STOCK PURCHASE AGREEMENT BETWEEN FIRSTWAVE TECHNOLOGIES, INC. AND ALLABOUTTICKETS, LLC
Exhibit 2.1
EXECUTION
COPY
BETWEEN
FIRSTWAVE
TECHNOLOGIES, INC.
AND
ALLABOUTTICKETS,
LLC
TABLE
OF CONTENTS
| 1. | Definitions | 1 | |||
| 2. | Purchase and Sale of Target Shares | 4 | |||
| (a) | Basic Transaction | 4 | |||
| (b) | Purchase Price | 4 | |||
| 3. | Representations and Warranties Concerning Transaction | 4 | |||
| (a) | Seller’s Representations and Warranties regarding Seller | 4 | |||
| (b) | Seller Representations and Warranties Regarding Target | 5 | |||
| (c) | Buyer’s Representations and Warranties | 7 | |||
| 4. | [Intentionally Omitted] | 7 | |||
| 5. | Post-Closing Covenants | 7 | |||
| (a) | Assigned Contracts | 7 | |||
| (b) | Termination of Guarantees | 8 | |||
| (c) | Lease Termination | 8 | |||
| (d) | Collections and Operational Expenses | 8 | |||
| (e) | Transition | 8 | |||
| (f) | General | 9 | |||
| (g) | Litigation Support | 9 | |||
| (h) | Change of Control of Target; Operation of Target Business | 9 | |||
| (i) | Access to Books and Records | 10 | |||
| 6. | Related Documents and Actions | 10 | |||
| (a) | Stock Power | 10 | |||
| (b) | License | 10 | |||
| (c) | Note | 10 | |||
| (d) | Negative Pledge Agreement | 10 | |||
| (e) | Pledge Agreement | 10 | |||
| (f) | Release of Target | 10 | |||
| (g) | Termination of Prior Agreements | 10 | |||
| (h) | Resignation | 10 | |||
| (i) | Cash in Deposit Accounts | 10 | |||
| (j) | Forgiveness Tax | 11 | |||
| (k) | Secretary’s Certificate | 11 | |||
| (l) | Closing Statement | 11 | |||
| (m) | License Agreement | 11 | |||
| 7. | Survival of Representations and Warranties | 11 | |||
| 8. | [Intentionally Omitted] | 11 | |||
| 9. | Miscellaneous | 11 | |||
| (a) | Press Releases and Public Announcements | 11 | |||
| (b) | No Third-Party Beneficiaries | 11 | |||
| (c) | No Code §338 Election | 11 | |||
| (d) | Entire Agreement | 12 | |||
| (e) | Succession and Assignment | 12 | |||
| (f) | Counterparts | 12 | |||
| (g) | Headings | 12 | |||
| (h) | Notices | 12 | |||
i
| (i) | Governing Law | 13 | |||
| (j) | Jurisdiction/Venue | 13 | |||
| (k) | No Agency | 13 | |||
| (l) | Amendments and Waivers | 13 | |||
| (m) | Severability | 13 | |||
| (n) | Expenses | 13 | |||
| (o) | Construction | 13 | |||
| (p) | Incorporation of Exhibits and Schedules | 14 | |||
| (q) | Governing Language; Currency | 14 | |||
| Exhibit A—Form of Buyer Note | |||||
| Exhibit B—Form of Negative Pledge Agreement | |||||
| Exhibit C—Form of License Agreement | |||||
| Exhibit D—Form of Pledge Agreement | |||||
| Schedule I - List of Assigned Contracts | |||||
ii
This
Stock
Purchase Agreement (this
“Agreement”) is
entered into as of June 3, 2005, by and between Firstwave Technologies,
Inc., a Georgia corporation (“Seller”), and
AllAboutTickets, LLC, a Georgia limited liability company (“Buyer”). Buyer
and Seller are referred to herein individually as a “Party” and
collectively herein as the “Parties”.
WHEREAS, Seller
owns all of the issued share capital of Firstwave Technologies UK, Ltd., whose
registered offices are located at The Pavillion, 0 Xxxxxx Xxxxx, Xxxxxx Xxxxxx,
Xxxxxx, XX0 ONF (“Target”); and
WHEREAS, this
Agreement contemplates a transaction in which Buyer will purchase from Seller,
and Seller will sell to Buyer, all of the issued share capital of Target upon
the terms of, and for the consideration set forth in, this
Agreement.
NOW,
THEREFORE, in
consideration of the premises and the mutual promises herein made, and in
consideration of the representations, warranties, and covenants herein
contained, the Parties agree as follows:
1. Definitions
“Affiliate” has the
meaning set forth in Rule 12b-2 of the regulations promulgated under the
Securities Exchange Act.
“Agreement” has the
meaning set forth in the preface above.
“April
1, 2005” means
12:01a.m. England time on April 1, 2005.
“Assigned
Contracts” means
those contracts and agreements of Target listed on Schedule I, all of
which are to be assigned by Target to Seller as promptly
after the date hereof as is practicable.
“Buyer” has the
meaning set forth in the preface above.
“Buyer
Note” has the
meaning set forth in §2(b) below.
“Buyer
Sub” shall
mean a subsidiary wholly owned by Buyer, one or more shareholders of Buyer as of
the date of this Agreement, and Xxxxx Xxxxx.
“Change
of Control” means
the occurrence of any of the following events: (i) the ceasing of the
stockholders or other owners of Buyer as of the date of execution and delivery
of this Agreement to have record and beneficial ownership (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”)) and
sole control of more than seventy percent (70%) (on a fully-diluted basis,
disregarding any director qualifying share ownership) of the combined voting
power or economic benefit of the then issued or outstanding equity interests of
Buyer (or any successor, by operation of law or otherwise, or assign thereof)
entitled to vote generally in the election of members to the board of directors,
board of managers or similar governing body of Buyer (or such successor or
assign), (ii) the ceasing of Buyer to have record and beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) and sole control,
of one hundred percent (100%) (on a fully-diluted basis, disregarding any
director qualifying share ownership) of the voting power of the then issued or
outstanding equity interests of Target (or any successor, by operation of law or
otherwise, or assign thereof) entitled to vote generally in the election of
members of the board of directors, board of managers or similar governing body
of Target (or such successor or assign); (iii) individuals who constitute
the board of directors, board of managers or other similar body of
1
Buyer or
Target on the Closing Date (each an “Incumbent
Board”) shall
cease to constitute for any reason at least two-thirds of the members of such
governing body of Buyer and Target at any time; (iv) the sale of all,
substantially all or any significant portion of the assets of Buyer or Target;
or (v) the entry into any agreement to accomplish or the effect of which,
if the terms thereof are consummated, would be any of the events described in
clauses (i) through (iv) above. Notwithstanding the forgoing, Buyer may,
upon Seller’s prior written consent, organize Buyer Sub and transfer the Target
Shares to Buyer Sub, and any such transfer with Seller’s prior written consent
shall not constitute a “Change
of Control.” It is
understood and agreed that Seller may withhold its consent to this transfer for
any reason or no reason whatsoever, in its sole discretion, except that if Buyer
Sub becomes a joint obligor or guarantor of the Buyer Note, Buyer Sub executes
and delivers a security agreement in a form that is sufficient to establish and
perfect a first priority security interest and pledge in all of Buyer Sub’s
assets, Buyer Sub executes and delivers to Seller a pledge agreement and all
stock and share powers and other documents ancillary thereto with respect to the
Target Shares that are sufficient to perfect a first priority security interest
in the Target Shares in favor of Seller, and Buyer, Buyer Sub and Target execute
any modifications to the Transaction Documents that may be necessary to preserve
the rights and obligations set forth therein, all in such forms as are
reasonably acceptable to Seller, then Seller will not unreasonably withhold its
consent to such transfer; and further provided that in addition to the
provisions set forth above it also shall be a Change in Control if, after Target
Shares are transferred to Buyer Sub, Buyer, the shareholders of Buyer of the
date hereof and Xxxxx Xxxxx cease to have record and beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) and sole control,
of one hundred percent (100%) (on a fully-diluted basis, disregarding any
director qualifying share ownership) of the voting power of the then issued and
outstanding equity interests of Buyer Sub (or any successor, by operation of law
or otherwise, or assign thereof) entitled to vote generally in the election of
members of the board of directors, board of managers or similar governing body
of Buyer Sub (or such successor or assign) or Buyer Sub ceases to have record
and beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) and sole control, of one hundred percent (100%) (on a
fully-diluted basis, disregarding any director qualifying share ownership) of
the voting power of the then issued and outstanding equity interests of Target
(or any successor, by operation of law or otherwise, or assign thereof) entitled
to vote generally in the election of members of the board of directors, board of
managers or similar governing body of Target (or such successor or
assign).
“Code” means
the U.S. Internal Revenue Code of 1986, as amended.
“Financial
Statements” means
the financial statements of Target, prepared in accordance with generally
accepted accounting principles and in
a manner consistent with past practices.
“Knowledge
of Seller” or
“to the
knowledge of Seller” or
similar phrases mean those matters actually known by Xxxxxxx Xxxxx or Xxxx
Xxxxxx.
“License
Agreement” means
the License Agreement in the form of Exhibit C attached
hereto executed by Buyer and Seller (with all blanks appropriately
completed).
“Lien” means
any mortgage, pledge, lien, encumbrance, charge, or other security interest,
other than (a) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings,
(b) purchase money liens and liens securing rental payments under capital
lease arrangements, (c) that certain rent deposit deed in the approximate
amount of £44,000 in favor of SHL Group Plc; and (d) other liens arising in
the Ordinary Course of Business and not incurred in connection with the
borrowing of money.
“Negative
Pledge Agreement” means
the Negative Pledge Agreement in substantially the form of Exhibit B attached
hereto executed by Buyer in favor
of Seller (with all blanks appropriately
completed).
2
“Operational
Expenses” means
all expenses of Target, including all expenses with respect to the office space
used by Target (rent, utilities, insurance, etc.), all expenses related to
Target’s employees (salary, bonus, travel, expense reimbursement, insurance,
perquisites, severance, vacation pay, sick pay, holiday pay, etc.), all expenses
relating to software development and support activities, all expenses relating
to the acquisition, maintenance and use of equipment (computers, software,
copiers, telephones, telecommunication charges, etc.), all professional and
service fees, all sales and marketing expenses, and all Taxes.
“Ordinary
Course of Business” means
the ordinary course of business consistent with past custom and practice
(including with respect to quantity
and frequency).
“Parties” and
“Party” have
the meanings set forth in the preface above.
“Person” means
an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, a U.K. limited company, any other business entity or a
governmental entity (or any department, agency, or political subdivision
thereof).
“Pledge
Agreement” means
the Pledge Agreement in the form of Exhibit D attached
hereto executed by Buyer Sub.
“Purchase
Price” has the
meaning set forth in §2(b) below.
“SEC” means
the United States Securities and Exchange Commission.
“Securities
Act” means
the Securities Act of 1933, as amended.
“Securities
Exchange Act” means
the Securities Exchange Act of 1934, as amended.
“Seller” has the
meaning set forth in the preface above.
“Subsidiary” means,
with respect to any Person, any Person of which (i) if a corporation, a
majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers, or trustees thereof is at the time owned or controlled, directly or
indirectly, by such first Person or one or more of the other Subsidiaries of
such first Person or a combination thereof or (ii) if a limited liability
company, partnership, association, or other business entity (other than a
corporation), a majority of partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of that Person or a combination thereof and
for this purpose, a Person or Persons owns a majority ownership interest in such
a business entity (other than a corporation) if such Person or Persons shall be
allocated a majority of such business entity’s gains or losses or shall be or
control any managing director or general partner of such business entity (other
than a corporation). The term “Subsidiary” shall include all Subsidiaries of
such Subsidiary.
“Target” has the
meaning set forth in the recitals above.
“Target
Shares” means
all shares of Target owned by Seller representing all of the issued share
capital of Target.
3
“Tax” and
“Taxes” means
any federal, state, local, foreign, provincial or city income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code §59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
“Transaction
Documents” means
this Agreement, the Buyer Note, the Negative Pledge Agreement, the License
Agreement, and all other documents and agreements referenced therein, together
with all schedules, exhibits and annexes to each of them.
2. Purchase
and Sale of Target Shares.
(a) Basic
Transaction. On and
subject to the terms and conditions of this Agreement, Buyer hereby purchases
from Seller, and Seller hereby sells to Buyer, all of the Target Shares for the
aggregate consideration specified below in this §2.
(b) Purchase
Price. Buyer
agrees to pay to Seller the aggregate amount of $2,214,000.00 (as adjusted
pursuant to the terms of this Agreement, the
“Purchase Price”) as
follows:
(i) Simultaneously
with the execution of this Agreement, Buyer has paid Seller in immediately
available funds the amount of $256,000.00; and
(ii) Simultaneously
with the execution of this Agreement, Buyer has delivered to Seller the
promissory note in the form of Exhibit A attached
hereto in
the
aggregate principal amount of $1,620,000 (the “Buyer
Note”), which
shall serve as partial consideration for the license granted by Seller to Buyer
pursuant to the License Agreement;
(iii) Simultaneously
with the execution of this Agreement, Target has executed and delivered to
Seller the License Agreement in the form attached hereto
as
Exhibit C pursuant
to which Target agrees to pay, in addition to the $1,620,000 payable under the
Buyer Note, the aggregate amount of $338,000 in prepaid royalties to
Seller.
3. Representations
and Warranties Concerning Transaction.
(a) Seller’s
Representations and Warranties regarding Seller. Seller
represents and warrants to Buyer and Target that the statements contained in
this §3(a) are
true and
correct as of the closing of the transactions contemplated by this
Agreement.
(i) Organization
of Sellers. Seller
is duly organized, validly existing, and in good standing under the laws of the
State of Georgia.
(ii) Authorization
of Transaction. Seller
has full power and authority (including full corporate power and authority) to
execute and deliver this
Agreement
and, upon
receipt of the consents and approvals contemplated hereby, to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of Seller, enforceable against Seller in accordance with its terms
and conditions, except as enforceability may be limited by laws concerning
bankruptcy, insolvency, creditors’ rights or general equitable
principles.
4
(iii) Noncontravention. Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will
(A) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government, governmental
agency, or court to which Seller is subject, or (B) result in the
imposition or creation of a Lien upon or with respect to the Target
Shares.
(iv) Target
Shares. Seller
holds of record and owns beneficially all Target Shares, free and clear of any
restrictions on transfer (other than restrictions
under the
Securities Act and other securities laws), Liens and purchase rights. Seller is
not a party to any option, warrant, purchase right, or other contract or
commitment that could require Seller to sell, transfer, or otherwise dispose of
any capital stock of Target (other than this Agreement). The Target Shares
constitute all of the issued share capital of Target.
(v) Broker’s
Fees. Neither
the Target nor the Seller has any liability or obligation to pay any fees or
commissions to any broker, finder or agent with
respect
to the transactions contemplated by this Agreement.
(vi) No
Intent to Xxx. Seller
has no plan, proposal or intention of suing or bringing a claim (including
without limitation a claim sounding in a conflict of
interest,
violation of fiduciary duty or diversion of corporate opportunity) against Xxxxx
Xxxxxxx or Xxxxx Xxxxx with respect to any capacity either may have held in
Seller or Target for any action or inaction in such capacity in connection with
the attempt of Seller to sell Target or with respect to any negotiations to sell
Target. Xxxxx Xxxxxxx and Xxxxx Xxxxx shall be third party beneficiaries of this
representation.
(b) Seller
Representations and Warranties Regarding Target. Seller
represents and warrants to Buyer and Target that the statements contained in
this §3(b) are
true and
correct as of the closing of the transactions contemplated by this Agreement.
With respect to the statements made in clauses (vi) through (x) of this
§3(b), such statements are made to the Knowledge of Seller. To the extent Xxxxx
Xxxxxxx or Xxxxx Xxxxx know or reasonably should know any fact which would
render any of the following representations and warranties untrue, Seller will
not be deemed to have made such representation or warranty.
(i) Organization
of the Target. The
Target is a limited stock company or other entity duly organized, validly
existing and in good standing under the laws
of the
jurisdiction of its incorporation. The Target is duly authorized to conduct the
business it is presently conducting, and is in good standing, under the laws of
each jurisdiction where the failure to qualify would have a material adverse
effect.
(ii) Authorizations. The
Target has full power and authority to execute and deliver each of the
Transaction Documents to which the Target is a party,
and to
perform its obligations thereunder. Each of the Transaction Documents to which
Target is a party constitutes the valid and legally binding obligation of the
Target, enforceable in accordance with its terms and conditions, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally, or by the
exercise of judicial discretion in accordance with general equitable
principles.
(iii) Noncontravention. Neither
the execution and the delivery of the Transaction Documents by the Target and
the Seller, nor the consummation by the
Target
and the Seller of the transactions contemplated thereby, will (i) violate
in any material respect any Law, rule, injunction, judgment, order, decree,
stipulation, ruling, charge or other restriction of any government or court to
which the Target is subject, or any provision of the charter or other
organizational documents of the Target, or (ii) to the Knowledge of Seller
conflict with, result in a material breach of, constitute a material default
under, result in the acceleration of, create in any Person the right to
accelerate, terminate, modify or cancel, or require any notice under, any
agreement, contract, lease, permit, instrument or other arrangement to which the
Target is a party, or by which the Target is bound or to which any assets of the
Target is subject (or result in the imposition of any Lien upon any assets of
the Target), it being understood and agreed that no representation or warranty
is being given by Target or Seller under this Agreement with respect to the
Assigned Contracts.
5
(iv) Capitalization. All of
the Target Shares are validly issued, fully paid and nonassessable. No Person
has any option, warrant, convertible debt or
security
or other right to acquire any shares of the capital stock of the Target, or any
securities convertible into any such shares. No option pool has been reserved by
the Target for any such options, warrants or other rights to acquire any capital
stock of the Target.
(v) Subsidiaries. The
Target has no Subsidiaries.
(vi) Title
to the Assets. Except
for a postage machine leased to Target, the Target has good and marketable title
to, or a valid leasehold interest in all of
its
equipment located in its London office free and clear of all Liens.
(vii) Undisclosed
Liabilities. Other
than the Assigned Contracts, Target is not a party to any agreements that are,
as of the date of this Agreement, in
force or
effect with customers outside the Sports Industry for the licensing, development
or maintenance of Seller’s software.
(viii) Tax
Matters. The
Target has filed all tax returns that it has been required to file. All such tax
returns were correct and complete in all material
respects.
All Taxes owed by the Target (whether or not shown on any tax return), to the
extent they are payable on or prior to the date hereof, have been paid. No claim
has ever been made by any government in a jurisdiction where the Target does not
file tax returns that it is or may be subject to taxation by that jurisdiction.
There is no dispute or claim concerning any Tax liability of the Target either
(i) claimed or raised by any government or (ii) as to which the Seller
or any of the directors or officers of the Seller have knowledge based upon
personal contact with any agent of such government. No Tax Returns of Target
have been audited nor has any taxing authority notified Target that it intends
to audit any Tax Returns. Notwithstanding the foregoing representations in this
paragraph (viii), Seller has received notice of some inquiry regarding
payroll and employment taxes and payments relating to Target and Buyer and
Target acknowledge having received notice thereof and agree that the foregoing
representations are qualified in their entirety by such notice and inquiry (and
any outcome thereof).
(ix) Insurance. Target
has, and has had for the past three years, insurance policies providing
liability, errors and omissions and workers’ compensation
coverage.
There are no pending claims with respect to insurance coverage owned by the
Target, including amounts held in reserve by the Target in connection with any
such claim. Upon request, Seller shall provide Buyer a copy of such
policies.
(x) Litigation. Neither
the Target nor Seller (i) is subject or party to any outstanding
injunction, judgment, order, decree, ruling or charge which
questions
or
enjoins the validity, execution or consummation of this Agreement, or
(ii) is subject or party, or is threatened to be made a party, to any
action of, in
or
before any court, arbitrator or government, which if a ruling were given against
Target or Seller, would have a material adverse affect on the business or
finances
of Target.
6
(c) Buyer’s
Representations and Warranties. Buyer
represents and warrants to Seller that the statements contained in this §3(c)
are true and correct as of the
closing
of the transactions contemplated by this Agreement.
(i) Organization
of Buyer. Buyer
is a corporation, limited stock entity, or other entity duly organized, validly
existing, and in good standing under the
laws of
the jurisdiction of its incorporation (or other formation). Buyer is duly
authorized to conduct the business it is presently conducting, and is in good
standing, under the laws of each jurisdiction where the failure to qualify would
have a material adverse effect.
(ii) Authorization
of Transaction. Buyer
has full power and authority (including full corporate power and authority) to
execute and deliver the
Transaction
Documents and to perform its obligations thereunder. The Transaction Documents
constitute the valid and legally binding obligation of Buyer, enforceable
against Buyer in accordance with its terms and conditions, except as
enforceability may be limited by laws concerning bankruptcy, insolvency,
creditors’ rights or general equitable principles.
(iii) Noncontravention. Neither
the execution and the delivery of the Transaction Documents, nor the
consummation of the transactions contemplated
hereby,
will violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Buyer is subject or any provision of its
charter, bylaws, articles of association or other governing
documents.
(iv) Brokers’
Fees. Buyer
has no liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions
contemplated
by this Agreement.
(v) Investment. Buyer
is not acquiring the Target Shares with a view to or for sale in connection with
any distribution or for any other purpose that
would
lead to or cause a violation of the Securities Act or any law, rule or
regulation of any country a jurisdiction that regulates the purchase and sale of
securities.
4. [Intentionally
Omitted].
5. Post-Closing
Covenants. The
Parties agree as follows with respect to the period following the date of this
Agreement:
(a) Assigned
Contracts. Seller
and Buyer, and their respective officers, directors and employees, shall use
their commercially reasonable efforts and shall
cooperate
with each other in order to obtain any necessary consents to assign the Assigned
Contracts to Seller as quickly as is practicable. Upon receipt of such consent
from any necessary Party with respect to any Assigned Contract, such Assigned
Contract shall be immediately assigned by Target to Seller. Until such consent
is received, or if any necessary Person fails to consent to such assignment of
any Assigned Contract, Buyer will offer Seller a reasonable and lawful
alternative arrangement for the continuation of the products or services
provided under such Assigned Contract, which may be through a subcontracting
relationship with Buyer at Buyer’s costs, with Seller at Seller’s option, or
with a third party of Seller’s choice, which will provide Seller with the full
economic benefits and liabilities of such Assigned Contract. Any revenues,
payments or other amounts received under such
7
Assigned
Contracts, whether or not consent to assignment is obtained, shall be to
Seller’s exclusive benefit and shall be the sole property of Seller, and upon
receipt of any such amounts Buyer and/or Target shall forward such amounts to
Seller immediately. Buyer and/or Target shall take no action to amend or modify
the Assigned Contracts without Seller’s prior written consent and shall promptly
transmit to Seller all correspondence or communications received by them with
respect to the Assigned Contracts and shall consult with Seller prior to
engaging in or responding to communications from parties to the Assigned
Contracts.
(b) Termination
of Guarantees. Seller
and Buyer and their respective officers, directors and employees shall use their
commercially reasonable efforts and shall
cooperate
with each other to obtain the release of:
(i) Any
guarantees or accommodations by Target of any contracts, agreements or
obligations of Seller; and
(ii) Any
guaranties or accommodations of Seller of any contracts, agreements or
obligations of Target.
To the
extent any such release is not obtained, then Buyer shall indemnify, defend and
hold Seller harmless with respect to any claim based on a guarantee or
accommodation by Seller of any Target obligation, and Seller shall indemnify,
defend and hold Target and Buyer harmless with respect to any claim based on a
guarantee or accommodation by Target of any Seller Obligation.
(c) Lease
Termination. Target
has recently transmitted to its landlord a termination notice with respect to
the lease pursuant to which as of the date hereof
Target
leases office space in Surrey, England. The Parties acknowledge that Target
and/or Seller will incur costs and expenses in connection with such termination,
and each Party agrees to bear and pay, as incurred, fifty percent (50%) of
all such costs and expenses up to an aggregate amount of such costs and expenses
of fifty thousand dollars ($50,000), and Buyer agrees to be solely responsible
for and to pay all such costs and expenses that exceed fifty thousand dollars
($50,000) in the aggregate. If one Party pays more than its pro-rata share of
such costs and expenses, then the other Party shall, within three (3) days
of receipt of a demand from the Party that has overpaid, reimburse such Party in
cash or other immediately available funds for the amount of such
overpayment.
(d) Collections
and Operational Expenses. Buyer
shall be responsible for all Operational Expenses as such Operational Expenses
are incurred by Target with
respect
to operations from and after April 1, 2005, and Seller shall be responsible for
such Operational Expenses with respect to operations before said date. The
Parties acknowledge and agree that of the payment of $256,000 by Buyer to Seller
on the date hereof pursuant to Section 2(b)(i), $56,000 of such payment
represents partial payment of the Operational Expenses of Target from April 1,
2005 until the date hereof, net of revenues received for royalties, license
fees, maintenance and services earned or rendered by Target for such period and
(when added to the £54,279.95 cash transfer to Seller from Target which is to
occur contemporaneously with or as soon after execution and delivery of this
Agreement as possible and, in any event, on or before June 6, 2005 and to the
other amounts reflected on the Closing Statement (as defined below)) constitutes
the Parties’ settlement and agreement with respect to any and all amounts that
may have been owed by one Party to the other Party for such period. The Closing
Statement (as defined below) shall contain a summary how such amount was
calculated. Buyer agrees that any collections from a customer shall first be
applied to the oldest outstanding invoice for such customer. To the extent any
such collection is for royalties, license fees, or services rendered before
April 1, 2005, Buyer shall promptly pay to Seller the amount so
collected.
(e) Transition. Seller
will not take any action that is designed or intended to have the effect of
discouraging any lessor, licensor, customer, supplier, or other
business
associate of Target’s Sports Industry from maintaining the same business
relationships with Target as it maintained with Target prior to the
8
execution
and delivery of this Agreement. Buyer will not take any action that is designed
or intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of Seller’s or Target’s from maintaining
the same business relationships with Seller or Target outside the Sports
Industry as it maintained with Seller or Target prior to the execution and
delivery of this Agreement.
(f) General. In case
at any time after the date hereof any further action is necessary to carry out
the purposes of this Agreement, each of the Parties will take
such
further action (including the execution and delivery of such further instruments
and documents) as any other Party reasonably may request, all at the sole cost
and expense of the requesting Party. Without limiting the generality of the
foregoing, Seller shall cooperate and execute such documents necessary to change
signature cards on deposit accounts, registered agents, or similar
action.
(g) Litigation
Support. In the
event and for so long as any Party actively is contesting or defending against
any action, suit, proceeding, hearing,
investigation,
charge, complaint, claim, or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the date hereof
involving Target or its Subsidiaries, the other Party shall cooperate in the
defense or contest, make available their personnel, and provide such testimony
and access to their books and records as shall be necessary in connection with
the defense or contest, all at the sole cost and expense of the contesting or
defending Party.
(h) Change
of Control of Target; Operation of Target Business. Until
such time as Seller has received payment in full of the Purchase Price,
including payment
of all
amounts owed pursuant to the Note, and has received full payment under the
License Agreement, without the express prior written consent of Seller,
(a) Buyer shall be and remain the sole record and beneficial owner of all
issued shares of Target, free and clear of all Liens; (b) Target shall
continue to own all assets owned by Target as of the date hereof, free and clear
of all Liens, except Target may dispose of obsolete or worn equipment in the
ordinary course of business; (c) no Change of Control of Buyer or Target
shall occur; and (d) Target shall conduct (and Buyer shall cause Target to
conduct) its business only in the ordinary course and consistent with prudent
business practice and past practice. Without limiting the generality of the
foregoing, each of Buyer and Target shall use all commercially reasonable
efforts to: (i) maintain its existence and status in good standing in all
jurisdictions in which it is required to be qualified or registered to conduct
its business, except where the failure to do so would not have a material
adverse effect on the Target or Buyer’s ability to perform its respective
obligations under the Transaction Documents; (ii) maintain all of its
tangible assets in good operating condition and maintain the protection of all
intellectual property in substantially the same standing as exists on the date
hereof; (iii) continue performance in the ordinary course of its
obligations under its contracts and agreements; (iv) preserve its business
organization intact, use all commercially reasonable efforts to keep available
its present officers and employees and preserve its present relationships with
suppliers, customers and others having business relationships with it;
(v) maintain its existing insurance, subject to variations in amount
required by the ordinary operations of its business; (vi) use and take all
commercially reasonable efforts and actions so that Target and Buyer shall not:
(A) write down the value of any inventory or write off as uncollectible any
notes or accounts receivable, except for write-downs and write-offs in the
ordinary course of business; (B) cancel or waive any claims or rights, or
sell, transfer, distribute or otherwise dispose of any assets or properties,
except in the ordinary course of business; (C) declare, file or permit to
be filed, or have filed against either of them, any voluntary or involuntary
bankruptcy, receivership, insolvency or other similar proceeding or petition
with any governmental authority with respect to the Company; (D) fail to
perform its obligations under any material contract or agreement (except those
being contested in good faith) or enter into, assume or amend any agreement that
would be a material contract other than agreements to provide services entered
into in the ordinary and usual course of business; or (E) take any action
that would or could reasonably be expected to result in a material adverse
effect on the Target or Buyer; and (vii) not agree, directly or indirectly,
to do any of the foregoing.
9
(i) Access
to Books and Records. Once a
calendar quarter and upon at least three (3) days prior written notice,
Target and Buyer shall permit Seller and/or its
representatives
reasonable access to Target’s and Buyer’s books, records and information
relating to Target, its assets, properties, operations, obligations and
liabilities, including, but not limited to, all books of account (including the
general ledger), tax records and filings, organizational documents,
capitalization, agreements, invoices, accounting records and reports, payroll
records, tax returns, statutory or other audited financial statements,
accountants’ work papers, computer systems and reports, and any other records
and information relating to Target and its operations in which Seller and its
representatives may have a reasonable interest in reviewing in connection with
this Agreement (including in connection with the performance by Target and Buyer
of their responsibilities under the Transaction Documents); provided,
however, that,
absent a default under the Transaction Documents, such investigation shall not
interfere unnecessarily with the normal business operations of Buyer or
Target.
6. Related
Documents and Actions.
Simultaneously with the execution and delivery of this Agreement, the Buyer,
Target and Seller have taken the following
actions
or have delivered the following documents:
(a) Stock
Power. Seller
has delivered to Buyer a Stock Certificate No. 3 evidencing all the Target
Shares, endorsed in blank or accompanied by duly executed
assignment
documents.
(b) License. Target
has executed and delivered to Buyer the License Agreement.
(c) Note. Buyer
has executed and delivered to Seller the Buyer Note.
(d) Negative
Pledge Agreement. Target
has executed and delivered to Seller the Negative Pledge Agreement.
(e) Pledge
Agreement. Buyer
has executed and delivered to Seller the Pledge Agreement.
(f) Release
of Target. Seller
hereby releases and forgives Target of all causes of action, claims,
indebtedness and liabilities owed by Target to Seller, including
without
limitation any and all indebtedness owed for services rendered by Seller to
Target, all allocations of management charges or expenses, any equipment leased
or provided by Seller to Target, employee expenses paid by Seller on Target’s
behalf and monies loaned or advanced by Seller to Target;
(g) Termination
of Prior Agreements. Seller
and Target hereby terminate any and all contracts, agreements and understandings
(other than the agreements
reflected
in the Transaction Documents) between Seller and/or any officer or director of
Seller, on the one hand, and Target, on the other;
(h) Resignation. Xxxxxxx
Xxxxx has submitted his resignations as a Managing Director, officer and
employee of Target;
(i) Cash
in Deposit Accounts.
Immediately before the date hereof or simultaneously with the execution hereof,
Target has paid to Seller any and all cash in any
and all
deposit accounts of Target, with the exception of $0, which shall remain with
Target as set forth in the Closing Statement. Target and Buyer acknowledge and
agree that a wire transfer of £54,279.95 has been initiated by Target on the
date hereof, and agree that they shall not attempt, permit or encourage any
Person to attempt or permit the cancellation or revocation of such wire
instructions, and that in the event such monies are not received by Seller on or
prior to June 7, 2006 at 5:00 p.m. (Atlanta time) (or such later time as Seller
may agree in writing), then Seller shall be entitled to declare an event of
default under the Transaction Documents effective immediately upon written
notice thereof to the Buyer and Target and to take all actions permitted by
the
10
Transaction
Documents and applicable law, including but not limited to an injunction
prohibiting the recordation of the transfer of the Target Shares.
(j) Forgiveness
Tax. Seller
and Buyer hereby agree that each shall pay one-half of any tax which may be
imposed upon Target as a result of the forgiveness or
waiver of
any debt, obligation or liability owed by Target to Seller in connection with
the transactions contemplated by this Agreement (a “Forgiveness
Tax”). If
both parties agree to contest such Forgiveness Tax, they shall share equally in
the cost of such contest;
(k) Secretary’s
Certificate. Seller
has delivered to Buyer a certificate of its secretary certifying to the
resolutions of the Board of Directors of Seller approving
the
transactions contemplated herein. Buyer has delivered to Seller a certificate of
its secretary certifying to the resolutions of the Board of Directors of Buyer
approving the transactions contemplated herein;
(l) Closing
Statement. The
Parties shall have executed a closing statement (“Closing Statement”),
evidencing the Parties’ agreement as to the net Operational
Expenses
chargeable to Seller or Buyer pursuant to Section 5(d) hereof, the Parties’
liability for the lease termination pursuant to Section 5(c) hereof, and
the retention of Target of £23,268.68, representing the Parties’ agreement with
respect to prepaid but unearned maintenance fees for maintenance Target is
obligated to perform; and
(m) License
Agreement. Target
has executed and delivered to Seller the License Agreement in the form attached
hereto as Exhibit C pursuant
to which Target
has
agreed to pay, in addition to the $1,620,000 payable under the Buyer Note, the
aggregate amount of $338,000 in prepaid royalties to Seller.
7. Survival
of Representations and Warranties. All of
the representations and warranties of the Parties contained in §3 above shall
survive (unless the damaged
Party
knew or had reason to know of any misrepresentation or breach of warranty) and
continue in full force and effect for two (2) years after the date hereof;
provided however, that such representations and warranties made by the Seller in
this Agreement that in any manner relate to (i) Tax matters,
(ii) title matters and Liens, or any of the foregoing, shall terminate or
expire only upon the termination or expiration of all applicable statutes of
limitation.
8. [Intentionally
Omitted].
9. Miscellaneous.
(a) Press
Releases and Public Announcements. No
Party shall issue any press release or make any public announcement relating to
the subject matter of this
Agreement
without the prior written approval of the other Party; provided,
however, that
any Party may make any filing or public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities including the filing by Seller of Forms 8-K with
the U.S. Securities and Exchange Commission (with this Agreement and other
Transaction Documents possibly being filed as Exhibits) and subsequent current,
quarterly and annual reports that describe the transaction contemplated by this
Agreement.
(b) No
Third-Party Beneficiaries. Except
as set forth in Section 3(a)(vi), this Agreement shall not confer any
rights or remedies upon any Person other than the
Parties
and their respective successors and permitted assigns.
(c) No
Code §338 Election. Neither
Buyer, Target, nor any of their Affiliates shall make any election under
Code §338 with respect to the transactions
contemplated
by this Agreement.
11
(d) Entire
Agreement. The
Transaction Documents (including the documents referred to therein) constitute
the entire agreement among the Parties and
supersede
any prior understandings, agreements, or representations by or among the
Parties, written or oral, to the extent they relate in any way to the subject
matter hereof.
(e) Succession
and Assignment. This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors
and
permitted assigns. Buyer may not assign any of its rights, interests, or
obligations hereunder without the prior written approval of Seller. A merger,
sale of control or other similar reorganization transaction shall be considered
an assignment.
(f) Counterparts. This
Agreement may be executed in one or more counterparts (including by means of
facsimile), each of which shall be deemed an original
but all
of which together will constitute one and the same instrument.
(g) Headings. The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or
interpretation
of this Agreement.
(h) Notices. All
notices, requests, demands, claims, and other communications hereunder will be
in writing. Any notice, request, demand, claim, or other
communication
hereunder shall be deemed duly given (i) when delivered personally to the
recipient, (ii) one business day after being sent to the recipient for
overnight delivery by a reputable overnight courier service, such as FedEx
(charges prepaid), (iii) one business day after being sent to the recipient
by facsimile transmission or electronic mail, or (iv) four business days
after being mailed to the recipient by U.S. certified or registered mail, return
receipt requested and postage prepaid, and addressed to the intended recipient
as set forth below:
| If to Seller: | Copy to: | ||
| Firstwave Technologies, Inc. | Xxxxx Xxxxxx, Esq. | ||
| Overlook III, Suite 1000 | Xxxxxx, Xxxxxxx & Xxxxxx, LLP | ||
| 0000 Xxxxx Xxxxx Xxxx | 0000 Xxxxxxx Financial Center | ||
| Xxxxxxx, Xxxxxxx 00000 | 0000 Xxxxxxxxx Xxxx, X.X. | ||
| Attn: Chief Financial Officer | Xxxxxxx, Xxxxxxx 00000 | ||
| If to Buyer: | Copy to: | ||
| Mr. Xxxxx Xxxxxxx | Xxxxxxx X. Xxxxxx, Esq. | ||
| 0000 Xxxxxxxxx Xxxxx | Xxxxxx & Xxxxxx, PLLC | ||
| Xxxxxxx, Xx. 00000 | 0000 Xxxxxxxxx Xx. XX, Xxxxx 000 | ||
| Xxxxxxx, Xxxxxxx 00000 | |||
| and to: | |||
| Xx. Xxxxx Xxxxx | |||
| First Wave Sports UK | |||
| The Pavillion | |||
| 0 Xxxxxx Xxxxx | |||
| Xxxxxx Xxxxxx, Xxxxxx XX0 0XX | |||
| Xxxxxxx |
Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
12
(i) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of Georgia,
U.S.A.,
without
giving
(j) Jurisdiction/Venue. Any
action, suit or proceeding arising out of or relating to this Agreement may be
filed in state courts located in Xxxxxx County, Georgia
or in the
U.S. District Court for the Northern District of Georgia, and each Party
consents and submits to the jurisdiction and venue of such courts for such
purpose and hereby waives any objection it might otherwise have to the
jurisdiction and venue of such courts, including, without limitation, any
objection based upon forum non conveniens or any similar theory.
(k) No
Agency. No
provision of this Agreement shall be deemed or construed to cause any Party to
be a partner, joint venturer or agent of or with the other
Party.
Neither Party has or will acquire by virtue of this Agreement (and no Party
shall hold itself out as having) any power or authority whatsoever to bind or
obligate the other Party or to enter into agreements or take any action
whatsoever in the other Party’s name.
(l) Amendments
and Waivers. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by Buyer and
Seller.
No waiver by any Party of any provision of this Agreement of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be valid unless the same shall be in writing and
signed by the Party making such waiver nor shall such waiver be deemed to extend
to any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
(m) Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or
enforceability
of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other
jurisdiction.
(n) Expenses. Except
as specifically set forth in this Agreement, each of Buyer, Seller, Target, and
Target’s Subsidiaries will bear his, her, or its own costs and
expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby. Without limiting the generality of the
foregoing, and except for any Forgiveness Tax which will be paid as set forth
herein, all transfer, documentary, sales, use, stamp, registration and other
similar Taxes, and all conveyance fees, recording charges and other fees and
charges (including any penalties and interest) incurred in connection with the
consummation of the transactions contemplated by this Agreement shall be paid by
Buyer when due, and Buyer shall, at its own expense, file all necessary tax
returns and other documentation with respect to all such Taxes, fees and
charges, and, if required by applicable law, the Parties will, and will cause
their Affiliates to, join in the execution of any such tax returns and other
documentation.
(o) Construction. The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or
interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word “including” shall mean “including
without limitation”.
13
(p) Incorporation
of Exhibits and Schedules. The
Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part
hereof.
(q) Governing
Language; Currency. This
Agreement has been negotiated and executed by the Parties in English. In the
event any translation of this Agreement
is
prepared for convenience or any other purpose, the provisions of the English
version shall prevail. Unless otherwise specifically stated, all monetary
amounts set forth in this Agreement are expressed in and shall be paid in United
States dollars.
14
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as of the date first above written.
SELLER
FIRSTWAVE
TECHNOLOGIES, INC.
By:
/s/
Xxxxxxx X.
Xxxxx
Title:
CEO
BUYER
ALLABOUTTICKETS,
LLC
By:
/s/
Xxxxx X.
Xxxxxxx
Title:
Manager
15
Schedule
1
Assigned
Contracts
All
non-Sports Industry Customers, including without limitation:
|
Argos
Limited |
Mars
4 Square | ||
|
Barclays
Merchant Serv |
Paypoint
Network | ||
|
BT
Ignite-Xxxxx Equitable/Aegon |
Prudential
Assurance Service via Cap Gemini | ||
|
Cybernetics |
RS
Components | ||
|
Electronic
Data Systems |
Xxxxxxx
Xxxxxxx/Interserve | ||
|
Lloyds
TSB Finance formerly (UDT) |
Tunbridge
Xxxxx Equitable |
Non-Sports
Industry Customers no longer on maintenance:
|
Abbey
National |
GAN-UK | ||
|
Admiral
Insurance |
Green
Flag | ||
|
Amersham
Int'l |
ICL/Inland
Revenue WFTC | ||
|
Aspect
Consulting Vodapage |
ICL/Sema
(NMW) | ||
|
A.T.S |
Manpower | ||
|
Xxxx
Cablemedia (Leeds) |
Xxxxx
Stopes International | ||
|
Xxxx
Cablemedia (London) |
M
& S FS | ||
|
Birmingham
Midshires |
MBF
(UK) Debis | ||
|
BT-New
College Xxxx/Clarendon College |
Mercury
Communications | ||
|
BT-Swansea
College |
Xxxxx
Laminates - BT | ||
|
Bull |
Microgen | ||
|
Capital
Credit |
National
Xxxxxxxxx | ||
|
Caravan
Club |
National
Instruments | ||
|
Xxxxxxx
Worldchoice Direct |
Nationwide
Building Society | ||
|
Colt |
Nestle | ||
|
Colonial |
LGH
Group | ||
|
Comet
Group - BT |
RAC
Motoring Services | ||
|
Xxxxx
Xxxxxxxx (Ascot Technologies) |
Xxxxxxx
Connections | ||
|
CSC/Guiness |
Siemens
Communications Ltd | ||
|
Dupont |
Software
Futures | ||
|
Eastgate
Connections |
Speedyhire
Plc | ||
|
Energis |
Telewest | ||
|
Equifax |
Thyssen
Garfield | ||
|
First
Drinks Brands |
UFB
Humberclyde | ||
|
Forte |
|||
|
Funeral
Plans (SCI) |
|||
|
Future
Electronics |
|||
1
