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EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
DATED AUGUST 1, 1999
BY AND AMONG
XETA CORPORATION
(THE "PURCHASER"),
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, INDIVIDUALLY,
AND
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, TRUSTEE UNDER LIVING TRUST
OF ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, DATED OCTOBER 13, 1994
(COLLECTIVELY, THE "SELLER")
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TABLE OF CONTENTS
SECTION OF
AGREEMENT
PAGE NO.
ARTICLE I - Purchase of Shares................................................1
1.1 Acquisition of Shares.......................................1
1.2 Purchase Price..............................................1
1.3 Tax Treatment...............................................2
ARTICLE II - Representations and Warranties of the Seller.....................2
2.1 Joint Representations and Warranties........................2
2.2 Continuity of Representations...............................3
2.3 Value.......................................................3
2.4 Concurrent Transaction......................................3
Article III - Representations and Warranties of Purchaser.....................3
3.1 Corporate Existence and Qualification.......................3
3.2 Consents....................................................4
3.3 Corporate Authority.........................................4
3.4 No Breach...................................................4
3.5 Brokers.....................................................4
Article IV - Covenants........................................................5
4.1 Pre-Closing Covenants of the Seller and the Company.........5
4.2 Pre-Closing Covenants of Purchaser..........................5
4.3 Seller's Confidentiality Agreement..........................5
4.4 Post-Closing Covenant of Purchaser..........................6
Article V - Conditions Precedent to the Obligation of Purchaser to Close......7
5.1 Representations and Warranties..............................7
5.2 Covenants...................................................7
5.3 No Actions..................................................7
5.4 Consents; Licenses and Permits..............................7
5.5 No Material Change..........................................7
5.6 Certificate.................................................8
5.7 Opinion.....................................................8
5.8 Lucent Distributorship......................................8
5.9 Non-Competition and Confidentiality.........................8
5.10 Section 338 Election........................................8
5.11 Board Approval..............................................8
5.12 Fairness Opinion............................................8
5.13 Bank Financing..............................................8
5.14 ▇▇▇▇▇▇ Stock................................................8
5.15 Additional Documents........................................8
Article VI - Conditions Precedent to the Obligation of the Seller to Close....9
6.1 Representations and Warranties..............................9
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6.2 Covenants...................................................9
6.3 No Actions..................................................9
6.4 Certificate.................................................9
6.5 ▇▇▇▇▇▇ Agreement............................................9
6.6 Headquarters Lease Extension................................9
Article VII - Closing.........................................................9
7.1 The Closing.................................................9
7.2 Location, Time and Date....................................10
7.3 Seller's Deliveries........................................11
7.4 Purchaser's Deliveries.....................................11
7.6 Transfer of Possession.....................................11
Article VIII - Survival of Representations; Indemnification..................11
8.1 Survival...................................................11
8.2 Indemnification by the Seller..............................12
8.3 Indemnification by Purchaser...............................12
8.4 Claims.....................................................12
8.5 Seller's Liability.........................................12
8.6 Purchaser's Liability......................................12
8.7 Final Determination........................................12
8.8 Defense of Claims..........................................13
8.9 Extension of Time..........................................13
Article IX - Termination and Waiver..........................................14
9.1 Termination................................................14
9.2 Waivers....................................................14
Article X - Miscellaneous Provisions.........................................15
10.1 Expenses...................................................15
10.2 Confidential Information...................................15
10.3 Publicity..................................................15
10.4 Modification, Termination or Waiver........................15
10.5 Notices....................................................15
10.6 Binding Effect and Assignment..............................16
10.7 Exhibits and Schedules.....................................16
10.8 Entire Agreement...........................................16
10.9 Governing Law..............................................16
10.10 Section Headings...........................................17
10.11 Gender.....................................................17
10.12 Severability...............................................17
10.13 Attorneys' Fees............................................17
10.14 Counterparts...............................................17
10.15 Recitals...................................................17
10.16 Equitable Relief...........................................17
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT"), which is to be
effective as of the 1st day of August, 1999 (the "EFFECTIVE DATE"), is entered
into by and among XETA CORPORATION, an Oklahoma corporation ("PURCHASER"),
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, individually, and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, AS TRUSTEE UNDER LIVING
TRUST OF ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, DATED OCTOBER 13, 1994 (collectively, the "Seller").
RECITALS:
A. Seller owns fifty (50) shares (the "SHARES") of the $1.00 par value
common stock of U. S. Technologies Systems, Inc., a Missouri corporation (the
"COMPANY").
B. The shares constitute fifty percent (50%) of the Company's issued
and outstanding common stock.
C. Purchaser desires to acquire from the Seller, and the Seller
desires to sell to Purchaser, all of the Shares and all associated goodwill.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
hereby, the representations, warranties, covenants, and agreements herein
contained, and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Purchaser, and Seller do hereby
agree as follows:
ARTICLE I
Purchase of Shares
1.1 Acquisition of Shares. Upon the terms of, and subject to the
conditions set forth in this Agreement at the Closing, Seller shall convey to
Purchaser and Purchaser shall acquire all of the Shares and associated goodwill
from the Seller, free and clear of all manner of liens, charges, encumbrances
and claims. The Shares shall constitute one-half (1/2) of all of the Company's
capital stock issued and outstanding as of the date of Closing.
1.2 Purchase Price. The purchase price for the Shares ("PURCHASE
PRICE") shall be $9,485,209. Upon the sale, transfer and delivery by the Seller
of the Shares to Purchaser as set forth in Section 1.1, and in consideration
therefor, Purchaser shall pay to the Seller, at the Closing Date as defined
herein, by cashier's check or by electronic wire transfer or other immediately
available funds the Purchase Price, $100,000 of which shall be allocated as
consideration for Seller's agreement not to compete with Purchaser or the
Company nor to solicit any of its
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employees, customers or vendors for a period of one (1) year after the Closing
Date, as more particularly set out in a Non-Competition Agreement in the form
of Exhibit "1.2" attached hereto ("NON-COMPETITION AGREEMENT"). In addition to
the Purchase Price, Purchaser shall pay, or cause to be paid, at the Closing,
by cashier's check or by electronic wire transfer or other immediately
available funds, the sum of $1,514,791 plus $11,361, the amount of interest
accrued on the Company's indebtedness to Seller for the period July 1, 1999,
through July 31, 1999 (collectively, the "DEBT PAYMENT"), being the principal
balance of all indebtedness of the Company to Seller. Upon payment in full of
the Debt Payment, Seller shall release and discharge the Company from any
further liability in relation to any and all indebtedness, obligations and
liabilities of any and every kind owed by the Company to Seller, whether
absolute or contingent, liquidated or unliquidated, matured or unmatured, known
or unknown, and however acquired or arising.
1.3 Tax Treatment. Seller is aware of the fact, and hereby acknowledges
that Purchaser is contemporaneously, but separately, negotiating for the
possible purchase of all of ▇▇▇▇ ▇▇▇▇▇▇'▇ stock in the Company. Though neither
purchase transaction is affected by the terms of the other, Seller hereby
agrees, upon request, to promptly and timely execute and file Form 8023-A and to
otherwise cooperate with XETA and ▇▇. ▇▇▇▇▇▇ in a joint election to treat each
transaction as a sale of assets under Section 338(h)(10) of the U. S. Internal
Revenue Code (the "CODE").
1.4 Automobile. As additional consideration for and inducement to
Seller to enter into this Agreement and sell Purchaser the Shares, Purchaser
hereby agrees that it will cooperate and use its best efforts to cause the
Company-owned automobile currently being driven by Seller to be conveyed to
Seller at or immediately after Closing, free of liens and encumbrances and at
no cost to Seller, except for any tax liability incurred as a result of such
conveyance.
ARTICLE II
Representations and Warranties
of the Seller
2.1 Joint Representations and Warranties. Contemporaneously with
Seller's execution and delivery of this Agreement, to be effective as of the
execution date hereof ("EXECUTION DATE") as well as the Closing Date, the
Seller shall make the representations and warranties to Purchaser (the
"REPRESENTATIONS AND WARRANTIES") contained in Article I of the supplementary
agreement, a copy of which constitutes Exhibit "2.1" hereto attached (the
"INDUCEMENT"). As an inducement to the Purchaser to enter into this Agreement
and an accommodation to the Seller as a principal shareholder of the Company,
the Company shall make the Representations and Warranties jointly and severally
with the Seller. Each of the Representations and Warranties shall be deemed
material, and Seller and the Company shall acknowledge in making the
Representations and Warranties that Purchaser, in executing, delivering, and
consummating this Agreement, has relied and will rely upon the correctness and
completeness of each of such Representations and Warranties.
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2.2 Continuity of Representations. The Seller covenants and agrees
that the all representations and warranties made by him herein or in connection
herewith shall be deemed given as of the Closing Date the same as on the
Execution Date and that there will be no material adverse change or deviation
in or from the Representations and Warranties from the Execution Date through
the Closing Date, unless and only to the extent that the Company and/or the
Seller shall have particularly advised Purchaser of such each such adverse
change or deviation in writing prior to Closing.
2.3 Value. In deciding to sell the Shares at the price provided
herein, Seller represents and warrants to the Purchaser that he has relied on
his own financial, tax, business and legal advisors and has not relied on any
express or implied representation by Purchaser or any other person or entity as
to the value of the Shares. Seller has been employed by the Company, has been
actively involved in the management of the Company's day-to-day affairs, has
had full and complete access to all documents, records and books of the
Company, and has had a reasonable opportunity to obtain all such other
information as he has deemed necessary to determine the value of the Shares.
2.4 Concurrent Transaction. Seller understands and acknowledges that
the Company's other shareholder, ▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") has negotiated
separately with the Purchaser for the sale and purchase of ▇▇▇▇▇▇'▇ shares of
the capital stock of the Company. Seller further understands and acknowledges
that the Purchaser would not have agreed to purchase the Shares without
▇▇▇▇▇▇'▇ concurrent agreement to sell his shares in the Company to the
Purchaser, that the concurrent purchase of ▇▇▇▇▇▇'▇ shares in the Company is a
condition of Closing, and that if negotiations with the Purchaser had been
conducted by him jointly with ▇▇▇▇▇▇, Seller might have realized a higher price
for the Shares. Nevertheless, Seller is satisfied with the Purchase Price and
terms provided herein, and he is willing and has freely agreed to sell the
Shares to the Purchaser at such price and on such terms.
ARTICLE III
Representations and Warranties of Purchaser
Purchaser makes the following representations and warranties to the
Seller, each of which shall be deemed material, and Seller, in executing,
delivering and consummating this Agreement, has relied and will rely upon the
correctness and completeness of each of such representations and warranties:
3.1 Corporate Existence and Qualification. Purchaser is a company duly
organized, validly existing and in good standing under the laws of the State of
Oklahoma. Purchaser has the corporate power to own its assets and properties
and to carry on its business as now conducted, and Purchaser is duly qualified
and is in good standing as a foreign corporation in those jurisdictions in
which it is required to qualify in order to own its assets or properties or to
carry on its business as now conducted.
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3.2 Consents. No consent of any governmental or other regulatory
agency, foreign or domestic, or any other party is required to be received by
or on the part of Purchaser to enable it to enter into and carry out this
Agreement in all material respects.
3.3 Corporate Authority. Purchaser has the power to enter into this
Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by Purchaser's Board of
Directors, and no other corporate proceeding on the part of Purchaser will be
necessary to authorize the execution and delivery of this Agreement. This
Agreement constitutes the legal, valid and binding agreement of Purchaser and,
assuming that this Agreement constitutes the legal, valid and binding agreement
of the Seller, it is enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting the rights of
creditors and to general principles of equity.
3.4 No Breach. To the knowledge of Purchaser, neither the execution or
delivery of this Agreement nor Purchaser's compliance with any of the
provisions hereof or its consummation of the transactions contemplated hereby,
will:
(a) violate or conflict with any provision of its Certificate
of Incorporation or Bylaws;
(b) violate or result, alone or with the passage of time, in
the material breach or termination of, or otherwise give any
contracting party the right to terminate or declare a default under,
the terms of any material agreement, document or undertaking to which
Purchaser is a party, or by which it or any of its properties or
assets may be bound (except for such violations, conflicts, breaches
or defaults as to which required waivers or consents by other parties
have been or, prior to Closing, will be obtained);
(c) result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of
Purchaser;
(d) violate any judgment, order, injunction, decree, or award
against or binding upon Purchaser, its properties or assets; or
(e) violate any law or regulation of any jurisdiction
relating to Purchaser or any of its securities, assets or properties.
3.5 Brokers. Purchaser has not engaged, consented to, or authorized
any broker, finder, investment banker or other third party to act on its
behalf, directly or indirectly, as a broker or finder in connection with the
transactions contemplated by this Agreement, and Purchaser agrees to indemnify
the Seller against, and to hold him harmless from, any claim for brokerage or
similar commission or other compensation, which may be made against Seller by
any third party in connection with the transactions contemplated hereby based
upon any wrongful action by Purchaser.
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ARTICLE IV
Covenants
4.1 Pre-Closing Covenants of the Seller and the Company. Seller and
the Company shall bind themselves, jointly and severally, to the covenants in
favor of Purchaser set forth in Article II of the Inducement. In addition, the
Seller covenants and agrees that from the Execution Date through the Closing
Date he shall not:
(a) trade in any of the Purchaser's stock;
(b) permit the Company to conduct its business other than in
the ordinary course consistent with past practice;
(c) permit the Company, its employees, agents or
representatives, directly or indirectly, to solicit, encourage or
participate in discussions concerning, or to supply information
relating to, any other sale of any material portion of the Company's
assets or capital stock; or
(d) permit the Company to make any distributions of any kind
to its shareholders, whether of operating profits or in payment of any
debt due to any such shareholder(s), or any interest thereon, from or
after July 31, 1999, other than normal salary payable for services
rendered.
4.2 Pre-Closing Covenants of Purchaser. Purchaser hereby covenants
that, from and after the Execution Date until the Closing or the earlier
termination of this Agreement, Purchaser will use its best efforts to insure
that all of its representations and warranties contained herein are true in all
material respects as of the Closing as if repeated at and as of such time, and
that no material breach or default that has not been cured by the Closing shall
occur with respect to any of its covenants, representations or warranties
contained herein. Purchaser will not voluntarily take any action or do anything
which will cause a breach of or default respecting such covenants,
representations and warranties and shall promptly notify the Seller of any
event or fact constituting or which is likely to cause such a breach or
default.
4.3 Seller's Confidentiality Agreement. At the Closing, Seller shall
execute and deliver to the Purchaser a Confidentiality Agreement in the form of
Exhibit 4.3 hereto attached ("CONFIDENTIALITY AGREEMENT") containing covenants
prohibiting Seller, for a period of five (5) years after the Closing Date (the
"RESTRICTED PERIOD") from disclosing any confidential or proprietary
information of or concerning the Company to any third party, including but not
limited to Lucent Technologies, Inc. ("LUCENT"), which information shall
include but not be limited to: (i) any information that the Company considers
or treats as confidential whether or not the Company
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has marked such information as confidential; (ii) any financial information of
the Company including its assets and results of operations; (iii) any
information concerning or related to the Company's Total Quality Management
program or its repair procedures or purchase methods; (iv) any information
concerning past contractual disputes with Lucent and the subject matter
thereof; and (v) any information concerning previous allegations of breaches by
the Company made by Lucent, the subject matter thereof, and the disposition of
such allegations.
4.3.1 If the Seller receives a request to disclose all or
any part of the foregoing information under the terms of a subpoena or
order issued by a court or governmental body, the Seller agrees:
(a) To notify the Purchaser, as promptly as
practicable, of the existence, terms, and circumstances
surrounding such request; and
(b) To consult with the Purchaser on the
advisability of taking legally available steps to resist or
narrow such request.
If disclosure of such information is required to prevent the Seller
from being held in contempt or subject to other penalty, Seller may
furnish the information, provided that Seller shall furnish only such
portion of the information as he is, in the written opinion of counsel
satisfactory to Seller and Purchaser, legally compelled to disclose,
and he shall afford Purchaser such reasonable cooperation as it may
request to obtain an order or other reliable assurance that
confidential treatment will be accorded to the disclosed information.
4.3.2 Specifically including, and without limiting any of
his obligations under this Section 4.3, Seller further agrees, subject
to the provisions of Section 4.3.1 hereof, that he shall not directly
or indirectly provide to Lucent, any of its affiliates, or any of its
employees, officers or agents any information that is in addition to,
different from, or contrary to the information provided earlier by the
Company or any of its officers or employees to Lucent in connection
with the disposition of any earlier allegations by Lucent that the
Company had breached or was in breach of any current or previous
agreement between the Company and Lucent or its predecessor.
4.4 Post-Closing Covenant of Purchaser. Purchaser hereby agrees to
reimburse the Seller, on or before January 15, 2000, for the "Net Tax Cost"
incurred by the Seller, if any, accruing from the Effective Date up to, but not
including, the day of Closing. As used herein, the term "Net Tax Cost" shall
mean the excess of the income allocated to the Seller from the Company's
operations at the date of Closing for calendar year 1999 over the income
allocated to Seller from the Company's operations for calendar year 1999 at
July 31, 1999, multiplied by 19.6 % (excluding any transaction gains or losses,
if any, resulting from the sale of Shares contemplated by this Agreement).
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ARTICLE V
Conditions Precedent to the Obligation of Purchaser to Close
The obligation of Purchaser to close is subject to the fulfillment,
prior to or on the Closing Date, of each of the following conditions, any one
or more of which may be waived by Purchaser (except when the fulfillment of
such condition is a requirement of law:
5.1 Representations and Warranties. All of the Representations and
Warranties and all other representations and warranties of the Company and the
Seller contained in this Agreement and in any written statement, Exhibit,
Schedule or certificate delivered to Purchaser pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be true and correct
in all material respects as at the Execution Date as well as on the Closing
Date, as if made at the Closing as of the Closing Date.
5.2 Covenants. The Company and the Seller shall have in all material
respects performed and complied with all covenants and agreements required by
this Agreement to be performed or complied with by each of them prior to or at
the Closing.
5.3 No Actions. No action, suit, proceeding or investigation shall
have been instituted, and be continuing before a court or before or by a
governmental body or agency, or shall have been threatened and be unresolved,
to restrain or to prevent or to obtain damages in respect of, the carrying out
of the transactions contemplated hereby, or which, if successful, would
materially affect the right of Purchaser to own the Shares, or which, if
successful, would have a material adverse effect on such right, the prospects
or net worth of the Company, or the value of the Shares.
5.4 Consents; Licenses and Permits. The Company and the Seller shall
have each obtained all consents, licenses and permits of third parties
necessary for the performance by each of them of all of their respective
obligations under this Agreement, and such other consents, if any, which are
necessary to prevent (i) any agreements of the Company from terminating, the
termination of which, in the aggregate, would have a material adverse effect on
the business, financial condition or assets of the Company, or (ii) any
material indebtedness of the Company from becoming due then or with notice or
the passage of time as a result of the performance of this Agreement.
5.5 No Material Change. The Purchaser shall have completed its due
diligence examination of the Company and found the Shares to be in all respects
satisfactory as an investment by the Purchaser, and there shall have been no
material change, whether or not adverse, at the Closing Date in the business,
assets, properties, operations, financial status or prospects of the Company
since December 31, 1998; provided, however, that the Seller shall release and
discharge the Company, at or before Closing, from all of the Seller Claims.
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5.6 Certificate. Purchaser shall have received a certificate in the
form of Exhibit 5.6 hereto attached, dated as of the Closing Date and signed by
the Seller and by the Company, verifying their satisfaction of the conditions
set forth in Sections 5.1 through 5.5.
5.7 Opinion. Purchaser shall have received the written opinion of
legal counsel to the Seller and the Company, dated as of the Closing Date, in
form and substance reasonably satisfactory to Purchaser and its counsel
covering the matters set forth in Exhibit 5.7 hereto.
5.8 Lucent Distributorship. The Company shall have successfully
renewed and extended its existing distributorship relationship with Lucent on
terms and for a period acceptable to Purchaser.
5.9 Non-Competition and Confidentiality. At the Closing, the Seller
shall have executed and delivered the Non-Competition Agreement and the
Confidentiality Agreement, shall have tendered his resignation as a director,
officer and employee of the Company, and shall have turned over and
relinquished to the Purchaser all written notes, memoranda, reports and other
documents containing any confidential or proprietary information of or
concerning the Company.
5.10 Section 338 Election. If requested by Purchaser, the Seller shall
have made an election under Section 338(h)(10) of the Code to treat the sale of
the Shares for tax purposes as a sale of the Company's assets. In such event
Purchaser shall prepare the appropriate IRS tax forms, and will provide copies
of the same to Seller for inclusion with the appropriate tax returns.
5.11 Board Approval. The Board of Directors of Purchaser shall have
given its final approval to the closing of the purchase of the Shares.
5.12 Fairness Opinion. Purchaser shall have obtained a "fairness
opinion" from the investment banking firm previously engaged by the Purchaser,
at its sole expense, in connection with the transaction contemplated by this
Agreement, finding the terms of this transaction, including the Purchase Price
and other consideration to be paid for the Shares, to be fair, from a financial
point of view, to the Shareholders of the Purchaser.
5.13 Bank Financing. The Purchaser shall have received firm
commitments from one or more financing syndicates to lend Purchaser the
aggregate sum of not less than $23,000,000, at a weighted-average interest rate
per annum not to exceed the London Interbank Offer Rate plus 2.5% per annum and
repayable over a term of not less than five (5) years.
5.14 ▇▇▇▇▇▇ Stock. Purchaser shall have entered into a binding
contract with ▇▇▇▇▇▇ for the purchase of all of the Company's remaining
outstanding stock.
5.15 Additional Documents. The Seller and the Company shall have
delivered, in a form mutually acceptable to Purchaser and Seller, all such
other certificates and documents as Purchaser or its counsel may have
reasonably requested as necessary to consummate the transaction contemplated by
this Agreement.
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ARTICLE VI
Conditions Precedent to the Obligation of the
Seller to Close
The obligation of the Seller to close is subject to the fulfillment,
prior to or on the Closing Date, of each of the following conditions, any one
or more of which may be waived by the Seller (except when the fulfillment of
such condition is a requirement of law):
6.1 Representations and Warranties. All representations and warranties
of Purchaser contained in this Agreement and in any Exhibit, Schedule or
certificate delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be true and correct in all material respects as at
the Closing Date, as if made at the Closing and as of the Closing Date.
6.2 Covenants. Purchaser shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by it prior to or at the Closing.
6.3 No Actions. No action, suit, proceeding, or investigation shall
have been instituted, and be continuing, before a court or before or by a
governmental body or agency, or shall have been threatened, and be unresolved,
by any governmental body or agency to restrain or prevent, or obtain damages in
respect of, the carrying out of the transactions contemplated hereby.
6.4 Certificate. The Seller shall have received a certificate in the
form annexed hereto as Exhibit 6.4 dated the Closing Date, signed by the
Purchaser verifying the satisfaction of the conditions contained in Sections
6.1 through 6.3.
6.5 ▇▇▇▇▇▇ Agreement. On or before November 1, 1999, the Purchaser and
▇▇▇▇▇▇ shall have entered into a stock purchase agreement for his sale to the
Purchaser of all of his stock in the Company.
6.6 Headquarters Lease Extension. If on the Closing Date, Seller is
the sole owner of the building in which the Company's executive offices are
located (the "BUILDING"), a ninety (90) day extension of the Company's existing
month-to-month lease thereof, duly executed by Seller and further providing for
such lease to continue thereafter on a month-to-month basis, until terminated
by either party upon thirty (30) days' prior written notice to the other
("HEADQUARTERS LEASE EXTENSION").
ARTICLE VII
Closing
7.1 The Closing. The closing of the sale and acquisition of the Shares
contemplated by this Agreement (the "CLOSING") shall occur upon satisfaction of
all of the conditions precedent to
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the obligations of the parties to close as set forth in Articles V and VI and
upon the delivery by the parties of all of the items to be delivered by them
pursuant to Sections 7.3 and 7.4 hereof.
7.2 Location, Time and Date. The Closing shall be held in the offices
of ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, at
10:00 o'clock a.m. on November 15, 1999, or at such other time and place as may
be mutually agreed to by the parties hereto; provided, however, that the
Purchaser shall have the right, as provided in Section 7.2.1 below, to extend
the date of Closing for one (1) thirty-day period; provided, further, that the
Closing shall in no event occur later than December 15, 1999 (the "TERMINATION
DATE"). (The date on which the Closing shall occur is referred to in this
Agreement as the "CLOSING DATE").
7.2.1 The Purchaser shall be entitled to extend the Closing
from November 15, 1999, to the Termination Date provided (a) Purchaser
pays Seller the sum of $150,000 as ▇▇▇▇▇▇▇ money to be applied to the
Purchase Price at Closing and (b) the conditions to Purchaser's
obligation to close described in Sections 5.8, 5.11 and 5.14 shall
have been satisfied or waived. Purchaser will accompany its payment of
such ▇▇▇▇▇▇▇ money with a written status report to Seller confirming
that Purchaser has completed its due diligence review of the Company
and that ▇▇▇▇ ▇▇▇▇▇▇ executed a stock purchaser agreement with
Purchaser by November 1, 1999, and informing Seller of any breach or
breaches of the conditions to Purchaser's obligation to close
described in Sections 5.1, 5.2, 5.3 and 5.5 of this Agreement of which
Purchaser is aware as of the date of such status report; provided,
however, that the furnishing of such status report shall in no way
waive or impair Purchaser's right to require Seller's strict
compliance with all of the representations, warranties and covenants
made by Seller in this Agreement, including but not limited to those
described in said Sections 5.1, 5.2, 5.3 and 5.5.
7.2.2 If the Closing shall not occur by the Termination Date
and Seller shall have satisfied all conditions imposed on Seller
hereunder prior to that date, Seller shall be entitled to retain said
$150,000 of ▇▇▇▇▇▇▇ money as liquidated damages in full satisfaction
of Purchaser's obligations under this Agreement. The parties hereby
expressly agree that this liquidated damage amount has been calculated
by the parties based upon their good faith estimate of the actual
damage that Seller would likely suffer as a result of Purchaser's
failure to close by the Termination Date, assuming Seller is ready,
willing and able to close on that date and has satisfied all
conditions to Purchaser's obligation to close hereunder. The parties
further agree, (i) that such amount is reasonable in light of the
anticipated actual harm that the Seller would suffer by reason of
Purchaser's wrongful failure to close, and (ii) that the difficulty of
proving Seller's actual damages and the lack of an adequate remedy at
law require the inclusion of liquidated damages herein.
7.2.3 The parties expressly agree, notwithstanding any other
contrary provision in this Agreement, that the retention of such
▇▇▇▇▇▇▇ money as liquidated damages shall be the Seller's sole and
exclusive remedy for Purchaser's failure to close by the Termination
Date; provided, however, that Purchaser shall be entitled to a full
refund of its ▇▇▇▇▇▇▇ money if any condition to its obligation to
close hereunder (other than those described in Section 7.2.1) shall
remain unsatisfied as of the Termination Date.
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7.3 Seller's Deliveries. At the Closing, the Company and the Seller
will deliver or cause to be delivered to Purchaser:
(a) All certificates representing the Shares, constituting
fifty percent (50%) of the outstanding shares of the Company
immediately prior to the Closing;
(b) The certificate required by Section 5.6;
(c) The opinion of counsel required by Section 5.7;
(d) The Non-Competition Agreement, the Confidentiality
Agreement, and the Seller's resignation as an officer, director and
employee of the Company;
(e) If Seller is the sole owner of the Building on the
Closing Date, the Headquarters Lease Extension; and
(f) Such other certified resolutions, releases, documents,
and certificates, as are required to be delivered by the Seller and/or
the Company pursuant to the provisions of this Agreement, including
but not limited the Inducement.
7.4 Purchaser's Deliveries. At the Closing, Purchaser will deliver or
cause to be delivered to the Seller:
(a) The Purchase Price and the Debt Payment;
(b) The certificate required by Section 6.4;
(c) If the Seller is the sole owner of the Building on the
Closing Date, the Headquarters Lease Extension; and
(d) Such other certified resolutions, documents and
certificates as are required to be delivered by Purchaser pursuant to
the provisions of this Agreement.
7.5 Transfer of Possession. As of the Closing Date, the Seller shall
give Purchaser full possession and ownership of the Shares.
ARTICLE VIII
Survival of Representations; Indemnification
8.1 Survival. The parties hereto agree that their respective
representations, warranties, covenants, and agreements contained herein shall
survive the Closing for a period of three (3) years after the Closing Date
except that those covenants, representatives and warranties made by the Seller
and/or the Company with respect to Taxes, Employee Benefit Plans and
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Environmental Matters (Sections 1.10, 1.22 through 1.22.7, and 1.27 of the
Inducement) shall survive the Closing for such periods of time that the
government agencies having jurisdiction over the subject matter of those
covenants, representations and warranties may be empowered to assess a
liability or deficiency with respect to any of the matters covered thereby (the
"INDEMNIFICATION PERIOD").
8.2 Indemnification by the Seller. The Seller agrees to save, defend,
and indemnify Purchaser against, and hold it harmless from, any and all
liabilities, of every kind, nature and description, fixed or contingent,
including without limitation reasonable attorney fees and expenses incurred in
connection with any action, claim or proceeding relating to such liabilities
("DAMAGES"), arising from the breach of any of his representations, warranties,
covenants or agreements contained herein or in the Exhibits or Schedules
hereto, which arise or a claim for which is made during the Indemnification
Period. Purchaser shall be entitled to set-off against any amounts due to the
Seller hereunder (including, without limitation, any compensation due pursuant
to the terms of the Non-Competition Agreement), the amount of any indemnity
claims, as reasonably estimated by Purchaser, which may arise under this
Agreement; provided, however, Purchaser's right to indemnification shall in no
way be limited to the amount of such set-off.
8.3 Indemnification by Purchaser. Purchaser agrees to save, defend and
indemnify the Seller against and to hold him harmless from any and all Damages
arising from the breach of any of Purchaser's representations, warranties,
covenants or agreements contained herein or the Exhibits hereto, which arise
and a claim for which is made during the Indemnification Period.
8.4 Claims. All claims for Damages arising out of breaches of
representations or warranties regarding tax deficiency assessments relating to
federal and state income tax returns filed prior to Closing, shall be computed
net of the present value of all readily ascertainable future tax benefits
associated therewith. No claim shall be made for matters adequately covered by
insurance.
8.5 Seller's Liability. Subject to the limitation contained in Section
8.2, upon a Final Determination of the amount of any claim for Damages made
against the Seller by Purchaser, Purchaser shall be entitled to recover the
amount of such Damages as finally determined; provided that Seller's liability
to Purchaser shall be limited to the sum of the Purchase Price and the Debt
Payment.
8.6 Purchaser's Liability. Upon a Final Determination of the amount of
any claim for Damages made against Purchaser by the Seller, the Seller shall be
entitled to recover the amount of such Damages as finally determined.
8.7 Final Determination. For the purposes of this Article VIII, a
"FINAL DETERMINATION" shall exist when (i) the parties agree upon the amount,
or (ii) a court of competent jurisdiction shall have made a Final Determination
with respect thereto and appeal therefrom shall not have been taken within a
timely fashion from the date of such determination. The asserting party will
assign to the other party any claims against which the asserting party has been
indemnified and paid as provided herein, as to which there may be claims
against persons other
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than the Company, and the other party in all respects shall be subrogated to
the rights of the asserting party in connection therewith.
8.8 Defense of Claims. Each party entitled to indemnification under
this Article VIII (the "INDEMNIFIED PARTY") agrees to notify the party required
to provide indemnification (the "INDEMNIFYING PARTY") with reasonable
promptness of any claim asserted against it in respect of which the
Indemnifying Party may be liable under this Agreement, which notification shall
be accompanied by a written statement setting forth the basis of such claim and
the manner of calculation thereof. The Indemnifying Party shall have the right,
at its election, to defend or compromise any such claim at their own expense
with counsel of their choice; provided, however, that (i) such counsel shall
have been approved by the Indemnified Party prior to engagement, which approval
shall not be unreasonably withheld or delayed; (ii) the Indemnified Party may
participate in such defense if it so chooses with its own counsel and at its
own expense; and (iii) any such defense or compromise shall be conducted in a
manner which is reasonable and not contrary to the Indemnified Party's
interest. In the event the Indemnifying Party does not undertake to defend or
compromise the claim, the Indemnifying Party shall promptly notify the
Indemnified Party of its intention not to undertake to defend or compromise the
claim, and the Indemnifying Party shall be bound by the final decree of any
court of competent jurisdiction deciding the validity and amount of the claim
asserted against the Indemnified Party.
8.9 Extension of Time. To the extent that an Indemnified Party files a
claim for Damages against an Indemnifying Party prior to the expiration of the
Indemnification Period, reasonably identifying the basis for the claim and the
amount of any reasonably ascertainable damages, the Indemnification Period
shall be extended for such claim until such claim is resolved, subject to the
limitations hereinabove provided.
8.10 Restriction on Transfers. From and after the Closing Date, Seller
shall not assign or transfer, for consideration less than fair market value, to
Seller's parents, siblings, spouse or children, or a trust for any of their
benefit, any portion of or interest in the Restricted Portion of the Purchase
Price (as hereinafter defined) received by Seller for the Shares, nor or any
portion of or interest in any property purchased or acquired by Seller with any
part of the Restricted Portion of the Purchase Price if the result of such
assignment or transfer might be in any manner to diminish the assets to which
Purchaser could resort in order to recover on any claim for Damages under this
Article VIII, unless Seller first obtains Purchaser's prior written consent to
the proposed assignment or transfer, which consent shall not be unreasonably
withheld, and the proposed assignee/transferee first signs a security agreement
and/or limited guaranty in favor of, and acceptable to, Purchaser and equal to
the value of the portion of or interest in the Restricted Portion of the
Purchase Price to be received by the assignee/transferee. As used herein,
"Restricted Portion of the Purchase Price" means:
(a) $7,500,000 during the first twelve (12) months after the
Closing Date;
(b) $5,000,000 during the period commencing twelve (12)
months after the Closing Date through the date which is thirty-six
(36) months after the Closing Date; and
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(c) $3,000,000 during the period commencing thirty-six (36)
months after the Closing Date through the date which is forty-eight
(48) months after the Closing Date.
ARTICLE IX
Termination and Waiver
9.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transactions provided
for herein abandoned at any time prior to the Closing Date:
(a) By mutual consent of the parties;
(b) By the Purchaser if any of the conditions set forth in
Article V hereof shall not have been fulfilled on or prior to the
Termination Date, or shall become incapable of fulfillment, and shall
not have been waived;
(c) By the Seller if any of the conditions set forth in
Article VI hereof shall not have been fulfilled on or prior to the
Termination Date, or shall have become incapable of fulfillment, and
shall not have been waived; or
(d) By either party, if any legal action or proceeding shall
have been instituted or threatened seeking to restrain, prohibit,
invalidate or otherwise affect the consummation of the transactions
contemplated by this Agreement which makes it inadvisable, in the
judgment of such party, to consummate same.
If terminated as described above, this Agreement shall be void and of
no further force or effect, without any liability or obligation on the part of
either party hereto except for any liability which may arise pursuant to
Sections 10.1, 10.2 and 10.3.
9.2 Waivers. Any condition to performance by the Seller or the
Purchaser which may be legally waived on or before the Closing Date may be
waived by the party entitled to the benefit of such condition by duly
authorized instrument in writing executed by the waiving party. The failure of
any party at any time or times to require performance of any provision hereof
shall not affect or impair the right of such party to require such performance
at a later time. No waiver by any party of the breach of any term, covenant,
representation or warranty contained in this Agreement as a condition to such
party's obligations hereunder shall release or affect any liability resulting
from such breach, and no waiver of any nature, whether by conduct or otherwise,
in any one or more instances, shall be construed as, or be deemed to be, a
further or continuing waiver either of any such condition or of any breach of
any other term, covenant, representation or warranty contained in this
Agreement.
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ARTICLE X
Miscellaneous Provisions
10.1 Expenses. Each party shall bear its own legal, accounting and
other professional fees, costs and expenses incurred in connection with this
Agreement and the transactions hereby intended to be effected.
10.2 Confidential Information. Each party agrees it and its
representatives shall hold in strict confidence, and shall not divulge or
disclose to any person without a need to know, any information and documents
received from the other party and, if the transactions herein contemplated are
not consummated, each party will continue to hold such information and
documents in strict confidence and shall return to such other party all such
documents then in such receiving party's possession (including the Exhibits and
Schedules to this Agreement) without retaining copies thereof; provided, that
each party's obligations under this Section 10.2 to maintain such
confidentiality shall not apply to any information or documents that are in the
public domain when furnished by the other or to be disclosed required by
applicable law . In the event of a breach or threatened breach under this
Section 10.2, the parties to this Agreement acknowledge that the person harmed
or threatened to be harmed thereby will not have an adequate remedy at law, and
shall be entitled to such equitable and injunctive relief as may be available
to restrain such breach; provided, that nothing herein shall be construed as
prohibiting such person from pursuing any other remedies available for such
breach or threatened breach, including the recovery of damages.
10.3 Publicity. The parties agree that no publicity, release or other
public announcement concerning the transactions contemplated by this Agreement
shall be issued by either party without the advance approval of the form and
substance of the same by the other party and its counsel, which approval, in
the case of any publicity, release or other public announcement required by
applicable law, shall not be unreasonably withheld or delayed.
10.4 Modification, Termination or Waiver. This Agreement may be
amended, modified, superseded or terminated, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, but only by a
written instrument executed by both parties. The failure of any party at any
time or times to require performance of any provision hereof shall in no manner
affect the right of such party at a later time to enforce the same.
10.5 Notices. Any notice or other communication required or which may
be given hereunder shall be in writing and shall be either (a) delivered
personally, (b) sent by U. S. Mail, certified or registered mail with postage
prepaid, return receipt requested, or by overnight courier service with
shipping fees prepaid, receipt requested, or (c) transmitted by telefacsimile
to a telephone number as to which the intended recipient notifies the other.
Notice shall be deemed given when so delivered personally, or if mailed or sent
by courier service, five (5) days after the date of mailing or deposited with
the courier service, addressed as follows:
If to Purchaser, to: XETA Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇, President
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With a copy to: ▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇
If to the Seller: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Individually
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Trustee
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Dankenbring, Greiman, ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇▇▇▇ Centre, Fifth Floor
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If notice is provided by facsimile it shall be deemed given upon confirmation
of transmission. Either party may change the person and/or address to which
notices or other communications are to be sent by giving written notice of any
such change to the other in the manner herein provided.
10.6 Binding Effect and Assignment. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the parties
hereto; provided, however, that no assignment of any rights or delegation of
any obligations provided for herein may be made by any party without the
express written consent of the other.
10.7 Exhibits and Schedules. All exhibits hereto (the "EXHIBITS") and
all schedules annexed hereto or thereto (the "SCHEDULES") are expressly made a
part of this Agreement as fully as though completely set forth herein, and all
references to this Agreement herein or in any of such Exhibits or Schedules
shall be deemed to refer to and include all such Exhibits and Schedules.
10.8 Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties with respect to the subject
matter hereof, and supersedes all of the negotiations, understandings and
representations (if any) made by and between such parties.
10.9 Governing Law. This Agreement shall be construed and enforced in
accordance with the local laws of the State of Oklahoma applicable to
agreements to be executed and performed wholly within said State without giving
effect to its conflicts of laws provisions. The parties further agree that in
any dispute between them relating to this Agreement, exclusive
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jurisdiction shall be in the trial courts located within Tulsa County, Oklahoma,
any objections as to jurisdiction or venue in such court being expressly waived.
10.10 Section Headings. The section headings contained in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement.
10.11 Gender. Words of the masculine gender in this Agreement shall be
deemed and construed to include correlative words of the feminine and neuter
genders and words of the neuter gender shall be deemed and construed to include
correlative words of the masculine and feminine genders.
10.12 Severability. The invalidity or unenforceability of any term or
provision of this Agreement shall in no way impair or affect the balance
thereof, which shall remain in full force and effect.
10.13 Attorneys' Fees. In the event of any litigation or controversy
arising out of or in connection with this Agreement between the parties hereto,
the prevailing party in such litigation or controversy shall be entitled to
recover from the other party all reasonable attorneys' fees, expenses and suit
costs, including those associated with any appellate or post-judgment
collection proceeding.
10.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but which together shall
constitute one and the same instrument.
10.15 Recitals. The recitals set forth at the beginning of this
Agreement are true and correct and incorporated by reference into the body of
this Agreement.
10.16 Equitable Relief. Each party recognizes that the other is likely
to suffer irreparable damage if the provisions of Section 4.3 or Sections 10.2
or 10.3 are not specifically enforced. In the event of a dispute concerning any
of these sections, each party agrees that the other may, without posting bond
or security, obtain an temporary or permanent injunction restraining the
consummation of any action or transaction prohibited thereby pending
determination of such dispute. The provisions of Section 4.3 and Sections 10.2
and 10.3 shall likewise be enforceable by a decree of specific performance. In
the event of litigation relating to such provisions, if the court determines
that either party or any of its employees, agents or representatives has
breached any thereof, the injured party shall be entitled to recover from the
breaching party its reasonable fees, costs, and expenses (including attorney
fees) incurred in connection with the negotiation of this Agreement, any
related due diligence review, and/or the prosecution of any equitable or legal
proceedings and any appeal therefrom.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"Seller" "Purchaser"
XETA CORPORATION
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By /s/ ▇▇▇ ▇. ▇▇▇▇▇
-------------------------------- ----------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, individually ▇▇▇ ▇. ▇▇▇▇▇,
President
"Seller's Spouse" (for purposes of acknowledging
and agreeing to be bound by Section 8.10 only)
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Trustee under
Living Trust of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, dated
October 13, 1999
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Index to Exhibits
Exhibit
Number Description
------- -----------
1.2 Non-Competition Agreement
2.1 Agreement Regarding
Representations, Warranties and
Covenants of The Company and the
Seller (the "Inducement")
4.3 Confidentiality Agreement
5.6 "Bring-Down" Certificate of the
Seller and the Company
5.7 Opinion of Counsel
6.4 Purchaser's "Bring-Down"
Certificate
