STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of this 27th day of March, 2000, by and among NETGURU, INC., a Delaware
corporation ("Purchaser"), ALLEGRIA SOFTWARE, INC., a California corporation
(the "Company"), and GRAL, INC., a Nevada corporation, and the parent and sole
shareholder of the Company ("Seller").
RECITALS
WHEREAS, Seller owns all of the issued and outstanding shares (the
"Shares") of capital stock of the Company; and
WHEREAS, Purchaser desires to purchase from Seller, and Seller desires
to sell to Purchaser, the Shares on the terms and subject to the terms and
conditions set forth in this Agreement;
NOW THEREFORE, in consideration of the foregoing recitals and the
respective terms, conditions, covenants, representations and warranties
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 PURCHASE AND SALE. Upon the terms and subject to the conditions set forth
in this Agreement, at the Closing (as defined below), Seller shall sell,
transfer, assign and deliver to Purchaser the Shares and Purchaser shall
purchase, acquire and accept the Shares from Seller.
1.2 PURCHASE PRICE. The aggregate purchase price for the Shares shall consist
of: (i) five thousand (5,000) shares ("Registered Shares") of Purchaser
common stock, $0.01 par value per share ("NGI Common Stock"); (ii) eight
thousand (8,000) shares ("Restricted Shares") of NGI Common Stock; (iii)
and $1,500,000.00 in cash. The aggregate of the Registered Shares and the
Restricted Shares and the cash shall be allocated, paid and delivered to
the Seller at the Closing in the manner described in Exhibit 1.2 attached
hereto.
1.3 REGISTERED SHARES AND RESTRICTED SHARES BUYBACK RIGHTS. Purchaser shall
provide to Seller options, each exercisable on March 31, 2001, with respect
to the Registered Shares, to purchase from Seller all or any part of the
five thousand (5,000) Registered Shares, and with respect to the Restricted
Shares, to purchase from Seller all or any part of the eight thousand
(8,000) Restricted Shares, in each case for a purchase price of $28.60 per
share, provided that the total consideration received by the Seller for any
Shares Seller may have previously sold and the aggregate balance of the
Shares sold subject to the buyback options herein shall not exceed
$371,800. To exercise either option, Seller shall provide written notice of
its election to exercise such option, setting forth in such notice the
number of Registered and/or Restricted Shares Seller has previously sold
and the price for which such Shares were sold and the number of Shares
Seller desires to sell to Purchaser, together with properly endorsed share
certificates, to Purchaser on the date set forth above. Upon Purchaser's
timely receipt of such notice and properly endorsed share certificates,
Purchaser shall pay to Seller the purchase price of $28.60 per share times
the number of shares specified in such notice for which share certificates
were properly tendered, up to a maximum consideration of $371,800 including
all previously sold Shares.
ARTICLE 2
RELATED MATTERS
2.1 EMPLOYEES. The Company has been using the services of employees of Seller,
pursuant to an agreement with Seller. Effective as of the close of
business on March 31, 2000, the Company will have Seller terminate the
employment of all employees used by the Company to conduct its operations
and listed on Exhibit 2.1 attached hereto. Seller will be solely
responsible for paying to such employees all salary, bonuses, accrued
vacation and severance benefits, if any, and providing to such employees
any COBRA and continuation medical coverage as may be required. Seller
will be solely responsible for terminating all employee benefit plans
covering such employees. Purchaser intends, but shall not be obligated, to
offer employment to the employees listed on Exhibit 2.1, effective as of
April 1, 2000. Seller will provide reasonable assistance to Purchaser,
without charge, to assist Purchaser in employing such employees. Any such
employees to be hired by Purchaser shall be new hires as of 12:01 A.M.,
April 1, 2000. Such new hires will have no accrued Purchaser pension or
vacation benefits and Purchaser shall not be deemed a successor employer
of such new hires for any purpose. Solely for determining their vacation
accrual rate and their eligibility for participation in Purchaser's
standard employee benefit plans, Purchaser will credit each employee hired
by Purchaser hereunder with such employee's date of hire with GRAL as set
forth on Exhibit 2.1. Purchaser shall not be liable to Seller or any
employee of Seller by reason of Purchaser's employment of any Seller
employee, failure to offer employment to or to employ any Seller employee
or with respect to wages, salaries, commissions, bonuses, severance pay,
vacation pay, pension or other retirement plans, fringe benefits, employee
benefits, or any other rights relating to employment with Seller.
2.2 KEY EXECUTIVES. On the Closing, Purchaser will enter into Executive
Employment Agreements, in the form attached hereto as Exhibit 2.2, with
Xxxxxx Xxxxx ("Xxxxx") and Xxxxxxx Xxxxx ("Dutta"), key management
executives of the Company.
2.3 LICENSE AND DISTRIBUTION AGREEMENTS. On the Closing, Purchaser will enter
into License and Distribution Agreements with GRAL Systems, A.G. ("GRAL
A.G."), the corporate parent of Seller, in the forms as attached hereto as
Exhibit 2.3, for the license to GRAL A.G. of Company products and the
license from GRAL A.G. of products previously licensed to, and used in,
the Company's business, and for the distribution rights related to such
licenses. In partial consideration of Seller's agreements hereunder,
Company shall grant to GRAL A.G. an additional discount as set forth in
the License and Distribution Agreement for the Company's products.
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2.4 REGISTRATION RIGHTS AGREEMENTS. On the Closing, Purchaser and Seller will
enter into a Registration Rights Agreement, substantially in the form of
Exhibit 2.4 attached hereto, pursuant to which Purchaser shall covenant to
register the Registered Stock under the Securities Act of 1933 within one
hundred and twenty (120) days of the Closing.
2.5 TAX ELECTION. Purchaser and Seller agree that in connection with the
transactions contemplated by this Agreement, each party will make an
election under Section 338(h)(10) of the Internal Revenue Code of the
United States after the Closing and will execute such documents as are
necessary to effectuate such election.
ARTICLE 3
CLOSING
The closing of the sale and purchase of the Shares (the "Closing") shall
take place at Purchaser's headquarters, 00000 Xxxx Xxxxx Xxxxxxx, Xxxxx Xxxxx,
XX 00000, at 10:00 A.M. local time on April 3, 2000, or at such other place,
time and date as may be mutually agreed by the parties. The parties agree that
the Closing shall be deemed to be effective for all purposes as of 12:01 A.M.
local time on April 1, 2000.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND COMPANY
Except as set forth in a schedule dated the date of this Agreement and
delivered by the Seller and Company to Purchaser concurrently herewith (the
"Disclosure Schedule"), Seller and Company hereby jointly and severally
represent and warrant to Purchaser, and Purchaser, in agreeing to consummate the
transactions contemplated by this Agreement, has relied upon such
representations and warranties, the following:
4.1 ORGANIZATION AND GOOD STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of California with all requisite power to carry on its business as
now conducted. The Company has full corporate power and authority to own
its assets and properties and to carry on the business as now owned and
operated. The Company is duly qualified to do business in all
jurisdictions in which it currently conducts the business.
4.2 AUTHORITY; NO CONFLICT. This Agreement constitutes the legal, valid, duly
authorized and binding obligations of the Company and Seller, enforceable
against each of them in accordance with its terms. The Company and Seller
each have the absolute and unrestricted right, power, authority and
capacity to execute and deliver this Agreement and to perform their
respective obligations under this Agreement. Neither the execution of this
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Agreement nor the consummation or performance of the transactions
contemplated hereunder will, directly or indirectly, violate or result in
the breach of, and will not conflict with or constitute a default under,
any of the terms of the charter documents or material agreements to which
the Company or Seller are a party or conflict with or violate any
applicable law, regulation, judgment, order or decree of any government,
governmental agency or court having jurisdiction over the Company or
Seller.
4.3 CAPITALIZATION. The authorized capital stock of the Company consists of
10,000 shares of common stock, $0.01 par value per share (the "Allegria
Common Stock") and no shares of preferred stock. At the Closing, 10,000
shares of Allegria Common Stock were issued and outstanding, all of which
were owned by Seller. All outstanding shares of Allegria Common Stock are
validly issued, fully paid and non-assessable and are not subject to
preemptive rights. The shares of Allegria Common Stock owned by Seller are
owned free and clear of any liens, security interests, pledges,
agreements, claims, charges or encumbrances. There are no options,
warrants, calls, rights, commitments, conversion rights or agreements of
any character to which the Company is a party or by which the Company is
bound obligating the Company to issue, deliver or sell, or cause to be
issued, delivered or sold, any shares of capital stock of the Company or
rights of any kind with respect thereto. There are no voting trusts or
other agreements to which the Company or Seller is a party with respect to
the voting of the capital stock of the Company.
4.4 FINANCIAL STATEMENTS. Seller has furnished to Purchaser copies of the
Company's unaudited balance sheet and related statements of income and
cash flow for the period ended December 31, 1999 ("Balance Sheet") and the
Company's interim unaudited balance sheet and related statements of income
and cash flow for the period ended February 28, 2000 ("Interim Balance
Sheet"). The Balance Sheet and Interim Balance Sheet are complete and
correct, have been prepared in accordance with generally accepted
accounting standards applied on a consistent basis, and fairly present the
Company's financial condition of as at the respective dates thereof and
the results of operations for the respective periods covered by the
statements of income contained therein. Except as set forth in the
Disclosure Schedule, the Company does not have any material obligations or
liabilities, contingent or otherwise, not fully disclosed by the Balance
Sheet and the Interim Balance Sheet.
4.5 INSURANCE. The Company's operations prior to the Closing have been
conducted by its parent, Seller, which maintains and at all times since
January 1, 1998 has maintained casualty and general liability insurance
that Seller believes to be reasonably prudent for its business. Section
4.5 of the Disclosure Schedule contains a complete and accurate list of
all insurance policies maintained by Seller covering the Company's
business and, except as noted therein, no claims have been made under such
insurance polices affecting the Company's business.
4.6 ACCOUNTS RECEIVABLE; ACCOUNTS PAYABLE. As of the Closing, the Company has
no accounts receivable or accounts payable.
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4.7 TAXES. Except as set forth in the Disclosure Schedule, all federal, state
and local tax returns of Company required by law to be filed have been
duly filed on a timely basis, are true, accurate and complete in all
material respects and no taxes, assessments, fees, penalties or charges
(other than those already paid or reserved for) are due or will be
required to be paid by Company. There are no liens or charges on any
assets or properties of Company imposed or arising as a result of the
delinquent payment or non-payment of any such tax, assessment, fee penalty
or charge. As used in this Agreement, "tax" and "taxes" shall mean all
taxes, charges, fees, levies or other assessments imposed by and required
to be paid to any federal, state, local or foreign taxing authority.
4.8 TITLE TO PROPERTIES; CONDITION AND SUFFICIENCY OF ASSETS. Section 4.8 of
the Disclosure Schedule contains a complete and accurate list of all of
the real and personal properties and assets owned by the Company. The
Company has good, indefeasible and marketable title to all of such
properties and assets, free and clear of all taxes, liens, encumbrances,
charges, claims or security interests of any kind. The equipment,
machinery, computer hardware, furniture, fixtures, supplies and
inventories are in good condition and repair, are adequate for the uses to
which they are being put and are sufficient in kind, quantity and quality
to operate the business of the Company as the Company has, prior to the
Closing, conducted its operations.
4.9 COMPLIANCE WITH LAW. The Company is not in violation of any applicable
law, ordinance, rule or regulation relating to the operation of its
business or affecting any of its properties or assets. The Company's
operation of its business is in compliance with all zoning, occupational
health and safety, environmental and other laws regulating the workplace.
The Company has not received notice from any governmental authority or
other person claiming or threatening any violation of any law, ordinance,
rule or regulation relating to the Company's business.
4.10 CONTRACTS. Section 4.10 of the Disclosure Schedule contains a complete and
accurate list of all agreements, contracts, licenses, purchase and sales
orders, and other executory commitments, oral or written, to which the
Company is a party ("Contracts"), including all amendments, modifications,
renewals and extensions thereto. Seller has delivered true and accurate
copies thereof (except for oral Contracts for which a complete summary is
provided) to Purchaser. Except as set forth in the Disclosure Schedule,
each Contract was entered into in the ordinary course of business,
constitutes a valid and enforceable agreement by the parties thereto, no
party is in default under the terms and conditions of any Contract and no
party to any Contract has provided oral or written notice of intent to
terminate, cancel or renegotiate any Contract.
4.11 NO MATERIAL ADVERSE CHANGE; ABSENCE OF CERTAIN EVENTS. Since December 31,
1999, except as set forth in Section 4.11 of the Disclosure Schedule,
there has been no change in the condition, financial or otherwise, of the
Company, or in its earnings, assets or properties, whether or not arising
from transactions in the ordinary course of business, that, individually
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or in the aggregate, have been materially adverse to the earnings, assets,
properties or condition, financial or otherwise, of the Company. Since
December 31, 1999, except as set forth in Section 4.11 of the Disclosure
Schedule, there has not been any:
(a) Transaction by the Company, except in the ordinary course of business
as conducted on that date;
(b) Destruction, damage to, or loss of any material asset of the Company
(whether or not covered by insurance), including, but not limited to,
any of its properties or assets;
(c) Change in accounting methods or practices (including, without
limitation, any change in depreciation or amortization policies or
rates) by the Company;
(d) Amendment to or termination of any contract, agreement or license to
which the Company is a party, or by which it or any of its assets or
properties are subject, except in the ordinary course of business;
(e) Waiver or release of any right or claim of the Company;
(f) Declaration of or agreement to declare or make, any payment or
distribution of any assets of any kind whatsoever;
(g) Notice of any violations of any law, ordinance, rule or regulation or
of any claims for damages or alleged damages for negligence or other
tort or breach of contract or other right (whether or not covered by
insurance);
(h) Sales, transfers, disposals of any assets, properties or rights of the
Company, except in the ordinary course of business consistent with the
Company's past practices;
(i) Any event, condition or agreement of any character materially and
adversely affecting the prospects, earnings, properties or condition,
financial or otherwise, of the Company; or
(j) Any agreement to do any of the things described above.
4.12 LICENSES AND PERMITS. Company holds free from burdensome restrictions all
franchises, permits, licenses, and other consents, and other rights from
governmental, regulatory or administrative agencies that are sufficient
and necessary for the lawful and efficient operation of Company's business
as presently conducted. No violations exist or have been recorded in
respect of any such franchises, permits, licenses, consents or other
rights and no proceeding is pending or threatened with respect thereto.
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All such franchises, permits, licenses, consents and other rights shall be
in full force and effect on the Closing. No registrations, filings,
applications, notices, transfers, consents, approvals, orders,
qualifications,, waivers or other actions of any kind are required by
virtue of the execution and delivery of this Agreement or the consummation
of the actions contemplated hereunder.
4.13 INTELLECTUAL PROPERTY. Section 4.13 of the Disclosure Schedule contains a
complete and accurate list of all patents, patent applications,
copyrights, copyright registrations, trademarks, service marks and
registrations therefor, trade names, know-how, trade secrets, software
products and confidential and proprietary information owned by, licensed
by (either as licensor or licensee) or used by Company in its business
("Intellectual Property"). Section 4.13 of the Disclosure Schedule
contains a complete and accurate list and summary description, including
any royalties paid or received by the Company, of all agreements and
licenses relating to Intellectual Property to which the Company is a party
or by which the Company is bound. There are no outstanding disputes with
respect to such agreements. The Intellectual Property assets are all those
necessary for the operation of the Company's business as it is currently
conducted. Except as set forth in Section 4.13 of the disclosure Schedule,
the Company either owns, free and clear of all liens, charges,
encumbrances, security interests, equities, restrictions and other adverse
claims, or validly licenses all Intellectual Property and has the
unrestricted right to use the Intellectual Property as currently used in
the Company's business. Attached to Section 4.13 of the Disclosure
Schedule is a complete release of all claims, charges, encumbrances and
restrictions that Advanced Technology Center had with respect to the
Intellectual Property. All of the Intellectual Property is in full
compliance with all applicable legal requirements, including payment of
all filing and other fees related thereto. There are no claims, disputes,
actions or proceedings pending or threatened by or against the Company
with respect to the Intellectual Property.
4.14 EMPLOYEES; EMPLOYEE BENEFITS. Section 4.14 of the Disclosure Schedule
contains a complete and accurate list of all of the following information
for each employee of Seller utilized by the Company in conducting its
business, including each employee on leave of absence or layoff status:
name, job title, current compensation paid or payable, vacation accrual
rate and vacation accrued, hire date, stock ownership, stock options,
deferred compensation, cash bonus, severance pay, insurance, medical and
dental coverage, and any other employee benefit or perquisite. Except as
set forth in the Disclosure Schedule, no employee listed thereon is a
party to, or is otherwise bound by, any agreement or arrangement,
including any confidentiality, non-competition or proprietary rights
agreement, between any such employee and any other entity or person that
in any way adversely affects or will affect the performance of such
employee's duties or the ability of the Company to conduct its business.
The Company has no employee benefit plans. There are no collective
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bargaining agreements with any union or bargaining group for any of the
employees listed in the Disclosure Schedule and there are no pending or
threatened labor actions, strikes, slowdowns or work stoppages. Seller has
complied with all legal requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and
similar taxes, occupational health and safety and plant closing. Seller is
not liable for the payment of any compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for failure to comply
with any of the foregoing legal requirements.
4.15 LITIGATION. Except as set forth in Section 4.15 of the Disclosure
Schedule, there is no pending or threatened lawsuit, proceeding or
investigation, at law or in equity or otherwise, in, for or by any court
or governmental board, commission, agency, department or office, or any
third party, arising from or related to any of the Company's assets or
properties or to the past, present or future operations of the Company's
business. The Company is not subject to, nor does any basis exist for, any
order, judgment, decree or governmental restriction that does or could
adversely affect the prospects, earnings, properties or condition,
financial or otherwise, of its business. There is no pending of threatened
action, proceeding or effort by any governmental or private authority,
entity or party that in any way challenges or adversely affects this
Agreement or the transactions contemplated hereunder.
4.16 AFFILIATED TRANSACTIONS. Except as set forth in Section 4.16 of the
Disclosure Schedule, no stockholder, director, officer or employee of the
Company, or any of their spouses or children, or any trust of which such
person is the grantor, or any corporation, partnership or other entity in
which such person is a party or shareholder, director, officer or employee
or otherwise owns an interest ("Affiliated Party"), has engaged in any
transaction with the Company, had any interest in any assets or property
of the Company's business, is a party to any contract or agreement with
the Company or has any claim or right against the Company.
4.17 FULL DISCLOSURE. The representations, warranties and other information
provided and to be provided by Seller or Company to Purchaser in this
Agreement, in the Disclosure Schedule hereto or in any documents required
to be delivered hereunder does not and will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated herein or therein or necessary to make the statements and facts
contained herein or therein, in light of the circumstances in which they
were made, not false or misleading. There is no fact known to Seller or
Company which has or could have a material adverse effect on the
prospects, earnings, properties or condition, financial or otherwise, of
the Company's business which has not been disclosed in this Agreement or
in the Disclosure Schedule.
4.18 BROKERS OR FINDERS. Neither Seller nor Company has incurred any
obligation, contingent or otherwise, for brokerage or finders' fees or
commissions in connection with this Agreement and will indemnify and hold
Purchaser harmless from any such payment allegedly due by Seller or
Company.
4.19 INVESTMENT REPRESENTATION. Seller acknowledges that, upon issuance, the
Registered Shares and the Restricted Shares will not have been
"registered" and will therefore be "restricted" securities as these terms
are used under the Securities Act of 1933 (the "Securities Act") and the
rules and regulations promulgated thereunder. By execution of this
Agreement, Seller agrees, represents and warrants that (i) its acquisition
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of the Registered Shares and Restricted Shares is for investment only, for
its own account, and not with a view to "distribution" as that term is
used under the Securities Act, (ii) it is an "accredited investor" as that
term is used in Regulation D of the Securities Act, and (iii) it has
received copies of the Purchaser's Form 10-KSB for the fiscal year ended
March 31, 1999 and Forms 10-QSB for the quarters ended June 30, 1999,
September 30, 1999 and December 31, 1999. Seller agrees that it shall not
at any time make any sale, pledge, hypothecation, gift or other transfer
of the Registered Shares or Restricted Shares, except pursuant to an
effective registration statement under the Securities Act or pursuant to
the provisions of Rule 144 under the Securities Act or another exemption
from the registration requirements of the Securities Act, and in
accordance with any applicable "blue sky" or other securities laws, and
Restricted Shares pursuant to any exemption, it shall, if requested by
Purchaser, obtain an opinion of counsel, satisfactory to Purchaser, that
such sale complies with applicable federal and state securities laws.
Seller agrees that it has been informed that the Registered Shares and
Restricted Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration
is available and he understands that any sale of the Registered Shares or
Restricted Shares made in reliance upon Rule 144, or any other like rule,
can be made only in limited amounts in accordance with the terms and
conditions of those rules and, if those rules are not applicable, any
resale may require compliance with another available exemption under the
Securities Act or, in the alternative, may require registration of such
shares. Seller acknowledges that, except as set forth in the registration
rights agreement attached hereto as Exhibit 3, Purchaser makes no
representation or covenant that it shall conduct its affairs so as to
permit sales under Rule 144 and Purchaser is under no obligation to
register or repurchase the Registered Shares or Restricted Shares. Seller
acknowledges that Purchaser shall cause a legend to be placed on the
certificates representing the Registered Shares and Restricted Shares to
reflect the foregoing.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
5.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware with all requisite power to carry on its business as now
conducted. Purchaser has full corporate power and authority to own its
assets and properties and to carry on its business as now owned and
operated. Purchaser is duly qualified to do business in all jurisdictions
in which it currently conducts the business.
5.2 AUTHORITY OF PURCHASER; NO CONFLICT. This Agreement constitutes the legal,
valid, duly authorized and binding obligations of Purchaser, enforceable
against it in accordance with its terms. Purchaser has the absolute and
unrestricted right, power, authority and capacity to execute and deliver
this Agreement and to perform its obligations under this Agreement. Neither
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the execution of this Agreement nor the consummation or performance of the
transactions contemplated hereunder will, directly or indirectly, violate
or result in the breach of, and will not conflict with or constitute a
default under, any of the terms of the charter documents or material
agreements to which Purchaser is a party or, to the best of Purchaser's
knowledge, conflict with or violate any applicable law, regulation,
judgment, order or decree of any government, governmental agency or court
having jurisdiction over Purchaser.
5.3 CAPITALIZATION; SHARES. The authorized capital stock of Purchaser consists
of 20,000,000 shares of common stock (the "Common Stock"), $.01 par value
per share, and 5,000,000 shares of preferred stock, $.01 par value per
share (the "NG Preferred Stock"). As of the date hereof, 13,225,466 shares
of Common Stock are issued and outstanding, 2,020,928 shares of Common
Stock are issuable and reserved for issuance pursuant to the Purchaser's
stock option and purchase plans and committed pursuant to pending
acquisitions and 345,000 shares are issuable and reserved for issuance
pursuant to securities exercisable or exchangeable for, or convertible
into, shares of Common Stock, and 12,000 shares of Series A Convertible
Preferred Stock are issued and outstanding. All outstanding shares of
Common Stock and Series A Convertible Preferred Stock are validly issued,
fully paid and nonassessable and are not subject to preemptive rights.
Except as disclosed herein, there are no outstanding rights, options,
warrants, subscriptions, calls, convertible securities or agreements of any
character or nature under which Purchaser is or may become obligated to
issue or to transfer shares of its capital stock of any kind. Purchaser has
filed on a timely basis all reports, schedules, registration statements,
proxy statements, and related documents that Purchaser was required to file
with the Securities and Exchange System (the "SEC") on and after September
30, 1996, which filings complied, when filed, in all material respects with
the then-applicable requirements of the Securities Act of 1933 and the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder.
5.4 LITIGATION. There is no suit, action, arbitration, demand, claim or
proceeding pending or, to the best knowledge of Purchaser, threatened
against Purchaser in connection with or relating to the transactions
contemplated by this Agreement or the consummation of the transactions
contemplated hereby.
5.5 DISCLOSURE. No representation or warranty made by Purchaser in this
Agreement, nor any document furnished by Purchaser hereunder, contains any
untrue statement of a material fact, or omits to state a material fact
necessary to make the statements or facts contained herein or therein not
misleading in light of the circumstances in which they were furnished.
5.6 BROKER OR FINDER. Purchaser has incurred no obligations, contingent or
otherwise, for brokerage or finders' fees or commissions in connection with
this Agreement and will indemnify and hold Seller harmless from any such
payment allegedly due by Purchaser.
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ARTICLE 6
COVENANTS OF SELLER AND COMPANY
6.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and the
Closing, Seller will, and will cause the Company and its representatives
to afford Purchaser and its representatives full and free access to the
Company's personnel, properties, contracts, books, records and documents
and such additional financial, operating, and other data as Purchaser may
reasonably request.
6.2 OPERATION OF THE BUSINESS. Between the date of this Agreement and the
Closing, the Seller will cause the Company to: (i) conduct the business of
the Company only in the ordinary course of business; (ii) use their best
efforts to preserve the current business organization and assets and
properties of the Company, including but not limited to intellectual
property, and maintain the goodwill of the Company; (iii) confer with the
Purchaser concerning any operational matters of a material nature; and
(iv) otherwise report to the Purchaser concerning the status of the
Company's business as necessary.
6.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing, Seller will
not, and will cause the Company not to, without the prior consent of the
Purchaser, take any affirmative action, or fail to take any reasonable
action within their control, as a result of which any of the changes or
events listed in 4.13 is likely to occur.
6.4 REQUIRED APPROVALS; INDEBTEDNESS; RELEASES. As promptly as possible after
the date of this Agreement and prior to the Closing, Seller will, and will
cause Company to, (i) make all required filings necessary in order to
consummate the transactions contemplated hereunder; (ii) pay or retire all
indebtedness of the Company; and (iii) obtain a full and complete release
from Advanced Technology Center of all rights, claims, royalties and
restrictions on Company's Intellectual Property, satisfactory to
Purchaser.
6.5 NOTIFICATION. Between the date of this Agreement and the Closing, Seller
and Company will promptly notify Purchaser in writing if Seller or Company
becomes aware of any fact or condition that causes or constitutes or could
cause or constitute a breach of any of the representations and warranties
of Seller and Company hereunder.
6.6 CONFIDENTIALITY. Seller and Xxxxx and Dutt acknowledge and agree, jointly
and severally, that they have had access to confidential and proprietary
information and trade secrets of the Company ("Company Confidential
Information") that is a valuable asset of the Company. Further, Seller and
Xxxxx and Dutta acknowledge and agree, jointly and severally, that they
have had access to certain confidential and proprietary information and
trade secrets of Purchaser ("Purchaser Confidential Information") during
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the negotiation of this Agreement. Seller and Xxxxx and Dutta agree,
jointly and severally, that they will not disclose any Purchaser
Confidential Information or Company Confidential Information to any third
party or use any such information for their own benefit without the prior
written permission of Purchaser.
6.7 COVENANTS OF SELLER AND XXXXX AND DUTTA.
(a) COVENANT NOT TO COMPETE. In partial consideration of the payments and
agreements made by Purchaser hereunder, without the written consent of
Purchaser, neither Seller, Xxxxx nor Dutta will, directly or
indirectly (whether through any subsidiary, affiliate, partnership,
joint venture, agent or otherwise) engage in any business competitive
with the Company (including, without limitation, any business of the
type conducted by the Company prior to the Closing or under
development by the Company at the Closing) in any State of the United
States of America, any province in Canada or in any country in Asia,
for a period of three (3) years commencing on the Closing. The parties
agree that the duration and scope for which the covenant not to
compete set forth herein is to be effective is reasonable. If any
court determines that extent unenforceable, the parties agree that the
covenant shall remain in full force and effect for the greatest time
period and broadest scope that would not render it unenforceable. The
parties intend that this covenant shall be deemed to be a series of
separate covenants, one for each and every county of each and every
State of the United States of America and each and every political
subdivision of each and every country outside the United States of
America where this covenant is intended to be effective.
(b) COVENANT NOT TO SOLICIT. During the period of the covenant set forth
in Section 6.7(a) above, each of Seller, Xxxxx and Dutta covenants and
agrees that it or he shall not, directly or indirectly, (i) induce or
attempt to induce any employee of Purchaser (including any former
employees of Seller hired by Purchaser) to leave the employ of
Purchaser or to hire or retain such employee, or (ii) contact or
attempt to contact any customer of the Company for the twelve (12)
month period immediately preceding the Closing for the purpose of
soliciting from any such customer business that is similar to the
business previously conducted between the Company and such customer.
(c) INJUNCTIVE RELIEF. Each of Seller, Xxxxx and Dutta hereby acknowledge
and agree that any violations of the provisions of Section 6.6 or this
Section 6.7 will cause damage to Purchaser in an amount or amounts
difficult to ascertain. Accordingly, in addition to any other relief
to which Purchaser may be entitled at law or in equity, Purchaser
shall be entitled to temporary and/or permanent injunctive relief from
any breach or threatened breach by Seller, Xxxxx or Dutta of the
provisions of Sections 6.6 or 6.7, without proof of actual damages
that have been or may be caused to Purchaser by such breach or
threatened breach.
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6.8 BEST EFFORTS. Between the date of this Agreement and the Closing, Seller
and Company will use their respective best efforts to cause the conditions
in Section 8 to be satisfied.
ARTICLE 7
COVENANTS OF PURCHASER
7.1 APPROVALS. As promptly as possible after this Agreement and prior to the
Closing, Purchaser will make all required filings necessary to consummate
the transactions contemplated hereunder.
7.2 BEST EFFORTS. Between the date of this Agreement and the Closing,
Purchaser will use its best efforts to cause the conditions in Section 9
to be satisfied.
ARTICLE 8
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
Purchaser's obligation to purchase the Shares and to take the other
actions required to be taken by Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Purchaser, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS. All of the representations and warranties of
the Seller and the Company in this Agreement (considered collectively),
and each of those representations and warranties (considered
individually), must have been accurate in all material respects as of the
date of this Agreement, and must be accurate in all material respects as
of the Closing as if made at the Closing, without giving effect to any
supplement to the Disclosure Schedule.
8.2 PERFORMANCE OF SELLER AND COMPANY. All of the covenants and obligations
that the Seller and the Company are required to perform or to comply with
pursuant to this Agreement at or prior to the Closing (considered
collectively) and each of these covenants and obligations (considered
individually), must have been duly performed and complied with in all
material respects, including, but not limited to, the delivery of the
Shares properly endorsed to the Purchaser, the payment or retirement of
all indebtedness of the Company and the execution and delivery of the
Registration Rights Agreement referred to in Section 2.4. Further, Seller
shall have caused GRAL A.G. to execute and deliver the License and
Distribution agreements referred to in Section 2.3 and Xxxxx and Dutta to
execute and deliver the Executive Employment Agreements referred to in
Section 2.2.
8.3 CONSENTS; RELEASE. All consents of any third parties required in order to
consummate the transactions contemplated hereunder must have been obtained
and must be in full force and effect. The release of Advanced Technology
Corporation referred to in Section 6.4 shall be obtained by Company and
shall be satisfactory to Purchaser in all material respects to enable
Purchaser to take full title, without restrictions, claims or
encumbrances, to the Intellectual Property.
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8.4 NO PROCEEDINGS. Since the date of this Agreement, there must not have been
commenced or threatened against Purchaser any proceeding involving any
challenge to, or seeking damages or other relief in connection with, any
of the contemplated transactions or that may have the effect of delaying,
preventing, making illegal or otherwise interfering with any of the
contemplated transactions hereunder.
8.5 NO CLAIM OR PROHIBITION. There must not have been made or threatened by
any person any claim asserting that such person is the holder or the
beneficial holder of, or has the right to acquire or obtain any beneficial
ownership interest in the Shares or in any voting or equity interest in
the Company. Neither the consummation nor the performance of any of the
transactions contemplated hereunder will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with,
or result in a material violation of any applicable legal requirement.
8.6 DUE DILIGENCE. Purchaser shall have completed its due diligence
investigation on a basis satisfactory to Purchaser.
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER AND
COMPANY TO CLOSE
The obligation of the Seller to sell the Shares and the obligation of
the Seller and the Company to take the other actions required to be taken by
them at the Closing is subject to the satisfaction, at or prior to the Closing,
of each of the following conditions (any of which may be waived by them, in
whole or in part):
9.1 ACCURACY OF REPRESENTATIONS. All of Purchaser's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and
must be accurate in all material respects as of the Closing as if made on
the Closing.
9.2 PURCHASER'S PERFORMANCE. All of the covenants and obligations that
Purchaser is required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively), and each
of these covenants and obligations (considered individually), must have
been performed and complied with in all material respects. Purchaser must
have delivered the certificates for the Registered Shares and Restricted
Shares required to be delivered by Purchaser pursuant to Section 1.2, made
the cash payment required to be made by Purchaser pursuant to Section 1.2,
executed and delivered the Registration Rights Agreement referred to in
Section 2.4, executed and delivered the License and Distribution
Agreements referred to in Section 2.3, and executed the Executive
Employment Agreements referred to Section 2.2 above.
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9.3 NO INJUNCTION. There must not be in effect any legal requirement,
injunction or order that prohibits the sale of the Shares by the Seller to
the Purchaser that has been adopted, issued or otherwise become effective
since the date of this Agreement.
ARTICLE 10
TERMINATION
This Agreement may, by notice given prior to or at the Closing, be
terminated (i) by either Seller and Company on the one hand or Purchaser on the
other hand if the other party commits a material breach of this Agreement and
such breach has not been waived; (ii) by Purchaser if any of the conditions in
Section 8 has not been satisfied as of the Closing; (iii) by Seller and Company
if any of the conditions in Section 9 has not been satisfied as of the Closing;
or (iv) by mutual consent of Purchaser, Seller and Company. In the event of any
termination hereunder, all obligations of the parties hereunder shall terminate
except those of Seller and Company with respect to confidentiality pursuant to
Section 6.6.
ARTICLE 11
POST CLOSING
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Regardless of any
investigation at any time made by or on behalf of any party, or of any
information any party may have in respect thereof, all covenants,
agreements, representations and warranties made hereunder or pursuant
hereto or in connection with the transactions contemplated hereby shall
survive the Closing for a period of twenty-four (24) months.
11.2 EXPENSES. Each of the parties hereto shall pay all costs and expenses
incurred by it or on its behalf in connection with this Agreement and the
transactions contemplated hereby, including, without limiting the
generality of the foregoing, fees and expenses of its own financial
consultants, accountants and counsel.
11.3 INDEMNIFICATION.
(a) INDEMNIFICATION BY SELLER, XXXXX AND DUTTA. Seller and each of Xxxxx
and Dutta, jointly and severally, shall indemnify, defend, protect and
hold harmless Purchaser and its successors and assigns and each of
such entities' directors, officers, employees, agents and affiliates
(each a "NGI Indemnified Party"), at all times and after the Closing
against all losses, claims, damages, actions, suits, proceedings,
assessments, adjustments, costs and expenses, including without
limitation reasonable attorneys', auditors' and experts' fees and
costs of investigation (collectively, "Losses"), based upon, resulting
from or arising out of (i) any inaccuracy or breach of any
representation or warranty of Seller or of Company contained in or
made in connection with this Agreement, (ii) the breach by Sellers or
15
Company of, or the failure by Seller or Company to observe, any of
their respective covenants or other agreements contained in or made in
connection with this Agreement, and (iii) any act or failure to act by
Seller or Company with respect to the Company's corporate records and
documentation, tax returns and documentation and financial records and
documentation.
(b) INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify, defend,
protect and hold harmless Seller at all times from and after the date
of this Agreement against all Losses based upon, resulting from or
arising out of (i) any inaccuracy or breach of any representation or
warranty of purchaser contained in or made in connection with this
Agreement, and (ii) the breach by Purchaser of, or the failure by
Purchaser to observe, any of its covenants or other agreements
contained in or made in connection with this Agreement.
(c) ADJUSTMENTS. Any payment made to any NGI Indemnified Party or to
Seller (each an "Indemnified Party") pursuant to this Section 11.3 in
respect of a claim will be net of any insurance proceeds realized by
and paid to the Indemnified Party in respect of any such claim.
(d) PROCEDURES. Promptly after receipt by an Indemnified Party of notice
of the commencement of any action, suit or proceeding by a person not
a party to this Agreement in respect of which the Indemnified Party
will seek indemnification hereunder (a "Third Party Action"), the
Indemnified Party will notify the party required to provide
indemnification (the "Indemnifying Party") in writing, but any failure
to so notify the Indemnifying Party shall not relieve it from any
liability that it may have under this Section 11.3, except to the
extent that the Indemnifying Party is prejudiced by the failure to
give such notice. The Indemnifying Party shall be entitled to
participate in the defense of such Third Party Action and to assume
control of such defense (including settlement thereof) with counsel
reasonably acceptable to such Indemnified Party; provided however,
that: (i) the Indemnified Party shall be permitted to participation
the defense of such Third Party Action and to employ counsel as its
own expense (which shall not constitute legal expenses subject to
indemnification) to assist in the handling of such Third Party Action;
(ii) the Indemnifying Party shall obtain the prior written approval of
the Indemnified Party before settlement of or ceasing to defend such
Third Party Action, if such action would adversely affect the
Indemnified Party; (iii) no Indemnifying Party shall consent to the
entry of any judgment or enter into any settlement that does not
include the unconditional release of each Indemnified Party from all
liability under such Third Party Action; (iv) the Indemnifying Party
shall not be entitled to control the defense of any Third Party Action
unless it has confirmed in writing its assumption of such defense and
continues to defend same reasonably and in good faith; (v) after the
Indemnifying Party's assumption of the defense of such Third Party
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Action hereunder, the Indemnifying Party shall not be responsible for
any legal expenses of the Indemnified Party and the Indemnified Party
will not admit any liability, settle, compromise or discharge the
claim underlying such Third Party Action without the Indemnifying
Party's prior written consent; (vi) if the Indemnifying Party does not
assume the defense of such Third Part Action, the Indemnified Party
shall have the right to defend and/or settle same in such manner as it
may deem appropriate at the cost and expense of the Indemnifying
Party; (vii) the Indemnifying Party will promptly reimburse the
Indemnified Party in cash, check or wire transfer periodically upon
receipt of an invoice therefor with supporting documentation.
ARTICLE 12
GENERAL
12.1 ASSIGNMENT; SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, neither this Agreement nor any interest herein shall be
assignable by any party hereto (voluntarily, involuntarily, by judicial
process, operation of law or otherwise), in whole or in part, without the
prior written consent of all other parties hereto. Each of the terms,
provisions and obligations of this Agreement shall be binding upon, shall
inure to the benefit of, and shall otherwise be enforceable by the
parties and their respective legal representatives, successors and
assigns.
12.2 WAIVER AND AMENDMENT. This Agreement may be amended, supplemented,
modified and/or rescinded only through an express written instrument
signed by all parties or their respective successors and permitted
assigns. Any party may specifically and expressly waive in writing any
portion of this Agreement or any breach hereof, but no such waiver shall
constitute a further or continuing waiver of any preceding or succeeding
breach of the same or any other provision. The consent by one party to
any act for which such consent was required shall not be deemed to imply
consent or waiver of the necessity of obtaining such consent for the same
or similar acts in the future.
12.3 SEVERABILITY. Each provision of this Agreement is intended to be
severable. If any covenant, condition or other provision contained in
this Agreement is held to be invalid, void or illegal by any court of
competent jurisdiction, such provision shall be deemed severable from the
remainder of this Agreement and shall in no way affect, impair or
invalidate any other covenant, condition or other provision contained in
this Agreement. If such condition, covenant or other provision shall be
deemed invalid due to its scope or breadth, such condition, covenant or
other provision shall be deemed valid to the extent of the scope or
breadth permitted by law.
12.4 GOVERNING LAW. This Agreement has been negotiated and executed in the
State of California and is to be performed in Orange County, California.
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of California, including all matters of
construction, validity, performance and enforcement, without giving
effect to principles of conflict of laws. The parties hereby consent, in
any dispute, action, litigation or other proceeding concerning this
Agreement (including arbitration) to the jurisdiction of the courts of
California, with the County of Orange being the sole venue for the
bringing of the action or proceeding.
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12.5 REMEDIES. No remedy made available hereunder by any of the provisions of
this Agreement is intended to be exclusive of any other remedy, and each
and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. In any action, litigation or
proceeding (including arbitration) between the parties arising out of or
in relation to this Agreement, the prevailing party in such action shall
be awarded, in addition to any damages, injunctions or other relief, such
party's costs and expenses, including, but not limited to, taxable costs
and reasonable attorneys', accountants' and experts' fees incurred in
bringing such action, litigation or proceeding and/or enforcing any
judgment or order granted therein.
12.6 NOTICES. All notices, demands or other communications which are required
or are permitted to be given hereunder shall be in writing and shall be
deemed given upon personal delivery, facsimile transmission or on the
third business day following due deposit in the United States mail,
postage prepaid, and sent certified mail, return receipt requested,
correctly addressed to the addresses of the parties as follows:
If to Purchaser: netGuru, Inc.
00000 Xxxx Xxxxx Xxxx
Xxxxx Xxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxxxx
President
If to Seller: To be supplied.
If to Xxxxx/Dutta: Xxxxxx Xxxxx
To be supplied.
Xxxxxxx Xxxxx
To be supplied.
12.7 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which shall
constitute the same instrument.
12.8 ENTIRE AGREEMENT. This Agreement, including all Schedules and Exhibits
attached hereto and referenced herein, sets forth the entire agreement
and understanding of the parties with regard to the subject matter
hereof, and supercedes all prior agreements, understandings, promises,
representations and warranties, express or implied, oral or written,
relating to the subject matter hereof.
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12.9 ACKNOWLEDGEMENT. Seller, Xxxxx and Dutta, jointly and severally,
represent and warrant that each of them has utilized its or his own
legal, financial and tax counsel with respect to this Agreement and has
not relied upon any advice, counsel, representation or warranty of
Purchaser or any advisors to Purchaser with respect to this Agreement and
the transactions contemplated hereunder.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the date first set forth above.
SELLER: PURCHASER:
GRAL, INC. NETGURU, INC.
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxxx Xxxxxxxxxx
------------------------------- -----------------------------
COMPANY:
ALLEGRIA SOFTWARE, INC.
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxxxxx Xxxxx
------------------------------- -----------------------------
Xxxxxx Xxxxx Xxxxxxx Xxxxx
XXXXXX XXXXX, Individually XXXXXXX XXXXX, Individually
/s/ Xxxxxx Xxxxx /s/ Xxxxxxx Xxxxx
----------------------------------- ---------------------------------
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