Exhibit 10.1

MEMORANDUM OF UNDERSTANDING

October 18, 2006

This Memorandum of Understanding (“Memorandum”) sets forth the agreement between
LG-Nortel Co.Ltd (“LGN”) and Vertical Communications, Inc (“Vertical”) and
relates to the proposed Agreement and Plan of Merger (the “Merger Agreement”)
between Vertical, Vodavi Technology, Inc., a Delaware corporation (“Vodavi”),
and Vertical Acquisition Sub, Inc., a Delaware corporation (“Vertical
Acquisition Sub”) pursuant to which Vodavi will become a wholly owned subsidiary
of Vertical (the “Merger”).

LGN owns 862,500 shares of the common stock of Vodavi. The Merger Agreement has
been approved by the Board of Directors of Vodavi, Vertical, and Vertical
Acquisition Sub.

In connection with the Merger Agreement, and pursuant to that certain Voting
Agreement, of even date herewith, between Vertical, LGN, and Vodavi (the “Voting
Agreement”), LGN has agreed to vote its shares of Vodavi common stock in favor
of the Merger Agreement.

Vertical and LGN have discussed the potential of LGN reinvesting the merger
consideration received as a result of the Merger into equity securities of
Vertical. Vertical is currently raising funds through both debt and equity
investors to finance the transactions contemplated by the Merger.

To facilitate the transactions proposed by the Merger, and to induce LGN to sign
the Voting Agreement, Vertical hereby acknowledges to LGN the following:

 

  •   Vertical will continue to support the LGN product line consistent with the
relationship Vodavi has historically had with LGN;

 

  •   Vertical will distribute, on a non-exclusive basis, certain LG-Nortel
products in fulfilling purchase orders for Nortel and supporting the LG-Nortel
products sold by Nortel in North America on mutually acceptable terms;

 

  •   Vertical will use its best efforts to enter into reasonably acceptable
consulting agreements with the existing CEO and CFO of Vodavi for a period of
not less than nine months to support the relationship transition between LGN and
Vertical;

 

  •   Vertical will make available to LGN an investment into its equity
securities on economic terms no less favorable than those received by any other
investor in its current financing efforts, provided however, LGN shall not be
accorded any investors’ rights to approve and waive certain covenants and
conditions in connection with Vertical’s current financing efforts which may be
held by other investors (the “Investment”); and

 

  •   Vertical shall use its best efforts to cause one (1) designee of LGN to be
elected to the Board of Directors of Vertical at the earliest feasible time
following consummation of the Merger and shall continue to do so for so long as
LGN holds at least 80% of the outstanding shares purchased by LGN in the
Investment.

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LGN hereby acknowledges to Vertical the following:

 

  •   LGN will honor its existing relationship with Vodavi and will assign all
rights under its supply agreement with Vodavi to Vertical; and

 

  •   LGN shall use its best efforts to execute all necessary investment
documents related to the Investment, including without limitation, a legally
binding Securities Purchase Agreement contemporaneously herewith, and shall
thereunder commit to invest substantially all of the merger consideration to be
received by LGN upon consummation of the merger (or approximately $6,500,000) as
part of the Investment.

[Signature Page Follows]

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In witness whereof, the parties have entered into this Memorandum as of the 18th
day of October 2006.

 

VERTICAL COMMUNICATIONS, INC.

By:

 

/s/ KEN CLINEBELL

 

Name: Ken Clinebell

Title: CFO

LG-NORTEL CO. LTD

By:

 

/s/ PETER DANS

 

Name: Peter Dans

Title: Chief Financial Officer

VODAVI TECHNOLOGY, INC.

By:

 

/s/ GREGORY K. ROEPER

 

Name: Gregory K. Roeper

Title: Chief Executive Officer