EXHIBIT #10
ASSET PURCHASE AGREEMENT
BETWEEN
CHEQUEMATE INTERNATIONAL, INC.
AND
TFL, L.L.C.
NOVEMBER 12, 1998
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into by and
between Chequemate International, Inc., a Utah corporation, d/b/a Chequemate
Technologies, Inc. (the "Seller") and the TFL , L.L.C., a Utah limited liability
company (the "Buyer", as of November 12, 1998. The Seller and the Buyer are
referred to collectively herein as the "Parties."
This Agreement contemplates a transaction in which Buyer will purchase
substantially all of the assets of the Seller's financial services business (as
set forth on Schedule AA@, attached hereto) in return for the purchase price set
forth in Section 1 below.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Purchase and Sale of Assets. On and subject to the terms and conditions of
this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to
sell, transfer, convey, and deliver to Buyer, the assets as set forth on
Schedule "A" attached hereto (collectively, the "Acquired Assets"), at the
Closing (as defined in Section 2) for the consideration specified below in
this Section 1.
1.1 Assumption of Liabilities. On and subject to the terms and conditions
of this Agreement, Buyer agrees to assume and become responsible for
the liabilities related to the Acquired Assets set forth on Schedule
"B" at the Closing.
1.2 Purchase Price. Buyer agrees to pay to Seller as consideration for the
Acquired Assets an amount (the "Purchase Price") equal to the greater
of Fifty Thousand Dollars ($50,000) (the "Minimum Purchase Price") or
twenty five percent (25%) of Buyer's "Net Income" (as defined in
Section 1.3) for each of the following periods (each, a "Contract
Period"):
Percentage of Buyer's
Net Income for such
Contract Period Contract Period
--------------- ---------------
First -- Closing Date -to- 10/31/1999 25%
Second -- 11/1/1999 -to- 10/31/2000 25%
Third -- 11/01/2000 -to- 10/31/2001 25%
[Payments by Buyer of the Purchase Price for each Contract Period (a "Net
Income Payment") under this Section 1.2 shall be made no later than the 30th day
after completion by Buyer of its financial statements ("Buyer's Financial
Statements"), audited in accordance with generally accepted accounting
principles ("GAAP"), but no later than 90 days following the end of an
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applicable Contract Period (the "Payment Date").] If after the third Net Income
Payment is made, the aggregate amount of the Purchase Price paid by Buyer to
Seller ("Total Net Income Payments") is less than the Minimum Purchase Price,
then Buyer shall additionally pay to Seller, within five (5) business days of
the third Payment Date (the "Final Payment Date"), the difference of the Minimum
Purchase Price and the Total Net Income Payments. Beginning on the Closing Date,
Buyer shall accrue interest on the Minimum Purchase Price at an annually
compounded interest rate of 8% (the "Interest Rate") until Buyer has paid Seller
the Minimum Purchase Price. Any outstanding interest amount owed by Buyer to
Seller shall be due and paid on the Final Payment Date.
1.3 Buyer's Net Income. Buyer's Net Income for any Contract Period under
this Section 1, shall mean the consolidated net income of Buyer (and
its subsidiaries and affiliates, if any) before interest expense and
state and federal income taxes determined in accordance and consistent
with GAAP.
1.3.1 The following shall be excluded in determining Buyer's Net Income:
1.3.1.1 The loss from any sale, exchange or other disposition of
assets;
1.3.1.2 The loss from the exchange of securities, or member
interests or any increase or reduction in the carrying
value of such securities or member interests, or any
increase or reduction in the carrying value of such
securities or member interests;
1.3.1.3 Any extraordinary loss;
1.3.1.4 Any additional depreciation, amortization or other
expense resulting from the write-up of any asset and any
amortization of goodwill or other intangibles relating
to the acquisition of the Acquired Assets by Buyer;
1.3.1.5 Any expenses directly or indirectly incurred in
connection with the financing of the acquisition of the
Acquired Assets;
1.3.1.6 The effect of valuing inventories on a last-in-first-out
basis;
1.3.1.7 Any loss or expense resulting from a change in Buyer's
accounting methods, principles or practices or a change
in GAAP or any GAAP election.
1.3.1.8 Intercompany charges between Buyer and any of Buyer's
affiliates;
1.3.1.9 Any employee termination or other costs arising out of a
consolidation of services or facilities or other
rationalization of Buyer or its affiliates subsequent to
the acquisition by Buyer of the Acquired Assets;
1.3.1.10 Any employment related costs associated with hiring of
employees by Buyer that are not demonstratably essential
to the operation of the business.
1.3.1.11 Any expenses directly or indirectly incurred in
connection with the acquisition of the Acquired Assets
by Buyer; and
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1.3.1.12 Any reserves or adjustments to reserves which are not
consistent with GAAP in connection with the financial
services business associated with the Acquired Assets.
1.3.2 The pre-tax profits resulting from or derived out of (I) the sale
of any product line, brand or proprietary right of Buyer related
directly to the Acquired Assets disposed of after the date of this
Agreement or (ii) the expiration by its terms or termination by a
supplier of any supply agreement related to the business of the
Acquired Assets between Buyer and a supplier, shall be included in
Net Income and amortized equally over the remaining months in the
period commencing on the earliest of (x) the expiration date of
the agreement, (y) the date of the agreement to dispose of such
product lines or brands was publicly announced, and (z) the date
of such agreement, as the case may be, and in each case ending on
the Closing Date;
1.3.3 If Buyer's Net Income for any Contract Period is a loss, then such
loss shall not be carried forward to any subsequent Contract
Period for purposes of computing Buyer's Net Income.
1.3.4 Any gains or losses from the trading of inventory in bulk shall be
included in the computation of Net Income as long as Buyer
maintains inventory at levels reasonable in relation to the
circumstances of its business related to the Acquired Assets; and
1.3.5 If the Buyer sells, transfers or assigns substantially all of the
acquired assets within the contract period as defined in Section
1.2, the net sale proceeds shall be considered part of net income.
1.3.6 Any other adjustments agreed to in writing by Buyer and the Seller
1.1.1
1.4 Event of Default. The following shall constitute an Event of Default by
Buyer with respect to this Agreement:
1.4.1 Failure by Buyer to pay Seller any amount when due under this
Agreement;
1.4.2 Failure by Buyer to provide its financial statements and related
financial information to Seller as required by Sections 1.2 and
1.6 of this Agreement;
1.4.3 Any bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding instituted by Buyer, or a
third party and not dismissed within thirty (30) days.
1.5 Event of Default Remedies. Seller may exercise any or all of the following
remedies in the event of an Event of Default:
1.5.1 The Interest Rate set forth under Section 1.2 shall immediately be
set at twelve percent (12%) (the "Default Interest Rate") from the
date hereof until the Event of Default is cured to the reasonable
satisfaction of Seller; or
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1.5.2 The Minimum Purchase Price shall be due and payable within thirty
(30) business days of receipt of written notice by Buyer from
Seller; or
1.5.3 Seller's right to exercise any remedy under this Section 1.5 shall
be in addition to Seller's right to receive the greater of Minimum
Purchase Price or twenty five percent (25%) of Buyer's Net Income
for each Contract Period as set forth under Section 1.2.
1.6 Delivery of Financial Statements and Related Financial Information.
1.6.1 In connection with the making of each Contract Payment by Buyer to
Seller under this Agreement, Buyer shall deliver to Seller a
schedule setting forth the computation of Buyer's Net Income and a
copy of the financial information used in making such computation.
Buyer's computation of any Contract Payment under Section 1.2
shall be conclusive and binding upon the Parties hereto unless,
within thirty calendar days following the Seller's receipt of the
Buyer's Financial Statements, Seller notifies Buyer in writing
(the ASeller's=s Notice@) that it disagrees with Buyer's
computation of Net Income. Seller's Notice shall include a
schedule setting forth Seller's computation of the Net Income,
together with a copy of any financial information, other than that
previously supplied by Buyer to Seller, used in making Buyer's Net
Income computation.
1.6.2 Seller's computation of Buyer's Net Income under this Section 1
shall be conclusive and binding upon the parties hereto unless,
within thirty calendar days following Buyer's receipt of Seller's
Notice, Buyer notifies the Seller in writing that it disagrees
with Seller's computation of Buyer's Net Income. If Buyer
disagrees with the Seller's computation of Buyer's Net Income,
Buyer and Seller shall request a firm of independent certified
public accountants mutually agreeable to Buyer and Seller to
compute the amount of the Buyer's Net Income as promptly as
possible, which computation shall be conclusive and binding upon
Buyer and the Seller. In the event that Buyer and Seller cannot
agree on such a firm of independent certified public accountants,
then the firm of PriceWaterhousCoopers, L.L.P., Salt Lake City
office, shall be selected to compute the disputed payment for
purposes of this Agreement. The expenses of any computation by any
such accounting firm selected by Buyer and Seller to resolve
computational disputes hereunder shall be borne equally by Buyer
and Seller.
1.6.3 In the event the amount of Buyer's Net Income to be paid by Buyer
to Seller in accordance with Section 1 for any Contract Period is
recomputed in accordance with Section 1.6, the increase in the Net
Income Payment shall be paid by Buyer to Seller within ten (10)
business days after the date of final recomputation of such
payment. If the Buyer's net income re-computation results in a
decrease in the net income payment, seller shall have ten (10)
days after the date of final re-computation of such payment to
refund the difference to Buyer.
1.6.4 Seller and and its respective agents shall be entitled during
normal business hours to enter onto the property of the Buyer to
review and audit the books and records of Buyer in order to verify
the computation of Buyer's Net Income and related financial
statements and financial information used by Buyer to compute
Buyer's Net Income.
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2. The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Chequemate
International, Inc. located at ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ at 10:00 a.m. Utah time on the second business day following
the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at
the Closing itself) or such other date as the Parties may mutually
determine (the "Closing Date").
2.1 Seller's Deliveries at the Closing. At the Closing, Seller will
deliver to Buyer the following documents:
2.1.1 This Asset Purchase Agreement with Disclosure Schedules
executed by Seller.
2.1.2 A ▇▇▇▇ of Sale and Assignment executed by Seller
conveying the Acquired Assets. 1.1.1
2.1.3 Certificate of Good Standing of Seller.
2.1.4 Certified Resolutions by the Board of Directors approving
this Agreement.
2.1.5 Specific assignments of all copyrights, trademarks, and
patents.
2.1.6 Assignment of trade name and consent to use similar
corporate name.
2.1.7 Such other documents as in the opinion of Buyer are
reasonably necessary to complete the transaction
contemplated in this Agreement.
2.2 Buyer's Deliveries at the Closing. At the Closing Buyer will
deliver to Seller the following documents:
2.2.1 This Asset Purchase Agreement executed by Buyer..
2.2.2 Certificate of Good Standing of Buyer.
2.2.3 Certified Resolutions approving this Agreement adopted
unanimously by the members of Buyer.
2.2.4 Such other documents as in the opinion of Seller are
reasonably necessary to complete the transaction
contemplated in this Agreement.
2.3 Allocation. [The Parties agree to allocate the Purchase Price (and
all other capitalizable costs) among the Acquired Assets for all
purposes (including financial accounting and tax purposes) in
accordance with the allocation schedule attached hereto as
Schedule "2.3"]
3. Representations and Warranties of the Seller. The Seller represents and
warrants to Buyer that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3), except as set forth in the disclosure
schedule accompanying this Agreement and initialed by the Parties (the
"Disclosure Schedule"). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3.
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3.1 Organization of Seller. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the State
of Utah.
3.2 Authorization of Transaction. Seller has full power and authority
(including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder.
Without limiting the generality of the foregoing, the board of
directors of Seller have duly authorized the execution, delivery,
and performance of this Agreement by Seller. This Agreement
constitutes the valid and legally binding obligation of the
Seller, enforceable in accordance with its terms and conditions.
3.3 Brokers' Fees. Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which Buyer
could become liable or obligated. None of the Subsidiaries of
Seller has any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
3.4 Title to Tangible Assets. Seller has good title to, or a valid
interest in, the Acquired Assets set forth on Schedule "A".
3.5 Intellectual Property. To Seller's knowledge, it has title to the
intellectual property listed and described on Schedule 3.5.1,
Schedule 3.5.2, Schedule 3.5.3, Schedule 3.5.4 and 3.5.5
(collectively, the AIntellectual Property@), subject to the
exceptions and exclusions listed on Schedule 3.5.6. To Seller's
knowledge, except as set forth on Schedule 3.5.6, there is no
pending or threatened litigation against the Company alleging
infringement by the Company of a third party's intellectual
property.
3.6 Contracts. Schedule 3.6 of the Disclosure Schedule lists all
written contracts and other written agreements related to the
Acquired Assets to which any of the Seller and its Subsidiaries is
a party the performance of which will involve consideration in
excess of One Thousand Dollars ($1,000).
3.7 Litigation. Schedule 3.7 of the Disclosure Schedule sets forth
each instance in which any of the Seller (I) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge
related to the Acquired Assets or (ii) is a party to any action,
suit, proceeding, hearing related to the Acquired Assets, except
where the injunction, judgment, order, decree, ruling, action,
suit, proceeding, hearing, or investigation would not have a
material adverse effect on the financial condition of the Acquired
Assets taken as a whole.
4. Representations and Warranties of Buyer. Buyer represents and warrants
to the Seller that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 4), except as set forth in the Disclosure
Schedule. The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this
Section 4.
4.1 Organization of Buyer. Buyer is a limited liability company duly
organized, validly existing, and in good standing under the laws
of the State of Utah.
4.2 Authorization of Transaction. Buyer has full power and authority
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(including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding
obligation of Buyer, enforceable in accordance with its terms and
conditions.
4.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (I) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or court
to which Buyer is subject or any provision of its charter or
bylaws [or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Buyer is a party or by
which it is bound or to which any of its assets is subject]. Buyer
does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
4.4 Brokers' Fees. Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which the
Seller could become liable or obligated or the effect of which
would reduce Net Income of Buyer in any Contract Period.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
their actions prior to the Closing.
5.1 General. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary or advisable in
order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Section 6 below).
5.2 Operation of Business. The Seller will not enter into any
transaction outside the ordinary course of business directly
related to business related to the Acquired Assets.
5.3 Full Access. The Seller will permit representatives of Buyer to
have access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Seller to
inspect the Acquired Assets and certain documents relating
directly to the Acquired Assets as agreed to by Seller. Buyer will
treat and hold any information it receives from Seller in the
course of the reviews contemplated by this Section 5.3 as
confidential (the "Confidential Information") and will not use any
of the Confidential Information except in connection with this
Agreement, and, if this Agreement is terminated for any reason
whatsoever, will return to the Seller all tangible embodiments
(and all copies) of the Confidential Information which are in its
possession.
5.4 Notice of Developments.
5.4.1 The Seller may elect at any time to notify Buyer of any
development causing a breach of any of its representations and
warranties in Section 3 above. Unless Buyer has the right to
terminate this Agreement pursuant to Section 7 below by reason of
the development and exercises that right within the period of ten
(10) business days referred to in Section 7, the written notice
pursuant to this Section 5.4 will be deemed to have amended the
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Disclosure Schedule, to have qualified the representations and
warranties contained in Section 3 above, and to have cured any
misrepresentation or breach of warranty that otherwise might have
existed hereunder by reason of the development.
5.4.2 Each Party will give prompt written notice to the other Party of
any material adverse development causing a breach of any of its
own representations and warranties in Section 3 and, Section 4
above. No disclosure by any Party pursuant to this Section 5.4,
however, shall be deemed to amend or supplement the Disclosure
Schedule or to prevent or cure any misrepresentation or breach of
warranty.
6. Conditions to Obligation to Close.
6.1 Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following
conditions:
6.1.1 The representations and warranties set forth in Section 3
above shall be true and correct in all material respects
at and as of the Closing Date;
6.1.2 The Seller shall have performed and complied with all of
its covenants hereunder in all material respects through
the Closing;
6.1.3 There shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing
consummation of any of the transactions contemplated by
this Agreement;
6.1.4 All actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and
all certificates, instruments, and other documents
required to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance to
Buyer.
Buyer may waive any condition specified in this Section 6.1 if it executes a
writing so stating on or prior to the Closing Date.
6.2 Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
6.2.1 The representations and warranties set forth in Section 4
above shall be true and correct in all respects at and as
of the Closing Date;
6.2.2 Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the
Closing;
6.2.3 There shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing
consummation of any of the transactions contemplated by
this Agreement;
6.2.4 All actions to be taken by Buyer in connection with
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consummation of the transactions contemplated hereby and
all certificates, instruments, and other documents
required to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance to
the Seller.
The Seller may waive any condition specified in this Section 6.2 if it executes
a writing so stating on or prior to the Closing Date.
7. Termination.
7.1 Termination of Agreement. The Parties may terminate this Agreement
as provided below:
7.1.1 Buyer and Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing Date;
7.1.2 Buyer may terminate this Agreement by giving written
notice to Seller at any time prior to the Closing Date in
the event Seller has, breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, Buyer has notified
Seller of the breach, and the breach has continued
without cure for a period of 21 calendar days after the
notice of breach; and
7.1.3 Seller may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing Date (A)
in the event Buyer has breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, Seller has notified
Buyer of the breach, and the breach has continued without
cure for a period of 21 calendar days] after the notice
of breach or (B) if the Closing Date shall not have
occurred on or before October 15, 1998.
7.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7.1 above, all rights and obligations of the
Parties hereunder shall terminate without any liability of any
Party to any other Party (except for any liability of any Party
then in breach); provided, however, that the confidentiality
provisions contained in Section 5.4 above shall survive
termination.
8. Miscellaneous.
8.1 Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this
Agreement shall survive the Closing hereunder.
8.2 Press Releases and Public Announcements. Buyer shall not issue any
press release or make any public announcement relating to the
subject matter of this Agreement prior to the Closing without the
prior written approval of Seller. Seller may make any public
disclosure it believes in good faith is required by applicable law
or any listing or trading agreement concerning its publicly-traded
securities.
8.3 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and
their respective successors and permitted assigns.
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8.4 Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties
and supersedes any prior understandings, agreements, or
representations by or between the Parties, written or oral, to the
extent they related in any way to the subject matter hereof.
8.5 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns, provided, however, no
Party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written
approval of the other Party, which approval shall not be
unreasonably withheld.
8.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
8.7 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.8 Notices. All notices, requests, demands, consents and other
communications which are required or may be given under this
Agreement (collectively, the "Notices") shall be in writing and
shall be give by facsimile transmission and, either (I) by
personal delivery against a receipted copy, or (ii) by certified
or registered U.S. mail, postage prepaid, to the following
addresses:
If to Seller: J. ▇▇▇▇▇▇▇ ▇▇▇▇, CEO
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
TEL: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer: TFL, L.L.C.
▇▇. ▇▇▇ ▇▇▇▇▇▇▇, Manager
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
TEL: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
8.9 Arbitration. The parties desire to resolve disputes arising out of
this Agreement without litigation. Accordingly, except for actions to seek
temporary restraining orders or injunctions related to the purposes of this
Agreement, or suit to compel compliance with the dispute resolution provision,
the parties agree to use the following alternative dispute procedure as their
sole remedy with respect to any controversy or claim arising out of or relating
to this Agreement or its breach.
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At the written request of a party, each party will appoint a
knowledgeable, responsible representative to meet and negotiate in good faith to
resolve any dispute arising under this Agreement. The parties intend that these
negotiations be conducted by non lawyer, business representatives. The location,
format, frequency, duration and conclusion of these discussions shall be left to
the discretion of the representatives. Upon agreement between the parties, the
representatives may utilize other alternative dispute resolution procedures such
as mediation to assist in the negotiations. Discussions and correspondence among
the representatives for the purposes of these negotiations shall be treated as
confidential information developed for the purposes of settlement, exempt from
discovery and production, which shall not be admissible in the arbitration
described below or in any lawsuit without the concurrence of both parties.
Documents identified in or provided with such communications, which are not
prepared for purposes of the negotiations, are not so exempted and may, if
otherwise admissible, be admitted in evidence in the arbitration of lawsuit.
If the negotiations do not resolve the dispute within sixty (60) days
after the initial written request, the disputes shall be submitted to binding
arbitration by a single arbitrator pursuant to the Commercial Arbitration Rules
of the American Arbitration Association. A party may demand such arbitration in
accordance with procedures set out in those rules. Discovery shall be controlled
by the arbitrator and shall be permitted to the extent set out in this
paragraph. Each party may submit in writing to a party, and that party shall
respond, to a maximum of any combination of thirty-five (35) (none of which may
have subplots) of the following: interrogatories, demands to produce documents,
and requests for admission. Each party is also entitled to take the oral
deposition of one individual of the other party. Additional discovery may be
permitted upon mutual agreement of the parties. The parties shall contract with
the arbitrator to commence the arbitration hearing within sixty (60) days of the
demand for arbitration. The arbitration shall be held in the City of Salt Lake
City, Utah, United States of America. The Arbitration shall control the
scheduling so as to process the matter expeditiously. The parties may submit
written brief. The parties shall require the arbitrator to rule on the dispute
by issuing a written opinion within thirty (30) days after the close of the
hearings. The times specified in this paragraph may be extended upon a showing
of good cause. Judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction.
Each party shall bear its own cost of these procedures. A party seeking
discovery shall reimburse to the responding party the costs of production of
documents (to include search time and reproduction costs). The parties shall
equally split the fees of the mediation and the arbitration.
8.10 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Seller. Seller may consent to any such amendment at any time prior to the
Closing with the prior authorization of its board of directors. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
8.11 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
39
the validity or enforce ability of the remaining terms and provisions hereof or
the validity or enforce ability of the offending term or provision in any other
situation or in any other jurisdiction.
8.12 Expenses. Each of Buyer and Seller will bear its own costs and
expenses (including legal and accounting fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
8.13 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
8.14 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
*****
[Remainder of Page Intentionally Left Blank]
40
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
CHEQUEMATE INTERNATIONAL, INC.
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------
J. ▇▇▇▇▇▇▇ ▇▇▇▇, CEO
TFL, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
Manager
41
Exhibit A
Assets Inventory List
Furniture, Fixtures, and Equipment
Make Asset Description Serial # Model #
---- ----------------- -------- -------
Name:Chequemate International
Three (3) Trademarks
Chequemate
Chequemate International
Chequemate International Logo
Patent Des.353,835
3M Overhead Projector 453985 9050
Apple Printer SR refurbished Personal Laser Writer
Apple Monitor CY33421T152
RCA TV 437210837 T20005BK
Apple CPU Quadra 610
Vertical Storage Cabinet
Chequemate Coin Plaque
Pull Out File Cabinet
Apple Color Laser Writer BCGM3036 12/660PS
Chequemate Coin Plaque
Apple Monitor BCGM1296
Apple CPU Quadra 630
Mitsubishi Monitor 401008277 FFY77055KTK
Apple Monitor CY4290UM252
Apple Server F12494V2718 Quadra 700
HP Laser Jet Printer C3916A HP Laser Jet 5
HP Laser Jet IIIsi 33419A
Relisys Monitor 10006128
Texas CPU ▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇
Data Fox CPU 0004415 MPC2100C-1D
Epson Printer 4002033962 LQ-870
Executive Desk Chair CA-27270
NEC Monitor 6032102414 MultiSync C400
Apple CPU TY6392DZ8FD 7200/120
10Base T Ethernet Hub 9712043221 SOHO-5/A
Ascend Pipeline modem 7327016 P75-1UBRI
Logicode Modem 33Y 816563 2814XV-C
File Cabinet/Regular
File Cabinet/Legal
Wood File Cabinet
HP Fax Machine SG778F30QQ 300
Executive Chair
Micron Laptop Computer 5109640552669NBK001221-00
Princeton Monitor 1162049504 E070
42
▇▇▇▇▇▇▇ CPU 0232453
Iomega Zip Drive RBCH21HAM5 2100PC
Sharp LCD Projector 703314876 XG-NV20
MPS Server 4333046093568
HP Printer 3107J76538 Laser Jet 3
HP Printer USCC532977 Laser Jet 4L
Sharp Computer Projector 2AU07408 QA-1150
Apple Printer AB0001586 Laser Writer Plus
Apple Monitor BCGM1212
Apple CPU Quadra 605
File Cabinet 4 drawer/Regular
File Cabinet 4 drawer/Regular
Conference Table
Copier Stand
Xerox Copier 5018
Texas CPU IPLB645-AP5VM
Sceptre Monitor 6KR450 S450
RCA TV 351220434 T13000BK
Sceptre Monitor 6KR450 S450
Executive Chair
Desk
Texas CPU IPLBG45-AP5VM
Sceptre Monitor GKR450 S450
Micron Laptop Computer
Micron Laptop Computer
Custom Software:
Custom Commission Payout and Database Management
Register Processing
Money Management Report Printing
CFM Report Generator
Product Inventory (As of June 30, 1998)
Description Quantity on Hand
----------- ----------------
Applications-CashFlow PLUS 3,251
Applications-Coach 380
Applications-Family Bsns Pol & Procedures 12,352
Applications-Family Bsns w/o Pol & Proc 9,963
Applications-Family Finance 5,681
Applications-Master Trainer 1,495
Applications-Master Trnr Pol & Procedures 1,495
Audio-American Dream w/comp 905
43
Audio-American Dream w/o comp 279
Audio-Chairman's Message 10/96 18,356
Audio-Million 1,859
Brochure Kit Cover 470
Brochures-CF+ 3,002
Brochures-CFM 1,540
Brochures-Clock 32,381
Brochures-CMI Bridge 12,325
Brochures-Dynamic Web 5,725
CF+ (Large) Complete Kits (New) 13
CF+ (Large) Journal & Envelope Pkgs 458
CF+ (Large) Peg Board 242
CF+ (Large) Peg Board & Inserts 42
CF+ (Large) Sample Booklets 4
CF+ (PS3) Complete Kits (New) 7
CF+ (PS3) Journal & Envelope Pkgs 258
CF+ (PS3) Peg Board 226
CF+ (PS3) Sample Booklets 63
CF+ Check Order Forms 51
CF+ Clear Pocket 213
CF+(Safeguard) Boxes 352
CFM-Binder Insert Sets (New Version) 35
CFM-Binder Insert Sets (Old Version) 58
CFM-Complete Binder 0
CFM-Complete Kits 2
CFM-Sample Analysis (as of 8/4/97) 6
CFM-Sheet Protectors 84
CFM/Flip Chart Binder 598
Check Register Covers (black) 3,201
Check Registers (97-98) 5,623
CMI Gold Coin 105
Coach-Complete Kits 0
Coach-Savings Program/Marketing Guide 198
Coach-Savings/Investment Form 298
Coach-Welcome Letter 142
DCI Return Envelope (CF+) 1,771
DCI Return Envelopes (Fastrak) 10,420
Debt Eliminator Packet 41
Debt Eliminator Samples 529
Debt Eliminator Worksheets ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ Planner Educational Supplements 0
Estate Planner Inserts 0
Estate Planners-Complete 34
Fam Bsns/Fam Fin Quick Start Guides 697
Family Business Dialog (6/21/96 version) 336
44
Family Business Instruction/Welcome Ltr 424
Family Business Kits-Complete 0
Family Business Marketing Guide 10/96 876
Family Business Sample Applications 936
Family Business Training Kit 0
Family Finance Complete Kits 2
Family Success Kit Boxes w/family pict. 3,249
Family Success Kit Boxes w/o family pict. 15
Family Success Kit Complete (Old) 346
Flip Chart (Complete Binder) 145
Flip Chart-Training Presentation 242
Four Laws Book on Audio Tape 3,874
Four Laws Book-Empty Jacket 1,206
Four Laws Book (Hard Back) 7,098
Four Laws Book (Paper Back) 10,319
Four Laws-Bsns Reply Insert Card 710
Four Laws-Sampler w/Bounce Back 24
Four Laws-Sampler w/o Bounce Back 7,965
Goal & Goal Card Sets (Complete) 185
Goal & Obstacle Card Sets (Complete) 233
Goal Card Sets w/o Holders 3,051
Goal Card Sleeves (Empty) 1,520
Goal Card-Singles 641
Instant Target Control Pack 327
Newsletter-March 1997 55
Obstacle Cards-Singles 662
Order Form-Client Product Supply 8
Order Form-CtrMgr Product Supply 325
Pen & Pencil Sets 67
Pen Sets 261
Planner Size Registers 395
Policies & Procedures (2/20/96) 1,039
QuadTrak Facilitator Manual 12
QuadTrak Tape Set 212
QuadTrak Workbook 194
Reference Guide-CF+ 0
Reference Guide-Fastrak 1,554
Referral Forms (MTerry Kit) 206
Sample Register-Fastrak 4,476
Sample Reports-Money Mgmt 385
Service & Fees Price List 1,365
Shipping Boxes (1 Coach Kit-Extra Small) 292
Shipping Boxes (1 Fam Bsns Kit Per Box-Small) 318
Shipping Boxes (2 Fam Bsns Kit Per Box-Med) 200
Shipping Boxes (4 Fam Bsns Kit Per Box-Lrg) 107
Standard Code List-CF+ 1,271
45
Standard Code List-Fastrak 314
Storage Binder Envelopes 1,823
Storage Binder Sub-Assembly (w/o Zipper Bag) 4
Storage Binder Tab Sets 353
Storage Binder Tab/Env Sets (Shrinkwrapped) 125
Storage Binder Tab/Env/Wrksht Sets (wrapped) 969
Storage Binders-Empty 4,159
Video Sleeves-Faces of Debt 4,313
Video Sleeves-Fastrak 0
Video Sleeves-Passport to Wealth 3,149
Video-Estate Planner w/sleeve 244
Video-Faces of Debt w/sleeve 232
Video-Fastrak Training (w/o sleeve) 25
Video-Fastrak Training (w/sleeve) 1,332
Video-Finance & Futures 3 min w/sleeve 637
Video-Finance & Futures 8 min w/sleeve 349
Video-Passport to Wealth 8 min w/sleeve 86
Video-Passport to Wealth 8 min w/o sleeve 785
Video-Satellite Broadcast #1 20
Video-Satellite Broadcast #2 31
Video-Satellite Broadcast #3 9
Video-Satellite Broadcast #4 2
Video-Satellite Broadcast #5 2
Video-Satellite Broadcast #6 9
Video-Satellite Broadcast #7 204
Worksheet-Business Target 679
Worksheet-Customized Code 2,253
Worksheet-Customized Code Instructions 2,103
Worksheet-Performance Overview 577
Worksheet-Sample Code List (FTrak Kit) 1,263
Worksheet-Sample Register (FTrak Kit) ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇ (Not in Kit) 24
Zipper Bags-Empty 1,108
46