SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
COMDIAL CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
( ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
(X) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
COMDIAL CORPORATION
1180 SEMINOLE TRAIL
CHARLOTTESVILLE, VIRGINIA 22901
July 10, 1995
Dear Stockholder:
You are cordially invited to attend a Special Meeting of
Stockholders of Comdial Corporation (the "Company") that will be held on
July 28, 1995, at 9:00 a.m., local time, in Conference Room A at the
Courtyard by Marriott, 638 Hillsdale Drive, Charlottesville, Virginia
22901.
At the Special Meeting, you will be asked to consider and vote
upon a proposal to amend the Company's Restated Certificate of
Incorporation to effect a one-for-three reverse stock split (the
"Reverse Stock Split") of the Company's outstanding shares of common
stock, par value $0.01 per share ("Common Stock"). If this proposal is
approved and implemented, each of the holders of shares of pre-split
Common Stock would receive one share of post-split Common Stock in
exchange for every three shares of pre-split Common Stock presently
owned. The Reverse Stock Split would not affect the number of
authorized shares of Common Stock, which would remain at 30,000,000.
The number of authorized shares of preferred stock would also remained
unchanged at 2,000,000.
The Reverse Stock Split is being proposed in connection with a proposed
public offering described more fully in the accompanying Proxy Statement (the
"Offering"), pursuant to which the Company proposes to sell 1,000,000 post-split
(3,000,000 pre-split) shares of Common Stock and PacifiCorp Credit, Inc., the
Company's largest stockholder ("PCI"), proposes to sell 2,000,000 post-split
(6,000,000 pre-split) shares of Common Stock and up to an additional 450,000
post-split (1,350,000 pre-split) shares of Common Stock to cover
over-allotments.
More generally, the Company's Board of Directors believes that the
relatively low market price per share of the Company's Common Stock,
when compared with the market prices of the common stock of the
Company's competitors, may impair the marketability of the Common
Stock to institutional investors and members of the investing public.
The Board is hopeful that the decrease in the number of shares of Common
Stock outstanding as a consequence of the Reverse Stock Split and the
anticipated corresponding increased price per share will stimulate
interest in the Company's Common Stock and promote greater liquidity for
the Company's stockholders with respect to the shares presently held by
them.
<PAGE>
The Company plans to use $7.5 million of its proceeds from the
Offering to redeem 750,000 shares of Series A 7-1/2% Cumulative
Convertible Redeemable Preferred Stock of the Company ("Series A
Preferred Stock") held by PCI (the "Redemption"). The Redemption would
eliminate the 7-1/2% cumulative cash dividend currently payable to PCI.
It would also eliminate PCI's ability to dilute the Common Stock by
converting shares of Series A Preferred Stock to shares of Common Stock.
The Offering, including PCI's sale of shares, and the Redemption
together would also have the effect of substantially reducing PCI's
percentage ownership of the Company.
Because PCI is the Company's largest stockholder, the Board of
Directors appointed a special committee of disinterested directors to
consider the advisability of the Offering and the transactions
contemplated thereby, including the Reverse Stock Split and the
Redemption. After careful review, the special committee concluded and
unanimously recommended that the Board of Directors approve the
Offering, the Reverse Stock Split and the Redemption. The Board of
Directors believes that the Reverse Stock Split is in the best interests
of the Company and its stockholders and accordingly recommends that you
vote for the proposal to effect the Reverse Stock Split.
It is important that your shares be represented at the meeting.
Even if you plan to attend the meeting, please sign, date, and mail
promptly the enclosed proxy in the postage-paid envelope. The vote of
each stockholder is important, and it should be recognized that a
failure to return a properly executed and dated proxy card in a timely
fashion or to vote in person at the meeting in effect constitutes a vote
against the proposal.
Sincerely yours,
William G. Mustain, Chairman,
President and Chief Executive Officer
<PAGE>
COMDIAL CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 28, 1995
TO THE STOCKHOLDERS OF
COMDIAL CORPORATION:
A Special Meeting of Stockholders of Comdial Corporation, a
Delaware corporation (the "Company"), will be held on July 28, 1995, at
9:00 a.m., local time, in Conference Room A at the Courtyard by
Marriott, 638 Hillsdale Drive, Charlottesville, Virginia 22901, for the
following purposes:
1. To consider and vote upon a proposal to amend the Company's
Restated Certificate of Incorporation to effect a one-for-three reverse
stock split of the Company's Common Stock while maintaining the current
number of authorized shares of Common Stock; and
2. To transact such other business of a procedural nature or
incidental to the conduct of the meeting, as may properly come before
the meeting.
Action may be taken on the foregoing proposal at the Special
Meeting on the date specified above, or on any subsequent date or dates
to which the Special Meeting may be adjourned.
Only stockholders of record at the close of business on June 26,
1995, will be entitled to receive notice of and to vote at the Special
Meeting. A list of stockholders entitled to vote at the Special Meeting
may be examined at the executive offices of the Company at 1180 Seminole
Trail, Charlottesville, Virginia.
By Order of the Board of Directors
Wayne R. Wilver, Secretary
July 10, 1995
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
<PAGE>
SPECIAL MEETING OF STOCKHOLDERS
OF
COMDIAL CORPORATION
JULY 28, 1995
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is being furnished to the holders of shares
of common stock, par value $0.01 per share (the "Common Stock"), of
Comdial Corporation, a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the Board of Directors of
the Company (the "Board of Directors" or the "Board") for use at a
Special Meeting of Stockholders (the "Special Meeting") to be held on
Friday, July 28, 1995, at 9:00 a.m., local time, in Conference Room A at
the Courtyard by Marriott, 638 Hillsdale Drive, Charlottesville,
Virginia 22901. This Proxy Statement and the enclosed form of proxy are
first being sent or given to the stockholders on or about July 10,
1995. The executive offices of the Company are located at 1180 Seminole
Trail, Charlottesville, Virginia 22901; and the mailing address for such
offices is Post Office Box 7266, Charlottesville, Virginia 22906-7266.
PURPOSE OF SPECIAL MEETING. At the Special Meeting, the
stockholders of the Company will be asked to consider and vote upon a
proposal to amend the Company's Restated Certificate of Incorporation to
effect a one-for-three reverse stock split (the "Reverse Stock Split")
of the Company's outstanding shares of Common Stock. If this proposal
is approved and implemented, each of the holders of shares of pre-split
Common Stock would receive one share of post-split Common Stock in
exchange for every three shares of pre-split Common Stock presently
owned. The Reverse Stock Split would not affect the number of
authorized shares of Common Stock, which would remain at 30,000,000.
The number of authorized shares of preferred stock would also remain
unchanged at 2,000,000.
The Reverse Stock Split is being proposed in connection with a
proposed public offering (the "Offering"), pursuant to which the Company
proposes to sell 1,000,000 post-split (3,000,000 pre-split) shares of
Common Stock and PacifiCorp Credit, Inc., the Company's largest
stockholder ("PCI"), proposes to sell 2,000,000 post-split (6,000,000
pre-split) shares of Common Stock. In order to cover over-allotments,
PCI has granted the underwriters the option to purchase up to an
additional fifteen percent (15%) of the number of shares offered, or
450,000 post-split (1,350,000 pre-split) shares.
<PAGE>
The Company plans to use $7.5 million of its proceeds from the
Offering to redeem 750,000 shares of Series A 7-1/2% Cumulative
Convertible Redeemable Preferred Stock of the Company ("Series A
Preferred Stock") held by PCI (the "Redemption"). The Redemption would
eliminate the 7-1/2% cumulative cash dividend currently payable to PCI.
It would also eliminate PCI's ability to dilute the Common Stock by
converting shares of Series A Preferred Stock to shares of Common Stock.
As a result of the Offering, including PCI's sale of shares, and
the Redemption, PCI's percentage ownership of the Company would be
reduced from 47.4% (PCI's current percentage ownership assuming
conversion of the Series A Preferred Stock) to 11.2% (5.7% if Rodman
elects to purchase all of the additional 450,000 post-split shares from
PCI).
More generally, the Board of Directors believes that the
relatively low market price per share of the Company's Common Stock may
be a factor that diminishes the effective marketability of the Common
Stock and, when compared with the market prices of the common stock of
the Company's competitors, may impair the marketability of the Common
Stock to institutional investors and members of the investing public.
The Board is hopeful that the decrease in the number of shares of Common
Stock outstanding as a consequence of the Reverse Stock Split and the
anticipated corresponding increased price per share will stimulate
interest in the Company's Common Stock and promote greater liquidity for
the Company's stockholders with respect to the shares presently held by
them. See "Reasons for the Reverse Stock Split" and "Action by the
Company's Board of Directors".
PROXIES; RECORD DATE; VOTE REQUIRED. If a proxy in the enclosed
form is duly executed and returned, the shares of Common Stock
represented thereby will be voted, where specification is made by the
stockholder on the form of proxy, in accordance with such specification.
IF NO DIRECTIONS TO THE CONTRARY ARE INDICATED, THE PERSONS NAMED IN THE
ENCLOSED PROXY WILL VOTE THE SHARES REPRESENTED THEREBY "FOR" THE
PROPOSAL LISTED ON THE PROXY CARD. If necessary, and unless the shares
represented by the proxy are voted against the proposal herein, the
persons named in the enclosed proxy may also vote in favor of a proposal
to recess the Special Meeting and to reconvene it on a subsequent date
or dates without further notice, in order to solicit and obtain
sufficient votes to approve the matters being considered at the Special
Meeting. Any stockholder may revoke his or her proxy by delivery of a
new later dated proxy or by providing written notice of revocation to
the Secretary of the Company at any time before it is voted. A proxy
will not be voted if the stockholder attends the meeting and elects to
vote in person.
Only the holders of record of Common Stock at the close of
business on June 26, 1995 have the right to receive notice of and to
vote at the Special Meeting and any adjournment thereof. As of that
date, 21,256,587 shares of Common Stock were outstanding. Each holder
of record of Common Stock is entitled to one vote for each share held on
the matter voted upon. The shares of Series A Preferred Stock are
non-voting with respect to such matter.
Presence in person or by proxy of the holders of 10,628,294 shares
of Common Stock will constitute a quorum at the Special Meeting.
Assuming a quorum is present, the affirmative vote of a majority of the
outstanding shares entitled to vote will be required to act upon the
proposal. The affirmative vote of the holders of a majority of the
shares represented at the Special Meeting and entitled to vote will be
required to act on all other matters to come before the meeting. The
Company believes that 8,721,509 shares held by PCI and 394,443 shares
held by directors and officers of the Company, constituting in the
aggregate approximately 42.89% of the outstanding Common Stock, will be
voted in favor of the proposal. If all such shares are voted as
anticipated, the affirmative vote of the holders of a minimum of
1,512,342 additional shares, constituting approximately 7.11% of the
outstanding Common Stock, will be required to assure approval of the
proposal.
<PAGE>
Stockholders may vote in favor of or against the proposal or they
may abstain from voting. In accordance with applicable law, the
treatment and effect of abstentions and broker non-votes are as follows.
If a stockholder registers an abstention vote by checking the "ABSTAIN"
box on the proxy card, no favorable vote is cast and therefore the
abstention vote has the effect of a vote against the proposal. Thus, an
abstention from voting on a matter has the same legal effect as a vote
against the matter, even though the stockholder may interpret such
action differently. Similarly, if a broker or other nominee holding
shares of Common Stock for the beneficial owner does not vote on the
proposal because the broker or nominee has not received instructions
from the beneficial owner and does not have the right to exercise
discretionary voting power, such broker non-vote has the same legal
effect as a vote against the matter.
The enclosed proxy confers discretionary authority to vote with
respect to the transaction of such other business of a procedural nature
or incidental to the meeting as may properly come before the meeting.
With respect to such matters, the persons named in the enclosed form of
proxy will vote in accordance with their best judgment.
The costs of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, certain directors, officers, and
employees of the Company may solicit proxies in person or by telephone,
telegraph, or mail. The Company has engaged Morrow & Co., Inc., 909
Third Avenue, New York, New York 10022-4799, to solicit proxies by mail
or telephone or in person, at a cost to the Company anticipated to be
approximately $4,000.00, plus reasonable out-of-pocket expenses.
Further, the Company will also request record holders of Common Stock
who are brokerage firms, custodians, and fiduciaries to forward proxy
material to the beneficial owners of such shares and upon request will
reimburse such record holders for the costs of forwarding the material
in accordance with customary charges.
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of June 12, 1995, as
to shares of Common Stock owned by (i) each person who is known by the
Company to own beneficially more than five percent of the Company's
Common Stock, (ii) each director and nominee for director of the
Company, (iii) each executive officer of the Company, and (iv) all
directors and officers as a group, together with their respective
percentages. The number of shares is stated in the following table
without giving effect to the proposed Reverse Stock Split.
<TABLE>
AMOUNT AND NATURE % OF CLASS
NAME OF PERSON OR OF BENEFICIAL (IF MORE
NUMBER OF PERSONS IN GROUP OWNERSHIP (1) THAN 1%) (2)
<S> <C> <C>
PacifiCorp Credit, Inc.
825 N. E. Multnomah Street
Suite 775
Portland, Oregon 97232-2152.................. 11,292,308 (3), (4) 47.4%
ALLTEL Corporation
One Allied Drive
Little Rock, Arkansas 72202.................. 1,095,667 (3) 5.2%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, Suite 650
Santa Monica, California 90401............... 1,101,700 (3), (5) 5.2%
A. M. Gleason ................................ 58,800 (6) *
Michael C. Henderson.......................... 11,302,308 (7), (8) 47.5%
William E. Porter............................. 20,000 (9) *
John W. Rosenblum............................. 40,000 (10) *
Dianne C. Walker.............................. 50,100 (11) *
William G. Mustain............................ 125,686 *
Wayne R. Wilver............................... 73,332 (12) *
Stephen C. Ayers.............................. 39,666 (13) *
Keith J. Johnstone............................ 20,536 (14) *
Lawrence K. Tate.............................. 60,265 (15) *
Ove Villadsen................................. 29,036 (14) *
Joe D. Ford................................... 5,133 (16) *
All directors and officers
as a group (12 persons).................... 11,824,862 (17) 49.4%
</TABLE>
_______________
* Less than one percent of the issued and outstanding shares of
Common Stock.
<PAGE>
(1) The amount and percentage of securities beneficially owned by an
individual are determined in accordance with the definition of
beneficial ownership set forth in the regulations of the Securities
and Exchange Commission and, accordingly, may include securities owned
by or for, among others, the spouse and/or minor children of the
individual and any other relative who has the same home as such
individual, as well as other securities as to which the individual has
or shares voting or investment power or has the right to acquire
within 60 days after June 12, 1995. Beneficial ownership may be
disclaimed as to certain of the securities. Unless otherwise
indicated, the persons and entities named have sole voting and
dispositive power over their shares.
(2) Individual percentages have been rounded. Shares subject to
outstanding stock options which the individual has the
right to acquire within 60 days after June 12, 1995, are deemed to be
outstanding for the purpose of computing the percentage of outstanding
securities of the class owned by such individual, or any group
including such individual, but are not deemed outstanding for the
purpose of computing the percentage of the class owned by any other
individual.
(3) Based on information filed with the Securities and Exchange Commission
by the reporting person.
(4) Includes 2,570,799 shares issuable upon the conversion of 750,000
shares of Series A 7-1/2% Cumulative Convertible Redeemable
Preferred Stock of the Company ("Series A Preferred Stock") held by
PacifiCorp Credit, Inc. ("PCI"). Mr. Henderson, a director of the
Company, is President and Chief Executive Officer of PacifiCorp
Holdings Inc., an affiliate of PCI. Mr. Henderson disclaims
beneficial ownership of the shares of Common Stock and Series A
Preferred Stock owned by PCI (see note 7).
(5) Dimensional Fund Advisors, Inc. ("DFA") is an investment advisor
registered under the Investment Advisors Act of 1940, as amended. The
shares reported in the table are held in portfolios of DFA Investment
Dimensions Group, Inc., a registered open-end investment company, or
in series of the DFA Investment Trust Company, a Delaware business
trust, or the DFA Group Trust and the DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, all of which
DFA serves as investment manager. DFA disclaims beneficial ownership
of all such shares. No individual client of DFA is known to the
Company to be the holder of more than five percent of the Company's
Common Stock.
(6) Until April 1995, Mr. Gleason served as PCI's nominee on the Board of
Directors of the Company. In May 1995, Mr. Gleason retired as Vice
Chairman and a director of PacifiCorp, an affiliate of PCI. PCI named
Mr. Henderson (see note 7) to replace Mr. Gleason as PCI's nominee on
the Board of Directors, effective as of the Annual Meeting held on
April 27, 1995 (see notes 4 and 7).
(7) Includes 11,292,308 shares beneficially owned by PCI (see note 4).
Pursuant to an agreement between PCI and the Company dated October 31,
1991, as long as PCI or any of its affiliates owns at least 10% of the
Company's outstanding Common Stock, the Company will nominate and use
its best efforts to cause a nominee of PCI to become a member of the
Board of Directors of the Company. Mr. Henderson currently serves as
PCI's nominee on the Company's Board of Directors (see note 4).
<PAGE>
(8) Includes 10,000 shares issuable upon the exercise of stock options.
(9) Includes 10,000 shares issuable upon the exercise of stock options.
(10) Includes 10,000 shares issuable upon the exercise of stock
options.
(11) Includes 20,000 shares issuable upon the exercise of stock options.
(12) Includes 6,666 shares issuable upon the exercise of stock options.
(13) Includes 16,666 shares issuable upon the exercise of stock options.
(14) All shares issuable upon the exercise of stock options.
(15) Includes 11,874 shares issuable upon the exercise of stock options.
(16) Includes 3,333 shares issuable upon the exercise of stock options.
(17) Includes 138,111 shares issuable upon the exercise of stock options
and 11,292,308 shares beneficially owned by PCI (see note 4).
The shares of Series A Preferred Stock held by PCI are non-voting,
except as follows. In addition to any other vote required by law, the
affirmative vote of the holders of a majority of the outstanding shares of
Series A Preferred Stock is required to effect the dissolution of the
Company, the sale, lease, exchange of all or substantially all of its
property and assets, the merger or consolidation of the Company with or
into any other entity, or the voluntary bankruptcy of the Company. In
addition to the foregoing, and in addition to any other vote required by
law, the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock is required to (i) create
any class or series of stock ranking prior to or in parity with the Series
A Preferred Stock as to dividends or upon liquidation or (ii) alter or
change any of the preferences, privileges, rights, or powers of the holders
of the Series A Preferred Stock so as to adversely affect such preferences,
privileges, rights, or powers. In addition, the holders of Series A
Preferred Stock have the right to elect two members of the Board of
Directors or such greater number as is necessary to equal at least 40% of
the Board, if the Company does not pay four consecutive quarterly dividends
required by the terms of the Series A Preferred Stock.
<PAGE>
PROPOSAL
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
TO EFFECT A ONE-FOR-THREE REVERSE STOCK SPLIT
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL
GENERAL
The Board of Directors has determined that it would be advisable to
amend the Company's Restated Certificate of Incorporation to effect a
one-for-three reverse stock split of the Company's issued and outstanding
shares of Common Stock (the "Reverse Stock Split") and to provide for the
payment of cash in lieu of fractional shares otherwise issuable. Subject
to stockholder approval, the Board of Directors has approved an amendment
which would add a new paragraph to Article THIRD of the Restated
Certificate of Incorporation, substantially in the form attached hereto as
Exhibit A (the "Amendment"), and would result in one share of post-split
Common Stock ("Post-Split Common Stock") being issued in exchange for every
three presently issued and outstanding shares of Common Stock ("Pre-Split
Common Stock"). The Reverse Stock Split will not affect the number of
authorized shares of the Company's Common Stock which will remain at
30,000,000. The number of authorized shares of Preferred Stock will also
remain unchanged at 2,000,000.
EFFECT OF REVERSE STOCK SPLIT ON EXISTING SECURITY HOLDERS
The terms of the shares of Post-Split Common Stock would be same as
Pre-Split Common Stock and the Amendment will not affect any stockholder's
proportionate equity interest in the Company or the rights, preferences or
privileges of any stockholder, other than an insignificant adjustment which
may occur in the event of cash payment for fractional shares. The
Amendment will not change the number of authorized shares of Common Stock.
As a result, if the Reverse Stock Split is approved, the decrease in the
number of shares outstanding will result in an increase in the number of
shares available for issuance. Neither the par value of the Common Stock
nor any rights presently accruing to holders of Common Stock will be
affected by this transaction. Effective with the Reverse Stock Split, the
exercise price, conversion ratio, shares available for issuance, and other
relevant terms and provisions of the Company's 1992 Stock Incentive and
1992 Non-Employee Directors Stock Incentive Plans, as well as outstanding
options to purchase Common Stock, will be appropriately adjusted to reflect
the Reverse Stock Split.
<PAGE>
The following unaudited pro forma financial information illustrates
the principal effects of the Reverse Stock Split on the earnings per share
for each of the last three fiscal years and for the three months ended
April 2, 1995. Please refer to the pro forma financial information
presented under "Use of Proceeds of the Offering" for an illustration of
the combined effects of the Reverse Stock Split, the Offering and the
Redemption.
HISTORICAL(1) AS ADJUSTED
Net income per common share for each of the
periods indicated:
Year ended December 31, 1992 $ 0.04 $ 0.13
Year ended December 31, 1993 $ 0.12 $ 0.35
Year ended December 31, 1994 $ 0.12 $ 0.37
Three months ended April 2, 1995 $ 0.05 $ 0.15
_______________________
(1) Primary earnings per share.
REASONS FOR THE REVERSE STOCK SPLIT
The Reverse Stock Split is being proposed in connection with the Offering.
See "Action by the Company's Board of Directors". Rodman & Renshaw, Inc.
("Rodman"), as the managing underwriter in connection with the Offering, has
advised the Company that it would not manage the Offering with a per share price
below $5.00. Accordingly, given the current market price of the Common Stock,
the Reverse Stock Split is an integral component of the Offering, and the
Company does not presently intend to proceed with the Offering as currently
contemplated absent the Reverse Stock Split.
In addition, the Board of Directors is of the opinion that the current
price per share of the Company's Pre-Split Common Stock has a tendency to
diminish the effective marketability of the Common Stock because of the
reluctance of many brokerage firms to recommend lower-priced stocks to
their clients.
The Board recognizes that policies and practices of a number of
brokerage houses tend to discourage individual brokers within those firms
from dealing in lower-priced stocks. Some of these policies and practices
relate to the payment of broker's commissions and to time-consuming
procedures that operate to make the handling of lower-priced stocks
economically unattractive to brokers. In addition, the structure of
trading commissions tends to have an adverse impact upon holders of
lower-priced stocks because the brokerage commission payable on the sale of
a lower-priced stock generally represents a higher percentage of the sales
price than the commission on a relatively higher-priced stock.
<PAGE>
The Board of Directors also believes that the relatively low per share
market price of the Common Stock, when compared with the market prices of
common stock of the Company's competitors, impairs the marketability of the
Common Stock to institutional investors and members of the investing
public. Theoretically, the number of shares of Common Stock outstanding
should not, by itself, affect the marketability of the Common Stock, the
type of investor who acquires it or the Company's reputation in the
financial community. However, in practice this is often not the case, as
many investors look upon low priced stock as unduly speculative in nature
and, as a matter of policy, avoid investment in such stocks. The foregoing
factors not only adversely affect the liquidity of the Common Stock, but
also impair the Company's ability to raise additional capital through the
sale of equity securities. Accordingly, the anticipated increased price
per share as a result of the Reverse Stock Split is expected to be
attractive to both the financial community and the investing public.
The Board of Directors hopes that the decrease in the number of shares
of Common Stock outstanding as a consequence of the Reverse Stock Split,
and the corresponding anticipated increase in price per share, will
stimulate interest in the Company's Common Stock and possibly promote
greater liquidity for the Company's stockholders with respect to those
shares presently held by them. However, the possibility does exist that
such liquidity may be adversely affected by the reduced number of shares
which will be outstanding if the proposed Reverse Stock Split is effected.
The Board of Directors also hopes that the Reverse Stock Split will
result in a price level for the shares of Post-Split Common Stock that will
mitigate the present reluctance, policies and practices of brokerage firms
referred to above and diminish the adverse impact of trading commissions on
the potential market for the Company's shares. Nevertheless, there is no
assurance that (i) the Reverse Stock Split will achieve the desired results
outlined above, (ii) the price per share of the Post-Split Common Stock
will increase proportionately with the decrease in the number of shares, or
(iii) any price increase can be sustained for a prolonged period of time.
USE OF PROCEEDS OF THE OFFERING
The Company plans to use $7.5 million of the net proceeds of the
22
Offering to redeem 750,000 shares of Series A Preferred Stock currently
held by PCI (the "Redemption"). The outstanding shares of Series A
Preferred Stock may be redeemed at the option of the Company, in whole or
in part, at any time upon not less than 30 days nor more than 90 days prior
written notice, at a redemption price equal to $10.00 per share plus all
accumulated but unpaid dividends. PCI has consented to the Redemption and
waived notice of redemption.
The Company will use the balance of the net proceeds for general
corporate and working capital purposes.
Taken in isolation, the principal effects of the Redemption would be a
reduction in stockholders' equity and the termination of the Company's
obligation to pay quarterly dividends on the Series A Preferred Stock which, in
turn, will increase earnings per share. In addition, PCI's ability to dilute
the Common Stock by converting the Series A Preferred Stock into Common Stock
will be eliminated.
The following unaudited pro forma financial information illustrates
the principal effects of the Reverse Stock Split, the Offering (assuming,
for illustrative purposes only, net proceeds to the Company of $11,981,540
from the sale of 1,000,000 shares in the Offering) and the Redemption on
the capitalization of the Company.
<PAGE>
<TABLE>
AT APRIL 2, 1995
(IN THOUSANDS)
ACTUAL AS ADJUSTED
<S> <C> <C>
Long-term debt, excluding current maturities . . . . . . . . . . . . . $ 3,988 $ 3,988
Stockholders' equity:
Series A 7-1/2% preferred stock ($10.00 par value),
(authorized 2,000 shares; issued 750 shares, no shares as
adjusted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500 -
Common Stock ($0.01 par value) and paid-in capital
(authorized 30,000 shares; issued: 7,036 shares, 8,036 shares as
adjusted) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . 100,517 112,499
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (973) (973)
Accumulated Deficit . . . . . . . . . . . . . . . . . . . . . . . . (84,749) (84,749)
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . 22,295 26,777
Total capitalization . . . . . . . . . . . . . . . . . . . . . . $ 26,283 $ 30,765
</TABLE>
(1) Excludes 548,706 shares of Common Stock reserved for
issuance upon exercise of options granted under the Company's stock
option plans.
<PAGE>
INTEREST OF PCI IN REVERSE STOCK SPLIT
PROCEEDS FROM OFFERING AND REDEMPTION. The Reverse Stock Split is
an integral component of the Offering, and the Company does not
presently intend to proceed with the Offering as currently contemplated
absent the Reverse Stock Split. As a part of the Offering, PCI will
sell 2,000,000 post-split shares of Common Stock and may sell up to an
additional 450,000 post-split shares of Common Stock, at the option of
Rodman, to cover over-allotments. Assuming, for illustrative purposes
only, an Offering price of $13.31 per share, PCI's proceeds from the
sale of 2,450,000 shares of post-split Common Stock in the Offering will
be approximately $30.46 million (net of underwriting discounts and
commissions and before deducting its share of offering expenses). The
actual proceeds could be more or less, depending upon the actual
Offering price.
In addition, the Company proposes to pay PCI $7.5 million of the
Company's proceeds from the sale of shares in the Offering (plus any
accrued but unpaid dividends as of the date of redemption) to redeem the
shares of Series A Preferred Stock owned by PCI.
As a result of the Offering, including PCI's sale of shares, and
the Redemption, PCI's percentage ownership of the Company would be
reduced from 47.4% (PCI's current percentage ownership assuming
conversion of the Series A Preferred Stock) to 11.2% (5.7% if Rodman
elects to purchase all of the additional 450,000 post-split shares from
PCI).
PIGGYBACK REGISTRATION RIGHTS. Under an agreement dated October
31, 1991, PCI has piggyback registration rights with respect to the
Common Stock which it currently owns and with respect to shares of
Common Stock issuable upon conversion of the Series A Preferred Stock.
As a result, if the Company proposes to make a public offering of its
Common Stock, PCI has the right to include its shares in such offering,
provided that the quantity of PCI shares so included would not, in the
opinion of the underwriters, adversely affect the proposed offering by
the Company. Other than with respect to the 2,450,000 shares of
post-split Common Stock owned by PCI that are to be registered for sale
as a part of the Offering, PCI has waived its piggyback registration
rights in connection with the Offering.
In December 1993, PCI exercised its piggyback rights to register
2,000,000 shares of Common Stock in conjunction with the demand
registration of 500,000 shares of Common Stock issued to certain former
lenders to the Company upon their exercise of warrants in November
1993. In July 1994, the Company's registration statement on Form S-3
registering these shares (the "Form S-3") was made effective by the
Securities and Exchange Commission. As of the date of this Proxy
Statement, PCI has not sold any of the shares covered by the Form S-3.
PCI has consented to the filing by the Company of a post-effective
amendment to the Form S-3 which will remove from registration the
2,000,000 shares of Common Stock owned by PCI covered thereby, such
amendment to be effective no earlier than the effective date of the
registration statement filed in connection with the Offering.
<PAGE>
ACTION BY THE COMPANY'S BOARD OF DIRECTORS
In early 1994, as part of its ongoing consideration of alternative
strategies to improve the capital structure of the Company, management of
the Company recommended to the Board of Directors that the Company seek a
way to raise funds with which to redeem its Series A Preferred Stock. Such
a redemption would eliminate the 7-1/2% cash dividend currently payable to
PCI, and would also eliminate the negative effect on the market for the
Company's Common Stock of the possible dilution of the Common Stock by the
conversion of shares of the Series A Preferred Stock to shares of Common
Stock. In April 1994, management reported to the Board that it had begun
the process of identifying an investment banking firm to advise the Company
on capital structure, acquisitions and other strategic matters.
At its October 14, 1994 meeting, the Board reviewed and approved
management's recommendation to engage Mabon Securities Corp. (whose
investment banking and equity departments were subsequently acquired by
Rodman) as investment bankers for the Company. During the following
months, management discussed with Rodman various strategic alternatives
relating to the capital structure and financing of the Company. At its
February 15-16, 1995 meeting, the Board considered various alternatives for
repurchasing the Series A Preferred Stock and all or a part of the Common
Stock owned by PCI and ALLTEL Corporation ("ALLTEL"). At that meeting the
Board rejected such alternatives, including a proposal that would have
involved the Company incurring debt in order to raise funds with which to
redeem the Series A Preferred Stock. The Board did not believe that such a
plan met the Company's objectives of avoiding debt and preserving
stockholder value.
In May, 1995, management advised the Board that Rodman had proposed an
alternate plan to raise funds with which to redeem the Series A Preferred
Stock owned by PCI, which involved an equity offering of Common Stock by
the Company and included a secondary offering by PCI and possibly ALLTEL.
At a special meeting of the Board held on June 6, 1995, Rodman presented to
the Board a proposal for the Offering, and provided information and
analysis on the related Redemption. Rodman advised the Company that it
would not manage the Offering if the per share price were below $5.00, and
that an increased per share price might be achieved through a reverse stock
split which would precede or coincide with the Offering. The secondary
offering by PCI would enable PCI to dispose of a major portion of its
holding of the Company's Common Stock, thereby "spreading" PCI's holdings
among a broader group of stockholders and likely improving the trading
market for the Company's Common Stock. Rodman provided the Board with
information to assist the Board in evaluating the effects of the redemption
of the Series A Preferred Stock and the reduction of PCI's Common Stock
ownership on the value of the Common Stock, and the Company's ability to
raise finance in the future.
The Board noted that Michael C. Henderson, a director of the Company,
is also President and Chief Executive Officer of PacifiCorp Holdings, Inc.,
an affiliate of PCI, and that A. M. Gleason, another director of the
Company, only recently stepped down as Vice Chairman and a director of
PacifiCorp, PCI's parent company. The Board discerned potential conflicts
of interest inherent in a transaction involving PCI, including the
Offering, which would involve shares of the Company's Common Stock owned by
PCI, the Redemption, which would involve the payment of at least $7.5
million to PCI, and the Reverse Stock Split, which, although potentially
beneficial to the Company and its stockholders as a whole for reasons
unrelated to the Offering and the Redemption, would be pursued at this time
in connection with the Offering. Although PCI has historically been
supportive of the Company's efforts to succeed, it is the major stockholder
of the Company owning approximately 47.4% of the outstanding Common Stock
(assuming conversion of the Series A Preferred Stock), and the Board noted
that PCI's interests may not be the same as those of the Company and the
stockholders as a whole.
For these reasons, the Board appointed a Special Committee, consisting
entirely of disinterested directors (the "Special Committee") to review the
reasonableness of the Offering, the Redemption and the Reverse Stock Split
(the "Proposed Transactions") and whether the Proposed Transactions would
be in the best interests of the Company, and, if approved by the Special
Committee, to recommend the Proposed Transactions to the Board. The
Special Committee consisted of Dianne C. Walker (an independent consultant
formerly associated with the investment banking firms of Bear, Stearns &
Co., Inc. and Kidder Peabody & Co., Inc.; between 1988 and 1990, Ms. Walker
was a consultant to an affiliate of PCI and of the Company), chair,
William E. Porter (Vice President-Project Future of Trigon Blue Cross Blue
Shield), and John W. Rosenblum (a Professor at and the former Dean of
the Darden Graduate School of Business Administration at the University of
Virginia).
The Special Committee met on June 14, 1995. At that meeting, the
Special Committee considered various aspects of the proposed Offering, the
Reverse Stock Split and the Redemption. The Committee considered
information previously provided by Rodman to the Board and to management in
connection with the Offering, including information about (1) the Company's
stock performance over the past six months, (2) the market performance of
the stocks of comparable companies, (3) the Company s comparative stock
position among communication companies and other selected publicly traded
companies, (4) the current market for equity offerings and the current
growth in the demand for new equity issues, particularly for technology
company stocks, and (5) a possible marketing strategy for the Company's
offering. Such information was provided by Rodman in connection with the
Offering, and Rodman was not engaged to provide any opinion to any party,
including the Special Committee, the Board of Directors, or the Company.
In addition, the Committee considered the Company's leverage relative
to comparable companies. In addition to relieving the Company of annual
dividend payments on the Series A Preferred Stock, the Proposed
Transactions would make a substantial contribution (approximately $10-$12
million) to the Company s capital, enhancing its debt-to-capitalization
ratio and bringing the ratio closer to the average ratio of comparable
companies. The Committee believed that this would better position the
Company to be competitive, and to be able to react to market conditions
and demands.
The Committee also considered the impact of the Proposed Transactions
on the Company s continued use of its net operating loss carryforwards
("NOLs"). In this regard, the Committee considered a report from Deloitte
29
& Touche LLP, concluding that the Proposed Transactions would not result in
a change in ownership under Section 382 of the Internal Revenue Code of
1986, as amended ("IRC"), which otherwise could limit the future usefulness
of the NOLs, although the Proposed Transactions, combined with future
transactions, might result in a change in ownership and NOL limits.
The Committee also considered five-year projections of (1) taxes payable
without regard to the Proposed Transactions, (2) taxes payable if Comdial
has an ownership change within the meaning of Section 382 of the IRC, and
(3) the calculation of the Section 382 limitation, should it be imposed.
The Committee concluded that any adverse impact of the Proposed
Transactions on the Company's NOLs did not outweigh the potential
advantages of the Proposed Transactions to the Company.
The Committee noted that Rodman had advised that the price per share
of the Common Stock must be in excess of $5.00 in order for Rodman to act
as managing underwriter of the Offering, and that an increased per share
price might be achieved through a reverse stock split which would precede
or coincide with the Offering. The Committee also noted other advantages
of the split, including the reduction of commissions payable by the
Company's shareholders if they sell their shares. See "Reasons for the
Reverse Stock Split." The Committee noted the risks that the per share
price post-split might not increase proportionately to the decrease in the
number of shares, that any increase might not be sustained, that the
reduced number of shares might adversely affect the liquidity of the market
for the Company's stock, and that earnings per share might be diluted,
depending upon the Offering price. However, it was the belief of the
Committee that on balance these risks were outweighed by the potential
benefits of the split.
The Committee reported the results of its deliberations and made its
recommendation to the full Board at a special meeting of the Board held on
June 26, 1995. The Committee recommended the Reverse Stock Split, the
Offering and the Redemption to the Board, subject to the approval by the
Board of the price per share in the Offering. At this meeting, the Board
noted that the Proposed Transactions would enhance the Company's balance
sheet, increase its equity and improve its leverage, bringing its capital
structure more in line with comparable companies. The Board noted that
this would place the Company in a better position for future growth.
The Board considered the proposed one-for-three stock split in detail,
noting that, due to recent increases in the market price of the Company's
Common Stock, a one-for-two stock split might result in a price per share
for the Company's Common Stock in excess of the desired $5.00 level.
Nonetheless, the Board approved the one-for-three split, on the basis that
(1) the price would more likely be sustained above $5.00 after a one-for-
three split than after a one-for-two split, (2) earnings per share figures
would likely be more attractive after a one-for-three split, (3) the market
float even after a one-for-three split would likely be sufficient to
sustain active trading in the Company's Common Stock in light of the
experience of comparable companies, especially after the spreading of PCI's
holding as a result of the Proposed Transactions, and (4) Rodman advised
the Company that it would not manage the Offering if the per share price
were below $5.00.
The Board noted that ALLTEL had declined to participate in the
Proposed Transactions, but would still hold a substantial amount of Common
Stock. The Board noted that ALLTEL had agreed to restrict its sales of
the Company's Common Stock during the Offering and for a short period
thereafter, but that, after the expiration of that period, there would be
no contractual restriction on ALLTEL's sales of the remaining Company
Common Stock currently owned by it.
The Board also considered the impact of the Proposed Transactions on
the Company's NOL position. The Board noted the Special Committee's
deliberations and recommendations, and the advise of management and
Deloitte & Touche LLP. The Board concluded that any negative impact on
NOLs did not outweigh the potential advantages of the Proposed
Transactions.
The Board concluded that the Proposed Transactions were in the best
interests of the Company, and resolved to recommend the Reverse Stock Split
to the Company's common stockholders, subject to the right of the Board not
to proceed with the Reverse Stock Split notwithstanding a favorable vote by
the stockholders.
ANTI-TAKEOVER EFFECTS
Management of the Company is not aware of any efforts by any
persons to accumulate Common Stock or to obtain control of the Company.
The proposed Reverse Stock Split is not intended to be an anti-takeover
device and is not expected to have a significant effect on the ownership
percentages of the Company's stockholders. Rather, the Amendment is
being sought to enhance the Company's image and its corporate
flexibility, and to price the stock in a range which is more acceptable
to the brokerage community and to investors generally. See "Reasons For
the Reverse Stock Split."
As a result of the Offering, including PCI's sale of shares, and
the Redemption, PCI's percentage ownership of the Company would be
reduced from 47.4% (PCI's current percentage ownership assuming
conversion of the Series A Preferred Stock) to 11.2% (5.7% if Rodman
elects to purchase all of the additional 450,000 post-split shares from
PCI). This reduction in PCI's percentage ownership may remove an
existing disincentive to persons wishing to obtain control of the
Company.
<PAGE>
MARKET FOR THE COMPANY'S COMMON STOCK
The Company's Common Stock is traded and listed on the Nasdaq
National Market under the symbol "CMDL".
The table below summarizes the high and low sales prices
based on actual trades on the Nasdaq National Market.
HIGH LOW
YEAR ENDED DECEMBER 31, 1993:
First Quarter . . . . . . . . . . . . $ 1-1/16 $ 7/16
Second Quarter . . . . . . . . . . . . 1-1/8 3/4
Third Quarter . . . . . . . . . . . . 1 3/4
Fourth Quarter . . . . . . . . . . . . 4 3/4
YEAR ENDED DECEMBER 31, 1994:
First Quarter . . . . . . . . . . . . $ 4-1/8 $ 2-9/16
Second Quarter . . . . . . . . . . . . 3-1/8 1-7/8
Third Quarter . . . . . . . . . . . . 3-1/8 1-15/16
Fourth Quarter . . . . . . . . . . . . 3-7/16 1-13/16
YEAR ENDED DECEMBER 31, 1995:
First Quarter . . . . . . . . . . . . $ 3-1/8 $ 2
Second Quarter (through June 27, 1995) 5-1/8 2-5/8
On June 27, 1995, the last reported sale price for the Company's
Common Stock on the Nasdaq National Market was $4-7/16 per share. As of
June 12, 1995, there were approximately 2,106 stockholders of record of
the Common Stock. Except as discussed above, the Company does not
believe that, if effected, the Reverse Stock Split will result in a
significant reduction of the number of stockholders of the Company.
Holders of Post-Split Common Stock will continue to be entitled to
receive such dividends as may be declared by the Board of Directors. To
date no dividends on the Common Stock have been paid by the Company.
EXCHANGE OF STOCK CERTIFICATES
If the Amendment is approved by the Company's stockholders, and if
the Board of Directors still believes that the Reverse Stock Split is in
the best interests of the Company and its stockholders, the Company will
promptly file the Amendment with the Secretary of State of the State of
Delaware. The Reverse Stock Split will become effective on the date of
such filing or the date specified in that filing, if later (the
"Effective Date") and the stockholders will be notified on or after the
Effective Date that the Reverse Stock Split has been effected. The
Company's transfer agent will act as the Company's exchange agent (the
"Exchange Agent") to act for holders of Common Stock in implementing the
exchange of their certificates.
As soon as practicable after the Effective Date, stockholders will
be notified and requested to surrender their certificates representing
shares of Pre-Split Common Stock to the Exchange Agent in exchange for
certificates representing Post-Split Common Stock. Beginning on the
Effective Date, each certificate representing shares of the Company's
<PAGE>
Common Stock will be deemed for all corporate purposes to evidence
ownership of shares of Post-Split Common Stock. To the extent a
stockholder holds a number of shares not evenly divisible by three, the
Company will pay cash for fractional interests as described below.
TREATMENT OF FRACTIONAL SHARES
No scrip or fractional certificates have been or will be issued in
connection with the Reverse Stock Split. Assuming the Reverse Stock
Split is effected, stockholders who ostensibly would be entitled to
receive fractional shares because they hold a number of shares of Common
Stock not evenly divisible by three will be entitled to receive, upon
surrender to the Exchange Agent of certificates representing such
shares, a cash payment in lieu thereof at a price equal to the average
of the closing bid price for the Common Stock on the five trading days
prior to the date on which the Reverse Stock Split is effective, as
reported by the Nasdaq National Market.
The Company will either deposit sufficient cash with the Exchange
Agent or set aside sufficient cash for the purchase of fractional
interests. Stockholders are encouraged to surrender their certificates
to the Exchange Agent for certificates evidencing whole shares of the
Post-Split Common Stock and to claim the sums, if any, due them for
fractional interests, as promptly as possible following the Effective
Date.
Stockholders should be aware that, under the escheat laws of the
various jurisdictions where stockholders reside, where the Company is
domiciled, and where the funds will be deposited, sums due for
fractional interests that are not timely claimed after the Effective
Date may be required to be paid to the designated agent for each such
jurisdiction, unless correspondence has been received by the Company or
the Exchange Agent concerning ownership of such funds within the time
permitted in such jurisdictions. Thereafter, stockholders otherwise
entitled to receive such funds will have to seek to obtain them directly
from the state to which they were paid.
The ownership of a fractional interest will not give the holder
thereof any voting, dividend, or other rights except to receive payment
therefor as described herein. No service charge will be payable by
stockholders in connection with the exchange of certificates or the
issuance of cash for fractional interests, all of which costs will be
borne and paid by the Company.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is
based on the IRC, the applicable Treasury Regulations promulgated
thereunder, judicial authority and current administrative rulings and
practices as in effect on the date of this Proxy Statement. This
discussion is for general information only and does not discuss
consequences which may apply to special classes of taxpayers (e.g.
non-resident aliens, broker-dealers, or insurance companies).
Stockholders are urged to consult their own tax advisors to determine
the particular consequences to them.
The exchange of shares of Pre-Split Common Stock for shares of
Post-Split Common Stock will not result in recognition of gain or loss
(except in the case of cash received for fractional shares as described
below). The holding period of the shares of Post- Split Common Stock
<PAGE>
will include the exchanging stockholder's holding period for the shares
of Pre-Split Common Stock exchanged therefor, provided that the
stockholder held the shares of Pre-Split Common Stock as a capital asset
at the time of the exchange. The adjusted basis of the shares of
Post-Split Common Stock will be the same as the adjusted basis of the
Pre-Split Common Stock exchanged therefor, reduced by the basis
applicable to the receipt of cash in lieu of fractional shares described
below.
A stockholder who receives cash in lieu of fractional shares will
be treated as if the Company has issued fractional shares to him and
then immediately redeemed such shares for cash. Such stockholder should
generally recognize gain or loss, as the case may be, measured by the
difference between the amount of cash received and the basis of his
Pre-Split Common Stock allocable to such fractional shares, had they
actually been issued. Such gain or loss will be capital gain or loss
(if such stockholder's Pre- Split Common Stock was held as a capital
asset), and any such capital gain or loss will generally be long-term
capital gain or loss to the extent such stockholder's holding period for
his Pre-Split Common Stock exceeds one year.
VOTE REQUIRED AND BOARD OF DIRECTORS RESERVATION OF RIGHTS
Under Delaware law, approval of the Amendment requires the
affirmative vote of the holders of at least a majority of the
outstanding shares of Common Stock. If the Reverse Stock Split is
approved by the stockholders, it will become effective upon the filing
of a Certificate of Amendment to the Restated Certificate of
Incorporation of the Company with the Delaware Secretary of State. The
Board of Directors reserves the right, notwithstanding stockholder
approval and without further action by the stockholders, to elect not to
proceed with the Reverse Stock Split, if at any time prior to filing the
Amendment with the Secretary of State of the State of Delaware the Board
of Directors, in its sole discretion, determines that the Reverse Stock
Split is no longer in the best interests of the Company and its
stockholders. In addition, the Board of Directors reserves the right to
delay filing the Amendment for up to twelve months following stockholder
approval of the Reverse Stock Split at the Special Meeting. However, at
the present time, the Board of Directors intends to proceed with the
Reverse Stock Split as presented herein without delay.
NO DISSENTER'S RIGHTS
Under Delaware law, stockholders are not entitled to dissenter's
rights of appraisal with respect to the proposed amendment to the
Company's Certificate of Incorporation to effect the Reverse Stock
Split.
OTHER MATTERS
Management is not aware of other matters which may come before the
meeting, but if any such matters are properly presented, proxies
solicited hereby will be voted in accordance with the best judgment of
the persons holding the proxies. All shares represented by duly
executed proxies will be voted at the meeting.
<PAGE>
INDEPENDENT ACCOUNTANTS
Representatives of Deloitte & Touche LLP, the principal accountants
of the Company for the current year and for the most recently completed
fiscal year, are expected to be present at the Special Meeting, will
have the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Any stockholder proposals to be considered by the Company for
inclusion in the proxy materials for the 1996 Annual Meeting of
Stockholders must have been received by the Company no later than
December 6, 1995.
For the Board of Directors
Wayne R. Wilver, Secretary
Charlottesville, Virginia
July 10, 1995
THE COMPANY WILL MAIL WITHOUT CHARGE UPON WRITTEN REQUEST A COPY OF THE
1994 ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS,
SCHEDULES AND A LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO SECRETARY,
COMDIAL CORPORATION, 1180 SEMINOLE TRAIL, P. O. BOX 7266,
CHARLOTTESVILLE, VIRGINIA, 22906-7266.
<PAGE>
EXHIBIT A
PROPOSED AMENDMENT TO ARTICLE THIRD OF THE
COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
(amends Article THIRD to add the following additional paragraph)
III. Reverse Stock Split
Upon filing with and acceptance by the Secretary of State of the
State of Delaware of a Certificate of Amendment to the Corporation's
Restated Certificate of Incorporation whereby Article THIRD is amended
to include this Division III, each three (3) issued and outstanding
shares of Common Stock, $0.01 par value per share, of this Corporation
shall thereby be combined into one (1) share of validly issued, fully
paid and non-assessable share of Common Stock, $0.01 par value per
share. Each person at that time holding of record any issued and
outstanding shares of Common Stock shall receive upon surrender to the
Corporation's transfer agent a stock certificate or certificates to
evidence and represent the number of shares of post-reverse split Common
Stock to which such stockholder is entitled after giving effect to the
reverse split; provided, however, that this Corporation shall not issue
fractional shares of Common Stock in connection with this reverse stock
split, but, in lieu thereof shall make a cash payment equal to the
Market Value (as subsequently defined herein) of each share of Common
Stock to holders thereof who would otherwise be entitled to receive
fractional shares, except for the provisions hereof, upon surrender of
certificates representing those shares to the Corporation's transfer
agent. The ownership of such fractional interests shall not entitle the
holder thereof to any voting, dividend or other right, except the right
to receive payment therefor as described above. For the purposes
hereof, "Market Value" of shares of Common Stock shall mean an amount
per share equal to the average of the closing bid price for the Common
Stock on the five trading days prior to the date on which the reverse
split is effective, as reported by the National Association of
Securities Dealers Automated Quotation system.
<PAGE>
[FRONT OF PROXY CARD]
COMDIAL CORPORATION
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
JULY 28, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF COMDIAL
CORPORATION
The undersigned acknowledges receipt of the Notice of Special Meeting
of Stockholders and Proxy Statement, each dated July 10, 1995, and
appoints William G. Mustain and Wayne R. Wilver, or either of them, as
proxies, each with the power to appoint his or her substitute and to act
alone, and authorizes them, or either of them, to represent and to vote,
as designated on the reverse side of this card, all shares of Common
Stock of Comdial Corporation held of record by the undersigned on June
26, 1995, at the Special Meeting of Stockholders to be held on July 28,
1995, and at any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL
APPEARING ON THE REVERSE SIDE HEREOF
<PAGE>
[REVERSE SIDE OF PROXY CARD]
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no directions to the contrary
are indicated, this proxy will be voted FOR the Proposal.
___________________________ ________________
ACCOUNT NUMBER COMMON
1. PROPOSED AMENDMENT to effect one-for-three reverse stock split:
FOR ( ) AGAINST ( ) ABSTAIN ( )
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
PLEASE MARK YOUR CHOICE
LIKE THIS IN BLUE OR BLACK INK.
Date , 1995
Signature
Signature, if held jointly
Please sign exactly as name
appears hereon. When shares
are held by joint tenants,
both should sign. When
signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such. If
a corporation, please sign
in full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED
ENVELOPE.
