STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT dated as of July 31, 2001, is made and
entered into by and among DARTWOOD, LLC, a limited liability company organized
under the laws of the State of Texas, with offices in Austin, Texas (the
"Purchaser"); MCC ACQUISITION CORPORATION, an Iowa Corporation, (the
"Shareholder"), being the sole Shareholder of PRIORITY INTERNATIONAL
COMMUNICATIONS, INC., and its wholly-owned subsidiary ATN, a Texas corporation,
with offices at Austin, Texas (the "Company") and XXXXXXX COMMUNICATIONS
CORPORATION, INC., an Iowa corporation, ("MCC") the parent company of
Shareholder, with offices at 0000 Xxxxx Xxxx, X.X., Xxxxx Xxxxxx, XX 00000.
A. The Company is engaged in the business of telecommunications,
conducted from its premises in Mobile, Alabama.
B. Purchaser wishes to purchase from the Shareholder and the
Shareholder wishes to sell to Purchaser all of the issued and outstanding
capital stock of the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereby agree as follows:
ARTICLE I
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DEFINITIONS
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When used in this Agreement, the following terms shall have the respective
meanings set forth below:
Affiliate. "Affiliate" shall mean with respect to any Person (i) a Person
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directly or indirectly controlling, controlled by or under, control with such
Person; (ii) a Person owning or controlling ten percent (10%) or more of the
outstanding voting securities of such Person; or (iii) an officer, director or
partner or member of the immediate family of an officer, director or partner of
such person. When the Affiliate is an officer, director or partner or member of
the immediate family of an officer, director or partner of such Person, any
other Person for which the Affiliate acts in that capacity shall also be
considered an Affiliate. For these purposes, control means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, by contract or otherwise.
Agreement. "Agreement" shall mean this Stock Purchase Agreement, including
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all exhibits and schedules thereto, as the same may hereafter be amended,
modified or supplemented from time to time.
Assets. "Assets" shall mean all of the Business, goodwill, assets,
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properties and rights of every nature, kind and description, whether tangible or
intangible, real, personal or mixed, wherever located and whether or not carried
or reflected on the books and
records of the Company, which are owned by the Company or in which the Company
has any interest.
Balance Sheet. "Balance Sheet" shall mean the balance sheet contained in
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the Financial Statements of the Company.
Books and Records. "Books and Records" shall mean the original of all
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books and records, ledgers, employee records, customer lists, files,
correspondence, and other written records of every kind owned by the Company.
Business. "Business" shall mean the business as currently conducted by the
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Company and as the same continues to be operated until Closing.
Closing. "Closing" shall mean the consummation of the transactions
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contemplated in this Agreement.
Closing Date. "Closing Date" shall mean the date upon which the Closing
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occurs.
Company Disclosure Schedule. "Company Disclosure Schedule" shall mean the
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schedule delivered to Purchaser and executed by the Company at Closing which is
incorporated in and considered a part of this Agreement.
Effective Time. "Effective Time" shall mean 12:01 a.m. Cedar Rapids, Iowa
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time of the day after the Closing Date.
Inventories. "Inventories" shall mean all inventories, including, without
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limitation, inventories of raw materials, work in progress, storehouse stocks,
finished goods and consigned goods, owned by the Company.
Person. "Person" shall mean any entity, corporation, company, association,
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joint venture, joint stock company, partnership, trust, organization, individual
trustee, receiver or liquidator.
Shares. "Shares" shall mean one hundred percent (100%) of the issued and
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outstanding capital stock of the Company which, in the aggregate, represents one
hundred percent (100%) of the equity interest in and to the Company.
Shareholder. "Shareholder" shall mean MCC Acquisition Corporation.
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Tax Returns. "Tax Returns" means and is limited to, for the purpose of
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this Agreement, federal and state income tax returns.
Taxes. "Taxes" means and is limited to, for the purpose of this Agreement,
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all federal and state income taxes.
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ARTICLE II
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SALE AND PURCHASE OF STOCK
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Subject to the terms and conditions set forth in this Agreement and in
reliance upon the representations and warranties of the Company, Shareholder,
and Purchaser herein set forth, the Shareholder shall at the Closing sell,
transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase
from the Shareholder all of the Shareholder's right, title and interest, as of
the Effective Time in and to the Shares. The Shares shall be conveyed free and
clear of Encumbrances.
ARTICLE III
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PURCHASE PRICE, PAYMENT AND RELATED MATTERS
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3.1 Purchase Price. The Purchase Price for the Shares shall be One
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Hundred Ninety-six Thousand Dollars ($196,000.00).
3.2 Payment of the Purchase Price. The Purchase Price shall be paid by
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Purchaser as follows:
3.2.1 $100,000 in cash payable to Shareholder's designated payee MCC
Investment Company, L.L.C. ("MCCIC") at Closing; and
3.2.2 A non-interest bearing promissory note ("Note"), executed by
Purchaser in the amount of $96,000, payable to Shareholder's designated payee
MCCIC, in payments of Four Thousand Dollars ($4,000) per month for twenty-four
(24) months, and a security agreement ("Security Agreement") securing the
payment of the Note, granting to MCCIC a security interest in a certain "SWITCH"
located at Company premises in Mobile, Alabama. A copy of the Note is attached
hereto as Exhibit "A", and a copy of the Security Agreement is attached hereto
as Exhibit "B", and exhibits are incorporated herein by reference.
3.3 Specific Liabilities Assumed By Purchaser as Consideration for
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Purchase Price. Notwithstanding the other provisions in this Agreement,
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Purchaser expressly agrees to assume, as of Closing Date, all liabilities
reflected on the Company's Balance Sheet and/or attributable to the Company's
business as of the Closing Date. Such assumption of liability by Purchaser
includes, but is not limited to: (a) any and all Universal Service
Administration Corporation Universal Service Fees, charges, assessments,
penalties, interest, and/or other charges or liabilities of any nature or kind
which have been or may be assessed in the future in connection therewith; (b)
any and all past, present, or future employment or consulting agreements
executed by the Company, MCC Acquisition Corporation, or Xxxxxxx Communications
Corporation in any manner connected with Xxxxx Xxxxxx, Prentice Services, Inc.,
or any of his affiliated companies; (c) any and all financial obligations not
reflected on the Company's final Balance Sheet, including all footnotes, as
presented at Closing; and (d) defense of Shareholder (and its officers and
affiliates) from any derivative law suit.
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ARTICLE IV
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CLOSING
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The Closing shall take place at the offices of Xxxxxxx & Xxxxxxxxxx,
P.L.C., at 3:00 p.m. local time on July 31, 2001 or at such other time and place
as the Purchaser and the Shareholder mutually agree in writing, such
transactions to be effective as of the Effective Time.
4.1 Transactions at the Closing. At the Closing the following shall
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occur:
(a) Purchaser shall deliver to Shareholder the Cash as set forth
in Article III hereof.
(b) Purchaser shall deliver to Shareholder fully executed copies
of Exhibits "A" and "B" as set forth in Article III hereof.
(c) Purchaser shall provide to the Company a certificate showing
the validity of Purchaser's corporate standing, and evidence that the Company is
in good standing as of Closing.
(d) The Shareholder shall deliver to Purchaser the original share
certificates for all Shares owned by Shareholder and execute such stock
certificates and other instruments which may be necessary to transfer such
Shares to Purchaser.
ARTICLE V
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REPRESENTATIONS AND WARRANTIES
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OF THE SHAREHOLDER
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The Shareholder hereby represents and warrants to Purchaser that:
5.1 Ownership. The Shareholder is the owner of the Shares.
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5.2 Organization and Good Standing. The Shareholder is a corporation
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duly organized, validly existing and in good standing.
5.3 Authority to Execute and Perform Agreements. Shareholder has all
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requisite power, authority and approval to enter into, execute and deliver this
Agreement and other Documents and to fully perform its obligations hereunder and
thereunder.
5.4 Regulatory Approvals and Other Consents. Except as otherwise
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disclosed in the Shareholder Disclosure Schedule, there are no consents or
approvals by any regulatory agency required for the completion of these
transactions to be valid and binding upon any of the parties hereto.
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5.5 Tax Matters. The Shareholder has been granted extensions for filing
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its federal and state Income Tax Returns for 2000. To Shareholder's knowledge,
the Company has fully complied with requirements imposed by federal and state
income taxation authorities with respect to the Company's income taxation.
Shareholder shall file and bear any costs associated with federal or state
income taxation for 2000. There are no federal or state income tax liens
pending which would materially affect the value of the Company.
5.6 Representations and Warranties on Closing Date. The
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representations and warranties contained in this Article V shall be true and
complete at and as of the Effective Time with the same force and effect as
though such representations had been made at the Effective Time unless the
parties have been notified in writing prior to the Effective Time.
ARTICLE VI
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REPRESENTATIONS AND WARRANTIES OF PURCHASER
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The Purchaser represents and warrants to the Shareholder as follows:
6.1 Organization and Good Standing. Purchaser is a limited liability
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company duly organized, validly existing and in good standing under the Laws of
the State of Texas and has requisite power and authority to own, lease and
operate its assets, properties and business, and to carry on its business as now
conducted.
6.2 Authority to Execute and Perform Agreements. Purchaser has all
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requisite power, authority and approval to enter into, execute and deliver this
Agreement and to perform fully Purchaser's obligations hereunder.
6.3 Authorization of Performance. Purchaser has taken all actions
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necessary to authorize the performance of its respective obligations under this
Agreement and to consummate the transactions contemplated herein. The Agreement
as of the Closing Date will be legal, valid and binding obligations of the
Purchaser.
6.4 No Violation. The completion of this transaction and Purchaser's
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performance hereunder will not and does not violate any provisions of the
Articles of Organization or the Regulations of Purchaser.
6.5 No Restrictions, Waiver, Release. Purchaser acknowledges it is
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under no restriction in entering this Agreement. Purchaser has consulted with
independent legal counsel prior to executing this Agreement. Purchaser
expressly states, by its execution of this Agreement below, that it has full and
complete knowledge about the Company's finances, financial history, operations,
business, outstanding litigation, and any and all other liabilities. Purchaser
voluntarily waives herein any and all claims arising from its purchase of the
Company, and Releases Shareholder from any and all liability in connection with
the operation of the Company prior to Closing.
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6.6 Representations. The representations and warranties contained in
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this Article VI shall be true and complete in all material respects at and as of
the Effective Time with the same force and effect as though such representations
and warranties had been made at and as of the Effective Time, except as affected
by the transactions contemplated in this Agreement and such representations
shall survive Closing.
ARTICLE VII
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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7.1 Organization and Good Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the Laws of the State of
Texas, and has requisite power and authority to own, lease and operate its
assets, properties and business and to carry on its business as now conducted.
7.2 Authority to Execute and Perform Agreements. The Company has all
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requisite power, authority and approval to enter into, execute and deliver this
Agreement and to perform fully the Company's obligations hereunder.
7.3 Authorization of Performance. The Company has taken all actions
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necessary to authorize the performance of its respective obligations under this
Agreement and to consummate the transactions contemplated herein. The Agreement
as of the Closing Date will be legal, valid and binding obligations of the
Company.
7.4 No Violation. The completion of this transaction and the Company's
performance hereunder will not and does not violate any provisions of the
Articles of Organization or the Regulations of the Company.
7.5 No Restrictions. The Company expressly acknowledges that it is
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under no restriction in entering this Agreement, any attached exhibits or
schedules.
7.6 Representations and Warranties on Closing Date. The
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representations and warranties contained herein shall be true and complete at
and as of the Effective Time with the same force and effect as though such
representations had been made at the Effective Time unless the parties to this
Agreement have been notified in writing prior to the Effective Time.
7.7 Assets. The Company will not engage in any action prior to the
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Closing Date which might impair, encumber or otherwise affect the good and
marketable title in and to the Assets.
7.8 Access. The Company has provided Purchaser with full and complete
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access to all financial and corporate books and records of the Company.
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7.9 Receipt of Final Balance Sheet. The Company shall provide
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Shareholder with the Company's final Balance Sheet as of the Closing Date, which
shall be provided by no later than thirteen (13) days after the Closing Date.
7.10 Representations. The representations and warranties contained in
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this Article VII shall be true and complete in all material respects at and as
of the Effective Time with the same force and effect as though such
representations and warranties had been made at and as of the Effective Time,
except as affected by the transactions contemplated in this Agreement and such
representations shall survive Closing.
ARTICLE VIII
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CONDITIONS PRECEDENT TO THE
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OBLIGATION OF PURCHASER TO CLOSE
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The obligation of the Purchaser to consummate the transactions contemplated
herein shall be subject to the fulfillment, at or before the Closing Date, of
all of the conditions set forth below in this Article VIII, unless waived in
writing by the Purchaser.
8.1 Representations and Warranties. The representations and warranties
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of Shareholder and Company set forth in this Agreement shall be true on and as
of the Closing Date with the same force and effect as though made on the Closing
Date.
8.2 Contingency. The Company shall have been fully released from its
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liability to Xxxxxxx Xxxxxx Leasing Company and its affiliates ("BFLC").
8.3 Third Party Consents. Any and all consents by Authorities and from
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other parties which may be required in connection with the consummation of the
transactions contemplated here shall have been received prior to the Effective
Time.
8.4 Access to Assets. During the pendency of this Agreement, the
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Purchaser has had full and complete access to investigate, evaluate and/or
review the Assets.
ARTICLE IX
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CONDITIONS PRECEDENT TO THE
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OBLIGATION OF THE SHAREHOLDER TO CLOSE
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The obligation of the Shareholder to consummate the transactions
contemplated herein shall be subject to the fulfillment, at or before the
Closing Date, of all the conditions set forth below in this Article IX.
9.1 Representations and Warranties. The representations and warranties
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of Purchaser set forth in this Agreement shall be true on and as of the Closing
Date with the same force and effect as though made on the Closing Date.
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9.2 Authority. All actions required to be taken by Purchaser to
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authorize execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, shall have been duly and
validly taken by Purchaser.
9.3 Closing Transactions. All of the transactions to occur at the
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Closing described in Article IV hereof shall have been completed or will occur
simultaneously with all other conditions set forth in this Article IX.
9.4 Contingency. The Company shall have been released from all of its
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liability to BFLC, and a copy of such Release shall have been received by
Shareholder.
9.5 Pending Litigation. TSB's lawsuit against the Company shall have
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been fully settled to Shareholder's satisfaction, and a copy of all Settlement
documents shall have been received by Shareholder.
ARTICLE X
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INDEMNIFICATIONS
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10.1 Indemnification by Shareholder. The Shareholder shall promptly
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indemnify, defend and hold harmless the Purchaser from any State or Federal
Income Tax obligation of the Company as of the Closing Date. Shareholder shall
be responsible for filing of State and Federal Income Tax Returns for 2000, and
any associated obligations connected with such payments.
10.2 Indemnification by the Purchaser. Purchaser expressly
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acknowledges that it has adequate knowledge of the Company's operations and
business prior to execution of this Agreement. Effective as of the Closing
Date, Purchaser shall indemnify and hold harmless Shareholder from all past,
present, and future claims, liabilities, obligations, debts, and duties, whether
known or unknown, which may be or may become owed by Shareholder, Company, or
Purchaser, arising from or in connection with the operation and business of the
Company. Such indemnification includes, but is not limited to, any and all
liabilities of PIC's wholly-owned subsidiaries, ATN and PIC-Resources,
including, inter alia, those liabilities set forth in Section 3.3 above.
ARTICLE XI
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TERMINATION; REMEDIES
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11.1 Termination Upon Default. In the event of a default, the
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non-defaulting party may terminate this Agreement by giving written notice to
the other on or prior to the Closing Date, without prejudice to any rights or
obligations it may have, if, after written notice of the default and the passage
of a thirty (30) day cure period or, if diligently pursued, a reasonable time
thereafter, the other party has failed in the due and timely performance of any
of their agreements herein contained or there shall have been a breach of the
other's warranties and representations herein contained.
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ARTICLE XII
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EXPENSES; CONFIDENTIALITY
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12.1 Expenses of Sale. The Shareholder and the Purchaser shall each
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bear their respective expenses incurred in connection with the negotiation and
preparation of the Agreement and the consummation and performance of the
transactions contemplated herein.
12.2 Confidentiality. The parties agree that the nature and detail of
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this Agreement shall be treated as confidential information. The Parties hereto
agree that as a part of the other Party's inducement to close the transactions
herein, certain disclosures as to the financial arrangements, including this
Agreement in its entirety and certain agreements inherent in this Agreement will
be, of necessity, disclosed to outside parties. The Parties shall not divulge
or disseminate any information except as may be necessary to the efforts to
close such other transactions as may be required to effectuate this Agreement.
Notwithstanding the foregoing, Shareholder or its Parent may disclose to the SEC
such information concerning this transaction as may be required to fulfill its
disclosure and reporting obligation under applicable securities laws.
ARTICLE XIII
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NOTICES
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13.1 Notices. All notices, request and other communications hereunder
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shall be in writing and shall be delivered by courier or other means of personal
service or sent by facsimile, or mailed first class postage prepaid, by
certified mail, return receipt requested in all cases addressed to:
Purchaser: Dartwood, LLC
Xxxxxx X. Xxxxx
x/x Xxxxx, Xxxxx & Xxxx, X.X.X.
00 Xxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
000-000-0000 (Telephone)
000-000-0000 (Fax)
With a Copy to: Xx. Xxxxxx X. Xxxxx
Xxxxx, Xxxxx & Head, L.L.P.
00 Xxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
000-000-0000 (Telephone)
000-000-0000 (Fax)
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Shareholder: MCC Acquisition Corporation
Xx. Xxxx Xxxxxx
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx & Xxxxxxxxxx, PLC
000 Xxxxxx Xxxxxx XX
Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Company: Priority International Communications, Inc.
Mr. Xxxxx Xxxxxx
Austin, TX
With a Copy to: Xxxxx Xxxxxxx
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx & Xxxxxxxxxx, PLC
000 Xxxxxx Xxxxxx XX
Xxxxx 000
Xxxxx Xxxxxx, XX 00000
ARTICLE XIV
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MISCELLANEOUS
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14.1 Brokerage Fees. If any person shall assert a claim to a fee or
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commission or other compensation on account of alleged employment as a broker or
finder or related services, the party who is alleged to have engaged such
broker/finder shall indemnify and hold the other party harmless against any such
claims.
14.2 Further Assurances. Each of the parties shall use their
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reasonable and diligent best efforts to proceed promptly with the transactions
contemplated herein, to fulfill the conditions precedent and perform such
further acts as may be reasonably required or desirable to carry out the
provisions and transactions contemplated herein. The parties acknowledge that
time is of the essence.
14.3 Modifications and Amendments; Waivers and Consents. At any time
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prior to the Closing Date or termination of the Agreement, Purchaser,
Shareholder, or Company may by written agreement: (a) extend the time of
performance; (b) waive any inaccuracies in the representations and warranties
made by the other party or any other agreement or document contained herein;
and/or (c) waive compliance with any of the agreements of any other party set
forth in this Agreement.
14.4 Entire Agreement. This Agreement (including exhibits and
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Disclosure Schedules) and the agreements, documents and instruments to be
executed and delivered pursuant hereto are intended to embody the final,
complete and exclusive agreement among the parties with respect to the purchase
of the Shares and related transactions; are intended to supersede all prior
agreements, understandings and representations written or
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oral, with respect thereto; and may not be contradicted by evidence of any such
prior or contemporaneous agreement, understanding or representation, whether
written or oral.
14.5 Binding Effect. This Agreement and the rights, covenants,
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conditions and obligations of the respective parties hereto, and any instrument
or agreement executed pursuant hereto, shall be binding upon the parties and
their respective successors, assigns and legal representatives.
14.6 Counterparts. This Agreement may be executed simultaneously in
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any number of counterparts, each of which shall be deemed to be an original but
all of which together shall constitute one and the same instrument.
14.7 Severability. If any provision or any part of any provision of
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this Agreement shall be void or unenforceable for any reason whatsoever, then
such provision shall be stricken and of no force and effect and the remaining
provisions of the Agreement shall remain in full force and effect.
14.8 Mutuality of Drafting. Should any provisions of the Agreement be
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submitted to judicial or arbitration interpretation, the Court or Arbitrator
shall not apply the presumption that the terms hereof shall be more strictly
construed against the party who drafted this Agreement, it being agreed that all
parties hereto have participated in the preparation of this Agreement.
14.9 Enforceable in Jurisdictions. The Parties to this Agreement agree
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that this Agreement is made and entered into under the laws of the State of Iowa
and that such undertakings are made in Linn, County, Iowa and that any
adjudication or enforcement of such agreements shall be properly held in the
appropriate courts of Linn County, Iowa.
14.10 Additional Documents. The parties hereto agree that they will
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fully and promptly cooperate in the preparation, delivery and execution of any
and all documents or instruments necessary to effectuate and accomplish the
provisions and intent of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
PURCHASER:
Dartwood, LLC,
a Texas Limited Liability Company
By: /s/ Xxxxx Xxxxxx Xxxxxx
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Xxxxx Xxxxxx Xxxxxx, President
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COMPANY:
PRIORITY INTERNATIONAL
COMMUNICATIONS, INC.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: President
SHAREHOLDER:
MCC ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
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Title: _______________________________
MCC:
XXXXXXX COMMUNICATION
CORPORATION, an Iowa Corporation
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
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Title: _______________________________
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