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EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
by and between
KLT TELECOM INC.
and
DIGITAL TELEPORT, INC.,
Dated December 31, 1996
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered
into as of December 31, 1996, by and between DIGITAL TELEPORT, INC., a Missouri
corporation (the "Company"), KLT Telecom Inc., a Missouri corporation
("Purchaser") (Purchaser and the Company each a "Party" and together the
"Parties") and, for purposes of Section 8.3, Section 8.4 and Section 9.9 only,
Xxxxxxx X. Xxxxxxxxx ("Xxxxxxxxx").
RECITALS
A. The Company wishes to issue and sell to Purchaser 300
shares (the "Purchased Shares") of a new series of voting preferred stock, $.01
par value (the "Preferred Stock") in substantially the form set forth in the
certificate of designations attached as Exhibit A ("Certificate of
Designations"), which will be convertible into 300 shares of the Company's
common stock, $.01 par value (the "Common Stock"), subject to adjustment, on the
terms and subject to the conditions hereinafter set forth, which would, if
issued at Closing, constitute 50% of the outstanding stock of the Company;
B. Purchaser wishes to purchase the Purchased Shares, on the
terms and subject to the conditions hereinafter set forth; and
X. Xxxxxxxxx owns 100% of the issued and outstanding shares of
the common stock of the Company, consisting of 300 shares of common stock..
NOW, THEREFORE, in consideration of the recitals and the
mutual covenants, representations, warranties, conditions, and agreement
hereinafter expressed, the Parties agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 The Purchased Shares. Upon the terms and subject to the
conditions set forth in this Agreement, at Closing, the Company shall issue and
sell to Purchaser and Purchaser shall purchase and accept from the Company the
Purchased Shares.
1.2 Consideration. The consideration that Purchaser shall pay
the Company for the Purchased Shares shall be Forty-Five Million Dollars
($45,000,000) (the "Purchase Price"). The Purchase Price shall be payable in the
following forms:.
(a) Cash ("Cash Portion") in an amount equal to the
$45,000,000 less (i) the outstanding principal of, and interest accrued to the
Closing on, the Promissory Note of the Company payable to the Purchaser dated
April 30, 1996, as amended July 16, 1996 and as amended hereby (the "DTI
Promissory Note"), (ii) the amount previously contributed in cash by Purchaser
as capital to KCDT LLC, a Delaware limited liability company ("KCDT"), and
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(iii) any outstanding principal of, and interest accrued to the Closing on, any
loan from the Purchaser to KCDT ("KCDT Loan"). The Cash Portion shall be paid
as specified in Section 6.5.
(b) The contribution, on a non-recourse basis, of the
DTI Promissory Note.
(c) The contribution , on a non-recourse basis, of
the KCDT Loan, if existing.
(d) The contribution, on a non-recourse basis, of all
of Purchaser's Interest in KCDT (as such term is defined in the Limited
Liability Company Agreement of KCDT LLC ("KCDT Operating Agreement"), including
without limitation the Percentage Interest (as such term is defined the KCDT
Operating Agreement.
1.3 Closing. The consummation of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Xxxxx Xxxx, 3500 One
Kansas City Place, 0000 Xxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, at 10:00 a.m.
local time on February 14, 1997 (the "Closing Date"), or, at such earlier or
later time as the conditions to closing have been satisfied or waived, but in no
event later than March 14, 1997.
1.4 Deliveries of the Company at Closing. Subject to the
conditions of the Company's obligations in Article V, on or before the Closing
Date, the Company shall deliver to Purchaser:
(a) a certificate executed by the Secretary (the
"Secretary's Certificate") of the Company in the form and substance of Exhibit
1.4(a);
(b) a certificate executed by the President (the
"Officer's Certificate") of the Company in the form and substance of
Exhibit 1.4(b);
(c) a Shareholders Agreement executed by Xxxxxxxxx
(the "Shareholders Agreement") in the form and substance of Exhibit 1.4(c);
(d) an opinion of the Company's counsel (the
"Company's Opinion") in the form and substance of Exhibit 1.4(d);
(e) a certificate evidencing and representing the
number of shares of Preferred Stock to be issued to the Company at Closing
(computed by dividing the amount paid in cash, plus the face amount of
contributions made by KLT at Closing, by $150,000);
(f) an executed Stock Purchase Agreement;
(g) an Employment Agreement executed by Xxxxxxxxx
(the "Employment Agreement") in the form and substance of Exhibit 1.4(g);
(h) a Guaranty Agreement executed by Xxxxxxxxx (the
"Guaranty Agreement") in the form and substance of Exhibit 1.4(h);
(i) a Stock Pledge Agreement executed by Xxxxxxxxx
(the "Stock
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Pledge Agreement") in the form and substance of Exhibit 1.4(i);
(j) an original stock certificate representing all
the shares owned by Xxxxxxxxx in the Company;
(k) a blank stock power in the name of Purchaser (the
"Stock Power") in the form and substance of Exhibit 1.4(k);
(l) a letter from the Missouri Highway and
Transportation Commission ("MHTC"), hereinafter referred to as the "MHTC
letter", stating that the Company is not in material default under that certain
Fiber Optic Cable on Freeways in Missouri Agreement, as amended, between MHTC
and the Company;
(m) a letter from Union Electric Company ("UE"),
hereinafter referred to as the "UE Letter", stating that the Company is not
in material default under that certain Network Services Agreement, as amended,
between UE and the Company, or that certain Agreement for the Provision of
Digital Transport Service, as amended between UE and the Company; provided that
UE shall not have to take any position, and may reserve all rights and remedies,
with respect to matters addressed in that certain letter dated November 18,
1996, from UE to the Company;
(n) a letter from MCIMetro Access Transmission
Services, Inc. ("MCI"), hereinafter referred to as the "MCI Letter", stating
that the Company is not in material default under that certain IRU Agreement
between the Company and MCI dated October 3, 1995;
(o) an executed Lease Agreement (the "Lease")
between the Company and Xxxxxxxxx, in the form and substance of Exhibit 1.4(m).
1.5 Deliveries of Purchaser at Closing. Subject to the
conditions to Purchaser's obligations in Article IV, at Closing, on or before
the Closing Date, Purchaser shall:
(a) make the contributions to the Company specified
in Sections 1.2(b), 1.2(c) and 1.2(d);
(b) wire transfer to the Company in immediately
available funds, to an account designated by the Company, up to $4,000,000 (in
the discretion of the Company);
(c) deliver to the Company and Xxxxxxxxx a
Shareholders' Agreement executed by Purchaser;
(d) a certificate executed by the Secretary of
Purchaser ("Purchaser Secretary's Certificate") of Purchaser in the form and
substance of Exhibit 1.5(d);
(e) a certificate executed by the President of
Purchaser (Purchaser "Officer's Certificate") the form and substance of Exhibit
1.5(e);
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby makes the following representations and
warranties to Purchaser; each of which is true and correct on the date hereof:
2.1 Enforceable Agreement. The Company has the full legal
right, power and authority to execute and deliver this Agreement, to perform its
obligations hereunder, and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company. This
Agreement is the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. The Shares have been duly
authorized by the Company and, when issued and paid for in accordance with this
Agreement, will be validly issued, fully paid and non-assessable. The execution,
delivery and performance of this Agreement by the Company, and the consummation
by the Company of the transactions contemplated hereby does not require the
consent, waiver, approval, license or authorization of any person, entity or
public authority except for such approval as may be required by the Missouri
Public Service Commission and pursuant to the Xxxx-Xxxxx Xxxxxx Antitrust
Improvements Act of 1976; this Agreement does not, with or without the giving of
notice or the passage of time or both, violate any provision of law or the
corporate charter or bylaw of the Company, or conflict with or result in a
breach, termination or acceleration of any provision of, constitute a default
under, or result in the creation of any lien, claim, security interest or
encumbrance upon any of the assets and properties of the Company pursuant to any
mortgage, deed of trust, indenture or other agreement or instrument, or any
order, law, rule, regulation, judgment or decree or any other restriction of any
kind or character, to which the Company is a party or by which the Company or
any of its assets may be bound.
2.2 Capitalization and Related Matters. As of the date hereof,
the authorized capital stock of the Company consists solely of 1,550 shares of
stock, which consist of 1,000 shares of Series A Voting Common Stock, par value
$.01, 50 shares of Series B Non-Voting Common Stock and 500 shares of Preferred
Stock, par value $.01. At Closing, the authorized capital stock of the Company
shall consist solely of 1,000 shares of Common Stock, par value $.01, and 500
shares of Preferred Stock, par value $.01 per share. As of the date hereof, 300
shares of Series A Voting Common Stock are issued and outstanding and are held
of record by Xxxxxxxxx. All of the issued and outstanding shares of Common Stock
were duly authorized and validly issued and are fully paid and non-assessable.
None of the Purchased Shares are subject to any preemptive rights of
shareholders of the Company, nor will any of them be issued in violation of any
right of first refusal or other similar right in favor of any person. Except as
set forth on Schedule 2.2, (a) there are no outstanding (i) other securities of
the Company, (ii) subscriptions, warrants, rights or options to acquire
securities of the Company, or (iii) any plans, understandings or agreements to
issue any such subscriptions, warrants, rights or options, or to otherwise
acquire any securities of the Company, and (b) the Company is not subject to any
obligation to issue, deliver, redeem, or otherwise acquire or retire the
Purchased Shares or any other securities of the Company.
2.3 Corporate Existence and Qualification. The Company is a
corporation duly incorporated, validly existing, and in good standing under the
laws of the State of Missouri; it is duly qualified and in good standing in each
foreign jurisdiction where such qualification is required, except where the
failure to so qualify and be in good standing will not have a material adverse
effect on the business, financial condition, operations or prospects of the
Company taken as a whole ("Material Adverse Effect"). The Company has the
corporate power and authority to own and use its properties and to transact the
business in which it is engaged.
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2.4 Affiliates. Except as set forth on Schedule 2.4, the
Company has no Affiliates. For purposes of this Agreement, an "Affiliate" of a
person means any person or entity which is controlling, controlled by, or under
common control with, directly or indirectly through any person or entity, the
person referred to, and, if the person referred to is a natural person, any
member of such person's family.
2.5 Property and Permits. Except as set forth on Schedule 2.5,
the Company is the sole owner of all right, title and interest in and to all
assets reflected on the Balance Sheet and all property, real and personal,
tangible and intangible, used by it in, or necessary for it to transact, the
business in which it is engaged, free and clear of all mortgages, security
interests, claims, restrictions, and other encumbrances, and there exists no
restriction on the use or transfer of such assets or property, in each case
except where such would not have a Material Adverse Effect. Except as set forth
on Schedule 2.5, and except as would not have a Material Adverse Effect, no
assets or property of the Company are in the possession of others and the
Company holds no property on consignment. Except as set forth on Schedule 2.5
and except as would not have a Material Adverse Effect, all tangible such assets
and property are in good condition and repair, ordinary wear and tear excepted,
and fit for their intended purpose, and are not in Material violation of
applicable zoning or other Law. Except as set forth on Schedule 2.5, the Company
holds all permits, licenses and other approvals necessary to conduct the
business in which it is engaged. There are no assets of the Company not
reflected on the Company's Balance Sheet in accordance with Generally Accepted
Accounting Principles ("GAAP").
2.6 Condition and Sufficiency of Assets - Network and
Equipment. Except as set forth on Schedule 2.6, the network and equipment of the
Company are structurally sound, are in good operating conditions and repair, and
are adequate for the uses to which they are being put, and none of such network
and equipment are in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that would not have a Material Adverse Effect.
2.7 Financial Statements.
(a) The Company has furnished or made available to
Purchaser (i) the balance sheet of the Company as of June 30, 1996 and
June 30, 1995, and the related statements of earnings, stockholders'
equity and changes in financial position or cash flow for the fiscal
years then ended and for the period from June 23, 1989 (inception) to
June 30, 1996, and all notes and schedules thereto (the "Annual
Financial Statements"), and (ii) the balance sheet of the Company as of
October 31, 1996, and the related statements of earnings and changes in
financial position for the period then ended, (the "Interim Financial
Statements"; together with the Annual Financial Statements, the
"Financial Statements"). The Annual Financial Statements have been
audited by Deloitte & Touche, independent public accountants.
(b) The Financial Statements, (i) present fairly, in
all material respects, the financial position, results of operations,
and cash flows of the Company at the dates and for the periods
indicated, and (ii) have been prepared in accordance with GAAP subject
to year-end audit adjustments.
(c) To the knowledge of the Company, the Company does
not have any liabilities or obligations (whether accrued, absolute,
contingent, unliquidated or otherwise), except as would not have a
Material Adverse Effect and except (i) as set forth in the Financial
Statements (including notes thereto) unless any such liabilities are
not required to be set forth therein in accordance with GAAP, (ii) as
set forth on Schedule 2.7, or (iii) to the extent they arise in the
ordinary course of the business of the Company and are not required to
be set forth in a Schedule hereto, and (iv) Taxes (defined below)
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incurred since the date of the Balance Sheet.
2.8 Books and Records; Returns and Reports; Taxes. The books
and records of the Company fairly reflect, in accordance with GAAP, all
transactions relating to the Company and all items of income and expense, assets
and liabilities and accruals relating to the Company. The Company has not
engaged in any transaction, maintained any bank account or used any corporate
funds except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of the Company.
2.9 Stock and Securities. Except for KCDT, the Company does
not own directly or indirectly the stock or the securities of any other
corporation nor does the Company own directly or indirectly any interest in a
general partnership, limited partnership, limited liability company, business
trust, joint venture, or any other entity.
2.10 Taxes. Except as set forth on Schedule 2.10:
(a) The Company timely has filed or caused to be
timely filed with the appropriate Government entity all federal, state,
local and foreign income franchise, excise, payroll, sales and use,
property and withholding tax returns and reports required to be filed
pursuant to any applicable federal, state, local and foreign tax laws
by or on behalf of the Company, including estimated tax and
informational returns ("Tax Returns") and no Tax Returns have been
amended. All Tax Returns are true, correct, and complete in all
material respects.
(b) All Taxes (whether or not reflected in Tax
Returns as filed) payable by the Company with respect to all periods
reflected on Tax Returns have been fully paid, and there are no grounds
for the assertion or assessment of any additional Taxes against the
Company or its assets with respect to such periods. All accrued, but
unpaid Taxes are properly reflected on the books of the Company.
(c) No Tax Returns of the Company are the subject of
an audit and there are no audits of any Tax Returns in process or
threatened. There is no waiver of any statute of limitations in effect
with respect to any Tax Returns.
(d) There are no tax liens, whether imposed by any
federal, state, local or foreign taxing authority, outstanding against
any of the assets, properties or business of the Company.
(e) As used in this Agreement, "Taxes" means all
taxes, charges, fees, levies, or other like assessments, including
without limitation income, gross receipts, ad valorem, value added,
premium, excise, real property, personal property, windfall profit,
sales, use, transfer, license, withholding, employment, payroll, and
franchise taxes imposed by the United States or any other nation,
state, or bilateral or multilateral governmental authority, any local
governmental unit or subdivision thereof, or any branch, agency, or
judicial body thereof ("government"); and shall include any interest,
fines, penalties, assessments, or additions to tax resulting from,
attributable to, or incurred in connection with any such Taxes or any
contest or dispute thereof.
2.11 Absence of Certain Changes or Events. Except for any
changes resulting or relating to the build-out of the KCDT network, since June
30, 1996, except as contemplated in this Agreement or set forth in the Financial
Statements or Schedule 2.11 hereto, there has not been:
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(a) Any change in the business, financial condition,
or operations of the Company taken as a whole that has resulted in a
Material Adverse Effect;
(b) Any declaration, setting aside, or payment of any
dividend or any distribution (in cash or in kind) to any shareholder of
the Company with respect to any securities of the Company, or any
direct or indirect redemption, purchase or other acquisition by the
Company of any of its securities;
(c) Any increase (other than increases in accordance
with past practice) in compensation or other remuneration payable by
the Company to or for the benefit of or committed to be paid to or for
the benefit of any shareholder, director, officer, agent, or employee
of the Company who received salary in fiscal year 1995 in excess of
$60,000, or in any benefits granted under any Plan with or for the
benefit of any such shareholder, director, officer, agent, or employee;
(d) Any material transaction entered into or carried
out by the Company other than in the ordinary course of business;
(e) Any borrowing or incurrence of any other
indebtedness, contingent or other, of a material amount by or on behalf
of the Company; or any endorsement, assumption, or guarantee of payment
or performance of any loan or obligation of any other person or entity
by the Company;
(f) Any material change made by the Company in its
methods of doing business or of accounting;
(g) Any grant by the Company of any mortgage,
security interest, or other encumbrance with respect to any of the
assets and property, real and personal, tangible and intangible, of the
Company (the "Property");
(h) Any sale, lease, or disposition of, or any
agreement to sell, lease, or dispose of, any of its Property other than
arm's-length sales, leases, or dispositions in the ordinary course of
business of the Company or which would not have a Material Adverse
Effect, to persons other than Affiliates of the Company or the Company;
(i) Any loan or advance made by the Company to any
person or entity except for advances not material in amount made in the
ordinary course of business to employees who are not Affiliates of the
Company; or
(j) disposed of or permitted to lapse any
Intellectual Property as defined in Section 2.14, except as would not
have an Material Adverse Effect;
(k) issued, sold or transferred any stock, bond,
debenture or other corporate security of the Company, whether newly
issued or held in treasury;
(l) experienced damage, destruction or loss (whether
or not covered by insurance) having a Material Adverse Effect;
(m) guaranteed the obligation of any person, firm or
corporation or other entity, except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of
business; or
(n) Any binding commitment or agreement by the
Company to do any
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of the foregoing items (b) through (m).
2.12 Compliance With Laws. The Company is in compliance with,
and not in breach or in default of, all applicable federal, state and local
laws, ordinances, rules and regulations relating to its business and assets and
properties except where such noncompliance, breach or default would not have a
Material Adverse Effect, and the Company is in compliance with the provisions of
its Articles of Incorporation or Bylaws. Without limiting the generality of the
foregoing:
(a) Permits and Licenses. Schedule 2.12 sets forth a
true, correct and complete list, and the Company has delivered to
Purchaser true, correct and complete copies, of all permits, licenses,
approvals, certifications and other authorizations (and the requests
and applications therefore) which the Company is required to hold to
own its assets and properties and/or conduct its business as currently
conducted, except where noncompliance would not have a Material Adverse
Effect. The Company has all permits, licenses, approvals,
certifications, or other authorizations to issue its shares of stock,
notes and other interests pursuant to the capitalization of the Company
as contemplated by this Agreement, and/or to otherwise consummate the
transactions contemplated by this Agreement, other than such approval
as is required by the Missouri Public Service Commission or pursuant to
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 ("HSR Act").
(b) Compliance with Other Regulations and Court
Orders. The Company is not in violation of any order of any court of
law or equity or any regulatory or administrative body which has
jurisdiction over the Company ("Court Order") or other rule or
regulation, and the assets and properties of the Company have not been
used or operated by the Company or any other person or entity in
violation of any regulation or Court Order, except in any such case as
would not have a Material Adverse Effect. The Company has made all
filings or notifications required to be made by it under any rules or
regulations applicable to the Company, its businesses and/or its assets
and properties except where noncompliance would not have a Material
Adverse Effect. Neither the Company nor any director, officer, employee
or agent of, nor any consultant to, the Company has unlawfully offered,
paid, or agreed to pay, directly or indirectly, any money or anything
of value to, or for the benefit of, any individual who is or was a
candidate for public office, or an official or employee of any
governmental or regulatory body or authority or a director, officer or
employee of any client, customer or supplier of the Company.
2.13 Intellectual Property Rights. The Company has no patents,
patent rights, patent applications, trademarks, trademark applications, trade
names, service marks, copyrights (the "Intellectual Property"). The Company owns
or possesses adequate licenses or other rights to use all Intellectual Property
necessary to conduct the Company's business as now operated. No claim is pending
or, to the knowledge of the Company, threatened, alleging that the present or
past operations of the Company infringe or conflict with the asserted
Intellectual Property rights of others, and neither the Company nor any employee
or officer of the Company or any other party has any rights whatsoever in any of
the Intellectual Property.
2.14 Litigation. Except as set forth on Schedule 2.14, (a)
there is no suit, claim, litigation, proceeding (administrative, judicial, or in
arbitration, mediation or alternative dispute resolution), Government or grand
jury investigation, or other action (any of the foregoing, "Action") pending or,
to the knowledge of the Company, threatened against the Company or involving its
business, any of its Property, or, in connection with its business, any of its
shareholders, directors, officers, agents, or other personnel, including without
limitation any
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Action challenging, enjoining, or preventing this Agreement or the consummation
of the transactions contemplated hereby, and (b) the Company is not subject to
any order, writ, injunction, or decree of any court or other Government entity
("Order") other than Orders of general applicability.
2.15 Environmental Matters.
(a) Compliance With Environmental Regulations. the
Company has operated its business in compliance with all applicable
environmental statutes, regulations, orders, decisions and restrictions
of the United States of America (including state, county and
local-statutes, regulations, orders, decisions and restrictions) (the
"Environmental Regulations") except where noncompliance would not have
a Material Adverse Effect.
(b) Environmental Permits and Approvals. Schedule
2.15 sets forth a true, correct and complete list, and the Company has
delivered to Purchaser true, correct and complete copies, of all
permits and approvals held by the Company with respect to the
refinement, production, storage, handling, processing, disposal,
treatment, transportation, discharge or release of any Hazardous
Substances (as such term is defined below), as required for the
operation of the business of the Company as presently conducted or
which relate to the assets and properties (including without
limitation, any leasehold interests) of the Company. Schedule 2.15 sets
forth a true, correct and complete list of all of the waste dumps and
disposal sites used by the Company and the names of the entities
engaged in the handling, transportation and disposal of Hazardous
Substances from any property owned or leased by the Company. For
purposes of this Agreement the term "Hazardous Substances" shall mean
materials defined as "hazardous substances", "hazardous wastes" or
"solid wastes" under any of the Environmental Regulations.
(c) Environmental Proceedings. No reports have been
filed by the Company, or to the Company's knowledge, by others, with
respect to the Company or its assets or properties (including, without
limitation, any leasehold interests) disclosing the presence of any
Hazardous Substances upon or with respect to the Company or its
properties (including without limitation, any leasehold interest).
There has not been and is not now any suit, action, arbitration, legal,
administrative or regulatory proceeding pending or, to the best
knowledge of the Company, any pending investigation or threatened suit,
action, arbitration, legal, administrative or regulatory proceeding,
with respect to the Company, its assets or properties (including
without limitation, any leasehold interests), relating to the
refinement, production, storage, handling, processing, disposal,
treatment, transportation, discharge or release of Hazardous
Substances.
2.16 Contracts.
(a) Set forth on Schedule 2.16 is a list of each
written or oral contract, agreement, lease, indenture, and evidence of
indebtedness, to which the Company is a party or of which it is a
beneficiary which involves outstanding, contingent, or continuing
liability or obligation of or to the Company ("Contract") and which (i)
is material to the business, financial condition or operations of the
Company taken as a whole, (ii) involves (A) a guaranty, indemnity, or
power of attorney, or (B) a sharing of payments or joint venture, or
(iii) is not in the ordinary course of business of the Company.
(b) Each of the Contracts is a valid, binding and
enforceable obligation of the Company and, to the knowledge of the
Company, the other parties thereto. Except as indicated on Schedule
2.16, (i) the Company is not, and (ii) to the knowledge of the
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Company, no other party to a Contract is, in default under or
in breach or violation of any Contract, except where such default
breach or violation would not have a Material Adverse Effect, and no
event has occurred that, through the passage of time or the giving of
notice, or both, would constitute, and neither the execution of this
Agreement nor the Closing hereunder do or will constitute or result
in, such a default, breach or violation, cause the acceleration of any
obligation of any party thereto or the creation of a lien or
encumbrance upon any Property or the Purchased Shares, or require any
consent thereunder, except as would not have a Material Adverse
Effect.
2.17 Insurance. The Company has at all times maintained: (a)
general comprehensive liability insurance against such risks as are customarily
insured against by companies similar to the Company and in at least such amounts
as are usually carried by persons engaged in the same or a similar business, and
(b) insurance as required by law or under any agreement to which the Company is
or has been a party, including without limitation, unemployment and workers'
compensation coverage. A list of each such insurance policy is set forth on
Schedule 2.17. The Company is not in default with respect to its obligations
under any insurance policy maintained by it. To the knowledge of the Company,
all insurance coverage applicable to the Company, its business, assets and
officers and directors is in full force and effect, is valid, binding and
enforceable in accordance with its terms against the respective insurers,
insures the Company in reasonably sufficient amounts against all risks usually
insured against by persons operating similar businesses or properties in the
localities where such businesses or properties are located and has been issued
by insurers of recognized responsibility. To the knowledge of the Company, there
is no default under any such coverage nor has there been any failure to give
notice or present any claim under any such coverage in a due and timely fashion.
There are no outstanding unpaid premiums except in the ordinary course of
business and no notice of cancellation or nonrenewal of any such coverage has
been received. Except as otherwise disclosed in the Disclosure Documents, there
are no provisions in such insurance policies for retroactive or retrospective
premium adjustments. To the knowledge of the Company, no event has occurred
which reasonably might form the basis of any claim against the Company, its
business, assets or officers and directors or which might materially increase
the insurance premiums payable for any such coverage. Except as set forth on
Schedule 2.17, there are no outstanding performance bonds covering or issued for
the benefit of the Company.
2.18 Officers, Directors, Employees, and Consultants. Set
forth on Schedule 2.18 is a list of: (a) all current directors of the Company,
(b) all current officers (with office held) of the Company, (c) all employees
(active or other) of the Company, (d) all current paid consultants to the
Company, and (e) all retirees and terminated employees of the Company for which
the Company has any benefits responsibility or other continuing or contingent
obligation, together, in each case, with the current rate of compensation (if
any) payable to each.
2.19 Transactions With Related Persons. Except as set forth on
Schedule 2.19 hereto, the Company has no obligations, contractual or otherwise,
owed to or owing from, directly or indirectly, the Company or any Affiliate of
the Company. Except as set forth on Schedule 2.19, no director, officer,
Affiliate, or shareholder of the Company has any material financial interest,
direct or indirect, in any supplier or customer of, or other business which has
any significant transactions or other business relationship with, the Company.
2.20 Labor Matters.
(a) Except as to anything which would not result in a
Material Adverse Effect, the Company is in compliance with all
applicable federal, state and local laws and regulations respecting
employment and employment practices, and terms and conditions of
employment and wages and hours, including, without limitation, the
Immigration
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Control and Reform Act of 1986, minimum wage and overtime
payment laws, the Occupational Safety and Health Act of 1970, as
amended, and any state or local occupational health and safety laws and
unemployment and workers' compensation laws, the Worker Adjustment and
Retraining Notification Act, any other labor relations laws or
governmental regulations or policies promulgated thereunder, Title VII
of the Civil Rights Act of 1964, as amended, the Equal Employment
Opportunity Act of 1972, as amended, the Age Discrimination in
Employment Act, as amended or the Reconciliation Act of 1972, as
amended, and there is no unfair labor practice complaint against the
Company pending before the National Labor Relations Board or any
comparable state or local agency relating to the employees of the
Company.
(b) Collective Bargaining. No collective bargaining,
works council, union representation or other similar agreement
presently covers the employees of the Company, nor has any in the past
covered employees of the Company, nor is any currently being negotiated
by the Company and there is no labor strike, dispute, slowdown,
stoppage, solicitation of union authorization cards or union
certification petition actually pending or, to the knowledge of the
Company, threatened against or involving the Company.
(c) Except as set forth on Schedule 2.20:
(i) The Company is not and has not
engaged in any unfair labor practice which would result in a
Material Adverse Effect;
(ii) There is no labor strike, dispute,
slowdown, or stoppage pending or, to the knowledge of the
Company, threatened against the Company;
(iii) No right of representation exists
respecting the Company's employees;
(iv) No collective bargaining agreement is
currently being negotiated and no organizing effort is
currently being made with respect to the Company's employees;
and
(v) No current or former employee of the
Company has made or, to the knowledge of the Company
threatened to make a claim against the Company on account of
or for (A) overtime pay, other than overtime pay for the
current payroll period, (B) wages or salary (excluding current
bonus, accruals and amounts accruing under pension and
profit-sharing plans) for any period other than the current
payroll period, (C) vacation, time off or pay in lieu of
vacation or time off, other than that earned in respect of the
current fiscal year, or (D) any violation of any Law relating
to minimum wages or maximum hours of work.
2.21 Employee Benefit Matters.
(a) Except as set forth on Schedule 2.21, the Company
does not have outstanding and is not a party to or subject to liability
under: (i) any agreement, arrangement, plan, or policy that involves
(A) any pension, retirement, profit sharing, deferred compensation,
bonus, stock option, stock purchase, health, welfare, or incentive
plan; or (B) welfare or "fringe" benefits, including without limitation
vacation, severance, disability, medical, hospitalization, dental, life
and other insurance, tuition, company car, club dues, sick leave,
maternity, paternity or family leave, or other benefits; or (ii) any
employment, consulting, engagement, or retainer agreement or
arrangement (i) and (ii)
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together the "Plans" and each item thereunder a "Plan"). True, correct
and complete copies of all documents creating or evidencing any Plan
listed on Schedule 2.21 have been delivered to Purchaser. There are no
negotiations, demands or proposals which are pending or threatened or
which have been made since June 30, 1996, which concern matters now
covered, or that would be covered, by the foregoing types of agreement,
arrangement, plan or policy.
(b) Each Plan has been administered in compliance
with its terms, and, except as set forth on Schedule 2.21, in
compliance with, and the Company has no direct or indirect liability
under, the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or other Law applicable to any Plan. Each Plan that is
intended to qualify under Section 401(a) or Section 509(c)(9) of the
Code has received a favorable determination letter from the Internal
Revenue Service (a copy of which has been provided to Purchaser) and
related trusts have been determined to be exempt from taxation. Nothing
has occurred that would cause and no Action is pending or, to the
knowledge of the Company, threatened which could result in the loss of
such exemption or qualification.
(c) (i) The Company has not made any contributions to
any multi-employer plan (as defined in ERISA) or to any pension plan
subject to the minimum funding standards of ERISA or Title IV of ERISA,
(ii) the Company has never been a member of a controlled group which
contributed to any such plans; and (iii) the Company has never been
under common control with an employer which contributed to any such
plans.
(d) Nothing has occurred which would cause the loss
of qualification or exemption or the imposition of any liability,
penalty or tax under ERISA or the Code with respect to the operation of
any of the Benefit Plans. All amendments required to bring the Benefit
Plans into conformity with all of the applicable provisions of ERISA or
the Code have been made.
(e) The Company has not terminated or taken action
terminate any employee benefit plans.
(f) All of the Plans, to the extent applicable, are
in compliance with the continuation of health benefit provisions
contained in the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, and with Section 1862(b)(4)(A)(i) of the Social
Security Act, and the Company does not have any liability for any
excise tax imposed by Code Section 5000.
(g) There is no violation of ERISA with respect to
the filing of applicable reports and notices regarding the Benefit
Plans with the Secretary of Labor and the Secretary of the Treasury or
the furnishing of such documents to the participants or beneficiaries
of the Benefit Plans.
(h) There are no pending claims or lawsuits which
have been asserted or instituted against the assets of any of the
Benefit Plans or against any fiduciary of the Benefit Plans with
respect to the operation of the Benefit Plans.
(i) The Benefit Plans have been maintained in
accordance with their terms and with all provisions of ERISA thereto
and neither the Company, Xxxxxxxxx nor any "party in interest" or
"disqualified person" with respect to the Benefit Plans has engaged in
a "prohibited transaction" within the meaning of Section 4975 of the
Code or
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Title I, Part 4 of ERISA.
(j) None of the Benefit Plans which are "employee
welfare benefit plans" within the meaning of Section 3(1) of ERISA
provides for continuing benefits or coverage after termination or
retirement from employment except as provided in the Consolidated
Omnibus Budget Reconciliation Act of 1985. Each such plan is in
compliance with the provisions of ERISA, the applicable provisions of
the Code and all other applicable law, except where such noncompliance
would not have a Material Adverse Effect.
2.22 Discrimination and Occupational Safety and Health. To the
knowledge of the Company, no person has any claim, or basis for any Action
against the Company arising out of any Law relating to discrimination in
employment or employment practices or occupational safety and health standards.
The Company has not received any notice from any person alleging a violation of
such law or occupational safety or health standards.
2.23 Disclosure. To the Company's knowledge, there are no
misleading misstatements in any of the representations and warranties made by
the Company in this Agreement or in any of the agreements, exhibits,
certificates and instruments delivered or to be delivered by the Company
pursuant to this Agreement, except as would not have a Material Adverse Effect,
and the Company has not omitted to state any fact necessary to make such
representations and warranties not misleading, except as would not have a
Material Adverse Effect. The Company has delivered the Disclosure Documents, and
to the Company's knowledge, the Company has delivered all documents in its
possession as requested by Purchaser's counsel pursuant to its correspondence
dated December 19, 1996 (the "Due Diligence Request"), a copy of which is
attached hereto as Schedule 2.23, except as would otherwise not have a Material
Adverse Effect.
2.24 Brokers, Finders. Except as set forth on Schedule 2.24,
no finder, broker, agent, or other intermediary, acting on behalf of the
Company, is entitled to a commission, fee, or other compensation or obligation
in connection with the negotiation or consummation of this Agreement or any of
the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the following representations and
warranties to the Company, each of which is true and correct on the date hereof:
3.1 Authorization. Purchaser is a Missouri corporation, duly
organized, validly existing and in good standing under the laws of Missouri.
Purchaser has all requisite power and authority to execute and deliver this
Agreement, to perform its obligations hereunder, and to consummate the
transactions contemplated hereby. This Agreement constitutes a valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms.
3.2 Investment Representation.
(a) Purchaser recognizes that an investment in the
Company is highly speculative and involves significant risks.
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(b) Purchaser has been afforded the opportunity to
ask questions and receive answers concerning the terms and conditions
of its purchase of the Purchased Shares and to obtain any additional
information which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy
of the information set forth in this Agreement. No oral or written
statement or inducement which is contrary to the information set forth
in this Agreement has been made by or on behalf of the Company to
Purchaser.
(c) Purchaser is an "accredited investor" (as defined
in Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended (the "Securities Act")) and has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Purchased
Shares.
(d) Purchaser (i) has adequate means of providing for
its current needs and possible contingencies, (ii) has no need for
liquidity in its investment, (iii) is able to bear the economic risks
of such investment, and (iv) at the present time, can afford a complete
loss of such investment.
(e) Purchaser is purchasing the Purchased Shares for
its own account, for investment purposes, and not for distribution,
assignment or resale to others. No other person has any direct or
indirect beneficial interest in the Purchased Shares.
(f) Purchaser understands that (i) there is and will
be no market for the Purchased Shares, (ii) the sale of such securities
has not been and will not be registered under the Securities Act or any
state securities laws in reliance on the exemption for nonpublic
offerings provided by Section 4(2) of the Act and Regulation D
promulgated thereunder and analogous state securities laws provisions,
and must be held indefinitely unless they are subsequently registered
under the Securities Act and applicable state securities laws or an
exemption from such registration is available, (iii) the Company is
under no obligation to register such securities on Purchaser's behalf
or to assist it in complying with any exemption from registration, and
(iv) such securities may not be sold pursuant to Rule 144 promulgated
by the Securities and Exchange Commission pursuant to the Securities
Act unless all of the conditions of that Rule are met.
(g) Purchaser understands that no Federal or state
agency has passed upon the Purchased Shares or made any finding or
determination as to the fairness of an investment therein or any
recommendation or endorsement thereof. Purchaser will not transfer the
Purchased Shares without registering or qualifying the same under
applicable state securities laws unless such transfer is exempt under
such laws.
(h) Purchaser has not relied upon any information or
representations and warranties of the Company with respect to its
investment in the Company except for the information, representations
and warranties expressly set forth in this Agreement and the Disclosure
Documents.
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(i) Purchaser is not any employee benefit plan,
pension plan, profit sharing plan, stock bonus plan, employee savings
plan, HR-10 or Xxxxx plan, or any plan or arrangement similar to any of
the foregoing (including a plan maintained for the benefit of
self-employed individuals or an individual retirement account or
annuity).
3.3 Projections. Purchaser understands that the financial
projections provided to them on December 18, 1996 represent only good faith
estimates by the Company. Purchaser understands that the Company cannot and does
not assure or guarantee the attainment of such projections, that the Company
makes no representations or warranties concerning such projections (and that no
representations or warranties herein should be read to imply otherwise), and
that there has been a delay in obtaining the equity investment assumed in such
projections. The foregoing should not be read to prevent the u se of Schedule
9.16 for purposes of Section 5(a) of the Certificate of Designations.
3.4 Governmental and Other Approvals. Except for filings under
the HSR Act, Purchaser is not required to give any notice to, make any filing
with or obtain any authorization, consent or approval of, any Government or
agency thereof or any other third party in order to consummate the transactions
contemplated by this Agreement.
3.5 No Sandbag. Purchaser has no knowledge of any breach by
the Company of its representations, warranties and covenants hereunder.
ARTICLE IV
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser at Closing shall be subject to
the satisfaction at Closing of each of the following conditions:
4.1 Xxxx-Xxxxx. The waiting period specified under the HSR Act
shall have expired or earlier terminated, and any other necessary regulatory
approvals shall have been obtained (including without limitation from the
Missouri Public Service Commission).
4.2 Consents. The Company shall have delivered to Purchaser
the consents referred to in Sections 1.4 (l), (m), and (n);
4.3 Execution of Shareholders' Agreement. The Company and
Xxxxxxxxx shall have executed and delivered the Shareholders' Agreement.
4.4 Xxxxxxxxx Guaranty. Xxxxxxxxx shall have executed and
delivered the Xxxxxxxxx Guaranty.
4.5 Lease. The Company and Xxxxxxxxx shall have entered into a
lease in substantially the form of Exhibit D hereto.
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4.6 Employment Agreement. The Company and Xxxxxxxxx shall have
entered into the Employment Agreement.
4.7 Certificate of Designations. The Company shall have filed
the Certificate of Designations.
4.8 Delivery of Documents The documents to be delivered at the
Closing by the Company as set forth in Section 1.4 shall have been delivered.
4.9 Representations and Warranties True as of the Closing. The
representations and warranties of the Company contained in this Agreement or in
any schedule, certificate or document delivered by the Company to Purchase
pursuant to the provisions hereof shall have been true in all material respects
on the date hereof without regard to any schedule updates furnished by the
Company after the date hereof and shall be true in all material respects on the
Closing Date with the same effect as though such representations and warranties
were made as of such date.
4.10 Compliance with this Agreement. The Company shall have
performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
4.11 Closing Certificate. Purchaser shall have received a
certificate from the Company dated the Closing Date, certifying in such detail
as Purchaser may reasonably request that the conditions specified in Sections
4.9 and 4.10 hereof have been fulfilled and certifying that the Company has
obtained all consents and approvals required with respect to it.
4.12 Opinions of Counsel for Company. Xxxxx Xxxx LLP, counsel
for the Company, shall have delivered to Purchaser a written opinion, dated the
Closing Date, in the form of Exhibit 1.4(d) hereto with only such changes as
shall be in form and substance reasonably satisfactory to Purchaser and its
counsel.
4.13 No Threatened or Pending Litigation. On the Closing Date,
no suit, action or other proceeding, or injunction or final judgment relating
thereto, shall be threatened or by pending before any court or governmental or
regulatory official, body or authority in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or proceeding shall be
pending or threatened.
4.14 Key Company Arrangements. Each of the employees of the
Company mutually agreed by the Company and Purchaser shall have executed and
delivered an employment/confidentiality/non-compete agreement in a form mutually
agreed to by Purchaser and the Company.
4.15 Approval of Counsel; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents required to carry out this
Agreement or incidental hereto
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and all other related legal matters shall have been approved on the Closing date
by Xxxxxxxx, Xxxxxxx & Xxxxxx. P.C., counsel for Purchaser, in the exercise of
their reasonable judgment. Company shall also have delivered to Purchaser such
other documents, instruments, certifications and further assurances as such
counsel may reasonable require.
ARTICLE V
CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligations of the Company at Closing shall be subject to
the satisfaction at the Closing of the following conditions:
5.1 Xxxx-Xxxxx. The waiting period specified under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 shall have expired or
earlier terminated.
5.2 Execution of Shareholders' Agreement. Purchaser shall have
executed a Shareholders' Agreement in substantially the form attached hereto.
5.3 Delivery of Purchase Price Purchaser shall have delivered
such portion and form of the Purchase Price as required by Section 1.5.
5.3 Delivery of Documents The documents to be delivered at the
Closing by the Purchaser as set forth in Section 1.5, shall have been delivered.
5.4 Representations and Warranties True as of the Closing. The
representations and warranties of the Purchaser contained in this Agreement or
in any schedule, certificate or document delivered by Purchaser to the Company
pursuant to the provisions hereof shall have been true in all material respects
on the date hereof without regard to any schedule updates furnished by the
Purchaser after the date hereof and shall be true in all material respects on
the Closing Date with the same effect as though such representations and
warranties were made as of such date.
5.5 Compliance with this Agreement. Purchaser shall have
performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
5.6 Closing Certificate. The Company shall have received a
certificate from Purchaser dated the Closing Date, certifying in such detail as
the Company may reasonably request that the conditions specified in Sections 5.4
and 5.5 hereof have been fulfilled and certifying that Purchaser has obtained
all consents and approvals required with respect to it.
5.7 Opinions of Counsel for Purchaser. Counsel for Purchaser,
shall have delivered to the Company a written opinion, dated the Closing Date,
in the form of Exhibit 5.7 hereto with only such changes as shall be in form and
substance reasonably satisfactory to the Company and its counsel.
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5.8 No Threatened or Pending Litigation. On the Closing Date,
no suit, action or other proceeding, or injunction or final judgment relating
thereto, shall be threatened or by pending before any court or governmental or
regulatory official, body or authority in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or proceeding shall be
pending or threatened.
5.9 Key Company Arrangements. Each of the employees of the
Company mutually agreed by the Company and Purchaser shall have executed and
delivered an employment/confidentiality/non-compete agreement in a form mutually
agreed to by Purchaser and Company.
5.10 Approval of Counsel; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents required to carry out this
Agreement or incidental hereto and all other related legal matters shall have
been approved on the Closing date by Xxxxx Xxxx L.L.C., counsel for the Company,
in the exercise of their reasonable judgment. Purchaser shall also have
delivered to the Company such other documents, instruments, certifications and
further assurances as such counsel may reasonable require.
ARTICLE VI
COVENANTS
6.1 Financial Statements and Other Information. So long as the
Purchaser shall be a shareholder, the Company shall furnish to the Purchaser and
each such subsequent holder:
(a) within 120 days after the end of each fiscal year
of the Company, a consolidated balance sheet of the Company as of the
end of such fiscal year and the related consolidated statements of
operations, changes in stockholders' equity and cash flows of the
Company for the fiscal year then ended, together with supporting notes
thereto, audited and certified in accordance GAAP by a firm of
independent public accounts of recognized national standing selected by
the Company; and
(b) within 30 days after the end of each month, a
consolidated balance sheet of the Company and its subsidiaries and the
related consolidated statements of operations and cash flows of the
Company, unaudited and subject to normal year-end adjustments, such
balance sheet to be as of the end of such month and such statements of
operations and cash flows to be for such month (with a comparison to
budget for such month) and for the period from the beginning of the
fiscal year to the end of such month (with a comparison to budget for
such period), and shall be accompanied by a narrative explanation of
the results;
6.2 Business Plan By the beginning of the first month of each
fiscal year, the Company shall submit a business plan for that year, including a
detailed projected income
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statement, balance sheet, and cash flow by month, along with a general business
and market forecast for the year. The business plan shall be formally approved
by the Board of Directors by unanimous vote.
6.3 Conduct Prior to Closing. All financing or financing
commitments (debt or equity) of the Company, between the date hereof and the
earlier of (i) the termination of this Agreement, or (ii) Closing, shall be
approved by Purchaser in its sole discretion. (It is understood that, pursuant
to the Shareholder's Agreement, Purchaser shall have also have the right to
approve all financing and financing commitments which would close after
Closing).
6.4 Cooperation. Each Party shall reasonably cooperate, as to
matters under such Party's control, in the satisfaction of conditions to the
obligations of the Parties at Closing; provided that the foregoing shall not
require either Party to waive any material condition herein to its obligations
at Closing or to incur any substantial cost not otherwise required hereunder.
6.5 Payment of Purchase Price.
(a) Purchaser shall pay up to $4 million of the Cash Portion
at Closing (in the discretion of the Company). The Company shall pay the balance
of the Cash Portion as needed to fund the Company's activities, provided that at
least twenty (20) days prior to the date of each draw THE COMPANY shall provide
Purchaser with a verified statement signed by Xxxxxxxxx that 70% or more of the
Purchase Price, other than expenses of the Company incurred in connection with
the Company's financing efforts (not to exceed $1,000,000) ("Financing
Expenses"), has been used directly by the Company in property, plant and
equipment. the Company shall provide Purchaser with an itemization of the
Financing Expenses at Closing.
(b) Upon each payment specified in Section 6.5(a), the Company
shall issue a Preferred Stock certificate for a number of shares equal to the
payment divided by $150,000.
6.6 Key-Man Life Insurance. At Closing, the Company shall
provide evidence of a $10 million of key-man life insurance on the life on
Xxxxxxxxx. Following Closing, the Company shall maintain such insurance as long
as such coverage is reasonably available.
6.7 Amendment of Articles Prior to Closing, the Company shall
amend its articles of incorporation to require that it shall take a vote of
shares holding at least 90% of the voting power of the Company's voting stock to
approve the actions set forth in the Shareholder Agreement as requiring the
approval of both the Company and Purchaser as shareholders.
6.8 Termination of Lending Contemporaneously with the
execution of this Agreement, the Company shall verify in writing that it has
canceled the financing commitment from the Company dated December 24, 1996.
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6.9 Energy Services Following the Closing, Purchaser shall
have the right of first offer from the Company concerning ENERGY SERVICES rights
and contracts in the entire the Company service area. Prior to Closing, the
Company shall make no agreement or take any action inconsistent with this
covenant.
6.10 Status Reports Following the Closing, the Company shall
provide Purchaser weekly with the Company weekly status reports on the build-out
of the Company fiber optic network for the 30 months following Closing or lesser
time as approved by Purchaser.
6.11 Non-Voting Common Stock Prior to Closing, the Company
shall amend its articles to eliminate the Company's Class B non-voting common
stock.
ARTICLE VII
RESTRICTED SECURITIES
7.1 Legend. Any shares of Preferred or Common Stock acquired
by Purchaser pursuant to this Agreement (and any securities issued with respect
thereto as a result of a stock dividend or stock split, or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization) shall be imprinted with a legend in substantially the following
form:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES ACTS, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
THE REGISTRATION PROVISIONS OF SUCH ACTS OR AN EXEMPTION THEREFROM. THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER CONTAINED IN A CERTAIN STOCK PURCHASE
AGREEMENT AND A CERTAIN SHAREHOLDERS AGREEMENT, BY AND AMONG THE
COMPANY AND THE PURCHASER OF SUCH SHARES, COPIES OF WHICH ARE AVAILABLE
AT THE PRINCIPAL OFFICES OF THE COMPANY.
7.2 Transfer of Common Stock.
(a) Any Common Stock acquired by Purchaser pursuant
to this Agreement (and any securities issued with respect thereto as a
result of a stock dividend or stock split, or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization) ("Restricted Securities") shall be transferred only in
compliance with the Shareholder's Agreement.
(b) The transfer of the Restricted Securities shall
be subject to and shall comply with, all applicable federal and/or
state securities laws.
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ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by the Company The Company will indemnify
and hold harmless Purchaser, and its affiliates, partners,
shareholders, directors, officers, employees, agents and assigns from
and against any and all losses, liabilities, damages, actions, costs
and expenses (including without limitation reasonable attorney fees and
expenses) (collectively "Losses") resulting from the breach by the
Company of its representations, warranties and covenants contained
herein.
8.2 Indemnification by Purchaser. Purchaser will indemnify and
hold harmless the Company and its affiliates, partners, shareholders,
directors, officers, employees, agents and assigns from and against any
and all Losses resulting from the breach by the Purchaser of its
representations, warranties and covenants contained herein.
8.3 Indemnification by Xxxxxxxxx Xxxxxxxxx will indemnify
Purchaser and the Company for any and all Losses resulting from
judgments and awards rendered against the Company in the matter of
Xxxxxx X. Xxxxx x. Xxxxxxx X. Xxxxxxxxx and Digital Teleport, Inc.,
filed in the Circuit Court of St. Louis County.
8.4 Dispute Resolution. In the event Purchaser makes a claim
against Company pursuant to Section 8.1 above, then Purchaser shall
make written demand first against the Company for the Losses. If the
Losses are not paid by Company within thirty (30) days of said written
notice to Company, then a dispute ("Dispute") shall be deemed to exist
between the Purchaser and Company in regard to said Losses. All
Disputes and other matters in question between the parties hereto
arising out of or relating to the Losses will be decided by arbitration
in Kansas City, Missouri, in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then existing, subject to
the limitations and restrictions stated in subparagraphs (a), (b), (c)
and (d) below. This agreement so to arbitrate and any other agreement
or consent to arbitrate entered into in accordance herewith as provided
in this subsection will be specifically enforceable under the
prevailing law of any court having jurisdiction.
(a) Notice of demand for arbitration must be filed in
writing with the other parties to this Agreement and with the American
Arbitration Association. The demand must be made within a reasonable
time after the Dispute or other matter in question has arisen. In no
event may the demand for arbitration be made after the date when
institution of legal or equitable proceedings based on such Dispute or
other matter in question would be barred by the applicable statute of
limitations or the survival provisions of Section 9.4 of this
Agreement.
(b) Xxxxxxxxx shall receive notice of any arbitration
proceeding pursuant to this Section 8.4 and Xxxxxxxxx shall have the
right to participate in any such
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arbitration proceeding and/or assume the defense of the Company at
Xxxxxxxxx'x sole cost and expense.
DTI and Xxxxxxxxx shall have the right to assert any
counter-claim, set-off, waiver or any other defenses in law or equity,
in any such arbitration proceeding.
(c) The award rendered by the arbitrator will be
final, judgment may be entered upon it in any court having jurisdiction
thereof, and will not be subject to modification or appeal except to
the extent permitted by Sections 10 and 11 of the Federal Arbitration
Act (9 U.S.C. Section 10, 11), as amended.
(d) The Dispute shall be heard by a single arbitrator
who shall decide the Dispute within sixty (60) days of the filing of
the Dispute with the American Arbitration Association. Upon a
determination by the arbitrator of the Dispute in favor of Purchaser,
and after a period of one hundred and fifty (150) days, if Company does
not pay any award to Purchaser, then Xxxxxxxxx shall surrender his
stock in the Company to Purchaser in accordance with the terms and
conditions of the Guaranty Agreement and Pledge Agreement.
8.5 Limitation. The liability of the Company under this
Agreement shall be limited to the Purchase Price paid by Purchaser
hereunder, plus interest and expenses of litigation (including
reasonable attorney's fees).
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Confidentiality.
(a) For purposes of this Agreement, "Confidential
Information shall mean all information, in whatever form transmitted,
relating to the past, present or future business affairs of the
Company, including without limitation, research, development, or
business plans, operations or systems of the Company or another party
whose information the Company has in its possession under obligations
of confidentiality, which (a) is disclosed by the Company or its
Affiliates to Purchaser or its Affiliates, bearing an appropriate
legend indicating its confidential or proprietary nature or otherwise
disclosed in a manner consistent with its confidential or proprietary
nature, or (b) is produced or developed during the working relationship
between the parties hereto and which would, if disclosed to competitors
of the Company, give such competitors an advantage (or increase such
advantage) over the Company or diminish the Company's advantage over
such competitors. "Confidential Information" includes all information
that would be confidential information pursuant to the existing
confidentiality agreement between the Company and Purchaser.
"Confidential Information" shall not include any information
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of the Company that: (i) is or becomes publicly known through no
wrongful act of Purchaser; (iii) is independently developed by
Purchaser without the use of other Confidential Information, (iv) is
communicated to a third party with the express written consent of the
Company, or (v) is lawfully required to be disclosed to any
governmental agency or is otherwise required to be disclosed by law,
provided that before making such disclosure Purchaser shall give the
Company an adequate opportunity to interpose an objection or take
action to assure confidential handling of such information.
(b) Each party agrees to provide to the other party
such information (including Confidential Information) as shall be
necessary to permit the performance of their respective obligations
hereunder. The Company and Purchaser shall not disclose any
Confidential Information it receives from the Company to any person
except (i) employees of Purchaser and its Affiliates who have a need to
know and who have been informed of Purchasers obligations under this
Agreement and (ii) employees of the Company and its Affiliates who have
a need to know and who have been informed of the confidential nature of
the information. Purchaser shall use not less than the same degree of
care, and in any event not less than reasonable care, to avoid
disclosure to such Confidential Information as Purchaser uses for its
own confidential information of like importance.
(c) All Confidential Information that is disclosed in
tangible form by the Company to Purchaser under this Agreement
(including without limitation documents, writings, designs, drawings,
specifications and information incorporated in computer software or
held in electronic storage media) shall be and remain the property of
the Company. All such Confidential Information shall be returned to the
Company or destroyed promptly upon written request and shall not
thereafter be retained in any form by Purchaser. The rights and
obligations of the parties under this Agreement shall survive any such
return or destruction of Confidential Information.
(d) The parties agree that, in the event of a breach
or threatened breach of the terms of this Article, the Company shall be
entitled to an injunction prohibiting any such breach. Any such relief
shall be in addition to and not in lieu of any appropriate relief in
the way of money damages. The parties acknowledge that Confidential
Information is valuable and unique and that disclosure in breach hereof
will result in irreparable injury to the Company.
9.2 Further Assurances. From and after the Closing, the
Parties shall do such acts and execute such documents and instruments as may be
reasonably required to make effective the transactions contemplated hereby.
9.3 Notice. All notices, requests, demands, and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given and made upon being delivered either
in person or by nationally recognized courier or by fax delivery to the Party
for whom it is intended, provided that a copy thereof is deposited, postage
prepaid, certified or registered mail, return receipt requested, in the United
States mail,
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bearing the address shown in this Section 9.3 for, or such other address as may
be designated in writing hereafter by, such Party:
If to the Company:
Digital Teleport, Inc.
00000 Xxxxxxx Xxxx
Xx. Xxxxx, XX 00000
Fax: 000-000-0000
Attn: Xxxxxxx X. Xxxxxxxxx
With a copy to:
Xxxxxxx X. Xxxxxxxxx
00000 Xxxxxxx Xxxx
Xx. Xxxxx, XX 00000
Fax: 000-000-0000
Attn: Xxxxxxx X. Xxxxxxxxx
With a copy to:
Xxxxx Xxxx LLP
One Metropolitan Square
Suite 3600
000 X. Xxxxxxxx
Xx. Xxxxx, XX 00000
Fax: 000-000-0000
Attn: J. Xxxx Xxxxxx
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If to Purchaser:
KLT Telecom Inc.
0000 Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Fax: 000-000-0000
Attn: Xxxxxx X. Xxxxxx
With a copy to:
KLT Inc.
0000 Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Fax: 000-000-0000
Attn: General Counsel
With a copy to:
Xxxxxxxx Xxxxxxx & Xxxxxx
Twelve Wyandotte Plaza
000 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Fax: 000-000-0000
Attn: Xxxxxx X. Xxxxxxxxxx
9.4 Survival. All representations and warranties contained
herein shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby for a period of three
years. All covenants contained herein shall survive the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
for as long as Purchaser is a shareholder of the Corporation.
9.5 Entire Agreement. This Agreement, the Shareholders
Agreement and the Guaranty embody the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements and understandings relative to such subject
matter.
9.7 Assignment; Binding Agreement. This Agreement and various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon Purchaser, its successors, and permitted assigns and the Company,
its successors and permitted assigns. Neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be transferred, delegated, or
assigned (by operation of law or otherwise) by either of the Parties hereto
without the prior written consent of the other Party (which consent shall not be
unreasonably withheld), except that Purchaser shall have the right to transfer
and assign its rights hereunder to purchase the Purchased Shares and any other
rights or benefits afforded to it by this
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Agreement to any entity which at the time of such transfer and assignment is
controlled by Purchaser.
9.8 Severability. Whenever 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 is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
9.9 Incorporators, Shareholders, Officers, Directors and
Employees Free From Personal Liability. No recourse under or upon any
obligation, covenant or agreement of this Agreement , other than Section 8.3 and
Section 8.4, will be had against any incorporator, shareholder, officer,
director, or employee, as such, past, present or future, of the Company or
Purchaser, or of any predecessor or successor entities, whether by virtue of any
constitution, statute, or rule of law, or by the enforcement of any assessment
or penalty or otherwise, it being expressly understood that this Agreement,
except for Section 8.3 and Section 8.4, is solely a corporate obligation, and
that no such personal liability whatsoever will attach to, or is or will be
incurred by, the incorporators, shareholders, officers, directors or employees,
as such, of the Company or Purchaser, or of any predecessor or successor
entities, under or by reason of the obligations, covenants, or agreements
contained in this Agreement and the documents referred to herein, except for
Section 8.3, Section 8.4. For purposes of the foregoing sentence, the term
"Agreement" shall not refer to any agreement set forth as an exhibit hereto
incorporated herein by reference and to which any incorporator, shareholder,
officer, director, or employee is a party in his or her personal capacity.
9.10 Knowledge. For purposes of this Agreement, "to the
Company's knowledge", "to the knowledge of the Company" or "to the best
knowledge of the Company" (or words of similar meaning) shall mean to the
knowledge of Xxxxxxx X. Xxxxxxxxx, as Chairman, President, Chief Executive
Office and sole shareholder of the Company. For purposes of this Agreement, "to
Purchaser's knowledge", "to the knowledge of Purchaser" or "to the best
knowledge of the Purchaser" (or words of similar meaning) shall mean to the
knowledge of Xxxxxx X. Xxxxxx as President of Purchaser and Xxxxx Xxxxxxxx as
director and employee of Purchaser.
9.11 Schedules. The following documents ("Disclosure
Documents") are deemed to be incorporated into each of the schedules of this
Agreement: (i) the documents referenced in the data room index, a copy of which
is attached as Schedule 9.11(a); (ii) the documents referenced in Schedule
9.11(b); (iii) the documents set forth in Schedule 2.24; and (iv) the proposed
amendment with one of the Company's major customers.
9.12 Counterparts. This Agreement may be executed
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
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9.13 Headings; Interpretation. The article and section
headings contained in this Agreement are inserted for convenience only and shall
not affect in any way the meaning or interpretation of the Agreement. Each
reference in this Agreement to an Article, Section, Schedule or Exhibit, unless
otherwise indicated, shall mean an Article or a Section of this Agreement or a
Schedule or Exhibit attached to this Agreement, respectively. References herein
to "days", unless otherwise indicated, are to consecutive calendar days. Both
Parties have participated substantially in the negotiation and drafting of this
Agreement and agree that no ambiguity herein should be construed against the
draftsman.
9.14 Termination of the Agreement. This Agreement may be
terminated without further liability or obligation, except for those liabilities
and obligations which expressly survive such termination,
(a) by either Party if a material breach of any
provision of this Agreement has been committed by the other Party and
such breach has not been waived;
(b) by mutual consent of the Parties; or
(c) by either Party if the Closing has not occurred
(other than through the failure of any Party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on
or before March 14, 1997, or such later date as the Parties may agree
upon.
9.15 Incorporation of Exhibits,
All of the exhibits hereto are hereby incorporated by
reference.
9.16 Quarterly EBITDA Targets
The quarterly EBITDA Targets referenced in the Certificate of
Designations is set forth in Schedule 9.16 hereto.
9.17 Governing Law.
This Agreement shall in all respects be construed in
accordance with and governed by the substantive laws of the State of Missouri,
without reference to its choice of law rules.
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THIS AGREEMENT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES
IN WITNESS WHEREOF, each of the Parties hereto has
caused this Agreement to be executed as of the date first above
written.
KLT TELECOM INC:
By: /s/ X. X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx
President
DIGITAL TELEPORT, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxx,
President
* * *
Schedules to this Exhibit have been omitted in accordance with Regulation S-K
of the Commission. The omitted materials set forth the factual representations
and other factual exceptions to representations and ancillary agreements
relating to the transaction as set forth in Articles I and II herein. The
Registrant hereby agrees to furnish any such omitted schedule to the Commission
upon request.
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