Exhibit 10.31
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (the "Shareholders Agreement")
is made as of this 6th day of February, 2001, by and among DTI
Holdings, Inc. (the "Company"), a Missouri corporation, XXXXXXX
X. XXXXXXXXX ("Xxxxxxxxx"), an individual, and KLT TELECOM INC.
("KLT"), a Missouri corporation. Xxxxxxxxx and KLT are
hereinafter sometimes referred to collectively as "Shareholders"
or individually as a "Shareholder."
WITNESSETH:
WHEREAS, the Shareholders have entered into an Amended and
Restated Agreement, dated as of December 26, 2000, as amended as
of January 18, 2001 (the "Agreement") to which this Shareholders
Agreement is attached as Exhibit 6.13;
WHEREAS, Section 6.13 of the Agreement contemplates the
execution of this Shareholders Agreement by the Shareholders as
part of the Initial Closing;
WHEREAS, the Shareholders will own the outstanding capital
shares ("Shares") of Company preferred stock, $.01 par value (the
"Preferred Stock") and common stock, $.01 par value (the "Common
Stock") indicated on Exhibit A following the Initial Shares
Closing;
WHEREAS, it is in the best interests of the Shareholders and
the Company that management of the Company be conducted in an
orderly manner as hereinafter provided; and
WHEREAS, the Shareholders desire to provide for the rights
and obligations set forth herein;
NOW, THEREFORE, the Shareholders and the Company agree as
follows:
1. MANAGEMENT OF THE COMPANY
1.1 COMPOSITION OF THE BOARD. The Board of Directors
of the Company shall consist of the number of directors
determined from time to time by KLT. One (1) director shall be
designated for nomination by the Board of Directors exclusively
by Xxxxxxxxx (which nominee may be either Xxxxxxxxx or his
designee). All of the remaining directors shall be designated
for nomination by the Board of Directors exclusively by KLT.
1.2 AGREEMENT TO VOTE SHARES. At any annual or special
stockholders' meeting called for the purpose of electing members
of the Board of Directors of the Company, and whenever
stockholders act by written consent with respect to the election
of members of the Board of Directors of the Company, each of the
Shareholders agrees to vote all of the Shares held or controlled
by such Shareholder having voting rights with respect to the
election of directors, and the Company agrees to take any and all
actions necessary, to cause:
(a) the election as directors of the Company of
all of the individuals designated by KLT for nomination by
the Board of Directors; and
(b) the election as a director of the Company of
the individual designated by Xxxxxxxxx for nomination by the
Board of Directors.
1.3 REMOVAL AND VACANCY OF DIRECTORS. In the event
either Shareholder wishes to remove a director who has been
elected as its own nominee to the Board of Directors of the
Company, the other Shareholder shall vote for or consent to such
removal. In the event a vacancy in the office of a director is
caused by death, retirement or removal of a director, the vacancy
shall be filled by appointing or electing the nominee of the
Shareholder whose nominee is so deceased, retired or removed. In
the event KLT wishes to remove an officer who has been elected as
its nominee, Xxxxxxxxx shall cause the director he has nominated
to vote for such removal. In the event a vacancy in the office of
an officer is caused by death, retirement or removal of an
officer, the vacancy shall be filled by appointing or electing
the nominee of KLT.
1.4 REQUIRED VOTES; LOCATION OF MEETINGS. Except as
otherwise provided in this Shareholders Agreement, the Articles
of Incorporation or Bylaws of the Company, or applicable law, all
actions by the Board shall be accomplished by the vote of at
least a simple majority of the Board members present at a duly
called meeting or by written unanimous consent. All meetings of
the Board of Directors shall take place at a location determined
by KLT.
1.5 XXXXXXXXX CONSENT RIGHTS. Xxxxxxxxx'x consent
shall be required (i) to amend the Company's articles of
incorporation or bylaws in a manner that would have a direct and
material adverse effect on the rights granted to Xxxxxxxxx by
this Shareholders Agreement, and (ii) on a residual basis, to
permit transactions between the Company, on the one hand, and KLT
and its affiliates, on the other hand ("Affiliated
Transactions"), to the extent otherwise prohibited by the
Indenture, dated as of February 23, 1998 between the Company and
The Bank of New York, as trustee (the "Note Indenture") for the
12 1/2% Series B Senior Discount Notes due 2008 (the "Notes"). While
the Note Indenture or the indenture ("Exchange Note Indenture")
for the Exchange Notes (as defined in Section 6.12 of the
Agreement) continues in effect, the ability to waive the
limitation on Affiliated Transactions shall remain solely with
the holders of the Notes and/or the Exchange Notes (as defined in
Section 6.12 of the Agreement), as the case may be. If the Note
Indenture is eliminated or amended and the Exchange Note
Indenture is eliminated or amended, with respect to Affiliated
Transactions, then the existing limitation on Affiliated
Transactions contained in the Note Indenture shall become
effective for the benefit of Xxxxxxxxx and Xxxxxxxxx shall have
the sole right to consent to such transactions.
1.6 REIMBURSABLE EXPENSES. The Company shall bear all
reasonable travel and related expenses incurred by each Director
to attend any meetings of the Board of Directors.
1.7 D&O INSURANCE. If available on reasonable terms
(I.E., not more than twice the current premium), the Company
shall maintain coverage reasonably equivalent to the directors
and officers liability insurance that the Company currently has
in place. The directors' and officers' liability insurance
coverage provided by the Company shall be the same for all of its
directors, including Xxxxxxxxx or his designee.
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2. REGISTRATION RIGHTS
2.1 DEFINITIONS. As used in this Shareholders
Agreement, the following terms shall have the following meanings:
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations
promulgated thereunder.
The terms "register," "registered," and "registration"
shall mean a registration effected by the preparation and
filing of a Registration Statement in compliance with the
Securities Act, and the declaration or ordering of
effectiveness of such Registration Statement by the SEC.
"Registration Expenses" shall mean all expenses
incident to the Company's performance of or compliance with
this Shareholders Agreement, including without limitation
all (i) registration, qualification and filing fees; (ii)
fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel
in connection with blue sky qualifications of any Xxxxxxxxx
Shares being registered); (iii) printing expenses,
messenger, telephone and delivery expenses; (iv) internal
expenses of the Company (including, without limitation, all
salaries and expenses of partners and employees of the
Company performing legal or accounting duties); (v) fees and
disbursements of counsel for the Company and customary fees
and expenses for independent certified public accountants
retained by the Company (including the expenses of any
comfort letters or costs associated with the delivery by
independent certified public accountants of comfort letters
customarily requested by underwriters); (vi) reasonable fees
and expenses of one counsel for the requesting Xxxxxxxxx
Shareholder(s); (vii) fees and expenses of listing any
Xxxxxxxxx Shares on any securities exchange on which the
securities are then listed; and (viii) fees and
disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding any underwriting fees,
discounts or commissions attributable to the sale of any
Xxxxxxxxx Shares and any fees and expenses of underwriters'
counsel (other than as provided in clause (ii) above).
"Registration Rights" shall mean the rights of
Xxxxxxxxx Shareholder(s) to cause the Company to register
Xxxxxxxxx Shares pursuant to Section 2 of this Shareholders
Agreement.
"Registration Statement" shall mean any registration
statement or similar document that covers any of the
Xxxxxxxxx Shares pursuant to the provisions of this
Shareholders Agreement, including the prospectus or
preliminary prospectus included therein, all amendments and
supplements to such Registration Statement, including post-
effective amendments, all exhibits to such Registration
Statement and all material incorporated by reference in such
Registration Statement.
"SEC" shall mean the Securities and Exchange
Commission.
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"Securities Act" shall mean the Securities Act of 1933,
as amended, and the rules and regulations promulgated
thereunder.
"Xxxxxxxxx Shareholder(s)" shall mean Xxxxxxxxx and his
permitted transferees.
"Xxxxxxxxx Shares" shall mean the shares of Common
Stock owned by Xxxxxxxxx or his permitted transferee.
2.2 DEMAND REGISTRATION.
(a) If any time following the expiration of six
months after the consummation of an initial offering of
Common Stock by the Company to the general public on a
primary basis that has been registered on
Form X-0, X-0 or S-3 (or any successor forms) under the
Securities Act (a "Qualifying IPO"), the Company shall
receive a written request from any Xxxxxxxxx Shareholder(s)
owning Xxxxxxxxx Shares ("Initiating Shareholder") that the
Company file a Registration Statement covering the
registration of the amount of Xxxxxxxxx Shares specified in
the written request of the Initiating Shareholder, then the
Company shall (i) within five (5) days of the receipt of
such registration request, give written notice of such
registration request to all Xxxxxxxxx Shareholder(s) owning
Xxxxxxxxx Shares, and (ii) use its commercially reasonable
efforts to effect, as soon as practicable and in any event
not more than 120 days after receipt of such registration
request, the registration of such Xxxxxxxxx Shares and shall
include in such registration all Xxxxxxxxx Shares with
respect to which the Company receives, within the twenty
(20) days immediately following the receipt by the Xxxxxxxxx
Shareholder(s) of such notice from the Company, a request
for inclusion in the registration from the Xxxxxxxxx
Shareholder(s). Each such request from any of the Xxxxxxxxx
Shareholder(s) of Xxxxxxxxx Shares for inclusion in the
registration shall also specify the aggregate amount of
Xxxxxxxxx Shares proposed to be registered.
(b) If the Initiating Shareholder intends to
distribute the Xxxxxxxxx Shares covered by its request by
means of an underwritten public offering, it shall so advise
the Company as a part of its request made pursuant to
Section 2.2(a) hereof and the Company shall include such
information in its written notice to the Xxxxxxxxx
Shareholder(s) required under such Section. In the event
that the Initiating Shareholder intends to distribute the
Xxxxxxxxx Shares by means of an underwritten offering, the
right of any of the Xxxxxxxxx Shareholder(s) to include his
Xxxxxxxxx Shares in such registration shall be conditioned
upon such Xxxxxxxxx Shareholder(s) participation in such
underwriting and the inclusion of such Xxxxxxxxx
Shareholder(s) Xxxxxxxxx Shares in the underwriting to the
extent provided herein. All Xxxxxxxxx Shareholder(s)
proposing to sell Xxxxxxxxx Shares through such underwriting
(including the Company as provided in Section 2.2(b) of this
Shareholders Agreement and any other holder of securities
permitted to participate in such registration pursuant to
this Section 2.2(b)) shall enter into an underwriting
agreement in customary form with the underwriter or
underwriters selected by the Initiating Shareholder for such
underwriting (provided the same are underwriters of recognized
national standing reasonably acceptable to the Company),
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upon the terms and conditions agreed upon between
the Company and such underwriter(s). Notwithstanding any
other provision of this Section 2.2(b), if the
underwriter(s) advise the Initiating Shareholder in writing
that marketing or other factors require that less than 100%
of the Xxxxxxxxx Shares requested by the Xxxxxxxxx
Shareholder(s) owning Xxxxxxxxx Shares be included in the
underwriting, then the Company shall so advise all Xxxxxxxxx
Shareholder(s) owning Xxxxxxxxx Shares that would otherwise
be underwritten pursuant hereto, and the amount of Xxxxxxxxx
Shares that may be included in the underwriting shall be
allocated among all Xxxxxxxxx Shareholder(s) thereof,
including the Initiating Shareholder, in proportion (as
nearly as practicable) to the amount of Xxxxxxxxx Shares
which each of the Xxxxxxxxx Shareholder(s) requested be
included in such registration. If the amount of Xxxxxxxxx
Shares to be underwritten has not been so limited, the
Company may include securities for its own account (or for
the account of other holders) in such registration if the
underwriter(s) so agree and to the extent that, in the
opinion of such underwriter(s), the inclusion of such
additional amount will not adversely affect the offering of
the Xxxxxxxxx Shares included in such registration.
(c) The Xxxxxxxxx Shareholder(s) owning Xxxxxxxxx
Shares will be entitled to request pursuant to this Section
2.2 one (1) registration on Form S-1 or any similar long-
form registration and one (1) registration on Form S-3 or
similar short-form registrations, but in no event may
Xxxxxxxxx Shareholder(s) be entitled to request more than
one (1) such registration in any 12-month period.
2.3 INCIDENTAL REGISTRATION. (a) In the event that
(but without any obligation to do so) the Company proposes to
conduct a Qualifying IPO and KLT has informed the Company that it
intends to include shares of Common Stock for resale in such
offering (or, if KLT does not elect to include its shares of
Common Stock for resale in such Qualifying IPO, then in the first
offering registered under the Securities Act in which KLT offers
its shares for resale), the Company shall promptly give each of
the Xxxxxxxxx Shareholder(s) written notice of such registration
at least 20 days before the anticipated filing date of any
Registration Statement for such offering. Upon the written
request of any of the Xxxxxxxxx Shareholder(s) within ten days
after the receipt by such Xxxxxxxxx Shareholder(s) of such notice
from the Company, the Company shall cause to be registered under
the Securities Act the Pro Rata Share of all of the Xxxxxxxxx
Shares that such Xxxxxxxxx Shareholder(s) have so requested to be
registered. The term "Pro Rata Share" for purposes of this
Section 2.3 shall mean the same proportion of shares of Common
Stock owned by Xxxxxxxxx Shareholder(s) in relation to the shares
of Common Stock owned by KLT or its permitted transferees that
are proposed to be included in such offering as is equal to the
fraction, the numerator of which shall be the number of shares of
Common Stock owned by such Xxxxxxxxx Shareholder(s) and the
denominator of which shall be the sum of the number of shares of
Common Stock owned by such Xxxxxxxxx Shareholder(s) and KLT and
its permitted transferees (assuming full conversion and exercise
of all convertible and exercisable securities into Common Stock).
The Company shall not be required to proceed with, or maintain
the effectiveness of, any registration of its securities after
giving the notice herein provided, and the right of any Xxxxxxxxx
Shareholder(s) to have Xxxxxxxxx Shares included in such
Registration Statement shall be conditioned upon participation in
any underwriting to the
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extent provided herein. The Company shall
not be required to include any Xxxxxxxxx Shares in such
underwriting unless the Xxxxxxxxx Shareholder(s) owning such
shares enter into an underwriting agreement with the
underwriter(s) selected by the Company in customary form, and
upon terms and conditions agreed upon between the Company and
such underwriter(s) (except as to monetary obligations of the
Xxxxxxxxx Shareholder(s) not contemplated by Section 2.7 of this
Shareholders Agreement).
(b) APPORTIONMENT IN INCIDENTAL REGISTRATION. If the
offering made pursuant to Section 2.3(a) is an underwritten
offering and the managing underwriter(s) of the offering inform
the Company in writing that, in its opinion, the number of
securities requested to be included in such registration would be
likely to have an adverse effect on marketing the offering, then
the Company may include all securities proposed by the Company to
be sold for its own account or the maximum amount that the
underwriters considers saleable and such limitation on any
remaining securities that may, in the opinion of the underwriter,
be sold will be imposed pro rata among the Xxxxxxxxx
Shareholder(s) and KLT and its permitted transferees (assuming
full conversion and exercise of all convertible and exercisable
securities into Common Stock) on the basis of the percentage of
the securities sought to be registered, provided, however, that
no holders of securities other than Xxxxxxxxx Shareholders and
KLT and its permitted transferees shall be entitled to include
their securities in such registration if such limitation is
imposed by the managing underwriter(s).
2.4 REGISTRATION PROCEDURE. Whenever required under
this Shareholders Agreement to effect the registration of any
Xxxxxxxxx Shares, the Company shall use its commercially
reasonable efforts to do the following as promptly as
practicable:
(a) prepare and file with the SEC a Registration
Statement with respect to such Xxxxxxxxx Shares and
cause such Registration Statement to become effective, and,
upon the request of the holders of a majority of the
Xxxxxxxxx Shares registered thereunder, keep such
Registration Statement effective for up to ninety (90) days
or such shorter period as shall be required to sell all of
the Xxxxxxxxx Shares covered by such Registration Statement;
(b) prepare and file with the SEC such
amendments, post-effective amendments and supplements
to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be
necessary to comply with the provisions of the Securities
Act with respect to the disposition of all Xxxxxxxxx Shares
covered by such Registration Statement;
(c) furnish to the Xxxxxxxxx Shareholder(s)
requesting registration of Xxxxxxxxx Shares, without charge,
such number of copies of a prospectus, including a
preliminary prospectus, and any amendments or supplements
thereto as such Xxxxxxxxx Shareholder(s) may reasonably
request;
(d) register and qualify the securities covered
by such Registration Statement under such other securities
or blue sky laws of such jurisdictions as shall be
reasonably requested by the Xxxxxxxxx Shareholder(s);
provided, however, that the
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Company shall not be required to qualify to do business, file
a general consent to service of process or subject itself to
taxation in any such states or jurisdictions where it would
not otherwise be required to so qualify to do business or
consent to service of process or subject itself to taxation;
(e) cooperate with the Xxxxxxxxx Shareholder(s)
and the underwriters, if any, participating in the
disposition of such Xxxxxxxxx Shares and their respective
counsel in connection with any filings required to be made
with the National Association of Securities Dealers, Inc.;
(f) in the event of any underwritten public
offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with
the underwriter(s) of such offering, in accordance with such
terms and conditions as the Company and the underwriter(s)
may agree. Each Xxxxxxxxx Shareholder participating in such
underwriting shall also enter into and perform its
obligations under such an agreement;
(g) notify each Xxxxxxxxx Shareholder owning
Xxxxxxxxx Shares covered by such Registration Statement, at
any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the occurrence of
any event as a result of which the prospectus included in
such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of
the circumstances then existing; PROVIDED that such
Shareholder first agrees to maintain the confidentiality of,
and not to trade on, such information until such time as the
Company's counsel has advised that public disclosure has
been made and a reasonable waiting period thereafter has
elapsed.
(h) in the case of an underwritten public
offering, furnish, at the request of any Xxxxxxxxx
Shareholder(s) requesting registration pursuant to this
Shareholders Agreement, on the date that such Xxxxxxxxx
Shares are delivered to the underwriters for sale in
connection with a registration pursuant to this Shareholders
Agreement, (A) an opinion of counsel representing the
Company for the purposes of such registration, and (B) a
letter addressed to the underwriters from independent
certified public accountants of the Company, in each case to
be dated such date and to be in form and substance as is
customarily given by counsel or independent certified public
accountants, as the case may be, to underwriters in an
underwritten public offering;
2.5 RIGHT TO WITHDRAW REGISTRATION. Notwithstanding
anything herein to the contrary, the Company may delay, suspend
or withdraw any registration or qualification of Xxxxxxxxx Shares
required pursuant this Shareholders Agreement for a reasonable
period not exceeding 90 days if the Company in good faith
determines that any such registration would adversely affect an
offering or contemplated offering of any securities of the
Company or any other contemplated material corporate event.
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2.6 OBLIGATION OF XXXXXXXXX SHAREHOLDER(S) TO FURNISH
INFORMATION. It shall be a condition precedent to the obligations
of the Company to take any action pursuant to this Shareholders
Agreement with respect to any Xxxxxxxxx Shares that any of the
Xxxxxxxxx Shareholder(s) requesting registration of such
Shareholder's shares furnish to the Company such information
regarding himself or itself, the Xxxxxxxxx Shares held by him or
it, and the intended method of disposition of such Xxxxxxxxx
Shares as shall be required to effect the registration of such
Selling Shareholder's Xxxxxxxxx Shares.
Each of the Xxxxxxxxx Shareholder(s) agrees that, upon
receipt of any notice from the Company of the occurrence of any
event of the kind described in Section 2.5 hereof, such
Shareholder shall forthwith discontinue disposition of Xxxxxxxxx
Shares pursuant to the then current prospectus until the earliest
of the following events: (i) such Shareholder is advised in
writing by the Company that a new Registration Statement covering
the reoffer of Xxxxxxxxx Shares has become effective under the
Securities Act, (ii) such Shareholder receives copies of a
supplemented or amended prospectus contemplated by Section 2
hereof, or (iii) until such Shareholder is advised in writing by
the Company that the use of the then current prospectus may be
resumed. The Company shall use its commercially reasonable
efforts to limit the duration of any discontinuance of
disposition of Xxxxxxxxx Shares pursuant to this paragraph.
2.7 REGISTRATION EXPENSES. In the case of any
registration of Xxxxxxxxx Shares required pursuant to this
Shareholders Agreement, the Company shall pay all Registration
Expenses regardless of whether the Registration Statement becomes
effective.
2.8 DELAY OF REGISTRATION. No Xxxxxxxxx Shareholder(s)
shall have any right to obtain or seek an injunction restraining
or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation
or implementation of this Section 2.
2.9 MARKET STAND-OFF AGREEMENT. Each of the Xxxxxxxxx
Shareholder(s) hereby agrees that during the 180-day period
following the effective date of a registration statement of the
Company filed under the Securities Act, he or it shall not, to
the extent requested by the Company and any underwriter, sell or
otherwise transfer or dispose of (other than to transferees who
agree to be similarly bound) any shares of Common Stock of the
Company held by him or it at any time during such period except
shares of Common Stock included in such registration, provided,
however, that:
(a) Such agreement shall be applicable only to:
(i) the first such registration statement of the Company
which covers Common Stock (or other securities) to be sold
on its behalf to the public in an underwritten offering and
(ii) a demand registration pursuant to Section 2.2 with
respect to an underwritten offering; and
(b) All officers and directors of the Company and
all other persons with registration rights (whether or not
pursuant to this Shareholders Agreement) enter into and be
bound by similar agreements.
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In order to enforce the foregoing covenant, the Company
may impose stop-transfer instructions with respect to the
Xxxxxxxxx Shares of each of the Xxxxxxxxx Shareholder(s) (and the
shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
2.10 TERMINATION OF REGISTRATION RIGHTS. All rights and
duties provided for in this Section 2 shall terminate (a) on the
third anniversary of the closing of the sale of securities
pursuant to a registration statement filed by the Company under
the 1933 Act in connection with a Qualifying IPO, or (b) as to
each of the Xxxxxxxxx Shareholder(s), at such time after the
Company's initial registered offering as all Xxxxxxxxx Securities
held by and issuable to such Shareholder may be sold under Rule
144 of the Securities Act and as long as such Shareholder holds
less than 1% of the then outstanding shares of Common Stock.
2.11 INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. In the event
any Xxxxxxxxx Shares are included in a Registration
Statement pursuant to this Shareholders Agreement, the
Company hereby agrees to indemnify and hold harmless each of
the Xxxxxxxxx Shareholder(s), his or its partners,
directors, officers and employees and each person, if any,
who "controls" (within the meaning of the Securities Act)
any Xxxxxxxxx Shareholder(s) (the "Shareholder Indemnitees")
against all losses, claims, damages, or liabilities, joint
or several, or actions in respect thereof ("Losses") to
which such Xxxxxxxxx Shareholder(s) Indemnitees may become
subject under the Securities Act, or otherwise, insofar as
such Losses arise out of, or are based upon, any untrue
statement or alleged untrue statement of any material fact
contained in such Registration Statement, any related
preliminary prospectus, or any related prospectus or any
amendment or supplement thereto, or arise out of, or are
based upon, the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
will reimburse such Shareholder Indemnitees for any legal or
other expenses reasonably incurred by it or them in
connection with investigating or defending any such Losses;
provided, however, that the Company will not be so liable to
the extent that any such Losses arise out of, or are based
upon, an untrue statement or alleged untrue statement of a
material fact or an omission or alleged omission to state a
material fact in such Registration Statement, such
preliminary prospectus, or such prospectus, or any such
amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the
Company by or on behalf of any Xxxxxxxxx Shareholder(s) or
an underwriter specifically for use therein; provided
further, that the Company shall not be liable, and this
indemnification agreement shall not apply, to the extent
that any such Losses are solely attributable to the failure
of any of the Xxxxxxxxx Shareholder(s) (or underwriter or
agent acting on its behalf) to deliver a final prospectus
(or amendment or supplement thereto) that corrects a
material misstatement or omission contained in the
preliminary prospectus (or final prospectus).
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(b) INDEMNIFICATION BY THE XXXXXXXXX
SHAREHOLDER(S) OF XXXXXXXXX SHARES. With respect to written
information furnished to the Company in connection with any
registration pursuant to the terms of this Shareholders
Agreement by or on behalf of any of the Xxxxxxxxx
Shareholder(s) specifically for use in a Registration
Statement, any related preliminary prospectus, or any
related prospectus or any supplement or amendment thereto,
such Xxxxxxxxx Shareholder(s) shall severally indemnify and
hold harmless the Company, and its partners and employees
and each person, if any, who "controls" (within the meaning
of the Securities Act) the Company (the "Company
Indemnitees") against any Losses to which the Company or
such other person entitled to indemnification hereunder may
become subject under the Securities Act, or otherwise,
insofar as such Losses arise out of, or are based upon, any
untrue statement or alleged untrue statement of any material
fact contained in such Registration Statement, such
preliminary prospectus, or such prospectus, or any such
amendment or supplement thereto, or arise out of, or are
based upon, the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and
such Xxxxxxxxx Shareholder(s) shall reimburse the Company
Indemnitees for any legal or other expenses reasonably
incurred by it or them in connection with investigating or
defending any such Losses, in each case to the extent, but
only to the extent, that the same arises out of, or is based
upon, an untrue statement or alleged untrue statement of a
material fact or an omission or alleged omission to state a
material fact in such Registration Statement, such
preliminary prospectus, or such prospectus or any such
amendment or supplement thereto in reliance upon, and in
conformity with, such written information. In no event shall
the liability of any of the Xxxxxxxxx Shareholder(s)
hereunder be greater in amount than the dollar amount of the
proceeds (net of the payment of all expenses by such
Xxxxxxxxx Shareholder(s)) received by such Xxxxxxxxx
Shareholder(s) upon the sale of the Xxxxxxxxx Shares giving
rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS.
Promptly after receipt by an indemnified party hereunder of
notice of any claim or the commencement of any action by a
claimant not an indemnified party hereunder ("Third-Party
Claim"), the indemnified party shall, if a claim for
indemnification in respect thereof is to be made by such
indemnified party against an indemnifying party, promptly
notify such indemnifying party in writing of such Third-
Party Claim as soon as is reasonably practicable after said
claim is actually known to the indemnified party; provided,
however, that the right of an indemnified party to be
indemnified hereunder in respect of Third-Party Claims shall
not be adversely affected by such indemnified party's
failure to notify the indemnifying party of such Third-Party
Claim unless, and then only to the extent that, an
indemnifying party is actually damaged or suffers any loss
or incurs any additional expense as a result thereof. If any
such Third-Party Claim is brought against an indemnified
party, and it promptly notifies the indemnifying party
thereof, the indemnifying party shall be entitled to assume
the defense thereof with counsel selected by the
indemnifying party and reasonably satisfactory to the
indemnified party. After the indemnifying party gives notice
to the indemnified party of its election to assume the
defense of such Third-Party Claim, (i) the indemnifying
party shall not, except as provided below, be liable to the
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indemnified party for any legal or other expense
subsequently incurred by the indemnified party in connection
with the defense thereof, (ii) the indemnifying party shall
not be liable for the costs and expenses of any settlement
of such claim or action unless such settlement was effected
with the written consent of the indemnifying party or the
indemnified party waived any rights to indemnification
hereunder in writing, in which case the indemnified party
may effect a settlement without such consent at its own cost
and expense, and (iii) the indemnified party shall be
obligated to cooperate with the indemnifying party in the
investigation of such claim or action; provided, however,
that the Shareholder Indemnitees may employ their own
counsel to participate in the defense of a Third-Party Claim
if they have been advised by counsel in writing that, in the
reasonable judgment of such counsel, it is advisable for
such Shareholder Indemnitees to be represented by separate
counsel due to the presence of a conflict of interest
between such Shareholder Indemnitees and the indemnifying
party, and in such event the fees and expenses of such
separate counsel shall be paid by the Company; provided
further, that the Company shall not be liable for the
reasonable fees and expenses of more than one separate
counsel at any time for all such Shareholder Indemnitees. An
indemnifying party shall not, without the prior written
consent of the indemnified parties, settle, compromise or
consent to the entry of any judgment with respect to any
pending or threatened Third-Party Claim in respect of which
indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or
potential parties to such Third-Party Claim) unless such
settlement, compromise or consent includes a release of such
indemnified party reasonably acceptable to such indemnified
party from all liability arising out of such Third-Party
Claim, or unless the indemnifying party shall confirm in a
written agreement reasonably acceptable to such indemnified
party that, notwithstanding any federal, state or common
law, such settlement, compromise or consent shall not
adversely affect the right of any indemnified party to
indemnification or contribution as provided in this
Shareholders Agreement.
(d) SURVIVAL OF INDEMNIFICATION. The obligations
under this Section 2.11 shall survive the completion of any
offering of Xxxxxxxxx Shares in a Registration Statement
pursuant to this Shareholders Agreement, and otherwise.
3. ADDITIONAL RIGHTS AND OBLIGATIONS OF XXXXXXXXX AND
PERMITTED TRANSFEREES
3.1 RIGHT OF FIRST OFFER
(a) If the Company proposes to sell equity
securities for cash to third parties other than employees of
the Company prior to a Qualifying IPO, then Xxxxxxxxx and
his permitted transferees (collectively, the "First
Offeree(s)") shall be given a Sale Notice which shall set
forth (i) the number of equity securities proposed to be
sold (the "First Offer Securities"), (ii) the price per
share or unit of equity securities for the First Offer
Securities (the "Offer Price"), and (iii) the other terms
and conditions of the proposed sale of the First Offer
Securities.
11
(b) Upon receipt of the Sale Notice, each First
Offeree shall have the option to purchase up to that number
of First Offer Securities at the Offer Price as equals the
product of (i) the number of First Offer Securities
multiplied by (ii) a fraction, the numerator of which shall
be the number of shares of Common Stock owned by such First
Offeree (assuming full conversion and exercise of all
convertible and exercisable securities into Common Stock)
and the denominator of which shall be the number of shares
of Common Stock owned by all of the First Offerees (assuming
full conversion and exercise of all convertible and
exercisable securities into Common Stock) (the
"PROPORTIONATE FIRST OFFER SHARE"). Upon delivery of the
Sale Notice, each First Offeree shall have 5 business days
(the "FIRST OFFER WINDOW") to deliver a written notice to
the Company stating whether he or it elects to exercise his
or its option under this Section 3.1 and the maximum number
of First Offer Securities (up to all of such First Offeree's
Proportionate First Offer Share) that he or it is willing to
purchase, and such notice shall constitute an irrevocable
commitment to purchase such First Offer Securities, subject
only to such conditions as were contained in the Sale
Notice. The closing of the sale of First Offer Securities
to any exercising First Offeree shall occur on or before the
second business day following the expiration of the First
Offer Window. At such closing, the Company shall deliver a
certificate or certificates representing the First Offer
Securities, properly endorsed for transfer, and the
exercising First Offerees shall deliver payment of the
purchase price therefor.
3.2 TAG ALONG SALES.
(a) RIGHT TO REQUIRE SALE. Notwithstanding any
other provision hereof, if KLT proposes to sell shares of
Common Stock, which shares would represent more than 10% of
the outstanding shares of Common Stock (assuming full
conversion and exercise of all convertible and exercisable
securities into Common Stock) at that time, to an
unaffiliated third party (a "Interest Sale"), then upon
request of Xxxxxxxxx or his permitted transferees
(collectively, the "Xxxxxxxxx Group"), KLT will afford such
member the opportunity to sell, the same percentage of
shares of Common Stock held by such member at that time to
such third party, at the same price and on the same terms
and conditions as KLT has agreed to sell its shares of
Common Stock to the unaffiliated third party. Such right
shall be exercisable upon delivery by such member (a
"Participating Shareholder") to the Company of a written
notice accepting such opportunity within (i) three (3)
(business days of the date of the Interest Sale Notice (as
defined below) if the consideration is all cash or (ii) five
(5) business days after receipt by the Participating Member
of Requested Information (defined below) if the
consideration other than all cash. (.
(b) INTEREST SALE NOTICE. Prior to making any
Interest Sale, KLT shall provide each member of the
Xxxxxxxxx Group with written notice (the "Interest Sale
Notice"). If the consideration in the Interest Sale is all
cash, KLT shall give the Interest Sale Notice at least four
(4) business days prior to the proposed date of the
Interest Sale ("Interest Sale Date"). In all other
situations, the Interest Sale Date shall not take place
until six (6) ( business days following the receipt by the
applicable member of the
12
Xxxxxxxxx Group of all information
(the "Requested Information") about the Interest Sale that
each member of the Xxxxxxxxx Group reasonably requests
within two (2) business days of receiving the Interest Sale
Notice. The Interest Sale Notice will identify the proposed
purchaser, the percentage of Common Stock to be sold, the
proposed amount and form of consideration to be paid per
share, the terms and conditions of payment and, if the
consideration in the Interest Sale is cash, the Interest
Sale Date.
(c) INTEREST SALE CLOSING. On the Interest Sale
Date, each Participating Shareholder and KLT shall deliver
certificates, notes and instruments of assignment for the
securities to be sold in the Interest Sale, duly endorsed
for transfer (accompanied as appropriate by stock power or
powers and other appropriate instruments of assignment duly
executed), to the purchaser in the manner and at the address
indicated in the Interest Sale Notice, against delivery of
the agreed purchase price.
3.3 EQUAL TREATMENT IN MERGERS, CONSOLIDATION AND
SALES OF ASSETS. If KLT agrees to vote in favor of a merger or
consolidation of the Company with a third party, or a sale of all
or substantially all of the assets of the Company to a third
party, Xxxxxxxxx and his permitted transferees shall be entitled
to participate therein at the same price per share of Common
Stock received by KLT and on the same terms and conditions as
KLT. KLT and Xxxxxxxxx agree, and Xxxxxxxxx shall cause each of
his permitted transferees to agree, not to exercise any
dissenter's rights of appraisal with respect to any such merger,
consolidation or sale of assets.
3.4 DRAG-ALONG RIGHTS. If KLT agrees to sell more
than 50% of the Company's fully diluted outstanding shares to a
third party, or if KLT agrees to vote in favor of a merger or
consolidation with a third party, or sell all or substantially
all of the assets of the Company to a third party, then KLT shall
have the right to require to be sold to such third party, or vote
in favor thereof, all of the shares of Common Stock owned by
Xxxxxxxxx and his permitted transferees at the same price and on
the same terms and conditions as apply to KLT with respect
thereto. KLT shall provide Xxxxxxxxx and his permitted
transferees written notice of the transactions described above,
and the terms and conditions related thereto, at least 10 days
prior to the date of consummation of such transaction.
3.5 ACCESS TO INFORMATION. During the time period
that Xxxxxxxxx or his designee serves as a director, Xxxxxxxxx
shall be granted such reasonable access to information concerning
the Company as is required by law to be made available to a
director of a Missouri corporation, PROVIDED that Xxxxxxxxx
agrees, and shall cause any designee of his to agree, (i) to
maintain the confidentiality of all nonpublic information and not
disclose such nonpublic information to any third parties, and
(ii) not to use any such nonpublic information for any purpose
that is directly or indirectly in competition with, or otherwise
injurious to, the current or proposed business of the Company or
its subsidiaries. If Xxxxxxxxx or his designee ceases to be a
director, Xxxxxxxxx shall be granted such access to nonpublic
information as is required by Missouri law to be granted to
shareholders of a Missouri corporation. If the Company ceases to
file reports with the U.S. Securities and Exchange Commission for
any reason, Xxxxxxxxx shall be provided with annual audited
financial statements within 90 days of the end of the Company's
13
fiscal year and unaudited quarterly financial statements for the
first three quarters of each year within 45 days of the end of
the applicable quarter.
3.6 Allocation of Net Operating Losses. Xxxxxxxxx
hereby consents to the allocation to, and use by, KLT and/or its
affiliates of the existing and future net operating losses of the
Company to offset the taxable income of KLT and/or its
affiliates, except to the extent that the Company would otherwise
have taxable income in the same tax year in which KLT and/or its
affiliates use such net operating losses.
3.7 RESTRICTIONS ON TRANSFER.
(a) Xxxxxxxxx agrees that he shall not be
permitted to transfer any of his shares of Common Stock
prior to September 1, 2003 to the extent that after such
sale Xxxxxxxxx would own less than 15% of the fully diluted
outstanding shares of Common Stock, except pursuant to tag-
along and drag-along rights granted pursuant to this
Shareholders Agreement.
(b) Any transfer of shares of Common Stock
permitted to be transferred pursuant to this Shareholders
Agreement shall be subject to the agreement by the
transferee of such Shares to be bound by all terms and
conditions of this Shareholders Agreement.
3.8 LEGEND. All Shares 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 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."
4. TERMINATION
4.1 COMPLETE TERMINATION. This Shareholders Agreement
and all restrictions on Share transfers created hereby shall
terminate on the occurrence of any of the following events:
(a) The issuance of an order by a court of
competent jurisdiction declaring that the Company is
bankrupt;
(b) The dissolution of the Company.
14
(c) KLT becoming the owner of all of the shares
of the Company which are then subject to this Shareholders
Agreement, in which case the director designated by
Xxxxxxxxx for nomination shall immediately resign and all
rights previously held by Xxxxxxxxx shall terminate.
(d) The execution of a written instrument by the
Company and Xxxxxxxxx which terminates this Shareholders
Agreement.
4.2 EFFECT. The termination of this Shareholders
Agreement for any reason shall not affect any right or remedy
existing hereunder prior to the effective date of its
termination, except that upon termination of this Shareholders
Agreement, Xxxxxxxxx shall resign from the Board of Directors or
cause the resignation of his designee for nomination to the Board
of Directors and shall thereafter have no right arising hereunder
to nominate or elect members of the Board of Directors.
15
5. GENERAL PROVISIONS
5.1 GOVERNING LAW. This Shareholders Agreement shall
be construed pursuant to the laws of the State of Missouri.
5.2 DEFINITIONS. When used herein, the term "Shares"
shall mean in all cases, except where the context clearly
requires otherwise, all shares of the Company's Common Stock and
Preferred Stock owned by the Shareholders. Unless otherwise
defined herein, all capitalized terms shall have the meanings
ascribed to them in the Shareholders Agreement.
5.3 REMEDIES FOR BREACH. The Shares are unique
chattels and each party to this Shareholders Agreement shall have
the remedies which are available to him or it for the violation
of any of the terms of this Shareholders Agreement, including,
but not limited to, the equitable remedies for specific
performance and injunctive relief.
5.4 NOTICES. All notices, requests, demands, and other
communications required or permitted under this Shareholders
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, bearing the address shown
in this Section 5.4 for, or such other address as may be
designated in writing hereafter by, such party:
If to the Company:
Xxxxxx X. Xxxxxx
DTI Holdings, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx. Xxxxx, XX 00000
If to KLT:
KLT Telecom Inc.
00000 Xxxx, Xxxxx 000
Xxxxxxxx Xxxx XX 00000
Attn: President
(000) 000-0000
(000) 000-0000 (Fax)
16
With a copy to:
KLT Telecom Inc.
00000 Xxxx, Xxxxx 000
Xxxxxxxx Xxxx XX 00000
Attn: General Counsel
(000) 000-0000
(000) 000-0000 (Fax)
and to:
Xxxxxxx, Mag & Fizzell, P.C.
0000 Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Fax: 000-000-0000
Attn: Xxxx X. Xxxxxx, Esq.
If to the Xxxxxxxxx:
Xxxxxxx X. Xxxxxxxxx
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 (Fax)
With a copy to:
Xxxxx Xxxx LLP
One Metropolitan Square, Suite 3600
000 X. Xxxxxxxx
Xx. Xxxxx, XX 00000
Attn: Xxxxx XxXxxxxx, Esq.
5.5 AMENDMENT. This Shareholders Agreement may be
amended or altered at any time if the amendment or alteration is
both ratified by the Board of Directors of the Company and
consented to in writing by all other parties hereto.
5.6 CAPTIONS. The captions and headings to Sections of
this Shareholders Agreement have been inserted for identification
and reference purposes only and shall not be used to construe the
meaning or the interpretation of this Shareholders Agreement.
17
5.7 BINDING EFFECT. This Shareholders Agreement is
binding upon and inures to the benefit of the Company, its
successors, assigns, and transferees, and to the Shareholders and
their respective heirs, personal representatives, successors and
permitted assigns and transferees.
5.8 ENTIRE AGREEMENT; AMENDMENT. This Shareholders
Agreement, together with the Agreement (including schedules)
constitutes the full and entire understanding and agreement
between the parties with respect to the subject matter hereof.
5.9 COUNTERPARTS. This Shareholders Agreement may be
executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
5.10 SEVERABILITY. In the event that any provision of
this Shareholders Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this
Shareholders Agreement shall continue in full force and effect
without said provision.
[REST OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE TO FOLLOW]
18
IN WITNESS WHEREOF, the Company and the Shareholders
have executed this Shareholders Agreement on the day and year
above written.
DTI Holdings, Inc.
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
SHAREHOLDERS:
/s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
KLT Telecom Inc.
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
19
EXHIBIT A
SHARES OWNED BY THE SHAREHOLDERS
NAME OF SHAREHOLDER NUMBER OF SHARES OWNED
Xxxxxxx X. Xxxxxxxxx 9,906,064 Shares of Common Stock
KLT Telecom Inc. 30,000 Shares of Preferred Stock
20,093,936 Shares of Common Stock
20
