PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is made and entered into this 14th day of
October, 1998, by and among Data Transmission Network Corporation, a Delaware
corporation (hereinafter referred to as "DTN"), Asset Growth Corporation, a
Delaware corporation (hereinafter referred to as "AGC"), Xxxxxx X. Xxxxxxx, a
shareholder of AGC (hereinafter referred to as "Xxxxxxx"), and Xxxxx X. Xxxxx ,
a shareholder of AGC (hereinafter referred to as "Xxxxx"). Xxxxx and Xxxxxxx are
sometimes hereinafter collectively referred to as the "Stockholders" and each
individually referred to as a "Stockholder").
RECITALS:
A. AGC is engaged in the negotiation and attempted acquisition of
various businesses (the "Targeted Businesses") owned and operated by Paragon
Software, Inc., an Illinois corporation ("Paragon"), A-T Financial Information,
Inc., an Illinois corporation ("ATFI"), Nirvana Systems, Inc., a Texas
corporation, Neurel Applications Corporation, an Iowa corporation, and Expert
Trading Ltd., a Maryland limited partnership doing business as Traders Library.
B. The parties hereto desire to enter into this Agreement regarding the
purchase by a subsidiary of DTN (hereinafter referred to as "Newco") of the
rights of AGC to acquire Paragon.
C. Assuming the consummation of the acquisition of Paragon by Newco,
DTN and AGC wish to provide for the management of Paragon by AGC until
consummation of the acquisition of ATFI by AGC.
D. Contemporaneously with the acquisition of ATFI by AGC, the parties
desire for Newco to acquire ninety percent of all shares of capital stock of AGC
issued and outstanding at that time.
E. Assuming the consummation of the acquisitions of Paragon by Newco
and ATFI by AGC, DTN and the Stockholders wish to provide for the employment of
the Stockholders by AGC and Stock Redemption Agreements between AGC and the
Stockholders.
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, AGC, the Stockholders and DTN,
intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.01 Terms Defined Above. As used in this Agreement, the terms "DTN",
"AGC", "Xxxxxxx", "Xxxxx", "Stockholders", "Stockholder", "Targeted Businesses",
"Newco", "Paragon", and "ATFI" shall have the respective meanings indicated
above.
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1.02 Certain Defined Terms. In addition, the following terms shall have
the indicated meanings, unless the context otherwise requires:
"Agreement" shall mean this Purchase Agreement, as the same may be
amended or supplemented from time to time.
"ATFI Purchase Agreement" shall mean a definitive agreement
entered into between AGC and ATFI regarding the acquisition by AGC of
all of the capital stock or substantially all of the assets of ATFI,
which agreement shall be in all aspects acceptable to DTN in its sole
and absolute discretion.
"ATFI Purchase Price" shall mean the aggregate cash payment to
ATFI or its shareholders as consideration for the purchase as provided
in the ATFI Purchase Agreement.
"Closing" shall mean the contemporaneous consummation of the
purchase and sale transactions contemplated in the ATFI Purchase
Agreement and the Stock Purchase Agreement.
"DTN Revolving Credit Rate" shall mean the rate per annum charged
to DTN from time to time under its bank revolving credit facility.
"Other Contract Rights" shall mean those preliminary, pending or
definitive contracts, understandings, proposals or other agreements,
written or oral, of AGC regarding the acquisition or proposed
acquisition by AGC of all of the capital stock of the owners of the
Targeted Businesses other than Paragon and ATFI or substantially all of
the assets of the Targeted Businesses other than the businesses of
Paragon and ATFI, which rights shall be in all aspects acceptable to
DTN in its sole and absolute discretion.
"Paragon Purchase Agreement" shall mean the definitive agreement
to be entered into between AGC and Paragon regarding the acquisition by
AGC of all of the capital stock of Paragon, which agreement shall be in
the form of attached hereto as Exhibit A.
"Paragon Purchase Price" shall mean the aggregate cash payment to
the shareholders of Paragon as consideration for the purchase of the
capital stock of Paragon as provided in the Paragon Purchase Agreement.
"Person" shall mean any individual, firm, corporation,
partnership, limited liability company, trust or other entity, and
shall include any successor (by merger or otherwise) to such entity.
"Stock Purchase Agreement" shall mean the definitive agreement to
be entered into among Newco and the Stockholders regarding the
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acquisition by Newco from the Stockholders of ninety percent of all of
the issued and outstanding capital stock of AGC, which agreement shall
be in the form attached hereto as Exhibit B.
ARTICLE II
ACQUISITION OF PARAGON
2.01 Assignment of Paragon Purchase Agreement. Contemporaneously with
the execution of this Agreement, AGC shall sell, transfer, assign, convey and
deliver to Newco all of AGC's right, title and interest as purchaser under the
Paragon Purchase Agreement by a duly executed assignment in form and substance
acceptable to DTN to effectively vest in Newco all right, title and interest of
purchaser under the Paragon Purchase Agreement, free and clear of all liens,
encumbrances, security interests, actions, claims and equities of any kind
whatsoever. In lieu of AGC's assignment as provided in this paragraph, AGC and
DTN may agree to have Newco enter into the Paragon Purchase Agreement directly
with Paragon.
2.02 Assumption of Paragon Purchase Agreement. From and after the
assignment to Newco of AGC's interest in the Paragon Purchase Agreement pursuant
to Section 2.01, DTN shall cause Newco to assume and perform all of the
obligations of the purchaser under the Paragon Purchase Agreement, including,
but not limited to, payment of the Paragon Purchase Price. To finance the
Paragon Purchase Price, DTN shall make a capital contribution to Newco of cash
in the amount of twenty percent (20%) of the Paragon Purchase Price and DTN
shall loan to Newco eighty percent (80%) of the Paragon Purchase Price.
2.03 Management Agreement. Contemporaneously with the execution of this
Agreement, AGC shall execute and deliver to DTN, and DTN shall cause Newco to
execute and deliver to AGC, the Management Agreement in the form attached as
Exhibit C.
2.04 AGC's Deliveries. Contemporaneously with the execution of this
Agreement, AGC shall deliver to DTN the following:
(i) A certificate from the Secretary of State of the State of
Delaware, dated within thirty days of the date of this
Agreement, to the effect that AGC is in existence and is in
good standing with respect to the payment of all franchise
and related taxes;
(ii) Certificates from the appropriate governmental authority of
each state wherein the business conducted by AGC makes
qualification necessary, dated within thirty days of the
date of this Agreement, to the effect that AGC is duly
qualified as a foreign corporation and is in good standing
with respect to the payment of all franchise and related
taxes;
(iii) A certificate of the Secretary of AGC, dated as of the date
of this Agreement, certifying (a) the Certificate of
Incorporation and Bylaws of AGC, (b) all corporate
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resolutions adopted by the shareholders and/or directors of
AGC as necessary to approve AGC's execution and performance
of this Agreement and (c) that the representations and
warranties of AGC contained in this Agreement are true and
correct on the date of this Agreement; and
(iv) Such other documents, instruments, certifications and
confirmations as may be reasonably required and designated
by DTN to effect and consummate fully the transactions
contemplated in this Article II.
ARTICLE III
PURSUIT AND ANALISIS OF ACQUISITIONS
3.01 Negotiation of Acquisitions. From and after the date of this
Agreement, AGC and the Stockholders shall use their best efforts and due
diligence to enter into the ATFI Purchase Agreement prior to December 31, 1998,
and to pursue the Other Contract Rights. The parties hereto shall cooperate
fully in connection with the negotiation and pursuit of the ATFI Purchase
Agreement and the Other Contract Rights and AGC shall allow DTN to actively
participate in such negotiations. Such cooperation shall include AGC's and the
Stockholders' furnishing to DTN all relevant and material information concerning
ATFI and the target companies under the Other Contract Rights and the
negotiations and proceedings related to such proposed acquisitions.
3.02 Due Diligence Review by DTN. Between the date of this Agreement
and the Closing, AGC and the Stockholders will cause AGC to afford DTN and its
representatives prompt and full access to all information, books and records in
their possession or control pertaining to or concerning ATFI and the target
companies under the Other Contract Rights and the negotiations and proceedings
related to such proposed acquisitions and use their best efforts to cause ATFI
and the target companies under the Other Contract Rights to furnish DTN and its
representatives all information, books and records in their possession or
control pertaining to or concerning their businesses, including, without
limitation, their financial and operating data and other information with
respect to the businesses and properties of such entities for the purpose of
permitting DTN to make such investigations of such businesses, properties, and
financial and legal conditions as DTN deems necessary or desirable to
familiarize itself therewith. In addition, AGC and the Stockholders will
promptly notify DTN in writing of any significant developments known to them
regarding ATFI and the target companies under the Other Contract Rights.
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ARTICLE IV
ACQUISITION OF ATFI AND STOCK OF AGC
4.01 Stock Purchase Agreement. Subject to the terms and conditions set
forth in this Article IV, at the Closing the Stockholders and Newco shall
execute, deliver and consummate the transactions contemplated by the Stock
Purchase Agreement.
4.02 Contributions to Capital of AGC. Contemporaneously with the
Closing, DTN shall cause Newco to make a capital contribution to AGC of (i) cash
in the amount of twenty percent (20%) of the ATFI Purchase Price, (ii) cash in
the amount referred to in Section 4.06(m) to fund AGC's obligations to
shareholders of AGC other than the Stockholders, and (iii) all of the capital
stock of Paragon, free and clear of all liens and encumbrances other than the
obligation to repay to DTN the sum of eighty percent (80%) of the Paragon
Purchase Price plus interest thereon at the DTN Revolving Credit Rate from the
date of this Agreement until repaid. AGC shall assume at Closing the
indebtedness referred to in clause (iii) of the preceding sentence.
Contemporaneously with the Closing, DTN shall loan to AGC eighty percent (80%)
of the ATFI Purchase Price, which loan shall bear interest at the DTN Revolving
Credit Rate from the date of Closing until repaid. AGC shall execute and deliver
to DTN at Closing documentation acceptable to DTN to evidence its payment
obligations referred to in this paragraph, which shall be payable to DTN on
demand, or such obligations may be accounted for internally by DTN.
4.03 Employment Agreements. Contemporaneously with the Closing, AGC and
each of the Stockholders shall enter into an Employment Agreement in the form
attached hereto as Exhibit E.
4.04 Stock Redemption Agreements. Contemporaneously with the Closing,
AGC and each of the Stockholders shall enter into a Stock Redemption Agreement
in the form attached hereto as Exhibit F.
4.05 Conduct of Business of AGC. During the period from the date of
this Agreement to the Closing, AGC shall (i) conduct its business and operations
according to its ordinary course of business consistent with past practice
except as otherwise provided in this Section 4.05, and (ii) use its best efforts
to preserve intact its business organization and its relationship with the
owners of the Targeted Businesses, its employees, and others having business
relationships with it, except as may otherwise be agreed by AGC and DTN. Without
limiting the generality of the foregoing, prior to the Closing without the prior
written consent of DTN, AGC shall not:
(a) change or amend its Certificate of Incorporation or By-laws (or
similar governing documents);
(b) (i) create, incur or assume any debt, liability or obligation,
direct or indirect, whether accrued, absolute, contingent or otherwise, other
than normal operating expenses incurred in the ordinary course of business
consistent with past practice (except for liability of AGC incurred in
connection with the redemption of stock from its existing shareholders as
provided in this Agreement) or (ii) pay any debt, liability or obligation of any
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kind other than current liabilities incurred in the ordinary course of business
consistent with past practice or (iii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person, or make any loans or advances to any
person; provided, however, normal operating expenses incurred in the ordinary
course of business will be considered consistent with past practices regardless
that such items were received free of charge by AGC in the past, including
without limitation office and equipment rental and administrative services.
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
the capital stock of AGC, or redeem or otherwise acquire any of the capital
stock of AGC or split, combine or otherwise similarly change the capital stock
of AGC or authorize the creation or issuance of or issue or sell any shares of
its capital stock or any securities or obligations convertible into or
exchangeable for, or giving any person any right to acquire from it, any shares
of its capital stock, or agree to take any such action;
(d) (i) change in any manner the rate or terms of compensation or bonus
payable or to become payable to any director, officer or employee (except AGC
shall be allowed to pay to the Stockholders the management fees received
pursuant to the Management Agreement referred to in Section 2.03, to the extent
such fees are not needed to pay expenses and liabilities incurred by AGC) or
(ii) change in any manner the rate or terms of any insurance, pension,
severance, or other employee benefit plan, payment or arrangement made to, for
or with any employees;
(e) discharge or satisfy any lien other than in the ordinary course of
business and consistent with past practice or subject to any lien any of its
assets or properties;
(f) except as otherwise permitted in this Section 4.05, enter into any
agreement or commitment for any borrowing, capital expenditure or capital
financing in excess of $1,000 individually or in the aggregate;
(g) sell, lease, transfer or dispose of any of its properties or
assets, waive or release any rights of material value, or cancel, compromise,
release or assign any indebtedness owed to it or any claims held by it in each
case other than in the ordinary course of business consistent with past
practice;
(h) make any investment of a capital nature either by purchase of stock
or securities, contributions to capital, property transfers or otherwise, or by
the purchase of any material property or assets of any other individual, firm,
corporation or entity, except as contemplated in this Agreement;
(i) take any action to permit any insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated or any of the
coverage thereunder to lapse, unless simultaneously with such termination or
cancellation replacement policies providing substantially the same coverage and
which are obtainable on substantially the same economic terms are in full force
and effect; provided, however that if AGC shall receive notice of any such
cancellation or termination, it shall so notify DTN promptly upon receipt
thereof and, if feasible upon the payment of a premium which is not materially
greater than the premium payable under such terminated or canceled policy,
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obtain simultaneously with such termination or cancellation such replacement
policies;
(j) license, transfer, grant, waive, release, permit to lapse or
otherwise fail to preserve any of its material proprietary rights or contract
rights, or dispose of or permit to lapse any material license, permit or other
form of authorization;
(k) terminate or amend or fail to perform any of its obligations under
any contract to which its is a party or take any other action which would have a
material adverse effect on AGC; or
(l) enter into an agreement to do any of the things described in
clauses (a) through (k) above.
4.06 Conditions to the Obligations of DTN to Effect the Transactions
Contemplated in Article IV. The obligations of DTN to effect the transactions
contemplated in Article IV shall be subject to the fulfillment at or prior to
the Closing of each of the following conditions, any one or more of which may be
waived in whole or in part by DTN in writing:
(a) AGC and the Stockholders shall have performed and complied in all
material respects with all agreements, obligations, conditions and covenants
contained in this Agreement and in the Stock Purchase Agreement required to be
performed and complied with by them at or prior to the Closing and all the
representations and warranties of AGC and the Stockholders set forth in this
Agreement and in the Stock Purchase Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing, and
DTN shall have received certificates to that effect signed by a duly authorized
officer of AGC and the Stockholders together with such other documents,
instruments and writings required to be delivered by the Stockholders or by AGC
at or prior to the Closing pursuant to this Agreement, the Stock Purchase
Agreement or otherwise required in connection herewith.
(b) AGC and the Stockholders shall have delivered to DTN (i) copies of
AGC's Certificate of Incorporation including all amendments thereto certified by
the Secretary of State of the State of Delaware, (ii) certificate from the
Secretary of State to the effect that AGC is in good standing and listing all
charter documents of AGC on file, and (iii) a certificate from the appropriate
governmental authority of each state wherein the business conducted by AGC makes
qualification necessary, dated within thirty days of the date of this Agreement,
to the effect that AGC is duly qualified as a foreign corporation and is in good
standing with respect to the payment of all franchise and related taxes.
(c) Prior to the Closing, there shall be no material adverse change in
the assets or liabilities, the business or condition, financial or otherwise,
the results of operations, or prospects of AGC, from the date of this Agreement,
and the Stockholders shall have delivered to DTN a certificate, dated as of the
Closing, to such effect.
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(d) No action or proceedings which have a reasonable likelihood of
success shall have been instituted or threatened by any governmental body or
authority to restrain or prohibit any of the transactions contemplated hereby.
(e) Each party hereto shall have received all material consents,
waivers, approvals, licenses or other authorizations required from any
governmental or non-governmental entity for the execution, delivery and
performance of the Stock Purchase Agreement and the ATFI Purchase Agreement by
the parties thereto.
(f) The consummation by AGC of the purchase and sale transaction
contemplated in the ATFI Purchase Agreement upon terms acceptable to DTN in its
sole and absolute discretion and the approval of all aspects and the status of
the Other Contract Rights by DTN in its sole and absolute discretion.
(g) DTN shall have received an opinion from counsel to the
Stockholders, dated as of the Closing, in form and substance satisfactory to DTN
and its counsel, to the effect set forth in Exhibit D hereto.
(h) No injunction or other court order requiring that any part of the
business or assets of AGC be held separate or divested or that any business or
assets of DTN or any affiliate of DTN be divested, or imposing or involving any
conditions on DTN or its affiliates or AGC, which could be reasonably expected
to have a material adverse effect on the assets, liabilities, business,
financial condition, prospects or results of operations of either DTN or any
affiliate of DTN on the one hand, or AGC on the other hand, shall be in effect
and no proceedings shall be pending by or before, or threatened in writing by or
before, any governmental body or court of competent jurisdiction with respect
thereto.
(i) AGC shall not have taken any of the actions set forth in Section
4.05(a) - (l) without the prior written consent of DTN.
(j) DTN shall have received satisfactory evidence of the resignation as
of the time of Closing of such of the present officers and directors of AGC as
DTN may request prior to Closing.
(k) There shall not be in effect at the Closing any contractual
provisions restricting the ability of AGC or any affiliate thereof to conduct
any business or compete with any person or restricting the area in which it may
conduct any business.
(l) DTN and its counsel shall have approved (i) the form of stock
certificates and related instruments of transfer to be delivered to Newco at the
Closing, (ii) all other proceedings to be effected at the Closing or otherwise
in connection with the transactions contemplated by the Stock Purchase Agreement
and the ATFI Purchase Agreement, and (iii) all other documents and instruments
to be delivered at the Closing or otherwise in connection with the transactions
contemplated by the Stock Purchase Agreement and the ATFI Purchase Agreement.
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(m) AGC shall redeem all of the capital stock held by its existing
shareholders (other than the Stockholders) for an aggregate redemption price of
not more than $700,000, which redemption price shall be a liability of AGC at
the Closing to be paid with funds received from Newco pursuant to this
Agreement.
4.07 Current Information. During the period from the date of this
Agreement to the Closing, AGC will promptly notify DTN in writing of any
significant development not in the ordinary course of business consistent with
past practice or of any material adverse change in the assets, liabilities,
business, financial condition, prospects or results of operation of AGC and of
any governmental complaints, investigations or hearings of which AGC have been
advised involving AGC, or the institution or threat of the institution of any
litigation or proceedings involving AGC.
4.08 Access to Information. Between the date of this Agreement and the
Closing, AGC will (i) afford DTN and its designated representatives full access
to the premises, books and records of AGC, and (ii) cause AGC's officers, and
use its best efforts to cause AGC's advisors (including, without limitation,
their auditors, attorneys and other advisors) to furnish DTN and its designated
representatives (including DTN's auditors, accountants, attorneys and
representatives) with financial and operating data and other information with
respect to the business, properties and prospects of AGC for the purpose of
permitting DTN to make such investigation of the business, properties, financial
and legal condition of AGC as DTN deems necessary or desirable to familiarize
itself therewith.
4.09 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement and except as otherwise provided herein, all of the parties
hereto will use their reasonable best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Article IV.
4.10 Consents. Each of the parties hereto will use its reasonable best
efforts to obtain the written consents of all persons and governmental
authorities required to be obtained by each such party and necessary to the
consummation of the transactions contemplated by this Article IV.
ARTICLE V
FAILURE TO ACQUIRE ATFI
5.01 Election to Terminate. In the event that the consummation of the
purchase and sale transaction contemplated by the ATFI Purchase Agreement fails,
for any reason, to occur prior to December 31, 1998, or such later date as
designated by DTN in its sole and absolute discretion, but not later than March
31, 1999, then either DTN or AGC may, upon written notice to the other, elect to
terminate the provisions of and transactions contemplated by Article IV of this
Agreement (the "Termination"). From and after the Termination, the terms and
provisions of Article IV of this Agreement shall be void and of no further force
or effect. However, the provisions of this Section 5.01 are not intended to
waive, limit or preclude the rights which any party to this Agreement may have
against any other party hereto for any breach of the terms and provisions of
Article IV occurring prior to the Xxxxxxxxxxx.
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0.00 Xxxxxxxxxx of Paragon. In the event of the Termination, AGC shall
have the right to purchase from Newco all of the shares of capital stock of
Paragon for an amount equal to the net book value of assets minus liabilities of
Paragon on the date of such purchase plus interest on the Paragon Purchase Price
from the date of this Agreement to the date such amount is paid in full to Newco
at the DTN Revolving Credit Rate in effect from time to time, such rate to be
adjusted upward or downward on each date upon which the DTN Revolving Credit
Rate changes. AGC shall have a period of six (6) months following the
Termination to obtain financing and pay to Newco in full in cash the purchase
price for the capital stock of Paragon determined as provided in this Section
5.02. Upon receipt of such amount by DTN within the six month period following
the Termination, Newco shall (i) deliver to AGC certificates for such capital
stock of Paragon duly endorsed for transfer and free and clear of any liens,
security interests, encumbrances, or claims other than the provisions of this
Agreement and (ii) pay to each of the Stockholders in cash the sum of $50,000 as
full and complete compensation to the Stockholders for their services related to
the transactions contemplated by this Agreement, subject to the Stockholders
executing and delivering a complete release in favor of DTN and Newco and their
shareholders, employees and agents relating to all matters arising out or
related to the transactions contemplated by this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties. AGC and the Stockholders jointly
and severally warrant, represent and covenant to and with DTN:
(a) That AGC has full right and lawful authority to enter into
this Agreement and to sell, transfer, assign and convey all of
its right, title and interest in the Paragon Purchase
Agreement; that AGC's performance of its obligations under
this Agreement will not violate any agreement, document, trust
(constructive or otherwise), order, judgment or decree to
which AGC is a party or by which it is bound; and that, upon
the transfer and assignment of the Paragon Purchase Agreement
to Newco as provided in this Agreement, Newco will acquire
good and merchantable title thereto, free and clear of any
liens, encumbrances, security interests, actions, claims, and
equities of any kind whatsoever, other than the rights of the
parties as set forth in this Agreement.
(b) That AGC is the sole and lawful owner of and has good and
marketable title to all of the interests of the purchaser
under the Paragon Purchase Agreement to be acquired by Newco
pursuant to this Agreement, free and clear of any liens,
encumbrances, security interests, actions, claims, and
equities of any kind whatsoever, other than the rights of the
parties as set forth in this Agreement.
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(c) That AGC will be at Closing the sole and lawful owner of and
will have good and marketable title to all of the interests of
the purchaser under the ATFI Purchase Agreement and Other
Contract Rights, free and clear of any liens, encumbrances,
security interests, actions, claims, and equities of any kind
whatsoever, other than the rights of the parties as set forth
in this Agreement.
(d) That there are no suits, arbitrations or other legal or
governmental proceedings pending or, to the knowledge of AGC
or the Stockholders, threatened against AGC which might
conceivably affect the title to the Paragon Purchase Agreement
to be acquired by Newco pursuant to this Agreement.
(e) That AGC has duly and timely filed all federal, state, and
local tax returns of every kind whatsoever required to be
filed by AGC and has paid in full the tax liability shown on
such returns; that no unpaid deficiencies are in existence
which have been asserted against AGC by any official or agency
as a result of the filing of such returns; and that, to the
knowledge of AGC, there is not now pending any examination
with respect to any such returns nor does AGC know of any
impending examination with respect to any such returns.
(f) The Paragon Purchase Agreement and the ATFI Purchase Agreement
include all rights and interests necessary to acquire the
capital stock or assets being acquired thereunder by AGC.
(g) There is no fact, development, or threatened development with
respect to Paragon, ATFI or the target companies under the
Other Contract Rights or their markets, products, customers,
vendors, suppliers, operations, assets or prospects which are
known to AGC which would materially adversely affect their
businesses, operations or prospects considered as a whole,
other than such conditions as may affect as a whole the
economy generally or matters disclosed in writing to DTN.
(h) AGC has delivered with respect to the Paragon Purchase
Agreement and will deliver prior to Closing with respect to
the ATFI Purchase Agreement and the Other Contract Rights,
true, correct and complete copies of the Paragon Purchase
Agreement, the ATFI Purchase Agreement and all written
contracts relating to the Other Contract Rights, and all of
such contracts or contract rights are presently or will be at
Closing in full force and effect. AGC has not received any
notices from the sellers under the Paragon Purchase Agreement,
the ATFI Purchase Agreement or the Other Contract Rights that
indicate that they intend to terminate any of such contracts
and, except as reflected in the copies delivered to DTN, such
contracts have not been amended and AGC and the other parties
to such contracts are not in default in any material respect
under such contracts or contract rights.
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ARTICLE VII
INDEMNIFICATION
7.01 Indemnification. AGC and the Stockholders jointly and severally
agree to indemnify DTN and Newco and to hold DTN and Newco harmless from any and
all loss, damage, cost, or expense incurred or sustained by DTN or Newco by
reason of the failure of any warranty or representation contained in this
Agreement to be true or as a result of AGC's failure to abide by or perform any
covenant or agreement on its part contained in the Paragon Purchase Agreement,
the ATFI Purchase Agreement or the Other Contract Rights and accruing prior to
the Closing.
ARTICLE VIII
MISCELLANEOUS
8.01 Survival. The representations, warranties, and covenants on the
part of AGC and/or the Stockholders contained in this Agreement shall survive
both the execution of this Agreement and the Closing and shall be binding upon
AGC and the Stockholders and their heirs, legal representatives, successors and
assigns.
8.02 Payment of Liabilities. AGC and the Stockholders agree to pay as
promptly as possible and hold DTN and Newco harmless from any and all
liabilities of AGC existing on the date of this Agreement and those incurred or
accruing prior to the Closing, except for reasonable attorneys fees and
accounting expenses incurred by AGC after December 31, 1998, solely in
connection with the negotiations and proposed acquisition of ATFI, which shall
be reimbursed to AGC by Newco. The Stockholders and AGC agree that neither DTN
nor Newco is assuming and neither shall have responsibility for any of the
debts, obligations, or liabilities of AGC of any kind whatsoever incurred or
accrued before the Closing, except those obligations specifically assumed by
Newco pursuant to this Agreement. AGC and the Stockholders agree to hold DTN
harmless from any cost or expense arising out of or relating to any such debts,
obligations, or liabilities.
8.03 Transfer Taxes. AGC shall pay all sales and other similar taxes
imposed on or collectible by AGC or Newco by reason of the transfer of the
Paragon Purchase Agreement being acquired by Newco pursuant to this Agreement
and all taxes attributable to the payments to AGC and the Stockholders pursuant
to this Agreement shall be paid by AGC and the Stockholders, respectively.
8.04 Entire Agreement. This document and the exhibits attached hereto
constitute 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.
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8.05 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.
8.06 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.
8.07 Further Actions. AGC agrees to take such actions from time to time
as may in the reasonable judgment of DTN or its counsel be necessary or
advisable to confirm the title of Newco to any of the contracts or assets
acquired by Newco from AGC pursuant to this Agreement.
8.08 Governing Law. This Agreement shall be construed in accordance
with the substantive laws, but not the choice of law provisions, of the State of
Nebraska.
8.09 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.
8.10 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.
8.11 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.
8.12 Notification. All notices which any party may be required or
desire to give to the other parties shall be in writing and shall be given by
personal service, telecopy, registered mail or certified mail (or its
equivalent) to any other party at its respective address or telecopy number set
forth below. Notices shall be deemed to be given upon actual receipt by the
party to be notified. Notices delivered by telecopy shall be confirmed in
writing by overnight courier.
If to AGC or Stockholders: Asset Growth Corporation
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
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If to DTN or Newco: Data Transmission Network
Corporation
0000 Xxxx Xxxxx Xxxx, #000
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
Telecopy No.: (000) 000-0000
8.13 Interpretation. The article and section headings in this Agreement
are solely for convenience and shall not be considered in its interpretation.
The language of this Agreement has been approved by counsel for each party and
shall be construed as a whole according to its fair meaning and none of the
parties hereto shall be deemed to be the draftsman of this Agreement in any
action which may hereafter arise between the parties. Time is of the essence of
this Agreement. Words denoting sex shall be construed to include the masculine,
feminine, and neuter, when such construction is appropriate, and specific
enumeration shall not exclude the general, but shall be construed as cumulative.
8.14 No Third Party Beneficiaries. Except as provided in this
Agreement, nothing in this Agreement shall confer any rights upon any Person
which is not a party or a permitted assignee of a party to this Agreement.
8.15 Remedies. In the event of a breach or default by any party to this
Agreement, the other parties shall be entitled to any and all remedies and
damages available to such party at law or in equity.
8.16 Expenses. All fees, expenses and costs incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such fees, expenses and costs.
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
/s/ Xxxx X. Xxxxx
--------------------------------
Xxxx X. Xxxxx, President
ASSET GROWTH CORPORATION,
a Delaware corporation
/s/ Xxxxxx X. Xxxxxxx,
------------------------------
Xxxxxx X. Xxxxxxx, President
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STOCKHOLDERS:
---------------------------------
Xxxxxx X. Xxxxxxx, an individual
---------------------------------
Xxxxx X. Xxxxx, an individual
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EXHIBIT A
Paragon Purchase Agreement
STOCK PURCHASE AGREEMENT
by and among
XXXX XXXX, XXXXXXX XXXXXXXXXXXXX,
XXX XXXXXXXXXXXXX, XXXXXX XXXXXXX, XXX XXXXX,
XXXXXXX XXXXXXXX AND XXXXXX XXXXXXXX
("Sellers")
and
DTN ACQUISITION, INC.
("Purchaser")
October 14, 1998
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of the 14th day of October 1998,
is made and entered into by and among XXXX XXXX ("Xxxx"), XXXXXXX XXXXXXXXXXXXX
("Xxxx"), XXX XXXXXXXXXXXXX, XXXXXX XXXXXXX, XXX XXXXX, XXXXXXX XXXXXXXX and
XXXXXX XXXXXXXX ("Sellers"), and DTN ACQUISITION, INC. ("Purchaser"), a
corporation organized under the laws of the State of Nebraska evidences the
arrangements concerning the purchase by Purchaser from the Sellers of common
stock of PARAGON SOFTWARE, INC., an Illinois corporation ("Company").
WITNESSETH:
In consideration of the mutual covenants and agreements herein contained,
the Purchaser and the Sellers agree as follows:
ARTICLE I.
DEFINITIONS
1.01 Terms Defined Above. As used in this Stock Purchase Agreement, the
terms "Sellers", "Purchaser" and "Company" shall have the respective meanings
indicated above.
1.02 Certain Defined Terms. As used in this Stock Purchase Agreement, the
following terms shall have the indicated meanings, unless the context otherwise
requires:
"Affiliate" shall mean any Person, which, directly or indirectly, controls,
is controlled by, or is under common control with any other Person. Control
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of management, policies or action through ownership of voting
securities, contract, voting trust, membership or otherwise through formal or
informal arrangements or business relationships.
"Agreement" shall mean this Stock Purchase Agreement, as the same may be
amended or supplemented from time to time.
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"Business Day" shall mean a day other than a Saturday, Sunday or legal
holiday under the laws of the State of Texas.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time.
"Common Stock" shall mean the common stock, without par value, of the
Company.
"Company's Fiscal Year" shall mean each annual fiscal reporting period of
the Company ending December 31.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which together with the Company would be treated as a single
employer under Section 4001 of ERISA.
"Financial Statements" shall mean the statements of financial condition, as
at the point in time and for the period indicated and consisting of at least a
balance sheet and related statements of operations, stockholders' equity, and,
when the foregoing are audited, accompanied by the certification of independent
certified public accountants and footnotes to any of the foregoing, all of which
shall be prepared in accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles established by
the Financial Accounting Standards Board and in effect in the United States from
time to time during the term of this Agreement.
"Insolvency Proceeding" shall mean application (whether voluntary or
instituted by another Person or Persons) for or the consent to the appointment
of a receiver, trustee, conservator, custodian or liquidator of any Person or of
all or a substantial part of such Person's Property, or the filing of a petition
commencing a case under Title 11 of the United States Code, seeking liquidation,
reorganization or rearrangement or taking advantage of any bankruptcy,
insolvency, debtor's relief or other similar law of the United States, the State
of Texas or any other jurisdiction.
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"Lien" shall mean any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract, and including, but not
limited to, the lien or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt, or a lease,
consignment or bailment for security purposes and reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting property which
secure an obligation owed to, or a claim by, a Person other than the owner of
such Property (for the purposes of this Agreement, the Company shall be deemed
to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, financing lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
for security purposes).
"Material Adverse Effect" shall mean any material and adverse effect on (a)
the material assets, liabilities, financial condition, business or operations of
the Company from those reflected in the Financial Statements of the Company or
from the facts represented or warranted in this Agreement, (b) the ability of
the Company to carry out in all material respects its business conducted as at
the date of this Agreement or (c) the ability of the Company to meet its
obligations generally, or the ability of the Company to meet its obligations
under this Agreement on a timely basis as provided herein.
"Multi-employer Plan" shall mean a Plan described in Section 4001(a)(3) of
ERISA which covers employees of the Company or any ERISA Affiliate.
"Non-competition Agreement" shall mean the agreements between Xxxx and Xxxx
and the Purchaser, in the form of agreements attached hereto as Exhibits 1.02(a)
and 1.02(b).
"Permitted Liens" shall mean: (a) Liens for taxes, assessments or other
governmental charges or levies not yet due or which (if foreclosure, distraint,
sale or other similar proceedings shall not have been initiated) are being
contested in good faith by appropriate proceedings diligently conducted, and
such reserve as may be required by GAAP shall have been made therefor; (b) Liens
in connection with workers' compensation, unemployment insurance or other social
security (other than Liens created by Section 4068 of ERISA), old age pension or
public liability obligations which are not yet due or which are being contested
in good faith by appropriate proceedings diligently conducted by or on behalf of
the Company, if such reserve as may be required by GAAP shall have been made
therefor, provided that such Liens shall not extend to or cover any other
Property of the Company.
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"Person" shall mean an individual, corporation, partnership, trust,
unincorporated organization or a government or any agency or political
subdivision thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Plan" shall mean any pension plan that is covered by Title IV of ERISA and
maintained by the Company and any such plan to which the Company is required to
contribute.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"Purchase Price" shall mean the aggregate cash payment to Sellers of
$5,222,000.00.
"Subsidiary" means any corporation or limited liability company of which
more than fifty percent (50%) of the issued and outstanding securities having
ordinary voting power for the election of directors is owned or controlled,
directly or indirectly, by the Company or any Subsidiary.
1.03 Accounting Principles 1.03 Accounting Principles . Where the character
or amount of any asset or liability or item of income or expense is required to
be determined or any consolidation or other accounting computation is required
to be made for the purposes of this Agreement, this shall be done in accordance
with GAAP.
1.04 References 1.04 References . All references in this Agreement to
Article and Section numbers are to Articles and Sections of this Agreement,
unless expressly provided to the contrary, and the terms "herein",
"hereinabove", "hereinafter", "hereinbelow" and "hereunder" when used in this
Agreement shall refer to this Agreement in its entirety and not only to the
Section of this Agreement in which such term appears.
ARTICLE II.TERMS OF COMMON STOCK PURCHASEARTICLE II.
TERMS OF COMMON STOCK PURCHASE
2.01 Purchase and Sale of Common Stock. Contemporaneously with the
execution of this Agreement and subject to the terms and conditions and relying
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on the representations and warranties of the Purchaser, as to actions by the
Sellers, and of the Sellers, as to actions by the Purchaser, the Sellers shall
sell in the aggregate one thousand (1,000) shares of the Common Stock, and the
Purchaser shall purchase the Common Stock.
2.02 Consideration to Sellers 2.02 Consideration to Sellers .
Contemporaneously with the execution of this Agreement and the delivery of the
Common Stock, but subject to the provisions of this Agreement, the Purchaser
shall deliver to the Sellers the Purchase Price by certified check or wire
transfer as directed by the Sellers, at a time and place mutually acceptable to
Sellers and Purchaser; provided, however, such event shall not occur later than
October 31, 1998 ("Closing Date"). Schedule 2.02 sets forth instructions to
Purchaser of the allocation of the Purchase Price between Sellers.
2.03 Non-competition Agreements. Company and Xxxx and Xxxx shall have
executed and delivered the Noncompetition Agreements, effective the Closing
Date.
2.04 Consulting Arrangements. Xxxx and Xxxx, for one (1) year after the
Closing Date, shall make themselves available (provided that they shall not
individually be required to be available for more than fifty (50) hours in any
week without their prior consent, and if their services are requested, a minimum
of five (5) hours shall be billed to Purchaser for services rendered during such
week to Purchaser and Company upon reasonable request, to perform consulting
services at the rate of $100.00 per hour (including travel time plus
out-of-pocket expenses; provided, however, Xxxx and Xxxx at no time will be
entitled to any employee benefits and shall maintain the status of independent
contractors. Xxxx and Xxxx shall determine their schedules and the manner in
which such services are provided. Xxxx and Xxxx xxx provide such services by
telephone. Unavailability by reason of vacation shall not constitute a breach
hereof. For a period of thirty (30) days following the Closing Date, Xxxx and
Xxxx shall perform such consulting services without compensation other than
reimbursement of reasonable documented out-of-pocket expenses.
ARTICLE III.
CONDITIONS
The indicated obligations of the Purchaser and the Sellers under this
Agreement are subject to satisfaction of the following conditions precedent:
3.01 Conditions to Execution by Purchaser. The execution of this Agreement
by the Purchaser and the payment of the Purchase Price to the Sellers as set
forth in Section 2.02, is subject to satisfaction of the following conditions
precedent:
(a) Receipt of Certified Copy of Corporate Proceedings. The Purchaser
shall have received (i) certificates from the Secretary of State of the
State of Illinois, dated reasonably near the date of this Agreement, to the
effect that the Company is in existence and is in good standing with
respect to the payment of all franchise taxes, with its articles of
incorporation attached thereto, and the Company's bylaws and all amendments
thereto.
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(b) Receipt of Certificates of Incumbency. The Purchaser shall have
received from the Company a certificate of incumbency signed by its
respective secretary or assistant secretary setting forth (i) the names of
the officers of the Company, respectively, executing this Agreement and the
Common Stock, (ii) the office(s) to which such persons have been elected
and in which they presently serve and (iii) an original specimen signature
of each such person.
(c) Accuracy of Representations and Warranties. The representations
and warranties of the Company contained in Article IV shall be true and
correct in all material respects on the date of execution of this
Agreement.
(d) Receipt of Opinion of Counsel. The Purchaser shall have received
an opinion of counsel for the Sellers in the form and substance acceptable
to the Purchaser, which opinion shall be accompanied by such supporting
documentation as the Purchaser or its counsel shall reasonably require, and
addressing, among other matters, certain of the representations and
warranties of the Company made herein.
(e) Legal Matters Satisfactory to Counsel to Purchaser. All legal
matters incident to the execution of this Agreement shall be reasonably
satisfactory to the firm of Xxxxxxxxx & Xxxxxx, L.L.P., counsel for the
Purchaser.
(f) No Material Adverse Effect. No Material Adverse Effect shall have
occurred since the date of any financial and other information regarding
the Company submitted to the Purchaser prior to the execution of this
Agreement.
(g) Receipt of Common Stock and Stock Purchase Agreement. Subject to
the provisions of Section 2.02, the Purchaser shall have received its
Common Stock and this Agreement, as requested by the Purchaser, duly
executed by the Sellers.
(h) Property of Company. The Property of the Company shall include,
but not be limited to, equipment, appliances, spare parts, accounts
receivable, works-in-progress, owned and leased real estate, leasehold
improvements, fixtures, general intangibles, intellectual property rights,
contractual rights, licenses, permits, security deposits, prepaid expenses,
cash portion of deferred revenue, accounting and personnel records, and
catalogs and brochures.
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3.02 Condition to Execution by Sellers. The execution of this Agreement by
the Sellers and the sale of the common stock to Purchaser is subject to
satisfaction of the condition precedent that the representations and warranties
of the Purchaser contained in Article IV shall be true and correct in all
material respects on the date of execution of this Agreement.
ARTICLE IV.REPRESENTATIONS AND WARRANTIESARTICLE IV.
REPRESENTATIONS AND WARRANTIES
4.01 Representations and Warranties of Sellers 4.01 Representations and
Warranties of Sellers . In order to induce the Purchaser to enter into this
Agreement, Xxxx and Xxxx represent and warrant to the Purchaser (which
representations and warranties shall survive the delivery of the Common Stock as
provided herein) that:
(a) Existence and Good Standing. The Company is a corporation, duly
organized, legally existing and in good standing in the State of Illinois.
--
(b) Authority. The execution and delivery by the Sellers of this
Agreement and the sale of the Common Stock as provided in this Agreement do
not and will not (A) require the consent of any regulatory authority or
governmental body, (B) contravene or conflict with any material provision
of applicable law or of the charter or bylaws of the Company, (C)
contravene or conflict with any material indenture, instrument or other
agreement to which the Company or any Sellers is a party.
(c) Capitalization. The authorized capital stock of the Company
consists of 10,000 shares of Common Stock, without par value of which one
thousand (1,000) shares are issued and outstanding. The outstanding shares
of Common Stock have been duly authorized and validly issued, and are fully
paid and nonassessable and have been issued in accordance with applicable
securities laws. There are no outstanding options, warrants or other rights
to purchase any of the Company's capital stock.
Sellers have full legal right to sell, assign and transfer the Common
Stock to Purchaser and will, upon delivery of the Common Stock to Purchaser
pursuant to the terms thereof, transfer to Purchaser good and valid title
to the Common Stock free and clear of all Liens, security interests,
claims, charges, encumbrances, rights, options to purchase, voting trusts
or other voting agreement (other than those voting trusts or agreements
which may be referred to herein), calls and commitments of every kind
affecting the Common Stock.
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(d) Valid and Binding Obligations. This Agreement, as and when
executed and delivered, constitutes legal, valid and binding obligations of
the Sellers enforceable against the Sellers in accordance with their
respective terms, except as limited by bankruptcy, insolvency or similar
laws of general application relating to the enforcement of creditors'
rights and as limited by general equitable principles.
(e) Scope and Accuracy of Financial Statements. The Financial
Statements on a consolidated and consolidating basis, as of December 31,
1996, December 31, 1997 and June 30, 1998, are complete and correct in all
material respects, have been prepared in accordance with GAAP consistently
applied (except with respect to the June 30, 1998 Financial Statements for
year-end adjustments and with respect to all Financial Statements for the
absence of footnotes), and fully and accurately reflect respectively the
financial condition and the results of the operations of the Company in all
material respects as of the dates and for the periods stated therein and no
Material Adverse Effect has occurred since June 30, 1998.
(f) Liabilities, Litigation and Restrictions. The Company has no
liabilities, direct or contingent, required by GAAP to be disclosed on a
balance sheet, other than as disclosed in the Financial Statements as of
June 30, 1998, and other than liabilities incurred since June 30, 1998 in
the ordinary course of business. Except as set forth in such Financial
Statements, there is no litigation or other action of any nature pending
before any court, governmental instrumentality, regulatory authority or
arbitral body or, to the knowledge of the Company, threatened against or
affecting the Company which might reasonably be expected to result in any
Material Adverse Effect. No unusual or unduly burdensome restriction,
restraint or hazard exists by contract, law, governmental regulation or
otherwise relative to the business or material Property of the Company
other than such as relate generally to Persons engaged in the business
activities conducted by the Company.
(g) Rights in Properties. The Company has good and marketable title or
valid leasehold interests in its Property, real and personal, reflected in
the Financial Statements as of June 30, 1998, other than Property disposed
of in the ordinary course of business. None of the Property of the Company
is subject to any Lien, except for Permitted Liens.
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(h) Authorizations and Consents. Except as expressly contemplated by
this Agreement, no authorization, consent, approval, exemption, franchise,
permit or license of, or filing with, any governmental or public authority
or any third party is required to authorize or is otherwise required in
connection with the valid execution and delivery by the Sellers of this
Agreement and the sale of the Common Stock, or the performance by the
Sellers of its obligations under any of the foregoing, except those
authorizations, consents, approvals, exemptions, franchises, permits and
licenses which if not obtained would not have a Material Adverse Effect.
(i) Compliance with Laws, Rules, Regulations and Orders. Neither the
business nor any of the activities of the Company as presently conducted,
violates any law or any rule, regulation or directive of any applicable
judicial, administrative or other governmental instrumentality the result
of which violation would have a Material Adverse Effect; the Company
possesses all licenses, approvals, registrations, permits and other
authorizations necessary to enable it to carry on its businesses in all
material respects as now conducted.
(j) Proper Filing of Tax Returns and Payment of Taxes Due. The Company
has duly and properly filed or duly extended all United States Income Tax
returns and all other tax returns which are required to be filed, and has
paid all taxes due pursuant to said returns or pursuant to any assessment
received, except such taxes, if any, as are being contested in good faith
and as to which adequate provisions and disclosures have been made; and the
charges and reserves on the books of the Company with respect to any taxes
or other governmental charges through the date hereof are adequate.
(k) ERISA. The Company does not presently nor has it ever established,
maintained or contributed to a Plan or similar program covered by ERISA.
(l) Casualties or Taking of Property. Neither the Sellers nor the
Company, after due inquiry, has any knowledge that, since the date of the
Financial Statements of the Company most recently delivered to the
Purchaser, the business of the Company or its Property has been materially
and adversely affected as a result of any fire, explosion, earthquake,
flood, drought, windstorm, accident, strike or other labor disturbance,
embargo, requisition or taking of Property or cancellation of contracts,
permits or concessions by any domestic or foreign government or any agency
thereof, riot, activities of armed forces or acts of God.
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(m) No Material Misstatements. No information, exhibit or report
prepared by the Company or at the direction or supervision of Sellers and
furnished to the Purchaser in connection with the negotiation and
preparation of this Agreement, or to the knowledge of the Sellers, after
due inquiry, any information, exhibit or report prepared by any other
Person and so furnished to the Purchaser, contained any material
misstatement of fact.
(n) Location of Business and Offices. The principal place of business
and chief executive office of the Company is located at 000 Xxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000.
(o) Subsidiaries. The Company has no Subsidiaries.
(p) No Registration Required. The sale and delivery of the Common
Stock pursuant to this Agreement does not require registration under the
Securities Act of 1933, as amended, nor under the securities acts of any
state of the United States.
(q) Brokers. The Sellers have not incurred any obligation or
liability, contingent or otherwise, for brokers' or finders' fees in
respect of the matters provided for in this Agreement, and, if any such
obligation or liability exists, it shall remain an obligation of the
Sellers, and the Purchaser shall have no responsibility therefor. The
Sellers shall indemnify and hold the Purchaser, and its Affiliates harmless
from any losses, costs or damages arising from any such obligation or
liability the Sellers have incurred.
(r) Year 2000 Compliance. The occurrence in or use by the computer
software internally developed by the Company, as currently used, of dates
on or after January 1, 2000 will not adversely affect the performance of
such computer software with respect to date dependent data, computations,
output or other functions, except where such affect will not have a
Material Adverse Effect. No representation is made, however, with respect
to computer software developed by any third party or any computer hardware.
(s) Cancellation Penalties. Except for those agreements described on
Schedule 4.01(u), there exists no agreements with cancellation penalties of
greater than $1,000.00, and prior to Closing Date, Company shall have not
entered into new agreements with cancellation penalties of greater than
$1,000.00.
00
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(x) Distributions to Sellers. As of the Closing Date, the Company has
cash in an amount not less than the deferred revenues of the Company.
4.02 Representations and Warranties of Purchaser 4.02 Representations and
Warranties of Purchaser . To induce the Sellers to enter into this Agreement,
the Purchaser represents and warrants to the Sellers (which representations and
warranties shall survive the delivery of the Common Stock as provided herein)
that:
(a) Status and Intent. The Purchaser is acquiring the Common Stock
solely for its own beneficial account, for investment purposes, and not
with a view to, or for resale in connection with, any distribution. The
Purchaser represents that it understands that the Common Stock has not been
registered under the Securities Act of 1933, as amended, or any state
securities laws by reason of specific exemptions under the provisions
thereof which depend in part upon the investment intent of such Purchaser.
The Purchaser understands that the Sellers are relying upon the
representations and warranties of such Purchaser contained in this
Agreement (and any supplemental information) for the purpose of determining
whether this transaction meets the requirements for such exemptions.
(b) Existence and Good Standing. The Purchaser is a corporation, duly
organized, legally existing and in good standing under the laws of the
State of Delaware and is duly qualified and in good standing as a foreign
corporation in all jurisdictions wherein the Property owned or the business
transacted by it makes such qualification necessary.
(c) Authority. The execution and delivery by the Purchaser of this
Agreement (i) is within the power of the Purchaser; (ii) has been duly
authorized by all necessary action on behalf of the Purchaser, and (iii)
does not and will not (A) require the consent of any regulatory authority
or governmental body, (B) contravene or conflict with any provision of law
or of the charter or by-laws of the Purchaser, or (C) contravene or
conflict with any indenture, instrument or other agreement to which the
Purchaser is a party.
(d) Valid and Binding Obligations. This Agreement constitutes a legal,
valid and binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms, except as limited by bankruptcy,
insolvency or similar laws of general application relating to the
enforcement of creditors' rights and as limited by general equitable
principles.
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(e) Authorizations and Consents. Except as expressly contemplated by
this Agreement, no authorization, consent, approval, exemption, franchise,
permit or license of, or filing with, any governmental or public authority
or any third party is required to authorize or is otherwise required in
connection with the valid execution and delivery by the Purchaser of this
Agreement and the purchase of the Common Stock, or the performance by the
Purchaser of its obligations under any of the foregoing, except those
authorizations, consents, approvals, exemptions, franchises, permits and
licenses which if not obtained would not have a Material Adverse Effect.
(f) Brokers. Purchaser has not incurred any obligation or liability,
contingent or otherwise, for brokers' or finders' fees in respect of the
matters provided for in this Agreement, and, if any such obligation or
liability exists, it shall remain an obligation of the Purchaser, and the
Sellers shall have no responsibility therefor. The Purchaser shall
indemnify and hold the Seller , and its Affiliates harmless from any
losses, costs or damages arising from any such obligation or liability the
Sellers have incurred.
ARTICLE V.INDEMNIFICATION
5.01 Indemnification by Sellers. Sellers shall bear and pay all taxes
attributable to the sale of the Common Stock and Sellers' receipt of the
Purchase Price, and Xxxx and Xxxx shall assume and indemnify and hold harmless
Purchaser and its Affiliates, successors and assigns from and against any
claims, demands, losses, damages, or expenses (including reasonable attorney's
fees and expenses) which are caused by or arise out of (a) any breach or default
in the performance by Sellers or Company of any material covenant or material
agreement of Sellers or Company contained in this Agreement, (b) any breach of a
material warranty or any inaccurate or erroneous material representation made by
Sellers herein, in any exhibit hereto, or in any other instrument delivered by
or on behalf of Sellers or Company pursuant hereto, or (c) any and all actions,
suits, proceedings, claims, demands, and judgments incident to any of the
foregoing. Xxxx and Xxxx shall further indemnify and hold harmless Purchaser
from and against any claims, demands, losses, damages, or expenses (including
reasonable attorney's fees and expenses) which are caused by or arise out of
other events or circumstances that occur prior to the Closing Date and are not
disclosed in this Agreement relating to gross negligence or willful misconduct
of Sellers. If any third person shall assert a claim against Purchaser that, if
successful, might result in a breach or default by Sellers of this Agreement,
Purchaser shall give Sellers prompt written notice thereof, and Sellers shall
have the right to participate in the defense thereof and be represented, at its
expense, by counsel to be selected by it. No such claim, demand or other matter
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shall be compromised or settled by Purchaser or Sellers in any manner that might
adversely affect the interests of the other party without the prior written
consent of such other party. Except as otherwise provided hereinafter, any
claims in respect of which indemnification is sought must be made in writing
prior to the expiration of twelve (12) months after the Closing Date. Claims
pursuant to Paragraph 4.01(j) above must be made within the applicable federal,
state or local tax statutory limitations period plus thirty (30) days, including
authorized extensions thereof.
5.02 Time for Assertion 5.02 Time for Assertion . Except as otherwise
provided hereinafter, any claim in respect of which indemnification hereunder is
sought must be made in writing prior to the expiration of twelve (12) months
after the Closing Date. Claims pursuant to Section 4.01(j) must be made within
the applicable federal, state, or local tax statutory limitation period plus
thirty (30) days, including authorized extensions thereof.
5.03 Indemnification by Purchaser 5.03 Indemnification by Purchaser .
Purchaser shall indemnify and hold harmless Sellers and their respective heirs
and assigns from and against any claims, demands, losses, damages, or expenses
(including reasonable attorney's fees and expenses) caused by or arising out of
(a) any breach or default in the performance by Purchaser of any material
covenant or material agreement of Purchaser contained in this Agreement,(b) any
breach of a material warranty or an inaccurate or erroneous material
representation made by Purchaser herein or in any other instrument delivered by
or on behalf of Purchaser pursuant hereto, or (c) any and all actions, suits,
proceedings, claims, demands, or judgments incident to any of the foregoing. If
any third party shall assert a claim against Sellers that, if successful, might
result in a breach or default by Purchaser of this Agreement, Sellers shall give
Purchaser prompt written notice thereof, and Purchaser shall have the right to
participate in the defense thereof and to be represented, at the sole expense of
Purchaser, by counsel to be selected by it. No such claim, demand, or other
matter shall be compromised or settled by Sellers or Purchaser in any manner
that might adversely affect the interests of the other party without the prior
written consent of such other party. Except as otherwise provided hereinafter,
any claim in respect of which indemnification hereunder is sought must be made
in writing prior to the expiration of twelve (12) months after the Closing Date.
5.04 Contribution in Lieu of Indemnification 5.04 Contribution in Lieu of
Indemnification . If the indemnification provided for in this Article V is held
by a court of competent jurisdiction to be unavailable to Purchaser or Sellers
("Indemnified Party") with respect to any loss, liability, claim, damage, or
expense referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party thereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and the Indemnified
Party on the other in connection with the statements or omissions which resulted
in such loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
14
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whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact related to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
5.05 Indemnification Limitation. Xxxx and Xxxx, on the one hand, and
Purchaser, on the other hand, shall be required to indemnify the Purchaser and
Sellers, respectively, under this Article V only to the extent and by the amount
that the aggregate amount of claims, demands, losses, damages and expenses
exceeds $150,000.00 and the aggregate liability of Xxxx and Xxxx, on the one
hand, and the Purchaser, on the other hand, under this Article V shall not
exceed $1,000,000. The amount for which indemnification is provided under this
Article V, shall be net of all amounts recovered or recoverable by the
indemnified party under insurance policies and shall be adjusted to take account
of any tax cost or benefit realized by the indemnified party as a result of the
incurrence or payment of any such claim, demand, loss, damage or expense.
5.06 Preparation of Tax Returns; Cooperation on Tax Matters.
(a) Tax periods ending on or Before the Closing Date. Sellers, at their
cost, shall prepare or cause to be prepared and file or cause to be filed all
tax returns for the Company for all tax periods ending on or before the Closing
Date which are filed after the Closing Date.
(b) Tax Periods Ending After the Closing Date. Purchaser, at its cost,
shall prepare or cause to be prepared and file or cause to be filed all tax
returns for the Company for all tax periods ending after the Closing Date.
(c) Cooperation. Sellers, Purchaser and the Company shall cooperate fully
in connection with the preparation and filing of tax returns pursuant to this
section and any audit, litigation or other proceeding with respect to any taxes.
Such cooperation shall include the retention and (upon the other party's
request) provision of records which are reasonably relevant to the preparation
of such returns and any such audit, litigation or other proceeding.
(d) Section 1377 Election. Within the time period permitted under the Code,
the parties hereto shall cause the Company to elect under Section 1377 of the
Code to have the rules provided in Section 1377 of the Code applied as if the
taxable year of the Company consisted of two taxable years, the first of which
shall terminate as of the closing date, and to file all necessary documents to
make such election with the Internal Revenue Service.
(e) Section 338(h)(10) Election. Sellers and Purchaser hereby agree:
15
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(i) at Purchaser's election, made within the period allowed by law,
Sellers and Purchaser shall cause (and shall cause the company) to join in
an election under Section 338(h)(10) and Section 338(g) of the Code and in
all comparable elections and in state and local tax laws so applicable (the
"Election");
(ii) Purchaser and Sellers agree to allocate the Purchase Price among
assets in accordance with applicable Treasury Regulations as set forth on
Exhibit 5.06(e)(i) (the "Price Allocation");
(iii) Purchaser and Sellers agree to follow the value and Price
Allocation above, for purposes of all federal, and where applicable, state
and local income tax returns to the extent said values are relevant for
such purpose; and
(iv) after Closing, neither Purchaser, Sellers, Company nor any of
their respective Affiliates shall take any action or fail to take any
action where such act or failure to act would result in or have the effect
of defeating the Election.
ARTICLE VI.MISCELLANEOUSARTICLE
6.01 Other Health Insurance Coverage Matters. Following the Closing Date,
the Purchaser shall cause the Company to provide "single" health insurance
coverage to all full-time employees of the Company as of the Closing Date at a
cost to such employee no greater than the cost to such employee of health care
coverage immediately prior to the closing. Furthermore, to the extent possible
and within the sole discretion of the Company, such coverage shall provide that
all pre-existing conditions and waiting periods shall be waived.
6.02 Other Negotiations. Sellers agree, until the earlier of the Closing
Date or Purchaser's indication that it no longer desires to pursue the purchase
of the Stock, not in any way solicit or contact, or hold discussions or
negotiations with, any one other than the Purchaser or its authorized
representatives concerning the sale of the Stock.
6.03 Company Employees. After the Closing, Purchaser may employ or attempt
to employ any employee involved in the Company's business.
6.04 Reasonable Inspection and Confidentiality. Sellers hereby agree to
permit Purchaser and its representatives to make such investigations of the
books, records and operations of the Company's business as Purchaser believes
necessary or advisable in connection with the purchase of the Stock. Sellers
hereby agree to permit the Purchaser and its representatives to have full access
to the assets and all the books and records of the Company's business, and
16
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Purchaser shall have the right to make copies thereof and excerpts therefrom.
Sellers shall furnish to Purchaser such financial and operating data and other
information with respect to the Company's business as Purchaser may reasonably
request. Purchaser and its representatives shall have the right to consult with
the officers, employees, attorneys, accountants and agents of Sellers in
connection with the foregoing. Purchaser hereby agrees that, if the transactions
contemplated hereby are not consummated for any reason, it (a) will return all
documents delivered to it by Sellers and all copies made by it and (b) will not
use for its own benefit or disclose to third parties any information other than
information which at the time of disclosure is in the public domain not as a
result of acts by Purchaser.
6.05 Publicity. Sellers and Purchaser each agree that no public statements
will be made with respect to the transactions contemplated hereby unless the
other party hereto has consented to such disclosure, such consent not to be
unreasonably withheld.
6.06 Expenses. All fees, expenses and costs incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such fees, expenses and costs; provided, however, that if the
Company or Sellers incur any fees, expenses or costs as a result of complying
with a request of Purchaser or in connection with the investigation of the
business and operations of the Company by Purchaser, such fees, expenses and
costs shall be paid by Purchaser upon presentation of an invoice therefor.
6.07 Survival of Representations, Warranties and Covenants 6.07 Survival of
Representations, Warranties and Covenants . All representations and warranties
of the Sellers and the Purchaser shall survive this Agreement for a period of
twelve (12) months and all covenants and agreements herein made shall survive
this Agreement and the sale of the Common Stock in accordance with their terms.
6.08 Notices and Other Communications 6.08 Notices and Other Communications
. Notices, requests and communications hereunder shall be in writing and shall
be sufficient in all respects if delivered to the relevant address indicated
below (including delivery by registered or certified United States mail, telex,
telegram, expedited courier service or hand):
(a) If to Purchaser:
DTN ACQUISITION, INC.
0000 Xxxx Xxxxx Xxxx
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx, Senior Vice President
17
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(b) If to Sellers:
Xxxx Xxxx Xxxxxxx Xxxxxxxxxxxxx
00000 00xx Xxx. 000 Xxxxxx
Xxxxxxxx Xxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Any party may, by proper written notice hereunder to the other, change
the individuals or addresses to which such notices to it shall thereafter be
sent.
6.09 Parties in Interest 6.09 Parties in Interest . All covenants and
agreements herein contained by or on behalf of the Sellers and Purchaser shall
be binding upon the Sellers and Purchaser, their respective heirs, successors
and assigns and inure to the benefit of Sellers and Purchaser, their respective
heirs, successors and assigns.
6.10 No Waiver 6.10 No Waiver . No course of dealing on the part of either
party , its officers or employees, nor any failure or delay by either party with
respect to exercising any of their rights, powers or privileges under this
Agreement, the Common Stock or any other instrument referred to herein or
executed in connection with the Common Stock shall operate as a waiver thereof.
The rights and remedies of the parties under this Agreement and the Common Stock
or any other instrument referred to herein or executed in connection with the
Common Stock shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
6.11 GOVERNING LAW 6.11 GOVERNING LAW . THIS AGREEMENT SHALL BE DEEMED TO
BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE SUBSTANTIVE LAWS OF THE STATE OF NEBRASKA NOTWITHSTANDING THE CHOICE OF
LAW PROVISIONS THEREOF.
6.12 Incorporation of Exhibits 6.12 Incorporation of Exhibits . The
Exhibits attached to this Agreement are incorporated herein for all purposes and
shall be considered a part of this Agreement.
6.13 Survival Upon Unenforceability 6.13 Survival Upon Unenforceability .
In the event any one or more of the provisions contained in this Agreement, the
Common Stock or in any other instrument referred to herein or executed in
connection with the Common Stock shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof or any provision of
any other instrument referred to herein or executed in connection herewith.
6.14 Rights of Third Parties 6.14 Rights of Third Parties . All provisions
herein are imposed solely and exclusively for the benefit of the Purchaser and
the Sellers and no other Person shall have standing to require satisfaction of
such provisions in accordance with their terms.
6.15 Amendments or Modifications 6.15 Amendments or Modifications . Neither
this Agreement nor any provision hereof may be changed, waived, discharged or
18
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terminated orally. This Agreement may be amended, and the observance of any term
of this Agreement may be waived, with (and only with) the written consent of the
Sellers and the Purchaser.
6.16 Agreement as Entirety. This Agreement, for convenience only, has been
divided into Articles and Sections and it is understood that the rights, powers,
privileges, duties and other legal relations of the parties hereto shall be
determined from this instrument as an entirety and without regard to the
aforesaid division into Articles and Sections and without regard to headings
prefixed to said Articles or Sections.
6.17 Number and Gender 6.17 Number and Gender . Whenever the context
requires, reference herein made to the single number shall be understood to
include the plural and likewise the plural shall be understood to include the
singular. Words denoting sex shall be construed to include the masculine,
feminine, and neuter, when such construction is appropriate, and specific
enumeration shall not exclude the general, but shall be construed as cumulative.
6.18 Entire Agreement 6.18 Entire Agreement . This Agreement contains the
entire agreement between the parties relating to the transactions contemplated
hereby. All prior or contemporaneous understandings, representations, statements
and agreements, whether written or oral, are merged herein and superseded by
this Agreement. THIS WRITTEN AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
6.19 Controlling Provision Upon Conflict 6.19 Controlling Provision Upon
Conflict . In the event of a conflict between the provisions of this Agreement
or any other instrument referred to herein or executed in connection with the
issuance of the Common Stock, the provisions of this Agreement shall control.
IN WITNESS WHEREOF, this Stock Purchase Agreement is executed as of the
date first above written.
SELLERS:
/s/ XXXX XXXX
-------------------------
Xxxx Xxxx
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/s/ XXXXXXX XXXXXXXXXXXXX
-------------------------------
Xxxxxxx Xxxxxxxxxxxxx
/s/ XXX XXXXXXXXXXXXX
-------------------------------
Xxx Xxxxxxxxxxxxx
/s/ XXXXXX XXXXXXX
-------------------------------
Xxxxxx Xxxxxxx
20
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/s/ XXX XXXXX
------------------------------
Xxx Xxxxx
/s/ XXXXXXX XXXXXXXX
-------------------------------
Xxxxxxx Xxxxxxxx
/s/ XXXXXX XXXXXXXX
------------------------------
Xxxxxx Xxxxxxxx
PURCHASER:
21
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DTN ACQUISITION, INC.
By: /s/Xxxxxxx X. Xxxx
--------------------------
Xxxxxxx X. Xxxx, President
22
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Schedule & Exhibit Index
23
- 253 -
Schedule 2.02 Instructions to Purchaser for Allocation of the Purchase Price
Schedule 4.01(u) Contracts Which May Exceed $1,000.00 Cancellation Penalties
Exhibit 1.02(a) Noncompetition Agreement - Xxxxxxx Xxxxxxxxxxxxx
Exhibit 1.02(b) Noncompetition Agreement - Xxxx Xxxx
Exhibit 5.06(e)(i) Price Allocation
24
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Schedule 2.02
25
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Schedule 2.02
Instructions to Purchaser for Allocation of the Purchase Price
47 1/2 % of Purchase Price to Xxxx Xxxx by wire transfer
instructions
47 1/2 % of Purchase Price to Xxxxxxx Xxxxxxxxxxxxx by wire transfer
instructions
1% of Purchase Price to Xxx Xxxxxxxxxxxxx by certified check
1% of Purchase Price to Xxxxxx Xxxxxxx by certified check
1% of Purchase Price to Xxx Xxxxx by certified check
1% of Purchase Price to Xxxxxxx Xxxxxxxx by certified check
1% of Purchase Price to Xxxxxx Xxxxxxxx by certified check
26
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Schedule 4.01(u)
27
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Schedule 4.01(u)
Contracts which may exceed $1,000 cancellation penalties:
Standard & Poors Xxxxxxxx, Inc. (stock market data provider)
Bridge Information Systems, Inc. (stock market data provider)
Alpha dot Net, Inc. (internet service provider)
TCG, Inc. (leased T1 data line provider)
28
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Exhibit 1.02(a)
29
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NON-COMPETITION AGREEMENT
THIS AGREEMENT is made and entered into as of the 14th day of October,
1998, by and between DTN ACQUISITION, INC., a Nebraska corporation, having its
principal office in Omaha, Nebraska ("Company"), and XXXXXXX XXXXXXXXXXXXX, an
individual residing at 000 Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 ("Protofanousis").
WITNESSETH
WHEREAS, Protofanousis has heretofore been a shareholder and served as an
officer and director of PARAGON SOFTWARE, INC. ("Paragon"); and
WHEREAS, the Company, by Stock Purchase Agreement of even date herewith,
has acquired all of Protofanousis's common stock ("Common Stock") in Paragon for
cash; and
WHEREAS, Protofanousis acknowledges that he possesses certain unique and
special knowledge of the business and assets of Paragon; and
WHEREAS, Company desires to protect the business and assets of Paragon; and
WHEREAS, Protofanousis acknowledges that as part of the consideration for
Company acquiring the Common Stock from Protofanousis, Protofanousis has agreed
to certain covenants of nondisclosure and non-competition.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
payments herein contained, the Company and Protofanousis hereby agree as
follows:
1. Recitals Part of Agreement. The foregoing recitals are made a part of
this Agreement.
30
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2. Term of Agreement. Company and Protofanousis agree that this Agreement
shall be beginning on the date above given (the "Effective Date") and end on the
third anniversary thereof unless sooner terminated as hereinafter provided (the
"Noncompete Period").
3. Non-Competition. Protofanousis agrees as follows: Protofanousis
acknowledges that he possesses special knowledge of Paragon and may during the
Noncompete Period receive special knowledge of the Company. Protofanousis
acknowledges that included in the special knowledge received is the confidential
information identified in Section 4 below. Protofanousis acknowledges that this
confidential information is valuable to Company and Paragon and, therefore, its
protection and maintenance constitutes a legitimate interest to be protected by
Company by this covenant not to compete. Protofanousis further represents and
acknowledges that due to the nature of the business of Company and Paragon,
Protofanousis is able to compete with the Company and Paragon anywhere in the
world. Therefore, Protofanousis agrees that during the Noncompete Period,
Protofanousis will not, directly or indirectly either as an employee, employer,
consultant, agent, principal, partner, stockholder (other than in investment in
a public company of no greater than five percent (5%) of its outstanding stock),
corporate officer, director, or in any other individual or representative
capacity, engage or participate in any business that is in competition with the
business of Paragon as presently conducted anywhere in the world.
4. Nondisclosure. Protofanousis agrees during the Noncompete Period to not
disclose to any person or entity copies, pictures, duplicates, facsimiles or
other reproductions or recordings of any abstracts or summaries of any reports,
studies, memoranda, correspondence, records, methods, plans, catalogs,
brochures, trade secrets, customer lists, customer data bases, patents,
application for patents, trademarks, inventions, engineering drawings, licenses,
copyrights and other intellectual property or other written, printed, or
otherwise recorded materials of any kind whatever belonging to or in the
possession of Company or Paragon or of any subsidiary or affiliate of Company or
31
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Paragon. Protofanousis shall have no right, title, or interest in any such
material. Protofanousis agrees that he will not, without the prior written
consent of Company, remove any such material from any premises of Company or of
any subsidiary or affiliate of Company at any time (if given access to or comes
into possession of any such material), and that he will surrender all such
material to Company immediately upon the request of Company. This paragraph
shall not apply to information which (i) is or becomes generally available to
the public or (ii) becomes available to Protofanousis on a non-confidential
basis from a source other than Company.
5. Consideration. In consideration for the agreements made by Protofanousis
herein, the Company shall pay Protofanousis a total of $250,000.00 in twelve
(12) quarterly installments of $20,833.34 each, the first such installment
commencing on the first day of the month following ninety (90) days from the
Effective Date.
6. Death of Protofanousis. In the event that Protofanousis dies during the
Noncompete Period, compensation due hereunder shall be paid to his estate in the
manner set forth in Paragraph 5 above.
7. Notices. Any notice required or permitted hereunder shall be sufficient
if in writing and if sent by certified mail, postage prepaid, return receipt
requested, to the addresses set forth on the execution page hereof, or to such
other address as may be designated by written notice similarly given by either
party to the other.
8. Assignment. This Agreement may not be assigned by Protofanousis.
9. Amendments. This Agreement may only be amended by a written instrument
captioned on its face as an "Amendment" hereto and duly executed by the Company
and Protofanousis.
10. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF NEBRASKA NOTWITHSTANDING THE CHOICE OF LAW
PROVISIONS THEREOF.
32
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11. Binding Effect. This Agreement shall inure to the benefit of and be
enforceable against the Company and Protofanousis and their respective
successors, heirs and permitted assigns.
12. Entire Agreement. This Agreement contains the entire agreement between
the parties relating to the transactions contemplated hereby. All prior or
contemporaneous understandings, representations, statements and agreements,
whether written or oral, are merged herein and superseded by this agreement.
THIS WRITTEN AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
13. Controlling Provision Upon Conflict. In the event of a conflict between
the provisions of this Agreement or any other instrument referred to herein or
executed in connection with the purchase and sale of the Common Stock, the
provisions of this Agreement shall control.
33
- 263 -
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and Protofanousis has executed this Agreement as of
the 14th day of October, 1998.
COMPANY:
DTN ACQUISITION, INC.
By:/s/ Xxxxxxx X. Xxxx
----------------------------
Xxxxxxx X. Xxxx
Senior Vice President
Address for Notices:
0000 Xxxx Xxxxx Xxxx
Xxxxx, XX 00000
PROTOFANOUSIS:
/s/ Xxxxxxx Xxxxxxxxxxxxx
----------------------------
Xxxxxxx Xxxxxxxxxxxxx
Address for Notices:
000 Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
34
- 264 -
Exhibit 1.02(b)
35
- 265 -
NON-COMPETITION AGREEMENT
THIS AGREEMENT is made and entered into as of the14th day of October, 1998,
by and between DTN ACQUISITION, INC., a Nebraska corporation, having its
principal office in Omaha, Nebraska ("Company"), and XXXX XXXX, an individual
residing at 00000 00xx Xxxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxxx 00000 ("Xxxx").
WITNESSETH
WHEREAS, Xxxx has heretofore been a shareholder and served as an officer
and director of PARAGON SOFTWARE, INC. ("Paragon"); and
WHEREAS, the Company, by Stock Purchase Agreement of even date herewith,
has acquired all of Xxxx'x common stock ("Common Stock") in Paragon for cash;
and
WHEREAS, Xxxx acknowledges that he possesses certain unique and special
knowledge of the business and assets of Paragon; and
WHEREAS, Company desires to protect the business and assets of Paragon; and
WHEREAS, Xxxx acknowledges that as part of the consideration for Company
acquiring the Common Stock from Xxxx, Xxxx has agreed to certain covenants of
nondisclosure and non-competition.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
payments herein contained, the Company and Xxxx hereby agree as follows:
1. Recitals Part of Agreement. The foregoing recitals are made a part of
this Agreement.
2. Term of Agreement. Company and Xxxx agree that this Agreement shall be
beginning on the date above given (the "Effective Date") and end on the third
36
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anniversary thereof unless sooner terminated as hereinafter provided (the
"Noncompete Period").
3. Non-Competition. Xxxx agrees as follows: Xxxx acknowledges that he
possesses special knowledge of Paragon and may during the Noncompete Period
receive special knowledge of the Company. Xxxx acknowledges that included in the
special knowledge received is the confidential information identified in Section
4 below. Xxxx acknowledges that this confidential information is valuable to
Company and Paragon and, therefore, its protection and maintenance constitutes a
legitimate interest to be protected by Company by this covenant not to compete.
Xxxx further represents and acknowledges that due to the nature of the business
of Company and Paragon, Xxxx is able to compete with the Company and Paragon
anywhere in the world. Therefore, Xxxx agrees that during the Noncompete Period,
Xxxx will not, directly or indirectly either as an employee, employer,
consultant, agent, principal, partner, stockholder (other than in investment in
a public company of no greater than five percent (5%) of its outstanding stock),
corporate officer, director, or in any other individual or representative
capacity, engage or participate in any business that is in competition with the
business of Paragon as presently conducted anywhere in the world.
4. Nondisclosure. Xxxx agrees during the Noncompete Period to not disclose
to any person or entity copies, pictures, duplicates, facsimiles or other
reproductions or recordings of any abstracts or summaries of any reports,
studies, memoranda, correspondence, records, methods, plans, catalogs,
brochures, trade secrets, customer lists, customer data bases, patents,
application for patents, trademarks, inventions, engineering drawings, licenses,
copyrights and other intellectual property or other written, printed, or
otherwise recorded materials of any kind whatever belonging to or in the
possession of Company or Paragon or of any subsidiary or affiliate of Company or
Paragon. Xxxx shall have no right, title, or interest in any such material. Xxxx
agrees that he will not, without the prior written consent of Company, remove
37
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any such material from any premises of Company or of any subsidiary or affiliate
of Company at any time (if given access to or comes into possession of any such
material), and that he will surrender all such material to Company immediately
upon the request of Company. This paragraph shall not apply to information which
(i) is or becomes generally available to the public or (ii) becomes available to
Xxxx on a non-confidential basis from a source other than Company.
5. Consideration. In consideration for the agreements made by Xxxx herein,
the Company shall pay Xxxx a total of $250,000.00 in twelve (12) quarterly
installments of $20,833.34 each, the first such installment commencing on the
first day of the month following ninety (90) days from the Effective Date.
6. Death of Xxxx. In the event that Xxxx dies during the Noncompete Period,
compensation due hereunder shall be paid to his estate in the manner set forth
in Paragraph 5 above.
7. Notices. Any notice required or permitted hereunder shall be sufficient
if in writing and if sent by certified mail, postage prepaid, return receipt
requested, to the addresses set forth on the execution page hereof, or to such
other address as may be designated by written notice similarly given by either
party to the other.
8. Assignment. This Agreement may not be assigned by Xxxx.
9. Amendments. This Agreement may only be amended by a written instrument
captioned on its face as an "Amendment" hereto and duly executed by the Company
and Xxxx.
10. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF NEBRASKA NOTWITHSTANDING THE CHOICE OF LAW
PROVISIONS THEREOF.
38
- 268 -
11. Binding Effect. This Agreement shall inure to the benefit of and be
enforceable against the Company and Xxxx and their respective successors, heirs
and permitted assigns.
12. Entire Agreement. This Agreement contains the entire agreement between
the parties relating to the transactions contemplated hereby. All prior or
contemporaneous understandings, representations, statements and agreements,
whether written or oral, are merged herein and superseded by this agreement.
THIS WRITTEN AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
13. Controlling Provision Upon Conflict. In the event of a conflict between
the provisions of this Agreement or any other instrument referred to herein or
executed in connection with the purchase and sale of the Common Stock, the
provisions of this Agreement shall control.
39
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and Xxxx has executed this Agreement as of the 14th
day of October, 1998.
COMPANY:
DTN ACQUISITION, INC.
By:/s/ Xxxxxxx X. Xxxx
---------------------------
Xxxxxxx X. Xxxx
Senior Vice President
Address for Notices:
0000 Xxxx Xxxxx Xxxx
Xxxxx, Xxxxxxxx 00000
XXXX:
/s/ Xxxx Xxxx
--------------------------------
XXXX XXXX
Address for Notices:
00000 00xx Xxxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxx 00000
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Exhibit 506(e)(i)
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Exhibit 5.06(e)(i)
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Fixed Assets and Purchased Software on Balance
Sheet Dated June 30, 1998 $ 125,000.00
In-House Developed Software 400,000.00
Customer Lists, Goodwill, Etc. 4,695,000.00
TOTAL $ 5,220,000.00
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EXHIBIT B
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement") dated as of ____________,
199__, by and among [Insert name of Newco], a Nebraska corporation ("Buyer"),
and Xxxxxx X. Xxxxxxx and Xxxxx X. Xxxxx (collectively the "Sellers" and
individually a "Seller").
WHEREAS, each Seller is the owner, beneficially and of record, of the
number of shares of the Common Stock of Asset Growth Corporation, a Delaware
corporation (the "Company"), set forth opposite his or her name on Schedule 1
attached hereto, and Sellers are the owners, in the aggregate, of all of the
issued and outstanding capital stock of the Company;
WHEREAS, Buyer wishes to purchase from Sellers and Sellers wish to sell
to Buyer ninety percent (90%) of all of the issued and outstanding capital stock
of the Company upon and subject to the terms and conditions set forth herein;
and
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein contained, Buyer and Sellers
agree as follows:
ARTICLE I
SALE OF SHARES
1.01 Sale of Shares. Subject to the terms and conditions herein stated,
each Seller agrees to sell, assign, transfer and deliver to Buyer on the Closing
Date (as defined herein), free and clear of any and all liens, claims and
encumbrances, good, valid and marketable title to the number of shares of
capital stock of the Company set forth opposite his or her name on Schedule 1 as
being sold to Buyer (all of such shares to be sold to Buyer hereunder being the
"Shares"), and Buyer agrees to purchase the Shares from Sellers on the Closing
Date. The certificates representing the Shares shall be duly endorsed in blank,
or accompanied by stock powers duly executed in blank, by Sellers.
1.02 Price. In full consideration for the purchase by Buyer of the
Shares, Buyer shall pay to each Seller on the Closing Date the amount set forth
opposite such Seller's name in Schedule 1 attached hereto, being an aggregate
amount of Six Hundred Thousand Dollars ($600,000).
1.03 Closing. The sale referred to in Section 1.01 (the "Closing")
shall take place at the office of ______________ at
__________________________________________, on the date of the execution of this
Agreement, or at such later date as the parties hereto shall by written
instrument designate. Such time and date are herein referred to as the "Closing
Date".
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
As of the date hereof (except as otherwise specified herein) and as of
the Closing Date, Sellers each jointly and severally represents and warrants to
Buyer as follows:
2.01 Organization and Qualification. At the Closing Date, the Company
will be a corporation duly organized, validly existing and in good standing
under the laws of Delaware and will have all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. Texas is the only jurisdiction in which the Company is qualified or
licensed to do business. Buyer has heretofore received true and complete copies
of the Certificate of Incorporation and By-laws (or other similar charter
documents), as currently in effect, of the Company.
2.02 Capitalization; Title to Stock. The authorized capital stock of
the Company consists of (i) 75,000,000 shares of common stock, $0.01 par value
per share (the "Common Stock"), of which 200,000 shares are issued and
outstanding as of the date hereof and no shares are held in the Company's
treasury and (ii) 10,000,000 shares of preferred stock, $3.00 par value per
share, of which no shares are outstanding and none are in the Company's
treasury. Sellers are the record owners of all the Company's outstanding shares
of Common Stock. All of the outstanding shares of Common Stock of the Company
are duly authorized, validly issued, fully paid and nonassessable. Except for
the sale to Buyer as contemplated by this Agreement, there are no outstanding
options, warrants, calls or other rights to subscribe for or purchase or acquire
from the Company or Sellers or any affiliate of the Company, or any plans,
contracts or commitments providing for the issuance of, or the granting of
rights to acquire (i) any capital stock of the Company or (ii) any securities
convertible into or exchangeable for any capital stock of the Company. The
Company is not contractually obligated to repurchase, redeem or otherwise
acquire any of its outstanding shares of capital stock. Each Seller represents
and warrants only with respect to that Seller and not with respect to any other
Seller, that such Seller (i) has good, valid and marketable title, beneficially
and of record, to the respective Shares set forth opposite his or its name on
Schedule 1 attached hereto, free and clear of all liens, encumbrances and rights
of others, (ii) is in rightful possession of duly and validly authorized and
issued certificates evidencing his or its ownership of record of such Shares,
and (iii) at the Closing Date, will have full right, power and authority to
sell, transfer, convey and deliver to Buyer, in accordance with the terms of
this Agreement, good, valid and marketable title, beneficially and of record, to
all of such Shares being sold by such Seller to Buyer hereunder, free and clear
of all liens, encumbrances and rights of others.
2.03 Subsidiaries. The Company has no subsidiaries. Except as set forth
on Schedule 2.03, there is no corporation, partnership, joint venture or other
person or entity in which the Company, directly or indirectly, has, or pursuant
to any agreement or agreements has or will have, a right or obligation to
acquire or make by any means, an interest or investment (including, without
limitation, equity ownership, proprietary interest, loans, guarantees of
indebtedness and other similar obligations).
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2.04 Authority Relative to the Transactions Contemplated by this
Agreement. At the Closing Date, each Seller will have full power, capacity and
authority (corporate or otherwise) to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. At the Closing Date, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will have been duly and validly authorized on
behalf of all Sellers and no other proceedings on behalf of Sellers are or will
be necessary to approve and authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Sellers, and
(assuming the valid execution and delivery of this Agreement by Buyer) at the
Closing Date will constitute a legal, valid and binding agreement of Sellers,
enforceable against Sellers in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general principles of equity.
2.05 Consents and Approval; No Violation. Except as set forth on
Schedule 2.05, neither the execution and delivery of this Agreement by Sellers,
nor the consummation of the transactions contemplated hereby, nor compliance by
any Seller with the provisions hereof, will (i) require the Company or any
Seller to file or register with, notify, or obtain any permit, authorization,
consent or approval of, any governmental or regulatory authority except for
those requirements which become applicable to the Company as a result of the
specific regulatory status of Buyer or as a result of any other facts that
specifically relate to the business activities in which Buyer is engaged; (ii)
conflict with or breach any provision of the Certificate of Incorporation,
By-laws or trust agreement (or other similar governing documents) of the Company
or any Seller; (iii) violate or breach a provision of, or constitute a default
(or an event which, with notice or lapse of time or both would constitute a
default) under, any of the terms, covenants, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
lease, contract, agreement or other instrument, commitment or obligation to
which the Company or any Seller is a party, or by which the Company or any
Seller or any of their respective properties or assets may be bound; or (iv)
violate any order, writ, injunction, decree or judgment of any court or
governmental authority applicable to the Company or any Seller or any of their
material assets.
2.06 Balance Sheet. Sellers have delivered to Buyer the unaudited
balance sheet of the Company as of September 30, 1998 (the "Balance Sheet"). The
Balance Sheet (i) has been prepared in accordance with the books and records of
the Company, and (ii) presents fairly the financial position of the Company as
of such date.
2.07 Undisclosed Liabilities. Except (i) as provided for in the Balance
Sheet, (ii) as disclosed in Schedule 2.07 or as specifically identified on other
Schedules to this Agreement or (iii) for normal trade obligations incurred in
the ordinary course of business subsequent to the date of the Balance Sheet,
consistent with past practices or as otherwise provided in this Agreement, the
Company has no liabilities or obligations in excess of $1,000 individually or
$10,000 in the aggregate of any kind or nature, whether known or unknown or
secured or unsecured (whether absolute, accrued, contingent or otherwise, and
whether due or to become due).
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2.08 Absence of Certain Changes or Events. Except as set forth in
Schedule 2.08, or as disclosed in the other Schedules hereto, the Company has
not (i) suffered any material adverse change in its assets, liabilities,
business, prospects, results of operations or financial condition, (ii) suffered
any damage, destruction or casualty loss adversely affecting any material assets
of the Company, or (iii) entered into any transaction, or conducted its business
or operations, other than in the ordinary and usual course of business,
consistent with past practices.
2.09 Title and Related Matters. Except as set forth on Schedule 2.09,
the Company does not own or lease any real property or office space. All of the
properties, rights and assets, tangible and intangible, now used in or, to the
best knowledge of Sellers, necessary for the conduct by the Company of its
business as presently conducted will be indirectly transferred to Buyer by its
purchase of the Shares. The interests of the Company in its properties, rights
and assets (whether owned or as a lessee) are free and clear of all Liens other
than (i) Liens for taxes not yet due, (ii) Liens which do not affect the use by,
or value to, the Company of its rights and assets, or (iii) Liens set forth on
Schedule 2.09. The term "Liens" shall mean any pledge, lien, security interest,
conditional sale agreement, or other similar encumbrance.
2.10 Material Contracts. Except as set forth in Schedule 2.10, the
Company does not have nor is it bound by (a) any agreement, contract or
commitment relating to the employment of any person by the Company, or any
bonus, commission, severance or termination pay, deferred compensation, pension,
profit sharing, stock option, employee stock purchase, retirement or other
employee benefit plan, (b) any agreement, indenture or other instrument which
contains restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock, (c) any agreement, contract or
commitment relating to capital expenditures in excess of $1,000, (d) any loan or
advance to, or investment in, any other person other than cash advances in the
ordinary course of business consistent with past practice, or any agreement,
contract or commitment relating to the making of any such loan, advance or
investment except for cash advances in the ordinary course of business
consistent with past practice, (e) any debt obligation for borrowed money or any
guarantee or other contingent liability in respect of any indebtedness or
obligation of any other person (other than the endorsement of negotiable
instruments for collection and other similar transactions in the ordinary course
of business), (f) any management, distributorship, sales, service (personal or
otherwise), consulting or any other similar type of contract, (g) any agreement,
contract or commitment limiting the freedom of the Company to engage in any line
of business or to compete with any other person or in any area, (h) any other
agreement, contract or commitment which involves $10,000 or more and is not
cancelable without penalty within 30 days, (i) any outstanding powers of
attorney or proxies granted to any person for any purpose whatsoever, (j) any
contract or oral or written agreement for the acquisition of any other person,
(k) any agreement as to which the United States Government, any state, local or
municipal government or any foreign government or any agency or instrumentality
of any of the foregoing is a party, exclusive of any such agreement which
contains solely the provisions set forth in a form contract used by the Company
in its ordinary course of business, which forms have been previously made
available to Buyer, or (l) any proposed contract or agreement which upon
acceptance of a customer or third party would create a binding obligation upon
the Company and which would not be cancelable without penalty within thirty (30)
days and would involve a commitment to pay $1,000 or more annually (all such
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oral or written agreements, contracts, arrangements and commitments are
hereinafter referred to as the "Material Contracts"). True, complete and correct
copies of all such written contracts, commitments, agreements or arrangements
described on Schedule 2.10 will have been made available to Buyer prior to
Closing. To the best knowledge of Sellers, Schedule 2.10 contains a complete
list of all such oral contracts, agreements, commitments or arrangements and
identifies which of such contracts are oral in nature. Except as set forth on
Schedule 2.10, there is not, under any of the Material Contracts, any default or
event which, with notice or lapse of time or both, would constitute a default on
the part of the Company. Neither the Company nor any Seller has received any
notice from the other party to such Material Contracts of the termination or
threatened termination thereof and no Seller knows of the occurrence of any
event which would allow such other party to terminate such Material Contract
except as otherwise disclosed in the Schedules hereto. Except as set forth on
Schedule 2.10 or any other Schedule hereto, no indebtedness of the Company will
be accelerated by its terms, or result from the consummation of the transactions
contemplated hereby.
Schedule 2.10 contains a complete list of all agreements providing for
the payment of severance pay to employees of the Company (the "Termination
Benefits Agreements"). Except as expressly indicated on Schedule 2.10, no event
has occurred under any of the Termination Benefits Agreements which alone or
upon the giving of notice or the passage of time or both would obligate the
Company to make any payment under any of the Termination Benefits Agreements.
2.11 Leases. Schedule 2.11 hereto sets forth an accurate list of all
leases to which the Company is a party (as lessee). All rents and additional
rent due to date and to the Closing Date on such leases have and will have been
paid and in each case, the lessee has been in peaceable possession since the
commencement of the original term of such lease or arrangement and is not in
default thereunder. Except as set forth on Schedule 2.11, there is not, with
respect to leases referred to above, any existing default, or an event of
default, or event which, with or without notice or lapse of time or both, would
constitute a default or an event of default, on the part of the Company.
2.12 Proprietary Rights; Computer Programs, Databases and Software.
Schedule 2.12 contains a complete list of all trademarks, trade names, assumed
names, service marks, logos, patents, copyrights and copyright registration, and
any applications for registration therefor presently owned or held by the
Company or with respect to which the Company owns or holds any license or other
direct or indirect interest (collectively, the "Proprietary Rights"); and no
other Proprietary Rights are used in or are necessary for the conduct of the
business of the Company as such business is presently conducted. Unless
otherwise indicated in such Schedule 2.12 the Company owns sufficient right,
title and interest in and to the material Proprietary Rights for the conduct of
its business. No material Proprietary Rights used by the Company conflict with
or infringe the rights of any other person. No claims have been asserted by any
person with respect to the ownership, validity, license or use of the
Proprietary Rights and no Seller knows of any basis for such claim. The Company
has taken all measures which it believes to be appropriate to maintain and
protect the Proprietary Rights. The Company has the right to use all material
Proprietary Rights, to provide and sell the services and products provided and
sold by it, and to conduct its business as heretofore conducted, and, except as
set forth on Schedule 2.12, the consummation of the transactions contemplated
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hereby will not alter or impair any such rights. Except as set forth on Schedule
2.12, no person is known to be infringing on or violating the Proprietary Rights
used by the Company. Except in the ordinary course of its business or as set
forth in Schedule 2.12, the Company has not sold, licensed, leased or otherwise
transferred or granted any interest or rights to any of its computer programs,
databases or software to any other person. The occurrence in or use by such
computer programs, databases and software of dates on or after January 1, 2000
("millennial dates") will not adversely affect the performance thereof with
respect to data dependent data, compilations, output, or other functions
(including but not limited to calculating, comparing and sequencing) and that
such computer programs, databases and software will create, store, process and
output information related to or including millennial dates without error or
omissions.
2.13 Litigation. Schedule 2.13 sets forth a complete list and an
accurate description of all claims, actions, suits, proceedings and
investigations pending and threatened, by or against or involving the Company or
its business and, in the case of collection claims, those involving claims in
excess of $1,000. No such pending or threatened claims, actions, suits,
proceedings or investigations, if adversely determined, would, individually or
in the aggregate, materially adversely affect the business, financial condition,
results of operations or prospects of the Company taken as a whole or the
transactions contemplated hereby. The Company does not know of any reasonable
basis for any other such claim, action, suit, proceeding or investigation. The
Company is not subject to any judgment, order or decree entered in any lawsuit
or proceeding which may have a material adverse effect on any of its operations,
business practices or on its ability to acquire any property or conduct business
in any area.
2.14 Employee Benefit Matters. Neither the Company nor any member of
the Control Group (within the meaning of section 414(b) of the Internal Revenue
Code of 1986, as amended (the "Code") maintains, has contributed to or has ever
been obligated to contribute to, for, on behalf of or with respect to current or
former employees of the Company, any employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), multiemployer plan (as defined in ERISA Section 3(37)), stock
purchase plan, stock option plan or deferred compensation agreement, plan or
funding arrangement (collectively "Employee Plans"). There are no employee
welfare benefit plans (as defined in ERISA Section 3(1)) maintained by the
Company.
2.15 Governmental Authorizations and Regulations. The Company has all
material licenses, franchises, permits and other governmental authorizations
necessary to the conduct of its business, as presently conducted and the same
are in full force and effect. The business of the Company is being conducted in
compliance in all material respects with all applicable licenses, franchises,
permits and other governmental authorizations and, to the best knowledge of
Sellers, in compliance in all material respects with all applicable laws,
ordinances, rules and regulations of all governmental authorities relating to
its properties or applicable to its business. Except as set forth on Schedule
2.15, the Company has not received any notice of any alleged violation of any of
the foregoing.
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2.16 Labor Matters. Except as set forth in Schedule 2.16, (i) the
Company is in compliance in all material respects with all applicable laws
respecting health and occupational safety, employment and employment practices,
terms and conditions of employment and wages and hours (including, without
limitation, the Federal Immigration Reform and Control Act of 1986), (ii) there
is no unfair labor practice complaint against the Company pending or threatened
before the National Labor Relations Board, (iii) there are no proceedings
pending or threatened before the National Labor Relations Board with respect to
the Company, (iv) there are no discrimination charges (relating to sex, age,
religion, race, color, national origin, ethnicity, handicap or veteran status or
any other basis protected by relevant law) pending before any federal, state or
local agency or authority against the Company or any of its employees, (v) no
grievance which might have a material adverse effect upon the Company is
currently pending, (vi) the Company is not bound by any collective bargaining
agreement and there is no collective bargaining agreement currently being
negotiated by the Company and (vii) the Company has not experienced any material
labor difficulty during the past three years.
2.17 Insurance. The Company maintains insurance coverage which Sellers
believes to be sufficient for compliance with all requirements of law and of all
agreements to which the Company is a party and which provides adequate insurance
coverage for the business of the Company. With respect to all policies, all
premiums currently payable or previously due and payable with respect to all
periods up to and including the Closing Date will have been paid and no notice
of cancellation or termination has been received with respect to any such
policy. Such policies will remain in full force and effect through the
respective dates set forth in such policies without the payment of, additional
premiums, unless called for in its original terms.
2.18 Tax Matters. (a) All Federal, state, local and foreign income,
profits, franchise, sales, use, occupancy, excise, withholding, payroll,
employment and other taxes and assessments (including interest and penalties)
payable by, or due from, the Company have been fully paid or adequately
disclosed and provided for in the Balance Sheet of the Company.
(b) The Company has not filed any election or caused any deemed
election under Section 338 of the Code.
(c) The Company is not delinquent in the payment of any taxes and no
extensions of time have been granted to the Company to file any return required
by applicable law to be filed by it prior to or on the Closing Date, which have
expired or will expire on or before the Closing Date without such return having
been filed.
2.19 Environmental Matters. The Company is in material compliance with,
and has not done anything to be in material violation of any federal, state or
local laws relating to the environment.
2.20 Brokers and Finders. No Seller has employed any broker or finder
and no broker or finder is entitled to any brokerage fees, commissions or
finder's fees arising from any act, representation or promise of any of them in
connection with the transactions contemplated hereby; provided, however, each
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Seller so represents and warrants only with respect to that Seller and not with
respect to any other Seller.
2.21 Books and Records. The minute books of the Company, as previously
made available to Buyer, contain accurate records in all material respects of
all meetings of and corporate actions or written consents by the respective
stockholders and Boards of Directors of the Company.
2.22 Bank Accounts. Sellers will cause the Company to deliver to Buyer
at least 3 business days prior to the Closing an accurate and complete list
showing the name and address of each bank in which the Company has an account or
safe deposit box, the number of any such account or any such box and the names
of all persons authorized to draw thereon or to have access thereto.
2.23 Other Information. The information furnished to Buyer by Sellers
or the Company or pursuant to this Agreement, including the exhibits hereto, the
schedules identified herein, and in any certificate or other document executed
or delivered pursuant hereto by Sellers (which for purposes of this Agreement
shall be deemed to be representations and warranties), is not materially false
or misleading, does not contain any misstatement of material fact, and does not
omit to state any material fact required to be stated in order to make the
statements therein not misleading in light of the circumstances under which they
were made.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
As of the date hereof and as of the Closing Date, Buyer represents and
warrants to Sellers as follows:
3.01 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nebraska.
3.02 Authority Relative to this Agreement. Buyer has full power,
capacity and authority (corporate or otherwise) to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of Buyer and no other proceedings on the part of Buyer or its
stockholders are necessary to approve and authorize the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Buyer and
(assuming the valid execution and delivery of the Agreement by Sellers)
constitutes a legal, valid and binding agreement of Buyer, enforceable against
Buyer in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy and other laws of general application relating to
creditors' rights and general principles of equity.
3.03 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Buyer nor the consummation by Buyer of the
transactions contemplated hereby, nor compliance by Buyer with any of the
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provisions hereof, will (i) require Buyer to file or register with, notify, or
obtain any permit, authorization, consent, or approval of, any governmental or
regulatory authority except for those requirements which become applicable to
Buyer as a result of the specific regulatory status of the Company or as a
result of any other facts that specifically relate to the business activities in
which the Company is or proposes to be engaged; (ii) conflict with or breach any
provision of the Articles of Incorporation or by-laws of Buyer; (iii) violate or
breach any provision of, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default under, any of the terms,
covenants conditions or provisions of any note, bond mortgage, indenture deed of
trust, license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which Buyer is a party, or by which
Buyer or any of its properties or assets may be bound, except for such breach or
default which would not have a material adverse effect on the transactions
contemplated by this Agreement taken as a whole; or (iv) violate any order,
writ, injunction, decree, judgment, statute, law or ruling of any court or
governmental authority applicable to Buyer or any of its material assets, which
violation would have a material adverse effect on the transactions contemplated
by this Agreement taken as a whole.
3.04 Litigation; Compliance with Law. Buyer is not a party to any
action or proceeding which seeks, or is subject to, any outstanding order, writ,
injunction or decree, which restrains or enjoins consummation of the
transactions contemplated hereby or which otherwise challenges the transactions
contemplated hereby and (ii) there is no litigation, administrative, arbitral or
other proceeding, or petition or complaint or, to the knowledge of Buyer,
investigation before any court or governmental or regulating authority or body
pending or, to the knowledge of Buyer, threatened against or relating to Buyer
that would materially adversely affect Buyer's ability to perform its
obligations pursuant to this Agreement.
3.05 Brokers and Finders. Buyer has not employed any broker or finder
and, to Buyer's knowledge, no broker or finder is entitled to any brokerage
fees, commissions or finder's fees arising from any act, representations or
promise of Buyer, in connection with the transactions contemplated hereby.
3.06 Purchase for Investment. Buyer will acquire all of the outstanding
stock of the Company to be purchased by it hereunder for its own account for
investment and not with a view toward any resale or distribution thereof.
ARTICLE IV
COVENANTS OF THE PARTIES
4.01 Expenses. Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby will be paid by the respective party
that incurred such cost and expense (it being understood, however, that all
legal and accounting fees and expenses so incurred by the Company shall be paid
by the Sellers).
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4.02 Public Announcements. Sellers and Buyer will consult with each
other before any of them or the Company issues any press releases or otherwise
makes any public statements (including statements made to employees of the
Company) with respect to this Agreement and the transactions contemplated
hereby.
4.03 Transfer Taxes. All transfer taxes (including all stock transfer
taxes, if any) incurred in connection with this Agreement and the transactions
contemplated hereby will be borne by Sellers, and Sellers will, at their own
expense, file all necessary tax returns and other documentation with respect to
all such transfer taxes, and, if required by applicable law, the other parties
hereto will (and will cause the Company to) join in the execution of any such
tax returns or other documentation.
4.04 No Dilution. During the three year period following the Closing,
Buyer will not permit the Company, through any consolidation, merger,
reorganization, dissolution, issue or sale of securities or other voluntary
action, to dilute the stock ownership of a Stockholder in the Company without
the prior written approval of such Stockholder.
ARTICLE V
CONDITIONS
5.01 Conditions to Each Party's Obligations to Effect the Transactions
Contemplated Hereby. The respective obligations of each party hereto to effect
the transactions contemplated hereby shall be subject to the fulfillment at or
prior to the Closing of each of the following conditions:
(a) No statute, rule, regulation, executive order, decree, injunction
or restraining order shall have been enacted, entered, promulgated or enforced
by any court of competent jurisdiction or governmental authority, nor shall any
action or proceeding brought by any governmental authority or agency, be
pending, which (i) prevents, restricts or delays or seeks to prevent, restrict
or delay the consummation of the transactions contemplated by this Agreement or
(ii) seeks a material amount of monetary damages in connection with the
consummation of the transactions contemplated by this Agreement.
(b) The other parties hereto shall have performed and complied in all
material respects with all agreements, obligations, conditions and covenants
contained in the Purchase Agreement dated ________, 1998, among the Company,
Sellers and the Buyer (the "Purchase Agreement") required to be performed and
complied with by them at or prior to the Closing and all representations and
warranties of such other parties contained in the Purchase Agreement shall be
true and correct in all material respects as of the Closing Date.
(c) No actions or proceedings which have a material likelihood of
success shall have been instituted or threatened by any governmental body or
authority to restrain or prohibit any of the transactions contemplated hereby.
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ARTICLE VI
SURVIVAL AND INDEMNIFICATION
6.01 Survival of Representations, Warranties and Covenants. All
covenants and agreements of any party hereto set forth herein shall survive the
Closing for the period provided for in such covenant or, if not so provided, for
a period of one year. The representations and warranties set forth herein shall
survive the Closing and shall remain in effect for the applicable statute of
limitation.
6.02 Post-Closing Indemnification. (a) From and after the Closing Date,
Sellers shall defend, indemnify and hold harmless Buyer and its affiliates
(including the Company) and each of their successors, assigns, officers,
directors and employees (the "Buyer Indemnitee Group") against and in respect of
any and all losses, actions, suits, proceedings, claims, liabilities, damages,
causes of action, demands, assessments, judgments, and investigations and any
and all costs and expenses paid to third parties, including without limitation,
reasonable attorneys' fees and expenses (collectively, "Damages"), suffered by
any of them as a result of, or arising from: (i) any inaccuracy in or breach of
or omission from any of the representations or warranties made by Sellers in
Article II of this Agreement or pursuant hereto, or any nonfulfillment, partial
or total, of any of the covenants or agreements made by Sellers in this
Agreement to the extent not waived by Buyer in writing; or (ii) any claim,
action, suit, proceeding or investigation of any kind relating to or arising
from events occurring prior to the Closing Date, instituted by or against or
involving the Company or any of its business or assets (other than those claims,
actions, suits, proceedings and investigations set forth in Schedule 2.13 of the
Disclosure Schedule) regardless of whether such claims, actions, suits,
proceedings or investigations are made or commenced before or after the Closing
Date, provided that Damages relating to claims, actions, suits, proceedings and
investigations that relate to events occurring both before and after the Closing
Date shall be equitably allocated between Buyer and Sellers.
(b) From and after the Closing Date, Buyer shall defend, indemnify and
hold harmless Sellers and their heirs, trustees, successors and assigns against
and in respect of any and all losses, actions, suits, proceedings, claims,
liabilities, damages, causes of action, demands, assessments, judgments, and
investigations and any and all costs and expenses paid to third parties,
including without limitation, reasonable attorneys' fees and expenses, suffered
by any of them as a result of, or arising from, any inaccuracy in or breach of
or omission from any of the representations or warranties made by Buyer in
Article III of this Agreement or pursuant hereto, or any non-fulfillment,
partial or total, of any of the covenants or agreements made by Buyer in this
Agreement to the extent not waived by Sellers in writing.
(c) If a claim by a third party is made against an indemnified party,
and if such party intends to seek indemnity with respect thereto under this
Article VI, the indemnified party shall promptly (and in any case within thirty
days of such claim being made) notify the indemnifying party of such claim,
provided, however, that the failure to so notify the indemnifying party shall
not discharge the indemnifying party of its obligations hereunder except that
the indemnifying party shall not be liable for default judgments or any amounts
related thereto if the indemnified party shall not have so notified the
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indemnifying party. Subject to the following sentence, the indemnifying party
shall have thirty days after receipt of such notice to undertake, conduct and
control, through counsel of its own choosing (which is satisfactory to the
indemnified party) the settlement or defense thereof, and the indemnified party
shall cooperate with it in connection therewith (provided that the indemnifying
party shall permit the indemnified party to participate in such settlement or
defense through counsel chosen by the indemnified party, provided that the fees
and expenses of such counsel shall be borne by the indemnified party) and the
indemnifying party shall promptly reimburse the indemnified party for the full
amount of any loss resulting from such claim and all related expenses as
incurred by the indemnified party within limits of this Article VI.
Notwithstanding anything herein to the contrary, the indemnified party shall
have the right to conduct and control the defense of any such claim in the event
that such claim (including a claim for equitable relief) or the continuation of
such claim could reasonably be expected to materially adversely affect the
business, results of operations, prospects or financial condition of the
indemnified party or any of its affiliates, provided, however, the indemnified
party may not settle any claim for an amount in excess of $25,000 or consent to
any settlement which imposes equitable remedies on the indemnifying party or its
affiliates without the prior consent of the indemnifying party, which consent
shall not be unreasonably withheld, unless the indemnified party agrees to waive
any right to indemnity therefor by the indemnifying party. If the indemnifying
party does not notify the indemnified party within thirty days after the receipt
of the indemnified party's notice of a claim of indemnity hereunder that it
elects to undertake the defense thereof or if the indemnifying party is not
reasonably contesting the claim in good faith, the indemnified party shall have
the right to contest, settle or compromise the claim in the exercise of its
reasonable judgment, and all losses incurred by the indemnified party, including
all fees and expenses of counsel for the indemnified party, shall be paid by the
indemnifying party.
(d) Claims for indemnification made under this Section 6.02 shall be
made within a period of three years from the Closing Date, provided, however,
notwithstanding the foregoing, claims for indemnification with respect to any
action, lawsuit, proceeding or investigation of any kind relating to or arising
out of the matters referred to in Section 6.02(a)(ii) may be made within five
years from the Closing Date.
6.03 Tax Indemnity, Etc.
(a) Sellers shall be responsible for and pay all Taxes attributable to
the Company or its subsidiaries or for which the Company is liable for any
period or portion of a period that ends on or before the Closing Date which have
not been paid or adequately provided for in the Balance Sheet. Such Taxes shall
include but not be limited to the Taxes of any member of an affiliated group of
which the Company was a member for federal income tax purposes or any entity
with which the Company filed a combined return for state or local tax purposes.
(b) Sellers shall indemnify Buyer, the Company and their affiliates and
their respective successors and assigns (each, a "Tax Indemnified Party", and
collectively, "Tax Indemnified Parties") against and hold the Tax Indemnified
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Parties harmless on an after-tax basis from all liability, loss or damage and
from all expenses paid to third parties (including reasonable attorneys' fees)
with respect to all such Taxes described in the immediately preceding clause
(a).
(c) All tax allocation, tax sharing and similar agreements, if any, to
which the Company is or was a party at any time on or before the Closing Date
shall be terminated as of the Closing Date with respect to the Company. The
Company shall have no obligation for the payment of any amount pursuant to any
such agreement, except as expressly provided for in the Balance Sheet. The
foregoing indemnity obligations of Sellers and the covenants and agreements of
the parties contained in this Section 6.03 shall survive the Closing and be
applicable for the applicable statute of limitations (as such may be waived or
extended).
(d) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
estimated, severance, stamp, occupation, property or other taxes, customs
duties, fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority (domestic or foreign) upon the Company or its subsidiaries.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.01 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of Buyer and Sellers.
7.02 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
7.02.
7.03 No Third Party Beneficiaries. Except as provided in this
Agreement, nothing in this Agreement shall confer any rights upon any person or
entity which is not a party or a permitted assignee of a party to this
Agreement.
7.04 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by cable, telegram or telex, telecopy,
courier, express mail delivery service, or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties as
follows:
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(a) if to Sellers, to:
Asset Growth Corporation
0000 Xxxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
with a copy to:
Xxxxxx Xxxx Xxxx & XxXxxx
0000 Xxxx Xxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxx Xxxxx
(b) if to Buyer, to:
Data Transmission Network Corporation
0000 Xxxx Xxxxx Xxxx
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, Xx. Vice President
with a copy to:
Xxxxxxxx Xxxxxx & Xxxxxxx
0000 Xxxx Xxxxx Xxxx
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attn: R. Xxxxx Xxx
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
7.05 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other parties.
7.06 Governing Law. This Agreement shall be governed by the law of the
State of Nebraska as to all matters, including, but not limited to, matters of
validity, construction, effect, performance and remedies without giving effect
to the principles of choice of law thereof.
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7.07 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.08 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
7.09 Entire Agreement. This Agreement, including the Exhibits hereto
and the documents, schedules, certificates and instruments referred to herein
embodies the entire agreement and understanding of the parties hereto in respect
of the transactions contemplated by this Agreement. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other than
those expressly set forth or referred to herein or therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such transactions.
7.10 Certain Definitions.
(a) An "affiliate" of a person shall mean any person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
person.
(b) The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities or by contract or otherwise.
(c) The term "person" shall mean and include an individual, a
partnership, a limited liability company, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
(d) The term "day" shall mean a calendar day unless otherwise stated.
(e) The term "subsidiary" when used in reference to any other person
shall mean any corporation of which outstanding securities having ordinary
voting power to elect a majority of the Board of Directors of such corporation
are owned directly or indirectly by such other person.
(f) Whenever any representation or warranty contained in this Agreement
is qualified by reference to the knowledge, information or belief of a party,
such party confirms that it has made due and diligent inquiry as to the matters
that are the subject of such representation and warranty.
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IN WITNESS WHEREOF, Sellers and Buyer have signed, or caused this
Agreement to be signed by their respective representatives, as the case may be,
as of the date first above written.
[Insert name of Newco]
Date:_____________________ By:_____________________________________
Title:__________________________________
Date:_____________________ ________________________________________
Xxxxxx X. Xxxxxxx
Date:_____________________ ________________________________________
Xxxxx X. Xxxxx
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SCHEDULE 1
Name and Number of Number of Payment Due
Address Of Seller Shares Owned Shares Being Sold at Closing
Xxxxxx X. Xxxxxxx 100,000 90,000 $300,000
Xxxxx X. Xxxxx 100,000 90,000 $300,000
TOTALS 200,000 180,000 $600,000
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DISCLOSURE SCHEDULE
No disclosures.
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EXHIBIT C
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of this ___ day
of _____________ 1998, by and between ASSET GROWTH CORPORATION, a Delaware
corporation ("AGC"), and [Insert name of Newco], a Nebraska corporation (the
"Company").
WHEREAS, AGC is a party to a Purchase Agreement (the "Purchase
Agreement") dated the same date as the date of this Agreement with Data
Transmission Network Corporation, a Delaware corporation ("DTN"), Xxxxxx X.
Xxxxxxx, a shareholder of AGC ("Xxxxxxx"), and Xxxxx X. Xxxxx, a shareholder of
AGC ("Xxxxx");
WHEREAS, pursuant to the Purchase Agreement, the Company is to acquire
all of the capital stock of Paragon Software, Inc., an Illinois corporation
("Paragon"), and AGC and the Company are to enter into this Agreement to provide
for AGC to manage the day to day affairs of the business of Paragon using the
management experience and expertise of Xxxxxxx and Xxxxx, subject to the terms
and conditions set forth in this Agreement; and
WHEREAS, Company desires to engage AGC to render such management
services and AGC desires to provide such services;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto agree as follows:
1. Engagement. The Company hereby engages AGC to render management
services to the Company and Paragon upon the terms and conditions hereinafter
set forth, and AGC agrees to provide such management services upon the terms and
conditions hereinafter set forth.
2. Term. The term of this Agreement shall commence on the date of this
Agreement. Unless sooner terminated in accordance with the provisions of
Paragraph 6, it shall continue until the earlier to occur of the Closing or the
Termination, as such terms are defined in the Purchase Agreement.
3. Compensation. In consideration of AGC's performance of the
management services as provided in this Agreement, the Company agrees to pay AGC
each calendar month during the term of this Agreement (or, in the case of a
partial month, a proportionate amount thereof based on the number of days of
such month within the term of this Agreement) an amount equal to the net income
before income taxes of the Company for such month. AGC shall invoice the Company
at the beginning of each month a reasonable estimate of the projected net income
before income taxes of the Company for such month. Newco shall pay such invoices
by the end of such month. Once the actual amount owed for such month is
determined, AGC shall refund to the Company the amount by which the estimate
exceeds the actual amount due for such month or the Company shall pay to AGC the
amount by which the actual amount due for such month exceeds the estimate.
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4. Duties of AGC. The duties of AGC under this Agreement generally
shall be to manage the day to day affairs of the business of Paragon, subject to
the control of the Board of Directors of Paragon. The precise nature of the
management services to be rendered by AGC during the term of this Agreement
shall be assigned and directed by the Board of Directors of Paragon and may be
modified from time to time at the direction of the Board of Directors of
Paragon. The services shall include, without limitation, the responsibility for
recommending the operational and managerial policies of Paragon as well as the
supervision of the employees of Paragon. During the term of this Agreement, the
Company shall cause Paragon to furnish to AGC at the office of Paragon
appropriate office space, equipment, and secretary and clerical assistance as
may be required from time to time to enable AGC to perform its duties under this
Agreement. It is understood that, except as expressly provided in this
Agreement, AGC shall be responsible for all expenses and costs incurred by it in
connection with the performance of its services under this Agreement.
5. Confidentiality. AGC acknowledges that in the course of performing
its services under this Agreement, AGC will be given access to proprietary and
confidential information of Paragon (collectively the "Proprietary Information")
which includes without limitation (a) the names, addresses and financial data
regarding customers, clients, or applicants of Paragon, (b) any data or
information that is competitively sensitive material including but not limited
to product planning information, marketing strategies, plans, finances,
operations, customer relationships, customer profiles, business plans, and
internal performance results relating to the past, present or future business
activities of Paragon and its affiliates and the customers, clients and
applicants of Paragon, and (c) all confidential or proprietary concepts,
documentation, reports, data, information, know-how and trade secrets, whether
or not patentable or copyrightable. AGC agrees to safeguard the Proprietary
Information and to prevent the unauthorized use or disclosure thereof. Either
during or after AGC's engagement with the Company, AGC will not directly or
indirectly disclose to anyone outside of the Company, Paragon or DTN (except in
the ordinary course of Paragon's business), nor use in other than Paragon's
business, except with the prior written permission of the President of the
Company, any Proprietary Information. Upon the request of the Company or Paragon
and, in any event upon termination of this Agreement, AGC shall surrender to the
Company or Paragon all memoranda, notes, records, and other documents or
materials (and all copies of same) pertaining to or including the Proprietary
Information. AGC acknowledges that use or disclosure of any Proprietary
Information in a manner inconsistent with this Agreement will give rise to
irreparable injury to the Company and Paragon. Accordingly, in addition to any
other legal remedies which may be available, at law or in equity, the Company
and Paragon shall be entitled to equitable or injunctive relief against such
unauthorized use or disclosure. Proprietary Information shall not include any
information or data known generally to the public (other than as a result of
unauthorized disclosure by AGC) or any information or data of a type not
generally considered confidential or proprietary by persons engaged in a
business similar to the business of Paragon. The obligations of AGC under this
paragraph shall survive the termination of this Agreement.
6. Termination. This Agreement shall terminate upon the occurrence of
any of the following events:
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(a) The bankruptcy, dissolution, liquidation or sale of
substantially all of the assets of the Company or Paragon.
(b) Notice from the Company in the event Paragon's revenues or net
earnings from operations before interest, income taxes for any
calendar month during the term of this Agreement are less than
the average monthly revenues or net earnings from operations
before interest, income taxes, respectively, of Paragon over
the three calendar months immediately preceding the date of
this Agreement.
(a) Notice from the Company if either Xxxxxxx or Xxxxx, for any
reason, including but not limited to their death, fails to
personally provide and perform to the best of their abilities
the primary responsibilities and obligations of AGC under this
Agreement.
(d) Written notice by the Company to AGC of the termination of
this Agreement for cause. For purposes of this Agreement,
"cause" shall mean (i) Xxxxxxx'x or Xxxxx'x confession or
conviction of theft, fraud, embezzlement or other crime
involving dishonesty, (ii) AGC's material violation of the
provisions of Paragraph 5, (iii) material negligence of AGC in
the performance of its duties under or pursuant to this
Agreement, or (iv) material non-compliance by AGC with its
obligations under this Agreement.
(f) The expiration of the stated term of this Agreement or the
earlier termination upon the mutual written agreement of the
parties to this Agreement.
7. Independent Contractor. AGC shall be an independent contractor with
respect to the Company and Paragon in connection with the work performed
hereunder. AGC does not have, and shall not hold itself out as having, any
authority to enter into any contract or create any obligation or liability on
behalf of, in the name of, or binding upon the Company or Paragon; and AGC shall
hold the Company and Paragon harmless from any claims resulting from any action
taken by AGC which is inconsistent with the provisions of this sentence.
8. Binding Effect; Assignment. This Agreement shall be binding upon,
and shall inure to the benefit of, AGC and the Company and their respective
heirs, legal representative, successors, and permitted assigns. The obligations
under this Agreement may not be assigned by the Company or AGC without the prior
written consent of the other party hereto, which consent may be withheld for any
reason whatsoever.
9. Notification. All notices which a party may be required or desire to
give to the other party shall be in writing and shall be given by personal
service, telecopy, registered mail or certified mail (or its equivalent) to the
other party at its respective address or telecopy number set forth below.
Notices shall be deemed to be given upon actual receipt by the party to be
notified. Notices delivered by telecopy shall be confirmed in writing by
overnight courier.
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If to AGC: Asset Growth Corporation
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy No.: ______________
If to the Company: Data Transmission Network
Corporation
0000 Xxxx Xxxxx Xxxx, #000
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
Telecopy No.: (000) 000-0000
10. Entire Agreement. This document constitutes the entire agreement
between the parties hereto with respect to the subject matter of this Agreement;
and there are no other agreements, representations, warranties, or covenants,
written or oral, with respect to the transactions contemplated by this Agreement
which are not expressly set forth, referred to, or incorporated herein by this
document.
11. Amendment. This Agreement may be amended by letter or other
document which by its terms specifically states that it is an amendment to this
Agreement; provided, that such letter or other document shall be signed by both
parties hereto.
12. Governing Law. This Agreement shall be governed by and construed in
enforced in accordance with the substantive laws, but not the choice of law
rules, of the State of Nebraska.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. Headings. The headings of the several paragraphs of this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
15. Construction. Whenever required by the context, references in this
Agreement in the singular shall include the plural and vice versa.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
ASSET GROWTH CORPORATION,
A Delaware corporation
By: __________________________________
Xxxxxx X. Xxxxxxx, President
[Insert name of Newco], a Nebraska corporation
By:___________________________________
Title:__________________________________
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EXHIBIT D
(Opinion of Looper, Reed, Xxxx & XxXxxx)
Dated __________, 199__
[Insert name of Newco]
c/o Data Transmission Network Corporation
0000 Xxxx Xxxxx Xxxx
Xxxxx 000
Xxxxx, XX 00000
Gentlemen:
We have acted as counsel to Asset Growth Corporation (the "Company"), a
Delaware corporation, and its shareholders, Xxxxxx X. Xxxxxxx and Xxxxx X. Xxxxx
(collectively the "Shareholders"), in connection with your purchase of ninety
percent (90%) of the issued and outstanding capital stock of the Company
pursuant to that certain Stock Purchase Agreement dated as of __________, 199__
among the Shareholders and you (the "Agreement"). Capitalized terms used herein
and not otherwise defined shall have the meanings set forth in the Agreement.
In connection with this opinion, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such documents,
corporate records, certificates, including certificates of public officials, and
other instruments as we have deemed necessary or advisable for purposes of this
opinion, including those relating to the authorization, execution and delivery
of the Agreement. We reviewed the following documents and agreements:
(i) the Agreement;
(ii) the Certificate of Incorporation of the Company, as amended,
as certified by the Secretary of State of the State of
Delaware (the "Certificate of Incorporation");
(iii) the Bylaws of the Company, as amended, as certified by the
Secretary of the Company on the date of this opinion letter
(the "Bylaws");
(iv) the stock certificates and stock records of the Company; and
(v) actions taken by the stockholders and Board of Directors of
the Company to authorize the transactions contemplated by the
Agreement.
In such examination and review we 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 we did not independently establish or verify,
we have relied without investigation upon certificates, statements and
representations of representatives of the Company. During the course of our
discussion with such representatives and our review of the documents described
above in connection with the preparation of these opinions, no facts were
disclosed to us that caused us to conclude that any such certificate, statement
or representation is untrue. In making our examination of the documents executed
by persons or entities other than the Shareholders and the Company, we have
assumed that each such other person or entity had the power and capacity to
enter into and perform all his, her or its obligations thereunder and the due
authorization of, and the due execution and delivery of, such documents by each
such person or entity.
As used in this opinion, the expression "to our knowledge" with
reference to matters of fact means that after an examination of documents in our
files or made available to us by the Company and after inquiries of officers of
the Company, and considering the actual knowledge of those attorneys in our firm
who have given substantive attention to legal matters for the Company, without
independent investigation or inquiry as to factual matters, but not including
any constructive or imputed notice of any information, we find no reason to
believe that the opinions expressed herein are factually incorrect. Beyond that,
we 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, we are
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 and has the corporate
power and authority and, to our knowledge, all franchises, licenses, and permits
from governmental authorities necessary to own and operate its properties and to
conduct its business as presently being conducted.
2. The Company is duly qualified to do business and is in good standing
in (i) the state of Delaware, and (ii) to our knowledge, each jurisdiction in
which its ownership or lease of property or the conduct of its business requires
such qualification.
3. The authorized capital stock of the Company consists of (i)
75,000,000 shares of Common Stock, $0.01 par value per share, of which 200,000
shares are outstanding and no shares are held in the treasury of the Company and
(ii) 10,000,000 shares of Preferred Stock, $3.00 par value per share, of which
no shares are outstanding and none are held in the treasury of the Company. All
of the outstanding shares of Common Stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable with no
personal liability attaching to the ownership thereof. To our knowledge, except
as disclosed in the disclosure schedules to the Agreement, there are no
outstanding subscriptions, scrip, warrants, commitments, conversion rights,
calls, options or agreements to issue or sell additional securities of the
Company, and no obligations whatsoever requiring, or which might require, the
Company to issue any securities.
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4. To our knowledge, the parties to the Agreement other than you have
good title to all of the outstanding shares of Common Stock of the Company, free
and clear of all liens, encumbrances, security interests, options, claims,
charges and restrictions.
5. Each of the Shareholders has the power, authority, and capacity to
execute, deliver, and perform the Agreement and to consummate the transactions
contemplated thereby, and the Agreement and all documents and instruments
delivered by the Shareholders thereunder have been duly executed and delivered
by them and constitute legal, valid and binding obligations of the parties
thereto other than Buyer, enforceable in accordance with their terms.
6. The execution, delivery, and performance of the Agreement and the
consummation of the transactions contemplated thereby will not, except as
disclosed in the disclosure schedules to the Agreement, result in a breach or
violation of or constitute a default under, or accelerate any obligation under,
or give rise to a right of termination of, the Certificate of Incorporation or
By-laws of the Company or, to our knowledge, any judgment, decree, order,
governmental permit or license, authorization, agreement, indenture, instrument,
or statute or regulation to which the Shareholders or the Company is a party or
by which the Shareholders or the Company or its business, assets, or properties
may be bound or affected, and, to our knowledge, will not, except as disclosed
in the disclosure schedules to the Agreement, result in the creation of any
lien, claim, encumbrance or restriction on any part of the business or assets of
the Company.
7. To our knowledge, there is no legal action or governmental
proceeding or investigation pending or threatened against or affecting the
Company or its stockholders which prevents the parties other than Buyer from
entering into or being bound by the Agreement or from consummating the
transactions contemplated thereby or which questions the validity of the
Agreement or the transactions contemplated thereby.
8. To our knowledge, except as disclosed in the disclosure schedules to
the Agreement, there is no legal action or governmental proceeding or
investigation pending or threatened against or affecting the Company, which, if
decided adversely to the Company, would have a material adverse affect on the
properties, business, profits or condition (financial or otherwise) of the
Company, taken as a whole.
9. To our knowledge, except as disclosed in the disclosure schedules to
the Agreement, no consent, authorization or approval of, or exemption by, or
filing with, any court or administrative agency or authority of the United
States of America or the State of Delaware is required in connection with the
delivery and performance by the Shareholders of the Agreement or any of the
instruments or agreements delivered by the Shareholders thereunder, or the
taking of any action therein contemplated.
10. All corporate proceedings required by the Delaware General
Corporation Law to be taken by the Board of Directors or the stockholders of the
Company on or prior to the Closing Date in connection with the execution and
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delivery of the Agreement and in connection with the sale of all of the capital
stock of the Company have been duly and validly taken.
This opinion relates solely to the laws of the State of Delaware, and
applicable Federal laws of the United States, and we express no opinion with
respect to the effect or applicability of the laws of other jurisdictions. We
have assumed that, and our opinions expressed in paragraph 5 above are based
upon our assumption that, the internal laws of the State of Delaware and Federal
law govern the provisions of the Agreement and the transactions contemplated
thereby.
The opinion set forth in paragraph 5 above concerning the
enforceability of the obligations of the Shareholders under the Agreement is
subject to the effect of (i) bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent transfer and other similar laws affecting
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 Delaware statutes and common law.
We are 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 us, as counsel for the Company and the Shareholders, solely for
your benefit in connection with the transactions contemplated by the Agreement
and upon the understanding that we are not hereby assuming any responsibility to
any other person whatsoever. This opinion may not be quoted or relied upon by
any other person or used for any other purpose without our prior written
consent. This opinion is rendered as of the date hereof and we do not undertake
to advise you of matters which occur subsequent to the date hereof and which
affect the opinions expressed herein.
Very truly yours,
Looper, Reed, Xxxx & XxXxxx
By:
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EXHIBIT E
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of the _____ day
of ____________, 199__, between Asset Growth Corporation (the "Company"), a
Delaware corporation, and [Insert name of the Stockholder] (the "Executive").
* * *
WHEREAS, the Company, a subsidiary of Data Transmission Network
Corporation ("DTN"), desires to employ the Executive; and
WHEREAS, the Executive 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 Executive agree as follows:
1. Employment and Duties. The Company hereby employs the Executive as
its __________________________________. The duties and responsibilities of the
Executive shall consist of the duties and responsibilities of the Executive's
corporate offices and positions which are set forth in the bylaws of the Company
from time to time and such other duties and responsibilities consistent with the
Executive's corporate offices and positions which the Board of Directors of the
Company may from time to time assign to the Executive.
2. Term. The term of this agreement shall begin on the date of this
agreement and shall continue thereafter for a period of thirty six (36) months,
unless terminated earlier in accordance with this agreement. The Executive shall
remain an employee at-will. Either the Executive 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 thirty (30) days advance written notice of such party's intention to
terminate this agreement, except in the event of the termination of Executive'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
Executive will perform the duties of the Executive at the Company's offices in
_________________, and the Executive will not be required to relocate or
transfer the principal residence of the Executive during the term of this
agreement.
4. Compensation. The Company agrees to pay the Executive a signing
bonus (the "Signing Bonus") of One Hundred Fifty Thousand Dollars ($150,000).
The Signing Bonus shall be paid in full on the date of this agreement, and is
not subject to forfeiture. The Company agrees to pay the Executive a base salary
(the "Base Salary") of One Hundred Seventy Five Thousand Dollars ($175,000) per
year (it being understood, however, that Executive shall be eligible for
discretionary increases in such Base Salary to the extent approved by the Board
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of Directors of DTN after recommendation by its Compensation Committee). The
Base Salary shall be paid in periodic installments in accordance with the
Company's regular payroll practices.
5. Annual Bonus. The Executive shall participate in the Company's
annual bonus plan in effect during the term of this agreement which will reward
targeted performance by the Executive in a manner similar to executives with
similar base salaries under DTN's annual bonus plan in effect during the term of
this agreement. If the goals by which the Executive's performance is measured
are reached for the particular year, the annual bonus would represent from 50%
to 100% of the Executive's Base Salary for such year. The targeted performance
of the Executive will be established near the beginning of the year and will
consider growth from ongoing operations as well as growth through acquisitions,
as applicable.
6. Board of Directors. During the term of this agreement, the Executive
shall serve, without additional compensation, as a director of the Company and
as a director of each of the subsidiaries of the Company.
7. Expenses. During the term of this agreement, the Executive shall be
entitled to prompt reimbursement by the Company of all reasonable ordinary and
necessary travel, entertainment, and other expenses incurred by the Executive
(in accordance with the policies and procedures established by the Company for
its executive officers, which shall be similar to those for DTN's executives) in
the performance of the duties and responsibilities of the Executive under this
agreement; provided, that the Executive shall properly account for such expenses
in accordance with Company policies and procedures.
8. Other Benefits. During the term of this agreement, the Executive
shall be entitled to all of the fringe benefits which are provided to employees
of the Company generally, excluding any stock option plans or similar programs.
During the term of this agreement, the Executive also shall be entitled to
participate in such other fringe benefits, benefit plans or programs which the
Company or DTN from time to time may make available either to its employees
generally or to its executive officers, such as but not limited to the Data
Transmission Network Corporation 401(k) plan, but excluding any stock option
plans or similar programs.
9. Vacations and Holidays. The Executive shall be entitled to four
weeks of paid vacation per year and paid holidays in accordance with the
Company's policies in effect from time to time.
10. Other Activities. The Executive shall devote substantially all of
the Executive's 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 the Executive
pursuant to this agreement, except for vacations and holidays. Despite the
foregoing, the Executive shall be free to broker proposed acquisitions which the
Company has elected not to pursue so long as such activities by the Executive do
not require any substantial services by the Executive and do not interfere with
or impair the performance of the Executive's duties and responsibilities under
this agreement.
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11. Termination. The Executive's employment under this agreement shall
terminate upon the death of the Executive. If the Executive becomes incapable by
reason of physical injury, disease, or mental illness of substantially
performing the duties and responsibilities of the Executive under this agreement
for a period of six (6) continuous months or more, then the Company may
terminate the Executive's employment under this agreement. The Company also may
terminate the Executive'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 Executive, (iii) habitual and material negligence in the performance of the
duties of the Executive under or pursuant to this agreement, (iv) material
non-compliance with the obligations of the Executive under Section 10 or (v)
failure of the Executive, within thirty days after written notice of such
failure, to abide by the lawful directives of the Board of Directors of the
Company that are not inconsistent with the terms of this Agreement. In the event
of the termination of the Executive's employment pursuant to any of the first
three sentences of this Section 11 or if the Executive voluntarily terminates
employment with the Company, other than as provided in Section 12(b), the
Executive (or, in the event of the Executive's death, the estate of the
Executive) shall be entitled to retain that portion of the Base Salary earned by
the Executive up to the effective date of such termination, provided that during
any period when the Executive is incapable by reason of physical injury,
disease, or mental illness of substantially performing his or her duties and
responsibilities under this agreement, the Company may subtract from such Base
Salary the amount of any payments which the Executive receives from
Company-sponsored disability insurance as a reimbursement for lost earnings or
wages relating to such period.
12. Severance Pay. Except as provided in Sections 11 and 12 of this
agreement, the Executive shall not receive any additional severance pay upon the
termination of employment of the Executive, regardless of the Company's
severance policy for its employees generally.
(a) Termination Without Cause. If the Company terminates the
employment of the Executive for any reason other than those referred to in
Section 11, the Company shall pay the Executive, upon the effective date of such
termination, the then current present value of all remaining payments of Base
Salary that would have been paid hereunder but for such termination, less
applicable employee tax withholdings and deductions. Such present value shall be
determined using the discount rate referred to in Section 12 (c).
(b) Voluntary Termination Upon Change in Control of DTN. If the
Executive voluntarily terminates employment with the Company within sixty (60)
days after receiving notice of a Change in Control Transaction, as hereinafter
defined, the Company shall pay the Executive, upon the effective date of such
termination, the then current present value of those payments of Base Salary
that would have been paid hereunder, but for such termination, during the
shorter of (i) the one year period following the effective date of such
termination or (ii) the remaining portion of the initial term of this agreement
after the effective date of such termination. Such present value amount shall be
reduced by applicable employee tax withholdings and deductions. Such present
value shall be determined using the discount rate referred to in Section 12(c).
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For purposes of this Section 12(b), "Change in Control Transaction" shall mean
the occurrence of any of the following: (a) the acquisition by any person or
entity (other than an Exempt Person as hereinafter defined) of securities of DTN
representing 30% or more of the combined voting power of DTN's then-outstanding
securities; (b) DTN shall consolidate with, or merge with and into, any other
person or entity; or (c) any person or entity shall consolidate with DTN, or
merger with and into DTN and DTN shall be the continuing or surviving
corporation of such merger, and, in connection with such merger, all or part of
DTN's capital stock shall be changed into or exchanged for stock or securities
of any other person or entity or cash or any other property. "Exempt Person"
shall mean DTN or any subsidiary of DTN, in each case including, without
limitation, in its fiduciary capacity, or any employee benefit plan of DTN or of
any subsidiary of DTN, or any entity or trustee holding the capital stock of DTN
for or pursuant to the terms of any such plan or for the purpose of funding any
such plan or funding other employee benefits for employees of DTN or of any
subsidiary of DTN.
(c) Discount Rate. For purposes of the present value
determinations referred to in this Section 12, 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.
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 Executive: ________________________
________________________
________________________
If to the Company: Data Transmission Network
Corporation
0000 Xxxx Xxxxx Xxxx, #000
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
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.
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15. 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 Executive and an officer of the Company
(other than the Executive) so authorized by the Board of Directors of the
Company. 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.
16. 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.
17. 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.
18. 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.
19. 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.
20. 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 Executive have executed this
agreement on the day and year first above written.
Asset Growth Corporation, a
Delaware corporation
By: _____________________________________
Title: ____________________________________
___________________________________________
[Insert name of the Stockholder]
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EXHIBIT F
STOCK REDEMPTION AGREEMENT
THIS STOCK REDEMPTION AGREEMENT, dated as of ___________, 199__, is
entered into between Asset Growth Corporation, a Delaware corporation (the
"Company") and [Insert name of Stockholder] (the "Shareholder").
W I T N E S S E T H:
WHEREAS, the Shareholder presently owns _____ shares of the common
stock of the Company and desires to agree upon certain matters relating to the
ownership of the shares of such stock now or hereafter owned by the Shareholder;
and
WHEREAS, the Company deems it to be in its best interests and the best
interests of its shareholders to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, the parties to this Agreement agree as
follows:
1. Definitions. As used in this Agreement, unless the context otherwise
requires:
(a) "DTN" means Data Transmission Network Corporation, a Delaware
corporation, and its successors and affiliates. The Company is
a subsidiary of DTN.
(b) "Employment Agreement" means the Employment Agreement dated
the same date as this Agreement between the Shareholder and
the Company, as the same may be amended from time to time.
(c) "Shares" means all or any portion of the shares of the common
stock of the Company now or in the future owned by the
Shareholder or any interest therein acquired by a Transfer.
(d) "Termination of Employment" means the termination of the
Shareholder's employment with the Company for any reason
whatsoever, including but not limited to death, voluntary
termination by the Shareholder, and Termination Without Cause.
(e) "Termination Without Cause" means termination of Shareholder's
employment by the Company for any reason other than those
referred to in Section 11 of the Employment Agreement.
Termination Without Cause does not include termination of
employment by the Shareholder.
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(f) "Transfer" as a verb means to directly or indirectly issue,
sell, transfer, assign, pledge, mortgage, create a security
interest in, or in any other way encumber or dispose of
Shares. "Transfer" as a noun means any issuance, sale,
transfer, assignment, pledge, mortgage, creation of a security
interest in, or any other encumbrance or disposition of
Shares.
(g) "Trigger Event" means any event described in Section 3 or 4
which triggers the redemption of all or any portion of the
Shares.
2. Restriction on Transfer of Shares. Without the prior written consent
of the then holders of all of the shares of capital stock of the Company, the
Shareholder shall not Transfer any Shares that he or she now or hereafter may
hold or beneficially own, nor shall any of the Shares be transferable, except
pursuant to or in compliance with the terms of this Agreement. Any attempt by
the Shareholder to Transfer any Shares other than in compliance with the terms
of this Agreement shall be null and void and of no force or effect, and the
Company shall not recognize and shall give no effect to any such attempt to
Transfer any Shares. The restrictions contained in this paragraph shall be
applicable to all Shares acquired by the Shareholder from any source after the
date of this Agreement as well as to the Shares owned or held by the Shareholder
on the date of this Agreement.
3. Shareholder Election for Redemption of Shares. Upon the
Shareholder's written notice to the Company of his or her election to have the
Company redeem all or a portion of the Shares, subject to the limitations set
forth in this Section 3, the Shareholder shall sell to the Company, and the
Company shall purchase from the Shareholder, the number of shares the
Shareholder elects to have redeemed as provided in such written notice. The
Shares being purchased pursuant to this Section 3 are collectively referred to
as the "Redemption Shares". The purchase price to be paid for the Redemption
Shares shall be the Base Value Per Share determined in accordance with Section
5. The purchase price for the Redemption Shares shall be paid to the Shareholder
in full in cash promptly after the purchase price has been determined as
provided herein, but no later than sixty (60) days after the occurrence of the
Trigger Event. The Shareholder shall deliver to the Company at such time
certificates for the Redemption Shares duly endorsed for transfer and free and
clear of any liens, security interests, encumbrances, or claims of any kind
whatsoever. Notwithstanding the foregoing, the Shareholder may not elect to have
redeemed, in the aggregate, more than one-third of the Shares prior to the first
anniversary of the date of this Agreement or more than two-thirds of the Shares
prior to the second anniversary of the date of this Agreement.
4. Redemption of Shares Upon Termination of Employment. Upon the
Termination of Employment, the Shareholder or the Shareholder's estate shall
sell to the Company, and the Company shall purchase from the Shareholder, all of
the Shares. If the Termination of Employment (other than a Termination Without
Cause) occurs prior to the first anniversary of the date of this Agreement, the
purchase price to be paid for each of the Shares shall be one-third of the Base
Value Per Share determined in accordance with Section 5. If the Termination of
Employment (other than a Termination Without Cause) occurs after the first
anniversary of the date of this Agreement but prior to the second anniversary of
the date of this Agreement, the purchase price to be paid for each of the Shares
shall be two-thirds of the Base Value Per Share determined in accordance with
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Section 5. If the Termination of Employment occurs after the second anniversary
of the date of this Agreement or is a Termination Without Cause, the purchase
price to be paid for each of the Shares shall be the Base Value Per Share
determined in accordance with Section 5. The purchase price for the Shares shall
be paid to Seller in full in cash promptly after the purchase price has been
determined as provided herein, but no later than sixty (60) days after the
Termination of Employment occurs; and the Shareholder or the Shareholder's
estate shall deliver to the Company at such time certificates for the Shares
duly endorsed for transfer and free and clear of any liens, security interests,
encumbrances, or claims of any kind whatsoever.
5. Base Value Per Share. For purposes of this Agreement, the "Base
Value Per Share" shall be determined by reducing the EBITDA Value (as
hereinafter defined) by the long-term debt of the Company at the end of the
calendar month immediately preceding the Trigger Event and dividing the result
by the total number of issued and outstanding shares of capital stock of the
Company. The term "EBITDA Value" shall mean the Operating Cash Flow of the
Company for the twelve full calendar months immediately preceding the Trigger
Event multiplied by the Cash Flow Multiple. In the event the Company has not
been in operation during the entire twelve month period, the Operating Cash Flow
of the Company for such period shall be annualized based upon the operations of
the Company preceding the Trigger Event. The EBITDA Value shall be determined
using the following meanings:
(i) "Operating Cash Flow" shall mean the average annual net
earnings from operations before interest, income taxes, depreciation
and amortization over a specified period.
(ii) "Cash Flow Multiple" shall mean the DTN Enterprise Value
divided by the Operating Cash Flow of DTN over the eight fiscal
quarters immediately preceding the Trigger Event.
(iii) "DTN Enterprise Value" shall mean the sum of (i) the
average of the Market Value on the last day of each calendar month
during the eight fiscal quarters of DTN immediately preceding the
Trigger Event and (ii) the average of the daily long-term debt of DTN
on the last day of each calendar month during the same eight fiscal
quarters.
(iv) "Market Value" shall mean the most recent closing market
price of DTN's capital stock as reported on NASDAQ multiplied by the
total number of shares of such stock issued and outstanding.
Accounting terms used in this Section 5 without definition shall have the
meanings generally ascribed to such terms in conformity with generally accepted
accounting principles and otherwise using accounting procedures followed by DTN
for purposes of reporting its financial performance.
6. Right to Terminate Shareholder. Nothing in this Agreement shall be
construed (i) to confer upon the Shareholder the right to continue in the
employment of the Company or (ii) to affect the right of the Company to
terminate the Shareholder's employment at any time.
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7. Legend on Certificates. Upon the execution of this Agreement, the
Shareholder shall deliver to the Company the certificates for the Shares so that
the Company can place a legend in substantially the following form on the
reverse side of such certificates:
"The shares of stock represented hereby are subject to the
terms and conditions of a Stock Redemption Agreement dated [Insert date
of this Agreement], between Asset Growth Corporation and [Insert name
of Shareholder] (the "Agreement") restricting the transferability of
this certificate and of the shares represented hereby. A copy of the
Agreement is filed with the corporate records of Asset Growth
Corporation.
8. Dilution and Other Adjustments. In the event of any change in the
outstanding shares of the Company by reason of any stock split, stock dividend,
recapitalization, merger, consolidation, reorganization, combination or exchange
of shares, or other similar event that equitably requires an adjustment in the
number, price, or kind of shares that have been sold pursuant hereto, then such
adjustment shall be made by the Company.
9. Notices. Any notice, offer, request, instruction, or other document
to be given hereunder by either party to the other shall be in writing and shall
be delivered personally or sent by registered mail, if to the Company, addressed
to the President of DTN at DTN's principal place of business, and if to the
Shareholder, addressed to the Shareholder at his or her residence.
10. Nonassignability. The rights and obligations of the Shareholder
arising under this Agreement shall not be assignable by the Shareholder. Nothing
expressed or implied in this Agreement is intended to confer upon any person,
other than the parties hereto, and their respective successors, heirs, legal
representatives and permitted assigns, any rights, remedies, obligations, or
liabilities by reason of this Agreement. In the event of the death of the
Shareholder, the provisions of this Agreement shall be binding upon the personal
representative of the Shareholder's estate.
11. Governing 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. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same agreement.
12. Entire Agreement. This document contains the entire agreement
between the parties hereto with respect to the matters contained herein. This
Agreement may not be changed orally but only by a written instrument signed by
both the Company and the Shareholder. The headings of the paragraphs in this
Agreement are solely for convenient reference.
13. Waivers. The waiver by the Company of any provision of this
Agreement shall not operate as or be construed to be a subsequent waiver of the
same provision or a waiver of any other provision hereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed in its corporate name, and the Shareholder has hereunto affixed his or
her signature, all as of the day and year first above written.
Asset Growth Corporation
By:________________________________
Title: ______________________
________________________________________
[Insert name of Stockholder]
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