SHARE
PURCHASE AGREEMENT
By
and Among
FIRST
ECOM.COM, INC.
FEDS
ACQUISITION CORPORATION
FIRST
ECOM DATA SERVICES ASIA LIMITED,
AND
FIRST
ECOMMERCE ASIA LIMITED
(collectively,
as “Sellers”)
and
FIRST
CURACAO INTERNATIONAL BANK, N.V.
(as
“Purchaser”)
with
respect to all the issued and outstanding share capital of
FIRST
ECOMMERCE DATA SERVICES LIMITED
THE
INSTALLMENT PAYMENTS REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH INSTALLMENT PAYMENTS
UNDER
SUCH ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO FIRST
CURACAO INTERNATIONAL BANK, N.V. AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT
REQUIRED.
SHARE
PURCHASE AGREEMENT
THIS
SHARE PURCHASE AGREEMENT
(together with all schedules, exhibits or other instruments attached hereto,
this “Agreement”) is entered into effective as of the 19th
day of
October, 2001 (the “Effective Date) by and among First Ecom.com, Inc., a Nevada
corporation (“First Ecom”), FEDS Acquisition Corporation, a Nevada corporation
(“FEDS Acquisition”), First Ecom Data Services Asia Limited, a Hong Kong
corporation (“FEDS Asia”), First Ecommerce Asia Limited, a Hong Kong corporation
(“First Asia”) (First Ecom, FEDS Acquisition, FEDS Asia and First Asia being
sometimes referred to herein individually as a Seller and collectively, whether
two or more, as “Sellers”), and First Curacao International Bank, N.V., a
Netherlands Antilles company (“Purchaser”).
WHEREAS
FEDS
Acquisition is the registered and beneficial owner of all of the issued and
outstanding share capital of First Ecommerce Data Services Limited, a Bermuda
company (the “Company”); and
WHEREAS,
FEDS
Asia is the owner and holder of all rights, titles and interest in and to
certain computer software technologies of interest to Purchases;
and
WHEREAS,
First
Ecom is the registered and beneficial owner of all of the issued and outstanding
share capital of FEDS Acquisition, First Asia and FEDS Asia; and
WHEREAS,
First
Asia is a party to a certain license and distribution agreement with Oasis
Technology Ltd. of interest to Purchaser; and
WHEREAS,
upon
the terms and subject to the conditions set forth in this Agreement, Purchaser
wishes to purchase, and Sellers wish to transfer or cause to be transferred
to
Purchaser, the Company Shares, and to effect such other transfers and grants
of
rights and licenses to purchaser as are contemplated herein for the
consideration set forth below;
NOW,
THEREFORE, in
consideration of the premises and of the mutual agreements, provisions and
covenants herein contained, and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, Purchaser and Sellers
hereby agree as follows:
ARTICLE
I
- DEFINITIONS
1.1 Definitions.
As used in this Agreement, the following capitalized terms shall have the
meanings ascribed to them below. Other capitalized terms used herein shall
have
the meanings given them where they first appear.
“Affiliate”
of a person or entity shall mean any other person or entity controlled by,
controlling, or under common control with said person or entity, and “control”
for this purpose is understood to include the ownership or voting control
of
more than 50% of the outstanding securities of any such person carrying the
power to vote with respect to the direction or management of the person or
entity.
“Business
Day” shall mean any on which businesses in Bermuda are normally open for
business, excluding governmental, banking and other generally recognized
holidays.
“Closing”
shall mean the closing of the transactions contemplated by this Agreement
to
take place upon the execution and delivery of this Agreement as specified
in
Article II.
“Closing
Date” shall mean the date on which Closing takes place.
“Companies
Act” shall mean the Companies Act 1981 of Bermuda, as amended from time to
time.
“Company
Shares” shall have the meaning given it in Section 4.5(a).
“Contracts”
shall mean any and all contracts, commitments, covenants, promises, notes,
mortgages, indentures, leases of tangible personal property, licenses,
franchises, options, warranties, commitments, and other agreements,
understandings and arrangements (other than those constituting real property
or
bank deposit agreements).
“Environmental
Requirements” shall mean all applicable Legal Requirements, together with any
other requirements of permits, licenses, certificates, authorizations,
concessions, franchises or other approvals of any Governmental Authority
relating to pollution, the protection of human health or safety or the
environment, including, without limitation all requirements pertaining to
reporting, licensing, permitting, investigation and remediation of emissions,
discharges, releases, or threatened releases of Hazardous Substances into
the
air, surface water, groundwater, or land, ore relating to the manufacture,
processing distribution, use, treatment, storage, disposal, transport, or
handling of Hazardous Substances; and all requirements pertaining to the
protection of the health and safety of the Company’s employees, contractors or
the public.
“Governmental
Authority” shall mean any court, governmental department, commission, council,
board, agency, or other judicial, administrative, regulatory, legislative
or
other governmental agency or instrumentality of Bermuda or any foreign country,
or any state, county, municipality or local governmental body located in
Bermuda
or any such other foreign country.
“Hazardous
Substances” shall mean any pollutant, contaminant, material, substance, waste,
chemical or compound that is regulated, restricted or prohibited by any
Environmental Requirement or designated by any Governmental Authority to
be
hazardous, toxic, radioactive, biohazardous or otherwise a danger to health
or
the environment.
“Intellectual
Property” shall mean any and all discoveries, inventions (patentable or
otherwise), methods, trade secrets, know-how and other proprietary information,
utility models, sketches, drawings, designs, charts, lists, reports, forms,
memoranda, writings, computer software, computer software documentation,
trademarks and trade names, service marks, and service names, domain names,
copyrights, patents (including without limitation utility patents, design
patents, utility models and petty patents), moral rights, in all cases whether
or not registered or registrable, and all rights to renewal and extension
of
copyrights, patents or designs to the full term or terms for which such
copyrights, patents or designs may be issued, renewed or extended, all
copyright, patent and design registrations and applications therefor, all
rights
under judicial orders or injunctions, and the right to recover for past and
future infringements, and also including in the case of patent application
the
right to claim priority for such patent applications.
“Legal
Requirements” means laws, statutes, orders, rules, ordinances, regulations,
codes, judgments, orders, writs or decrees of any governmental Authority
having
jurisdiction over the person or subject matter in question, and any and all
legal duties arising under applicable common law.
ARTICLE
II - PURCHASE AND SALE
2.1 Purchase
and Sale of the Company Shares. Subject to the terms and conditions of this
Agreement, Sellers hereby agree to sell and deliver, or cause to be sold
and
delivered, to Purchaser or its assignee or nominee, and Purchaser or its
assignee or nominee hereby agrees to purchase and accept form Sellers, all
legal
and beneficial interest in all of the Company Shares, consisting of 3,000,000
ordinary shares of par value BD$1.00, represented by Certificate No. 8 (the
“Certificate”, whether one or more), free from all liens, charges, encumbrances,
equities and claims of third parties of any description, together with all
rights now or hereafter attaching thereto.
2.2 Grant
of
Software Licenses; Assignment of Distribution License; Support and Maintenance,
Subject to the terms and conditions of, this Agreement, Sellers hereby agree
to
execute and deliver to Purchaser (i) a Software License Agreement for Merchant
Accounting and Reporting System, (ii) a Software License Agreement for Payment
Gateway, and (iii) a Software Development License Agreement, each in the
form of
Exhibits A, B and C attached hereto and made a part hereof for all purposes,
respectively, (iv) subject to any necessary consents that remain to be obtained
from Oasis Technology Ltd., a Subdistributor and Assignment Agreement in
the
form of Exhibit D attached hereto and made a part hereof for all purposes,
and
(v) an End User Support Agreement in the form of Exhibit E attached hereto
and
made a part hereof for all purposes.
2.3 Purchase
Price. The aggregate purchase price (the “Consideration”) to be paid by
Purchaser for the Company Shares, the grants of the software licenses and
the
assignment described in Section 2.2 above, the entry into the End User Support
Agreement described in Section 2.2 above, and the other covenants and agreements
on the part of Sellers provided for hereunder, shall be US$1,663,986 payable
at
Closing in cash, by cashier’s check or by wire transfer of immediately available
funds to an account designated in writing by Sellers to Purchaser no less
than
three Business Days prior to the Closing for this purpose, plus the payments
required to be paid to Sellers by or on behalf of Purchaser in the amounts
and
at the times set forth in Section 7.1 below (the “Installment Payments”). In
this connection the parties acknowledge and agree that, of the US$1,663,986
payable at Closing, US$10.00 represents the entire fee for each of the license
agreements described in clauses (i), (ii) ad (iii), respectively, of Section
2.3, an additional US$10.00 represents the entire fee for the Subdistributor
and
Assignment Agreement described in clause (iv) of Section 2.3 , and US$10.00
represents the entire fee for the end User Support Agreement described in
clause
(v) of Section 2.3, and the remaining US$1,663,936, plus the Installment
Payments, represents the entire purchase price being paid for the Company
Shares. As provided in Section 10.12 hereof, Purchaser shall be deemed to
have
discharged its obligations to make payments hereunder by making such payments
to
First Ecom, which shall hold such payments in trust for the other Sellers
as
their interest may appear.
2.4 Closing.
The Closing shall take place at the offices of Appleby Spurling & Kempe,
Cedar House, 41 Cedar Avenue, Hamilton, Bermuda upon the latest to occur
of (i)
immediately upon complete execution and delivery of this Agreement and (ii)
as
soon as practicable following complete execution and delivery of this Agreement
and satisfaction or waiver of all of the conditions to the obligations of
the
parties to consummate the transactions contemplated hereby in accordance
with
this Agreement, and (iii) at such other time, place and date as is mutually
agreed to by the parties hereto. The parties acknowledge that the execution
of
documents and instruments required hereunder may take place prior to the
actual
finding of the Consideration payable at Closing or the satisfaction of certain
conditions to Closing, in which case such documents and instruments shall
be
placed into escrow with the firm of Appleby Spurling & Kempe for release
upon funding and satisfaction of all such conditions, and the Closing Date
shall
be the date of such release. Notwithstanding any requirement herein that
documents or instruments be dated the Closing Date, such documents and
instruments shall be deemed satisfactory if dated on the date of signing,
but
considered effective on the Closing Date, and conditions required to be
satisfied prior to Closing, and representations and warranties given at signing,
shall be deemed satisfied if satisfied after signing but prior to or on the
Closing Date.
| 2.5 |
Sellers’
Actions at the Closing. At or prior to the
Closing:
|
| (a) |
Sellers
shall deliver to Purchaser:
|
(i) (A) the
Certificates of Incorporation or other equivalent organizational document
of
each of First Ecom, FEDS Acquisition, FEDS Asia and First Asia, respectively,
certified in each case as of a date no earlier than five (5) Business Days
prior
to the Closing Date by the Secretary of State of the State of Nevada or
equivalent official or office of the jurisdiction of incorporation, and (B)
a
certificate of said Secretary of State or other official or office dated
as of
no earlier than three (3) Business Days prior to the Closing Date as to the
due
incorporation and good standing of each of First Ecom, FEDS Acquisition,
FEDS
Asia and First Asia, respectively; and
(ii) certificates
of the Secretary or an Assistant Secretary of each of First Ecom, FEDS
Acquisition, FEDS Asia and First Asia, respectively, dated the Closing Date
and
certifying (A) that the Certificate of Incorporation or equivalent
organizational document of such company has not been amended since the date
of
the last amendment referred to in the certificate delivered pursuant to clause
(i) (A) above, (B) that attached thereto is a true and correct copy of all
resolutions adopted by the Board of Directors and, if required under the
company’s organizational documents or applicable Legal Requirements,
shareholders of such company authorizing the execution, delivery and performance
of this Agreement and the ancillary agreements and transactions contemplated
hereby and that such resolutions have not been amended or modified and are
in
full force and effect in the form adopted, and (C) to the incumbency and
specimen signature of each officer of such company executing this Agreement
and
each ancillary agreement to be executed by such company pursuant to this
Agreement and any certificate or instrument furnished pursuant hereto;
and
(iii) (A)
the
Memorandum of Association of the Company, certified as of a date no earlier
than
three (3) Business Days prior to the Closing Date by the Registrar of Companies
of Bermuda, and (B) a Certificate of Compliance from said Registrar of companies
dated as of no earlier than three (3) Business Days prior to the Closing
Date as
to the due incorporation and good standing of the Company; and
(iv) certificate
of the Secretary of the Company dated the Closing Date and certifying (A)
that
the Memorandum of Association of the Company has not been amended since the
date
of the last amendment referred to in the Certificate delivered pursuant to
clause (iii) (A) above, and (B) that attached thereto is a true and correct
copy
of all resolutions adopted by the Board of Directors and shareholders of
the
Company pursuant to the provisions of Section 2.5(c) below and that such
resolutions have not been amended or modified and are in full force and effect
in the form adopted, and (C) that the other requirements of Section 2.5(c)
have
been fulfilled in accordance with the provisions thereof; and
(v) an
opinion of counsel from legal counsel to First Ecom and FEDS Acquisition
substantially in the form of Exhibit J attached hereto and made a part hereof
for all purposes;
(b) Sellers
shall deliver or procure delivery to the Purchaser of the Certificate evidencing
the Company Shares, accompanied by duly executed share transfer instruments
in
the form attached hereto as Exhibit F effecting transfer from FEDS Acquisition
of all the Company Shares in favor of Purchaser (or its nominee(s)), and,
in
connection therewith, Sellers hereby irrevocably appoint, as of the time
of
Closing, any corporate officer of Purchaser and any Director of the Company
as
Sellers’ attorneys-in-fact and irrevocably instruct any such attorney-in-fact to
execute all or any form(s) of transfer, surrender and/or other documents(s)
at
such attorney-in-fact’s direction in relation to the Company Shares in favor of
Purchaser or such other person or persons as Purchaser may direct and to
do all
such acts and things as may in the opinion of such attorney-in-fact be
reasonably necessary or reasonably expedient for the purposes of, or in
connection with, the acceptance of the purchase described in Section 2.1
and to
surrender or vest in Purchaser or its nominee(s) the Company Shares;
(c) To
the
extent they have not previously done so, Sellers shall, and shall cause the
Company to, procure that a board meeting of the Company shall be held at
which
(i) there shall be submitted and accepted the resignations or otherwise arranged
the removals of directors and officers referred to in Section 4.4(b); (ii)
there
shall be appointed as directors and officers of the company the nominees
of
Purchaser specified in Section 4.4(b); (iii) the transfers of the Company
Shares
contemplated by this Agreement shall be approved and Purchaser and/or its
nominee(s) shall be registered as the holders of the Company Shares and new
share certificates shall be executed and issued accordingly; (iv) all existing
instructions of the Company to its banks shall be cancelled and new instructions
given in such form as Purchaser may require; and (v) the registered office
of
the company will be changed to Cedar House, 41 Cedar Avenue, Hamilton HM
EX,
Bermuda, all in form and substance reasonably satisfactory to
Purchaser;
(d) To
the
extent they have not previously done so, Sellers shall, or shall cause the
Company to, procure that the auditors of the Company shall deliver their
written
resignation to Purchaser;
(e) To
the
extent they have not previously done so, Sellers shall cause Company to repay
to
First Ecom out of Company’s accounts the US$1,336,014 debt and the US$9,401.27
interest obligation currently owed by Company to First Ecom, and Sellers
will
furnish to Company a release in the form attached hereto as Exhibit G of
said
debt and obligation and any and all liens or encumbrances or related
undertakings securing its or their repayment, together with the originals(s)
of
the promissory note or notes evidencing said indebtedness;
(f) Sellers
shall, or shall cause the Company to, deliver to Purchaser the statutory
books
of the Company complete and accurate up to Closing and any company seal(s),
memorandum of association, bye-laws and amendments thereto, name change
certificates and other company filings, and all unused share certificates
of the
Company;
(g) To
the
extent they have not previously done so, Sellers shall, or shall cause the
Company to, deliver to Purchaser the unaudited financial statements of the
Company comprising the balance sheet as at, and the year-to-date income and
cash
flow statement for the period ending, September 30, 2001;
(h) To
the
extent they have not previously done so, Sellers shall, or shall cause their
appropriate Affiliates to, procure that their names and the names of their
Affiliates that are the same as or confusingly similar to the Company’s name be
changed so that they are not, it being understood that “FirstEcom.Com” shall not
be considered as such for this purpose, and Seller shall deliver to Purchaser
(i) a copy of the instruments or documentation necessary to do so as certified
by the appropriate Governmental Authority no earlier than five (5) business
Days
prior to the Closing Date or in the event that such certifications cannot
with
reasonable diligence be obtained prior to the Closing Date, (ii) evidence
reasonably satisfactory to Purchaser that applications to accomplish same
have
been duly filed and are being diligently pursued;
(i) To
the
extent they have not previously done so, Sellers shall, and shall cause the
Company to, execute and deliver an agreement in the form of Exhibit H attached
hereto and made a part hereof for the purpose of assigning, conveying and
transferring to First Ecom or its designee all of the Company’s right, title and
interest, if any, in and to the logo attached to said Exhibit H, which logo
is
and shall remain First Ecom’s or its designee’s property;
(j) To
the
extent they have not previously done so, Sellers shall, or shall cause the
Company to, obtain and deliver to Purchase an accurate and complete copy
of the
permission in writing granted form the Bermuda Monetary Authority for the
transfer of all the Company Shares from FEDS Acquisition to Purchaser
contemplated by this agreement, all in form and substance reasonably
satisfactory to Purchaser;
(k) Sellers
shall provide confirmation reasonably satisfactory to Purchaser in connection
with the license currently held by the Company under Section 114 of the
Companies Act to the effect that (i) said license shall continue in full
force
and effect following the transfer of control of the Company from FEDS
Acquisition to Purchaser contemplated hereunder, and (ii) that the condition
in
said license previously limiting to “financial institutions” the range of
customers to whom the Company would be permitted to render services has been
or
will be removed;
(l) To
the
extent they have not previously done so, Sellers shall, and shall cause the
Company to, procure that the Bye-laws of the Company be amended in the following
respects; (i) amend Bye-law 61, which still requires beneficial ownership
by
Bermudians in the Company to be at least 60% and a non-Bermudian holding
more
than 40% of the shares of the Company to dispose of the excess, so that the
Bye-laws reflect and permit the ownership by FEDS Acquisition (a non-Bermudian)
of all the Company Shares and so that they further permit the transfer of
those
Company Shares from FEDS Acquisition to Purchaser, and (ii) amend Bye-law
64,
which currently provides that the Board of Directors has absolute discretion
without assigning any reason not to register any share transfer, so that
such
discretionary power is removed, all in form and substance reasonably
satisfactory to Purchaser;
(m) To
the
extent they have not previously done so, Sellers shall cause the Company
to
execute and deliver to FEDS Asia an assignment in the form of Exhibit I attached
hereto and made a part hereof for all purposes of all the Company’s right, title
and interest in and to that certain E-commerce Transaction Processing Agreement
dated June 22, 2000 entered into between the Company and Wing Hang Bank and
that
certain Services Agreement for E-commerce Transaction Processing dated November
30, 2000 between the Company and International Bank of Asia Limited, all
in form
and substance reasonably satisfactory to Purchaser;
(n) To
the
extent they have not previously done so, Sellers shall cause the Company
to
furnish to the “Customer” under that certain Transaction Processing Agreement
made effective 20 April 2001 and entered into by and between the Company
and
Planet Group, Inc. a letter in form and substance reasonably satisfactory
to
Purchaser regarding the provisions of Section 14 of that Agreement;
and
(o) To
the
extent they have not previously done so, Sellers shall, and shall cause the
Company to, pay to the appropriate governmental Authority any and all applicable
Bermuda stamp duties incurred with respect to the execution and delivery
of all
of the contracts, agreements and other instruments listed in Schedules 1
or 2,
the employment-related agreements specified in Section 4.17(b) and the Lease
specified in Section 4.12 (a) below, including without limitation any fines
or
penalties for delinquent or insufficient filing or payment with respect
thereto.
| 2.6 |
Purchaser’s
Actions at the Closing. At the
Closing:
|
| (a) |
Purchaser
shall deliver to Sellers:
|
(i) (A) the
Articles of Association of Purchaser, certified as of no earlier than five
(5)
Business Days prior to the Closing Date by Mr. G.C.A. Smeets, a civil law
notary
residing in Curacao, Netherlands Antilles, and (B) a certificate of the said
Mr.
G.C.A. Smeets dated as of no earlier than five (5) Business Days prior to
the
Closing Date as to the due incorporation and good standing of
Purchaser;
(ii) certificate
of a Managing Director of Purchaser dated the Closing Date and certifying
(A)
that the Articles of Association of Purchaser has not been amended since
the
date of the last amendment referred to in the Certificate delivered pursuant
to
clause (i) (A) above, (B) that attached thereto is a true and correct copy
of
all resolutions adopted by the Board of Managing Directors of Purchaser
authorizing the execution, delivery and performance of this Agreement and
the
ancillary agreements and transactions contemplated hereby and that such
resolutions have not been amended or modified and are in full force and effect
in the form adopted, and (C) to the incumbency and specimen signature of
each
officer of Purchaser executing this Agreement and each ancillary agreement
to be
executed by purchaser pursuant to this Agreement and any certificate of
instrument furnished pursuant hereto; and
(b) Purchaser
shall deliver to Seller the portion of the Consideration to be paid at Closing
in the form and manner described in Section 2.3 above.
ARTICLE
III - REPRESENTATIONS AND WARRANTIES
REGARDING
SELLERS
Sellers,
acting jointly and severally, hereby represent and warrant to Purchaser as
follows:
3.1 Organization.
Each of First Ecom and FEDS Acquisition is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Nevada
and
has all requisite corporate power and authority to own, lease and operate
its
properties and to carry on its business as now being conducted. Each of FEDS
Asia and First Asia is a corporation duly incorporated, validly existing
and in
good standing under the laws of Hong Kong and has all requisite corporate
power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. First Ecom is the registered and beneficial
owner of all of the issued and outstanding share capital of FEDS Acquisition,
First Asia and FEDS Asia.
3.2 Authority.
Each Seller has all requisite corporate power and authority to enter into
this
Agreement and to perform its obligations hereunder and consummate the
transactions contemplated hereby. Each Seller’s execution and delivery of this
Agreement, the performance by such Seller of its obligations hereunder and
the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of such
Seller.
FEDS
Acquisition has the full power to assign, transfer and deliver the Company
Shares hereunder, free and clear of all covenants, conditions, voting trust
arrangements, liens, encumbrances, equities, security interests, restrictions,
claims, charges, and other claims or rights of third parties (“Encumbrances”).
This Agreement, and each agreement, document or other instrument required
to be
executed and delivered hereunder, when executed and delivered by all Sellers
named as a party thereto, will constitute the valid and legally binding
obligation of each such named Seller, legally enforceable against such Seller
in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
the
rights of creditors generally, limitations imposed by applicable law or
equitable principles upon the specific enforceability of any of the remedies,
covenants or other provisions of this Agreement, and upon the availability
of
injunctive relief or other equitable remedies. FEDS Acquisition acquired
the
Company Shares from First Ecom in a bona fide transaction for fair
consideration, such transfer was duly and validly authorized by all necessary
corporate action on the part of First Ecom and FEDS Acquisition, and such
transfer is property stamped and not subject to any executory agreement,
condition subsequent or other covenant or condition that would reserve to
First
Ecom or any other party the right to rescind or otherwise avoid such
transfer.
3.3 No
conflict with Other Instruments. Each Seller’s execution and delivery of, and
performance of its obligations under, this Agreement, each agreement, document
or other instrument required to be executed and delivered hereunder, and
the
transactions contemplated hereby and thereby (i) will not result in any
violation of, conflict with, constitute a breach, violation or default (with
or
without notice of lapse of time, or both), give rise to a right of termination,
cancellation, forfeiture or acceleration of any obligation or loss of any
benefit under, or result in the creation or encumbrance on any of the properties
or assets of any Seller or the Company or any of its or their subsidiaries,
under (x) any provision of the certificate of incorporation, bylaws, or other
charter or government document of any Seller or (y) any agreement, arrangement,
contract, understanding, note, mortgage, indenture, lease, franchise, license,
permit or other instrument to which any Seller is a party or by which any
Seller
or any of its properties or assets is bound, (ii) will not conflict with,
or
result in any breach or violation of, any Legal Requirement applicable to
Seller
or its properties or assets, or (iii) will not result in the imposition of
any
Encumbrance upon the Company Shares, except, in the case of clauses (i) (y)
and
(ii), for any of the foregoing that would not, individually or in the aggregate,
have a material adverse effect on Sellers and their subsidiaries, taken as
a
whole, or that could not result in the creation of any material lien, charge
or
encumbrance upon any assets of any Seller or any of its subsidiaries, or
that
could not prevent, materially delay or materially burden the transactions
contemplated by this Agreement.
3.4 Ownership
of Securities, FEDS Acquisition will sell the Company Shares pursuant to
this
Agreement with full title guarantee (as construed under Bermuda law) and,
upon
consummation of the purchase contemplated by this Agreement, Purchaser will
acquire such Company Shares free and clear of all liens, charges, encumbrances,
equities and claims of third parties of any description with full title
guarantee and with the benefit of all other rights and advantages belonging
to
or accruing on such Company Shares. No Seller is a party to or otherwise
subject
to, any trust, voting trust or agreement, proxy or other agreement, arrangement
or understanding, between or among any persons that affects or relates to
the
voting or giving of written consent with respect to the Company Shares or
any
other outstanding security of the Company, the election of directors, the
appointment of officers or other actions of the board of directors of the
Company (the “Board of Directors”) or the management of the
Company.
3.5 Sale
Entirely for Own Account. This Agreement is made with each Seller in reliance
upon Sellers’ representation to Purchaser, which by the execution of this
Agreement Seller hereby confirm, that the Installment Payments to be received
by
FEDS Acquisition will be acquired for investment for FEDS Acquisition’s own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that no Seller has any present intention
of selling, granting any participation in, or otherwise distributing the
same
other than in each case pursuant to an appropriate exemption from registration
under applicable law. By executing this Agreement, Sellers further represent
that no Seller has any contract, undertaking, agreement or arrangement with
any
person to sell, transfer or grant participations to such person or to any
third
person, with respect to any of the Installment Payments.
3.6 Reliance
Upon Seller’s Representations. Each Seller understands that the Installment
Payments are not registered under the United States Securities Act of 1933
(the
“Securities Act”) on the ground that the sale provided for in this agreement and
the issuance of securities hereunder is exempt from registration under the
Securities Act pursuant to Section 4(2) thereof and/or Regulation S promulgated
thereunder, and that Purchaser’s reliance on such exemption is based on every
Seller’s representations set forth herein. Each Seller realizes that the basis
for the exemption may not be present if, notwithstanding such representations,
any Seller has in mind merely acquiring the Installment Payments for a fixed
or
determinable period in the future, or for a market rise, or for sale if the
market does not rise. No Seller has any such intention.
3.7 Restricted
Securities. Each Seller understands that the Installment Payments may not
be
sold, transferred or otherwise disposed of or in the United States without
registration under the Securities Act or an exemption therefrom, and that
in the
absence of an effective registration statement covering the Installment Payments
or an available exemption from registration under the Securities Act, the
Installment Payments must be held indefinitely. In particular, each Seller
is
aware that the Installment Payment may not be sold pursuant to Rule 144
promulgated under the Securities Act unless all of the conditions of that
Rule
are met. In this connection, each Seller represents that such Seller understands
that under Rule 144, the Installment Payments must be held for at least one
year
after purchase thereof from Purchaser prior to resale (and possibly longer
under
applicable regulations) and that, under certain circumstances, the conditions
for use of Rule 144 include the availability of public current information
about
Purchaser, that sales be effected through a “broker’s transaction” or in
transactions with a “market maker,” and that the number of securities in respect
of the Installment Payments being sold not exceed specified limitations.
Such
public current information about Purchaser for purposes of Rule 144 is not
now
publicly available and may not be in the future.
3.8 Governmental
Consents and Notices. No consent, approval, order or authorization of, or
registration, declaration of, notice to or qualification or filing with,
any
Governmental Authority or regulated public securities exchange or other
organized public market on which the shares of any such Seller are traded
(including but not limited to Nasdaq), whether domestic or foreign, is required
to be obtained or submitted by or on behalf of or with respect to any Seller
in
connection with the execution and delivery of this Agreement by any Seller
or
the consummation by any Seller of the transactions contemplated hereby that
has
not been, or will not prior to Closing have been, duly obtained and/or
submitted, as applicable. No consent, approval, order or authorization of,
or
registration, declaration of, notice to or qualification or filing with,
any
Governmental Authority or regulated public securities exchange or other
organized public market on which the shares of any such Seller are traded
(including but not limited to Nasdaq), whether domestic or foreign, was required
to be obtained or submitted by or on behalf of or with respect to any Seller
in
connection with First Ecom’s transfer of Company Shares to FEDS Acquisition that
has not been duly obtained and/or submitted, as applicable.
3.9 Litigation.
There is no (a) claim, action, suit or proceeding pending or, to the knowledge
of Sellers and the Company, threatened against or relating to any Seller
or any
of its or their subsidiaries before any Governmental Authority or arbitration
tribunal, or (b) outstanding judgment, order, writ, injunction or decree,
or
application, request or motion therefor, of any court, governmental agency
or
arbitration tribunal in a proceeding to which any Seller or any of its or
their
subsidiaries was or is a party that would individually or in the aggregate,
either impair any Seller’s ability to consummate the transactions contemplated
by this Agreement or have a material adverse effect on Sellers and their
subsidiaries taken as a whole.
3.10 Insolvency.
Each of the Sellers is unable to pay its liabilities as they come due, and
none
is otherwise “insolvent” under bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting the rights of
creditors generally that are applicable to such Seller or its assets. No
order
has been made, petition presented, resolution passed or meeting convened
for the
winding up of any Seller or for an administration order in respect of any
Seller; no receiver, receiver and manager, administrative receiver or liquidator
has been appointed of the business or the whole or any part of the assets
or
undertaking of any Seller; there are no circumstances that now or with the
passage of time may give rise to the appointment of any such receiver, receiver
and manager, administrative receiver or liquidator, and, to the knowledge
of
Sellers and the Company, no such order, petition, resolution, meeting or
appointment is pending or threatened.
3.11 No
Misleading Statements. No representation or warranty made herein by any Seller
contains any statement of a material fact that is either untrue or, in the
light
of the circumstances under which they are made, misleading.
3.12 Brokers
or Finders. Neither any Seller nor any of their officers, directors, employees
or shareholders has employed any broker or finder in connection with the
transactions contemplated by this Agreement, nor have they incurred, and
they
shall not incur, directly or indirectly, any liability for any brokerage
or
finders’ fees or agents’ commissions or any similar charges in connection with
this Agreement or any transaction contemplated hereby.
ARTICLE
IV - REPRESENTATIONS AND WARRANTIES
Sellers,
acting jointly and severally, hereby represent and warrant to Purchaser as
follows:
(a) The
Company is a local company incorporated under a private act known as “The
Rosebank Investment Company Act, 1957” (the “EDS Act”) by a memorandum of
association deposited 10 September 1957 (the “Memorandum of Association”) under
the laws of Bermuda, both of which remain in full force and effect, as amended
to the date hereof, under the Companies Act. True, complete and accurate
copies
of the Company’s Memorandum of Association and Bye-laws, as amended to the date
hereof, and of the minutes of all of directors’ and shareholders’ meetings, and
the shareholders’ registry, complete and accurate as of the date hereof, have
been delivered to Purchaser or its counsel. Such documents contain full details
of the rights and restrictions attached to the share capital of the Company,
and
all directors’ and shareholders’ resolutions reflected in the said minutes have
been duly adopted as resolutions of the Company, and have not, except as
disclosed therein, been rescinded or modified.
(b) The
Company holds a validly issued and currently in effect license from the
Registrar of Companies under Section 114 of the Companies Act permitting
ownership of up to 100% of the Company Shares by FEDS Acquisition, which
license
(i) contains no conditions, and is subject to no express or implied limitations
by reason of the representations made or other information provided in the
course of making application for such license, that would render the license
invalid or otherwise jeopardize its scope or continued validity by reason
of the
transfer of the Company Shares to Purchaser contemplated hereby, and (ii)
is
current in all payments of fees required for maintenance of the license,
including without limitation the required 2001 annual fee of
BD$1000.00.
4.2 Qualification;
Location of Asset and Operations. The Company has all requisite power and
authority to own, lease and operate its respective properties and to carry
on
its business as and where now being conducted. The Company is qualified to
conduct business in its jurisdiction of incorporation and in each such other
jurisdiction where the nature of its assets or the conduct of its business
requires it to be so qualified. The Company has no assets having a situs
outside
of Bermuda and does not have a branch, agency or place of business or any
permanent establishment (as that expression is defined in the relevant double
taxation relief orders current at the date of this agreement) outside Bermuda
and is not required to be qualified to do business outside Bermuda.
4.3 Register
of shareholders and meetings. The register of shareholders an statutory books
of
the company contain complete, true and accurate records of the shares and
shareholders of the Company and all the other information which they are
required to contain under the Companies Act up to the date of this Agreement,
and comply with all the requirements of the Companies Act and all returns,
particulars, resolutions and other documents required to be delivered by
the
Company to the Registrar of Companies have been duly delivered with the required
time limits and no fines or penalties are outstanding or known to be due.
The
Company has not received notice of any application or intended application
for
the modification of its register of shareholders that is not already reflected
in the entries recorded therein. The Company has held all regular and special
meetings of shareholders required of it under the Companies Act or, to the
extent of any delinquency in the convening or completion of such meetings,
such
delinquencies have been cured by application to and sanction by the Registrar
of
Companies, the convening and completion of such meetings, and the payment
in
full of any resulting fines, penalties or assessments. No application has
been
made by a shareholder or creditor of the Company or any other person to wind-up
the affairs of the Company on account of any such delinquency. All transfers
of
shares of the Company taking place prior to the date hereof have been properly
stamped and have, received all necessary or appropriate approvals of the
Bermuda
Monetary Authority.
| 4.4 |
Board
of Directors and Officers.
|
(a) As
of
August 31, 2001, (i) the number of directors comprising the Company’s Board of
Directors was six (6), (ii) three of the directors positions were vacant,
(iii)
the directors serving in the remaining three positions were Gregory Pek,
J.
David Lema and Ian G. Robinson and (iv) the President and Vice President
positions were held by J. David Lema and Gregory Pek, respectively. Each
of the
aforenamed directors and officers was duly appointed in accordance with the
Company’s Memorandum of Association and Bye-laws, and in accordance with the
Companies Act, and none of them has since their respective appointments resigned
or offered his or her resignation as such. Any other person who previously
served as a director of the Company has duly and validly resigned or been
removed from that position, or has vacated the position upon the due expiration
of his or her term, and no basis for any claim against the Company, its
Affiliates or its or their directors, officers or shareholders exists, and
none
has been asserted, by or on behalf of any previous directors arising out
of such
previous service or holding of office or the termination thereof, however
occasioned.
(b) Further,
effective as of the Closing, Sellers and the Company’s Board of Directors have
taken or caused to be taken all necessary and appropriate actions to (i)
reduce
the number of positions in the Company’s Board of Directors from six to two,
(ii) remove or secure the resignations of Gregory Pek and Ian G. Robinson
from
their positions as directors of the Company without any claim for compensation
or otherwise and replace them with Purchaser’s nominee Michael Sanchez, and
(iii) remove or secure the resignation of Gregory Pek from his position as
Vice
President of the Company without any claim for compensation or otherwise
and
replace him with Purchaser’s nominee Michael Sanchez, with the result that the
Company’s Board of Directors will consist of two directors, namely J. David Lema
and Michael Sanchez.
(a) The
authorized share capital of the Company consists of 5,000,000 ordinary shares
having a par value of BD1.00 per share, of which 3,000,000 of such shares
are
issued and outstanding as of the date hereof, which issued and outstanding
shares are recorded and duly registered in the Company’s register of
shareholders in the name of FEDS Acquisition (the “Company Shares”). All issued
Company Shares are validly issued and fully paid, have been issued in compliance
with applicable Legal Requirements, and, without limiting the provisions
of
Section 4.5(b) below, are not subject to any rights of pre-emption, redemption,
repurchase, right of first refusal, co-sale right, right of participation,
right
of first offer, option or other restriction on transfer, including without
limitation any such rights that may arise or have existed under the Memorandum
of Association or Bye-laws of the Company, the Shareholders’ Agreement relating
to the Company dated May 26, 2000 by and among The Bank of Bermuda Limited,
First Ecom and the Company (the “Shareholders’ Agreement”), or the Share
Purchase and Sale Agreement between The Bank of Bermuda Limited and First
Ecom
dated June 18, 2001 (the “Share Purchase and Sale Agreement”), or otherwise in
relation to the sale and purchase of the same hereunder. The rights, preferences
and privileges of the Company Shares are as set forth in the Company’s
Memorandum of Association and Bye-laws. The Company has not purchased any
of its
own shares. As of the date hereof, without limiting the provisions of Section
4.5(b) below, there are no other shares or other equity securities of the
Company and no other options, warrants, calls, conversion rights, commitments
or
agreements of any character to which the Company is a party or by which the
Company may be bound that do or may obligate the Company to issue, deliver
or
sell, or cause to be issued, delivered or sold, additional shares in the
Company’s share capital or securities convertible into or exchangeable for the
Company’s share capital or that do or may obligate the Company to grant, extend
or enter into any such option, warrant, call, conversion right, commitment
or
agreement.
(b) With
respect to that certain Transaction Processing Agreement dated 20 April 2001
and
entered into by and between the Company and Planet Group, Inc., Company has
issued a letter to the “Customer” thereunder in form and substance reasonably
satisfactory to purchaser providing notice of the transfer of shares
contemplated hereby and certain other matters in connection with the provisions
of Section 14 of said agreement.
(c) Nothing
in this Agreement shall oblige Purchaser to buy any issued and outstanding
shares of the Company or otherwise complete this Agreement unless the sale
and
purchase of all such issued and outstanding shares in the Company is completed
and transferred to Purchaser simultaneously.
(d) FEDS
Acquisition owns or holds the entire beneficial interest in the Company Shares
of which it is the holder of record, and such shares are not subject to,
and the
Company is not a party to or otherwise subject to, any trust, voting trust
or
agreement, proxy or other agreement, arrangement or understanding, between
or
among any persons that affects or relates to the voting or giving of written
consent with respect to the Company Shares or any other outstanding security
of
the Company, the election of directors, the appointment of officers or other
actions of the Board of Directors of the Company or the management of the
Company.
4.6 Subsidiaries;
Equity Investments. The Company does not now have and, except to the extent
of
any such subsidiaries or other controlled companies as the Company may have
had
prior to its change of name from “Rosebank Investment Company Limited” to “First
Ecommerce Data Services Limited” on 12 November 1999, has never had any other
subsidiaries or companies controlled by the Company and does not own and,
except
to the extent of any such equity or other controlling interests as the Company
may have had prior to its change of name from “Rosebank Investment Company
Limited” to “First Ecommerce Data Services Limited” on 12 November 1999, has
never owned any equity interest in, or controlled, directly or indirectly,
any
other corporation, partnership, joint venture, trust, firm or other
entity.
4.7 No
conflict with Other Instruments.
(a)
Except
as
otherwise specifically stated in Section 4.7(b), 4.7(c) or 4.7(d) below,
the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby (I) will not result in any violation of, conflict with,
constitute a breach, violation or default (with or without notice or lapse
of
time, or both) under, give rise to a right of termination, cancellation,
forfeiture or acceleration of any obligation or loss of any benefit under,
or
result in the creation of encumbrance on any of the properties or other assets
of any Seller or the Company pursuant to, (i) any provision of the Company’s
Memorandum of Association and/or Bye-laws or other organizational documents,
or
(ii) any agreement, contract, understanding, note, mortgage, indenture, lease,
franchise, license, permit or other instrument to which the Company is a
party
or by which the properties or assets of the Company is bound, including without
limitation those contracts listed in Schedules 1 or 2 attached hereto or
specified in Section 4.17(b) below, or (2) conflict with or result in any
breach
or violation of any Legal Requirement applicable to the Company or its
properties or assets.
(b) Each
of
(i) that certain E-commerce Transaction Processing Agreement dated 12 June
2001
and entered into by and between the Company and Provident Bank and Trust
of
Belize Limited and (ii) that certain Transaction Processing Services Agreement
dated 7 August 2001 and entered into by and between the Company and DPI Merchant
Services, Inc. (signed for an on behalf of Data Processors International
Inc.),
contain provisions entitling either party to terminate the agreement upon
a
change in control of the other party. Neither of those two agreements has
ever
generated, nor do they currently generate, a material portion of the Company’s
net income or revenues.
(c) Further,
the Company’s policy of Professional Liability insurance maintained through
certain Lloyd’s of London syndicates and underwriters and dated 30 March 2000
entitles Lloyd’s to notice of any merger or acquisition by or of the Company,
and the Company has given all notice and taken such further action as is
required of it under said policy in connection with this Agreement and the
transactions contemplated hereby.
(d) The
Mastercard Member Service Provider TPP Agreement dated 4 November 1999 and
entered into by and between The Bank of Bermuda Limited (as “Processor”) and
MasterCard International Incorporated, under which the Company has now succeeded
to all the rights and obligations of The Bank of Bermuda Limited as Processor,
contains a provision obligating the Processor to notify MasterCard International
Limited of any “material changed circumstances in organizational structure”
experienced by the Processor.
4.8 Governmental
Consents and Notices. No consent, approval, order or authorization of, or
registration, declaration of, notice to or qualification or filing with any
Governmental Authority or any regulated public securities exchange or other
organized public market on which the shares of any Seller are traded (including
but not limited to Nasdaq), whether domestic or foreign, is required to be
obtained or submitted by or on behalf of or with respect to the Company in
connection with the execution, delivery and performance of this Agreement
or the
consummation of the transactions contemplated hereby that has not been, or
will
not prior to Closing have been, duly obtained and/or submitted, as
applicable.
4.9 Financial
Statements. A complete and accurate copy of the Company’s income statement,
balance sheet and statement of cash flow for the period from January 1, 2000
to
December 31, 2000, together with the associated auditors’ and directors’ reports
and notes thereto (“Audited Financial Statements”), together with the Company’s
internal monthly income statements, balance sheets and statements of cash
flow
statement for the periods from January 1, 2001 through August 31, 2001 (the
“Unaudited Financial Statements”) have been furnished to Purchaser (the Audited
Financial Statements and the Unaudited Financial Statements being herein
referred to collectively as the “Financial Statements”). The Financial
Statements were prepared in accordance with applicable Companies Act
requirements and United States generally accepted accounting principles
consistently applied, and present fairly in all material respects the financial
condition as at the dates of such statements and results of operations of
the
Company for the periods covered thereby, except that the Unaudited Financial
Statements may be subject to normal and recurring year-end adjustments.
| 4.10 |
Accounting
and Other Records
|
(a) All
the
accounts, books, ledgers and financial and other records of whatsoever kind
of
the Company (including all invoices) have been kept in accordance with
applicable Companies Act requirements and are in the possession of the Company
or under its control. Except as stated in Section 4.10(b) below, none of
the
Company’s records, systems, controls, data or information are recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or held by
any
means (including any electronic, mechanical or photographic process whether
computerized or not) which (including all means of access thereto and therefrom
are not under the exclusive ownership and direct control of the
Company.
(b) Two
Sun
E250 servers and related equipment and software owned and operated by FEDS
Asia
have been used in connection with the Company’s fulfillment of its obligations
under the agreements referred to in Section 2.5(m). Upon completion of the
assignment referred to in Section 2.5(m). Upon completion of the assignment
referred to in Section 2.5(m), such use will no longer be necessary in order
for
the Company to continue to render to FEDS Asia in support of those agreements
the services it has to date been obligated to render to Wing Hang Bank and
International Bank of Asia under those agreements, and will no longer be
available to the Company.
4.11 Absence
of Changes. Except as otherwise expressly contemplated by this Agreement,
since
August 31, 2001, the Company’s business has been conducted only in the ordinary
and usual course without any interruption in the nature, scope or manner,
and
without limiting the generality of the foregoing:
(i)
Except as disclosed in this Article IV, there have been no changes in the
Company’s properties, employees, obligations or liabilities of the Company or in
its relations with customers, vendors, lessors, licensors or other business
relationships that, in the aggregate, have had or may be reasonably expected
to
have a material adverse effect on the Company;
(ii)
The
Company has not issued, or authorized for issuance, or entered into any
commitment to issue, any equity security, bond, note or other
security;
(iii)
Except as disclosed in this Article IV, the Company has not incurred additional
debt for borrowed money, or incurred any obligation or liability, except
in the
ordinary course of business consistent with past practice and, in any event,
not
in excess of US$10,000 individually or US$30,000 in the aggregate or the
equivalent in any other currency;
(iv)
The
Company has not discharged any obligation or liability, or discharged, settled
or satisfied any claim, lien or encumbrance, except for current liabilities
in
the ordinary course of business consistent with past practice and, in any
event,
not in excess of US$10,000 for any single occurrence or US$30,000 in the
aggregate or the equivalent in any other currency;
(v)
Except for the payment to Seller of US$1,336,014 in satisfaction of the
Company’s intercompany debt and US$9,401.27 intercompany interest obligation to
Seller as contemplated by Section 2.5(e) above, the Company has not declared
or
made any dividend, payment or other distribution to its shareholders or any
Affiliate of its shareholders or otherwise on account of any outstanding
equity
interest in the Company;
(vi)
The
Company has not purchased, redeemed or otherwise acquired or committed itself
to
acquire, directly or indirectly, any of its shares;
(vii)
The
Company has not conveyed or disposed of, or agreed to conveyor dispose of,
by
sale, assignment, lease, license or otherwise, or mortgaged, pledged or
otherwise encumbered, any of its intangible assets or properties;
(viii)
The Company has not mortgaged, pledged, or otherwise encumbered any of its
tangible assets or properties;
(ix)
The
Company has not disposed of, or agreed to dispose of, by sale, lease, license
or
otherwise, any tangible asset or property, except in the ordinary course
of
business consistent with past practice; -
(x)
The
Company has not written off any debts, no debt has been released by the Company
on terms under which the debtor pays less than the book value of its debt,
and
no debt owing to the Company has proved to any extent to be
unrecoverable;
(xi)
The
Company has not purchased or agreed to purchase or otherwise acquire any
securities of any corporation, partnership, joint venture, firm or other
entity;
(xii)
Except as disclosed in this Article IV or in Schedule 5 attached hereto,
the
Company has not made any expenditure or commitment for the purchase,
acquisition, construction or improvement of a capital asset, except in the
ordinary course of business consistent with past practice and, in any event,
not
in excess of US$5,000 for any single item or US$15,000 in the aggregate or
the
equivalent in any other currency;
(xiii)
The Company has not entered into any contract or commitment (whether in respect
of capital expenditure or otherwise) on terms which will allow for less than
full recovery by the Company of costs and overheads or which is of a 10ng-tenn
nature, or which involves or could involve an ob1igation in excess of US$10,000
or the equivalent in any other currency; and for this purpose a long-term
contract or commitment is one which will not be performed in accordance with
its terms
within three months after the date it was entered into or undertaken or which
is
incapable of termination by the Company on three months’ notice or
less;
(xiv)
The
Company has not adopted or amended any bonus, incentive, profit-sharing,
stock
option, stock purchase, pension, retirement, deferred-compensation, severance,
life insurance, medical or other benefit plan, agreement, trust, fund or
arrangement for the benefit of employees of any kind whatsoever, nor entered
into or amended any agreement relating to employment, services as an independent
contractor or consultant, or severance or termination pay, nor agreed to
do any
of the foregoing;
(xv)
Except as disclosed in this Article IV, neither any Seller nor the Company
has
effected or agreed to effect any change in the Company’s directors, officers or
employees;
(xvi)
Except as contemplated in Section 2.5, neither any Seller nor the Company
has
effected or committed itself to effect any amendment or modification to the
Company’s Memorandum of Association or Bye-laws;
(xviii)
The Company has not disposed of or agreed to dispose of any asset for a
consideration payable by installments where any installment remains
unpaid;
(xix)
All
cash and payments of any kind received by the Company have been credited
to the
Company’s accounts with its bankers;
(xx)
The
Company has paid its creditors in accordance with the same policy as that
maintained during prior periods.
(xxi)
None of the assets of the Company has been diminished by the wrongful act
of any
person;
(xxii)
There has been no material change in the working capital requirements of
the
Company;
(xxiii)
Except for changing market conditions prevailing in the industry generally
to
which the Company and its competitors are subject, there has otherwise been
no
material adverse change in the Company or its business, assets, operations
or
financial condition; provided, however, that transaction volumes from The
Bank
of Bermuda Limited have declined significantly since August 31,
2001.
(a) Lease.
The Company is a party to that certain Lease (herein, the “Lease”) dated 18th
June 2001 between J.H.R. Properties Limited (“Landlord”) and the Company
(“Tenant”) and Carecorp Limited (“Agent”) covering part of the fourth floor of
the premises known as “The Emporium” located at 69 Front Street, Hamilton,
Bermuda (the “Premises”), which provides for a- two year fixed term tenancy
ending the 31st
of May
2003, with an option to renew for a further two years which must be (but
has not
yet been) exercised on or before February 28, 2002, a complete and accurate
copy
of which has previously been furnished to Purchaser by Seller and/or the
Company. Under the Lease, the Company is obliged to pay rent fixed at
BD$71,610.00 per annum payable monthly in the sum of BD$5,967.50,
with
a
service charge payable monthly at the rate of BD$17.35 per square foot, but
with
provision for an accounting by the Landlord at the end of each year of the
tenancy. The Lease is in full force and effect, valid, enforceable in accordance
with its terms subject to the effects. of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors and the effect or availability of rules of law governing specific
performance, injunctive relief or other equitable remedies. The Lease comprises
the only real property in which the Company has an interest and which is
used in
connection with its business. The Premises are occupied or used by Company
under
the Lease, and the terms of that lease permit occupation or use for the purposes
for which the Company currently uses the Premises and contemplates future
use of
the Premises. Neither the Premises nor the Company’s occupancy of the Premises
is in violation of any applicable Legal Requirements, and the Company has
not
received any notice restricting the use and enjoyment of the Premises that
is
inconsistent with the Company’s current and contemplated future use of the
Premises. .
(i)
The
Lease is held by Company free from any mortgage, debenture, charge, or other
encumbrance securing the repayment of monies or other obligation or liability
of
the Company or any other person, and neither the Lease nor the Premises covered
thereby is
subject
to any option, right of pre-emption or right of first refusal.
(ii)
The
Company has not assigned its interest in the Lease to any other party, whether
an Affiliate of the Company or otherwise, and the Company has not created
any
further subtenancy or license of its interest in the Lease and there are
no
persons other than the Company in occupation of the Premises.
(iii)
Without limiting any other representation or warranty contained in this
Agreement, the Lease is not subject to any restrictive covenants, stipulations,
easements, profits, rights-of-way, licenses, grants, restrictions, overriding
interests or other rights vested in third parties, and the Company has not
entered into any agreement or commitment to give or create any of the
foregoing.
(iv)
There are no outstanding actions, disputes, claims or demands between the
Company and any third party affecting the Premises, or any boundaries thereof,
or with respect to any of the rights appurtenant to the Premises as set out
in
the Lease.
(c) Regulatory
Matters. The Premises are not being or intended or required by the Company
to be
used other than for the uses thereof permitted under applicable Legal
Requirements, and all necessary permissions have been obtained or deemed
to have
been granted by applicable Governmental Authorities for the use, alternations,
improvements of the Premises by Company. The Company has satisfied any charges,
monetary claims and liabilities imposed by reason of the occupancy or use
of the
Premises by the Company under applicable Legal Requirements. The Company
has
received no notice of any outstanding and unobserved or unperformed obligation
with respect to the Premises necessary to comply with any applicable Legal
Requirements.
(d) Compliance
with Lease. The obligations and liabilities imposed and arising under the
Lease
on the Company have been fully observed and performed, and any payments in
respect of them due and payable by the Company have been duly paid as and
when
due, and no other event has occurred that constitutes, or that with the giving
of notice or the passage of time would constitute, a default or violation
by the
Company thereunder or, to the knowledge of Sellers and the Company, by any
other
party thereto. The Company has received no notice from the Landlord of any
breaches of the covenants on its part and the conditions contained in the
Lease
and the last demand (or receipt for rent if issued) was unqualified and the
Company has not received notice that the Landlord has any intention of
terminating the Lease. All requisite licenses, consents and approvals required
of the Company from the Landlord have been obtained, and the covenants on
the
part of the Company contained in such licenses, consents and approvals have
been
duly performed and observed. The Company has not served any notice on the
Landlord claiming any breach by the Landlord of its obligations under the
Lease,
nor is there any current or, to the knowledge of Sellers and the Company,
threatened dispute with the Landlord regarding the observance of obligations
under the Lease (whether by the Landlord or the Company).
(a) The
Company has filed all Tax Returns (as defined below) that it was required
to
file within the requisite time limits, and all such Tax. Returns were correct
and complete in all material respects and were properly made. The Company
has
paid all Taxes (as defined below) that are shown to be due on any such Tax
Returns within the time limits set out by law and the provisions and reserves
for Taxes set forth in the Financial Statements are sufficient to pay all
unpaid
Taxes of the Company attributable to all periods ended on or before August
31,
2001, and all Taxes attributable to the period from and after August 31,
2001
and continuing through the Closing Date are attributable to the operation
of the
Company in the ordinary course of business. All Taxes that the Company is
or was
required by law to withhold or collect have been duly withheld or collected
and,
to the extent required, have been paid to the proper Taxation Authority.
(b) For
purposes of this Agreement, “Taxes” means all taxes, charges, fees, levies,
duties, imposts or other similar assessments or liabilities, including without
limitation income, corporation, capital gains, value added taxes, stamp duties,
and customs duties and excise duties. imposed by Bermuda or any jurisdiction
elsewhere in the world, and any interest, fines or penalties resulting from,
attributable to or incurred in connection with any tax or any contest or
dispute
thereof and “Taxation” shall be construed accordingly. For purposes of this
Agreement, “Tax Returns” means all returns, declarations, notices, statements,
applications, reports, clearances, or other information required to be supplied
to a Taxation Authority in connection with Taxes, and ‘‘Taxation Authority”
means any governmental or other fiscal, revenue customs or excise authority,
department, agency, body or office whether in Bermuda or elsewhere in the
world
having authority or jurisdiction to impose or assess in relation to the Company
for any Taxes. .
(c) No
investigation or other inquiry of any Tax Returns of the Company by any Taxation
Authority is currently in progress or, to the knowledge of Sellers and the
Company, threatened or contemplated. There are no matters likely to affect
the
liability of the Company (whether accrued, contingent or future) to taxation
of
any nature whatsoever or to other sums imposed, charged, assessed, levied
or
‘payable or withdrawal of any relief are disputed with the relevant tax
authorities.
(d) The
amount of tax chargeable to the Company during any accounting period ending
before August 31, 2001 was not dependent on any concession, agreement or
other
formal arrangement with any Taxation Authority when such concessions,
agreements, or arrangements are in writing.
(e) All
pension contributions (both employer’s and employee’s) in respect of employees,
officers of the Company and any person(s) who, should have been treated as
such
for these purposes have been duly paid.
(f) The
Company has not at any time:
(i)
reduced its share capital or repurchased, repaid or redeemed shares of any
class
of its share capital or capitalized any profits or reserves or share premium
account in the form of, or in paying up any amounts unpaid on, any shares,
debentures or other securities or agreed or resolved to do any of the foregoing;
or
(ii)
provided capital to any company on terms whereby the company so capitalized
has
in consideration thereof issued shares, loan stock or other securities where
the
terms of any such capitalization were otherwise than by way of a bargain
made at
arms’ length or where the shares, loan stock or other securities acquired are
shown in the Financial Statements at a value in excess of their market value
at
the time of acquisition.
(g) All
documents in the possession of the Company to which the Company is a party
which
are necessary to prove the title of the Company to its assets or by virtue
of
which the Company has any right have been properly stamped, and for the
avoidance of doubt this includes adjudication if appropriate, and no such
documents which are outside Bermuda would attract stamp duty if they were
brought into Bermuda. All transactions to which the Company is or was a party
and relating to chargeable securities of the Company have been completed
by duly
stamped documents of transfer.
(h) The
Company is not under any actual or contingent liability to taxation in respect
of any other person, including but not limited to any other company which
at any
time has been a member of the same group or consortium as the Company or
any
associated company of the Company for taxation purposes.
(i) Since
November, 1999, the Company has at all times been resident for taxation purposes
in Bermuda is not chargeable to tax or similar duties or imposts in any
jurisdiction other than Bermuda and has never had any permanent establishment
in
any other country.
4.14 Guaranties.
There are no actual or contingent liabilities on the part of the Company
arising
directly or indirectly out of any agreement, contract, lease, sublease, tenancy,
sub-tenancy, conveyance, transfer, license, deed or any other instrument,
arrangement or understanding in the nature of a guaranty, indemnity or surety
for the performance or payment by any third party under the terms of that
or any
other instrument, arrangement or understanding;
(a) Except
for Contracts that do not obligate, any party thereto to make payments or
furnish goods or services valued in excess of US$500 individually or US$5000
in
the aggregate or the equivalent in any other currency,
(i)
Schedules 1 and 2 attached hereto, together with Section 4.17(b), list all
of
the Contracts to which the Company is a party or by which the Company or
its property
or assets are bound, and complete and accurate copies of all of such Contracts
have been furnished to Purchaser,
(ii)
all
of such Contracts are valid, properly and adequately stamped or adjudicated,
and
enforceable in accordance with their respective terms subject to the effects
of
applicable bankruptcy, insolvency~ reorganization, moratorium or other similar
laws affecting
the rights of creditors and the effect or availability of rules of law governing
specific performance, injunctive relief or other equitable remedies, such
Contracts are in full force and effect, free and clear of any liens or
encumbrances, and no event has occurred that constitutes, or that with the
giving of notice or the passage of time would constitute, a default or violation
by the Company thereunder or, to the knowledge of Sellers and the Company,
by
any other party thereto,
(iii)
the
Company is a party to each of such Contracts and, except as otherwise provided
in Section 2.5(m) above, has not assigned or otherwise transferred any interest
therein or any of the rights and benefits accruing therefrom,
(iv)
no
third party has notified the Company of any claim, dispute or controversy
with
respect to any of such Contracts, nor has the Company received notice or
warning
of alleged nonperformance, delay in delivery or other noncompliance by the
Company with respect to its obligations under any of such Contracts, nor,
to the
knowledge of Sellers and the Company as of the date hereof (but except with
respect to the change in control issue under the contract’ with DPI Merchant
Services, Inc. and Provident Bank and Trust of Belize Limited described in
Section 4.7(b) above), are there any facts which exist indicating that any
of
such Contracts may be totally or partially terminated or suspended by the
other
parties thereto, and
(v)
except for those Contracts listed in Schedules 1 and 2, there are no other
agreements, understandings or arrangements, whether written or oral, affecting
or relating to the ownership, use or operation by the Company of its assets,
or
the conduct of its business, or the rights or obligations of any party to
such
Contracts.
(b) The
Company has not nor, to the knowledge of Sellers and the Company, has any
of the
employees of the Company, entered into any Contract containing covenants
limiting the right of the Company or such employee to compete in any business
or
with any person, other than the Contracts listed in Section 4.
17(b).
(c) Any
information contained in any materials previously furnished to Purchaser
to the
contrary notwithstanding, the Company has in fact succeeded to all of The
Bank
of Bermuda Limited’s rights and obligations as “Processor” under that certain
Mastercard Member Service Provider Third Party Processor Agreement dated
4
November, 1999 between The Bank of Bermuda Limited and MasterCard International
Incorporated (the “TPP Agreement”), and all MasterCard transactions processed by
the Company have been processed under appropriate authorization from
MasterCard;
4.16 Environmental
Matters.
(a) The
Company is and at all times has been, in compliance with all applicable
Environmental Requirements, including, without limitation, Environmental
Requirements relating to exposures, emissions, discharges, releases or
threatened releases of Hazardous Substances into or on land, ambient air,
surface water, groundwater, personal property or structures (including the
protection, cleanup, removal, remediation or damage thereof), or otherwise
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, discharge or handling of Hazardous Substances or related
to
health and safety of employees and other persons. The Company has not received
any notice of any investigation, claim or proceeding against the Company
relating to any violation or alleged violation on the part of the Company
under
any Environmental Requirements, and the Company is not aware of any fact
or
circumstance that could involve the Company as a party in any litigation,
proceeding, investigation or claim under any Environmental
Requirement.
(b) The
Company has not disposed of any Hazardous Substances on or about any properties
at any time owned, leased or occupied by the Company in a manner that would
give
rise to liability of the Company under any Environmental Requirements. The
Company has not itself disposed of any materials at any site being investigated
or remediated for contamination or possible contamination of the
environment.
(c) The
Company has all permits, licenses and approvals required by Environmental
Requirements for their use and occupancy of, and for all their operations
and
activities conducted on, the Premises and. to the knowledge of Sellers and
the
Company, the Company is in full compliance with all such permits, licenses
and
approvals, except where such non-compliance would not have an adverse effect
on
the Company or its business, assets, operations- or financial
condition.
(a) A
complete and accurate list setting forth all employees, contractors and
consultants of the Company as of the date hereof, together with their titles
or
positions, dates of hire, regular work location and current compensation,
current salary and benefits, notice period, confidentiality obligations and
all
other terms and conditions of employment or engagement, including any additional
terms and conditions of employment or engagement, whether contained in a
Company
or staff handbook or otherwise, has previously been furnished to Purchaser
by or
on behalf of Sellers and/or Company.
(b) The
employment contracts or other agreements between the Company and any officer,
director, employee, contractor, consultant or other individual person relating
to the performance of services consist of those with Mr. David Lema as “Chief
Executive Officer” dated June 18, 2001, Mrs. Leslie Pooley-Maughan as “Chief
Business Officer” dated June 18, 2001, Mr. Kieth Flaherty as “Chief Technology
Officer” dated June. 18, 2001, Ms. Marcy Judd as “Financial Controller” dated
June 19, 2001, Mr. Horst Finkbeiner as “Head of Business Analysts/Project
Management” dated August 2, 2000, Ms. Barbara Gaudette as “Senior Business
Analyst” dated June 19, 2001, Mr. Arrigo Merlo as “Client Relationship Manager”
effective as of June 29, 2000, Mr. Jason Taylor as “Senior Analyst Programmer”
effective as of June 19, 2001, Mr. David Petty as “Business Analyst” effective
as of July 9, 2001, Ms. Deborah L.A. King as “Executive Administrative
Assistant” effective as of August 23, 2001, and Mr. Alexander Fox as “Junior
Bankcard Switch Technician effective as of October 1, 2001, and complete
and
accurate copies of all such agreements have previously been furnished to
Purchaser by or on behalf of Sellers and/or Company.
(c) Except
for Robert St. John, who is to report to work October 29, 2001 as “Senior
Bankcard Switch Technician” at a salary of US$75,000 annually, there are no
outstanding offers of employment or engagement made to any person by the
Company
and there is no one who has accepted an offer of employment or engagement
made
by the Company who has not yet taken up that employment or
engagement.
(d) Except
as
expressly contemplated by the terms of this Agreement, no officer, director,
employee, contractor or consultant of the Company identified in the materials
furnished to Purchaser under subsections (a) or (b) above:
(i)
has
given or received notice terminating his or her employment or engagement
or
altering its terms, and no such person will be entitled as a result of the
entering into of this Agreement and the sale of the Company Shares to Purchaser
to give notice of termination or to claim for any payment or benefit or to
treat
himself or .herself as being released from any obligation and, to the knowledge
of Sellers and the Company, no such person is planning to terminate his or
her
employment as of or shortly after the Closing; or
(ii) is
currently on sick leave which (as of the date of this Agreement) has been
for
more than 14 consecutive days; or
(iii) is
currently on maternity leave.
(e) As of
August
31, 2001, there were no outstanding arrears of salary, wages, holiday pay
or
other remuneration due to any officer, director, consultant, employee or
contractor of the Company other than as set forth in the Financial Statements
except as incurred in the ordinary course of business and not used.
(f) Except
or
Mr. David Petty, whose annual salary was increased from US$68,OOO to US$71,400,
since August 31, 2001, (i) no change has been made in the rate or basis of
remuneration, fee or other benefits provided for or paid to .any officer,
director, consultant, employee or contractor of the Company and (ii) no change
has been made in any other terms of employment or engagement of any such
officer, director, consultant, employee or contractor.
(g) The
Company has not entered into any agreement or legally binding commitment
regarding any future variation in any contract of employment or other agreement
in respect of any of their officers, directors, employees, consultants or
contractors or any agreement imposing an obligation on the Company to increase
the basis and/or rates of remuneration or payment and/or the provision of
other
benefits to or on behalf of its officers, directors, employees, consultants
or
contractors at any future date.
(h) All employees
of the Company who require a work permit will have a valid work permit in
force
at the Closing, except that Kieth Flaherty, Barbara Gaudette Jason Taylor
and
Robert St. John are currently in the process of having their work permits
renewed under the auspices of the Company.
(i) The
Company is not liable to pay any industrial levy nor do they have any
outstanding undischarged liability to pay any Governmental Authority in any
jurisdiction, other than as provided in the Financial Statements, nor any
taxation, contribution or other impost arising in connection with the employment
or engagement by the Company of employees, directors, officers, consultants
or
contractors.
(j) The
Company is not aware of any facts or matters affecting any employee of the
Company which might reasonably be considered grounds for dismissing such
employee or warning such employee that the continuation of any conduct or
behavior may lead to dismissal.
(k) No
grievance or complaint of sex, race or disability discrimination, whether
formal
or informal, is pending in an administrative or litigation proceeding nor,
to
the knowledge of Sellers and the Company, has been raised by any employee,
director, officer or consultant or former employee, director, officer or
consultant of the Company in the twelve months prior to Closing.
(l) The
Company has not made any loans to or entered into any credit transaction
with
any of its directors or to any employee.
(m) Except
as
expressly listed otherwise in Schedule 3 attached hereto and made a part
hereof
for all purposes, the Company has not any deferred compensation, pension,
health, profit sharing, bonus, stock purchase, stock option, hospitalization,
insurance., severance, redundancy, workers’ compensation, supplemental
unemployment benefits, vacation benefits, disability benefits, or any other
employee benefit or otherwise or welfare benefit plan or obligation covering
any
of its officers or employees or any informal understanding with -respect
to the
foregoing. -
(n) The
Company’s pension plan described in Schedule 3 has been maintained in material
compliance with its governing rules or terms, and all applicable requirements
as
to the filing of reports, documents and notices with Governmental Authorities
and the furnishing of documents to participants or beneficiaries have been
satisfied. No employee, former employee or relative or dependent of such
employee or other participants in said pension plan has made any claim against
the Company in respect thereof.
(o) The
Company has not entered into any union membership, security of employment,
redundancy, recognition or other collective agreement (whether legally binding
or not) with a trade union, works council, staff association, employee
representatives or other organization or body of employees, nor has the Company
done any act which might be construed as recognition.
(p) There
are
no controversies or labor or trade disputes or union organization activities
pending or, to the knowledge of Sellers and the Company, threatened between
the
Company and any of its employees nor are there facts known to the Company
which
might ,indicate that there may be any such dispute or activities.
(q) To
the
knowledge of Sellers and the Company, none of the employees of the Company
belongs to any union or collective bargaining unit or is represented by any,
works council, staff association or other body representing employees relating
to their activities as employees of the Company.
(r) The
Company has complied with its obligations under all applicable domestic and
foreign equal employment opportunity and other laws and regulations related
to
employment or working conditions.
(s) To
the
knowledge of Sellers and the Company, no employee of the Company is in violation
of any agreement of employment, non-competition or confidentiality with any
former employer.
4.18 Intellectual
Property.
(a) The
operations of the Company do not conflict with or infringe, and no one has
asserted to any Seller or to the Company that such operations conflict with
or
infringe, any Intellectual Property owned, possessed or used by any third
party.
There are no claims, disputes, actions, proceedings, suits or appeals pending
against Seller or the Company with respect to any such Intellectual Property,
and, to the knowledge of Sellers and the Company, none has been threatened
against the Company. Without limitation of the foregoing, the Company has
complied in all material respects with all express and/or implied obligations
of
confidentiality to which it is subject in relation to Intellectual Property
owned by third parties.
(b) Except
as
expressly stated in the relevant Contracts listed in Schedule 1
hereto,
(i)
there
are no facts or, to the knowledge of Sellers and the Company, alleged facts
that
would reasonably serve as a basis for any claim that the Company does not
have
the right to use and to transfer the right to use, free of any rights or
claims
of others, all Intellectual Property used or held for use by it in the
development, manufacture, use, sale or other disposition of any or all products
or services presently being used; furnished or sold in the conduct of the
business of the Company as it has been and is now being conducted (the
‘.’Company Intellectual Property”),
(ii)
the
Company Intellectual Property referred to in clause (i) immediately above
are
free of any unresolved ownership disputes with respect to any third party
and,
to the knowledge of Sellers and the Company, there is no unauthorized use,
infringement or misappropriation of any of the Company Intellectual Property
by
any third party, including any employee, or former employee of the Company,
nor,
to the knowledge of Sellers and the Company, is there any breach of any license,
sublicense or other agreement authorizing another party to use such Company
Intellectual Property.
(c) The
Company has not entered into any agreement granting any third party the right
to
bring infringement actions with respect to, or otherwise to enforce rights
with
respect to, any of such Company Intellectual Property.
(d) The
Company has taken all measures it deems reasonable and appropriate to maintain
the confidentiality of such of the Company Intellectual Property the value
of
which to the Company is contingent upon maintenance of the confidentiality
thereof.
(e) The
Company has secured valid written assignments from all consultants and employees
who contributed to the creation or development of the Company Intellectual
Property of the rights to such contributions that the Company does not already
own by operation of law, and no employee or consultant retains any interest
or
right in relation to such Company Intellectual Property.
4.19 Compliance
with Law; Permits.
(a) All
licenses, franchises, permits, approvals, clearances, consents, certificates
and
other evidences of authority normally issued by a Governmental Authority
that
are necessary for the carrying on of the Company’s business (“Permits”) are in
full force and effect and, to the knowledge of Sellers and the Company, the
Company is not in violation of any Permit in any material respect. The Permits
are not subject to any unusual or onerous conditions. The business of the
Company has been conducted in accordance with its Memorandum of Association
and
Bye-laws and, except where such non-compliance would not have a material
adverse
effect on the Company or its business, assets, operations or financial
condition, all applicable Legal Requirements.
(b) To
the
knowledge of Sellers and the Company, there are no investigations, proceedings,
inquiries, communications or other circumstances that indicate that any Permits
may be revoked, cancelled, superseded; modified or not renewed.
(c) No
outstanding notices in relation to any statutory obligation have been served
on
the Company in respect of any of its assets or in respect of any contravention
or non-compliance with or alleged contravention or non-compliance with any
obligation or otherwise.
(d) To
the
knowledge of Sellers and the Company, there have not been and are not pending,
or in existence, any investigations or inquiries by, or on behalf of, any
governmental or administrative or other body in respect of any of the affairs
of
the Company.
4.20 Litigation.
There is no “claim, dispute, action, proceeding, notice, order, suit, appeal or
investigation, at law or in equity, pending or, to the knowledge of Sellers
and
the Company, threatened, against the Company or any pension scheme of the
Company or any of its directors, officers, employees, former employees or
agents, or involving any of its assets or properties, before any Governmental
Authority. The Company is not aware that there are any facts which, if known
to
shareholders, customers, suppliers, Governmental Authorities or other persons,
would result
in
any such claim, dispute, action, proceeding, suit or appeal or investigation
that would have or would reasonably be likely to have a material adverse
effect
on the Company or its business, assets, operations or financial condition.
The
Company is not subject to any order, writ, injunction or decree of any
Governmental Authority, arbitration panel or other tribunal, nor is the Company
in default with respect to any notice, order, writ, injunction or
decree.
4.21 Tangible
Personal Property. The items of tangible personal property reflected in the
Company’s Financial Statements or otherwise listed in the “fixed asset
schedules” furnished to Purchaser by or on behalf of Sellers or the Company in
connection with the Financial Statements (“Tangible Personal Property”) comprise
the only material tangible personal property owned by the Company in whole
or in
part, are used or held for use in connection with the business of the Company,
and are owned by the Company free and clear of any and all liens, encumbrances,
equities, security interests, mortgages, debentures, claims, charges, and
other
claims or rights of third parties, and, except as and to the extent provided
for
in Section 14 of that certain Transaction Processing Agreement dated 20 April
2001 and entered into by and between the Company and Planet Group, Inc.,
none of
such Tangible Personal Property is subject to any option, right of pre-emption
or right of first refusal. All requisite licenses, consents and approvals
required of the Company for the ownership and/or operation of the Tangible
Personal Property have been duly obtained or given.
4.22 Computer
System and Software.
(a) Subject
to the terms of any relevant Contracts listed in Schedule 1 attached hereto,
the
Company is the legal and beneficial owner free of any and all liens and
encumbrances or is the lessee of all the items of equipment, hardware. firmware
and accessories relating to the “Computer System”) and no other person (other
than the lessor, as applicable) has any claims or rights in respect thereof.
For
the purposes of this Agreement, “Computer System” means the computer systems,
including all its equipment, hardware, firmware, software and accessories
used
or held for use by the Company in the processing of financial transactions
for
its customers.
(b) Except
to
the extent that the Software incorporates code obtained under license from
Oasis
Technology Ltd. under the license specified in Schedule I attached hereto,
and
except for the Merchant Accounting and Reporting System and Payment Gateway
software that is the subject of Seller’s obligation to grant licenses under
Section 2.2 hereof, the Company is the legal and beneficial owner free of
any
and all liens and encumbrances of all Software, and such Software was either
developed by the Company’s employees in the course of their employment or by
third parties pursuant to agreements under which all rights in the Software
are
vested in the Company. For the purposes of this Agreement, “Software” means all
computer programs and all related object code and source-code and databases
used
or held for use by the Company in the processing of financial transactions
for
its customers.
(c) There
are
in existence maintenance and support agreements in respect of all equipment,
hardware, furniture, software and accessories used in the Computer System,
and
the Company has not done, or omitted to do, any act which might entitle the
provider of the maintenance and support services to terminate such agreements
or
to withhold or refuse to supply any services thereunder, and the Company
is not
in dispute with such provider regarding its maintenance and support
obligations.
(d) The
Computer System comprises equipment, hardware, firmware, software including
source code and object code, supporting materials and accessories which are
necessary to enable the Company to carry on its business in the same manner
and
to the same extent as ‘it has been carried on prior to Closing, and the rights
to use the Computer System or any part thereof will not be adversely affected
by
the transactions effected by this Agreement.
4.23 Insurance.
The Company and its assets are insured against such risks and in such sums
as
are described in the policies listed in Schedule 2, a complete and accurate
copy
of which policies have previously been furnished to Purchaser. All premiums
due
in respect of such insurances have been fully paid or have been paid in
accordance with the obligations stated in the insurance policies; and the
next
renewal date for each of such insurances is a date at least 30 days after
the
Closing Date. Nothing has been done or omitted to be done which could make
any
policy of insurance void or voidable, or which is likely to result in an
increase in premium; and none of such insurances is subject to any special
or
unusual terms or restrictions or to the payment of any premium in excess
of the
normal rate. Each such insurance policy is enforceable and in full force
and
effect in accordance with its terms and will continue to be enforceable and
in
full force and effect immediately following the Closing in accordance with
the
terms thereof as in effect prior to the Closing. The Company is not in breach
or
default (including with respect to the payment of premiums or the giving
of
notices) under any such policies, no event has occurred which, with notice
or
the lapse of time, would constitute such a breach or default or permit
termination, modification or acceleration, under such policy; and the Company
has not received any notice from the insurer disclaiming coverage or reserving
rights with respect to a particular claim or such policy in general. There
are
no claims arising against the Company by an employee, a worker or any other
third party, in respect of any accident or injury and, to the knowledge of
Sellers and the Company, there are no unreported accidents or incidents that
would give rise to such a claim, which are not fully covered by
insurance.
4.24 Brokers
or Finders. Neither the Company nor any of its officers, directors, employees
or
shareholders has employed any broker or finder in connection with the
transactions contemplated by this Agreement, nor have they incurred, and
they
shall not incur, directly or indirectly, any liability for any brokerage
or
finders’ fees or agents’ commissions or any similar charges in connection with
this Agreement or any transaction contemplated hereby.
4.25 Related
Parties. No officer or director of the Company has, either directly or
indirectly, (a) an interest in any corporation, partnership, firm or other
person or entity which furnishes or sells services or products which are
similar
to those furnished or sold by the Company, (b) a beneficial interest in any
contract or agreement to which the Company is a party or by which the Company
may be bound, or (c) an interest in any of the assets used by the
Company.
4.26 Certain
Advances. There are no loans by the Company to any directors, officers,
employees, consultants or shareholders of the Company, or owing by any Affiliate
of any director or officer of the Company, other than advances in the ordinary
course of business consistent with past practice to officers and employees
for
reimbursable business expenses which are not in excess of US$l,000 or the
equivalent in any other currency for anyone individual.
4.27 Underlying
Documents. Copies of any underlying documents listed in this Agreement
(including without limitation in any Schedule, Exhibit or other attachment
hereto), or described in this Agreement as having been disclosed or furnished
to
Purchaser have been furnished to Purchaser. All such documents furnished
or made
available to Purchaser are true and correct copies, and there are no amendments
or modifications thereto, that have not been included in the documents furnished
to Purchaser.
4.28 Banking
Facilities. The Company maintains the following banking accounts:
(i)
an
investment account at The Bank of Bermuda Limited under account number 0022319,
the reported balance of which as of August 31, 2001 was valued at BD$31,715.30,
(ii)
a
corporate account at The Bank of Bermuda Limited under account number 804391,
the reported ba1ances of which as of August 31, 200 1 were valued at
US$1,443,576.69 and BD$12,020.71,
and
the
authorized signatories on these accounts were, immediately prior to taking
the
actions required under Section 2.5(c)(iv) above, any two of Gregory Pek,
David
Lema, Leslie Pooley-Maughan and Marcy Judd. The Company maintains no other
deposit accounts or other depositary or financing relationships at any other
financial institution or credit company, and the signatories on the aforesaid
accounts may be replaced upon notice in writing to The Bank of Bermuda
Limited.
4.29 Relations
with Affiliates. Except for (i) First Ecom’s ownership and operation at no cost
to the Company of the two Sun E250 servers and related equipment and software
in
support of the Merchant Accounting and Reporting System portion of the Company’s
business, and (ii) the working capital loan facility extended from First
Ecom to
the Company as described in Section 2.5(e) above, the Company has no Contract
with any of its Affiliates for, and neither the management, operation or
conduct
of the Company’s business, nor the goodwill of its vendors, customers or other
business relations, nor its rights in, maintenance of or access to its assets
and facilities, draws upon, the provision of any services or support from
First
Ecom or any other Affiliate of First Ecom.
4.30 Insolvency.
The Company is ab1e to pay its liabilities as they come due, and is not
otherwise “insolvent” under bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting the rights of creditors
generally that are applicable to the Company or its assets. No order has
been
made, petition presented, resolution passed or meeting convened for the winding
up of the Company or for an administration order in respect of the Company;
no
receiver, receiver and manager, administrative receiver or liquidator has
been
appointed of the business or the whole or any part of the assets or undertaking
of the Company; there are no circumstances that now or with the passage of
time
may give rise to the appointment of any such receiver, receiver and manager,
administrative receiver or liquidator, and, to the knowledge of Sellers and
the
Company, no such order, petition, resolution, meeting or appointment is pending
or threatened.
4.31 No
Misleading Statements. No representation or warranty made herein, and nothing
contained in the materials furnished to Purchaser by or on behalf of Sellers
and/or the Company in connection with Purchaser’s review and analysis of the
Company and its business, operations, assets or financial condition (other
than
statements of a forward-looking nature, such as those contained in multi-year
forecasts and projections), contains any statement of a material fact that
is
either untrue or, in the light of the circumstances under which they are
made,
misleading.
ARTICLE
V
- REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser
represents and warrants to Sellers as follows:
5.1 Organization.
Purchaser is a corporation duly incorporated, validly existing arid in good
standing under the laws of the Netherlands Antilles and has all requisite
corporate power and authority to own, lease and operate its properties and
to
carryon its business as now being conducted.
5.2 Authority.
Purchaser has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by Purchaser of its obligations hereunder and the consummation
of the transactions contemplated hereby have been duly and validly authorized
by
all necessary corporate action on the part of Purchaser. This Agreement,
when
executed and delivered by Purchaser, will constitute a valid and legally
binding
obligation of Purchaser, legally enforceable against Purchaser in accordance
with its terms, subject to the effects of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
the
rights of creditors generally, limitations imposed by applicable law or
equitable principles upon the specific enforceability of any of the remedies,
covenants or other provisions of this Agreement, and upon the availability
of
injunctive relief or other equitable remedies.
5.3 No
Conflict with Other Instruments. Purchaser’s execution and delivery of, and
performance of its obligations under. this Agreement (including the Exhibits
hereto), the related agreements required to be entered into as conditions
of
Closing under Article VI hereof, and the transactions contemplated hereby
(i)
will not result in any violation of, conflict with, constitute a breach,
violation or default (with or without notice or lapse of time, or both) under,
give rise to a right of termination, cancellation, forfeiture or acceleration
of
any obligation or loss of any benefit under, or result in the creation or
encumbrance on any of the properties or assets of Purchaser or any of its
subsidiaries, pursuant to (x) any provision of the certificate of incorporation,
bylaws, or other charter or governing document of Purchaser, or (y) any
agreement, arrangement, contract, understanding, note, mortgage, indenture,
lease, franchise, license, permit or other instrument to which Purchaser
is a
party or by which Purchaser or any of its properties or assets is bound,
(b)
wi11 not conflict with, or result in any breach or violation of, any Legal
Requirement applicable to Purchaser or its properties or assets, except.
in the
case of clauses (i)(y) and (ii) for any of the foregoing that would not,
individually or in the aggregate, have a material adverse effect on Purchaser
and its subsidiaries, taken as a whole, or that could not result in the creation
of any material lien, charge or encumbrance upon any assets of Purchaser
or any
of its subsidiaries or that could not prevent, materially delay or materially
burden the transactions. contemplated by this Agreement.
5.4 Governmental
Consents and Notices. Except for the approval of the Bermuda Monetary Authority
required for the transfer of Company Shares to Purchaser contemplated by
Article
II, no consent, approval, order or authorization of, or registration,
declaration of, notice to or qualification or filing with, any Governmental
Authority, whether domestic or foreign, is required to be obtained or submitted
by or on behalf of or with respect to Purchaser in connection with the execution
and delivery of this Agreement by Purchaser or the consummation by Purchaser
of
the transactions contemplated hereby that has not been, or will not prior
to
Closing have been, duly obtained and/or submitted, as applicable.
5.5 Litigation.
There is no (a) claim, action, suit or proceeding pending or, to the knowledge
of Purchaser, threatened against or relating to Purchaser or its subsidiaries
before any Governmental Authority or arbitration tribunal, or (b) outstanding
judgment, order, writ. injunction or decree, or application, request or motion
therefor, of any court, governmental agency or arbitration tribunal in a
proceeding to which Purchaser or any subsidiary of Purchaser was or is a
party
that would individually or in the aggregate, either impair Purchaser’s ability
to consummate the transactions contemplated by this Agreement or have a material
adverse effect on Seller and its subsidiaries taken as a whole.
5.6 No
Misleading Statements. No representation or warranty made herein by Purchaser
contains any statement of a material fact that is untrue or, in the light
of the
circumstances under which they are made, misleading.
5.7 Brokers
or Finders. Neither Purchaser nor any of its officers, directors, employees
or
shareholders has employed any broker or finder in connection with the
transactions contemplated by this Agreement, nor have they incurred, and
they
shall not incur, directly or indirectly, any liability for any brokerage
or
finders’ fees or agents’ commissions or any similar charges in connection with
this Agreement or any transaction contemplated hereby.
5.8 Acquisition
for Investment. Purchaser is acquiring the Company Shares for its own account
and not with the present view to sell the Company Shares in connection with
the
distribution thereof.
ARTICLE
VI - CONDITIONS TO CLOSING
6.1 Conditions
to Obligations of Each Party to Effect the Closing. The respective obligations
of each party to this Agreement to consummate the Closing and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or
prior
to the Closing of the following conditions:
(a) Illegality.
There shall not have been any Legal Requirement enacted, promulgated or deemed
applicable to the transactions contemplated by this Agreement by any
Governmental Authority that prevents the consummation of the Closing or the
transactions contemplated by this Agreement or has the effect of making the
purchase of Company Shares illegal.
(b) Absence
of Litigation. No action, suit or proceeding concerning Purchaser, the Company,
or any Seller shall be pending by or before any court of competent jurisdiction
or Governmental Authority wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement or (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation.
6.2 Additional
Conditions to the Obligations of Sel1ers. The obligations of Sellers to
consummate the Closing and the transactions contemplated by this Agreement
shall
be subject to the satisfaction at or prior to the Closing of each of the
following conditions, any of which may be waived, in writing, exclusively
by
Sellers:
(a) Representations
and Warranties. The representations and warranties of Purchaser contained
in
this Agreement or in the certificates required to be delivered at the Closing
pursuant to Section 2.6(a) shall be true and correct on the date hereof and
on
and as of the Closing Date, as though made on and as of the Closing Date
(except
for representations and warranties made as of a specified date, which need
be
true and correct only as of the specified date).
(b) Agreements
and Covenants. Purchaser shall have performed or complied in all material
respects with al1 agreements and covenants required by this Agreement. to
be
performed or, complied with by it on or prior to the Closing.
6.3 Additional
Conditions to the Obligations of Purchaser. The obligations of Purchaser
to
consummate the Closing and the transactions contemplated by this Agreement
shall
be subject to the satisfaction at or prior to the Closing of each of the
following conditions, any of which may be waived, in writing, exclusively
by
Purchaser:
(a) Representations
and Warranties. The representations and warranties of Sellers contained in
this
Agreement or in the certificates required to be delivered at the Closing
pursuant to Section 2.5(a) shall be true and correct on the date hereof and
on
and as of the Closing Date, as though made on and as of the Closing Date
(except
for representations and warranties made as of a specified date, which need
be
true and correct only as of the specified date).
(b) Agreements
and Covenants. Sellers and the Company shall have performed or complied in
all
material respects with all agreements and covenants, and otherwise shall
have
taken all actions, required by this Agreement to be performed or complied
with
or taken by them on or prior to the Closing.
(c) Absence
of Litigation, Prohibitions or Restrictions. No action, suit or proceeding
concerning the Company or any Seller shall be pending or threatened in writing
by or before any Governmental Authority out of which may issue a Legal
Requirement, and no Legal Requirement shall have been issued or determined
by a
Governmental Authority to be applicable to the transactions contemplated
hereby,
that would: (i) prohibit Purchaser’s ownership of the Company Shares or the
Company’s ownership or operation of any portion of the business or assets of the
Company or (ii) compel Purchaser or the Company to dispose of or hold separate,
as a result of the transactions contemplated hereby, any portion of the business
or assets of the Company or Purchaser; in either case, the unavailability
of
which assets or business would have a material adverse effect on Purchaser
or
would reasonably be expected to have a material adverse effect on Purchaser’s
ability to realize the benefits expected from the transactions
contemplated hereby.
(d) Sellers
shall have in good faith supported and cooperated with Purchaser in its efforts
to obtain the consent of Oasis Technology Ltd. to the assignment contemplated
in
clause (iv) of Section 2.2.
ARTICLE
VII - POST-CLOSING AGREEMENTS
7.1 Installment
Payments.
(a) Within.
sixty (60) days following the end of each of the three calendar years ending
December 31, 2002, 2003 and 2004, respectively. Purchaser will pay to FEDS
Acquisition an amount in U.S. dollars equal to the lesser of:
(i)
the
greater of (x) forty percent (40%) of the net operating profits, if any,
realized by Company during the calendar year in question or (y) the amounts
set
forth below under the column headed “Minimum”, or
(ii)
the
amounts set forth below under the column headed “Maximum”,
for
each
of the years in question, respectively (all dollar amounts are in United
Stares
dollars):
|
YEAR
|
MAXIMUM
|
MINIMUM
|
|
2002
|
$500,000
|
$350,000
|
|
2003
|
$1
million
|
$650,000
|
|
2004
|
$1.5
million
|
$1
million
|
(b) “Net
operating profits” for this purpose will be calculated after deduction of taxes,
interest, depreciation and amortization in accordance with United States
generally accepted accounting principles applied consistently with the
accounting policies and practices of the Company from period to period,
excluding (i) any management or other administrative fees or expenses of
a
general nature charged to Company by Purchaser or any Affiliate of Purchaser,
(ii) interest and other charges for facilities granted to Company by Purchaser
or ,any Affiliate of Purchaser to the extent such charges exceed rates generally
available elsewhere in the, commercial lending market for comparable facilities
to similarly situated borrowers, and (iii) any reductions of revenue caused
by
the transfer of all or a substantial part of Company’s revenue-generating
operations from Company to Purchaser or any Affiliate of Purchaser.
(c) Purchaser
hereby acknowledges its intent to cause Company to be operated following
Closing
in a manner consistent with the assumptions and projections identified in
the
“Business Plan” attached hereto as Schedule 4 and made a part hereof for all
purposes, including but not limited to providing Company with sufficient
working
capital (not exceeding US$4 million) to conduct its business in the manner
heretofore conducted. In this regard, it is anticipated that Purchaser will,
as
soon as practicable following Closing, extend to Company a working capital
loan
facility in a principal amount equal to that described in Section 2.5(e)
on such
terms and conditions as Purchaser and the Company shall mutually agree.
Notwithstanding the foregoing, however, Seller and Purchaser agree and
acknowledge that Company, and Purchaser’s intentions with respect to the
Company, are subject to changing market conditions in the environment in
which
Company operates, and that Purchaser shall have no obligations to cause Company
to be operated in any particular way or furnished with any particular level
of
funding. Seller’s sole assurances regarding its participation in future
operating profits of Company lie in the “Minimum” payment obligations set out in
the table in Section 7.1 (a) above.
(d) Following
the end of each of the said three calendar years, Purchaser shall, or shall
cause the Company to deliver to Seller annual financial statements of the
Company that have been audited by an independent auditing firm of international
stature and reputation, together with the auditors’ statement and notes thereto.
Such statements shall be delivered to Seller no later than one hundred twenty
(120) days following the end of each such calendar year period, accompanied
by a
reconciliation statement prepared by such auditing firm setting forth the
calculation of “net operating profits” in accordance with the standards set
forth in subparagraph (b) above and specifying the amount underpaid or overpaid
by Purchaser as compared to said statement. Sellers shall then have up the
thirty (30) days to review such materials and, if no objection is raised
in
writing by Sellers within that time, said reconciliation statement shall
be
final and binding on the parties. If on the other hand Sellers object to
said
materials in any respect by written notice to Purchaser, then the parties
shall
work in good faith to resolve their disagreement(s) within the succeeding
thirty
(30) day period. During that time, either Sellers or Purchaser may give notice
to the other of its election to refer the disagreement to a second independent
auditing firm of international stature and reputation, which firm shall be
selected (i) by the firm that audited Purchaser’s financial statements in the
first place, or (i) if such firm fails or refuses to select a second such
firm,
by mutual agreement of Sellers and Purchaser. The decision of the second
such
firm shall be final and binding on the parties and may be enforced by a court
of
competent jurisdiction. If the second such firm’s decision results in a “net
operating profit” calculation difference of less than five percent from the
first such firm’s decision, the costs of the second such firm’s review shall be
borne by Sellers. If the difference is from five to ten percent., the cost
shall
be borne equally between Sellers, on the one hand, and Purchaser, on the
other.
If the difference is greater than ten Percent, the cost shall be borne by
Purchaser. Any overpayment by Purchaser shall be refunded by Sellers, and
any
underpayment by Purchaser shall be paid to Sellers, promptly upon the parties’
receipt of the final determination.
7.2 Assignment
of Oasis Distribution License. To the extent that such consent has not yet
-been
obtained, and to the extent that Purchaser so requests, Sellers shall continue
in good- faith to support and cooperate with Purchaser in its efforts to
obtain
the consent of Oasis Technology Ltd. to the assignment contemplated by clause
(iv) of Section 2.2.
7.3 Following
the Closing. Sellers shall, and shall cause their Affiliates to, discontinue
and
thereafter refrain from the use of the “FEDS” name and any other such
trademarks, tradenames, service marks, service names, or logos that are the
same
as or confusingly similar to Company’s name, it being understood that
“FirstEcom.Com” shall not be considered as such for this purpose. In addition,
to the extent that they have not completely done so prior to Closing, Sellers
shall, and shall cause their appropriate Affiliates to, procure that their
names
and the names of their Affiliates that are the same as or confusingly similar
to
the Company’s name be changed so that they are not, it being understood that
“FirstEcom.Com” shall not be considered as such for this purpose.
7.4 Post-Closing
Intercompany Support. For a period of twelve (12) months following the Closing,
and only to the extent that any Seller has within the twelve (12) months
preceding Closing provided or caused to be provided intercompany operational
support for Company using the assets, resources or facilities of such Seller
or
its Affiliates, Sellers shall continue to provide or cause to be provided
such
support as Purchaser shall request in order to maintain Company’s operations at
the level of functionality and efficiency enjoyed by Company prior to Closing,
including without limitation the provision of such remote hardware support,
application hosting, and/or other computer processing functions as are
currently being performed for or on behalf of Company by any Sellers and/or
its
Affiliates. Without limiting the foregoing, this includes the servers and
related hardware, software and data described in Section 4.10 above. It is
understood and agreed that such support shall be at no additional cost to
Purchaser or the Company. This Section 7.4 does not apply to the support
services covered by that certain End User Support Agreement in the form attached
hereto as Exhibit E and entered into by the parties thereto.
7.5 Processing
Transactions. From time to time following the Closing, Sellers may contact
Company to propose the entry by a Seller and/or its designee into agreements
or
understandings for the processing by the Company of financial transactions
referred by such Seller, and Company will be entitled to accept or decline
or
propose modifications to such proposals in its sole discretion.
7.6 Post-closing
Audit. During the course of First Ecom’s annual audit of its financial condition
and results of operations with respect to the fiscal. year ending December
31,
2001, Purchaser agrees that it shall, and shall cause the Company to, permit
the
auditors of First Ecom access during reasonable business hours and upon
reasonable advance notice to the books and records of the Company for the
purpose of completing their audit of First Ecom’s consolidated financial
statements for the portion of said fiscal year ending on the Closing Date.
In
this connection, Purchaser shall instruct its auditors to provide reasonable
cooperation with respect to such access. Sellers agree that they shall pay
and
be responsible for any out-of-pocket costs and expenses reasonably incurred
by
Purchaser in the course of such audit, and that they shall limit such access
so
as to minimize the time and disruption necessary to complete the work. To
the
extent reasonably practicable, Sellers shall permit Purchaser to make available
copies of such information as shall the auditors shall require without the
need
for actual onsite visits. In any case, such auditing firm and Sellers shall
be
required to sign such confidentiality and non-disclosure agreements as Purchaser
shall reasonably require with respect to such information as may be disclosed
to
Sellers or their auditor during the course of such review.
7.7 Additional
Documents and Further Assurances. Each party hereto, at the reasonable request
of the other party hereto, shall execute and deliver such other instruments
and
do and perform such other acts and things as may be reasonably necessary
or
desirable for effecting completely the consummation of this Agreement and
the
transactions contemplated hereby.
ARTICLE
VIII - INDEMNIFICATION
8.1 Survival
of Representations and Warranties
(a) All
of
Sellers’ and Purchaser’s representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Closing
and continue until 5:00 p.m., Bermuda time, on the third anniversary of the
Closing Date (the “Expiration Date”), except that nothing in this Section 8.1
shall be deemed to limit any right or remedy for fraud with respect to the
representations and warranties set forth in Articles III, IV or V.
The
waiver of any condition based on the accuracy of any representation or warranty,
or the performance or compliance of any covenant or obligation, or any
limitations on the survival of such representations and warranties, will
not
affect the right to indemnification set forth in Section 8.2.
(b) The
representations, warranties, covenants and obligations of Sellers, and the
rights and remedies that may be exercised by Purchaser, shall not be limited
or
otherwise affected by or as a result of any information furnished to, or
any
investigation conducted for or on behalf of, or any knowledge acquired by,
Purchaser or its officers, directors, employees, shareholders, agents advisors,
or representatives as to the accuracy or inaccuracy of any such representation
or warranty, except as, otherwise expressly provided in this
Agreement.
(a) Indemnification.
Subject to the limitations set forth herein, Sellers agree to indemnify
Purchaser, the Company, their Affiliates, and their respective. shareholders,
directors, officers, employees, agents and representatives (collectively,
the
“Indemnified Parties”) for claims, losses, liabilities, damages, deficiencies,
costs and expenses, including reasonable attorneys’ fees and expenses, and
expenses of investigation and defense (calculated after deduction for insurance
proceeds recovered or recoverable) incurred by such Indemnified Party directly
or indirectly (including, after the Closing. by the Company) as a result
of (i)
any inaccuracy or breach of a representation or warranty of Sellers contained
herein or in any certificate required to be delivered at Closing by Seller
under
Section 2.5(a), or (ii) any failure by Sellers or the Company to perform
or
comply with any covenant or agreement contained herein, or (iii) any
transactions, business, or other activities, actions or omissions by or on
behalf of the Company at any time prior to January 1, 2000, or (iv) any claim
or
cause or action arising out of the Shareholders’ Agreement or the Share Purchase
and Sale Agreement (hereinafter individually a “Loss” and collectively
“Losses”), or (v) without limiting any of the foregoing, the failure of the
Company to have, or any claim or al1egation on the part of any person that
the
Company has not, succeeded to all of The Bank of Bermuda Limited’s rights and
obligations as “Processor” under the TPP Agreement referenced in Section 4.15(
c) above effective from the first date on which the Company engaged in
transaction processing for MasterCard transactions, or (vi) the provisions
of
Section 14 of that certain Transaction Processing Agreement dated 20 April
2000
and entered into by and between the Company and Planet Group, Inc. Sellers
acknowledge that such Losses, if any, would relate to unresolved contingencies
existing at the Closing, which if resolved at the Closing would have led
to a
reduction in the aggregate purchase price paid by Purchaser. For the avoidance
of doubt, the Company shall not be liable in respect of any inaccuracy or
breach
in any representation, warranty or covenant contained in this Agreement,
howsoever caused, or in any instrument delivered pursuant to this Agreement
or
in connection with the transactions contemplated hereby.
(b) Third-Party
Claims. In the event Purchaser becomes aware of a third-party claim which
Purchaser believes may result in a demand against Sellers hereunder, Purchaser
shall promptly notify First Ecom of such claim, and First Ecom shall be
entitled, at its expense, to participate in any defense of such claim. If
First
Ecom acknowledges in writing to Purchaser that if the allegations in such
claim
are in fact true then any liability arising from the adjudication or other
settlement of such claim would be for the account of Sellers, then First
Ecom
shall be entitled to assume the defense of such claim and shall have the
power
to settle such claim. If First Ecom is not entitled to or chooses not to
assume
the defense of any such claim, Purchaser shall consult with and attempt to
solicit the consent of First Ecom prior to and in connection with any settlement
of any such claim, but Purchaser shall have the right in its sole discretion
to
settle any such claim. If First Ecom had the right but chose not
to
assume the defense of any such claim, First Ecom shall be estopped from
objecting to Purchaser’s claim under this Article VIII for the amount of any
settlement entered into by Purchaser with respect to such claim.
(c) Basket;
Limitations Period. Purchaser shall not be entitled to bring any claim against
Sellers under this Section 8.2 unless and until the aggregate of all such
c1aims
equals or exceeds the sum of US$50000. In addition, Purchaser shall not be
entitled to bring any claim against Sellers under this Section 8.2 unless
Purchaser notifies Sellers in writing of such c1aim on or before the third
anniversary of the Effective Date of this Agreement.
ARTICLE
IX-TERMINATION AND WAIVER
9.1 Termination.
This Agreement may be terminated and the transactions contemplated hereby
abandoned at any time prior to the Closing:
(a) By
mutual
written consent of Sellers and Purchaser;
(b) By
Purchaser if the Closing has not occurred by October 31, 2001 on account
of the
failure or non-fulfillment of any of Purchaser’s conditions to Closing set forth
in Section 6.3 above;
(c) By
Sel1ers if the Closing has not occurred by October 31, 2001 on account of
the
failure or non-fulfillment of any of Sellers’ conditions to Closing set forth in
Section 6.2 above; or
(d) By
Purchaser or Seller if in any case Closing has not occurred by November 30,
2001
(provided that the right to terminate this Agreement under this paragraph
(d)
shall not be available to any party whose willful failure to fulfill any
obligation hereunder has been the cause of, or resulted in, the failure of
the
Closing to occur on or before such date).
9.2 Extension
.of Time, Waiver. At any time prior to the Closing, Purchaser, on the one
hand,
and Sellers, on the other hand, may, to the extent legally allowed:
(a) Extend
the time for the performance of any of the obligations or other acts of the
other party hereto,
(b) Waive
any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto,
(c) Waive
compliance with any of the agreements or conditions for the benefit of such
party contained herein; provided, that no failure or delay by any party hereto
in exercising any right hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or, further exercise
thereof or the -exercise of any other right hereunder;
provided,
that any agreement on the part of any party hereto to any such extension
or
waiver shall be valid only if set forth in an instrument in writing signed
on
behalf of such party that expressly refers to this Section and the particular
obligation, inaccuracy, agreement or condition that is the subject of the
waiver.
ARTICLE
X
- GENERAL
10.1 Expenses.
All fees and expenses incurred in connection with the transactions contemplated
hereby, including, without limitation, all legal, accounting, financial
advisory, consulting and all other fees and expenses of third parties incurred
by a party in connection with the negotiation and effectuation of the terms
and
conditions of this . Agreement and the transactions contemplated hereby,
shall
be the obligation of the respective party incurring such fees and expenses;
provided, however, that if the purchase and sale of the Company Shares is
consummated, the Company shall not incur financial advisory, brokers’, finders’,
legal and accounting fees and expenses in excess of US$5000.00 in connection
with the transactions contemplated hereby, and provided, further, that Sellers,
on the one hand, and Purchaser, on the other, shall each bear one-half of
the
applicable Bermuda stamp duties incurred with respect to the transfer of
the
certificates representing the Company Shares.
10.2 Public
Disclosure. Unless otherwise required by applicable Legal Requirements
(including, without limitation, applicable securities laws) or by the rules
and
regulations of a regulated public securities exchange or other organized
public
market on which the shares of any Seller are traded (including but not limited
to Nasdaq), prior to the Closing, no disclosure (whether or not in response
to
an inquiry) of the discussions or subject matter of this Agreement or the
transactions contemplated hereby shall be made by any party hereto unless
approved by Purchaser and Sellers prior to release, provided that such approval
shal1 not be unreasonably withheld.
10.3 Notices.
Any notice, request, instruction or other document to be given hereunder
by any
party to the other shall be in writing and shall be deemed to have been given
or
made if in writing and (a) delivered personally, as of the date of such
delivery, (b) by telecopy as of the date of receipt of confirmation of
transmission (provided that such telecopy was promptly confirmed by personal
delivery, first class mail, or courier), or (c) by internationally recognized
delivery service guaranteeing delivery in two business days or less, with
the
price of delivery paid by the sender, as of the date of such delivery, to
the
parties at the following addresses and numbers:
to: Mr.
John
Chr. MA.M. Deuss
President
First
Curacao International Bank, N.V.
Kaya
WFG
(Jombi)
Mensing
Nr. 18,
Zeelandia,
Curacao
Netherlands
Antilles
with
a
copy to:
Transworld
Oil Limited
#3
St.
James Court
Flatts
Village
Hamilton
Parish FL04
Bermuda
Attn:
General Counsel
80
Gloucester Road, 19th Floor
Wan
Chai,
Hong Kong
with
a
copy to:
D.
Roger
Glenn
Friedman
Kaplan
875
Third
Avenue
Chief
Executive Officer
69
Front
Street
Hamilton,
Bermuda
with
a
copy to:
Transworld
Oil Limited
#3
St.
James Court
Hamilton
Parish FL04
Bermuda
Attn:
General Counsel
or
to
such other address as may be designated in writing by the parties, by a notice
given as aforesaid.
10.4 Headings
and Interpretation. The headings of the several sections of this Agreement
are
inserted for-convenience of reference only and are not intended to affect
the
meaning or interpretation of this Agreement. As used in this Agreement, the
use
of pronouns in the masculine, feminine or neutral gender shall be interpreted
as
a use of any of the other genders, and the use of plural or singular shall
be
interpreted as the use of the other, as the context shall require. Further,
as
used in this Agreement, the phrase “to the knowledge of Sellers and the Company”
means to the collective knowledge of any and/or all of them, whether such
knowledge is held by one, more than one or all of them.
10.5 Counterparts.
This Agreement may be executed in counterparts, and when so executed each
counterpart shall be deemed to be an original, and said counterparts together
shall constitute one and the same instrument.
10.6 Amendment
or Supplement. This Agreement may not be amended or supplemented except by
an
instrument in writing signed by or on behalf of Purchaser and
Sellers.
10.7 Entire
Agreement; Assignment. This Agreement, the Schedules and Exhibits hereto,
and
the documents and instruments and other agreements among the parties hereto
referenced herein (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise except as mutually agreed in writing between the parties, except
that:
(i)
Purchaser may transfer or assign its rights, interests or obligations hereunder
in whole or in part to any third party upon notice to Sellers, provided that
no
such transfer or assignment shall relieve Purchaser of any of its obligations
hereunder, and .
(ii)
Sellers may transfer or assign their rights and interests under Section 7.1
with
respect to the Installment Payments in whole or in part to any unrelated
third
party in a bona fide, cash-only, arms’ length transaction, provided that they
first give detailed notice to Purchaser of any such proposed transfer and
its
terms, whereupon Purchaser shall have the right and opportunity to elect
to
purchase such rights on the same terms, the exercise of which right
will require
either written or, if given either to First Ecom’s Chief Executive Officer or
Chief Financial Officer, oral notice received by. First Ecom from Purchaser
to
that effect within five (5) Business Days following Purchaser’s receipt of
Sellers’ notice of proposed transfer, provided that no such transfer or
assignment shall relieve Sellers of any of their obligations
hereunder.
This
Agreement will be binding upon and inure to the benefit of the parties and
their
respective successors and permitted assigns.
10.8 Severability.
In the event that any provision of this Agreement or the application thereof,
becomes or is declared by a court of competent jurisdiction to be illegal,
void
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of
the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes
of
such void or unenforceable provision.
10.9 Other
Remedies. Except as otherwise provided herein, any and all remedies herein
expressly conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by law or equity upon
such
party, and the exercise by a party of anyone remedy wi1l not preclude the
exercise of any other remedy.
10.10 Governing
Law. This Agreement shall be governed by and construed in accordance
with the
laws
of Bermuda, without regard to the applicable principles of conflicts of laws
thereof.
10.11 Absence
of Third-Party Beneficiary Rights. No provision of this Agreement is intended,
or will be interpreted, to provide to or create for any third-party beneficiary
rights or any other rights of any kind in any client, customer, affiliate,
shareholder, employee, partner or any party hereto or any other person or
entity, and all provisions hereof will be personal solely between the parties
to
this Agreement, except that the provisions of Article VIII shall be for the
benefit of, and enforceable by, the indemnified parties referred to
therein.
10.12 Joint
and
Several Responsibility. Sellers acknowledge and agree that they are entering
into this Agreement, and that they make the representations, warranties,
covenants and agreements set forth herein, jointly and severally, with full
recourse on the, part of Purchaser to any and all Sellers for the obligations
and undertakings of any Seller contained herein. In this respect, each Seller
joins in this Agreement as primary obligor and not as surety, and Purchaser
shall not be required to proceed first against or exhaust its remedies against
any one or more Sellers as a condition to proceeding hereunder against any
other
Seller with respect to any claim arising hereunder. Further, each Seller
hereby
irrevocably and exclusively appoints First Ecom as its agent and
attorney-in-fact for the giving or receipt of all notices or payments, the
granting of all consents, approvals, or waivers, and the taking of all such
other actions and making of all such other elections and/or decisions as
shall
be explicitly or implicitly provided or permitted herein to be given, received,
granted, taken or made by or on behalf of the Sellers or any of them (it
being
understood that omitting to take any action or make any election or decision
shall be deemed the taking of an action or the making of any election or
decision for this purpose), and to do all such acts and things as may in
the
opinion of such attorney-in-fact be reasonably necessary or reasonably expedient
for the purposes thereof, or in connection therewith, and Purchaser shall
be
entitled to rely conclusively on any of the foregoing as the action, decision
or
election, as the case may be, of each and all of the Sellers. Each Seller
agrees
that the foregoing appointment constitutes a power coupled with an interest
and
shall be binding upon its successors and assigns. Any payments received by
First
Ecom hereunder that properly belong to any of other Seller shall be held
by
First Ecom in trust for the benefit of such other Seller, and Sellers hereby
release, discharge and agree to hold harmless Purchaser for any amounts payable
to any Seller hereunder or pursuant to any transaction or instrument
contemplated hereby that Purchaser pays to First Ecom.
IN
WITNESS WHEREOF,
Purchaser and Sellers have caused this Agreement to be executed and delivered
all as of the date first above written.
“Sellers”:
|
FIRST
ECOM.COM, INC.
By:
/s/
Kenneth G.C. Telford
Name:
Kenneth G.C. Telford
Title:
Secretary
|
FEDS
ACQUISITION CORPORATION
By:
/s/
Kenneth G.C. Telford
Name:
Kenneth G.C. Telford
Title:
Secretary
|
|
FIRST
ECOM DATA SERVICES
ASIA
LIMITED
By:
/s/
Kenneth G.C. Telford
Name:
Kenneth G.C. Telford
Title:
Secretary
|
FIRST
ECOMMERCE ASIA LIMITED
By:/s/
Kenneth G.C. Telford
Name:
Kenneth G.C. Telford
Title:
Secretary
|
|
“Purchaser”:
FIRST
CURACAO INTERNATIONAL BANK, N.V.
By:
/s/
John Chr. M.A.M. Deuss
Name:
John Chr. M.A.M. Deuss
Title:
President
|
Exhibits
attached:
A - Form
of
Mars Software License Agreement
B - Form
of
Payment Gateway License Agreement
C - Form
of
Software Development License Agreement
D - Form
of
Oasis Subdistributor and Assignment Agreement
E - Form
of
End User Support Agreement
F - Form
of
Share Transfer Instruments
G
- Form
of
Release And Discharge of Intercompany
Debt And Related Liens
H - Assignment
and Transfer of Logo from the Company to Seller
I
- Assignment
and Transfer of Wing Hang Bank and International Bank of Asia Contracts From
The
Company to FEDS Asia
J
-
Form
of
Opinion of Legal Counsel to be delivered on behalf of First Ecom and FEDS
Acquisition
Schedules
attached:
2 - List
of
Insurance Policies
5 - Capital
Expenditures and Commitments
(END
OF
DOCUMENT - SEE ATTACHED EXHIBITS AND SCHEDULES)
SOFTWARE
DEVELOPMENT LICENSE AGREEMENT
This
SOFTWARE
DEVELOPMENT LICENSE AGREEMENT
(“Agreement”)
is
entered into effective as of October 19, 2001 (the “Effective
Date”)
by and
among First Ecom.com, Inc., a Nevada corporation having its principal place
of
business at 80 Gloucester Road, 19th Floor, Wan Chai, Hong Kong (“First Ecom”),
and First Ecom Data Services Asia Limited, a Hong Kong corporation having
its
principal place of business at 80 Gloucester Road, 19th Floor, Wan Chai,
Hong
Kong (“FEDS Asia”)( First Ecom and FEDS Asia being referred to herein
individually, jointly and collectively as “Licensor”),
and
Transworld Payment Solutions N.V., a Netherlands Antilles company having
its
offices at c/o Julianaplein No. 5, Curacao, Netherlands Antilles (“Licensee”)
.
1. Definitions.
As used
in this Agreement, the capitalized terms defined in the introductory paragraph
shall have the meanings assigned to them therein, and the following capitalized
terms shall have the meanings assigned to them below:
“Affiliate”
of
a
person or entity means any other person or entity controlled by, controlling,
or
under common control with said person or entity, and "control" for this purpose
is understood to include the ownership or voting control of more than 50%
of the
outstanding securities of any such person carrying the power to vote with
respect to the direction or management of the person or entity;
“Documentation”
means
the related hard-copy or electronically reproducible technical documents
created
in the course of the development of the Software, including without limitation
all specifications, instructions, technical descriptions, manuals, flow,
charts,
pseudo-code, state diagrams, interim versions of programs or parts thereof,
comments to source code, or other tangible notes or records pertaining to
the
Software's development;
“Media”
means
the original Licensor-supplied physical materials (if any) containing the
Software and/or Documentation;
“Product”
means
collectively the Media, Software and Documentation, and all Software, Media
or
Documentation updates subsequently provided to the Licensee by Licensor or
its
authorized distributor;
“Software”
means
the original computer files (including all computer programs and data stored
in
such files) comprising (i) Licensor’s financial transaction management and
reporting computer software product known as “Merchant Accounting and Reporting
system or “MARS”, and system or “MARS”, and (ii) Licensor's “Payment Gateway”
computer software product, which product consists of an electronic internet
payment gateway that translates various types of financial transaction data,
including but not limited to transaction data originating from credit, debit
and
check payment methods, into a format that can be read by the processing system
or systems proprietary to First Ecommerce Data Services Limited, and all
whole
or partial copies thereof, including without limitation modified copies and
portions merged into other programs, and further including any and all updates,
revisions, enhancements, modifications, subsequent versions and other derivative
works thereof developed and furnished to Licensee by or on behalf of Licensor
from time to time.
Other
capitalized terms used herein shall have the meanings assigned to them where
they first appear.
.
2. Grant
Of License Rights. For
good
and valuable consideration in hand received, the receipt and sufficiency
of
which are hereby acknowledged, but subject to the terms and conditions set
forth
herein, Licensor grants to Licensee and its Affiliates a paid-up, royalty-free,
non-exclusive, non-transferable, perpetual license to revise, modify, enhance
and otherwise develop derivative works of the Product. Licensor agrees to
deliver promptly upon the execution and delivery of this Agreement (but not
before November 15, 200l), no less than two (2) master copies of the Software
in
source (human readable) code format to Licensee on such Media as Licensee
shall
reasonably request, together with two (2) copies of the Documentation, including
without limitation all relevant third party development toolkits and
licenses.
3. Title
And Copyright. Licensor
represents and warrants to Licensee that Licensor is the owner and holder
of all
rights, titles and interests in and to the Product, free and clear of all
liens,
charges, encumbrances, equities and claims of third parties of any description.
There are no facts or alleged facts known to Licensor which would reasonably
serve as a basis for any claim that Licensor does not have the right to grant
the rights and licenses provided for herein. As between Licensor and Licensee,
Licensee acknowledges and agrees that, except as and to the extent otherwise
agreed in writing between the parties, all title and copyrights in and to
the
Product, including without limitation the original code or other copyrightable
material embedded in any derivative works thereof created by or on behalf
of
Licensee pursuant to this Agreement, are and will remain the property of
Licensor and/or its affiliates and suppliers, and are protected by applicable
copyright laws, and applicable international copyright treaties, and that
Licensor neither grants hereby nor otherwise transfers hereby any rights
of
ownership therein to Licensee or to any third party; provided, however, that
any
incremental additional code or other copyrightable material created by or
for
Licensee or its Affiliates shall be the property of Licensee or its Affiliates,
as applicable, and shall not be subject to the restrictions set forth herein
except to the extent such incremental material incorporates, is embedded
in or
bundled with the Product. Licensee will not claim or assert title to or
ownership of the Product except pursuant to a written agreement expressly
entitling Licensee to claim or assert such title or ownership. This Agreement,
when executed and delivered by Licensor and Licensee, will constitute the
valid
and legally binding obligation of Licensor, legally enforceable against Licensor
in accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
the
rights of creditors generally, limitations imposed by applicable law or
equitable principles upon the specific enforceability of any remedies, covenants
or other provisions of this Agreement, and upon the availability of injunctive
relief or other equitable remedies.
4. Restrictions.
Licensee
will not remove or alter any copyright or proprietary notice from copies
of the
Product. Except in accordance with the terms of this Agreement or any other
express written agreement between the parties, Licensee agrees (a) not to
sell,
rent, lease, license, sublicense, display, modify, time share, outsource
or
otherwise transfer the Product or any derivative work of the Product to,
or
permit the use of the Product or any derivative work of the Product by, any
third party not an affiliate of Licensee, provided,
without
limiting the scope of the license grant hereinabove stated, it is understood
and
agreed that this Agreement permits the use of any derivative work of the
Product
by Licensee and its Affiliates in support of services rendered to their
customers in the normal course of their trade or business; and (b) to use
reasonable care and protection to prevent the unauthorized use, copying,
publication or dissemination of the Product. Licensor has the right to obtain
injunctive relief against any actual or threatened violation of these
restrictions, in addition to any other available remedies.
5. Taxes
And Additional Charges.
All
license fees paid or payable by the Licensee for the license granted hereunder
(this "License") do not include, and Licensor will be responsible for, any
and
all taxes, duties, levies, tariffs, and other governmental charges now or
hereafter imposed by any governmental authority on the purchase or sale of
this
License or the use or possession of the Product by Licensee and/or its
Affiliates; provided that Licensee will be responsible for its own corporate
franchise taxes and taxes based upon its own net income.
6. Limited
Warranty.
Licensor
warrants to Licensee that, for a period of ninety (90) days from the Effective
Date, (i) the Documentation and Media will be, under normal use, free from
physical defects, and (ii) the Software will perform in substantial accordance
with the operating specifications contained in the Documentation that is
most
current at the Effective Date. If Licensee notifies Licensor within said
ninety-day period of its belief that either of these warranties has been
breached, including a description of the nature or circumstances of such
breach,
Licensor will be obligated to use reasonable efforts to remedy the defect(s)
in
question within a reasonable period of time or, at Licensor’s option, to replace
the defective Product component at no additional charge. Licensor, its
authorized distributors and its suppliers do not warrant that the Product
will
satisfy Licensee’s requirements, that the operation of the Product will be
uninterrupted or error free, or that all software defects can be corrected,
This
warranty will be void if: (i) the Product is not used in accordance with
the
instructions set out in the Documentation, (ii) a Product defect has been
caused
by any of Licensee's or a third party's malfunctioning equipment, or (iii)
Licensee has made modifications to the Product not expressly authorized
in writing by Licensor.
7. Indemnification
For Infringement. Licensor
will defend or settle, at its own expense, any claim against Licensee by
a third
party asserting that Licensee's and/or its Affiliates’ use of the Product within
the scope of this Agreement violates such third party’s patent, copyright,
trademark, trade secret or other proprietary rights, and will indemnify Licensee
against any damages finally awarded against Licensee arising out of such
claim.
Licensee will promptly notify Licensor in writing after first receiving notice
of any such claim, and Licensor will have sole control of the defense of
any
action and all negotiations for its settlement or compromise, with Licensee's
reasonable assistance; provided, that Licensee's approval in writing shall
be
required of any settlement or compromise involving any admission of fault
or
wrongdoing on the part of Licensee, and provided, further, that Licensee
may at
Licensor's cost and expense take responsibility for its own defense if and
to
the extent that Licensee has any reasonable doubt as to the ability or
willingness of Licensor to fund such defense or any award, settlement or
compromise arising therefrom. Licensor will not be liable for any costs or
expenditures incurred by Licensee without Licensor's prior written consent
except insofar as Licensee reasonably determines that it is necessary or
appropriate to incur such costs and expenses in order to preserve its legal
or
equitable rights and remedies, protect it from further such claims, or minimize
the losses associated with claims so made. If an order is obtained against
the
Licensee's and/or its Affiliates' use of the Product by reason of any claimed
infringement, or if in Licensor's opinion the Product is likely to become
the
subject of such a claim, Licensor will, at its option and expense, and in
addition to any other rights and remedies available to Licensee hereunder,
either (i) procure for Licensee the right to continue using the product,
or (ii)
modify or replace the Product with a compatible functionally equivalent,
non-infringing Product.
8. Support.
Contemporaneously with the execution of this Agreement, Licensor and Licensee
are entering into an End User Support Agreement under which Licensor will
provide ongoing support and maintenance beyond the scope and time limits
of the
warranty period set forth in Section 6 above, which End User Support Agreement
sets forth the terms and conditions under which Licensee will be entitled
to
receive such Product updates and other Product support as may be provided
for
therein.
9. Successors
And Assigns.
This
Agreement will be binding upon and inure to the benefit of each of the parties
and their respective successors and assigns; provided, however, that Licensee
may not assign or sublicense this Agreement in whole or in part to any person
or
entity not an Affiliate of Licensee without the prior written consent of
Licensor, and any assignment or sublicense attempted without such consent
will
be void. Notwithstanding the foregoing, if for any reason both First Ecom
and
FEDS Asia cease doing business, or both discontinue maintenance and support
for
the Software or any portion thereof, then in either case, unless the Software
or
portion thereof so affected has been conveyed to a third party, the license
granted hereunder shall thereupon automatically and without need for further
action by either party become transferable, and the restrictions contained
herein on disclosure or dissemination to third parties of the Product or
derivative works thereof shall thenceforth be of no force or
effect.
10. Governing
Law. This
agreement will be governed by and construed in accordance with the laws of
Bermuda, without regard to conf1icts of law principles.
(a) Each
party is an independent contractor under this Agreement, and nothing herein
will
be construed to create any partnership, joint venture, or agency relationship
between the parties hereto. Any use of the term "partner" in any communication
by or between the parties or on their individual or joint behalf or in any
trademark or service to describe their relationship is intended solely in
the
colloquial sense of a valued business relationship, and does not indicate
the
existence of or an offer to enter into a legal partnership, joint agency
or
other relationship involving common ownership or joint and/or several liability
with one another and/or any of their Affiliates. Neither party will incur
any
debt or make any express or implied agreement, guarantee, warranty or
representation in the name or on behalf of the other without the others express
written authorization, and each party will be responsible for its own costs
and
expenses incurred in connection with this Agreement. No failure or delay
by
either party in exercising any right, power or privilege hereunder will operate
as a waiver thereof, nor will any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power
or
privilege hereunder. No remedy expressly provided in this Agreement for a
breach
will be the sole or exclusive remedy for such breach, and each party hereby
reserves to itself, in addition to the remedies expressly provided to it
in this
Agreement, all remedies available to it under law and at equity. This Agreement
may be amended, modified or waived only by a subsequent writing that
specifically refers to this Agreement and that is signed by both parties,
and no
other act, document, usage, or custom will be deemed to amend this Agreement.
Headings in this Agreement are for the convenience of reference only and
will
not affect the construction or interpretation of this Agreement. If any
provision or provisions of this Agreement will be held, for any reason, to
be
illegal, invalid or unenforceable in any circumstance, the remaining provisions
will nonetheless be legal, valid and enforceable provisions, and the affected
provision will remain legal, valid and enforceable in other circumstances.
The
terms of this Agreement that expressly or by implication are intended to
continue beyond its termination will survive any such termination. Under
local
law and treaties, the restrictions and limitations of this Agreement may
not
apply to Licensee; Licensee may have other rights and remedies, and be subject
to other restrictions and limitations.
(b) IN
NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER, UNDER THE LAW OF TORT, CONTRACT
OR OTHER WISE, AND INCLUDING AS A RESULT OF NEGLIGENCE, FOR SPECIAL, INCIDENTAL,
INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE
PERFORMANCE OR NON-PERFORMANCE HEREOF EVEN IF THE RESPONSIBLE PARTY HAS BEEN
ADVISED OF OR FORESEES A LIABILITY OF ANY SUCH DAMAGES OCCURRING), INCLUDING
BUT
NOT LIMITED. TO LOST BUSINESS REVENUE, FAILURE TO REALIZE EXPECTED PROFITS
OR
SAVINGS, OR LOSS OF DATA.
(c) Neither
party hereto shall be held liable hereunder for any default arising from
the
delay in
the
performance of its obligations hereunder to the extent that such default
or
delay:
(i) is
caused
directly by an event beyond the reasonable control of the defaulting party
or
delaying party (the “Non-performing Party”), such as, but not restricted to,
fire, flood, earthquake, elements of nature, acts of war, terrorism, riots,
civil disorders, rebellions or revolutions, strikes, lockouts or labor
difficulties; and
(ii) could
not
have been prevented by reasonable precautions and cannot
possibly
be circumvented by the Non-performing Party through the use of commercially
reasonable alternative sources, work-around plans or other means; (a “Force
Majeure Event”). The Non-performing Party will be excused from any further
performance of the obligations affected by such Force Majeure Event for as
long
as the Force Majeure Event continues and the Non-Performing Party continues
to
use its reasonable efforts to recommence performance. The Non-performing
Party
shall immediately notify the other party by telephone (to be confirmed in
writing within five (5) days of the inception of the Force Majeure Event)
and
describe at a reasonable level of detail the circumstances causing such default
or delay. During the continuance of a Force Majeure Event affecting Licensor,
Licensee shaIl continue to pay Licensor's charges for professional services
actually rendered and expenses incurred in the actual performance of such
services in accordance with this Agreement. Notwithstanding any other provisions
hereof, this clause (c) will not excuse a breach of any purely monetary
obligation.
12. Joint
and Several Responsibility. Each
of
First Ecom and FEDS Asia acknowledge and agree that they are entering into
this
Agreement, and that they make the representations, warranties, covenants,
agreements, indemnities and other undertakings and responsibilities of Licensor
set forth herein, jointly and severally, with full recourse
on the part of Licensee to either or both of them for the obligations and
undertakings of Licensor contained herein. In this respect, each of First
Ecom
and FEDS Asia joins in this Agreement as primary obligor and not as surety,
and
Licensee shall not be required to proceed first against or exhaust its remedies
against either of First Ecom or FEDS Asia as a condition to proceeding hereunder
against the other with respect to any claim arising hereunder. Further, each
of
First Ecom and FEDS Asia hereby irrevocably and exclusively appoints First
Ecom
as its agent and attorney-in-fact for the giving or receipt of all notices
or
payments, the granting of all consents, approvals, or waivers, and the taking
of
all such other actions and making of all such other elections and/or decisions
as shall be explicitly or implicitly provided or permitted herein to be given,
received, granted, taken or made by or on behalf of Licensor or either of
them
(it being understood that omitting to take any action or make any election
or
decision shall be deemed the taking of an action or the making of any election
or decision for this purpose), and to do all such acts and things as may
in the
opinion of such attorney-in-fact be reasonably necessary or reasonably expedient
for the purposes thereof, or in connection therewith, the Licensee shall
be
entitled to rely conclusively on any of the foregoing as the action, decision
or
election, as the case may be, of each and both of First Ecom and FEDS Asia.
Each
of First Ecom and FEDS Asia agrees that the foregoing appointment constitutes
a
power coupled with an interest and shall be binding upon its successors and
assigns. Any payments received by First Ecom hereunder that properly belong
to
FEDS Asia shall be held by First Ecom in
trust
for the benefit of FEDS Asia, and FEDS Asia hereby releases, discharges and
agrees to hold harmless Licensee for any amounts payable to FEDS Asia that
Licensee pays to
First
Ecom.
LICENSOR:
FIRST
ECOM.COM, INC. FIRST
ECOM DATA SERVICES
By:_____________________ By:_____________________
Name:
Kenneth G.C. Telford Name:
Kenneth G.C. Telford
Title:
Secretary Title:
Secretary
LICENSEE:
TRANSWORLD
PAYMENT SOLUTIONS N.V.
Name:
John Chr. M.A.M. Deuss
Title:
Managing Director
[END
OF DOCUMENT]
