EX-2.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of September 24, 2003, among those persons
whose names are listed on Exhibit A hereto and who have executed a
signature page to this Agreement (the "Sellers") and FreeStar
Technology Corporation, a Nevada corporation with principal executive
offices at Calle Fantino Falco, ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("FreeStar").
RECITALS
A. Each of the Sellers owns the number of shares of common
stock, par value $.0001 per share (the "TA Common Stock"), of
TransAxis, Inc. (formerly Digital Courier Technologies, Inc.), a
Delaware corporation with principal offices at 348 East ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ("TA"), set forth opposite his
name on Exhibit A hereto (such shares being referred to herein as the
"Shares"); and
B. ▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") is one of the Sellers who is a
party to that certain Settlement and Release Agreement among
▇▇▇▇▇▇▇▇, Nautilus Management, Ltd. ("Nautilus"), and TA dated as of
October 16, 2001 (the "Settlement Agreement"), and Amendment No. 1 to
Settlement and Release Agreement by and among TA, ▇▇▇▇▇▇▇▇ and
Nautilus dated as of March 18, 2002 ("Amendment No. 1"). Under the
Settlement Agreement, as amended by Amendment No. 1, TA agreed to pay
Marshall a cash payment of $800,000 (the "Cash Payment") which amount
plus any accrued and unpaid interest thereon became convertible into
shares of TA Common Stock at any time after an Event of Default (as
defined under Amendment No. 1) at the lesser of (i) $0.07 per share
or (ii) the average closing bid price of TA Common Stock for the 20
trading days immediately preceding the date of conversion. In July
2002, ▇▇▇▇▇▇▇▇ notified TA that an Event of Default had occurred
under Amendment No. 1, which Event of Default has continued to the
date hereof. As of the date hereof, the amount payable to ▇▇▇▇▇▇▇▇
under Amendment No. 1 is $349,983.96 ($290,525.69 of principal and
$59,458.27 of accrued interest), which is convertible into 2,916,533
shares of TA Common Stock (collectively, ▇▇▇▇▇▇▇▇'▇ rights in and to
the remaining principal balance of the Cash Payment and any accrued
and unpaid interest thereon, and the right to convert such amounts
into shares of TA Common Stock as set forth in Amendment No. 1 is
referred to herein as the "Conversion Right").
C. Each of the Sellers desires to sell to FreeStar, and
FreeStar desires to purchase from each of the Sellers, for the
consideration hereinafter described, the Shares.
▇. ▇▇▇▇▇▇▇▇ desires to sell to FreeStar, and FreeStar desires
to purchase from ▇▇▇▇▇▇▇▇ the Conversion Right in accordance with the
terms of this Agreement.
THEREFORE, for and in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES AND CONVERSION RIGHT
1.01 Agreement to Purchase and Sell Shares. Subject to and in
accordance with the terms and conditions of this Agreement, on the
Closing Date (as hereinafter defined) each of the Sellers shall sell
to FreeStar, and FreeStar shall purchase from each of the Sellers,
for the consideration hereinafter described, the number of Shares set
forth opposite such Seller's name on Exhibit A hereto, together with
all shares, securities, certificates, or property representing a
dividend, a distribution or return of capital upon or in respect of
such Shares or any part thereof, or resulting from a split-up,
revision, combination, reclassification, recapitalization, or other
like change of such Shares, or otherwise received in exchange
therefor, and any warrants, rights, or options issued to the holders,
or otherwise in respect, of such Shares, in each case declared or
payable after the date hereof.
1.02 Agreement to Purchase and Sell Conversion Right. Subject
to and in accordance with the terms and conditions of this Agreement,
on the Closing Date, ▇▇▇▇▇▇▇▇ shall sell, assign and transfer to
FreeStar, and FreeStar shall purchase and receive from ▇▇▇▇▇▇▇▇ an
assignment of the Conversion Right.
1.03 The Closing; Effectiveness.
(a) The closing of the purchase and sale of the Shares and
the assignment of the Conversion Right (the "Closing") shall take
place at the New York City offices of FreeStar's counsel, ▇▇▇▇▇▇▇▇▇
Traurig, LLP, MetLife Building, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on or prior to five (5) business days following
satisfaction of the condition set forth in Section 4.01(e) (the time
and date of the Closing being herein referred to as the "Closing
Date"); provided, however, that if the Closing shall not have
occurred on or prior to December 31, 2003, FreeStar or the Seller
Representative (as defined below), as the case may be, may terminate
this Agreement on notice to the Seller Representative or FreeStar, as
the case may be. As used herein, "Business Day" shall mean any day
other than Saturday, Sunday, or any other day when banks in New York
City are required or permitted by law or other governmental actions
to be closed.
(b) Notwithstanding anything to the contrary contained in
this Agreement, this Agreement shall be of no force or effect unless
the Shares identified on Exhibit A, and the shares of TA Common Stock
issuable in respect of the Conversion Right shall aggregate to at
least 70 percent of the issued and outstanding shares of TA Common
Stock issued or that would be issued upon a conversion of the
Conversion Right, and such Sellers and ▇▇▇▇▇▇▇▇ have executed this
Agreement as Sellers, at which time this Agreement shall be binding
on the parties.
1.04 Deliveries by the Sellers. At the Closing, each of the
Sellers shall deliver to FreeStar:
(a) certificates representing the Shares to be sold by
such Seller hereunder, duly endorsed in blank or with appropriate
stock powers executed in blank, in proper form for transfer and in
form satisfactory to counsel for FreeStar;
(b) an executed counterpart signature page to the
Registration Rights Agreement, dated as of the date hereof (the
"Registration Rights Agreement"), in the form attached hereto as
Exhibit B; and
(c) ▇▇▇▇▇▇▇▇ shall deliver the Assignment and Transfer of
Conversion Right in the form attached hereto as Exhibit C.
1.05 Deliveries by FreeStar. Based upon FreeStar's
understanding that there will be on the Closing Date approximately
805,000 shares of TA Common Stock issued and outstanding, and the
Conversion Right will represent the right to receive a total of
2,916,533 additional shares of TA Common Stock) FreeStar shall
deliver or cause to be delivered to each of the Sellers, for the
Shares (or in the case of the Conversion Right, the right to receive
shares of TA Common Stock upon conversion of the Conversion Right) to
be sold by such Seller hereunder:
(a) at the Closing, a certificate registered in the name
of such Seller representing the number of shares of common stock, par
value $.001 per share (the "FreeStar Common Stock"), of FreeStar as
determined in accordance with Section 1.07; and
(b) an executed counterpart signature page to the
Registration Rights Agreement.
1.06 No Fractional Shares. Neither certificates nor scrip for
fractional shares of FreeStar Common Stock will be issued in
connection with the transaction contemplated hereby.
1.07 Calculation of FreeStar Common Stock Consideration.
(a) The aggregate number of shares of FreeStar Common
Stock to be issued to the Sellers, on a pro rata basis based on the
Sellers' current percentage beneficial ownership of TA Common Stock
(including the beneficial ownership of TA Common Stock represented by
the Conversion Right), shall be the greater of (i) 7,000,000 shares
of FreeStar Common Stock, and (ii) that number of shares of FreeStar
Common Stock equal to $1,260,000 divided by the average closing bid
price per share of FreeStar Common Stock on the five (5) days prior
to the Closing Date.
(b) Notwithstanding the calculation set forth in
subsection (a) above, in no event shall the aggregate number of
shares of FreeStar Common Stock issuable pursuant to this Agreement
equal or exceed 20% of FreeStar's outstanding shares of FreeStar
Common Stock so as to require the vote of the shareholders of
FreeStar to approve such issuance under applicable or proposed
Securities and Exchange Commission or Nasdaq rules or regulations.
In the event that the number of shares of FreeStar Common Stock
otherwise issuable under subsection (a) above is limited by this
subsection (b), FreeStar will pay to the Sellers, pro rata, cash
equal to the number of shares not issued as a consequence of this
subsection (b) multiplied by the average closing bid price per share
of FreeStar Common Stock on the five (5) days prior to the Closing Date.
(c) FreeStar and the Seller Representative (as defined
below) will, to the extent reasonably possible and consistent with
the economic and business terms of this Agreement, endeavor to
structure the terms of the consideration to be paid to the Sellers
such that no federal income taxes will be presently due by the
Sellers relating to such consideration and will otherwise endeavor to
structure this transaction in the most tax-efficient manner for all parties.
1.08 Seller Representative. TA, ▇▇▇▇▇▇▇▇ and each Seller hereby
irrevocably constitute and appoint ▇▇▇ ▇▇▇▇▇▇▇▇, with full power of
substitution and re-substitution, as its and their true and lawful
agent, attorney-in-fact and representative (such person and his
appointed and designated successor or successors being herein
referred to as the "Seller Representative"), with full power to act
for and on behalf of TA and the Sellers, and each of them, for all
purposes under this Agreement and in connection with the transactions
contemplated hereby including, without limitation, for purposes of:
(i) determining the amount of any Damages (as such term is
hereinafter defined) suffered or incurred by FreeStar and the number
of shares of FreeStar Common Stock to be delivered for cancellation
in satisfaction of the Sellers' indemnification obligations, (ii)
determining the amount of Seller Damages (as that term is hereinafter
defined) suffered or incurred by the Sellers, (iii) receiving notices
from FreeStar given under this Agreement, of which the Seller
Representative will give a copy to the other Sellers, (iv) approving
and agreeing with FreeStar as to additions, deletions, changes,
modifications and amendments to this Agreement and the Annexes
hereto, except with respect to any addition, deletion, change,
modification or amendment to a material financial term or condition
of any of such documents that would materially, financially and
adversely affect the Sellers, and (v) settling finally and completely
any disputes or controversies among the parties hereto (other than
solely among the Sellers) with respect to the interpretation or
effect of or damages or relief under this Agreement and any and all
transactions contemplated hereby. The Seller Representative shall be
entitled to reimbursement by the Sellers from the consideration
actually payable to the Sellers or otherwise for all reasonable costs
and expenses incurred by him in fulfilling his duties hereunder, and
the Sellers agree among themselves that such costs and expenses shall
be borne pro rata among them according to the number of shares of TA
Common Stock owned immediately prior to the Closing. The Sellers
agree that the Seller Representative may make reasonable requests for
advances to cover such costs and expenses, and the Sellers will
promptly make such advances. In no event will FreeStar be liable for
any costs or expenses of any nature incurred by the Seller
Representative in its capacity as such. TA AND EACH SELLER, JOINTLY
AND SEVERALLY, AGREE THAT THE SELLER REPRESENTATIVE SHALL HAVE NO
LIABILITY TO THE SELLERS FOR ACTION TAKEN OR OMITTED IN GOOD FAITH IN
EXERCISING THE AUTHORITY GRANTED UNDER THIS SECTION 1.07. FreeStar
shall not have any obligation or liability to indemnify or defend the
Seller Representative in respect of any claim or liability asserted
against the Seller Representative by any Seller or its successors or
assigns. All determinations, decisions, actions and the like made by
the Seller Representative shall be final, conclusive and binding upon
all Sellers and all persons claiming under or through them.
ARTICLE II
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF THE SELLERS
Each of the Sellers, jointly and severally, represents and
warrants to, and agrees with, FreeStar as follows, except to the
extent set forth in the Disclosure Letter of even date herewith and
separately provided to FreeStar (the "Disclosure Letter"):
2.01 Validity of Transaction. Such Seller owns the number of
shares of TA Common Stock set forth opposite his name on Exhibit ▇.
▇▇▇▇▇▇▇▇ owns the Conversion Right, and the Conversion Right as
defined herein represents all rights owned by him in an individual
capacity to the capital stock of TA. Such Seller has all requisite
power and authority to execute, deliver, and perform this Agreement
and to sell to FreeStar the shares of TA Common Stock (or the
Conversion Right) to be sold by such Seller pursuant hereto. All
necessary corporate proceedings or other similar actions by such
Seller have been duly taken to authorize the execution, delivery, and
performance of this Agreement and to authorize the sale of the shares
of TA Common Stock to FreeStar by such Seller. This Agreement has
been duly authorized, executed, and delivered by such Seller, is the
legal, valid, and binding obligation of such Seller, and is
enforceable as to such Seller in accordance with its terms except as
may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting creditors' rights generally, and subject to general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law). No consent, authorization,
approval, order, license, certificate, or permit of or from, or
declaration or filing with, any Federal, state, local, or other
governmental authority or of any court or other tribunal is required
by such Seller for the execution, delivery, or performance of this
Agreement by such Seller, except for filings under Sections 13(d) and
16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and except as would not affect the ability of the Seller to
perform any of its material obligations under this Agreement. No
consent of any party to any contract, agreement, instrument, lease,
license, arrangement, or understanding to which such Seller is a
party, or by which any of its properties or assets is bound, is
required for the execution, delivery, or performance by such Seller
of this Agreement, except for such consents as have been obtained at
or prior to the date of this Agreement, and except as would not
affect the ability of the Seller to perform any of its material
obligations under this Agreement. The execution, delivery, and
performance of this Agreement by such Seller will not violate, result
in a breach of, conflict with, or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate
or call a default under, any such contract, agreement, instrument,
lease, license, arrangement, or understanding, or violate or result
in a breach of any term of the certificate or articles of
incorporation or by-laws (or other organizational document) of such
Seller, or violate, result in a breach of, or conflict with any law,
rule, regulation, order, judgment, or decree binding on such Seller
or to which any of its operations, business, properties, or assets is
subject, except as would not affect the ability of the Seller to
perform any of its material obligations under this Agreement. Except
as set forth in the Disclosure Letter, the Shares sold by such Seller
have been duly authorized and validly issued and are fully paid and
nonassessable and have not have been issued in violation of any
preemptive right of stockholders or rights of first refusal. Upon
the transfer of the Shares and the Conversion Right, as the case may
be, sold by such Seller to FreeStar at the Closing, FreeStar will
acquire good and valid title to such Shares and the Conversion Right
free and clear of all claims, liens, security interests, pledges,
charges, encumbrances, stockholders' agreements, and voting trusts
(other than any created for and in favor of FreeStar). The exercise
of the Conversion Right by FreeStar following the Closing will not
violate, result in a breach of, conflict with, or (with or without
the giving of notice or the passage of time or both) entitle any
party to terminate or call a default under, any contract, agreement,
instrument, lease, license, arrangement, or understanding, or violate
or result in a breach of any term of the certificate or articles of
incorporation or by-laws (or other organizational document) of TA, or
violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on TA or to which any
of its operations, business, properties, or assets is subject.
2.02 Finder or Broker. Neither such Seller nor any person
acting on behalf of such Seller has negotiated with any finder,
broker, intermediary, or similar person in connection with the
transaction contemplated hereby.
2.03 Accredited Investor. Such Seller is an "accredited
investor," as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). Such Seller has received all requested documents
from FreeStar, including without limitation, the Confidential
Offering Memorandum, dated the date hereof, relating to the FreeStar
Common Stock (the "Offering Memorandum") and has had an opportunity
to ask questions of and receive answers from the officers of FreeStar
with respect to the business, results of operations, financial
condition, and prospects of FreeStar.
2.04 Investment Intent. Such Seller is acquiring the shares of
FreeStar Common Stock pursuant hereto for its own account for
investment and not with a view to, or for sale in connection with,
any public distribution thereof in violation of the Securities Act,
it being understood that such Seller has the right to sell such
shares in its sole discretion in accordance with the terms of the
Registration Rights Agreement, and that by this Section 2.04, no
Seller is required to hold any shares of FreeStar Common Stock for
any period of time, subject to the requirements of applicable law.
Such Seller understands that such shares of FreeStar Common Stock, as
of Closing, have not been registered for sale under the Securities
Act or qualified under applicable state securities laws and that the
FreeStar Common Stock will be delivered to such Seller pursuant to
one or more exemptions from the registration or qualification
requirements of such securities laws and that the representations and
warranties contained in this Article II are given with the intention
that FreeStar may rely thereon for purposes of claiming such
exemptions. Such Seller understands that the FreeStar Common Stock
cannot be sold unless registered under the Securities Act and
qualified under state securities laws, or unless an exemption from
such registration and qualification is available.
2.05 Full Disclosure. All documents filed by TA pursuant to the
Exchange Act since June 30, 2002 (the "TA Exchange Act Documents"),
(i) were prepared in accordance with the requirements of the Exchange
Act and the rules and regulations thereunder, (ii) did not at the
time they were filed contain any untrue statement of a material fact,
and (iii) did not at the time they were filed omit to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. From
the date as of which information is given in the most recent report
filed by TA under the Exchange Act to the date of this Agreement,
except as contemplated or described in such report, and except as set
forth in the Disclosure Letter, there has not been any material
adverse change in, or any adverse development which materially
affects, the business, results of operations or financial condition
of TA and its subsidiaries taken as a whole.
2.06 Transfer of Shares. Such Seller will not sell or otherwise
dispose of any FreeStar Common Stock unless (a) a registration
statement with respect thereto has become effective under the
Securities Act and such shares have been qualified under applicable
state securities laws or (b) such registration and qualification are
not required and, if FreeStar so requests, there is presented to
FreeStar a legal opinion reasonably satisfactory to FreeStar to such
effect. Such Seller consents that the transfer agent for the
FreeStar Common Stock may be instructed not to transfer any FreeStar
Common Stock acquired pursuant hereto unless it receives satisfactory
evidence of compliance with the foregoing provisions, and that there
may be endorsed upon any certificate representing the FreeStar Common
Stock acquired pursuant hereto (and any certificates issued in
substitution therefor) the following legend calling attention' to the
foregoing restrictions on transferability and stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR QUALIFICATION UNDER THE BLUE SKY LAWS OF
ANY JURISDICTION. SUCH SECURITIES MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED OR OTHERWISE DISPOSED OF, BENEFICIALLY OR ON THE RECORDS
OF THE CORPORATION, UNLESS THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT AND
QUALIFIED UNDER APPLICABLE BLUE SKY LAWS, OR AN EXEMPTION FROM SUCH
REGISTRATION AND QUALIFICATION IS AVAILABLE."
FreeStar shall, upon the request of any holder of a certificate
bearing the foregoing legend and the surrender of such certificate,
issue a new certificate without such legend if (i) the security
evidenced by such certificate has been effectively registered under
the Securities Act and qualified under any applicable state
securities law and sold by the holder thereof in accordance with such
registration and qualification or (ii) such holder shall have
delivered to FreeStar a legal opinion reasonably satisfactory to
FreeStar to the effect that the restrictions set forth herein are no
longer required or necessary under the Securities Act or any
applicable state law.
2.07 TA's Corporate Existence. Except as set forth in the
Disclosure Letter, TA is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware
and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on
its business as now conducted. TA is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions
where failure to be so qualified would not, individually or in the
aggregate, be material to the business of TA. TA is not in violation
of any of the provisions of its Certificate of Incorporation or By-laws.
2.08 Capitalization.
(a) The authorized capital stock of TA consists of
77,500,000 shares, consisting of 75,000,000 shares of TA Common Stock
and 2,500,000 shares of preferred stock, of which 360 shares are
designated Series D Convertible Preferred Stock. There are
outstanding 805,000 shares of TA Common Stock and 324 shares of
Series D Convertible Preferred Stock, which are convertible into a
total of 108,000 shares of TA Common Stock. As of the Closing Date,
there are outstanding options to purchase a total of 105,177 shares
of TA Common Stock and warrants to purchase a total of 29,800 shares
of TA Common Stock. The Conversion Right is convertible, as of the
date of this Agreement, into 2,916,533 shares of TA Common Stock.
(b) To the knowledge of Sellers, (i) all outstanding
shares of capital stock of TA have been duly authorized and validly
issued and are fully paid and non-assessable and are not subject to
preemptive rights created under Delaware law, the Certificate of
Incorporation or By-laws of TA or any agreement or document to which
TA is a party or by which it or its assets are bound, (ii) all
outstanding shares of capital stock of TA have been issued and
granted in compliance with all applicable securities law and other
legal requirements and all requirements set forth in applicable
agreements or instruments, and (iii) none of the outstanding TA
Securities (as defined below) is unvested or is subject to a
repurchase option, risk of forfeiture or other condition providing
that such TA Securities may be forfeited or repurchased by TA or
otherwise vest upon termination of stockholder's or grantee's
employment, directorship or other relationship with TA or a TA
Subsidiary (as defined below) under the terms of any restricted stock
agreement or other agreement with TA. No TA debt has voting rights.
As used herein, "TA Subsidiary" shall mean any entity of which
securities or other ownership interests having ordinary voting power
to elect a majority of the board or directors or other persons
performing similar functions are at the time directly or indirectly
owned by TA.
(c) Except as set forth in this Section 2.08 or in the
Disclosure Letter, there are no outstanding (i) shares of capital
stock or voting securities of TA, (ii) securities of TA convertible
into or exchangeable for shares of capital stock or voting securities
of TA or (iii) options or other rights to acquire from TA, or other
obligation of TA to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or
voting securities of TA (the items in clauses (i), (ii) and (iii) of
this Section 2.08(c) being referred to collectively as the "TA
Securities"). Except as set forth in the Disclosure Letter, there
are no registration rights and there is no voting trust, proxy,
rights plan, anti-takeover plan or other agreement or understanding
to which TA or any of TA's Subsidiaries is a party or by which it is
bound with respect to any TA Securities. There are no outstanding
obligations of TA or any TA Subsidiary to repurchase, redeem or
otherwise acquire any TA Securities.
2.09 TA's Subsidiaries.
(a) Except as disclosed in the Disclosure Letter, each TA
Subsidiary is a corporation duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation,
has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on
its business as now conducted, is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except where any failure to do
so would not individually or in the aggregate have a material adverse
effect on TA or its business. All of TA's Subsidiaries and their
respective jurisdictions of incorporation are identified in the
Disclosure Letter.
(b) Except as disclosed in the Disclosure Letter, all of
the outstanding capital stock or other voting securities of each TA
Subsidiary is owned by TA, directly or indirectly, free and clear of
any lien, mortgage, pledge, charge, security interest, encumbrance or
other adverse claim of any kind and free of any other limitation or
restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other voting securities).
There are no outstanding (i) securities of TA or any TA Subsidiary
convertible into or exchangeable for shares of capital stock or
voting securities of any TA Subsidiary or (ii) options or other
rights to acquire from TA or any TA Subsidiary, or other obligation
of TA or any TA Subsidiary to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital
stock or voting securities of any TA Subsidiary (the items in clauses
(i) and (ii) of this Section 2.09(b) being referred to together as
the "TA Subsidiary Securities"). There are no registration rights
and there is no voting trust, proxy, rights plan, anti-takeover plan
or other agreement or understanding to which any TA Subsidiary is a
party or by which it is bound with respect to any TA Subsidiary
Securities. There are no outstanding obligations of TA or any TA
Subsidiary to repurchase, redeem or otherwise acquire any outstanding
TA Subsidiary Securities.
2.10 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of
TA included in the TA Exchange Act Documents (collectively, the
"Financial Statements") (a) were prepared in accordance with and
accurately reflect in all material respects, TA's books and records
as of the times and for the periods referred to therein, (b) complied
in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto
in effect during the periods included and (c) fairly present in all
material respects, in conformity with United States generally
accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto
and except in the unaudited financial statements as may be permitted
by Form 10-Q), the consolidated financial position of TA and its
consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods
then ended (subject to normal year end adjustments in the case of any
unaudited interim financial statements which were not and are not
expected to be material to TA).
2.11 No Undisclosed Material Liabilities. Except as set forth
in the Disclosure Letter, there are no liabilities of TA or any TA
Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined or determinable, and no existing condition,
situation or set of circumstances which could reasonably result in
such a liability, other than:
(a) liabilities recorded in full or reserved for in the
unaudited financial statements included in the TA Exchange Act
Documents filed with respect to the fiscal period ended March 31,
2003 (the "TA Balance Sheet Date"); and
(b) liabilities incurred in the ordinary course of the
business of TA consistent with past practice since the TA Balance
Sheet Date, none of which has or may reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the
business, results of operations, or financial condition of TA and its
subsidiaries taken as a whole.
2.12 Litigation. Except as disclosed in the Disclosure Letter,
there is no action, suit, investigation or proceeding (or to
Sellers's knowledge any basis therefor) pending against, or to the
knowledge of such Seller, threatened against or affecting, such
Seller, TA or any TA Subsidiary or any of their respective properties
before any court or arbitrator or any governmental body, agency or
official which, individually or in the aggregate, if determined or
resolved adversely in accordance with the plaintiff's demands, could
reasonably be expected to have a material adverse effect on the
business, results of operations, or financial condition of TA and its
subsidiaries taken as a whole or which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the transactions
contemplated by this Agreement.
2.13 Intellectual Property.
(a) The Disclosure Letter contains a list of all
Intellectual Property Rights (as defined below) owned or licensed and
used or held for use by TA or any TA Subsidiary, specifying as to
each, as applicable: (i) the nature of such Intellectual Property
Right, (ii) the owner of such Intellectual Property Right, (iii) the
jurisdictions by or in which such Intellectual Property Right (A) is
recognized (without regard to registration) or (B) has been issued or
registered or in which an application for such issuance or
registration has been filed, (iv) the registration or application
numbers and (v) the termination or expiration dates. As used herein,
"Intellectual Property Right" shall mean any trademark, service ▇▇▇▇,
trade name, mask work, invention, patent, trade secret, copyright,
know-how (including any registrations or applications for
registration of any of the foregoing) or any other similar type of
proprietary intellectual property right.
(b) The Disclosure Letter sets forth a list of all
licenses, sublicenses and other agreements as to which TA or any TA
Subsidiary is a party and pursuant to which any Person (as defined
below) is authorized to use any Intellectual Property Right of TA or
any TA Subsidiary, including (i) the identity of all parties thereto,
(ii) a description of the nature and subject matter thereof, (iii)
the applicable royalty and (iv) the term thereof. As used herein,
"Person" shall mean an individual, corporation, partnership, limited
liability company, association, trust or other entity or
organization, including a government or political subdivision or an
agency or instrumentality thereof.
(c) Since June 30, 2002, neither TA nor any TA Subsidiary
has been a defendant in any action, suit, investigation or proceeding
relating to, or otherwise has been notified of, any alleged claim of
infringement of any Intellectual Property Right, and such Seller has
no knowledge of any other such infringement by TA or any TA
Subsidiary and such Seller has no outstanding claim or suit for, and
has no knowledge of, any continuing infringement by any other Person
of any Intellectual Property Rights of TA or any TA Subsidiary. No
Intellectual Property Right of TA or any TA Subsidiary is subject to
any outstanding judgment, injunction, order, decree or agreement
restricting the use thereof by TA or any TA Subsidiary or restricting
the licensing thereof by TA or any TA Subsidiary to any Person.
Neither TA nor any TA Subsidiary has entered into any agreement to
indemnify any other Person against any charge of infringement of any
Intellectual Property Right.
(d) None of the processes and formulae, research and
development results and other know-how of TA or any TA Subsidiary,
the value of which to TA or such TA Subsidiary is contingent upon
maintenance of the confidentiality thereof, has been disclosed by TA
or any of its Affiliates (as defined below) to any Person other than
employees, representatives and agents of TA or any TA Subsidiary all
of whom are bound by written confidentiality agreements substantially
in the form previously disclosed to FreeStar. As used herein,
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common
control with such Person; provided that none of the Sellers, TA nor
any TA Subsidiary shall be considered an Affiliate of FreeStar.
2.14 Compliance with Laws and Court Orders.
(a) Except as disclosed in the Disclosure Letter, neither
TA nor any TA Subsidiary is in violation of, and has not since June
30, 2002 violated, and to the knowledge of such Seller is not under
investigation with respect to and has not been threatened to be
charged with or given notice of any violation of, any applicable law,
rule, regulation, judgment, injunction, order or decree, except for
violations that have not had and could not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on
the business, results of operations or financial condition of TA and
its subsidiaries taken as a whole.
(b) To the knowledge of Sellers, TA and each of its
officers and directors have complied in all material respects with
the applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the
related rules and regulations promulgated under such Act or the
Exchange Act ("▇▇▇▇▇▇▇▇-▇▇▇▇▇"). Since the enactment of ▇▇▇▇▇▇▇▇-
▇▇▇▇▇, neither TA nor any of its Affiliates has made any loans to any
executive officer or director of TA.
(c) o the knowledge of Sellers, except as disclosed in
the Disclosure Letter, each executive officer and director of TA has
complied with all applicable laws in connection with or relating to
actions within the scope of TA's business, except where the failure
to comply would not be material to TA. No executive officer or
director of TA is a party to or the subject of any pending or
threatened suit, action, proceeding or investigation by any
governmental entity that would have a material adverse effect on the
business, results of operations or financial condition of TA and its
subsidiaries taken as a whole, except as disclosed in TA Exchange Act
Documents.
2.15 Absence of Liens and Encumbrances; Title to Properties. TA
has good, valid and marketable title to all properties and assets
used in the conduct of its business free of all liens, mortgages,
pledges, charges, security interests, encumbrances or other adverse
claims of any kind except as described in the Disclosure Letter.
Without limiting the generality of the foregoing, TA has good and
marketable title to all of its properties and assets reflected in the
Financial Statements, except for property disposed of in the usual
and ordinary course of business since the TA Balance Sheet Date and
except as disclosed in the Disclosure Letter.
2.16 Material Contracts. Except as filed as exhibits to the TA
Exchange Act Documents prior to the date of this Agreement, or as set
forth in the Disclosure Letter, since June 30, 2002, neither TA nor
any TA Subsidiary is a party to or bound by any Contract (as defined
below) that (a) is a "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K promulgated by the SEC) or (b)
materially limits or otherwise materially restricts TA or any TA
Subsidiary or that would, after the Closing Date, materially limit or
otherwise materially restrict FreeStar or any of its subsidiaries or
any successor thereto, from engaging or competing in any material
line of business in any geographic area or that contains most favored
nation pricing provisions or exclusivity or non-solicitation
provisions with respect to customers. As used herein, "Contract"
shall mean any written or oral agreement, contract, commitment,
lease, license, contract, note, bond, mortgage, indenture,
arrangement or other instrument or obligation. Each Contract of the
type described in this Section 2.16, whether or not set forth in a
schedule to this Agreement, is referred to herein as a "TA Material
Contract." Except as disclosed in the Disclosure Letter, or in the
TA Exchange Act Documents, neither TA nor any TA Subsidiary is in, or
has received notice of, any violation of or default under (or any
condition which with the passage of time or the giving of notice
would cause such a violation of or default under) any TA Material
Contract or any other Contract to which it is a party or by which it
or any of its properties or assets is bound, except for violations or
defaults that would not have a material adverse effect on the
business, results of operations or financial condition of TA and its
subsidiaries taken as a whole or, after giving effect to the Closing,
FreeStar or any of its subsidiaries.
2.17 Interested Party Transactions. Except as disclosed in the
Disclosure Letter, no officer, director or stockholder of TA or any
Affiliate or "associate" (as such term is defined in Rule 405 under
the Securities Act) of any such Person or TA has or has had, either
directly or indirectly, (a) an interest in any Person that (i)
furnishes or sells services or products that are furnished or sold or
are proposed to be furnished or sold by TA or any TA Subsidiary or
(ii) purchases from or sells or furnishes to TA or any TA Subsidiary
any goods or services, or (b) a beneficial interest in any contract
or agreement to which TA or any TA Subsidiary is a party or by which
it may be bound or affected (other than routine compensation and
expense reimbursement programs in the ordinary course of business).
ARTICLE III
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF FREESTAR
FreeStar represents and warrants to, and agrees with, the
Sellers as follows:
3.01 Validity of Transaction. FreeStar has all requisite power
and authority to execute, deliver, and perform this Agreement and to
issue and sell to the Sellers the shares of FreeStar Common Stock.
All necessary corporate proceedings of FreeStar have been duly taken
to authorize the execution, delivery, and performance of this
Agreement, and the issuance and sale to the Sellers of the shares of
FreeStar Common Stock. This Agreement has been duly authorized,
executed, and delivered by FreeStar, is the legal, valid, and binding
obligation of FreeStar, and is enforceable as to FreeStar in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, moratorium, or other similar laws affecting creditors'
rights generally, and subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law). Subject to the compliance with and completion of
the registration requirements of the Securities Act as contemplated
in the Registration Rights Agreement, no consent, authorization,
approval, order, license, certificate, or permit of or from, or
declaration or filing with, any Federal, state, local, or other
governmental authority or of any court or other tribunal is required
by FreeStar for the execution, delivery, or performance of this
Agreement by FreeStar, except as would not affect the ability of they
Seller to perform any of its material obligations under this
Agreement. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which
FreeStar is a party, or by which any of its properties or assets is
bound, is required for the execution, delivery, or performance by
FreeStar of this Agreement, except for such consents as have been
obtained at or prior to the date of this Agreement, and except as
would not affect the ability of the Seller to perform any of its
material obligations under this Agreement. The execution, delivery,
and performance of this Agreement by FreeStar will not violate,
result in a breach of, conflict with, or (with or without the giving
of notice or the passage of time or both) entitle any party to
terminate or call a default under any such contract, agreement,
instrument, lease, license, arrangement, or understanding, or violate
or result in a breach of any term of the Articles of Incorporation or
By-laws of FreeStar, or violate, result in a breach of, or conflict
with any law, rule, regulation, order, judgment, or decree binding on
FreeStar or to which any of its operations, business, properties, or
assets is subject, except as would not affect the ability of the
Seller to perform any of its material obligations under this
Agreement. The shares of FreeStar Common Stock have been duly
authorized and, upon receipt by FreeStar from the Sellers of the
stock certificates representing the shares of TA Common Stock being
sold pursuant to this Agreement, will be validly issued, fully paid,
and nonassessable, will not have been issued in violation of any
preemptive right of stockholders or rights of first refusal, and the
Sellers will have good title to the shares of FreeStar Common Stock,
free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders agreements, and voting trusts (other than
any created by such Seller).
3.02 Finder or Broker. Neither FreeStar nor any person acting
on behalf of FreeStar has negotiated with any finder, broker,
intermediary, or similar person in connection with the transaction
contemplated herein.
3.03 Accredited Investor. FreeStar is an "accredited investor,"
as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act.
3.04 Investment Intent. FreeStar is acquiring the shares of TA
Common Stock for its own account for investment and not with a view
to, or for sale in connection with, any public distribution thereof
in violation of the Securities Act. FreeStar understands that it
must bear the economic risk of its investment in TA for an indefinite
period of time, and the shares of TA Common Stock being purchased
from the Sellers cannot be sold unless registered under the
Securities Act and qualified under state securities laws, unless an
exemption from such registration and qualification is available.
3.05 Full Disclosure. So far as FreeStar is aware, all
documents filed by FreeStar pursuant to the Exchange Act since
December 31, 2001 (the "FreeStar Exchange Act Documents") (i) were
prepared in accordance with the requirements of the Exchange Act and
the rules and regulations thereunder, (ii) did not at the time they
were filed contain any untrue statement of a material fact, and (iii)
did not at the time they were filed omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
Offering Memorandum, together with the exhibits thereto, when read in
conjunction with the FreeStar Exchange Act Documents, as such
Offering Memorandum and other documents may be supplemented to the
reasonable satisfaction of the Sellers on or before the Closing Date,
do not omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, except insofar as any of such documents relate to TA,
as to which FreeStar makes no representation. So far as FreeStar is
aware, from the date as of which information is given in the most
recent report filed by FreeStar under the Exchange Act to the date of
this Agreement, except as contemplated or described in such report or
in the Offering Memorandum, there has not been any material adverse
change in, or any adverse development which materially affects, the
business, results of operations, or financial condition of FreeStar
and its subsidiaries taken as a whole.
3.06 Other Stockholders. FreeStar has not entered into any
agreement with any holders of TA Common Stock, other than this
Agreement with the Sellers, with respect to the acquisition of TA
Common Stock by FreeStar.
3.07 FreeStar's Corporate Existence. FreeStar is a corporation
duly incorporated, validly existing and in good standing under the
laws of Nevada and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to
carry on its business as now conducted. FreeStar is duly qualified
to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, be material to the business of
FreeStar. FreeStar is not in violation of any of the provisions of
its Certificate of Incorporation or By-laws.
3.08 Capitalization.
(a) As of March 31, 2003, the authorized capital stock of
FreeStar consists of 505,000,000 shares, consisting of 500,000,000
shares of FreeStar Common Stock and 5,000,000 shares of preferred
stock, of which 1,000,000 shares are designated Series A Convertible
Preferred Stock and 4,000,000 shares are designated Series B
Convertible Preferred Stock. As of March 31, 2003, there are
outstanding 152,500,306 shares of FreeStar Common Stock, 1,000,000
shares of Series A Convertible Preferred Stock and 2,500,000 shares
of Series B Convertible Preferred Stock.
(b) All outstanding shares of capital stock of FreeStar
have been duly authorized and validly issued and are fully paid and
non-assessable and are not subject to preemptive rights created under
Nevada law, the Certificate of Incorporation or By-laws of FreeStar
or any agreement or document to which FreeStar is a party or by which
it or its assets are bound. All outstanding shares of capital stock
of FreeStar have been issued and granted in compliance with all
applicable securities law and other legal requirements and all
requirements set forth in applicable agreements or instruments.
None of the outstanding FreeStar Securities (as defined below) is
unvested or is subject to a repurchase option, risk of forfeiture or
other condition providing that such FreeStar Securities may be
forfeited or repurchased by FreeStar or otherwise vest upon
termination of stockholder's or grantee's employment, directorship or
other relationship with FreeStar or a FreeStar Subsidiary (as defined
below) under the terms of any restricted stock agreement or other
agreement with FreeStar. No FreeStar debt has voting rights. As
used herein, "FreeStar Subsidiary" shall mean any entity of which
securities or other ownership interests having ordinary voting power
to elect a majority of the board or directors or other persons
performing similar functions are at the time directly or indirectly
owned by FreeStar.
(c) Except as set forth in this Section 3.08, there are no
outstanding (i) shares of capital stock or voting securities of
FreeStar, (ii) securities of FreeStar convertible into or
exchangeable for shares of capital stock or voting securities of
FreeStar or (iii) options or other rights to acquire from FreeStar,
or other obligation of FreeStar to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital
stock or voting securities of FreeStar (the items in clauses (i),
(ii) and (iii) of this Section 3.08(c) being referred to collectively
as the "FreeStar Securities"). There are no registration rights and
there is no voting trust, proxy, rights plan, anti-takeover plan or
other agreement or understanding to which FreeStar or any of
FreeStar's Subsidiaries is a party or by which it is bound with
respect to any FreeStar Securities. There are no outstanding
obligations of FreeStar or any FreeStar Subsidiary to repurchase,
redeem or otherwise acquire any FreeStar Securities.
3.09 Litigation. Except as disclosed in Schedule 3.09, there is
no action, suit, investigation or proceeding (or to FreeStar's
knowledge any basis therefor) pending against, or to the knowledge of
FreeStar, threatened against or affecting, FreeStar or any FreeStar
Subsidiary or any of their respective properties before any court or
arbitrator or any governmental body, agency or official which,
individually or in the aggregate, if determined or resolved adversely
in accordance with the plaintiff's demands, could reasonably be
expected to have a material adverse effect on the business, results
of operations, or financial condition of FreeStar and its
subsidiaries taken as a whole or which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the transactions
contemplated by this Agreement.
3.10 Compliance with Laws and Court Orders.
(a) Neither FreeStar nor any FreeStar Subsidiary is in
violation of, and has not since January 1, 2001 violated, and to the
knowledge of FreeStar is not under investigation with respect to and
has not been threatened to be charged with or given notice of any
violation of, any applicable law, rule, regulation, judgment,
injunction, order or decree, except for violations that have not had
and could not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the business, results of
operations or financial condition of FreeStar and its subsidiaries
taken as a whole.
(b) FreeStar and each of its officers and directors have
complied in all material respects with the applicable provisions of
▇▇▇▇▇▇▇▇-▇▇▇▇▇. FreeStar has disclosed to the Seller Representative
any of the information required to be disclosed by FreeStar and
certain of its officers to FreeStar's Board of Directors or any
committee thereof pursuant to the certification requirements
contained in Form 10-KSB and Form 10-QSB under the Exchange Act.
From the period beginning January 1, 2000 through the enactment of
▇▇▇▇▇▇▇▇-▇▇▇▇▇, neither FreeStar nor any of its Affiliates made any
loans to any executive officer or director of FreeStar equal to or in
excess of $60,000. Since the enactment of ▇▇▇▇▇▇▇▇-▇▇▇▇▇, neither
FreeStar nor any of its Affiliates has made any loans to any
executive officer or director of FreeStar.
(c) Each executive officer and director of FreeStar has
complied with all applicable laws in connection with or relating to
actions within the scope of FreeStar's business, except where the
failure to comply would not be material to FreeStar. No executive
officer or director of FreeStar is a party to or the subject of any
pending or threatened suit, action, proceeding or investigation by
any governmental entity that would have a material adverse effect on
the business, results of operations or financial condition of
FreeStar and its subsidiaries taken as a whole, except as disclosed
in FreeStar Exchange Act Documents.
3.11 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of
FreeStar included in FreeStar's filings under the Exchange Act
(collectively, the "FreeStar Financial Statements") (a) were prepared
in accordance with and accurately reflect in all material respects,
FreeStar's books and records as of the times and for the periods
referred to therein, (b) complied in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto in effect during the
periods included and (c) fairly present in all material respects, in
conformity with United States generally accepted accounting
principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto and except in the
unaudited financial statements as may be permitted by Form 10-Q), the
consolidated financial position of FreeStar and its consolidated
subsidiaries as of the dates thereof and their consolidated results
of operations and cash flows for the periods then ended (subject to
normal year end adjustments in the case of any unaudited interim
financial statements which were not and are not expected to be
material to FreeStar).
3.12 No Undisclosed Material Liabilities. There are no
liabilities of FreeStar or any FreeStar Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined or
determinable, and no existing condition, situation or set of
circumstances which could reasonably result in such a liability,
other than:
(a) liabilities recorded in full or reserved for in the
unaudited financial statements included in the FreeStar Exchange Act
Documents filed with respect to the fiscal period ended June 30, 2003
(the "FreeStar Balance Sheet Date"); and
(b) liabilities incurred in the ordinary course of the
business of FreeStar consistent with past practice since the FreeStar
Balance Sheet Date, none of which has or may reasonably be expected
to have, individually or in the aggregate, a material adverse effect
on the business, results of operations, or financial condition of
FreeStar and its subsidiaries taken as a whole.
ARTICLE IV
CONDITIONS TO CLOSING
4.01 Conditions Precedent to the Sellers' Obligations. The
obligation of the Sellers to consummate the transaction contemplated
hereby is subject to the fulfillment prior to or on the Closing Date
of each of the following conditions, any one or more of which may be
waived in writing by the Seller Representative:
(a) Representations and Warranties True. All of the
representations and warranties of FreeStar contained in this
Agreement shall be true and correct in all material respects on and
as of the Closing Date as if made on and as of the Closing Date, and
the Seller Representative shall have received a certificate to such
effect executed by the President or a Vice President of FreeStar
dated the Closing Date.
(b) Litigation. There shall be no injunction, restraining
order, or other order of any nature, issued by a court of competent
jurisdiction, which shall direct that this Agreement or any of the
transactions contemplated hereby not be consummated as herein
provided, and no action, suit, or proceeding (or investigation that
could lead to any action, suit, or proceeding) challenging such
transactions shall have been instituted or threatened by any person
or entity.
(c) Deliveries by FreeStar. FreeStar shall have delivered
to the Sellers the items described in Section 1.05(a).
(d) No Material Adverse Change. There shall not have been
a material adverse change, subsequent to the date of this Agreement,
in the financial condition of FreeStar.
(e) Due Diligence Delivery. FreeStar shall have delivered
to the Sellers due diligence materials relating to FreeStar (the "Due
Diligence Materials") reasonably requested by the Sellers.
(f) Due Diligence Review. The Sellers shall have
completed their review of the Due Diligence Materials to their
reasonable satisfaction.
4.02 Conditions Precedent to FreeStar's Obligations. The
obligation of FreeStar to consummate the transaction contemplated
hereby is subject to the fulfillment prior to or on the Closing Date
of each of the following conditions, any one or more of which may be
waived, in writing by FreeStar:
(a) Representations and Warranties True. All of the
representations and warranties of the Sellers contained in this
Agreement shall be true and correct in all material respects on and
as of the Closing Date as if made on and as of the Closing Date, and
FreeStar shall have received a certificate to such effect executed by
each Seller.
(b) Litigation. There shall be no injunction, restraining
order, or other order of any nature, issued by a court of competent
jurisdiction, which shall direct that this Agreement or any of the
transactions contemplated hereby not be consummated as herein
provided, and no action, suit, or proceeding (or investigation that
could lead to any action, suit, or proceeding) challenging such
transactions shall have been instituted or threatened by any person
or entity.
(c) No Material Adverse Change. There shall not have been
a material adverse change, subsequent to the date of this Agreement,
in the financial condition of TA.
(d) Deliveries by the Sellers. Each of the Sellers shall
have delivered to FreeStar the items described in Section 1.04(a).
ARTICLE V
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; COVENANT
OF FREESTAR
5.01 Nature and Survival. The covenants, representations and
warranties of the parties hereunder and all documents delivered
pursuant hereto shall survive the Closing for a period of twelve
months following the Closing and all inspections, examinations or
audits on behalf of the parties whether conducted before or after the
Closing.
5.02 Seller Indemnification.
(a) Subject to Section 5.03, each Seller agrees to
indemnify and hold harmless FreeStar against and in respect of its
pro rata share (determined on the basis of the percentage of the
total number of shares of FreeStar Common Stock issued pursuant to
Section 1.06 that were issued to such Seller) of any and all Damages.
"Damages," as used herein, shall include any claim, action, demand,
loss, cost, expense, liability (joint or several), penalty and other
damage, including, without limitation, reasonable counsel fees and
other costs and expenses reasonably incurred in investigation or in
attempting to avoid the same or oppose the imposition thereof or in
enforcing this indemnity, resulting to FreeStar from (i) any
inaccurate representation made by or on behalf of TA or a Seller in
this Agreement or any certificate or other document referenced in,
this Agreement and delivered pursuant hereto, (ii) the breach of any
of the warranties or agreements made by or on behalf of TA or a
Seller in this Agreement or any certificate or other document
referenced in this Agreement and delivered pursuant hereto, or (iii)
the breach or default in the performance by a Seller of any of the
obligations to be performed by any of them hereunder.
(b) If any claim shall be asserted against FreeStar by a
third party for which FreeStar intends to seek indemnification from
the Sellers under this Section 5.02, FreeStar shall given written
notice to the Seller Representative of the nature of the claim
asserted within forty-five (45) days after any executive officer of
FreeStar learns of the assertion thereof and determines that FreeStar
may have a right of indemnification with respect thereto, but the
failure to give this notice will not relieve the Sellers of any
liability hereunder in respect of this claim. FreeStar shall have
the exclusive right to conduct, through counsel of its own choosing,
which counsel is approved by the Seller Representative (which
approval may not be unreasonably withheld), the defense of any such
claim or action, and may compromise or settle such claims or actions
with the prior consent of the Seller Representative (which shall not
be unreasonably withheld).
5.03 Satisfaction of Seller Indemnification.
(a) Any Damages incurred, paid or borne by FreeStar for
which it is entitled to indemnification from any Seller under this
Article 5 shall be satisfied, in whole or in part, solely by such
Seller delivering to FreeStar for cancellation, shares of FreeStar
Common Stock, without further recourse to any Seller; provided,
however, that each Seller's indemnification obligation shall be
unlimited (and shall be satisfied by a cash payment to the extent
that shares of FreeStar Common Stock are insufficient) with respect
to Damages arising out of the intentional fraud of such Seller. In
the event that any Seller elects to return shares of FreeStar Common
Stock to satisfy any indemnification obligation, each such share of
FreeStar Common Stock shall be valued at its Current Market Value (as
defined below) as of the date such shares are tendered to FreeStar.
Such Seller shall also pay or reimburse FreeStar for the out-of-
pocket expenses (including without limitation any fees payable to the
transfer agent of the shares) of canceling such returned shares.
(b) "Current Market Value" of the FreeStar Common Stock as
of a particular date shall mean the average of the price of a share
of FreeStar Common Stock, determined on the basis of the last
reported sales price on the Over-the-Counter Bulletin Board for the
ten (10) consecutive trading days preceding such date (the
"Measurement Days"); or, if such shares are not traded on the Over-
the-Counter Bulletin Board, the Current Market Value will be
determined by an independent reputable valuation and appraisal
company mutually agreed upon by FreeStar and the Seller
Representative (which appraiser shall be instructed to disregard any
minority interest discount), and if no agreement can be reached
within a 30-day period, by the average of the two Current Market
Values as determined by independent reputable valuation and appraisal
companies retained by each of FreeStar and the Seller Representative;
provided, however, that the aggregate fees and expenses of any such
independent valuation and appraisal company or companies shall be
shared evenly between FreeStar, on the one hand, and the applicable
indemnifying Seller(s).
5.04 FreeStar Indemnification.
(a) Subject to subsection (b) below, FreeStar shall
indemnify and hold the Sellers harmless against and in respect of all
Seller Damages. "Seller Damages" shall mean any claim, action,
demand, loss, cost, expense, liability (joint or several), penalty
and other damage, including, without limitation, reasonable counsel
fees, and other costs and expenses reasonably incurred in
investigating or in attempting to avoid the same or oppose the
imposition thereof or in enforcing this indemnity, resulting to a
Seller from (A) any inaccurate representation made by FreeStar in
this Agreement or any certificate or other document referenced in
this Agreement and delivered by it pursuant hereto, (B) breach of any
of the warranties or agreements made by FreeStar in this Agreement or
any certificate or other document referenced in this Agreement and
delivered by it pursuant hereto, or (C) breach or default in the
performance by FreeStar of any of the obligations to be performed by
FreeStar hereunder. FreeStar agrees to pay or reimburse the Sellers
for any payment made or amount payable or loss suffered or incurred
by the Sellers at any time from and after the Closing Date in respect
of any Seller Damages to which the foregoing indemnity relates.
(b) Any Seller Damages incurred, paid or borne by a Seller
for which it is entitled to indemnification from FreeStar under this
Article 5 shall be satisfied, in whole or in part, solely by FreeStar
delivering to the applicable Seller, additional shares of FreeStar
Common Stock up to an aggregate maximum for all Sellers of ten
percent (10%) of the amount of shares of FreeStar Common Stock
delivered on the Closing Date, without further recourse to FreeStar;
provided, however, that FreeStar's indemnification obligation shall
be unlimited with respect to Seller Damages arising out of the
common-law fraud of FreeStar. In the event that FreeStar elects to
deliver shares of FreeStar Common Stock to satisfy any
indemnification obligation, each such share of FreeStar Common Stock
shall be valued at its Current Market Value as of the date such
shares are tendered by FreeStar.
5.05 Covenant of FreeStar as to Remaining Stockholders of TA.
Subsequent to but in all events within one hundred eighty (180) days
after the Closing, FreeStar shall use reasonable efforts to effect a
merger or similar transaction with TA, the effect of which would be
that the stockholders of TA who are not Sellers would receive cash in
exchange for their shares of TA Common Stock in an amount per share
that is equivalent in value to the shares of FreeStar Common Stock to
be received by the Sellers; provided, however, that the foregoing
obligation of FreeStar shall not apply to the extent that FreeStar
does not possess the resources to engage in such a transaction or if
the Board of Directors of FreeStar, in the exercise of its fiduciary
duties, shall determine that the consummation of such a transaction
is materially detrimental to the business and financial condition of
FreeStar.
ARTICLE VI
MISCELLANEOUS
6.01 Notices. All notices or other communications hereunder
shall be in writing and shall be given by registered or certified
mail (postage prepaid and return receipt requested), by an overnight
courier service which obtains a receipt to evidence delivery, or by
telex or facsimile transmission (provided that written confirmation
of receipt is provided), addressed as follows:
If to FreeStar:
FreeStar Technology Corporation
Calle Fantino Falco
▇.▇. ▇▇▇▇ Building, 2nd Floor
Santo ▇▇▇▇▇▇▇, Dominican Republic
Attention: ▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ Traurig, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Seller:
▇▇▇ ▇▇▇▇▇▇▇▇
c/o TransAxis, Inc.
348 East ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile: [___________]
or such other address as any party may designate to the other in
accordance with the aforesaid procedure. All notices and other
communications sent by overnight courier service shall be deemed to
have been given as of the second Business Day after delivery thereof
to such courier service, those given by telex or facsimile
transmission shall be deemed given when sent, and all notices and
other communications sent by mail shall be deemed given as of the
fifth Business Day after the date of deposit with the United States
Postal Service.
6.02 Successors and Assigns. Neither FreeStar nor the Sellers
may sell, assign, transfer, or otherwise convey any of its rights or
delegate any of its duties under this Agreement, except: (a) to a
corporation which has succeeded to substantially all of the business
and assets of such party and has assumed in writing its obligations
under this Agreement, and this Agreement shall be binding on each
party hereto and any such successor, and (b) a Seller may transfer or
otherwise dispose of the shares of TA Common Stock held by it that
are the subject of this Agreement, but only on the condition that the
transferee expressly agrees to assume the Seller's obligations under
and be bound by the terms of this Agreement, whereupon the transferee
shall be entitled to all the benefits of this Agreement. Without
limiting the generality of the foregoing, any transferee of FreeStar
Common Stock shall have the rights set forth in Article V, and such
rights shall be enforceable against FreeStar by such transferees as
third party beneficiaries.
6.03 Amendments and Waivers. Neither this Agreement nor any
term hereof may be changed or waived (either generally or in a
particular instance and either retroactively or prospectively) absent
the written consent of FreeStar and the Sellers. Each Seller
acknowledges that Exhibit A to the Agreement may be amended to
reflect additional or deleted parties or correct minor typographical
or mathematical errors, provided that a copy of Exhibit A in its
final form is provided to each Seller.
6.04 Expenses. Each of the Sellers and FreeStar will be
responsible for the payment of all expenses incurred by it in
connection with the preparation, execution, and delivery of this
Agreement, any other documents relating to the transaction
contemplated by this Agreement, and the consummation of the
transaction herein described.
6.05 Survival of Representations, Etc. The representations,
warranties, covenants, and agreements made herein or in any
certificate or document executed in- connection herewith shall
survive the execution and delivery of this Agreement and the
consummation of the transactions herein described, regardless of any
investigation made at any time by or on behalf of any of the parties
hereto.
6.06 Delays or Omissions; Waiver. No delay or omission to
exercise any right, power, or remedy accruing to any of the Sellers
or FreeStar upon any breach or default by the other under this
Agreement shall impair any such right, power, or remedy nor shall it
be construed to be a waiver of any such breach or default, or any
acquiescence therein or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or
thereafter occurring.
6.07 Entire Agreement. This Agreement and the Exhibits hereto
contain the entire understanding of the parties with respect to the
subject matter hereof and all prior negotiations, discussions,
commitments, and understandings heretofore had between them with
respect thereto are merged herein, except for Sections 1 and 4 of the
Letter of Intent, dated June 20, 2003, among FreeStar, TA and the
Sellers, the provisions of which sections shall remain in full force
and effect.
6.08 Counterparts; Governing Law. This Agreement may be
executed in any number of counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the
same instrument. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving
effect to conflicts of laws rules or principles.
6.09 Further Actions. At any time and from time to time, each
party agrees, without further consideration, to take such actions and
to execute and deliver such documents as may be reasonably necessary
to effectuate the purposes of this Agreement.
6.10 Sellers' Representations Qualified by Knowledge. When any
of the Sellers' representations or warranties herein is made to the
"knowledge" of the Sellers, such qualification shall assume that the
Sellers have, prior to the date hereof, made a good faith inquiry of
one or more (as appropriate) present directors, officers or employees
of TA or a TA Subsidiary as to the subject matter of the applicable
representation or warranty.
STOCK PURCHASE AGREEMENT - SIGNATURE PAGE
This Agreement has been duly executed on the date hereinabove set
forth.
FREESTAR TECHNOLOGY CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇
Title: President
THE SELLERS:
REFERENCE IS MADE TO THE
COUNTERPART SELLER'S SIGNATURE
PAGE EXECUTED BY EACH SELLER AND
MADE A PART HEREOF
Stock Purchase Agreement
Form of counterpart signature page
SELLER:
Name of Seller: Nautilus Management Ltd.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
(signature)
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
Tax I.D. or Soc. Sec. No.
No. of Shares of TA Common Stock to be Sold: 373,382
Name of Seller: ▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
(signature)
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Tax I.D. or Soc. Sec. No.:
No. of Shares of TA Common Stock to be Sold: Conversion Right
EXHIBIT A
Number of Shares of
TA Common Stock
Name and Address of Seller
to be Sold
Nautilus Management Ltd.
373,382 (46.4%)
▇▇▇ ▇▇▇▇▇▇▇▇
Conversion Right
EXHIBIT B
FREESTAR TECHNOLOGY CORPORATION
Calle Fantino Falco
▇.▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
October 8, 2003
To each Selling Stockholder of TransAxis, Inc.
Ladies and Gentlemen:
Reference is made to the Stock Purchase Agreement, dated as
of September 24, 2003 (the "Purchase Agreement"), between FreeStar
Technology Corporation, a Nevada corporation ("FreeStar"), and the
selling stockholders (the "Sellers") of TransAxis, Inc., a Delaware
corporation ("TransAxis"), who have executed a signature page to the
Purchase Agreement, pursuant to which FreeStar has agreed to purchase
from the Sellers a minimum of 70% of the outstanding common stock of
TransAxis. All capitalized terms not defined herein shall have the
meanings ascribed to them in the Purchase Agreement.
(a) Promptly, but in all events within thirty (30) days
following the Closing (the "Filing Date"), FreeStar shall cause a
Form SB-2 shelf registration statement (the "Registration Statement")
to be filed with the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "Securities Act"),
covering resales of all of the shares of FreeStar Common Stock to be
issued to or on behalf of the Sellers at the Closing pursuant to
Section 1.01 of the Purchase Agreement, and shall thereafter use its
best efforts to have the Registration Statement declared effective as
promptly as possible thereafter, but in all events prior to that date
which shall be the one hundred eightieth (180th) day following the
Closing (the "Effectiveness Date"), and to keep it effective until
the earlier of (i) one year following the Effectiveness Date or (ii)
that date on which all of the FreeStar Common Stock covered by the
Registration Statement may be resold without further restriction
pursuant to Rule 144 under the Securities Act. If FreeStar shall
fail to file the Registration Statement with the SEC by the Filing
Date, FreeStar shall issue to each Seller an additional number of
shares of FreeStar Common Stock equal to 10% of the shares held by
each such Seller. FreeStar shall not permit any shares other than
the FreeStar Common Stock to be issued to or on behalf of the Sellers
at the Closing to be included in the Registration Statement, unless
otherwise agreed by the Sellers.
(b) Until the Registration Statement has become effective
under the Securities Act, each certificate representing the shares of
FreeStar Common Stock issued at the Closing and all certificates and
instruments issued in transfer thereof, shall be endorsed with the
following restrictive legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT
WITH A VIEW TO THE DISTRIBUTION THEREOF, AND NEITHER SUCH
SHARES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED,
ASSIGNED OR PLEDGED EXCEPT IF REGISTERED UNDER APPLICABLE
STATE BLUE SKY OR SECURITIES LAWS OR ANY EXEMPTIONS FROM
SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS ARE
AVAILABLE, ALL IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT
BETWEEN THE REGISTERED HOLDER HEREOF AND THE ISSUER OF SUCH
SHARES."
Upon the effectiveness of the Registration Statement, FreeStar shall,
upon the request of any Seller, issue to such Seller a replacement
certificate without such legend in exchange for any such legended
certificate.
(c) FreeStar shall furnish to all Sellers, at FreeStar's
expense, such number of copies of the Registration Statement and each
amendment and supplement thereto, preliminary prospectus, final
prospectus and such other documents as such Sellers may reasonably
request in order to facilitate the public offering of their shares of
FreeStar Common Stock.
(d) FreeStar shall promptly, at the Sellers' expense, use
its reasonable efforts to register or qualify any shares of FreeStar
Common Stock covered by the Registration Statement under such state
securities or blue sky laws of such jurisdictions as such Sellers
participating in such registration may reasonably request, except
that FreeStar shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as
a foreign corporation in any jurisdiction where it is not so
qualified.
(e) FreeStar shall notify the Sellers, promptly after it
shall receive notice thereof, of the date and time when the
Registration Statement and each post-effective amendment thereto has
become effective or a supplement to any prospectus forming a part of
the Registration Statement has been filed.
(f) FreeStar shall advise the Sellers, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of
any stop order by the SEC suspending the effectiveness of the
Registration Statement or the initiation or threatening of any
proceeding for the purpose and promptly use its best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued.
(g) (i) FreeStar agrees to bear all SEC registration and
filing fees, printing and mailing expenses, fees and disbursements of
counsel and accountants for FreeStar and all expenses and fees
incident to an application for listing the shares of FreeStar Common
Stock on the NASD's Over-the-Counter Bulletin Board or other primary
stock market or exchange, and (ii) the Sellers agree to bear all fees
and disbursements of counsel for all underwriters, brokers and
dealers engaged in connection with the distribution of such shares of
FreeStar Common Stock and any discounts, commissions and fees of any
such underwriters, brokers and dealers, NASD filing fees and expenses
incurred by any person or entity in connection therewith, legal fees
and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which such shares
of FreeStar Common Stock are to be registered or qualified and the
fees and disbursements of legal counsel for the Sellers.
(h) (i) FreeStar hereby agrees to indemnify and hold
harmless each Seller from and against, and agrees to reimburse such
Seller with respect to, any and all claims, actions (actual or
threatened), demands, losses, damages, liabilities, costs and
expenses to which such Seller may become subject under the Securities
Act or otherwise, insofar as such claims, actions, demands, losses,
damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained
in the Registration Statement, any prospectus contained therein, or
any amendment or supplement thereto, or are caused by the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that FreeStar shall not be liable in
any such case to the extent that any such claim, action, demand,
loss, damage, liability, cost or expense is caused by an untrue
statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished in writing by such
Seller for use in the preparation thereof; provided further, however,
that this indemnity is subject to the condition that insofar as it
relates to any untrue statement, alleged untrue statement, omission
or alleged omission made in a preliminary prospectus but eliminated
or remedied in the final prospectus, such indemnity shall not inure
to the benefit of any Seller if a copy of the final prospectus was
not furnished to the person asserting the claim, action, demand,
loss, damage or liability.
(ii) Each Seller hereby agrees to indemnify and hold
harmless FreeStar, its officers, directors, legal counsel and
accountants and each person or entity who controls within the meaning
of the Securities Act, from and against, and agrees to reimburse
FreeStar, its officers, directors, legal counsel, accountants and
controlling persons or entities with respect to, any and all claims,
actions, demands, losses, damages, liabilities, costs or expenses to
which FreeStar, its officers, directors, legal counsel, accountants
or such controlling persons or entities may become subject under the
Securities Act or otherwise, insofar as such claims, actions,
demands, losses, damages, liabilities, costs or expenses are caused
by any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any prospectus contained or
any amendment or supplement thereto, or are caused by the omission or
the alleged omission to state therein a material required to be
stated therein or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading, in each
case to the extent, but only to the extent that such untrue statement
or alleged untrue statement or omission or alleged omission was so
made in reliance upon and in conformity with information furnished in
writing by such Seller for use in the preparation thereof.
(iii) If any claim shall be asserted against any
person or entity (an "Indemnified Person") for which such person or
entity intends to seek indemnification pursuant to Section (h)(i) or
(ii), as the case may be, such Indemnified Person shall give prompt
written notice to FreeStar or ▇▇▇ ▇▇▇▇▇▇▇▇, as the Sellers'
Representative, as the case may be, of the nature of such claim, but
the failure to give such notice shall not relieve FreeStar or the
Sellers, as the case may be, of their obligations under this Section
(h) unless it or they have been prejudiced substantially thereby.
FreeStar or the Sellers (acting through the Sellers' Representative),
shall have the exclusive right to conduct, at their expense, through
counsel of its or their own choosing, which counsel is approved by
the Indemnified Person (which approval may not be unreasonably
withheld), the defense of any such claim, and may compromise or
settle such claims with the prior consent of FreeStar or the Sellers'
Representative (which consent shall not be unreasonably withheld).
This letter agreement shall be governed by the internal
laws of the State of Delaware, without regard to choice of law principles.
FreeStar confirms, by its execution hereof, that this
letter agreement has been duly authorized by its Board of Directors.
If the foregoing is acceptable to you, please sign below
where indicated and return a copy of this letter to FreeStar,
whereupon this letter shall become a binding agreement between us.
FREESTAR TECHNOLOGY CORPORATION
By: ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, President and Chief
Executive Officer
Agreed to and Accepted:
THE SELLERS:
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
NAUTILUS MANAGEMENT LTD.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
