EXECUTION COPY
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, J.A. Baez
Building, 2nd Floor, Santo Domingo, Dominican Republic ("FreeStar").
R E C I T A L S
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 6400 South, Suite 220, Salt Lake City, Utah 84107 ("TA"),
set forth opposite his name on Exhibit A hereto (such shares being referred to
herein as the "Shares"); and
B. Don Marshall ("Marshall") is one of the Sellers who is a party to
that certain Settlement and Release Agreement among Marshall, 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, Marshall 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, Marshall 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
Marshall 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, Marshall's 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.
D. Marshall desires to sell to FreeStar, and FreeStar desires to
purchase from Marshall 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,
Marshall shall sell, assign and transfer to FreeStar, and FreeStar shall
purchase and receive from Marshall 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, Greenberg Traurig, LLP, MetLife
Building, 200 Park Avenue, 15th Floor, New York, New York 10166, 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 Marshall 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:
(c) 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) Marshall 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:
(d) 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, Marshall and each Seller hereby
irrevocably constitute and appoint Don Marshall, 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 A. Marshall 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 mark, 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 Sarbanes-Oxley Act of 2002 and the related rules and regulations
promulgated under such Act or the Exchange Act ("Sarbanes-Oxley"). Since the
enactment of Sarbanes-Oxley, neither TA nor any of its Affiliates has made any
loans to any executive officer or director of TA.
(c) To 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 Sarbanes-Oxley. 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 Sarbanes-Oxley, 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
Sarbanes-Oxley, 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
J.A. Baez Building, 2nd Floor
Santo Domingo, Dominican Republic
Attention: Paul Egan
Facsimile: (809) 338-0768
With a copy to:
Greenberg Traurig, LLP
200 Park Avenue
New York, New York 10166
Attention: Spencer G. Feldman, Esq.
Facsimile: (212) 801-6400
If to any Seller:
Don Marshall
c/o TransAxis, Inc.
348 East 6400 South, Suite 220
Salt Lake City, Utah 84107
Facsimile: (801) 266-5417
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/ Paul Egan
-----------------------------------------
Name: Paul Egan
Title: President and Chief Executive Officer
THE SELLERS:
REFERENCE IS MADE TO THE COUNTERPART SELLER'S
SIGNATURE PAGE EXECUTED BY EACH SELLER AND MADE A
PART HEREOF
STOCK PURCHASE AGREEMENT
COUNTERPART SIGNATURE PAGE
SELLER:
Name of Seller: Don Marshall
By: /s/ Don Marshall
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(signature)
Name:
------------------------------------------------------------------
Title:
------------------------------------------------------------------
Tax I.D. or Soc. Sec. No.:
------------------------------------------------------------------
No. of Shares of TA Common Stock to be Sold: Conversion Right
--------------------------
STOCK PURCHASE AGREEMENT
COUNTERPART SIGNATURE PAGE
SELLER:
Name of Seller: Nautilus Management Ltd.
By: /s/ Don Marshall
-------------------------------------------------------------------
(signature)
Name: Don Marshall
-------------------------------------------------------------------
Title: Managing Director
-------------------------------------------------------------------
Tax I.D. or Soc. Sec. No.:
-------------------------------------------------------------------
No. of Shares of TA Common Stock to be Sold: 373,382
--------------------------
EXHIBIT A
Number of Shares of
TA Common Stock
Name and Address of Seller to be Sold
-------------------------------------------------------------------
Nautilus Management Ltd. 373,382 (46.4%)
Don Marshall Conversion Right