REPURCHASE AGREEMENT
This REPURCHASE AGREEMENT ("Agreement") is made as of this 27th day of
November, 2000 by and among netGuru, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx Associates, L.P., a Delaware limited partnership
("Xxxxxxx") and Westgate International, L.P, a Cayman Islands limited
partnership ("Westgate" and, collectively with Xxxxxxx, the "Investors", and
each individually, an "Investor").
W I T N E S S E T H:
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WHEREAS, pursuant to that certain Securities Purchase Agreement dated
as of March 8, 2000 by and between the Company and the Investors (the "Purchase
Agreement"), the Company sold and issued to the Investors, and the Investors
purchased from the Company, (i) an aggregate of 12,000 shares of the Company's
Series A Cumulative Convertible Preferred Stock, and (ii) warrants (the "Initial
Warrants") to purchase an aggregate of 150,000 shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"); and
WHEREAS, pursuant to that certain Exchange Agreement dated as of March
30, 2000 by and between the Company and the Investors, the Investors exchanged
(i) all of its 12,000 shares of Series A Cumulative Convertible Preferred Stock
for an equal number of shares of the Company's Series B Cumulative Convertible
Preferred Stock, par value $.01 (the "Preferred Shares") having the rights,
designations and preferences set forth in the Company's Certificate of
Designations filed with the Secretary of State of the State of Delaware on March
30, 2000, which was subsequently incorporated into the Company's Restated
Certificate of Incorporation (as so incorporated, the "Certificate"), and (ii)
all of their Initial Warrants for new warrants which are identical to the
Initial Warrants in all respects except for a change in the "Exercise Price"
thereunder (which, together with the warrants received by the Investors pursuant
to transactions with the Company on June 22, 2000, shall be hereinafter referred
to as the "Warrants");
WHEREAS, each of Xxxxxxx and Westgate currently owns 4,000 Preferred
Shares and Warrants to purchase 75,000 shares of Common Stock; and
WHEREAS, each Investor wishes to sell to the Company, and the Company
wishes to purchase from each Investor, 3,165.9835 Preferred Shares at a
repurchase price equal to the current Liquidation Preference (as defined in the
Certificate) of such Preferred Shares, and the Investors and the Company wish to
terminate the Purchase Agreement in its entirety, all on and subject to the
terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. REPURCHASE. Each Investor hereby sells, assigns, transfers and
conveys to the Company, and the Company hereby purchases from each Investor,
3,165.9835 Preferred Shares for a purchase price ("Purchase Price") equal to
$3,282,080 (with an aggregate of 6,331.967 Preferred Shares sold to the Company
for an aggregate purchase price equal to $6,564,160). Simultaneous with the
execution hereof, the Company shall pay the Purchase Price by wire transfer to
the account designated by each Investor.
2. CONVERSION. Simultaneous with the execution hereof, each Investor
hereby converts the remaining amount of Preferred Shares held by such Investor,
which equals 834.0165 Preferred Shares (with an aggregate of 1,668.033 Preferred
Shares converted), as set forth in the Conversion Notice (as defined in the
Certificate) for each Investor attached hereto. The Company acknowledges and
agrees that the attached Conversion Notices shall constitute valid delivery of
such Conversion Notices to the Company as of the date hereof. The parties
acknowledge and agree that the applicable Conversion Price (as defined in the
Certificate) is $3.93. In the event that an Investor revokes or withdraws its
Conversion Notice attached hereto in whole or in part due to default by the
Company under the Certificate, then such Investor shall have the right to
rescind and unwind the repurchase pursuant to Section 1 above in whole or in
part.
3. CANCELLATION OF PURCHASE AGREEMENT. In consideration of the mutual
agreements and covenants hereunder, the Investors and the Company hereby cancel
the Purchase Agreement in its entirety and all rights, obligations,
representations and warranties thereunder.
4. PURCHASE AND SALES OF SHARES.
(a) In consideration of the Investors agreements and covenants
hereunder, on and subject to the terms and conditions set forth herein, the
Company hereby sells, assigns, transfers, conveys and delivers Two Hundred
Thousand (200,000) shares of the Company's Common Stock, to each of Elliot and
Westgate, an aggregate of Four Hundred Thousand (400,000) shares of Common Stock
(the "Shares" or "Common Shares") to the Investors, and the Investors hereby
acquire, purchase and accept the Shares from the Company at a purchase price per
share of $0.01.
(b) Each Investor shall pay their respective purchase price
for the Common Shares by wire transfer to the account designated by the Company
in writing to each Investor against delivery of the applicable Common Shares,
upon execution hereof. In lieu of delivering physical certificates representing
the Common Shares upon the execution hereof, the Company shall promptly deliver
to its transfer agent, with a copy simultaneously to each Investor's counsel, a
letter authorizing and directing such transfer agent to deliver certificates
representing the Common Shares to the Investor within five (5) business days
after the date hereof. Once payment of the Purchase Price has been made by an
Investor, such Investor shall own, and the Company shall be deemed to have
issued to such Investor, such Investor's applicable number of Common Shares as
of the time of such payment, regardless of whether or when physical certificates
evidencing such securities are actually received by the Investor. Nothing herein
shall affect the Company's obligation hereunder to deliver certificates
representing the Common Shares to the Investors. In the event that the Company
fails to deliver certificates representing the Common Shares to an Investor
within five business days after the date hereof, then such Investor shall have
the right to rescind and unwind the purchase of the Common Shares pursuant to
Section 4(a) above, the repurchase of Preferred Shares pursuant to Section 1
above, and/or the conversion of Preferred Shares pursuant to Section 2 above, in
each case in whole or in part.
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(c) Promptly after the date hereof, counsel to the Company
shall deliver to the Investors an opinion of such counsel in form and substance
reasonably acceptable to the Investors and their counsel.
5. REPRESENTATIONS AND WARRANTIES OF INVESTORS. Each Investor,
severally and not jointly, hereby represents and warrants to the Company as
follows:
(a) ACCREDITED INVESTOR STATUS; SOPHISTICATED INVESTOR. Each
Investor is an "accredited investor" as that term is defined in Rule 501(a) of
Regulation D under the Securities Act of 1933, as amended (the "Securities Act"
or "1933 Act"). Each Investor has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Shares.
(b) INFORMATION. Each Investor and its advisors, if any, have
been furnished with all materials reLating to the business, finances and
operations of the Company which have been requested and materials relating to
the offer and sale of the Common Shares which have been requested by each
Investor. Each Investor and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by each Investor or its advisors,
if any, or its representatives shall modify, amend or affect the Investor's
right to rely on the Company's representations and warranties contained in
Section 6 below. Each Investor understands that its investment in the Common
Shares involves a high degree of risk. Each Investor has sought such accounting,
legal and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Common Shares.
(c) NO GOVERNMENTAL REVIEW. Each Investor understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Common
Shares or the fairness or suitability of the investment in the Common Shares nor
have such authorities passed upon or endorsed the merits of the offering of the
Common Shares.
(d) LEGENDS. The Company shall issue certificates for the
Common Shares to each Investor without any legend except as described in Section
9 below. Each Investor covenants that, in connection with any transfer of Common
Shares by the Investor pursuant to the registration statement contemplated by
the Registration Rights Agreement, it will comply with the applicable prospectus
delivery requirements of the 1933 Act, provided that copies of a current
prospectus relating to such effective registration statement are or have been
supplied to each Investor.
(e) AUTHORIZATION; ENFORCEMENT. Each of this Agreement and the
Registration Rights Agreement (as defined below) have been duly and validly
authorized, executed and delivered on behalf of each Investor and is a valid and
binding agreement of each Investor enforceable against each Investor in
accordance with their terms, subject as to enforceability to general principles
of equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies. Each Investor has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and the Registration Rights Agreement and each
other agreement entered into by the parties hereto in connection with the
transactions contemplated by this Agreement.
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(f) RESIDENCY. Xxxxxxx is a resident of the State of Delaware
and Westgate is a resident of the Cayman Islands, B.W.I.
(g) NO CONFLICTS. The execution, delivery and performance of
this Agreement and the Registration Rights Agreement by each Investor and the
consummation by each Investor of the transactions contemplated hereby and
thereby will not result in a violation of the certificate of incorporation,
by-laws or other documents of organization of each such Investor.
(h) INVESTMENT REPRESENTATION. Each Investor is purchasing the
Common Shares for its own account and not with a view to distribution in
violation of any securities laws. Each Investor has been advised and understands
that Common Shares have not been registered under the 1933 Act or under the
"blue sky" laws of any jurisdiction and may be resold only if registered
pursuant to the provisions of the 1933 Act or if an exemption from registration
is available, except under circumstances where neither such registration nor
such an exemption is required by law. Each Investor has been advised and
understands that the Company, in issuing the Common Shares is relying upon,
among other things, the representations and warranties of each Investor
contained in this Section 5 in concluding that such issuance is a "private
offering" and is exempt from the registration provisions of the 1933 Act.
(i) RULE 144. Each Investor has been advised or is aware of
the provisions of Rule 144 promulgated under the 1933 Act.
(j) RELIANCE BY THE COMPANY. Each Investor understands that
the Common Shares are being offered and sold in reliance on a transactional
exemption from the registration requirements of Federal and state securities
laws and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
each Investor set forth herein in order to determine the applicability of such
exemptions and the suitability of the Investor to acquire the Common Shares.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents warrants to each Investor as follows:
(a) ORGANIZATION AND QUALIFICATION; MATERIAL ADVERSE EFFECT.
The Company is a corporation duly incorporated and existing in good standing
under the laws of the State of Delaware and has the requisite corporate power to
own its properties and to carry on its business as now being conducted. The
Company does not have any subsidiaries other than the subsidiaries listed on the
SEC Documents (as defined below) ("Subsidiaries"). Except where specifically
indicated to the contrary, all references in this Agreement to subsidiaries
shall be deemed to refer to all direct and indirect subsidiaries of the Company.
The Company is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary other than
those in which the failure so to qualify would not have a Material Adverse
Effect. "Material Adverse Effect" means any adverse effect on the business,
operations, properties, prospects or financial condition of the Company and its
subsidiaries, if any, and which is (either alone or together with all other
adverse effects) material to the Company and its Subsidiaries, if any, taken as
a whole, and any material adverse effect on the transactions contemplated under
this Agreement and the Registration Rights Agreement, or any other agreement or
document contemplated hereby or thereby.
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(b) AUTHORIZATION; ENFORCEMENT. (i) The Company has all
requisite corporate power and authority to enter into and perform this Agreement
and the Registration Rights Agreement ("Transaction Documents") and to issue the
Common Shares in accordance with the terms hereof, (ii) the execution and
delivery of this Agreement and the Registration Rights Agreement by the Company
and the consummation by it of the transactions contemplated hereby and thereby,
including the issuance of the Common Shares have been duly authorized by all
necessary corporate action, and no further consent or authorization of the
Company or its Board of Directors (or any committee or subcommittee thereof) or
stockholders is required, (iii) this Agreement and the Registration Rights
Agreement have been duly executed and delivered by the Company, (iv) this
Agreement and the Registration Rights Agreement constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of creditors' rights and
remedies or by other equitable principles of general application, and (B) to the
extent the indemnification provisions contained in the Registration Rights
Agreement may be limited by applicable federal or state securities laws and (v)
the Common Shares have been duly authorized and, upon issuance thereof and
payment therefor in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, free and clear of any and all liens,
claims and encumbrances.
(c) CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 150,000,000 shares of Common Stock, $.01 par value and
5,000,000 shares of Preferred Stock, $.01 par value per share (the "Preferred
Stock"), of which 12,000 shares have been designated Series B Cumulative
Convertible Preferred Stock, $.01 par value per share (the "Series B Preferred
Stock"). As of the date hereof and prior to consummation of the transactions
contemplated by this Agreement and the Repurchase Agreement, 14,303,033 shares
of the Company Common Stock are issued and outstanding, 2,423,027 shares of the
Company Common Stock are reserved for issuance upon the exercise of outstanding
options and warrants to purchase the Company Common Stock, 8,000 shares of
Series B Preferred Stock are issued and outstanding and no other shares of the
Company Preferred Stock are issued and outstanding. All outstanding shares of
the Company Common Stock and Series B Preferred Stock are validly issued, fully
paid and nonassessable and not subject to preemptive rights. There are no
outstanding rights, options, warrants, subscriptions, calls, convertible
securities or agreements of any character or nature (other than as disclosed
herein) under which the Company is or may become obligated to issue or to
transfer any shares of its capital stock of any kind. There are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the Securities Act (except as
set forth in the Registration Rights Agreement). There are no outstanding
securities of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries. There are no securities or instruments containing anti-dilution or
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similar provisions that will be triggered by the issuance of the Common Shares.
The Company does not have any stock appreciation rights or "phantom stock" plans
or agreements or any similar plan or agreement. The Company has furnished to the
Investor true and correct copies of the Company's Certificate of Incorporation,
as amended and as in effect on the date hereof (the "Certificate of
Incorporation"), and the Company's By-laws, as in effect on the date hereof (the
"By-laws"), and the terms of all securities convertible or exchangeable into or
exercisable for Common Stock and the material rights of the holders thereof in
respect thereto.
(d) ISSUANCE OF SHARES. Upon issuance in accordance with this
Agreement, the Common Shares will be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.
(e) NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby and issuance of the Common
Shares will not (i) result in a violation of the Certificate of Incorporation,
any certificate of designations, preferences and rights of any outstanding
series of preferred stock of the Company or the By-laws; (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including United States federal and state securities laws and regulations and
the rules and regulations of the Nasdaq National Market ("Principal Market") or
principal securities exchange or trading market on which the Common Stock is
traded or listed) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected. Neither the Company nor its Subsidiaries is in violation of any
term of, or in default under, (x) its certificate of incorporation, any
certificate of designations, preferences and rights of any outstanding series of
preferred stock or By-laws or their organizational charter or by-laws,
respectively, (y) any material contract, agreement, mortgage, indebtedness,
indenture, instrument, or (z) any judgment, decree or order or any statute, rule
or regulation applicable to the Company or its Subsidiaries, the non-compliance
with which (in the case of (z) only), would be material to the Company or its
Subsidiaries or interfere with the performance of its obligations under the
Transaction Documents. Except as specifically contemplated by this Agreement and
as required under the 1933 Act, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court, governmental agency or any regulatory or self-regulatory agency in order
for it to execute, deliver or perform any of its obligations under, or
contemplated by, the Transaction Documents or the issuance of the Common Shares
in accordance with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company complies with and is not in violation of the
listing requirements of the Principal Market as in effect on the date hereof and
on each of the Closing Dates and is not aware of any facts which would
reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future.
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(f) SEC DOCUMENTS; FINANCIAL STATEMENTS. Since December 31,
1998, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
Documents"). The Company has delivered to each Investor or its representatives
true and complete copies of any SEC Documents that were not filed electronically
via XXXXX. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other written information provided by or on behalf of the
Company to each Investor which is not included in the SEC Documents, contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading. Neither the
Company nor any of its Subsidiaries or any of their officers, directors,
employees or agents have provided any Investor with any material, nonpublic
information which was not publicly disclosed prior to the date hereof.
(g) ABSENCE OF LITIGATION. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company, the Common Stock or any of the Company's Subsidiaries or
any of the Company's or the Company's Subsidiaries' officers or directors in
their capacities as such, except which individually would have a Material
Adverse Effect.
(h) ACKNOWLEDGMENT REGARDING INVESTOR'S PURCHASE OF SHARES.
The Company acknowledges and agrees that each Investor is acting solely in the
capacity of arm's length purchaser with respect to the Transaction Documents and
the transactions contemplated hereby and thereby. The Company further
acknowledges that each Investor is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and thereby, and
any advice given by each Investor or any of its respective representatives or
agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to each Investor's purchase
of the Common Shares. The Company further represents to the Investor that the
Company's decision to enter into the Transaction Documents has been based solely
on the independent evaluation by the Company and its representatives.
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(i) NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES. No event, liability, development or circumstance has occurred or
exists with respect to the Company or its Subsidiaries or their respective
business, properties, prospects, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws on a
registration statement filed with the SEC relating to an issuance and sale by
the Company of its Common Stock and which has not been publicly disclosed.
(j) NO INSIDE INFORMATION. The Company has not provided and,
the Company shall not provide, any Investor with any non-public information.
(k) NO INTEGRATED OFFERING. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of Common
Shares to each Investor to be integrated with prior offerings by the Company for
purposes of the 1933 Act or any applicable shareholder approval provisions,
including, without limitation, under the rules and regulations of the Principal
Market or other Approved Market, nor will the Company or any of its Subsidiaries
take any action or steps that would cause the offering of the Common Shares to
be integrated with other offerings.
(l) APPLICATION OF TAKEOVER PROTECTIONS. There are no
anti-takeover provisions contained in the Company's Certificate of Incorporation
or otherwise which will be triggered as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's
issuance of the Common Shares and the Investor's ownership of the Common Shares.
(m) RIGHTS PLAN. Neither the Company nor any of its
Subsidiaries has adopted a shareholder or rights plan or similar arrangement
relating to accumulations of beneficial ownership of Common Stock or a change in
control of the Company. The Company confirms that no provision of such plan
will, under any present or future circumstances, delay, prevent or interfere
with the performance of any of the Company's obligations under the Transaction
Documents and such plan will not be "triggered" by such performance.
(n) OBLIGATIONS ABSOLUTE. Each of the Company and each
Investor agrees that, subject only to the conditions, qualifications and
exceptions (if any) specifically set forth in the Transaction Documents, its
obligations under the Transaction Documents are unconditional and absolute.
Except to the extent (if any) specifically set forth in the Transaction
Documents, each party's obligations thereunder are not subject to any right of
set off, counterclaim, delay or reduction.
(o) ISSUANCE OF COMMON SHARES. The Common Shares are duly
authorized and reserved for issuance and, upon purchase of the Common Shares in
accordance with the terms hereof, such Common Shares will be validly issued,
fully paid and non-assessable, free and clear of any and all liens, claims and
encumbrances, and entitled to be traded on the Principal Market or the Nasdaq
SmallCap Market (collectively with the Principal Market, the "Approved
Markets"), and the holders of such Common Shares shall be entitled to all rights
and preferences accorded to a holder of Common Stock. As of the date of this
Agreement, the outstanding shares of Common Stock are currently listed on the
Principal Market.
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(p) FORM S-3. The Company is eligible to file the Registration
Statement (as defined in the Registration Rights Agreement) for secondary
offerings on Form S-3 (as in effect on the date of this Agreement) under the
1933 Act and rules promulgated thereunder, and Form S-3 (as in effect on the
date of this Agreement) is permitted to be used for the transactions
contemplated hereby under the 1933 Act and rules promulgated thereunder.
7. REGISTRATION RIGHTS. On or before December 4, 2000, the Company
shall, at its sole cost and expense, file a registration statement on the
appropriate form under the 1933 Act with the SEC covering all of the Shares
purchased by the Investors hereunder, pursuant to the Registration Rights
Agreement attached hereto as Exhibit A ("Registration Rights Agreement"). The
Company shall use its best efforts to have such registration statement declared
effective as soon thereafter as possible, and to keep such registration
statement current and effective until December 31, 2002, or until such earlier
date as all of the Shares registered thereunder shall have been sold. If Company
is unable to file such registration statement by such date or have the
registration statement declared effective by February 15, 2001, Investors shall
be entitled, in addition to and not in lieu of all other remedies at law or in
equity, to liquidated damages as set forth in the Registration Rights Agreement.
8. COVENANTS.
(a) REGISTRATION AND LISTING; EFFECTIVE REGISTRATION. Until
such time as each Investor has sold all such Investor's Common Shares, the
Company will cause the Common Stock to continue at all times to be registered
under Sections 12(b) or (g) of the 1934 Act, will comply in all material
respects with its reporting and filing obligations under the 1934 Act, and will
not take any action or file any document (whether or not permitted by the
Exchange Act or the rules thereunder) to terminate or suspend such reporting and
filing obligations. Until such time each Investor has sold all such Investor's
Common Shares, the Company shall continue the listing or trading of the Common
Stock on the Principal Market or one of the other Approved Markets and comply in
all material respects with the Company's reporting, filing and other obligations
under the bylaws or rules of the Approved Market on which the Common Stock is
listed. The Company shall cause the Common Shares to be listed on the Principal
Market or one of the other Approved Markets no later than the effectiveness of
the registration of the Common Shares under the Securities Act.
(b) REPLACEMENT CERTIFICATES. The certificate(s) representing
the Common Shares held by any Investor (or then holder) may be exchanged by the
Investor (or such holder) at any time and from time to time for certificates
with different denominations representing an equal aggregate number of Common
Shares, as requested by the Investor (or such holder) upon surrendering the
same. No service charge will be made for such registration or transfer or
exchange.
(c) SECURITIES COMPLIANCE. The Company shall notify the SEC
and the Principal Market, in accordance with their requirements, of the
transactions contemplated by this Agreement and the Registration Rights
Agreement, and shall take all other necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and
valid issuance of the Common Shares.
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(d) FORM D; BLUE SKY LAWS. The Company agrees to file a Form D
with respect to the Common Shares, as required under Regulation D and to provide
a copy thereof to each Investor promptly after such filing. The Company shall,
on or before the date hereof, take such action as the Company shall have
reasonably determined is necessary to qualify the Common Shares for sale to each
Investor under applicable securities or "blue sky" laws of the states of the
United States (or to obtain an exemption from such qualification), and shall
provide evidence of any such action so taken to each Investor upon request of
any Investor; provided, however, that the Company shall not be required in
connection therewith to register or qualify as a foreign corporation in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to service of process in suits or taxation, in each case, in any
jurisdiction where it is not now so subject.
(e) SHAREHOLDER RIGHTS PLAN. The acquisitions of Common Shares
will not, under any circumstances, trigger the poison pill provisions of any
stockholders' rights or similar agreements, or a substantially similar
occurrence under any successor or similar plan.
9. LEGEND AND STOCK.
(a) Upon payment therefor as provided in this Agreement, the
Company will issue one or more certificates representing the Common Shares in
the name of each Investor or its designees and in such denominations to be
specified by each Investor prior to (or from time to time subsequent to) the
date hereof. Each certificate representing the Common Shares, prior to such
securities being registered under the 1933 Act for resale or available for
resale under Rule 144 under the 1933 Act, shall be stamped or otherwise
imprinted with a legend substantially in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED FOR OFFER OR SALE
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD OR OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
(b) The Company agrees to reissue Common Shares without the
legend set forth above at such time as (i) the holder thereof is permitted to
dispose of such Common Shares pursuant to Rule 144 under the 1933 Act, or (ii)
such Common Shares are sold to a purchaser or purchasers who (in the opinion of
counsel to the seller or such purchaser(s), in form and substance reasonably
satisfactory to the Company and its counsel) are able to dispose of such shares
publicly without registration under the 1933 Act, or (iii) such securities have
been registered under the 1933 Act.
(c) Prior to the Registration Statement (as defined in the
Registration Rights Agreement) being declared effective, any Common Shares shall
bear a legend in the same form as the legend indicated above; provided that such
legend shall be removed from the Common Shares and the Company shall issue new
certificates without such legend if (i) the holder has sold or disposed of such
Common Shares pursuant to Rule 144 under the 1933 Act, or the holder is
permitted to dispose of such Common Shares pursuant to Rule 144(k) under the
1933 Act, (ii) such Common Shares are registered for resale under the 1933 Act,
or (iii) such Common Shares are sold to a purchaser or purchasers who (in the
opinion of counsel to the seller or such purchaser(s), in form and substance
10
reasonably satisfactory to the Company and it counsel) are able to dispose of
such shares publicly without registration under the 1933 Act. Upon such
Registration Statement becoming effective, the Company agrees to promptly, but
no later than three (3) business days thereafter, issue new certificates
representing such Common Shares without such legend. Any Common Shares issued
after the Registration Statement has become effective shall be free and clear of
any legends, transfer restrictions and stop orders. Notwithstanding the removal
of such legend, the Investor agrees to sell the Common Shares represented by the
new certificates in accordance with the applicable prospectus delivery
requirements (if copies of a current prospectus are provided to the Investor by
the Company) or in accordance with an exemption from the registration
requirements of the 1933 Act.
(d) Nothing herein shall limit the right of any holder to
pledge these securities pursuant to a bona fide margin account or lending
arrangement entered into in compliance with law, including applicable securities
laws.
10. RELEASES.
(a) The Company, on behalf of itself, subsidiaries and
affiliates, and their respective successors and assigns (hereinafter
collectively, "Company Releasors"), hereby irrevocably releases and forever
discharges each of the Investors and each of the Investor's partners,
subsidiaries, officers, directors, shareholders, employees, agents and
representatives, and their respective successors, heirs, executors,
administrators, legal representatives, predecessors and assigns (hereinafter
collectively, "Company Releasees"), of and from any and all manner of action or
actions, cause or causes of action, choses in action, suits, controversies,
debts, liens, claims, accounts, sums of money, reckonings, bonds, bills,
demands, damages, trespasses, judgments, executions, loss, cost or expense,
whether direct or derivative, known or unknown, fixed or contingent, accrued or
to accrue, liquidated or unliquidated, at law or in equity, of any kind or
nature whatsoever, including without limitation any claim for indemnification or
contribution (collectively, the "Claims") which any Company Releasor has, ever
had, now has, may have or hereafter may acquire against Company Releasees, or
any of them, for, upon or by reason of any matter, cause or thing whatsoever
from the beginning of time through and including the date of this Agreement.
(b) Each Investor, on behalf of itself, its subsidiaries and
affiliates, and their respective successors and assigns (hereinafter
collectively, "Investor Releasors"), hereby irrevocably releases and forever
discharges the Company and its respective successors and assigns (hereinafter
collectively, "Investor Releasees"), of and from any and all Claims which any
Investor Releasor has, ever had, now has, may have or hereafter may acquire
against Investor Releasees, or any of them, for, upon or by reason of any
matter, cause or thing whatsoever from the beginning of time through and
including the date of this Agreement, excluding obligations, liabilities and
Claims arising under or relating to this Agreement, the Registration Rights
Agreement and any other registration rights agreement between the Company and
the Investors or any registration statements filed in connection with any such
registration rights agreements, including without limitation the Registration
Rights Agreement.
11
11. MISCELLANEOUS.
(a) FULL FORCE AND EFFECT. Except as otherwise expressly
provided herein, each of the Registration Rights Agreement, the Warrants and the
other agreements and transactions contemplated thereby shall remain in full
force and effect.
(b) CONSENT TO JURISDICTION ETC. Each of the Company and each
Investor agree that any legal action or proceeding relating to or arising out of
or under this Agreement may be brought in the state or federal courts in the
State of New York, and each party accepts with regard to any such action or
proceeding for itself and in respect to its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each party further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified U.S. mail, postage prepaid, to it at its addresses
provided in the Purchase Agreement, such service to become effective upon
receipt or five (5) days after such mailing, whichever shall first occur. To the
fullest extent permitted by applicable law, each party hereby waives, and agrees
not to assert, by way of motion, defense, counterclaim or otherwise, in any such
suit, action or proceeding any claim that (i) it is not personally subject to
the jurisdiction of any of the above-named courts by reason of any immunity or
otherwise, (ii) its properties are exempt or immune from setoff, execution or
attachment, either prior to judgment or in aid of execution or (iii) any suit,
action or proceeding so brought is in an inconvenient forum or that the venue of
the suit, action or proceeding is improper or that the subject matter hereof may
not be enforced in or by such courts.
(c) AUTHORITY. Each party hereto hereby represents and
warrants to the other party that the execution and delivery by the such party of
this Agreement, and the performance by such party of its obligations hereunder,
have been duly and validly authorized by such party, with no other action on the
part of such party being necessary. This Agreement has been duly and validly
executed and delivered by such party and constitutes a legal, valid and binding
obligation of such party enforceable against such party in accordance with its
terms.
(d) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
(e) NOTICES. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally, by courier or by facsimile transmission or mailed (first
class postage prepaid) to the parties at the addresses or facsimile numbers set
forth in the Purchase Agreement.
(f) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(g) FURTHER ASSURANCES. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
12
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be duly executed as of the 27th day of November, 2000.
NETGURU, INC.
By: /S/ Xxxxx X. Xxx
-------------------------------------------------
Name: Xxxxx X. Xxx
Title: Chief Executive Officer
WESTGATE INTERNATIONAL, L.P.
By: Xxxxxxx International Capital Advisors Inc.,
as Attorney-in-Fact
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
XXXXXXX ASSOCIATES, L.P.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
13
CONVERSION NOTICE
-----------------
FOR
---
SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
-----------------------------------------------
The undersigned, as a holder ("Holder") of shares of Series B Cumulative
Convertible Preferred Stock ("Preferred Shares") of netGuru, Inc. (the
"Corporation"), hereby irrevocably elects to convert 834.0165 Preferred Shares
for shares ("Common Shares") of common stock, par value $0.01 per share (the
"Common Stock"), of the Corporation according to the terms and conditions of the
Certificate of Designations for the Preferred Shares as of the date written
below. The undersigned hereby requests that share certificates for the Common
Shares to be issued to the undersigned pursuant to this Conversion Notice be
issued in the name of, and delivered to, the undersigned or its designee as
indicated below. No fee will be charged to the Holder of Preferred Shares for
any conversion. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed thereto in the Certificate of Designations.
Conversion Date: November 27, 2000
Conversion Information: NAME OF HOLDER:
XXXXXXX ASSOCIATES, L.P
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
Print Address of Holder:
Xxxxxxx Associates, L.P.
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000 and (000) 000-0000
Attention: Xxxxx Xxxxx
Issue Common Stock to: XXXXXXX ASSOCIATES, L.P
at: above address
IF COMMON SHARES ARE TO BE ISSUED TO A PERSON OTHER THAN HOLDER, HOLDER'S
SIGNATURE MUST BE GUARANTEED BELOW:
SIGNATURE GUARANTEED BY:
THE COMPUTATION OF NUMBER OF COMMON SHARES TO BE RECEIVED IS SET FORTH ON PAGE 2
OF THE CONVERSION NOTICE.
PAGE 1 OF CONVERSION NOTICE
14
PAGE 2 TO CONVERSION NOTICE DATED NOVEMBER 27, 2000 FOR: XXXXXXX ASSOCIATES, L.P
(Conversion Date) (Name of Holder)
COMPUTATION OF NUMBER OF COMMON SHARES TO BE RECEIVED
-----------------------------------------------------
Number of Preferred Shares converted: 834.0165 shares
Number of Preferred Shares converted x Liquidation Preference $ 864,600
TOTAL DOLLAR AMOUNT CONVERTED $ 864,600
===========
CONVERSION PRICE $ 3.93
Number of Common Shares = TOTAL DOLLAR AMOUNT CONVERTED = $ 864,600
----------------------------- -----------
Conversion Price $ 3.93
NUMBER OF COMMON SHARES = 220,000
-------
Please settle this conversion through DTC. If the conversion is cannot be
settled by DTC, please issue and deliver 1 certificate for Common Shares.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
If the Holder is receiving certificate(s) for Preferred Shares upon the
conversion, please issue and deliver _____ certificate(s) for Preferred Shares
in the following amounts:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
15
CONVERSION NOTICE
-----------------
FOR
---
SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
-----------------------------------------------
The undersigned, as a holder ("Holder") of shares of Series B Cumulative
Convertible Preferred Stock ("Preferred Shares") of netGuru, Inc. (the
"Corporation"), hereby irrevocably elects to convert 834.0165 Preferred Shares
for shares ("Common Shares") of common stock, par value $0.01 per share (the
"Common Stock"), of the Corporation according to the terms and conditions of the
Certificate of Designations for the Preferred Shares as of the date written
below. The undersigned hereby requests that share certificates for the Common
Shares to be issued to the undersigned pursuant to this Conversion Notice be
issued in the name of, and delivered to, the undersigned or its designee as
indicated below. No fee will be charged to the Holder of Preferred Shares for
any conversion. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed thereto in the Certificate of Designations.
Conversion Date: November 27, 2000
Conversion Information: NAME OF HOLDER:
WESTGATE INTERNATIONAL, L.P.
By: /s/ Xxxx X. Xxxxxx
----------------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
Print Address of Holder:
WESTGATE INTERNATIONAL, L.P.
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000 and (000) 000-0000
Attention: Xxxxx Xxxxx
Issue Common Stock to: WESTGATE INTERNATIONAL, L.P.
at: above address
IF COMMON SHARES ARE TO BE ISSUED TO A PERSON OTHER THAN HOLDER, HOLDER'S
SIGNATURE MUST BE GUARANTEED BELOW:
SIGNATURE GUARANTEED BY:
THE COMPUTATION OF NUMBER OF COMMON SHARES TO BE RECEIVED IS SET FORTH ON PAGE 2
OF THE CONVERSION NOTICE.
PAGE 1 OF CONVERSION NOTICE
16
PAGE 2
TO CONVERSION NOTICE DATED NOVEMBER 27, 2000 FOR: WESTGATE NTERNATIONAL, L.P.
-----------------
(Conversion Date) (Name of Holder)
COMPUTATION OF NUMBER OF COMMON SHARES TO BE RECEIVED
-----------------------------------------------------
Number of Preferred Shares converted: 834.0165 shares
Number of Preferred Shares converted x Liquidation Preference $ 864,600
TOTAL DOLLAR AMOUNT CONVERTED $ 864,600
Conversion Price $ 3.93
-----------
Number of Common Shares = TOTAL DOLLAR AMOUNT CONVERTED = $ 864,600
----------------------------- -----------
Conversion Price $ 3.93
-----------
NUMBER OF COMMON SHARES = 220,000
-------
Please settle this conversion through DTC. If the conversion is cannot be
settled by DTC, please issue and deliver 1 certificate for Common Shares.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
If the Holder is receiving certificate(s) for Preferred Shares upon the
conversion, please issue and deliver _____ certificate(s) for Preferred Shares
in the following amounts:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
17
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
18
