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EXHIBIT 4.12
February 12, 1998
DTI Holdings, Inc.
Digital Teleport, Inc.
00000 Xxxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Re: Agreement Of Subordination
Ladies and Gentlemen:
Xxxxxxx X. Xxxxxxxxx ("Xxxxxxxxx") has certain obligations to KLT
Telecom Inc., a Missouri corporation ("KLT"), pursuant to that certain Guaranty
Agreement dated as of March 12, 1997, as amended (such obligations being
referred to herein as the "Junior Claims"). The Junior Claims are secured by
security interests (the "Junior Security Interests") in Xxxxxxxxx'x stock in DTI
Holdings, Inc. (the "Collateral") pursuant to a Stock Pledge Agreement dated
March 12, 1997 (the "Stock Pledge Agreement"). Xxxxxxx X. Xxxxxxxxx
("Xxxxxxxxx") has certain other obligations to KLT ("Xxxxx Litigation
Obligations to KLT") pursuant to Section 8.3 of the Stock Purchase Agreement
dated December 31, 1996, as amended ("Stock Purchase Agreement"). The Xxxxx
Litigation Obligations to KLT are also secured by security interests in the
Collateral pursuant to the Stock Pledge Agreement.
For value received, and to induce Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated and TD Securities (USA) Inc. to enter into certain financial
transactions with Xxxxxxxxx, KLT (i) hereby subordinates and postpones the
Junior Claims to any indemnification claims of Digital Teleport, Inc. ("DTI"), a
Missouri corporation, or DTI Holdings, Inc. ("Holdings") against Xxxxxxxxx
pursuant to Section 8.3 of the Stock Purchase Agreement (such claims being
referred to herein as the "Senior Claims"), and (ii) hereby agrees to reimburse
DTI and Holdings for the Senior Claims to the extent of any proceeds that KLT
receives from Xxxxxxxxx pursuant to the Xxxxx Litigation Obligations to KLT,
less all costs and expenses (including without limitation reasonable attorneys'
fees and expenses) incurred by KLT in pursuit of such claims. If any such
proceeds consist of securities of Holdings, the amount of such proceeds shall
mean (a) the amount received from the sale of such securities, or (b) if KLT
does not sell such securities, the fair market value thereof. The Xxxxx
Litigation Obligations to KLT are not subordinated to DTI or Holdings hereunder,
and nothing herein shall be deemed to preclude KLT from exercising its rights
under the Stock Pledge Agreement in its sole discretion with respect to such
Xxxxx Litigation Obligations to KLT, subject to KLT's reimbursement obligations
to DTI and Holdings set forth herein.
KLT hereby agrees that the relative priorities of the Junior Security
Interests and the Senior Security Interests shall be as set forth in this
Agreement notwithstanding the time of filing of financing statements, taking
possession of the Collateral or the taking of any other steps necessary to
perfect its liens or security interests and notwithstanding bankruptcy or
insolvency proceedings involving Xxxxxxxxx as debtor.
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KLT hereby agrees that until such time as the dispute resulting in the
Xxxxx Litigation is finally determined, whether by mutual written agreement of
the parties, by final and binding arbitration or by an order or judgment of a
court of competent jurisdiction, which has not been reversed, stayed, modified,
or amended, and as to which the time to appeal or seek certiorari has expired
and no appeal or petition for certiorari has been timely taken, or as to which
any appeal that has been taken or any petition for certiorari that has been
timely filed has been resolved by the highest court to which the order or
judgment was appealed or from which certiorari was sought ("Xxxxx Matter
Resolution"), KLT shall not have any right (i) to foreclose upon or exercise any
other right or remedy with respect to any of the Collateral, whether by judicial
action or otherwise, or (ii) to ask, demand, xxx for, take, enforce or accept
from Xxxxxxxxx any payment on account of, or any security for, any Junior Claim.
KLT hereby represents to you that (i) KLT has not heretofore assigned,
transferred, created a security interest in, or otherwise encumbered such Junior
Claims nor executed or delivered any other instrument or document adversely
affecting the Junior Claims, and (ii) KLT is not insolvent within any meaning of
that term as of the date hereof.
This Agreement is a continuing agreement and, unless you shall have
specifically consented in writing to its revocation, shall remain in full force
and effect in all respects until the Xxxxx Matter Resolution.
No delay or failure on your part in exercising any right or remedy
shall operate as a waiver thereof; and no single or partial exercise of any
right or remedy shall preclude other or further exercises thereof or the
exercise of any right or remedy; and no notice to or demand on Xxxxxxxxx or KLT
shall be deemed a waiver of any obligation or duty of Xxxxxxxxx or KLT or of
your right to take further action without notice or demand; nor in any event
shall any modification, alteration or waiver of any of the provisions hereof be
effective unless in writing and signed for or on behalf of you and then only in
the specific instance for which given.
ALL PARTIES TO THIS AGREEMENT WAIVE TRIAL BY JURY IN ANY LITIGATION TO
WHICH YOU ARE A PARTY ARISING OUT OF OR RELATING TO THE JUNIOR CLAIMS OR THIS
AGREEMENT, AND KLT WAIVES ALL RIGHTS TO INTERPOSE THEREIN COUNTERCLAIMS OTHER
THAN COMPULSORY COUNTERCLAIMS OR OFFSETS OF ANY KIND.
Your rights and privileges hereunder shall inure to the benefit of your
successors and assigns, and this Agreement shall be binding upon KLT's and
Xxxxxxxxx'x respective successors and assigns. KLT and Xxxxxxxxx waive notice of
assignment hereof.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Missouri. Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of
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such provision or the remaining provisions of this Agreement.
IN WITNESS WHEREOF, KLT and Xxxxxxxxx have executed this Agreement this
12th day of February, 1998.
KLT TELECOM INC.
By: /s/ X.X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: President
XXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
ACCEPTED AND AGREED TO BY:
DTI HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
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ACCEPTED AND AGREED TO BY:
DIGITAL TELEPORT, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
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