PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is made and entered into this 14th day of
January, 1999, by and among Xxxxxxxx Associates, Inc., a Delaware corporation
("Seller"), Data Transmission Network Corporation, a Delaware corporation
("Buyer"), and Xxxxxx X. Xxxxxxxx, an individual ("Stockholder"), and Xxxxxx
Xxxxxxxx, the spouse of Stockholder ("Spouse").
RECITALS:
A. Seller is engaged in the business of creating, assembling, marketing
and distributing information with respect to the gas and electric energy
industries (the "Business").
B. Seller desires to sell substantially all of the assets used by it in
the conduct of the Business, and Buyer desires to acquire such assets.
C. Stockholder, as the owner of all of the issued and outstanding stock
of Seller, joins in this Agreement to confirm certain representations,
warranties and agreements of Seller herein and to indemnify Buyer in connection
with certain matters.
In consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Seller, Stockholder and Buyer,
intending to be legally bound, agree as follows:
1. Purchase and Sale. Buyer agrees to purchase from Seller, and Seller
agrees to sell to Buyer, the following assets of the Business (except the
Excluded Assets as defined at the end of this Paragraph 1), to-wit:
(a) All of Seller's motor vehicles, equipment, inventory, supplies,
furniture, trade fixtures, leasehold improvements, promotional
materials, and other tangible personal property used in the
conduct of the Business, including but not limited to the items
listed on Schedule 1 attached hereto and incorporated herein by
this reference;
(b) All of Seller's intangible property used in the Business to the
extent assignable, including but not limited to rights,
privileges, benefits and interests under all contracts,
agreements, consents and licenses; computer software used or
useful in the Business (including but not limited to the software
listed on Schedule 1 attached hereto); permits or certificates of
occupancy; agreements, leases and arrangements with respect to
intangible or tangible property or interests therein; copyrights
and trademarks; agreements with suppliers and customers; and
Seller's rights in and to the trade names "Btu" and "Natural Gas
Publications, Inc.";
(c) All of Seller's prepaid items, and unbilled costs and fees
related to the Business;
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(d) All of Seller's information, files, records, data, plans, and
recorded knowledge, including customer and supplier lists,
related to the Business and similar or related data; and
(e) All of Seller's goodwill pertaining to or arising out of the
Business.
The term "Excluded Assets" means (i) any records not relating to the Business
and all corporate, accounting and tax records relating to the Business, (ii) all
of Seller's cash and cash equivalents, in hand or in bank accounts, and Seller's
accounts receivable, and (iii) Seller's rights under this Agreement.
2. Purchase Price. Buyer agrees to pay, and Seller agrees to accept, as
the entire aggregate purchase price for the assets of Seller being acquired by
Buyer pursuant to Paragraph 1, the sum of $350,000 (hereinafter referred to as
the "Purchase Price"). The Purchase Price shall be paid by Buyer to Seller in
cash upon the execution of this Agreement, which payment may include checks
payable to the order of Seller and the holders of liens or security interests
perfected in the assets being sold pursuant to this Agreement, in amounts
agreeable to Seller and Buyer. In the event Stockholder voluntarily terminates
his employment with Buyer or such employment is terminated by Buyer for cause
within five years of the date of this Agreement, Seller, Stockholder and Spouse
jointly and severally agree to pay to Buyer a refund of a portion of the
Purchase Price equal to the product of multiplying $5,833.33 by the number of
full calendar months in such 5-year period following such termination of
employment.
3. Assumption of Liabilities. Buyer shall assume, agree to perform, and
discharge when due only those obligations of Seller arising out of the
contracts, leases and agreements listed on Schedules 7(j) and 7(k) which are or
become assignable with respect to the period from and after the date of this
Agreement or the date such contract, lease or agreement becomes assignable, as
the case may be (the Assumed Liabilities"). Seller and Buyer agree that, other
than the Assumed Liabilities, Buyer does not agree to assume and shall have no
responsibility for any of the debts, obligations or liabilities of Seller (the
"Excluded Liabilities"), all of which shall remain the sole responsibility of
and shall be paid and discharged by Seller as they become due. The Excluded
Liabilities include without limitation all of the following:
(a) Any tax liability or tax obligation of Seller, its directors,
officers, shareholders and agents which has been or may be
asserted by any taxing authority, including without limitation
any such liability or obligation arising out of or in connection
with this Agreement or the transactions contemplated hereby.
(b) Any liability or obligation of Seller whether incurred prior to,
at or subsequent to the date of this Agreement for any amounts
due or which may become due to any person or entity who is or has
been a holder of any debt or equity security of Seller.
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(c) Any trade account payable or note payable of Seller or any
contract obligation of Seller (other than the Assumed
Liabilities) whether incurred prior to, at or subsequent to the
date of this Agreement.
(d) Any liability or obligation arising out of any litigation, suit,
proceeding, action, claim or investigation, at law or in equity
or in arbitration, related to Seller's operation of the Business
prior to the date of this Agreement.
(e) Any claim, liability or obligation, known or unknown, contingent
or otherwise, the existence of which is a breach of, or
inconsistent with, any representation, warranty or covenant of
Seller set forth in this Agreement.
(f) Any liability or obligation specifically stated in this Agreement
or the Schedules hereto as not to be assumed by Buyer.
4. Transfer Documents. Concurrently with the execution of this
Agreement, Seller shall sell, transfer, assign, convey, and deliver to Buyer the
assets referred to in Paragraph 1 by duly executed titles, warranty xxxx of sale
and assignment, and other good and sufficient instruments of sale, assignment,
conveyance and transfer as shall be required to effectively vest in Buyer all of
Seller's right, title, and interest in and to such assets, free and clear of all
liens, encumbrances, security interests, actions, claims and equities of any
kind whatsoever, following the closing. Seller agrees to take such actions as
may be necessary to make available for use by Buyer where appropriate the trade
names "Btu" and "Natural Gas Publications, Inc." Buyer shall be entitled to
possession of such assets upon the execution of this Agreement.
5. Additional Documents. Concurrently with the execution of this
Agreement, Seller shall cause its legal counsel to execute and deliver to Buyer
the opinion of such counsel in the form of Exhibit "A" hereto. Concurrently with
the execution of this Agreement, Stockholder and Buyer shall enter into an
employment agreement in the form of Exhibit B hereto.
6. Obligations to Employees. Seller agrees that it shall be responsible
for any obligations to any of its employees which heretofore may have arisen or
hereafter may arise by reason of any services rendered by such employees,
including but not limited to salaries, bonuses, vacation pay, retirement
benefits, and other fringe benefits; and Seller hereby agrees to pay all of such
obligations directly to the employees involved when due. Seller agrees timely to
pay all payroll tax, withholding, and unemployment compensation payments
required to be made with respect to the compensation of such employees and to
hold Buyer harmless therefrom. Seller shall furnish to Buyer such evidence of
Seller's compliance with the provisions of this paragraph as Buyer reasonably
may request from time to time.
7. Representations and Warranties. Seller and Stockholder jointly and
severally warrant, represent and covenant to and with Buyer:
(a) That Seller has full right and lawful authority to enter into
this Agreement and to sell the items of personal property to be
acquired by Buyer pursuant to this Agreement; that Seller's
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performance of its obligations under this Agreement will not
violate any agreement, document, trust (constructive or
otherwise), order, judgment or decree to which Seller is a party
or by which it is bound; and that, upon the transfer and
assignment of such property to Buyer as hereinbefore mentioned,
Buyer will acquire good and merchantable title thereto, free and
clear of any liens, encumbrances, security interests, actions,
claims, and equities of any kind whatsoever.
(b) That Seller is the sole and lawful owner of and has good and
marketable title to all of the items of personal property to be
acquired by Buyer pursuant to this Agreement, free and clear of
any liens, encumbrances, security interests, actions, claims, and
equities of any kind whatsoever.
(c) All material items of tangible personal property to be acquired
by Buyer pursuant to this Agreement are in good operating
condition, subject to normal wear.
(d) That there are no suits, arbitrations or other legal or
governmental proceedings pending or threatened against Seller
which might conceivably affect the title to the items of personal
property to be acquired by Buyer pursuant to this Agreement.
(e) That Seller has duly and timely filed all federal, state, and
local tax returns of every kind whatsoever required to be filed
on or before the date of this Agreement and has paid in full the
tax liability shown on such returns; that no unpaid deficiencies
are in existence which have been asserted against Seller by any
official or agency as a result of the filing of such returns; and
that there is not now pending any examination with respect to any
such returns nor does Seller know of any impending examination
with respect to any such returns.
(f) That promptly after the date of this Agreement Seller shall pay
all sales and use taxes imposed on or collectible by Seller and
shall furnish to Buyer evidence that all of Seller's sales and
use taxes have been paid.
(g) The property to be acquired by Buyer pursuant to this Agreement
includes all rights and property necessary to the conduct of the
Business by Buyer in the manner it is presently conducted by
Seller and no property excluded from Paragraph 1 hereof
constitutes property or rights material to the Business.
(h) There is no fact, development, or threatened development with
respect to the markets, products, customers, vendors, suppliers,
operations, assets or prospects of the Business which are known
to Seller which would materially adversely affect the business,
operations or prospects of the Business considered as a whole,
other than such conditions as may affect as a whole the economy
generally.
(i) The financial statements of Seller furnished to Buyer fairly and
accurately represent the financial operations of the Business for
the periods covered thereby.
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(j) That Seller has listed on Schedule 7(j) all of Seller's contracts
(oral or written) with customers and suppliers of the Business;
Seller has no other contracts (oral or written) with customers
and suppliers of the Business. Seller has delivered to Buyer
true, correct and complete copies of all written contracts
relating to the Business, and written summaries of the terms of
all oral contracts relating to the Business, and all of such
contracts are presently in full force and effect and are
assignable to Buyer, except as otherwise noted on Schedule 7(j).
Seller has not received any notices from any customers or
suppliers of the Business that indicate that they intend to
terminate any of such contracts and, except as reflected in the
copies delivered to Buyer or on Schedule 7(j), such contracts
have not been amended and Seller and the other parties to such
contracts are not in default in any material respect under such
contracts. Seller has not been apprised and does not currently
believe or have reason to believe that any of the customers of
the Business plan to cancel or reduce the volume under any
customer contracts.
(k) That Schedule 7(k) contains a complete list of all of Seller's
contracts (oral and written) relating to the Business, if any,
other than the contracts with customers and suppliers listed on
Schedule 7(j). Seller has delivered to Buyer true, correct and
complete copies of all such other written contracts relating to
the Business and written summaries of the terms of all such other
oral contracts relating to the Business, and all of such
contracts are presently in full force and effect and are
assignable, except as otherwise noted on Schedule 7(k), and,
except as reflected in the copies delivered to Buyer or on
Schedule 7(k), such contracts have not been amended and Seller
and the other parties to such contracts are not in default in any
material respect under such contracts.
8. Indemnification. Seller and the Stockholder jointly and severally
agree to indemnify Buyer and to hold Buyer harmless from any and all loss,
damage, cost, or expense incurred or sustained by Buyer by reason of the failure
of any warranty or representation contained in this Agreement to be true or as a
result of Seller's failure to abide by any covenant or agreement on its part
contained in this Agreement.
9. Bulk Sales. Seller has taken any and all actions required under the
bulk sales laws of the State of New Jersey, if any, applicable to the
transactions contemplated by this Agreement and will satisfy on or before the
date of this Agreement (or make arrangements satisfactory to Buyer in its sole
discretion to satisfy) all creditor claims, excluding Assumed Liabilities.
10. Survival. The representations, warranties, and covenants on the
part of Seller and/or Stockholder contained in this Agreement shall survive the
closing of this Agreement and shall be binding upon Seller and the Stockholders
and their heirs, legal representatives, successors and assigns.
11. Payment of Liabilities. Following the closing, Seller shall pay as
promptly as possible any and all liabilities of Seller existing on the date of
this Agreement and to hold Buyer harmless therefrom. Buyer and Seller agree that
Buyer is not assuming and shall have no responsibility for any of the debts,
obligations, or liabilities of Seller, including but not limited to any
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liabilities or obligations of Seller (whether fixed, absolute, contingent,
known, unknown, direct, indirect, or otherwise) whether incurred or accrued
before or after the date of this Agreement, which in any way relate to the
performance or non-performance of, or any other liability or obligation relating
to any service or product furnished or sold by Seller prior to or after the date
of this Agreement, and Seller hereby agrees to hold Buyer harmless from any cost
or expense arising out of or relating to any such debts, obligations, or
liabilities; provided, however, such indemnification by Seller does not extend
to any Assumed Liabilities.
12. Transfer Taxes. Seller shall pay all sales and other similar taxes
imposed on or collectible by Seller or Buyer by reason of the transfer of the
property being acquired by Buyer pursuant to this Agreement.
13. Noncompete. For a period of three (3) years after the date of this
Agreement, neither Seller, Stockholder or any of their affiliates shall,
directly or indirectly, whether as a shareholder, partner or investor possessing
any ownership interest, or as principal, agent, employee, proprietor,
independent contractor, consultant, information provider or in any other
capacity:
(a) Solicit for itself or himself or others, or advise or recommend
to any other person that such person solicit, any current
customer of the Business, for the purpose of competing with Buyer
in the Business.
(b) Employ, solicit for employment, or advise or recommend to any
other person that such person solicit for employment or employ
any person employed by or under contract with Buyer.
If any court having jurisdiction at any time hereafter shall hold any of such
restrictive covenants to be unenforceable or unreasonable as to its scope,
territory, or period of time, and such court in its judgment or decree shall
declare or determine the scope, territory, or period of time which such court
deems to be reasonable, then such scope, territory or period of time, as the
case may be, shall be deemed automatically to have been reduced to that declared
or determined to be reasonable by such court. Notwithstanding the foregoing, if
any clause or provision of this paragraph shall be unenforceable, then such
clause or provision shall be deemed to be deleted from this paragraph, but every
other clause and provision shall continue in full force and effect. These
covenants are an integral part of the asset purchase transaction contemplated by
this Agreement and Buyer would not have entered into this Agreement in the
absence of such covenants. Seller and Stockholder acknowledge that the
agreements contained in this paragraph are reasonable and necessary to protect
the Business being purchased by Buyer and that any breach thereof will result in
irreparable injury to Buyer for which Buyer has no adequate remedy at law.
Seller and Stockholder therefore agree that, in the event either of them
breaches any of the agreements contained in this paragraph, Buyer shall be
authorized and entitled to seek from any court of competent jurisdiction (i) a
temporary restraining order, (ii) preliminary and permanent injunctive relief,
(iii) an equitable accounting of all profits or benefits arising out of such
breach, and (iv) direct, incidental, and consequential damages resulting from
such breach. Such rights or remedies shall be cumulative and in addition to all
other rights or remedies to which Buyer may be entitled.
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14. Entire Agreement. This document constitutes the entire agreement of
the parties with respect to the subject matter hereof and may not be modified,
amended, or terminated except by a written agreement specifically referring to
this Agreement and signed by all of the parties hereto.
15. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
16. Further Instruments. The parties hereto shall execute and deliver
such additional instruments and documents as may be reasonably requested by any
of them in order to carry out the purposes and intent of this Agreement and to
fulfill their respective obligations.
17. Further Actions. Seller agrees to take such actions from time to
time as may in the reasonable judgment of Buyer or its counsel be necessary or
advisable to confirm the title of Buyer to any of the items of property acquired
by Buyer from Seller pursuant to this Agreement.
18. Governing Law. This agreement shall be construed in accordance with
the laws of the State of Nebraska.
19. Severability. In the event that one or more of the provisions
contained in this Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any of the other provisions contained in this Agreement, which
provisions shall remain in full force and effect.
20. Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto in separate counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
21. Schedules and Exhibits. All references to Schedules and Exhibits
herein, unless otherwise stated, means the schedules and exhibits attached to
this Agreement which are hereby incorporated by reference.
22. Spouse Guaranty. Spouse shall guarantee all obligations of
Stockholder under this Agreement and any ancillary agreement and such
obligations shall be the primary liability of Spouse, not secondary liability.
23. Nonassignable Rights. Seller and Stockholder agree to use their
best efforts after closing to obtain the consent of the other parties to the
contracts listed on Schedules 7(j) and (k) which are nonassignable. Anything
contained herein to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any contract, order, commitment, license or
right if an assignment or attempted assignment thereof without the consent of
the other party thereto would constitute a breach thereof or in any material way
affect the rights of Seller thereunder or hereunder unless such consent is
obtained. If any such consent is not obtained, or if an attempted assignment
would be ineffective and would materially affect Seller's rights thereunder, so
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that Buyer would not in fact receive all such rights, the parties agree to
cooperate in any reasonable arrangement designed to assure that Buyer shall have
all the benefits, rights, obligations and duties under such contracts, orders,
commitments, licenses and rights, without further consideration being paid by
Buyer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
DATA TRANSMISSION NETWORK
CORPORATION, a Delaware corporation
By:/s/ Xxxx X. Xxxxx
---------------------------
Xxxx X. Xxxxx
Title: President and COO
XXXXXXXX ASSOCIATES, INC., a Delaware
corporation
By:/s/ Xxxxxx X. Xxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxx, President
By: /s/ Xxxxxx Xxxxxxxx
----------------------------
Xxxxxx Xxxxxxxx
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EXHIBIT "A"
January __, 1999
Data Transmission Network Corporation
0000 Xxxx Xxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
ATTN: Xxxx X. Xxxxx, President
Dear Sir:
I have acted as corporate counsel for Xxxxxxxx Associates, Inc., a
Delaware corporation (the "Company") in connection with the sale of
substantially all of the Company's assets pursuant to the provisions of the
Purchase Agreement dated January ___, 1999, (the "Agreement"), by and among the
Company, its sole shareholder, the sole shareholder's spouse and Data
Transmission Network Corporation (the "Buyer"). This opinion is being rendered
to you pursuant to Paragraph 5 of the Agreement. Capitalized terms used herein
and not otherwise defined shall have the same meaning give to such terms as in
the Agreement.
In connection with this opinion, I have examined originals or copies,
certified or otherwise identified to my satisfaction, of such documents,
corporate records, certificates, including certificates of public officials, and
other instruments that I have deemed necessary or advisable for purposes of this
opinion, including those relating to the authorization, execution and delivery
of the Agreement. Without limitation, I reviewed the following documents and
agreements:
(i) the Agreement;
(ii) the Certificate of Incorporation of the Company as certified by
the Secretary of State of the State of Delaware (the "Charter");
(iii) the Bylaws of the Company as adopted by the Company on April 1,
1993, and certified by the President/Secretary of the Company on
December 28, 1998 (the "Bylaws");
(iv) the Xxxx of Sale, Assignment and Assumption Agreement dated
January ____, 1999, executed by the Company and the Buyer (the
"Xxxx of Sale"); and
(iv) actions taken by the shareholders and Board of Directors of the
Company to authorize the transactions contemplated by the
Agreement.
In such examination and review, I have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. As to any facts material to the
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opinions hereafter expressed which I did not independently establish or verify,
I have relied without investigation upon certificates, statements and
representations of representatives of the Company. During the course of my
discussions with such representatives and my review of the documents described
above in connection with the preparation of these opinions, no facts were
disclosed to me that caused me to conclude that any such certificate, statement
or representation is untrue. In making my examination of the documents executed
by entities other than the Company, I have assumed that each such other entity
had the power to enter into and perform all its obligations thereunder and the
due authorization of, and the due execution and delivery of, such documents by
each such entity.
As used in this opinion, the expression "to my knowledge" with
reference to matters of facts means that after an examination of documents in my
files and considering my actual knowledge of legal matters I have handled for
the Company, without independent investigation or inquiry as to factual matters,
but not including any constructive or imputed notice of any information, I find
no reason to believe that the opinions expressed herein are factually incorrect.
Beyond that, I have made no independent factual investigation for the purpose of
rendering an opinion with respect to such matters.
Based upon and subject to the foregoing and subject to the further
assumptions, limitations, qualifications and exceptions set forth herein, I am
of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has the
corporate power and authority required to conduct the Business and to own and
use the properties currently owned and used by it. The Company is in good
standing with the State of New Jersey, its state of operation.
2. The Company has the corporate power and the authority to execute and
deliver the Agreement and to perform its respective obligations thereunder. The
execution and delivery of the Agreement by the Company and the performance of
its obligations thereunder have been duly and validly authorized by all
necessary corporate action on the part of the Board of Directors and
stockholders of the Company. The Agreement has been duly and validly executed
and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, subject to
the effect of (i) applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance and other similar laws or
judicial decisions affecting the validity and enforcement of creditors' rights
generally and (ii) the discretion of any court of competent jurisdiction in
awarding equitable remedies, including without limitation, specific performance
or injunctive relief, and the effect of general principles of equity embodied in
New Jersey statutes and common law.
3. Neither the execution and delivery of the Agreement nor the
consummation of the transactions contemplated thereby, (i) conflicts with or
violates any provision of the Charter or Bylaws, (ii) to my knowledge, requires
on the part of the Company any filing with, or permit, authorization, consent or
approval of, any federal or state governmental agency or entity, except as
specified in the Agreement, (iii) to my knowledge conflicts with, results in a
breach of, constitutes (with or without notice or lapse of time or both) a
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default under, or requires any notice, consent or waiver under any contract,
lease, license, franchise, permit, indenture, agreement or mortgage for borrowed
money or other agreement to which the Company is a party or by which the Company
is bound or to which any of its assets is subject, (iv) to my knowledge violates
any statute, rule or regulation, or (v) to my knowledge, violates any order,
writ, injunction, decree, statute, rule or regulation applicable to the Company
or any properties or assets of the Company.
4. To my knowledge, the Company (i) is not subject to any unsatisfied
judgment, order, decree, stipulation or injunction and (ii) is not a party to or
threatened to be made a party to any complaint, action, suit, proceeding,
hearing or investigation of any court or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator.
5. To my knowledge, all authorizations, consents and approvals, if any,
of all federal, state and local governmental agencies and entities required in
order to permit consummation by the Company of its obligations under the
Agreement have been obtained.
6. Assuming payment of the Purchase Price by the Buyer, the Xxxx of
Sale is sufficient to transfer all of the Company's right, title and interest in
the properties and assets of the Company to be acquired by the Buyer as
contemplated by the Agreement.
This opinion relates solely to the laws of the State of New Jersey, the
corporate laws of the State of Delaware and applicable federal laws of the
United States, and I express no opinion with respect to the effect or
applicability of the laws of other jurisdictions. I have assumed that and my
opinions expressed in paragraph 2 above are based upon my assumption that the
internal laws of the State of New Jersey, the corporate laws of the State of
Delaware and federal laws, as applicable, govern the provisions of the Agreement
and the transactions contemplated thereby.
I am opining only as to the matters expressly set forth herein and no
opinion should be inferred as to other matters. The opinions expressed herein
are furnished by me, as counsel for the Company, solely for your benefit in
connection with the transactions contemplated by the Agreement and upon the
understanding that I am not assuming any responsibility to any other person or
entity whatsoever. This opinion may not be quoted or relied upon by any other
person or entity or used for any other purpose without my written consent. This
opinion is rendered as of the date hereof and I do not undertake to advise you
of matters which occur subsequent to the date hereof and that affect the
opinions expressed herein.
Sincerely,
Xxxxx X. Xxxxxxx, Esq.
A Professional Corporation
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EXHIBIT "B"
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of the _____ day
of ____________, 199__, between DATA TRANSMISSION NETWORK CORPORATION (the
"Company"), a Delaware corporation, and XXXXXX X. XXXXXXXX (the "Employee").
* * *
WHEREAS, the Company desires to employ the Employee; and
WHEREAS, the Employee desires to accept such employment.
NOW, THEREFORE, in consideration of the foregoing recitals and the
respective covenants and agreements of the parties contained in this document,
the Company and the Employee agree as follows:
1. Employment and Duties. The Company hereby employs the Employee for
work in connection with the natural gas and electrical product offerings by the
Company (the "Products") with such duties and responsibilities as the Board of
Directors of the Company (the "Board") or a person (other than the Employee) so
authorized by the Board from time to time may assign to the Employee.
2. Term. The term of this agreement shall begin on the date of this
agreement and shall continue thereafter for a period of ten (10) years, unless
terminated earlier in accordance with this agreement. The Employee shall remain
an employee at-will. Either the Employee or the Company may terminate the
employment relationship at any time, with or without any reason, subject to the
other provisions of this agreement. Each party shall provide the other party
with sixty (60) days advance written notice of his or its intention to terminate
this agreement, except in the event of the termination of Employee's employment
pursuant to any of the first three sentences of Section 11 of this agreement.
3. Place of Employment. During the term of this agreement, the Employee
will perform his duties at the Company's offices in Red Bank, New Jersey, and he
will not be required to relocate or transfer his principal residence during the
term of this agreement.
4. Base Salary. For all services to be rendered by the Employee
pursuant to this agreement, the Company agrees to pay the Employee during the
term of this agreement a base salary (the "Base Salary") at an annual rate of
$100,000 through December 31, 1999, and at an annual rate of not less than
$100,000 after December 31, 1999; provided, that the Base Salary as then in
effect shall be increased as of January 1 of each calendar year after 1999
during the term of this agreement by at least the same percentage that the
United States Department of Labor Consumer Price Index (All Items) for All Urban
Consumers, 1982-84=100 ("CPI-U") for the November immediately preceding such
January 1 increased over the CPI-U for the November one year earlier. The Board
shall review the Base Salary at least annually for the purpose of determining
whether a Base Salary increase greater than such CPI-U increase should be
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granted to the Employee for a particular 12-month period. The Employee's annual
incentive bonus provided for in Section 5 and all other compensation and
benefits to which the Employee is or may become entitled pursuant to this
agreement shall be in addition to the Base Salary. The Base Salary shall be paid
in periodic installments in accordance with the Company's regular payroll
practices.
5. Annual Incentive Bonus. In addition to the Employee's Base Salary
and any other benefits to which the Employee is entitled under this agreement,
the Employee also shall be entitled to receive an annual incentive bonus (the
"Bonus") from the Company of one percent (1%) of the amount, if any, by which
the revenues received from the Products by the Company for such calendar year
(which revenues will represent only the portion of the revenues of the DTNergy
division of the Company directly attributable to the Products) exceed the
revenues from the Products for the calendar year ended December 31, 1998. The
Bonus shall be paid to the Employee for each full calendar year during the term
of this agreement promptly after the revenues from the Products for such year
have been computed by the Company.
6. Expenses. During the term of this agreement, the Employee shall be
entitled to prompt reimbursement by the Company of all reasonable ordinary and
necessary travel, entertainment, and other expenses incurred by the Employee (in
accordance with the policies and procedures established by the Company for its
employees) in the performance of his duties and responsibilities under this
agreement; provided, that the Employee shall properly account for such expenses
in accordance with Company policies and procedures.
7. Other Benefits. During the term of this agreement, the Employee
shall be entitled to all of the fringe benefits which are provided to employees
of the Company generally (such as but not limited to the Company's 401(k) plan),
but excluding the Company's discretionary bonus plan, stock option plan and
similar programs.
8. Vacations and Holidays. The Employee shall be entitled to paid
vacations and holidays in accordance with the Company's policies in effect from
time to time for comparable employees.
9. Other Activities. The Employee shall devote substantially all of his
working time and efforts during the Company's normal business hours to the
business affairs of the Company and to the diligent and faithful performance of
the duties and responsibilities assigned to him pursuant to this agreement,
except for vacations and holidays.
10. Nondisclosure. During the term of this agreement and thereafter,
the Employee shall not, without the prior written consent of the Board or a
person (other than the Employee) so authorized by the Board, disclose or use for
any purpose (except in the course of his employment under this agreement and in
furtherance of the business of the Company or any of its subsidiaries) any
confidential information, trade secrets, or proprietary data of the Company or
any of its subsidiaries (collectively, for purposes of this agreement,
"Confidential Information"); provided, however, that Confidential Information
shall not include any information then known generally to the public or
ascertainable from public or published information (other than as a result of
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unauthorized disclosure by the Employee) or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that conducted by the Company or its subsidiaries, as the
case may be.
11. Termination. The Employee's employment under this agreement shall
terminate upon his death. If the Employee becomes incapable by reason of
physical injury, disease, or mental illness of substantially performing his
duties and responsibilities under this agreement for a period of six (6)
continuous months or more, then the Company may terminate the Employee's
employment under this agreement. The Company also may terminate the Employee's
employment under this agreement for Cause; however, for purposes of this
agreement, "Cause" shall mean only (i) confession or conviction of theft, fraud,
embezzlement, or any other crime involving dishonesty with respect to the
Company or any parent, subsidiary, or affiliate of the Company, (ii) material
violation of the provisions of any confidentiality agreement or non-competition
agreement in force between the Company or DTN and the Employee, (iii) habitual
and material negligence by the Employee in the performance of his duties under
or pursuant to this agreement, (iv) material non-compliance by the Employee with
his obligations under Section 9 (after having received written notice thereof
and a right to cure) or (v) failure of the Employee to abide by the lawful
directives of the Board that are not inconsistent with the terms of this
Agreement. In the event of the termination of the Employee's employment pursuant
to any of the first three sentences of this Section 11 or if the Employee
voluntarily terminates employment with the Company, the Employee (or, in the
event of the Employee's death, his estate) shall be entitled to retain that
portion of the Base Salary earned by the Employee up to the effective date of
such termination, provided that during any period when the Employee is incapable
by reason of physical injury, disease, or mental illness of substantially
performing his duties and responsibilities under this agreement, the Company may
subtract from such Base Salary the amount of any payments which the Employee
receives from Company-sponsored disability insurance as a reimbursement for lost
earnings or wages relating to such period.
12. Termination Without Cause. If the Company terminates the employment
of the Employee for any reason other than those referred to in Section 11, the
Company shall pay the Employee, upon the effective date of such termination, the
then current present value of all remaining payments of Base Salary (computed
assuming no further increase in the CPI-U) and Bonuses (computed assuming a
Bonus each year equal to the Bonus for the year preceding the termination) that
would have been paid hereunder but for such termination, less applicable
employee tax withholdings and deductions. For purposes of the foregoing present
value determination, a discount rate equal to the prime rate on corporate loans
at large U.S. money center commercial banks as quoted in the "Money Rates"
column of the Wall Street Journal on such effective date shall be used. Except
as provided in Sections 11 and 12 of this agreement, the Employee shall not
receive any additional severance pay upon his termination of employment,
regardless of the Company's severance policy for its employees generally. The
Employee agrees to accept the payments provided for in this Section 12 as full
and complete liquidated damages for any breach of this agreement resulting from
the actual or constructive termination of the Employee's employment under this
agreement for a reason other than cause or the Employee's death or disability;
and the Employee shall not have and hereby waives and relinquishes any other
rights or claims in respect of such breach.
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13. Successors and Assigns. This agreement and all rights under this
agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective personal or legal representatives,
executors, administrators, heirs, distributees, devisees, legatees, successors,
and assigns. This agreement is personal in nature, and neither of the parties to
this agreement shall, without the written consent of the other, assign or
transfer this agreement or any right or obligation under this agreement to any
other person or entity.
14. Notices. For purposes of this agreement, notices and other
communications provided for in this agreement shall be deemed to be properly
given if delivered personally or sent by United States certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Employee: Xxxxxx X. Xxxxxxxx
00 Xxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
With a Copy to: Xxxxx X. Xxxxxxx
A Professional Corporation
1120 Market Tower
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
If to the Company: Data Transmission Network Corporation
0000 Xxxx Xxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
Attn: Xxxx X. Xxxxx, President
or to such other address as either party may have furnished to the other party
in writing in accordance with this paragraph. Such notices or other
communications shall be effective only upon receipt.
15. Non-Solicitation of Employees. For a period of one (1) year after
the effective date of the termination of the Employee's employment under this
agreement for any reason, whether voluntarily or involuntarily and with or
without cause, without the prior written consent of the Company the Employee
agrees (i) not to directly or indirectly employ, solicit for employment, assist
any other person in employing or soliciting for employment, or advise or
recommend to any other person that such other person employ or solicit for
employment any person who then is an employee of the Company or any of the
subsidiaries of the Company and (ii) not to recommend to any then employee of
the Company or any of the subsidiaries of the Company that such employee leave
the employ of such employer.
16. Post-Termination Noncompetition. Because the Confidential
Information known to or developed by the Employee during his employment by the
Company encompasses at the highest level information concerning the plans,
strategies, services, operations, and existing and prospective customers
pertaining to the Products and could not practically be disregarded by the
Employee, the Employee acknowledges that his provision of information and other
15
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services to a competitor of the Company soon after the termination of the
Employee's employment by the Company would inevitably result in the use of the
Confidential Information by the Employee in his performance of such services,
even if the Employee were to use his best efforts to avoid such use of the
Confidential Information. To prevent such use of the Confidential Information
and the resulting unfair competition and wrongful appropriation of the goodwill
and other valuable proprietary interests of the Company, the Employee agrees
that for a period of one (1) year after the termination of his employment by the
Company for any reason, whether voluntarily or involuntarily and with or without
cause, the Employee will not, directly or indirectly:
(a) engage, whether as an employee, agent, consultant, independent
contractor, owner, partner, member, information provider, or
otherwise, in a business activity which then competes in a
material way with the Products then being offered by the
Company;
(b) solicit or recommend to any other person that such period
solicit any then customer of the Company, which customer also
was a customer of the Company at any time during the one (1)
year period prior to the termination of the Employee's
employment by the Company, for the purpose of obtaining the
business of such customer in competition with the Products; or
(c) induce or attempt to induce any then customer or prospective
customer of the Products to terminate or not commence a
business relationship with the Company.
The restrictions contained in this Section 16 are separate from the restrictive
covenants contained in the Purchase Agreement among the Company, Xxxxxxxx
Associates, Inc., Xxxxxx Xxxxxxxx and the Employee, and such 1-year period may
run concurrently with the period of restriction in such Purchase Agreement. The
Company and the Employee acknowledge and agree that the restrictions contained
in this Section 16 are both reasonable and necessary in view of the Employee's
position with the Company and that the Employee's compensation and benefits
under this agreement are sufficient consideration for the Employee's acceptance
of such restrictions. Nevertheless, if any of the restrictions contained in this
Section 16 are found by a court having jurisdiction to be unreasonable, or
excessively broad as to geographic area or time, or otherwise unenforceable,
then the parties intend that the restrictions contained in this Section 16 be
modified by such court so as to be reasonable and enforceable and, as so
modified by the court, be fully enforced. Nothing contained in this paragraph
shall be construed to preclude the investment by the Employee of any of his
assets in any publicly owned entity so long as the Employee has no direct or
indirect involvement in the business of such entity and owns less than 2% of the
voting equity securities of such entity.
17. Injunctive Relief. The Employee acknowledges that his violation of
the provisions and restrictions contained in Sections 10, 15, and 16 could cause
significant injury to the Company for which the Company would have no adequate
remedy at law. Accordingly, the Employee agrees that the Company will be
entitled, in addition to any other rights and remedies that then may be
available to the Company, to seek and obtain injunctive relief to prevent any
breach or potential breach of any of the provisions and restrictions contained
in Sections 10, 15, or 16.
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18. Miscellaneous. No provision of this agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in writing and is signed by the Employee and an officer of the Company (other
than the Employee) so authorized by the Board. No waiver by either party to this
agreement at any time of any breach by the other party of, or compliance by the
other party with, any condition or provision of this agreement to be performed
by the other party shall be deemed to be a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter of this agreement have been made by either party
that are not expressly set forth in this agreement.
19. Validity. The invalidity or unenforceability of any provision or
provisions of this agreement shall not affect the validity or enforceability of
any other provision of this agreement, which other provision shall remain in
full force and effect; nor shall the invalidity or unenforceability of a portion
of any provision of this agreement affect the validity or enforceability of the
balance of such provision. The provisions of this agreement are severable.
20. Counterparts. This document may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute a single agreement.
21. Headings. The headings of the paragraphs contained in this document
are for reference purposes only and shall not in any way affect the meaning or
interpretation of any provision of this agreement.
22. Applicable Law. This agreement shall be governed by and construed
in accordance with the internal substantive laws, and not the choice of law
rules, of the State of Nebraska.
23. Arbitration. In the event a dispute shall arise as to the parties'
respective rights, duties and obligations under this agreement, or in the event
of a claim for breach of this agreement by either party (collectively,
"Dispute"), the parties agree to utilize arbitration as the exclusive means for
resolution of the Dispute. With respect to any such Dispute, the arbitrator
shall be selected and the arbitration conducted in accordance with the most
recent Employment Dispute Resolution Rules of the American Arbitration
Association. The arbitration proceeding shall be held in Omaha, Nebraska, or
such other location as may be acceptable to the parties. The arbitrator shall
make written findings, including any award, which shall be signed by the
arbitrator. The award shall be deemed final and binding thirty (30) days after
the award is made. The parties agree to abide by and perform any award rendered
by the arbitrator. The arbitrator shall be bound by the provisions of this
agreement in determining any award. The parties agree that the proceedings and
any decision by the arbitrator, including the amount of any award, shall be kept
confidential and not disclosed to any person other than the parties, witnesses
and their counsel (who also must each agree to maintain the confidentiality of
the proceedings and any decision). A party may enforce any award in any court of
competent jurisdiction.
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IN WITNESS WHEREOF, the Company and the Employee have executed this
agreement on the day and year first above written.
DATA TRANSMISSION NETWORK
CORPORATION, a Delaware corporation
By:/s/ Xxxx X. Xxxxx
-----------------------------
Xxxx X. Xxxxx
Title: President and COO
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxx
18
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SCHEDULE 1
List of Certain Assets
"The reporting person agrees to furnish supplementally a copy of this omitted
schedule to the Securities and Exchange Commission upon request."
19
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SCHEDULE 7(j)
Customer and Supplier Contracts
"The reporting person agrees to furnish supplementally a copy of this omitted
schedule to the Securities and Exchange Commission upon request."
20
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SCHEDULE 7(k)
List of Other Contracts
Xx. Xxxxxx Thynne (Subcontractor)
21
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