EXHIBIT 7
AFFILIATE'S AGREEMENT
This AGREEMENT (this "Agreement") is made as of _____________, 1997, by and
among Lernout & Hauspie Speech Products N.V., a Belgian corporation ( the
"Parent"), and the undersigned stockholder (the "Undersigned") of Kurzweil
Applied Intelligence, Inc., a Delaware corporation (the "Company"). Reference
is made to that certain Agreement and Plan of Merger, dated April ___, 1997 (the
"Merger Agreement"), by and among Parent, Trappist Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of Parent ("Trappist Acquisition"), and
the Company.
WHEREAS, Parent, Trappist Acquisition and the Company are contemplating a
merger of Trappist Acquisition with and into the Company (the "Merger") pursuant
to which the Company will become a wholly owned subsidiary of Parent.
WHEREAS, the Merger is contingent upon the approval of the Merger and the
Merger Agreement by the Company's stockholders, and the Undersigned desires to
facilitate the Merger by agreeing to vote the Undersigned's shares of the
Company's Company Common Stock and any Company Common Stock of the Company over
which the Undersigned has voting control in favor of the Merger and the Merger
Agreement.
WHEREAS, the Undersigned desires to irrevocably appoint Parent or any
designee of Parent as the Undersigned's lawful agent, attorney and proxy to vote
in favor of the Merger and the Merger Agreement.
WHEREAS, in accordance with the Agreement, shares of common stock, $.01 par
value per share, of the Company (the "Company Common Stock") owned by the
Undersigned at the Effective Time (as defined in the Agreement) shall be
converted into a combination of cash and shares of common stock of the Parent
(the "Parent Common Stock"), as described in the Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants set forth in the Agreement and hereinafter in this agreement, the
Undersigned represents and agrees as follows:
1. Transfer Restriction. The Undersigned will not sell, transfer or
--------------------
otherwise dispose of, or reduce his or its interest in any shares of Company
Common Stock currently owned or hereafter acquired by him prior to the
termination of this Agreement.
2. Voting Agreement. At a special meeting of the stockholders of the
----------------
Company called for the purpose of considering the approval of the Merger and the
Merger Agreement, the Undersigned (if a director or executive officer of the
Company) agrees to vote all of the Company Common Stock held by the Undersigned
and any of the Company Common Stock over which the Undersigned has voting
control, in favor of the Merger and the Merger Agreement.
3. Irrevocable Proxy. The Undersigned (if a director or executive officer
-----------------
of the Company) hereby irrevocably appoints Parent or any designee of Parent as
the Undersigned's lawful agent, attorney and proxy to vote or give consents with
respect to the shares of Company Common Stock held by the Undersigned and any
shares of Company Common Stock over which the Undersigned has voting control, in
favor of the approval of the Merger and the Merger Agreement. The Undersigned
intends this proxy to be irrevocable and coupled with an interest. Parent
agrees that it or its designee shall vote the shares of Company Common Stock
held by the Undersigned and any shares of Company Common Stock over which the
Undersigned has voting control, in favor of the approval of the Merger and the
Merger Agreement. The agents, attorneys and proxies named herein may not
exercise this proxy on any other matter except as provided herein. The
1
Undersigned may vote all shares of Company Common Stock held by the Undersigned
and any shares of Company Common Stock over which the Undersigned has voting
control on all other matters.
4. No Shopping. The Undersigned (if a director or executive officer of
-----------
the Company) shall not directly or indirectly (i) solicit, initiate or encourage
(or authorize any person to solicit, initiate or encourage) any inquiry,
proposal or offer from any person (other than Parent) to acquire the business,
property or capital stock of the Company or any direct or indirect subsidiary
thereof, or any acquisition of a substantial equity interest in, or a
substantial amount of the assets of, the Company or any direct or indirect
subsidiary thereof, whether by merger, purchase of assets, tender offer or other
transaction or (ii) subject to the fiduciary duty of the Undersigned as a
director of the Company under applicable law, participate in any discussion or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise cooperate in any way with, or participate in,
facilitate or encourage any effort or attempt by any person (other than
Parent)to do or seek any of the foregoing.
5. Rule 145. The Undersigned understands that the Undersigned's resale of
--------
Parent Common Stock issued to the Undersigned in the Merger will be subject to
certain restrictions on transfer in accordance with Rule 145 under the
Securities Act of 1933, as amended (the "Securities Act"), and in connection
therewith agrees not to offer, sell, pledge, transfer or otherwise dispose of
any of such shares of Parent Common Stock unless at such time either: (i) such
transaction shall be permitted pursuant to the provisions of Rule 145 under the
Securities Act; (ii) the Undersigned shall have furnished to the Parent an
opinion of counsel, satisfactory to the Parent, to the effect that no
registration under the Securities Act would be required in connection with the
proposed offer, sale, pledge, transfer or other disposition; (iii) a
registration statement under the Securities Act covering the proposed offer,
sale, pledge, transfer or other disposition shall be effective under the
Securities Act; or (iv) an authorized representative of the Securities and
Exchange Commission (the "SEC") shall have rendered written advice to the
Undersigned to the effect that the SEC will take no action, or that the staff of
the SEC will not recommend that the SEC take action, with respect to the
proposed offer, sale, pledge, transfer or other disposition if consummated.
6. Legend. The Undersigned understands that all certificates representing
------
the Parent Common Stock deliverable to the Undersigned pursuant to the Merger
shall, until the occurrence of one of the events referred to in Section 5 above,
bear a legend substantially as follows:
"The shares represented by this certificate may not be offered, sold,
pledged, transferred or otherwise disposed of except in accordance
with the requirements of Rule 145 of the Securities Act of 1933, as
amended."
The Parent, in its discretion and in a manner consistent with the legend
set forth above, may cause stop transfer orders to be placed with its transfer
agent with respect to the certificates for the shares of Parent Common Stock
which are required to bear the foregoing legend.
7. SEC Filings: Information. From and after the Effective Date, and for
------------------------
so long as necessary in order to permit the Undersigned to sell the Parent
Common Stock pursuant to Rule 145, and to the extent applicable, Rule 144 under
the Securities Act, Parent will file on a timely basis all reports required to
be filed by it pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, referred to in paragraph (c)(1) of Rule 144 under the Securities Act (or,
if applicable, Parent will make publicly available the information regarding
itself referred to in paragraph (c)(2) of Rule 144), in order to permit the
Undersigned to sell, pursuant to the terms and conditions of Rule 145 and the
applicable provisions of Rule 144, any of such shares of Parent Common Stock
held by the Undersigned.
2
8. Miscellaneous.
-------------
(a) By signing below, the Undersigned represents and warrants that
the Undersigned has all necessary power and authority to execute this Agreement
and, if a director or executive officer of the Company, to cause the
Undersigned's Company Common Stock and any shares of Company Common Stock over
which the Undersigned has voting control, to be voted as provided herein, and
the Undersigned has duly authorized, executed and delivered this Agreement.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to the principles
of conflict of laws thereof.
(c) This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same instrument, and any
and all of the parties hereto may execute this Agreement by signing any such
counterpart.
(d) This Agreement shall terminate upon the earlier to occur of (i)
the Effective Date or (ii) termination of the Merger Agreement in accordance
with the terms thereof; provided, however, that Sections 5 and 7 shall survive
-------- -------
the termination of this Agreement if the Agreement is terminated pursuant to
clause (i) above.
(e) This agreement shall be binding on the Undersigned's successors
and assigns, including his heirs, executors and administrators.
(f) The undersigned has carefully read this agreement and discussed
its requirements, to the extent the Undersigned believed necessary, with its
counsel or counsel for the Company or the Parent.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V.
By:____________________________
Name:
Title:
STOCKHOLDER:
_________________________________
3