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EXHIBIT 10.3
AGREEMENT OF PURCHASE AND SALE OF STOCK
This agreement is made as of April 30, 1997, by and among NET/GUARD
Technologies, Inc., a Delaware corporation ("Buyer"), having its principal
office at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, NetPage
Communications, Inc., an Illinois corporation (the "Corporation"), having its
principal office at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the
current shareholders of the Corporation whose addresses are set forth next to
their names below (the "Shareholders"). Corporation and the Shareholders are
sometimes, collectively, referred to herein as the NetPage Parties.
Buyer desires to purchase from the Corporation and the Corporation desires
to sell to Buyer 147,784,000 shares of Common Stock of the Corporation, no par
value per share, (the "New NetPage Shares"), which will represent 80% of all of
the issued and outstanding shares of Common Stock of the Corporation. The
Shareholders desire that this transaction be consummated. It is the intention of
Buyer and the NetPage Parties that the New NetPage Shares and the Existing
Shares (as hereinafter defined) will, collectively, represent 100% of the issued
and outstanding shares of Common Stock of the Corporation.
In consideration of the mutual covenants, agreements, representations, and
warranties contained in this agreement, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 Subject to the terms and conditions set forth in this agreement,
prior to the date hereof, the Shareholders have amended the Articles of
Incorporation of the Corporation to increase its authorized number of shares
from 100,000,000 shares to 300,000,000 shares of Common Stock.
1.2 Concurrent with the execution and delivery of this agreement and
subject to the terms and conditions set forth herein, the NetPage Parties shall
cause the Corporation to issue and deliver the New NetPage Shares to Buyer, and
Buyer shall acquire and accept the New NetPage Shares from the Corporation.
1.3 As consideration for the New NetPage Shares, Buyer will deliver the
following:
(a) To the Corporation, the purchase price of $362,000 as follows:
(i) Concurrent with Buyer's receipt of the New NetPage
Shares (the "Delivery Date"), a check, payable to the order of the Corporation,
in an amount which, when added to all amounts already paid by Buyer to the
Corporation, will equal the sum of at least $200,000.00;
(ii) Approximately 30 days, but no later than 35 days,
after the Delivery Date, a check, made payable to the order of the Corporation,
in the amount of $75,000.00 (the "Second Payment"); and
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(iii) 60 days after the Delivery Date, a check, made
payable to the order of the Corporation, in the amount of $87,000.00 (the "Final
Payment").
(iv) Buyer may at its election deliver from time to time
all or a portion of the Second Payment and Final Payment before the dates on
which such payments are due and in such event Buyer shall be obligated to pay
the balance then owing of the Second Payment or Final Payment.
(b) To the Shareholders, pro rata to the respective interests of
the Shareholders in the Corporation, evidence satisfactory to the Shareholders
that 200,003 shares of restricted Common Stock of Buyer (the "Restricted
Shares") will be issued by Buyer and delivered to the Shareholders by Buyer's
transfer agent no later than five (5) business days after the date hereof. The
share certificates evidencing the Restricted Shares shall bear an appropriate
legend to the effect that the Restricted Shares have not been registered under
the Securities Act of 1933, as amended, and that the subsequent resale or
transfer of the Restricted Shares would be limited accordingly (the "Legend").
1.4 From and after the date hereof, the board of directors of the
Corporation shall consist of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇ ("▇▇▇▇▇▇") and E. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("Mansfield"). All other directors
shall resign as of such date. In the event the number of authorized directors is
increased to five persons by an amendment to the Bylaws of the Corporation,
Buyer shall have the right to appoint two persons to fill the vacancies created
by such amendment. However, for so long as the Shareholders own, in the
aggregate, 20% of all of the issued and outstanding Common Stock of the
Corporation, the following actions must be approved by a vote of more than 80%
of the issued and outstanding Common Stock of the Corporation:
(a) a merger of the Corporation with another entity, unless the
Corporation is the surviving entity; or
(b) the liquidation or dissolution of the Corporation; or
(c) the sale of substantially all of the assets of the Corporation.
1.5 Concurrent with the execution and delivery of this agreement, Crane
shall resign as the Chief Executive Officer of the Corporation and Mansfield
shall be elected to such office. The Corporation and Mansfield shall enter into
an employment agreement (the "Employment Agreement"), providing that, among
other things, it is anticipated that Mansfield will devote a significant
portion, but not 100%, of his time and effort on behalf of the Corporation, as
its Chief Executive Officer, for so long as Mansfield and a majority of the
board of directors consider it to be in the best interests of the Corporation to
maintain such arrangement.
1.6 Concurrent with the execution and delivery of this agreement, the
Corporation shall issue to ▇▇▇▇▇▇, for the purchase price of $1000.00, a warrant
substantially in the form attached hereto as Exhibit A allowing ▇▇▇▇▇▇ to
purchase an additional 38,893,846 shares
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of Common Stock of the Corporation (the "Warrant"). The Warrant shall entitle
▇▇▇▇▇▇ to purchase such shares of Common Stock of the Corporation at a price of
$0.001 per share and may only be exercised if the Corporation achieves gross
pretax profit of $8,000,000 (the "Profit Trigger") through the period commencing
January 1, 1997 and ending December 31, 1998. Notwithstanding the foregoing, if
the Corporation attains at least 80% of the Profit Trigger by the end of such
period, ▇▇▇▇▇▇ may exercise the Warrant in proportion to the gross profits
actually attained. If the Corporation fails to achieve at least 80% of the
Profit Trigger prior to the period ending December 31, 1 998 then the Warrant
shall expire and have no further force or effect.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF NETPAGE PARTIES
The NetPage Parties, jointly and severally, represent and warrant that:
2.1 The Corporation is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Illinois, has all necessary
corporate powers to carry on its business as now owned and operated by it, and
is duly qualified to do intrastate business and is in good standing in
California.
2.2 The authorized capital stock of the Corporation consists of
300,000,000 shares of Corporation Common Stock, of which, prior to the issuance
of the New NetPage Shares pursuant to paragraph 1.2, above, 36,946,000 shares
(the "Existing Shares") were issued and outstanding to the Shareholders. The
Existing Shares are validly issued, fully paid, and nonassessable, and such
shares have been so issued in full compliance with all federal and state
securities laws. The New NetPage Shares upon delivery according to the terms of
this agreement are (i) duly authorized, validly issued, fully paid and
nonassessable, and (ii) when delivered in accordance with the terms of this
agreement, free and clear of any and all liens, security interests, pledges,
claims, charges, voting trusts, shareholder agreements and encumbrances of any
kind whatsoever (except for state and federal securities laws of general
applicability). There are no outstanding subscriptions, options, rights,
warrants, convertible securities, or other agreements or commitments obligating
the Corporation to issue or to transfer from treasury any additional shares of
its Common Stock or granting the rights to participate in the profits of the
Corporation, with the exception of the Warrant being issued pursuant to
paragraph 1.6, above.
2.3 The Shareholders are the owners, beneficially and of record, of the
Existing Shares and have the power to amend the Articles of Incorporation to
increase the authorized capitalization of the Corporation and to cause the
Corporation to issue the New NetPage Shares to Buyer without obtaining the
consent or approval of any other person or governmental authority other than the
Secretary of State of the State of Illinois.
2.4 The Corporation does not own, directly or indirectly, any interest or
investment (whether equity or debt) in any corporation, partnership, business,
trust, or other entity.
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2.5 Section 2.5 of the Disclosure Schedule sets forth the unaudited balance
sheets, including statements of income and retained earnings, of the
Corporation, dated within 30 days hereof and certified by the chief financial
officer of the Corporation as accurately reflecting the financial condition of
the Corporation. To the actual knowledge of Crane, the financial statements have
been prepared in accordance with generally accepted accounting principles
consistently followed by the Corporation and fairly present the financial
position of the Corporation as of the date of the balance sheet and the results
of its operations for such period.
2.6 To the actual knowledge of Crane and except as set forth in Section
2.6 of the Disclosure Schedule or as contemplated hereby, since the date of the
balance sheet referred to paragraph 2.5, above, there has not been any:
(a) Transaction by the Corporation except in the ordinary course of
business as conducted on that date;
(b) Capital expenditure by the Corporation exceeding $10,000;
(c) Material adverse change in the financial condition,
liabilities, assets, business, or prospects of the Corporation;
(d) Destruction, damage to, or loss of any asset of the Corporation
(whether or not covered by insurance) that materially and adversely affects the
financial condition, business, or prospects of the Corporation;
(e) Change in accounting methods or practices (including, without
limitation, any change in depreciation or amortization policies or rates) by the
Corporation;
(f) Revaluation by the Corporation of any of its assets;
(g) Declaration, setting aside, or payment of a dividend or other
distribution in respect to the capital stock of the Corporation, or any direct
or indirect redemption, purchase, or other acquisition by the Corporation of any
of its shares of Common Stock;
(h) Increase in the salary or other compensation payable or to
become payable by the Corporation to any of its officers, directors, or
employees, or the declaration, payment, or commitment or obligation of any kind
for the payment by the Corporation of a bonus or other additional salary or
compensation to any such person;
(i) Sale or transfer of any asset of the Corporation, except in the
ordinary course of business;
(j) Amendment or termination of any contract, agreement, or license
to which the Corporation is a party, except in the ordinary course of business;
(k) Loan by the Corporation to any person or entity, or guaranty by
the Corporation of any loan;
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(l) Mortgage, pledge, or other encumbrance of any asset of the
Corporation;
(m) Waiver or release of any right or claim of the Corporation,
except in the ordinary course of business;
(n) Commencement or notice or threat of commencement of any civil
litigation or any governmental proceeding against or investigation of the
Corporation or its affairs;
(o) Labor trouble or claim of wrongful discharge or other unlawful
labor practice or action;
(p) Issuance or sale by the Corporation of any shares of its
capital stock or any other of its securities;
(q) Agreement by the Corporation to do any of the things described
in the preceding clauses (a) through (q); or
(r) Other event or condition of any character that has or might
have a material and adverse effect on the financial condition, business, assets,
liabilities, or prospects of the Corporation.
2.7 Except as set forth in Section 2.7 or 2.6 of the Disclosure Schedule,
since the date of the balance sheets referred to in paragraph 2.5, above, there
has not been any change in the financial condition or operations of the
Corporation, except changes in the ordinary course of business, which changes
have not in the aggregate been materially adverse.
2.8 To the actual knowledge of Crane, the Corporation does not have any
debt, liability, or obligation of any nature, whether accrued, absolute,
contingent, or otherwise, and whether due or to become due, that is not
reflected or reserved against in the Corporation's financial statements as set
forth in Section 2.5 and/or 2.6 of the Disclosure Schedule.
2.9 Section 2.9 of the Disclosure Schedule is a complete and accurate list
of all real property owned by or leased to the Corporation, together with an
accurate brief description of each property. Section 2.9 of the Disclosure
Schedule also sets forth brief descriptions of all buildings and other major
improvements located on these properties.
2.10 To the actual knowledge of Crane, Section 2.10 of the Disclosure
Schedule is a schedule of all trade names, trademarks, service marks, and
copyrights and their registrations, owned by the Corporation or in which it has
any rights or licenses, together with a brief description of each. To the actual
knowledge of Crane, there has been no infringement or alleged infringement by
others of any trade name, trademark, service ▇▇▇▇, or copyright owned by the
Corporation. To the actual knowledge of Crane, the Corporation has not
infringed, and is not now infringing, on any trade name, trademark, service
▇▇▇▇, or copyright belonging to any other person, firm, or corporation. To the
actual knowledge of Crane, except as set forth in Schedule 2.10 of the
Disclosure Schedule, the Corporation is not a party to any license, agreement,
or arrangement, whether as licensor, licensee, franchisor, franchisee, or
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otherwise, with respect to any trademarks, service marks, trade names, or
applications for them, or any copyrights.
2.11 Section 2.11 of the Disclosure Schedule is a description of all
insurance policies held by the Corporation concerning its businesses and
properties. The Corporation has maintained and now maintains (i) insurance on
all of its assets and businesses of a type customarily insured, covering
property damage and loss of income by fire or other casualty, and, to the actual
knowledge of Crane (ii) adequate insurance protection against all liabilities,
claims, and risks against which it is customary to insure. To the actual
knowledge of Crane, the Corporation is not in default with respect to payment of
premiums on any such policy. A brief description of all pending claims, if any,
is also set forth in said Section 2.11.
2.12 To the actual knowledge of Crane, the Corporation has not received
notice of any violation of any applicable federal, state, or local statute, law,
or regulation (including, without limitation, any applicable building, zoning,
environmental protection, or other law, ordinance, or regulation) affecting its
properties or the operation of its business; and to the actual knowledge of
Crane, there are no such violations.
2.13 To the actual knowledge of Crane, except as set forth in Section 2.13
of the Disclosure Schedule, there is not pending, or, to the best actual
knowledge of the Shareholders and the Corporation, threatened, any suit, action,
arbitration, or legal, administrative, or other proceeding, or governmental
investigation against or affecting the Corporation or any of its businesses,
assets or financial condition.
2.14 All necessary corporate proceedings of NetPage have been taken to
authorize the execution, delivery and performance by NetPage of this agreement.
This agreement has been duly and validly authorized, executed and delivered by
the NetPage Parties and is a valid and binding obligation of the NetPage
Parties, enforceable against them in accordance with their respective terms. The
consummation of the transactions contemplated by this agreement will not result
in or constitute any of the following: (i) a breach of any term or provision of
this agreement; (ii) a default or an event that, with notice or lapse of time or
both, would be a default, breach, or violation of the Articles of Incorporation
or the Bylaws of the Corporation or any material lease, license, promissory
note, conditional sales contract, commitment, indenture, mortgage, deed of
trust, or other material agreement, instrument, or arrangement to which the
Corporation is a party or by which its property and/or other assets may be
bound; or (iii) an event that would permit any party to terminate any agreement
material to the business of the Corporation.
2.15 The NetPage Parties have the right, power, legal capacity, and
authority to enter into, and perform their respective obligations under this
agreement, including, but not limited to, the issuance of the New NetPage
Shares; and no approvals or consents of any persons other than the NetPage
Parties are necessary in connection with it, other than the consent of Secretary
of State of the State of Illinois to the authorization of the New NetPage
Shares. The execution and delivery of this agreement and the issuance of the New
NetPage Shares by the Corporation has been duly authorized by all necessary
corporate action.
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2.16 The Corporation has furnished to Buyer, if so requested by Buyer for
its examination, (i) copies of the Articles of Incorporation and Bylaws of the
Corporation; (ii) the minute book of the Corporation, containing all records
required to be set forth of all proceedings, consents, actions, and meetings of
the shareholders and boards of directors of the Corporation; (iii) all permits,
orders, and consents issued by the Secretary of State of the State of Illinois
with respect to the Corporation's capital stock; and (4) the stock transfer book
of the Corporation setting forth all stock transfers.
2.17 When used herein, "to the actual knowledge" means the actual
knowledge of the individual without inquiry or investigation. None of the
representations and warranties made by the Shareholders or the Corporation, or
made in any certificate or memorandum furnished or to be furnished by any of
them or on their behalf, contains or will contain any untrue statement of a
material fact, or omits to state any material fact necessary to make the
statements made, in the light of the circumstances under which they were made,
not misleading.
2.18 Each of the Shareholders (i) is an "accredited investor" within the
meaning of the federal securities laws, (ii) acknowledges that he has no need
for liquidity in the investment evidenced by the Restricted Shares, (iii) has
been advised that the Restricted Shares are speculative securities subject to
high risk, (iv) understands fully that the Buyer has not granted the
Shareholders, or any of them, "registration rights" with respect to the
Restricted Shares, and accordingly, each of the Shareholders may have to bear
indefinitely the economic risk of owning Restricted Shares, and (v) is aware
that the shares of Common Stock of the Buyer trade on the Nasdaq Bulletin Board
but Buyer has informed the Shareholders that no assurance can be given that such
trading market will continue, and that if such trading market does continue, it
is likely that sales or the expectation of sales of substantial numbers of
shares of Common Stock in the public market, whether by the Shareholders or
other stockholders of Buyer, will adversely affect prevailing market prices for
Common Stock of the Buyer.
2.19 Each of the Shareholders acknowledges that certificates evidencing
the Restricted Shares will have a legend prominently affixed to each certificate
substantially in the following form:
"THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
THEY MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, SIGNED OR
TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION STATEMENT UNDER THE
ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE
SHARES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER
THE ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, OR OTHER COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY, THAT THE PROPOSED DISPOSITION IS CONSISTENT
WITH ALL APPLICABLE PROVISIONS OF THE ACT AS WELL AS ANY APPLICABLE
"BLUE SKY" OR SIMILAR STATE SECURITIES LAW."
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ARTICLE 3
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants that:
3.1 Buyer is a corporation duly organized, existing, and in good standing
under the laws of Delaware. The execution and delivery of this agreement and the
consummation of this transaction by Buyer have been duly authorized, and no
further corporate authorization is necessary on the part of Buyer.
3.2 The authorized capital stock of Buyer consists of 20,000,000 shares of
Common Stock, of which 10,675,000 shares are issued and outstanding as of April
25, 1997 (excluding the Restricted Shares). Buyer has the right, power, legal
capacity, and authority to enter into, and perform its obligations under this
agreement, including, but not limited to, the issuance of the Restricted Shares;
and no approvals or consents of any persons or entities other than Buyer are
necessary in connection with it, except that Buyer has not qualified the
issuance and delivery of the Restricted Shares with any state authority nor has
Buyer registered the Restricted Shares under the Securities Act of 1933 as
amended. The execution and delivery of this agreement and the issuance of the
Restricted Shares by Buyer has been duly authorized by all necessary corporate
action. The Restricted Shares upon delivery according to the terms of this
agreement are (i) duly authorized, validly issued, fully paid and nonassessable,
and (ii) when delivered in accordance with the terms of this agreement, are free
and clear of any and all liens, security interests, pledges, claims, charges,
voting trusts, shareholder agreements and encumbrances of any kind whatsoever
(except for state and federal securities laws of general applicability).
3.3 Section 3.3 of the Disclosure Schedule is a description of the
business of Buyer. The information set forth in said Section 3.3, as
supplemented by any additional information that Buyer's representatives may
furnish under this paragraph 3.3, will not contain any untrue statement of a
material fact, or omit any material fact necessary to make the statements made,
in the light of the circumstances under which they were made, not misleading.
3.4 No consent, approval, or authorization of, or declaration, filing, or
registration with, any United States federal or state governmental or regulatory
authority is required to be made or obtained by Buyer in connection with the
execution, delivery, and performance of this agreement and the consummation of
the transactions contemplated by this agreement. The NetPage Parties have been
informed that the issuance and delivery of the Restricted Shares have not been
qualified under the laws of any state, nor have the Restricted Shares been
registered under the Securities Act of 1933, as amended, as set forth in 3.2
above.
3.5 To the actual knowledge of Buyer and except as set forth in Section
3.5 of the Disclosure Schedule, since the date of any financial statements
provided to the NetPage Parties, there has not been any:
(a) Capital expenditure by the Buyer exceeding $10,000;
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(b) Material adverse change in the financial condition,
liabilities, assets, business, or prospects of the Buyer;
(c) Destruction, damage to, or loss of any asset of the Buyer
(whether or not covered by insurance) that materially and adversely affects the
financial condition, business, or prospects of the Buyer;
(d) Material change in accounting methods or practices (including,
without limitation, any material change in depreciation or amortization policies
or rates) by the Buyer;
(e) Revaluation by the Buyer of any of its assets;
(f) Declaration, setting aside, or payment of a dividend or other
distribution in respect to the capital stock of the Buyer, or any direct or
indirect redemption, purchase, or other acquisition by the Buyer of any of its
shares of Common Stock;
(g) Sale or transfer of any asset of the Buyer, except in the
ordinary course of business;
(h) Mortgage, pledge, or other encumbrance of any asset of Buyer;
(i) Waiver or release of any material right or claim of the Buyer,
except in the ordinary course of business;
(j) Commence or notice or threat of commencement of any civil
litigation or any governmental proceeding against or investigation of the Buyer
or its affairs;
(k) Labor trouble or claim of wrongful discharge or other unlawful
labor practice or action; and
(l) Agreement by Buyer to do any of the things described in the
preceding clauses (a) through (m); or
(m) Other event or condition of any character that has or might
have a material and adverse effect on the financial condition, business, assets,
liabilities, or prospects of the Buyer.
3.6 None of the representations and warranties made by Buyer, or made in
any certificate or memorandum furnished or to be furnished by any of it or on
its behalf, contains or will contain any untrue statement of a material fact, or
omits to state any material fact necessary to make the statements made, in the
light of the circumstances under which they were made, not misleading.
3.7 All necessary corporate proceedings of the Buyer have been taken to
authorize the execution, delivery and performance by the Buyer of this
agreement. This agreement has been duly and validly authorized, executed and
delivered by the Buyer and is a valid and binding obligation of the Buyer,
enforceable against it in accordance with its respective terms.
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The consummation of the transactions contemplated by this agreement will not
result in or constitute any of the following: (i) a breach of any term or
provision of this agreement; (ii) a default or an event that, with notice or
lapse of time or both, would be a default, breach, or violation of the
Certificate of Incorporation or the Bylaws of the Buyer or any material lease,
license, promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust or other material agreement, instrument, or arrangement
to which the Buyer is a party or by which its property and/or other assets may
be bound; or (iii) an event that would permit any party to terminate any
agreement material to the business of the Buyer.
ARTICLE 4
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
4.1 The obligations of Buyer to purchase the New NetPage Shares are
subject to the satisfaction, concurrent with or prior to the execution of this
agreement, of all the conditions set forth in this Article 4. Buyer may, at its
option, waive any or all of these conditions in whole or in part without prior
notice; provided, however, that no such waiver of a condition shall constitute a
waiver by Buyer of any of its other rights or remedies, at law or in equity, if
the Shareholders or the Corporation shall be in default of any of their
representations, warranties, or covenants under this agreement.
4.2 The execution and delivery of this agreement by the NetPage Parties,
and the performance of their covenants and obligations under it, shall have been
duly authorized by all necessary corporate action, and Buyer shall have received
copies of all resolutions pertaining to that authorization, certified
respectively by the secretary of the Corporation.
4.3 All necessary agreements and consents of any parties to the
consummation of the transactions contemplated by this agreement, or otherwise
pertaining to the matters covered by it, shall have been obtained by the NetPage
Parties and delivered to Buyer.
4.4 The form and substance of all certificates, instruments and other
documents delivered to Buyer under this agreement shall be satisfactory in all
reasonable respects to Buyer and its counsel.
4.5 Buyer shall have received from the firm of ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
P.C., counsel to the NetPage Parties, an opinion, in form and substance
substantially in the form of Exhibit B, hereof, and satisfactory to Buyer and
its counsel.
ARTICLE 5
CONDITIONS PRECEDENT TO NETPAGE PARTIES' PERFORMANCE
5.1 The obligations of the NetPage Parties to issue the New NetPage Shares
are subject to the satisfaction, concurrent with or prior to the execution of
this agreement, of all of the conditions set forth in this Article 5. The
Shareholders may, at their option and on behalf of the Corporation and
themselves, waive any or all of these conditions in whole or in part without
prior notice; provided, however, that no such waiver of a condition shall
constitute a waiver by either the Shareholders or the Corporation of any of
their rights or
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remedies, at law or in equity, if Buyer should be in default of any of its
representations, warranties, or covenants under this agreement.
5.2 The execution and delivery of this agreement by Buyer, and the
performance of their covenants and obligations under it, shall have been duly
authorized by all necessary corporate action, and the NetPage Parties shall have
received copies of all resolutions pertaining to that authorization, certified
respectively by the secretary of Buyer.
5.3 All necessary agreements and consents of any parties to the
consummation of the transactions contemplated by this agreement, or otherwise
pertaining to the matters covered by it, shall have been obtained by Buyer and
delivered to the NetPage Parties.
5.4 The form and substance of all certificates, instruments and other
documents delivered to the NetPage Parties under this agreement shall be
satisfactory in all reasonable respects to the NetPage Parties and its counsel.
5.5 Buyer shall have received from the firm of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, counsel to Buyer, an opinion, in form and substance substantially in
the form of Exhibit C, hereof, and satisfactory to the NetPage Parties and their
counsel.
ARTICLE 6
NETPAGE PARTIES' OBLIGATIONS AFTER CLOSING
6.1 The NetPage Parties jointly and severally shall indemnify, defend,
and hold harmless Buyer against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties, and reasonable attorneys' fees,
that they shall incur or suffer, which arise, result from, or relate to any
breach of, or failure by the NetPage Parties to perform, any of their
representations, warranties, covenants, or agreements in this agreement or in
any schedule, certificate, exhibit, or other instrument furnished or to be
furnished by the NetPage Parties under this agreement unless the Buyer as of the
date of this agreement, had actual knowledge of any misrepresentation, breach or
failure (with the burden of proving such actual knowledge upon the NetPage
Parties). Notwithstanding anything to the contrary contained herein, the
liability of the NetPage Parties pursuant to this Article 6 shall not commence
until Buyer or the Corporation has experienced losses (i) in excess of $5,000,
net of insurance recoveries and tax benefits allocable to such loss, and then
only to the extent such losses exceed $5,000, and (ii) exceed in the aggregate
of $5,000, net of insurance and tax benefits allocable to such loss provided
that the total amount of such indemnity shall not exceed $362,000 in the
aggregate.
6.2 Buyer shall promptly notify the NetPage Parties of the existence of
any claim, demand, or other matter to which the NetPage Parties' indemnification
obligations would apply and shall give them a reasonable opportunity to defend
the same at their own expense and with counsel of their own selection; provided
that Buyer shall at all times also have the right to fully participate in the
defense at its own expense. If the NetPage Parties shall, within a reasonable
time after this notice, fail to defend, Buyer shall have the right, but not the
obligation, to undertake the defense of, and to compromise or settle (exercising
reasonable
-11-
12
business judgment), the claim or other matter on behalf, for the account, and at
the risk, of the NetPage Parties.
6.3 (a) The NetPage Parties and each of them agree that they will not,
at any time within the three-year period commencing as of the date hereof,
directly or indirectly engage in, or have any interest in any person, firm,
corporation, or business (whether as an employee, officer, director, agent,
security holder, creditor, consultant, or otherwise) except that nothing set
forth herein shall prohibit any of the NetPage Parties from having an ownership
of publicly traded securities which amounts to less than three percent (3%) of
any such entity's issued and outstanding securities that engages in, any
activity in the United States, which activity is the same as, similar to, or
competitive with any activity now engaged in by the Corporation (or any
successor or successors of either) in any of these counties or cities so long as
Corporation, or any successor or assign of Corporation, shall engage in this
activity in such county or city.
(b) The parties intend that the covenant contained in the preceding
portion of this section shall be construed as a series of separate covenants,
one for each county and city specified. Except for geographic coverage, each
such separate covenant shall be deemed identical in terms to the covenant
contained in subparagraph (a), above. If, in any judicial proceeding, a court
shall refuse to enforce any of the separate covenants deemed included in this
paragraph, then this unenforceable covenant shall be deemed eliminated from
these provisions for the purpose of those proceedings to the extent necessary to
permit the remaining separate covenants to be enforced.
6.4 The Shareholders agree not to divulge, communicate, use to the
detriment of the Corporation or Buyer or for the benefit of any other person or
persons, or misuse in any way, any confidential information or trade secrets of
the Corporation, including personnel information, secret processes, know-how,
customer lists, recipes, formulas, or other technical data. The Shareholders
acknowledge and agree that any information or data it has acquired on any of
these matters or items was received in confidence and as a fiduciary of the
Corporation.
ARTICLE 7
BUYER'S OBLIGATIONS AFTER CLOSING
7.1 Buyer shall indemnify, defend, and hold harmless the NetPage Parties
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries, and deficiencies, including
interest, penalties, and reasonable attorneys' fees, that they shall incur or
suffer, which arise, result from, or relate to any breach of, or failure by
Buyer to perform, any of their representations, warranties, covenants, or
agreements in this agreement or in any schedule, certificate, exhibit, or other
instrument furnished or to be furnished by Buyer under this agreement unless the
NetPage Parties as of the date of this agreement, had actual knowledge of any
misrepresentation, breach or failure (with the burden of proving such actual
knowledge upon Buyer). Notwithstanding anything to the contrary contained
herein, the liability of the Buyer to the NetPage Parties pursuant to this
Article 7 shall not commence until the NetPage Parties have experienced losses
in excess
-12-
13
of $5,000, provided that the total amount of such indemnity of the Buyer to the
NetPage Parties shall not exceed $362,000 in the aggregate.
7.2 The NetPage Parties shall promptly notify Buyer of the existence of
any claim, demand, or other matter to which Buyer's indemnification obligations
would apply and shall give it a reasonable opportunity to defend the same at
their own expense and with counsel of its own selection; provided that the
NetPage Parties shall at all times also have the right to fully participate in
the defense at their own expense. If Buyer shall, within a reasonable time after
this notice, fail to defend, the NetPage Parties shall have the right, but not
the obligation, to undertake the defense of, and to compromise or settle
(exercising reasonable business judgment), the claim or other matter on behalf,
for the account, and at the risk, of Buyer.
ARTICLE 8
PUBLICITY
All notices to third parties and all other publicity concerning the
transactions contemplated by this agreement shall be jointly planned and
coordinated by and between Buyer and the NetPage Parties. No party shall act
unilaterally in this regard without the prior written approval of the others;
however, this approval shall not be unreasonably withheld.
ARTICLE 9
COSTS
9.1 Each party represents and warrants that it has dealt with no broker or
finder in connection with any transaction contemplated by this agreement, and,
as far as it knows, no broker or other person is entitled to any commission or
finder's fee in connection with any of these transactions. The NetPage Parties
and Buyer each agree to indemnify and hold harmless one another against any
loss, liability, damage, cost, claim, or expense incurred by reason of any
brokerage, commission, or finder's fee alleged to be payable because of any act,
omission, or statement of the indemnifying party.
9.2 Each party shall pay all costs and expenses incurred or to be incurred
by it in negotiating and preparing this agreement and in closing and carrying
out the transactions contemplated by this agreement.
ARTICLE 10
FORM OF AGREEMENT
10.1 The subject headings of the Articles of this agreement are included
for convenience only and shall not affect the construction or interpretation of
any of its provisions.
10.2 This agreement constitutes the entire agreement between the parties
pertaining to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations, and understandings of the parties.
No supplement, modification, or amendment of this agreement shall be binding
unless executed in writing by all the parties.
-13-
14
No waiver of any of the provisions of this agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar, nor shall
any waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
10.3 This agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
ARTICLE 11
PARTIES
11.1 Nothing in this agreement, whether express or implied, is intended
to confer any rights or remedies under or by reason of this agreement on any
persons other than the parties to it and their respective successors and
assigns, nor is anything in this agreement intended to relieve or discharge the
obligation or liability of any third persons to any party to this agreement, nor
shall any provision give any third persons any right of subrogation or action
over against any party to this agreement.
11.2 This agreement shall be binding on, and shall inure to the benefit
of I the parties to it and their respective heirs, legal representatives,
successors, and assigns; provided, however, that Buyer may not assign any of its
rights under this agreement, except to a wholly owned subsidiary corporation of
Buyer. No such assignment by Buyer to its wholly owned subsidiary shall relieve
Buyer of any of its obligations or duties under this agreement.
ARTICLE 12
REMEDIES
12.1 Any controversy or claim arising out of, or relating to, this
agreement, or the making, performance, or interpretation of it, shall be settled
by arbitration in Orange County, California under the commercial arbitration
rules of the American Arbitration Association then existing, and judgment on the
arbitration award may be entered in any court having jurisdiction over the
subject matter of the controversy. Arbitrators shall be persons experienced in
negotiating, making, and consummating stock acquisition agreements.
12.2 Each party's obligation under this agreement is unique. If any
party should default in its obligations under this agreement, the parties each
acknowledge that it would be extremely impracticable to measure the resulting
damages; accordingly, the nondefaulting party or parties, in addition to any
other available rights or remedies, may ▇▇▇ in equity for specific performance,
and the parties each expressly waive the defense that a remedy in damages will
be adequate. Notwithstanding any breach or default by any of the parties of any
of their respective representations, warranties, covenants, or agreements under
this agreement, since the purchase and sale contemplated hereunder are, for the
most part, being consummated concurrent with the execution and delivery of this
agreement, each of the parties waives any rights that it or they may have to
rescind this agreement or the transactions being consummated by it; provided,
however, that this waiver shall not affect any other rights or remedies
available to the parties under this agreement or under the law.
-14-
15
12.3 If any legal action or any arbitration or other proceeding is brought
for the enforcement of this agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
ARTICLE 13
NATURE AND SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS
No representations or warranties whatever are made by any party, except as
specifically set forth in this agreement, or in an instrument, certificate or
other writing provided for in this agreement. All statements contained in any of
these instruments, certificates or other writings shall be deemed to be
representations and warranties under this agreement. The representations,
warranties, and indemnities made by the parties in this agreement or in
instruments, certificates or other writings provided shall be deemed to be
continuing and surviving from and after date hereof for a period of 365 days
(the "Survival Period"), unless a specific claim in writing with respect to
these matters shall have been made, or an action at law or in equity shall have
been commenced or filed, before the expiration of the Survival Period. Nothing
in this Article 1 3 shall affect the obligations and indemnities of the parties
with respect to covenants and agreements contained in this agreement that are
permitted to be performed, in whole or in part, after the date hereof.
ARTICLE 14
NOTICES
All notices, requests, demands, and other communications under this
agreement shall be in writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom notice is to be given,
or on the second day after mailing if mailed to the party to whom notice is to
be given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
To the Corporation at: NetPage Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
22nd Floor, IBM Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
To the Shareholders at: The addresses set forth below.
-15-
16
To Buyer at: NET/GUARD Technologies, Inc.
Attn: E. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
President ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Any party may change its address for purposes of this Article 14 by giving the
other parties written notice of the new address in the manner set forth above.
ARTICLE 15
GOVERNING LAW
This agreement shall be construed in accordance with, and governed by, the
laws of the State of California as applied to contracts that are executed and
performed entirely in California.
ARTICLE 16
SEVERABILITY
If any provision of this agreement is held invalid or unenforceable by
any court of final jurisdiction, it is the intent of the parties that all other
provisions of this agreement be construed to remain fully valid, enforceable,
and binding on the parties.
ARTICLE 17
SIGNATURES
IN WITNESS WHEREOF, the parties to this agreement have duly executed it on
the day and year first above written.
BUYER: NET/GUARD TECHNOLOGIES, INC.,
a Delaware corporation
By
-------------------------------------
E. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President,
Chief Executive Officer and Chief
Financial Officer
-16-
17
CORPORATION: NETPAGE COMMUNICATIONS, INC.,
an Illinois corporation
By
-------------------------------------
[signature; typed name below]
President or Chief Executive
Officer
By
-------------------------------------
[signature; typed name below]
Secretary or Chief Financial
Officer
Number of Net/Guard
Number of NetPage Restricted Shares
SHAREHOLDERS: Shares Owned to be Received
------------ --------------
------------------------------------ 7,500,000 40,600
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 7,500,000 40,600
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
19 Presidio
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 2,000,000 10,827
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 5,000,000 27,067
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-17-
18
Number of Net/Guard
Number of NetPage Restricted Shares
SHAREHOLDERS: Shares Owned to be Received
------------ --------------
------------------------------------ 500,000 2,707
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 500,000 2,707
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 2,500,000 13,533
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 312,500 1,692
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 500,000 2,707
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 1,030,000 5,576
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇. ▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 312,500 1,692
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-18-
19
Number of Net/Guard
Number of NetPage Restricted Shares
SHAREHOLDERS: Shares Owned to be Received
------------ --------------
------------------------------------ 312,500 1,692
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 312,500 1,692
Aunrie Dash
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
------------------------------------ 500,000 2,707
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 1,000,000 5,413
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 2,500,000 13,533
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 500,000 2,707
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 2,500,000 13,533
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-19-
20
Number of Net/Guard
Number of NetPage Restricted Shares
SHAREHOLDERS: Shares Owned to be Received
------------ --------------
------------------------------------ 500,000 2,707
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 1,000,000 5,413
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 100,000 541
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ 66,000 357
Bas ▇▇▇▇▇▇
c/o NetPage Communications
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
TOTAL: 36,946,000 200,003
-20-
21
State of Delaware
Office of the Secretary of State
I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "ROLLO ENTERTAINMENT INC.", CHANGING ITS NAME FROM "ROLLO ENTERTAINMENT INC."
TO "NET/GUARD TECHNOLOGIES, INC.", FILED IN THIS OFFICE ON THE EIGHTEENTH DAY OF
NOVEMBER, A.D. 1996, AT 9:05 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
[SEAL] --------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary of State
AUTHENTICATION: 8199469
DATE: 11-19-96
