security Agreement; and
(v) the Joint Escrow Instructions duly executed by
Teltronics.
(c) Other Documents. All other instruments and documents
required by this Agreement and the other Operative Documents to be
provided by Teltronics, and such other instruments and documents as Tri-
Link and/or its counsel may reasonably request Teltronics to provide,
consistent with the provisions hereof and thereof, shall have been
provided by Teltronics.
ARTICLE VI
INDEMNIFICATION AND LIMITATIONS ON LIABILITY
6.01. Indemnity for Pre-Agreement Actions. From and after the
date hereof, Tri-Link shall indemnify, defend and hold harmless Teltronics, and
its shareholders, officers, directors, agents, representatives, and employees
(Tri-Link is referred to in this Section 6.01 as the "Indemnifying Party," and
the party to whom such indemnification obligation is owed is referred to in this
Section 6.01 as the "Indemnified Party"), from and against, any and all actions,
claims, losses, costs, liabilities, and expenses (including reasonable
attorneys' fees) resulting from or arising out of any act or omission (occurring
entirely before the date hereof) of Tri-Link or any officer, employee,
representative or agent of Tri-Link (collectively "Pre-closing Claims") and will
promptly reimburse any Indemnified Party for all Pre-closing Claims as incurred
in connection with the investigation of, preparation for or defense of any
pending or threatened action or proceeding (collectively, "Proceeding"), whether
or not such Indemnified Party is a formal party to any such Proceeding. An
Indemnified Party shall not, without the prior written consent of the
Indemnifying Party (which consent shall not be unreasonably withheld) settle,
compromise or consent to the entry of any judgment in any pending or threatened
Proceeding in respect of which indemnification may be sought hereunder (whether
or not the Indemnified Party is an actual or potential party to such
Proceeding), provided, however, that the Indemnified Party may execute such
settlement, compromise or consent to the entry of judgment in any pending or
threatened Proceeding if same includes an unconditional release of the
Indemnifying Party hereunder from all liability arising out of such Proceeding.
6.02. Indemnity under this Agreement. From and after the date
hereof, Tri-Link shall indemnify, defend and hold harmless Teltronics and its
shareholders, officers, directors, agents, representatives, and employees, and
Teltronics shall indemnify, defend and hold harmless Tri-Link and its
shareholders, officers, directors, agents, representatives, and employees (Tri-
Link or Teltronics, as applicable, shall be referred to in this Section 6.02 as
the case may be as the "Indemnifying Party" and the party to whom such
indemnification obligation is owed is referred to in this Section 6.02 as the
"Indemnified Party"), from and against any and all actions, claims, losses,
costs, liabilities, and expenses (including reasonable attorneys' fees)
resulting from or arising out of any breach by the Indemnifying Party of any
representation, warranty, or covenant by such Indemnifying Party in this
Agreement (collectively, for purposes of this Section 6.02 only, "Claims") and
will promptly reimburse any Indemnified Party for all Claims as incurred in
connection with the investigation of, preparation for, or defense of any pending
or threatened action or proceeding (collectively, "Proceeding"), whether or not
such Indemnified Party is a formal party to any such Proceeding. Notwithstanding
the foregoing, the
11
Indemnifying Party shall not be liable (a) for any amount paid by or on behalf
of an Indemnified Party in settlement of any Claim without the consent of the
Indemnifying Party (which consent shall not be unreasonably withheld), or (b) in
respect of any losses, claims, damages, liabilities or expenses that a court of
competent jurisdiction shall have determined by final judgment resulted
primarily from the bad faith, negligence, or willful misconduct of an
Indemnified Party. An Indemnified Party shall not, without the prior written
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld), settle, compromise or consent to the entry of any judgment in any
pending or threatened Proceeding in respect of which indemnification may be
sought hereunder (whether or not the Indemnified Party is an actual or potential
party to such Proceeding), provided, however, that the Indemnified Party may
execute such settlement, compromise or consent to the entry of judgment in any
pending or threatened Proceeding if the same includes an unconditional release
of the Indemnifying Party hereunder from all liability arising out of such
Proceeding.
6.03. Procedure. Promptly after a party to whom an
indemnification obligation is owed hereunder (an "Indemnified Party") receives
notice of the commencement of any Proceeding in respect of which indemnification
may be sought hereunder, the Indemnified Party will notify the party that is
obligated to indemnify hereunder (an "Indemnifying Party"); but the omission to
so notify the Indemnifying Party shall not relieve the Indemnifying Party from
any obligation hereunder unless, and only to the extent that, such omission
results in the Indemnifying Party's forfeiture of substantive rights or
defenses. If any such Proceeding shall be brought against the Indemnified Party,
the Indemnifying Party shall, upon written notice given reasonably promptly
following the Indemnified Party's notice to the Indemnifying Party of any such
Proceeding, be entitled to assume the defense thereof at its own expense with
counsel chosen by the Indemnifying Party and reasonably satisfactory to the
Indemnified Party; provided; however, that any Indemnified Party may, at its own
expense, retain separate counsel to participate in such defense.
6.04. Limitation on Liability. IN NO EVENT SHALL ANY PARTY
HERETO BE LIABLE TO THE OTHER UNDER ANY THEORY OF TORT, CONTRACT, STRICT
LIABILITY, OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY LOST PROFITS, EXEMPLARY,
PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, EACH OF WHICH
IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER ANY PARTY
HERETO HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER,
THAT THE FOREGOING DOES NOT PRECLUDE ANY PARTY FROM BEING INDEMNIFIED AGAINST
THIRD-PARTY CLAIMS UNDER ANY OF THE FOREGOING THEORIES OR FOR ANY OF THE
FOREGOING DAMAGES.
6.05. Sole Remedies. Teltronics and Tri-Link, on behalf of
themselves and their respective Affiliates, agree that from and after the date
hereof their sole remedies for any breach of any representation, covenant or
warranty contained in this Agreement shall be limited to the right of
indemnification as and to the extent set forth in this Article VI and waive any
and all other remedies available at law or in equity, provided, however, that
this limitation shall not apply in respect of any action brought for fraud.
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ARTICLE VII
CONFIDENTIAL INFORMATION; PUBLICITY
7.01. Confidential Information.
(a) The parties agree that any and all technical, financial,
operations or business information including, but not limited to,
technical know how, customer data, marketing plans, customer lists,
customer information, customer account numbers, the status of any
account, pricing information, computer access codes, instruction and/or
procedural manuals, operating policies and manuals, or financial data of
either party ("Information") furnished or disclosed by either party to
the other or obtained by either party as a result of its activities
under or in connection with this Agreement shall be deemed the property
of the disclosing party and, when in tangible form, shall be returned by
the receiving party to the disclosing party upon request, along with
any copies as may be authorized herein.
(b) "Information" shall not include: (1) information
previously known to the receiving party free of any obligation to keep
it confidential, as evidenced by written records; (2) information that
has been or subsequently is made public, through no wrongful act of the
receiving party or any third party; or (3) information that is received
from a third party without restriction and without breach of this
Agreement, other than information provided to such party in connection
with its performance of this Agreement or any of the other Operative
Documents.
(c) Each party agrees that it shall hold Information in
confidence and shall not make disclosure of Information to anyone except
such of its employees or third party contractors or agents to whom such
disclosure is necessary for the purpose of and as permitted in
performance of this Agreement, except in the following circumstances:
(i) to the extent necessary to comply with a specific applicable law or
the valid final order of a court of competent jurisdiction in which the
party making the disclosure or communication shall notify the other
party in writing and shall seek confidential and proprietary treatment
of the information; (ii) as part of normal reporting or review
procedures of such party's Board of Directors, parent company, auditors
and attorneys; provided, however, that such persons or entities agree to
be bound by the provisions of this paragraph; (iii) to enforce its
rights legally under this Agreement in a court of competent
jurisdiction; or (iv) such information as is part of the public domain
through disclosure other than by or through such party. Each party
shall appropriately notify each employee, contractor, or agent to whom
Information is disclosed that any such disclosures are made in
confidence and shall be kept in confidence by such employee, contractor,
or agent, and shall require any third party contractor or agent to sign
a written agreement to maintain the confidentiality of the Information.
(d) If the transactions contemplated by this Agreement are
not consummated, the parties shall maintain the confidentiality of
Information, and such Information shall not be used to the detriment of
the disclosing party or otherwise in any manner, and all such
Information (including copies and extracts thereof) shall be returned to
the disclosing party immediately upon its written request.
13
(e) The obligations of the parties hereunder shall survive
and be enforceable by temporary and permanent injunctive relief against
the breaching party and its employees, officers, directors, agents,
representatives, and contractors notwithstanding any termination of
this Agreement.
7.02. Confidentiality of Agreement; Publicity.
(a) Except as required by law, each of the parties shall
keep confidential and not disclose, and shall cause their officers,
employees, and agents to keep confidential and not disclose, any of the
terms and conditions of this Agreement or any of the other Operative
Documents to any third party without the prior written consent of the
other party.
(b) The obligations of the parties hereunder shall survive
and be enforceable by temporary and permanent injunctive relief against
the breaching party and its employees, officers, directors, agents,
representatives, and contractors notwithstanding any termination of
this Agreement.
(c) Each party will consult with the other party prior to
issuing any press release or otherwise making any public statement with
respect to the transactions contemplated by this Agreement, and will not
issue any such release or make any such statement over the reasonable
objection of the other party, except as required by law or the rules and
regulations of any relevant securities exchange or quotation system.
ARTICLE VIII
CONCILIATION AND ARBITRATION OF DISPUTES
8.01. Conciliation. In the event of any dispute, claim,
question or disagreement arising out of or relating to this Agreement or any of
the other Operative Documents, other than a matter for which a dispute
resolution mechanism is specifically provided in this Agreement (including but
not limited to a party's right to seek specific performance, judicial remedies
or injunctive relief as provided in Sections 7.01 or 7.02 hereof) the parties
shall use commercially reasonable efforts to settle such dispute, claim,
question or disagreement. To this effect, they shall consult and negotiate with
each other, in good faith, and, recognizing their mutual interests, attempt to
reach a just and equitable solution satisfactory to both parties. If settlement
is not otherwise possible within a reasonable time (not to exceed 20 days), the
Chief Executive Officers, Chief Financial Officers, or other comparable senior
executive officers of Teltronics and Tri-Link shall become involved in such
efforts.
8.02. Arbitration. If the parties do not reach a solution
within a period of thirty (30) days after a matter is referred for conciliation,
as provided above, the dispute shall be submitted to final and binding
arbitration as the sole and exclusive remedy for such dispute. Unless prohibited
by applicable law, any claim shall be made by filing a written demand for
arbitration within one (1) year following the conduct, act or other event or
occurrence first giving rise to the claim; otherwise, the right to any remedy
shall be deemed forever waived and lost. The right and duty of the parties to
this Agreement to resolve any disputes by arbitration shall be governed
exclusively by, and arbitration shall take place according to the commercial
arbitration
14
rules of the American Arbitration Association in effect as of the date hereof.
The arbitration shall be held at a mutually acceptable time and place in
Xxxxxxx, Xxxxxxx, Xxxxxx. Each party will select one arbitrator and the two so
chosen will select a third, and failing selection of an arbitrator by either
party or by the two chosen by the parties, the arbitrator(s) shall be selected
from a panel of neutral arbitrators provided by the American Arbitration
Association and shall be chosen by the striking method. The parties each shall
bear all of their own costs of arbitration; however, the fees of the arbitrators
shall be divided equally between the parties. The arbitrators shall have no
authority to amend or modify the terms of this Agreement or any of the other
Operative Documents. Each party further agrees that, unless such a limitation is
prohibited by applicable law, the other party shall not be liable for punitive
or exemplary damages and the arbitrators shall have no authority to award the
same. The award or decision by a majority of the arbitrators shall be final and
binding on the parties and may be enforced by judgment or order of any court
located in the Province of British Columbia or the State of Florida (an
"Arbitration Jurisdiction Court") or by any other court having jurisdiction over
the parties. The parties consent to the exercise of personal jurisdiction over
them by any Arbitration Jurisdiction Court and to the propriety of venue of any
Arbitration Jurisdiction Court for the purpose of carrying out this provision;
and they waive any objections that they would otherwise have to the same. No
arbitration under this Agreement shall include, by consolidation, joinder or in
any other manner, any Person other than the parties hereto or thereto and any
Person in privity with or claiming through, in the right of or on behalf of such
a party, unless both of the parties consent in writing. To the extent permitted
by applicable law, no issue of fact or law shall be given preclusive or
collateral estoppel effect in any arbitration hereunder, except to the extent
such issue may have been determined in another proceeding between the parties or
between either of the parties and any person in privity with or claiming
through, in the right of or on behalf of the other party.
8.03. Provisional Remedies. Each party shall have the right to
seek from an appropriate court provisional remedies including, but not limited
to, temporary restraining orders or preliminary injunctions before, during or
after arbitration. Neither party need await the outcome of the arbitration
before seeking provisional remedies. Seeking any such remedies shall not be
deemed to be a waiver of either party's right to compel arbitration. Any such
action shall be brought by the party in any Arbitration Jurisdiction Court. The
parties consent to the exercise of personal jurisdiction over them by courts
located there and to the propriety of venue in such courts for the purpose of
carrying out this provision; they waive any objections that they would otherwise
ave to the same; and they waive the right to have any such action decided by a
jury.
ARTICLE IX
TERM AND TERMINATION
9.01. Term. This Agreement shall take effect on the date
hereof and shall remain in effect until all of the obligations of Teltronics
hereunder have been satisfied, unless sooner terminated pursuant to Section 9.02
hereof.
9.02. Termination. This Agreement and the transactions
contemplated hereby may be terminated as follows:
(a) By the mutual written consent of the parties; and
15
(b) By either Teltronics or Tri-Link, if Tri-Link with
respect to Teltronics, or if Teltronics with respect to Tri-Link, shall
have failed to perform any of its obligations hereunder.
9.03. Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 9.02, this Agreement shall become void
and have no effect, except that the provisions of Articles VI, VII, VIII and X
and any other provision necessary to give effect to such surviving provisions,
shall survive any such termination.
ARTICLE X
MISCELLANEOUS
10.01. Amendments and Waivers. Except as otherwise expressly
provided herein, this Agreement shall not be amended or modified in any manner
except by an instrument in writing signed by all of the parties hereto. The
waiver by a party of any condition, or any breach of this Agreement by any other
party, shall not be effective unless in a writing signed by the waiving party,
and no such waiver shall operate or be construed as the waiver of any conditions
other than those expressly identified in the written waiver or of the same or
another breach on a subsequent occasion.
10.02. Nonassignability. All terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This Agreement may
not be assigned by either party without the prior written consent of the other;
provided, however, that such consent shall not be required for the assignment by
either party of its rights and privileges hereunder to an Affiliate of that
party (it being understood that no such assignment shall relieve the assigning
party of its duties or obligations hereunder).
10.03. No Third Party Beneficiaries. This Agreement is not for
the benefit of any Person other than the parties and their Affiliates, and no
Person other than Teltronics and Tri-Link and their respective Affiliates shall
have any rights against the parties hereunder.
10.04. Rules of Construction. The headings in this Agreement
are inserted only as a matter of convenience and in no way affect the terms or
intent of any provision of this Agreement. All defined phrases, pronouns, and
other variations thereof shall be deemed to refer to the masculine, feminine,
neuter, singular, or plural, as the actual identity of the organization, person,
or persona may require. No provision of this Agreement shall be construed
against any parties hereto by reason of the extent to which such parties or its
counsel participated in the drafting hereof.
10.05. Choice of Law. This Agreement is made and entered into
under the laws of Province of British Columbia (without giving effect to the
principles of conflicts of laws thereof), which law shall govern the validity,
enforceability and interpretation hereof and the performance by parties hereto
of their respective duties and obligations hereunder.
10.06. Severability of Provisions. If any provision of this
Agreement shall be contrary to the internal laws of the Province of British
Columbia or any other applicable law, at
16
the present time or in the future, such provision shall be deemed null and void,
but shall not affect the legality of the remaining provisions of this Agreement.
This Agreement shall be deemed to be modified and amended so as to be in
compliance with applicable law and this Agreement shall then be construed in
such a way as will best serve the intention of the parties at the time of the
execution of this Agreement
10.07. Counterparts; Delivery. This Agreement may be executed
in one or more counterparts. Each such counterpart shall be considered an
original and all of such counterparts shall constitute a single agreement
binding all the parties as if all had signed a single document. The parties
acknowledge that delivery of executed counterparts of this Agreement may be
effected by a facsimile transmission or other comparable means, with an original
document to be delivered promptly thereafter via overnight courier.
10.08. Entire Agreement. This Agreement (including any
schedules, exhibits or other attachments hereto), taken together with the other
Operative Documents, constitute the entire agreement among the parties. This
Agreement and the other Operative Documents supersede all prior and
contemporaneous agreements, statements, understandings, and representations of
the parties, including, without limitation, the e-mail of Xxx Xxxxxxx on
August 1, 2002. There are no representations, warranties, agreements,
arrangements, or understandings, oral or written between the parties relating to
the subject matter of this Agreement which are not fully expressed herein. The
parties agree that the traditional formulation of the parole evidence rule
(whereby extrinsic evidence may not be used to vary or contradict the
unambiguous terms of a document that represents a final and complete expression
of the parties' agreement) shall govern in any action or proceeding that may
arise in connection with this Agreement.
10.09. Last Day for Performance Other Than a Business Day. In
the event that the last day for performance of an act or the exercise of a right
hereunder falls on a day other than a Business Day, then the last day for such
performance or exercise shall be the first Business Day immediately following
the otherwise last day for such performance or such exercise.
10.10. Notices. All notices, requests, consents, or other
communications required or permitted to be given under this Agreement shall be
in writing, may be delivered in person, by overnight air courier, or by
certified or registered mail (return receipt requested with all fees prepaid),
and shall be deemed to have been duly given and to have become effective upon
the date actually delivered to the parties or their assignees at the following
addresses:
If to Tri-Link: Tri-Link Technologies Inc.
#000 - 0000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxx Xxxxxxx
17
If to Teltronics: Teltronics, Inc.
0000 Xxxxxxxxx Xxxxxxxxxx Xxx
Xxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxxx, President and CEO
The persons or addresses to which mailings or deliveries shall be made may be
changed from time to time by notice given pursuant to the provisions of this
section.
10.11. Waiver of Jury Trial. The parties hereto hereby waive
their respective right to trial by jury of any cause of action, claim,
counterclaim or cross-complaint in any action, proceeding and/or hearing brought
by any party hereto against another party hereto on any matter whatsoever
relating to, resulting from, arising out of, or in any way connected with this
Agreement, or any amendment or breach hereof, including, without limitation, any
claim or injury or damage, or the enforcement of any remedy under any law,
statute, or regulation, emergency or otherwise, now or hereafter in effect.
10.12. Expenses. Except as otherwise specifically provided in
this Agreement, each party shall bear and pay all direct costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration and applicable fees, printing fees,
and fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel.
10.13. Further Assurances. The parties hereto from time to
time after execution of this Agreement, without further consideration, shall
execute and deliver, as appropriate, such documents and take such actions as may
be reasonably necessary or proper to carry out and consummate the transactions
contemplated by this Agreement.
10.14. Force Majeure. Neither party shall be liable for
defaults or delays due to acts of God or the public enemy, acts or demands of
government or any government agency, strikes, fires, flood, accident, or other
unforeseeable causes beyond its control (other than general economic conditions)
and not due to its fault or negligence. Any party desiring to excuse its default
or delay for any such reason shall notify the other party of the cause of such
default or delay within five (5) days after the beginning thereof.
10.15. Brokers and Finders. Each of the parties represents and
warrants that neither it nor any of its officers, directors, employees, or
Affiliates has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions, or finders' fees in
connection with this Agreement or the transactions contemplated hereby, except
for the Financial Advisory Agreement between Tri-Link and Xxxxxx-Global Ventures
Inc. dated November 13, 2001 (for which Teltronics has no obligations or
liability whatsoever). In the event of a claim by any broker or finder based
upon his or its representing or being retained by or allegedly representing or
being retained by any party, such party agrees to indemnify and hold each other
party harmless of and from any liability in respect of such claim.
10.16. Relationship of Parties. Nothing contained in this
Agreement shall be construed as constituting a partnership or agency
relationship between the parties hereto.
18
IN WITNESS WHEREOF, the undersigned parties hereby execute this
Agreement as of the date first above written.
"Teltronics"
Teltronics, Inc.
By: /s/ Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxxxx
President and CEO
"Tri-Link"
Tri-Link Technologies Inc.
By: /s/ Xxx Xxxxxxx
-------------------------------------
Xxx Xxxxxxx
President
19
EXHIBIT A
DEFINITIONS
When used in this Agreement or in any of the other Operative Documents, the
following terms shall have the meaning here ascribed to them:
"Affiliate" means: (1) any other person directly, or indirectly through one or
more intermediaries, controlling, controlled by or under common control with
such person; (2) any officer, director, partner, employer, or director or
indirect beneficial owner of any 10% or greater equity or voting interest of
such person; or (3) any other person for which a person described in clause (2)
acts in any such capacity.
"Business Day" means any day other than a day which is a Saturday, a Sunday or a
statutory holiday in either British Columbia or Florida.
"Canadian GAAP" means generally accepted accounting principals, as used in
Canada.
"Closing" means the completion of the purchase and sale contemplated by this
Agreement, to take place at the offices of Xxxxx & Lardner, Suite 2700, 000
Xxxxx Xxxxx Xxxxxx, Xxxxx, Xxxxxxx, at the Closing Time.
"Closing Time" means 10:00 a.m. Eastern Time on the earlier of May 1, 2003 or
the fifth Business Day following the earliest day on which Tri-Link and
Teltronics have agreed in writing that the Developed Vortex Technology fully
meets the specifications set forth on Exhibit C attached hereto.
"Consent" means any consent, approval, authorization, clearance, exemption,
waiver, or similar affirmation by any person pursuant to any contract, Law,
Order, or permit.
"Conversion Price" has the meaning specified in Section 4.05.
"Conversion Provisions" has the meaning specified in Section 4.05.
"Developed Vortex Technical Information" means the Vortex Technical Information
as constituted at the Closing Time.
"Developed Vortex Technology" means the Vortex Technology as constituted on the
earlier of April 30, 2003 or the date on which Tri-Link and Teltronics agree in
writing that the Vortex Technology fully meets the specifications set forth on
Exhibit C attached hereto, and shall include the MIKET License as amended
pursuant to Section 3.03 of the Agreement and the Operating System License and
the names "Vortex" and "Vortex SE" and any and all Tri-Link Trademarks held at
the Closing Time and any and all other Rights which Tri-Link may hold therein
and/or thereto at the Closing Time.
A-1
"Escrowholder" means Xxxxx & Xxxxxxx.
"Existing Vortex Hardware" means the proprietary telephony equipment which
constitutes the Vortex Hardware at the time of execution of this Agreement, one
of two identical embodiments of which, marked "Vortex Hardware @ October 31,
2002", has been delivered by Tri-Link to Teltronics at the time of execution of
this Agreement and the other of which has been retained by Tri-Link.
"Existing Vortex Software" means those proprietary computer programs which
constitute the Vortex Software at the time of execution of this Agreement, the
Source Code for which is contained on each of the two identical CD-ROM's marked
"Vortex SE Software @ October 31, 2002", one of which has been delivered by
Tri-Link to Teltronics at the time of execution of this Agreement and the other
of which has been retained by Tri-Link.
"Existing Vortex Technology" means the Vortex Technology as constituted at the
time of execution of this Agreement, and includes, without limitation, the
Existing Vortex Software and the Vortex Documentation and the Vortex Technical
Information pertaining thereto and to the Existing Vortex Hardware.
"Information" has the meaning specified in Section 7.01(a).
"Initial Tri-Link Certificate" has the meaning specified in Section 5.02(a).
"Intellectual Property" means all intellectual and industrial property and all
rights thereto throughout the world of every nature, whether registered or
unregistered, including, without limitation, copyrights, patents, patent rights,
industrial designs, trade marks, and all applications and registrations for any
of the foregoing and all continuations, divisions, reissues, extensions and
renewals thereof, all trade names, service marks, Internet domain names and
websites, and other trade rights, all license agreements, marketing rights,
moral rights, trade secrets, know-how, formulae, processes, technology,
inventions, engineering and other proprietary processes, source code, object
code, computer programs and other computer software, in whatever media, and
data, databases, specifications, prototypes, designs, records, drawings, and
calculations, licenses, sub-licenses, computer rights, and all other
intellectual or industrial property and all rights thereto throughout the world
and all other proprietary rights or interests, together with all antecedent
derivative works;
"Intellectual Property Rights" in and to the Vortex Software, the Vortex
Hardware, the Vortex Documentation and the Vortex Technical Information, as
constituted at any particular time, means such Rights as are then required to
develop, make, use, sell, lease, rent or license and/or offer for sale, lease,
rent or license and/or have developed, made, sold, leased, rented or sublicensed
and/or offered for sale, lease, rental or sublicense all or any portions of that
Vortex Software, that Vortex Hardware and that Vortex Documentation and any
Vortex Derivative Works, and which arise under or by virtue of: (a) the Vortex
Technical Information, (b) the Vortex Copyrights; and/or (c) the Vortex
Trademarks;
A-2
"Law" means any code, law, ordinance, regulation, reporting or licensing
requirement, rule or statute applicable to a person or its assets, liabilities
or business, including those promulgated, interpreted or enforced by any
Regulatory Authority.
"Material Adverse Effect" means an event, change or occurrence which,
individually or together with any other substantially contemporaneous event,
change or occurrence, would, in the opinion of a reasonable person knowledgeable
in such matters, impair to an unreasonable degree the financial position,
business or results of operations of such entity or the ability of such entity
to perform its obligations under any Operative Document or to consummate the
transactions contemplated by any Operative Document.
"MIKET License" has the meaning specified in Section 1.06 but as amended
pursuant to Section 3.03.
"Object Code" means a form of software code resulting from the translation or
processing of Source Code by a computer into machine language or intermediate
code, which thus is in a form that would not be convenient to human
understanding of the program logic, but which is appropriate for execution or
interpretation by a computer.
"Operative Documents" means this Agreement, the Teltronics Note, the Joint
Escrow Instructions and the Teltronics Security Agreement.
"Operating System" has the meaning specified in Section 1.06.
"Operating System License" has the meaning specified in Section 1.06.
"Order" means any administrative decision or award, decree, injunction,
judgment, order, quasi-judicial decision or award, ruling, or writ of any
federal, state, local foreign or other court, arbitrator, mediator, tribunal,
administrative agency or Regulatory Authority.
"Person" means and includes any individual, corporation, partnership, firm,
joint venture, syndicate, association, trust, government body, and any other
form of entity or organization.
"Purchase Price" has the meaning specified in Section 4.02.
"Purchased Assets" means the Existing Vortex Technology, the Developed Vortex
Technology and the Vortex Technology Assets.
"Regulatory Authority" shall mean all United States federal and state and
Canadian federal and provincial regulatory agencies having jurisdiction over
Tri-Link and/or Teltronics.
"Rights" means any and all legally enforceable proprietary, possessory, use and
ownership rights, titles and interests (whether beneficial or legal) of all
kinds whatsoever, howsoever and wheresoever arising, and whether partial or
whole in nature.
"Royalty Commitment" has the meaning specified in Section 4.06.
A-3
"Source Code" means a presentation or representation of a computer program,
regardless of the form in which it is stored, from which it is possible to
discern the logic, algorithms, internal structure, operating features and any
other design characteristics of such computer program.
"Teltronics Financial Statements" has the meaning specified in Section 2.04.
"Teltronics Note" has the meaning specified in Section 4.02.
"Teltronics Security Agreement" has the meaning specified in Section 4.03.
"Tri-Link Financial Statements" has the meaning specified in Section 1.07.
"Upgrades" means, in respect of software and related documentation: (a) updates,
comprising new revisions of the software and related documentation, including
corrections and modifications, and (b) upgrades, comprising new releases of the
software and related documentation, including improvements and enhancements.
"U.S. GAAP" means generally accepted accounting principals, as used in the
United States.
"Vortex Copyrights" means any and all copyrights, copyright registrations and
applications for registration, in and to and/or with respect to the Vortex
Software, the Vortex Documentation and any Vortex Derivative Works.
"Vortex Documentation" means, at any particular time, the user manuals,
handbooks, user guides and other written or electronic material relating to the
Vortex Hardware and/or the Vortex Software, as then constitute, whether in
written form or electronic form (and, if in electronic form, both the Source
Code and all Object Code therefor).
"Vortex Derivative Works" means all repairs, corrections, modifications,
revisions, additions, expansions, abridgements, condensations, improvements,
enhancements, translations and/or adaptations (whether complete or incomplete)
of, to, in, based upon or that find support in, the Vortex Software, the Vortex
Documentation and/or the Vortex Technical Information, as the case may be, the
making or preparation of which, if effected without the authorization of the
owner of the copyright therein, would constitute copyright infringement.
"Vortex Hardware" means, at any particular time, the telephony equipment that,
in conjunction with the Vortex Software, as then constituted, enables the
implementation of telephony over a standard Ethernet local area network,
generally in the manner contemplated by the Existing Vortex Technology, and
which has resulted from further development of the Existing Vortex Hardware.
"Vortex Software" means, at any particular time, the Source Code and all Object
Code for those proprietary computer programs that, in conjunction with the
Vortex Hardware, as then constituted, enable the implementation of telephony
over a standard Ethernet local area network, and which have resulted from
further development of the Existing Vortex Software.
A-4
"Vortex Technical Information" means, at any particular time, all information,
data, formulae, know-how, trade secrets, unpatented inventions or improvements,
manufacturing information, technical reports, specifications, quality control
documentation, product design histories drawings and the like which are employed
to develop, make, use, sell, lease, rent or license and/or offer for sale,
lease, rent or license, import and/or export and/or have developed, made, sold,
leased, rented or sublicensed and/or offered for sale, lease, rental or
sublicense, imported and/or exported all or any portions of the Vortex Software,
the Vortex Hardware, the Vortex Documentation and any Vortex Derivative Works,
whether protectable or not as trade secrets or otherwise, including, without
limitation, copies of any standard operating procedures, development and/or
manufacturing protocols, development and/or manufacturing records and research
notebooks.
"Vortex Technology" means, at any particular time, the Vortex Software, the
Vortex Documentation and the Vortex Technical Information, each as constituted
at that time, and all Intellectual Property Rights therein and thereto and in
and to the Vortex Hardware, as then constituted.
"Vortex Technology Assets" means all those tangible and intangible assets
associated with the Existing Vortex Technology and the Developed Vortex
Technology set forth on Exhibit D attached hereto.
"Vortex Trademarks" means any and all trademark registrations and trademark
applications, complete or incomplete, for the marks "Vortex" and "Vortex SE"
held from time to time in any jurisdiction, worldwide.
A-5
EXHIBIT B
EXISTING VORTEX TECHNOLOGY
SPECIFICATIONS
The following, together with the physical embodiment of the Existing Vortex
Hardware referred to in the definition thereof in Exhibit A and the CD-ROM
containing the Service Code for the Existing Vortex Software referred to in the
definition thereof in Exhibit A, defines the Existing Vortex Technology to be
developed to create the Developed Vortex Technology and the Vortex Technology.
Vortex S.E.
-----------
Vortex S.E. Controller Software
The Vortex Controller is the central component of the Vortex S.E. system. The
Vortex Controller Software implements the telephony control functions of a PBX
as well as all of the software that provides Administration and Management
Services.
As a provider of Operations, Administration, and Maintenance Services, the
Controller provides the entire Intranet and Internet accessible capability set
needed to configure, monitor, and troubleshoot the system.
Vortex S.E. QSAP
The QSAP (Quality of Service Access Points) is a network appliance that is
co-located with every PC-Phone. The device provides the Ethernet interface
hardware and firmware that routes voice and control into and out of an embedded
DSP, as well as the signal processing elements that ensure that high quality
audio is delivered to and from the PC-Phone.
In situations where the PC-Phone is co-located with a user's personal computer,
the device seamlessly inserts between the PC's Ethernet port and the switched
Ethernet backbone maintaining a single wire to the desktop solution.
The QSAP is an intelligent peripheral that auto discovers the presence of a
Vortex Controller, automatically identifies itself and is provided an IP address
by the Vortex Controller. The `personality' of the QSAP can be downloaded and is
resident within the QSAP allowing Users to move location without any
reprogramming of the Vortex Controller.
SLIC & POTS
The SLIC and POTS modules provide a Station and PSTN interface for the Vortex
S.E. product. Each module represents a single line interface.
The SLIC and POTS provide the ability for the Vortex S.E. to be used in
conjunction with the PSTN and also provide a Station interface for an analog
telephone instrument or analog peripheral such as a Voicemail System.
B-1
PC-Phone
The PC-Phone serves as the primary desktop audio device within the Vortex SE
system and provides the following features and functions: -
An ergonomic design with 10 programmable keys, 2 line x16 character LCD display
and soft key capabilities.
The PC-Phone software exposes the physical phone elements to higher-level
control software in the QSAP eliminating the need for software updates.
B-2
EXHIBIT C
DEVELOPED VORTEX TECHNOLOGY
SPECIFICATIONS
The following are the specifications for the technology intended to result from
the further development of the Existing Vortex Technology, initially by Tri-Link
and thereafter, by Teltronics. The Developed Vortex Technology takes the
Existing Vortex Technology, enhances the current feature set, and adds PSTN, WAN
and BRI Gateways in order to bring the Vortex Technology on par with Teltronics'
competition.
Vortex S.E.
-----------
Vortex S.E. Controller Software
The Vortex Controller is the central component of the Vortex S.E. system. The
Vortex Controller Software implements the telephony control functions of a PBX
as well as all of the software that provides Administration and Management
Services.
As a provider of Operations, Administration, and Maintenance Services, the
Controller provides the entire Intranet and Internet accessible capability set
needed to configure, monitor, and troubleshoot the system.
Vortex S.E. QSAP
The QSAP (Quality of Service Access Points) is a network appliance that is
co-located with every PC-Phone. The device provides the Ethernet interface
hardware and firmware that routes voice and control into and out of an embedded
DSP, as well as the signal processing elements that ensure that high quality
audio is delivered to and from the PC-Phone.
In situations where the PC-Phone is co-located with a user's personal computer,
the device seamlessly inserts between the PC's Ethernet port and the switched
Ethernet backbone maintaining a single wire to the desktop solution.
The QSAP is an intelligent peripheral that auto discovers the presence of a
Vortex Controller, automatically identifies itself and is provided an IP address
by the Vortex Controller. The `personality' of the QSAP can be downloaded and is
resident within the QSAP allowing Users to move location without any
reprogramming of the Vortex Controller.
SLIC & POTS
The SLIC and POTS modules provide a Station and PSTN interface for the Vortex
S.E. product. Each module represents a single line interface.
The SLIC and POTS provide the ability for the Vortex S.E. to be used in
conjunction with the PSTN and also provide a Station interface for an analog
telephone instrument or analog peripheral such as a Voicemail System.
C-1
PC-Phone
The PC-Phone serves as the primary desktop audio device within the Vortex SE
system and provides the following features and functions
An ergonomic design with 10 programmable keys, 2 line x16 character LCD display
and soft key capabilities.
The PC-Phone software exposes the physical phone elements to higher-level
control software in the QSAP eliminating the need for software updates.
Analog PSTN Gateway
The Analog PSTN Gateway is a network-attached appliance that provides reliable
multi channel interface between the switched Ethernet domain of Vortex S.E. and
the more traditional Analog TDM domain.
The Analog PSTN Gateway is a sixteen (16) channel universal interface that will
support the aforementioned POTS and SLIC devices. Two (2) RJ45 connections, one
for control and one for voice data provide the interface to the switched
Ethernet domain.
Digital PSTN Gateway
The Digital PSTN Gateway is a network-attached appliance that provides reliable
multi span interfaces between the switched Ethernet domain of Vortex S.E. and
the digital T1 and E1 TDM domain.
The Digital PSTN Gateway will provide both E1 and T1 interfaces. Each Digital
PSTN Gateway will be available in either a dual or a quad span unit and support
a variety of CAS and Primary Rate ISDN signaling protocols. Two (2) RJ45
connections, one for control and one for voice data provide the interface to the
switched Ethernet domain.
X.000 XXX Xxxxxxx
Xxx X.000 XXX Xxxxxxx is a network-attached appliance that provides a reliable
WAN interface using the H.323 protocol for basic call control.
The H.323 WAN Gateway will use technology currently being developed as a part of
the Teltronics 20-20 switching product to provide access to H.323 enabled WAN
systems for basic call connectivity.
BRI Gateway
The Digital BRI PSTN Gateway is a network-attached appliance that provides
reliable multi channel interfaces between the switched Ethernet domain of Vortex
S.E. with the digital BRI TDM domain.
C-2
The Digital BRI PSTN Gateway will provide both an S and T interface. Each
Digital PSTN BRI Gateway will be available in either a quad or octal channel
unit and support a variety of BRI ISDN signaling protocols. Two (2) RJ45
connections, one for control and one for voice data provide the interface to the
switched Ethernet domain.
C-3
EXHIBIT D
VORTEX TECHNOLOGY ASSETS
The Vortex Technology Assets shall include the following hardware and software
and other assets associated with the following components of the Vortex and
Vortex SE products.
Patent
5,875,246, February 23, 1999, "Distributed Audio Signal Processing in a Network
experiencing Transmission Delay"
Vortex
------
Vortex Controller and Management Software
The Vortex Controller Software up to and including Vortex Release 2.5;
the assets include both the Source Code, compiled Object Code,
Technical Specifications and Documents. Contained within the Vortex
Controller software are the following general software modules.
o Real Time Server (RTS, Telephony Service)
o Vortex OA&M Software
o Vortex Configuration Service
o Vortex Gateway Service
o Vortex Console
o PC-Phone Set-up
o TAPI Service Provider
o Vortex NIC and NID Drivers
Vortex NIC
Hardware
All documentation including but not limited to Schematics, Xxxx of
Materials, Gerber Files, Assembly Drawings and Technical
Specifications.
Vortex NIC includes proprietary ASIC designs; all design information is
required for the ASIC devices.
Software
Source Code and compiled Object Code including all Technical
Specifications and Documentation.
D-1
The Source Code shall include but not be limited to the software, which
provides Device Control, Signal Processing, Cell Routing and Audio
Routing to the PC-Phone, Acoustic Echo Canceller, DTMF Generators and
Call Progress Tone Generators.
Vortex NID
Hardware
All documentation including but not limited to Schematics, Xxxx of
Materials, Gerber Files, Assembly Drawings and Technical
Specifications.
Vortex NID includes proprietary ASIC and FPGA designs; all design
information is required for the ASIC and FPGA devices.
Software
Source Code and compiled Object Code including all Technical
Specifications and Documentation.
The Source Code shall include but not be limited to the software which
provides Device Control, Signal Processing, Cell Routing to and from
attached Personal Computer and Audio Routing to the PC-Phone, Acoustic
Echo Canceller, DTMF Generators and Call Progress Tone Generators.
Vortex CO Card (3 port Trunk Interface Card)
Hardware
All documentation including but not limited to Schematics, Xxxx of
Materials, Gerber Files, Assembly Drawings and Technical
Specifications.
Vortex CO Card includes proprietary ASIC designs; all design
information is required for the ASIC devices.
Software
Source Code and compiled Object Code including all Technical
Specifications and Documentation.
The Source Code shall include but not be limited to the software which
provides Device Control, Signal Processing, Call Progress Detection,
Tone Generation and Line Echo Cancellation.
Vortex AD Card (3 port Station Interface Card)
Hardware
All documentation including but not limited to Schematics, Xxxx of
Materials, Gerber Files, Assembly Drawings and Technical
Specifications.
Vortex AD Card includes proprietary ASIC designs; all design
information is required for the ASIC devices.
Software
Source Code and compiled Object Code including all Technical
Specifications and Documentation.
The Source Code shall include but not be limited to the software which
provides Device Control, Signal Processing, Acoustic Echo Cancellation,
DTMF Generation, DTMF Detection and Call Progress Tone Generation.
Vortex DID Card (3 port DID Interface Card)
Hardware
All documentation including but not limited to Schematics, Xxxx of
Materials, Gerber Files, Assembly Drawings and Technical
Specifications.
D-2
Vortex DID includes proprietary ASIC designs; all design information is
required for the ASIC devices.
Software
Source Code and compiled Object Code including all Technical
Specifications and Documentation.
The Source Code shall include but not be limited to the software which
provides Device Control, Signal Processing, Line Echo Cancellation,
DTMF Generation, DTMF Detection, and Call Progress Tone Generation.
Vortex Mini Hub
Hardware
All documentation including but not limited to Schematics, Xxxx of
Materials, Gerber Files, Assembly Drawings and Technical
Specifications.
Vortex Mini Hub includes proprietary CPLD designs; all design
information is required for the CPLD devices.
Vortex S.E.
-----------
Vortex S.E. Controller Software
The Vortex Controller Software including all additions and
modifications; the asset includes the Source Code, compiled Object Code
and Technical Specifications and Documents. Contained within the Vortex
Controller software are the following general software modules.
D-3
o Vortex Telephony Service (RTS)
o Vortex OA&M Software
o Vortex Configuration Service
o Vortex Console
o PC-Phone Set-up
o TAPI Service Provider
o Controller Web Site
Vortex S.E. QSAP
Hardware
All documentation including but not limited to Schematics, Xxxx of
Materials, Gerber Files, Assembly Drawings and Technical
Specifications.
Vortex S.E. QSAP includes proprietary FPGA designs; all design
information is required for the FPGA devices.
Software
Source Code and compiled Object Code including all Technical
Specifications and Documentation.
The Source Code shall include but not be limited to the software which
provides Device Control, Signal Processing, Acoustic Echo Cancellation,
DTMF Generators and Tone Generators.
SLIC & POTS
Hardware
All documentation including but not limited to Schematics, Xxxx of
Materials, Gerber Files, Assembly Drawings and Technical
Specifications.
The software being developed for the Analog and Digital gateways
includes SP code which provides Line Echo Cancellation, Tone Detection
including both DTMF detection and Call Progress detection, CLID
detection, packet loss concealment algorithms, enhanced LEC and new
Acoustic Echo Canceller algorithms. MIKET DSP owns all of these
algorithms as per the delivered agreement.
Vortex and Vortex S.E. PC-Phone
Plastics
All documentation including but not limited to the PC-Phone Auto-CAD
drawings for the various piece parts that collectively make up the
PC-Phone, Xxxx of Materials, Assembly Drawings and Physical Plastic
Molding Tools to manufacturer the PC-Phone.
D-4
Hardware
All documentation including but not limited to Schematics, Xxxx of
Materials, Gerber Files, Assembly Drawings and Technical
Specifications.
Software
Source Code and compiled Object Code including all Technical
Specifications and Documentation.
The Source Code shall include but not limited to the 8051 software,
which provides keyboard scan, LED scan, low level LCD writes, and audio
switching between Speaker/Microphone and Handset only.
The Vortex and Vortex SE Muppet System
Hardware
All documentation including but not limited to Schematics, Xxxx of
Materials, Gerber Files, Assembly Drawings and Technical
Specifications.
Software
Source Code and compiled Object Code including all Technical
Specifications and Documentation.
The Source Code shall include but not be limited to MUPTAPI and the
Visual Test scripts.
D-5
EXHIBIT E
TRI-LINK CAPITAL STRUCTURE
Common
Share
Common Preference Warrants &
Shares Shares Options
------ ------ -------
Helix (PEI) Inc. 50,000 4,513,568 1,806,229
Xxxxxx-Global Ventures Inc. 50,000 18,425,979 18,810,106
Ex Fund Capital Inc. 330,574
Exceptional Technologies Fund 3 (VCC) Inc. 9,248,555 9,625,316
Exceptional Technologies Fund 5 (VCC) Inc. 1,585,402 1,014,874
Fidulex Management Inc. 61,263 31,896
Banque IPPA & Associates. 233,407 121,522
Banque Xxx Xxxxx & Cie AG 142,632
Union Bancaire Privee 455,931
687043 Alberta Ltd. 72,000
Xxxxxx & Associates 25,000
Intasys Corporation 3,548,648 3,442,586
Manitex Capital Inc. 1,314,326 1,320,054
3778312 Canada Inc. 166,802 47,500
Management 34,000 2,197,030 2,197,030
--------------------------------------------------
Employee Stock Options 231,000 42,224,117 46,459,029
--------------------------------------------------
E-1
EXHIBIT F
TRI-LINK SECURED CREDITORS
Helix (PEI) Inc.
Xxxxxx-Global Ventures Inc.
Exceptional Technologies Fund 3 (VCC) Inc.
Exceptional Technologies Fund 5 (VCC) Inc.
Intasys Corporation
Manitex Capital Inc.
Roytor & Co.
Fidulex Management Inc.
Xxxx Xxxxxx
Xxx Xxxxx
Xxx Xxxxx
Xxxx Xxxxxxx
Xxxxxxx Xxxx
F-1
EXHIBIT G
TRI-LINK FINANCIAL STATEMENTS
G-1
EXHIBIT H
TELTRONICS FINANCIAL STATEMENTS
H-1
EXHIBIT I
FORM OF TELTRONICS NOTE
PROMISSORY NOTE
---------------
$2,250,000 (US dollars)
Sarasota, Florida
__________, 2003
FOR VALUE RECEIVED, Teltronics, Inc. (the "Company"), a Delaware
corporation and having an address at 0000 Xxxxxxxxx Xxxxxxxxxx Xxx, Xxxxxxxx,
Xxxxxxx 00000, hereby promises to pay Tri-Link Technologies Inc. a corporation
incorporated under the laws of Canada and having an address of #301-8988
Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0 or Tri-Link's Securityholders
(the "Holders"), the principal sum of Two Million Two Hundred and Fifty Thousand
Dollars (US$2,250,000) (the "Principal") with interest calculated from the date
of this promissory note on the balance of such sum and payable at the same
place, both before and after maturity, default, and judgment, at the nominal
rate per annum of Six and One Half percent (6.5%) (the "Interest") at the same
time and place.
The Principal and Interest shall be payable by the Company to the
Holders in twelve quarterly installments as detailed in the attached schedule.
The Principal or any part thereof may be paid in advance at any time
without notice, bonus or penalty. This promissory note shall be governed by and
construed in accordance with the laws of the Province of British Columbia and
the laws of Canada applicable therein.
IN WITNESS WHEREOF, the undersigned has caused this promissory note to
be duly signed as of the ______ day of __________, 2003.
Teltronics, INC.
By:_____________________________________
Xxxx Xxxxxxx, President and CEO
I-1
Total
Principal Interest Payment Date
Payment 1 187,500.00 36,562.50 224,062.50 August 1, 2003
Payment 2 187,500.00 33,515.63 221,015.63 November 1, 2003
Payment 3 187,500.00 30,468.75 217,968.75 February 1, 2004
Payment 4 187,500.00 27,421.88 214,921.88 May 1, 2004
Payment 5 187,500.00 24,375.00 211,875.00 August 1, 2004
Payment 6 187,500.00 21,328.13 208,828.13 November 1, 2004
Payment 7 187,500.00 18,281.25 205,781.25 February 1, 2005
Payment 8 187,500.00 15,234.38 202,734.38 May 1, 2005
Payment 9 187,500.00 12,187.50 199,687.50 August 1, 2005
Payment 10 187,500.00 9,140.63 196,640.63 November 1, 2005
Payment 11 187,500.00 6,093.75 193,593.75 February 1, 2006
Payment 12 187,500.00 3,046.88 190,546.88 May 1, 2006
I-2
EXHIBIT J
FORM OF TELTRONICS SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is effective as of
the ___ day of ____, 2003, between Teltronics, Inc., a Delaware corporation (the
"Debtor") and Tri-Link Technologies Inc., a Canadian corporation (the "Secured
Party") (the Debtor and the Secured Party together are referred to as the
"parties"). The parties agree as follows:
I. SECURITY INTEREST
The Debtor gives the Secured Party an unconditional continuing
interest (the "Security Interest") in the property described on Schedule A
attached hereto with the priorities stated thereon, and in all proceeds and
products thereof in any form together with all records relating thereto (the
"Collateral").
II. INDEBTEDNESS SECURED
This Agreement and the Security Interest created by it secures
the obligation of the Debtor to pay to the Secured Party Two Million Two Hundred
Fifty Thousand Dollars ($2,250,000.00) and such interest as may from time to
time accrue on the unpaid portion thereof and remain unpaid, as evidenced in
that certain Promissory Note executed by the Debtor in favor of the Secured
Party on the same date as this Agreement, a copy of which is attached hereto as
Exhibit 1 (the "Indebtedness").
III. REPRESENTATIONS AND WARRANTIES OF DEBTOR
The Debtor represents and warrants, and as long as the
Indebtedness remains unpaid shall be deemed continuously to represent and
warrant, that:
1. Except for the security interests described on Schedule A
and except for the Security Interest, the Debtor is owner of the Collateral free
of all security interests or other encumbrances.
2. The Collateral was acquired by the Debtor from the Secured
Party and is now used solely for the benefit of the Debtor and, except as
disclosed on Schedule A, the Debtor knows of no other rights in, claims against,
or litigation, filed or threatened, regarding the Collateral.
3. To the best of the Debtor's knowledge, no other business,
firm, or person is using, promoting, or marketing, with or without Debtor's
authorization, the Collateral, or any portion thereof.
4. The Debtor is authorized to enter into this Security
Agreement and into the transactions evidenced by the Collateral.
J-1
5. The Debtor's records concerning creation, application, and
use of the Collateral are kept at the address of its principal office: 0000
Xxxxxxxxx Xxxxxxxxxx Xxx, Xxxxxxxx Xxxxxxx, 00000-0000.
IV. COVENANTS OF DEBTOR
So long as this Agreement has not been terminated as provided
in Article VII, the Debtor:
(a) will defend the Collateral against the claims and demands
of all other parties; and will not sell, transfer, assign, deliver or otherwise
dispose of any of the Collateral or any interest therein without the prior
written consent of the Secured Party;
(b) will keep in accordance with generally accepted
accounting principles consistently applied, accurate and complete records
concerning the Collateral; upon the Secured Party's request will xxxx any of
such records and all or any of the Collateral to give notice of the Security
Interest; and will permit the Secured Party or its agents to inspect the
Collateral and to audit and make abstracts of such records or any of the
Debtor's books, ledgers, reports, correspondence and other records;
(c) upon demand will deliver to the Secured Party any
documents of title and any chattel paper representing or relating to the
Collateral or any part thereof which the Secured Party may from time to time
reasonably request;
(d) will notify the Secured Party promptly in writing of any
change in the Debtor's address, name or identity specified above, of any change
in the location or of any additional locations at which the Collateral is kept
and of any change in the address at which records concerning the Collateral are
kept;
(e) will notify the Secured Party immediately of any use,
whether or not such use is authorized by the Debtor, of the Collateral, or any
portion thereof, or any tradenames, trade secrets, trademarks, or product
formulae substantially similar to the Collateral, by another party;
(f) without the Secured Party's written consent will not make
or agree to make any alteration, modification of or adjustment to any of the
Collateral, or to the use, presentation or promotion thereof as of the date of
this Agreement;
(g) in connection herewith will execute and deliver to the
Secured Party such financing statements and other documents, pay all costs of
title searches and filing financing statements and other documents in all public
offices requested by the Secured Party and do such other things as the Secured
Party may request; and
(h) will pay or cause to be paid all taxes, assessments and
other charges of every nature which may be levied or assessed against the
Collateral.
J-2
V. VERIFICATION OF COLLATERAL
The Secured Party shall have the right to verify any
Collateral in any manner and through any medium which the Secured Party may
consider appropriate and the Debtor shall furnish such assistance and
information and perform such acts as the Secured Party may require in connection
therewith.
VI. DEFAULT
Any of the following events or conditions shall constitute an
event of default: ("Event of Default"):
(a) non-payment of the Indebtedness when due, or failure by
the Debtor to perform any obligations under this Agreement or any other
agreement between the Debtor and the Secured Party;
(b) filing by or against the Debtor of a petition in
bankruptcy or for reorganization under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution,
liquidation or similar law or any Jurisdiction;
(c) making a general assignment by the Debtor for the benefit
of creditors, the appointment of or taking possession by a receiver, trustee,
custodian or similar official for the Debtor or for any of the Debtor's assets;
or any indebtedness of the Debtor;
(d) material falsity in any certificate, statement,
representation, warranty or audit at any time furnished to the Secured Party
(including warranties in this Agreement) and including any omission to disclose
any substantial contingent or liquidated liabilities or any material adverse
change in any facts disclosed by any certificate statement, representation,
warranty or audit furnished to the Secured Party;
(e) any attachment or levy against the Collateral or any
other occurrence which inhibits the Secured Party's free access to the
Collateral.
Upon the happening of any Event of Default the Secured Party's
right with respect to the Collateral shall be those of a secured party under the
Florida Uniform Commercial Code and any other applicable law from time to time
in effect. The Secured Party shall also have any additional rights granted
herein and in any other agreement now or hereafter in effect between the Debtor
and the Secured Party. If requested by the Secured Party the Debtor will
assemble the Collateral and make it available to the Secured Party at a place to
be designated by the Secured Party.
The Debtor agrees that any notice by the Secured Party of the
sale or disposition of the Collateral or any other intended action hereunder,
whether required by the Florida Uniform Commercial Code and/or the Personal
Property Security Act of the Province of British Columbia or otherwise, shall
constitute reasonable notice to the Debtor if the notice is mailed by regular or
certified mail, postage prepaid, at least five days before the action to the
Debtor's address as specified in this Agreement or to any other address which
the Debtor has specified in writing to the Secured Party as the address to which
notices shall be given to the Debtor.
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The Debtor shall pay all costs and expenses incurred by the
Secured Party in enforcing this Security Agreement, realizing upon any
Collateral and collecting any of the Indebtedness, including a reasonable
attorney's fee whether suit is brought or not and whether incurred in connection
with collection, trial, appeal or otherwise, and shall be liable for any
deficiencies in the event the proceeds of disposition of the Collateral does not
satisfy the Indebtedness in full.
VII. MISCELLANEOUS
(a) The Debtor authorizes the Secured Party at the Debtor's
expense to file any financing statement or statements relating to the Collateral
(without the Debtor's signature thereon) which the Secured Party deems
appropriate, and the Debtor irrevocably appoints the Secured Party as the
Debtor's attorney-in-fact to execute any such financing statement or statements
in the Debtor's name and to perform all other acts which the Secured Party deems
appropriate to perfect and to continue perfection of the Security Interest.
(b) The Debtor hereby irrevocably consents to any act by the
Secured Party or its Agents in entering upon any premises for the purpose of
either (i) inspecting the Collateral; or (ii) taking possession of the
Collateral after any Event of Default. The Debtor hereby waives its right to
assert against the Secured Party or its Agents any claim based upon trespass or
any similar cause of action for entering upon any premises where the Collateral
may be located. The Debtor hereby irrevocably consents to any use, or
authorization to use, the Collateral, or any portion thereof, after any Event of
Default; and the Debtor hereby waives his right to assert against the Secured
Party or its assignees any claim based upon infringement or any similar cause of
action for use of the Collateral.
(c) No delay or omission by the Secured Party in exercising
any right hereunder or with respect to any Indebtedness shall operate as a
waiver of that or any other right, and no single or partial exercise of any
right shall preclude the Secured Party from any other or future exercise of the
right or the exercise of any other right or remedy. The Secured Party may cure
any Event of Default by the Debtor in any reasonable manner without waiving the
Event of Default so cured and without waiving any other prior or subsequent
default by the Debtor. All rights and remedies of the Secured Party under this
Agreement and under the Florida Uniform Commercial Code and/or the Personal
Property Security Act of the Province of British Columbia shall be deemed
cumulative.
(d) The rights and benefits of the Secured Party under this
Agreement shall, if the Secured Party agrees, inure to any party acquiring an
interest in the Indebtedness or any part thereof.
(e) The terms "Secured Party" and "Debtor" as used in this
Agreement include the heirs, personal representatives, and successors or assigns
of those parties.
(f) This Agreement may not be modified or amended nor shall
any provision of it be waived except by in writing signed by the Debtor and by
an authorized officer of the Secured Party.
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(g) This Agreement shall be construed under the laws of the
state of Florida in effect from time to time.
(h) This Security Agreement is a continuing agreement which
shall remain in force until the Secured Party shall actually receive written
notice of its termination and thereafter until all of the Indebtedness
contracted for or created before receipt of the notice and any extensions or
renewals on that Indebtedness (whether made before or after receipt of the
notice) together with all interest thereon both before and after the notice
shall be paid in full.
IN WITNESS WHEREOF, the Debtor has executed this Agreement on
the day and year first above written.
TELTRONICS, INC.
________________________________________
Xxxx Xxxxxxx, President
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Schedule A to Teltronics Security Agreement
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EXHIBIT K
FORM OF JOINT ESCROW INSTRUCTIONS
---------------------------------
THESE JOINT ESCROW INSTRUCTIONS ("Escrow Instructions") are
made and entered into the ____ day of __________ 2003 by and among TRI-LINK
TECHNOLOGIES INC., a Canadian corporation ("Tri-Link), and TELTRONICS, INC., a
Delaware corporation (Teltronics) (Tri-Link and Teltronics may be referred to
jointly herein as the "Principals") and XXXXX & LARDNER, whose address is 000
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx (hereinafter referred to as
"Escrow Holder").
WITNESSETH:
WHEREAS, the Principals desire that Escrow Holder hold certain
property as described on Exhibit "A" hereto ("Escrowed Property") pursuant to
that certain Agreement for Purchase and Sale of Vortex Technology, dated October
31, 2002 (the "Agreement") which is incorporated herein by reference; and
WHEREAS, Escrow Holder has agreed to act as escrow agent for
the Escrowed Property on the terms and conditions now about to be set forth.
NOW THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable considerations, the
receipt and sufficiency of which is hereby acknowledged, it is mutually agreed
as follows:
ARTICLE I
ESCROW
1.01 The Escrow Holder agrees to hold all of the Escrowed
Property in escrow subject to the terms and conditions contained in these Escrow
Instructions and the Agreement. The provisions of these Escrow Instructions
shall control in the event of any conflict between the provisions hereof and the
provisions of the Agreement, if any.
1.02 The Escrow Holder shall not be deemed to have knowledge
of any matter or thing unless and until the Escrow Holder has actually received
notice of such matter or thing and the Escrow Holder shall not be charged with
any constructive notice whatsoever.
1.03 In the event instructions from Principals would require
the Escrow Holder to expend any monies or to incur any cost, the Escrow Holder
shall be entitled to refrain from taking any action until it receives payment
for such costs.
1.04 The Principals acknowledge and agree that nothing in
these Escrow Instructions shall prohibit the Escrow Holder from: (1) serving in
a similar capacity on behalf of others; or (2) acting in the capacity of
attorneys for one or more Principals in connection with any matter.
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ARTICLE II
RELEASE OF ESCROWED PROPERTY
2.01 The Escrow Holder agrees to release the Escrowed
Property in accordance with the terms and conditions set forth in the Agreement
and these Escrow Instructions.
2.02 In the event the Escrow Holder shall be uncertain as to
its duties or rights hereunder or shall receive instructions, claims or demands
from any Principals or from third persons with respect to the Escrowed Property
or any other sums or things which may be held hereunder, which, in its sole
opinion, are in conflict with any provision of these Escrow Instructions and/or
the Agreement, if any, the Escrow Holder shall be entitled to refrain from
taking any action until it shall be directed otherwise in writing by all
Principals and said third persons, if any, or by a final order or judgment of a
court of competent jurisdiction.
ARTICLE III
DISPUTES
3.01 In the event the Escrow Holder is joined as a party to a
lawsuit by virtue of the fact that it is holding the Escrowed Property, the
Escrow Holder shall, at its option, either (1) tender the Escrowed Property to
the registry of the appropriate court; or (2) disburse the Escrowed Property in
accordance with the court's ultimate disposition of the case, and Principals
hereby jointly and severally indemnify and hold the Escrow Holder harmless from
and against any damages or losses in connection therewith including, but not
limited to, reasonable attorneys' fees and court costs at all trial and
appellate levels. In the event of litigation pursuant to these Escrow
Instructions, the party not prevailing shall be responsible for the legal fees
and expenses of both the Escrow Holder and the prevailing party.
3.02 In the event the Escrow Holder tenders the Escrowed
Property to the registry of the appropriate court and files an action of
interpleader naming the Principals and any affected third parties of whom Escrow
Holder has received actual notice, the Escrow Holder shall be released and
relieved from any and all further obligation and liability hereunder or in
connection herewith and Principals hereby jointly and severally indemnify and
hold the Escrow Holder harmless from and against any damages or losses arising
in connection therewith, including, but not limited to, all costs and expenses
incurred by the Escrow Holder in connection with the filing of such action
including, but not limited to, reasonable attorneys' fees and court costs at all
trial and appellate levels.
ARTICLE IV
TERM OF ESCROW INSTRUCTIONS
4.01 These Escrow Instructions shall remain in effect unless
and until it is canceled in any of the following manners:
a) Upon written notice given by all Principal(s) of
cancellation of designation of the Escrow Holder to act and serve in
said capacity, in which event cancellation shall take effect no earlier
than twenty (20) days after notice to the Escrow Holder of such
cancellation; or
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b) The Escrow Holder may resign as escrow holder at any
time upon giving notice to Principal(s) of its desire to so resign;
provided, however, that resignation of the Escrow Holder shall take
effect no earlier than ten (10) days after the giving of notice of
resignation; or
c) Upon compliance with all escrow provisions as set forth
in these Escrow Instructions and in the Agreement, if any.
4.02 In the event Principal(s) fail to agree to a successor
escrow holder within the period described hereinabove, the Escrow Holder shall
have the right to deposit all of the Escrowed Property held hereunder into the
registry of an appropriate court and request judicial determination of the
rights between Principal(s), by interpleader or other appropriate action, and
Principal(s) hereby jointly and severally indemnify and hold the Escrow Holder
harmless from and against any damages or losses in connection therewith,
including, but not limited to, reasonable attorneys' fees and court costs at all
trial and appellate levels.
4.03 Upon termination of the duties of the Escrow Holder in
either manner set forth of this Article IV, the Escrow Holder shall deliver all
of the Escrowed Property to the newly appointed escrow holder designated by the
Principal(s), and, except for rights of the Escrow Holder specified in Paragraph
A of Article III of these Escrow Instructions, the Escrow Holder shall not
otherwise have the right to withhold Escrowed Property from said newly appointed
escrow holder.
ARTICLE V
NOTICES
All notices, certificates, requests, demands, materials and
other communications hereunder shall be in writing and deemed to have been duly
given: (1) upon delivery by hand to the appropriate address of each of the
Principals or the Escrow Holder as set forth in these Escrow Instructions or in
the Agreement; or (2) on the third business day after mailing by United States
registered or certified mail, return receipt requested, postage prepaid, to such
address. All notices to the Escrow Holder shall be addressed to the Escrow
Holder at the following address:
Xxxxx & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Esq.
ARTICLE VI
CHOICE OF LAW AND VENUE
These Escrow Instructions shall be governed by and construed
in accordance with the laws of the State of Florida. In the event any action,
suit or proceeding is instituted as a result of any matter or thing affecting
these Escrow Instructions, the parties hereto hereby designate Hillsborough
County, Florida, as the proper jurisdiction and the venue in which same is to be
instituted.
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ARTICLE VII
CUMULATIVE RIGHTS
No right, power or remedy conferred upon the Escrow Holder by
these Escrow Instructions is exclusive of any other right, power or remedy, but
each and every such right, power or remedy shall be cumulative and concurrent
and shall be in addition to any other right, power or remedy the Escrow Holder
may have under these Escrow Instructions or now or hereafter existing at law, in
equity or by statute, and the exercise of one right, power or remedy by the
Escrow Holder shall not be construed or considered as a waiver of any other
right, power or remedy.
ARTICLE VIII
BINDING INSTRUCTIONS
These Escrow Instructions shall be binding upon the
Principal(s) and Escrow Holder and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the day and year first above
written.
Signed, sealed and delivered ESCROW HOLDER:
In the presence of:
XXXXX & XXXXXXX
___________________________________ By:___________________________________
Print Name: _______________________
___________________________________
Print Name: _______________________
PRINCIPALS:
TRI-LINK TECHNOLOGIES INC.
___________________________________ By:___________________________________
Print Name: _______________________ Name:_________________________________
Its:__________________________________
___________________________________
Print Name: _______________________
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TELTRONICS, INC.
___________________________________ By:___________________________________
Print Name: _______________________ Xxxx Xxxxxxx
President and CEO
___________________________________
Print Name: _______________________
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EXHIBIT L
CONVERSION PROVISIONS
Anti-Dilution. If and whenever, at any time at which any portion of the Purchase
Price remains unpaid, Teltronics:
(a) issues any shares of its voting common stock to all or substantially all
of the holders of its voting common stock by way of a stock dividend or
other distribution;
(b) subdivides or redivides the outstanding shares of its voting common stock
into a greater number of shares of voting common stock; or
(c) combines, reduces or consolidates the outstanding shares of its voting
common stock into a lesser number of shares of voting common stock;
then, in each such event, the Conversion Price shall be adjusted to be equal to
the product of the Conversion Price in effect immediately prior to such event
and a fraction, the numerator of which is equal to the total number of shares of
voting common stock of Teltronics that are outstanding immediately before such
event and before giving effect thereto and the denominator of which is equal to
the total number of shares of voting common stock of Teltronics that are
outstanding immediately after such event and after giving effect thereto, and,
for the purpose of calculating the number of shares of voting common stock of
Teltronics outstanding, any such issuance of voting common shares by way of a
stock dividend or other distribution shall be deemed to have been made on the
record date for such stock dividend or other distribution.
If, at any time at which any portion of the Purchase Price remains unpaid, there
is:
(d) any reclassification of the outstanding shares of voting common stock of
Teltronics, any change of the outstanding shares of voting common stock
of Teltronics into other shares or securities of Teltronics or any other
capital reorganization of Teltronics, other than as described in
subsections (a), (b) and (c), above;
(e) any consolidation, amalgamation, merger or other form of business
combination of Teltronics with or into any other corporation resulting in
a reclassification of the voting common stock of Teltronics, any change
of the voting common stock of Teltronics into other shares or securities
of any other corporation or any other capital reorganization of
Teltronics; or
(f) any sale, lease, exchange or transfer of the undertaking or assets of
Teltronics as an entirety or substantially as an entirety to another
corporation or entity;
then Tri-Link shall be entitled to receive upon any conversion provided for
hereunder and will accept, in lieu of the number of shares of voting common
stock of Teltronics which it would otherwise have been entitled to receive as a
result thereof, the kind and quantity of shares or other securities or property
(including cash) that Tri-Link would have been entitled to receive as a result
of such event if, on the effective date thereof, Tri-Link had been the
registered holder of
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the number of shares of voting common stock of Teltronics which Tri-Link would
have received had the applicable conversion been effected immediately before
such effective date. If necessary as a result of any such event, appropriate
adjustments will be made in application of the provisions set forth herein with
respect to the rights and interests of Tri-Link, so that the provisions set
forth herein will, thereafter, correspondingly be made applicable, as nearly as
may reasonably be possible, to such shares or other securities or property as
may thereafter be deliverable upon any conversion provided for hereunder.
No Fractional Securities. No fractional securities shall be issued and if any
conversion provided for hereunder would result in Tri-Link being entitled to
receive a fraction of a security, Teltronics shall instead issue upon the
conversion the next lower whole number of securities, with the Conversion Price
being adjusted accordingly.
Mechanics of Conversion. Tri-Link shall effect any and all conversions provided
for hereunder by giving notice thereof to Teltronics in writing and deliver to
Teltronics therewith the Teltronics Note evidencing the obligation of Teltronics
to pay the portion of the Purchase Price being converted. Upon each conversion
so effected:
(a) Teltronics shall deliver to Tri-Link a certificate(s) or other
document(s) evidencing the securities issuable upon the conversion of the
specified portion of the Purchase Price; and
(b) if only part of the Purchase Price then remaining unpaid is being
converted, Teltronics shall issue and deliver to Tri-Link a promissory
note, using the form attached as Exhibit F to this Agreement, for the
balance of the Purchase Price then remaining unpaid and unconverted, with
the payment amounts specified therein having been adjusted as herein
provided.
Tri-Link shall be treated for all purposes as the record holder of the
applicable shares of voting common stock of Teltronics or other securities
issuable in respect of each conversion effected hereunder as of the date of such
conversion.
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