EXHIBIT 10.49
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 19th day of April, 2001, between
Electronic Clearing House, Inc., a Nevada corporation with its principal place
of business located at 00000 Xxxxxxx Xxxxx, Xxxxxx Xxxxx, XX 00000 ("Buyer"),
and National Check Network, Inc., a South Dakota corporation with its principal
place of business located at 0000 X. Xxxxxx Xx., Xxxxxxxx, XX 00000 ("NCN") and
the shareholders of NCN ("Shareholders"). NCN and the Shareholders are
collectively referred to herein as the "Seller."
WITNESSETH:
WHEREAS, Seller wishes to sell to Buyer and Buyer wishes to purchase from Seller
all of Seller's right, title and interest in and to (i) certain Assets and Names
as set forth herein, and (ii) the materials and rights relating thereto;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Seller and Buyer hereby agree as follows:
Asset Purchase Agmt (rev-4/10/01-9:39am)cmw
1. SALE OF THE ASSETS.
(a) Subject to the terms and conditions set forth in this Agreement,
Seller hereby sells, transfers and assigns to Buyer, and Buyer hereby
purchases from Seller, all of Seller's right, title and interest in
and to the Assets and all materials and rights pertaining thereto
listed on Exhibit A.
(b) Subject to the terms and conditions set forth in this Agreement,
Seller hereby sells, transfers and assigns to Buyer, and Buyer hereby
purchases from Seller, all of Seller's right, title and interest in
and to the name "National Check Network," the acronym "NCN," and any
trademarks, service marks, copyrights, and the like, utilized or owned
by Seller that are related to such name or acronym, including all
licenses and other rights related thereto ("Names").
2. PRICE AND PAYMENT.
(a) Buyer will pay Seller, on the Closing Date, as full payment for the
Assets and Names and the materials and rights which Buyer is
purchasing pursuant to Section 1 of this Agreement, $255,000.00,
payable as follows:
(i) $168,750.00 by certified check and made payable to National Check
Network, Inc.; and
(ii) shares of common capital stock of Buyer as shall have a value of
$86,250.00 based on the closing price of Buyer's common capital
stock on NASDAQ over the ten (10) day trading period immediately
preceding April 6, 2001. Buyer acknowledges and agrees that such
shares of common capital stock will be restricted stock that can
only be transferred in accordance with applicable securities laws
and regulations. The shares shall be issued in the number of
shares for each named issuee as set forth on Exhibit C.
3. SELLER'S WARRANTIES.
(a) Seller represents and warrants to Buyer:
(i) Seller is the sole owner of all of the rights in and to all of
the Assets and Names; the Assets and Names are not subject to any
lien or other encumbrance or claim or to any option or other
right in favor of a third party; except for the provisions of
this Agreement, there are no monies owing or obligations
outstanding with respect to any of the Assets and Names; and no
consent or approval by or notice to any third party is required
in connection with the sale of the Assets and Names to Buyer
pursuant to this Agreement;
(ii) except for Seller and the Buyer, no one has custody or control of
any of the Assets and Names;
(iii) except for those rights sold to Buyer under this Agreement,
Seller does not own or have any other rights in or to any of the
Assets and Names;
(iv) neither any of the Assets and Names, nor the use of any of them
by Buyer (i) violates or infringes any patent, copyright,
trademark, service xxxx or other right, (ii) violates any
agreement or document to which NCN or any Shareholder is a party,
or misuses or misappropriates any trade secret or confidential
information;
(v) the Assets will operate properly for the purpose for which they
have been designed, and are free from defects;
(vi) there is no litigation or claim pending or threatened with
respect to any of the Assets and Names;
(vii) the Assets which Seller will deliver to Buyer pursuant to
Section 1 will be in good condition and in good working order;
(viii) the Assets and Names do not constitute a substantial part of
the materials, supplies, merchandise or other inventory of
Seller; the balance sheet of Seller as at February 28, 2001, a
copy of which is attached hereto as Exhibit B, fairly reflects
the assets and liabilities of Seller at that time, and since that
date there have been no material changes in the assets and
liabilities of Seller.
(ix) the execution, delivery and performance of this Agreement has
been duly authorized by Seller's board of directors;
(x) NCN is a corporation duly organized, validly existing, and in
good standing under the laws of South Dakota, has all necessary
corporate powers to own its properties and to carry on its
business as now owned and operated by it, and is duly qualified
to do business and is in good standing in all of those States in
which it currently conducts business;
(xi) The consummation of the transactions contemplated by this
Agreement will not result in or constitute any of the following:
(1) a breach of any term or provision of this Agreement; (2) a
default or an event that, with notice or lapse of time or both,
would be a default, breach, or violation of the Articles of
Incorporation or Bylaws of NCN or any lease, license, promissory
note, conditional sales contract, commitment, indenture,
mortgage, deed of trust, member agreement or other agreement,
instrument, or arrangement to which NCN or any Shareholder is a
party or by which any of them or the property of any of them is
bound; (3) an event that would permit any party to terminate any
agreement or to accelerate the maturity of any indebtedness or
other obligation of NCN; or (4) the creation or imposition of any
lien, charge, or encumbrance on any of the Assets or Names of NCN
or any Shareholder which are the subject of Agreement;
(xii) Seller has the right, power, legal capacity, and authority to
enter into, and perform their respective obligations under this
Agreement, and no approvals or consents of any persons other than
Seller are necessary in connection with the transactions
contemplated by this Agreement. The execution and delivery of
this Agreement by NCN and the Shareholders have been duly
authorized by all necessary corporate or other appropriate action
on the part of NCN and all Shareholders.
(xiii) Seller represents that it intends to cease business activities
on a date no later than 120 days after the closing date and
acknowledges that Buyer has agreed to the terms and conditions of
this Agreement in reliance thereon.
(b) The representations and warranties of Seller under Section 3(a)
will survive execution of this Agreement.
4. SELLER'S INDEMNIFICATION.
(a) NCN will indemnify Buyer against any claim or liability and will hold
Buyer harmless from and pay any loss, damage, cost and expense
(including, without limitation, legal fees, court costs and the cost
of appellate proceedings) which Buyer incurs arising out of a breach
of any of said representations and warranties or any claim against
Buyer alleging facts which, if true, would result in a breach of any
said representations and warranties. NCN will indemnify and defend
Buyer against any claim or liability, and related expenses including
legal fees and costs, arising out of, or in connection with, any act
or omission of NCN or any Shareholder including, but not limited to,
any breach of any agreement between NCN and any member of NCN or any
other party, or any obligation to any creditor of NCN. Each
Shareholder will indemnify and defend Buyer against any claim or
liability, and related expenses including legal fees and costs,
arising out of, or in connection, any act or omission of only that
Shareholder, and not any other Shareholder or NCN.
(b) The Indemnifications of NCN and Shareholders under Section 4(a) will
survive execution of this Agreement.
5. BUYER'S WARRANTY. Buyer represents and warrants to Seller that the
execution, delivery and performance of this Agreement have been duly
authorized by Buyer's board of directors.
6. AFFIRMATIVE COVENANTS OF SELLER.
(a) Seller shall deliver to Buyer, on the Closing Date, $75,000.00 by
certified check payable to Rocky Mountain Retail Systems, Inc.
(b) Seller will execute such additional documents as Buyer may reasonably
request to vest or confirm the vesting in Buyer of all of the Assets
and Names and title thereto.
(c) Seller will provide, on or before 12:00 p.m. PDT, April 27, 2001 for
the benefit of Buyer, the legal opinion of Seller's counsel, in form
and content satisfactory to Buyer to the effect that (i) Buyer will
receive full right, title and interest in the Assets and Names free
and clear of all liens, claims, and encumbrances, and (ii) the sale
and purchase of the Assets and Names comply with all laws and
regulations applicable to Seller and the transactions contemplated
pursuant to this Agreement, including, without limitation, Bulk Sales
Laws and other laws regarding creditors' rights, and (iii) the
purchase and sale of the Assets and Names and all of the covenants and
agreements set forth in this Agreement have been duly authorized by
the NCN Board of Directors and the Shareholders, and (iv) that the
purchase and sale of the Assets and Names and all transactions
contemplated pursuant to this agreement are consistent with the
corporate charter documents and bylaws of NCN.
(d) Promptly after execution of this Agreement, Seller will, at its risk
and expense, deliver the Assets listed in Exhibit A to Buyer at
Buyer's subsidiary's address at 000 Xxxxxxx Xxxxxx XX, Xxxxx 0X,
Xxxxxxxxxxx, XX 00000.
(e) Seller agrees that, after the Closing Date of this transaction, Seller
will not use any of the Assets or Names transferred and sold to Buyer
pursuant to this Agreement, unless Seller delivers to Buyer,
concurrently with the execution of this Agreement, Seller's election
to lease the Assets and obtain a license for use of the Names from
Buyer and subject to the terms of Buyer's Lease and license agreements
as referred to in paragraph 7(b) of this Agreement.
(f) Seller hereby requests Buyer to perform all duties of Seller in
connection with "billing" Existing NCN Members for services and
activities provide to Existing NCN Members by NCN. Seller hereby
assigns all rights of NCN from Existing NCN Members for compensation
from those Existing NCN Members in connection with such services and
activities provided by NCN. In that regard, Seller hereby assigns all
of its rights, title and interests in connection with any contracts
between NCN and any Existing NCN Member to Buyer with respect to any
obligation of the Existing NCN Member to pay compensation to NCN for
NCN services rendered and/or activities performed. Seller specifically
acknowledges and agrees that none of the Seller's obligations or
duties owed to any Existing NCN Member pursuant to any contracts or
agreements between NCN and any Existing NCN Member is being assigned
to or assumed by Buyer and that Seller remains obligated to each
Existing NCN Member for Seller's and/or NCN's obligations and duties
to each Existing Member. Seller covenants that it intends to cases
business activities in the near future and Buyer is not requested to
perform any billing activities after Seller ceases business
activities. Seller also agrees that Buyer's subsidiary, XpressCheX,
Inc., shall have no obligation to perform services pursuant to its
contract with NCN after January 31, 2002.
7. AFFIRMATIVE COVENANTS OF BUYER.
(a) Upon receipt of Seller's certified check in the sum of $75,000.00,
Buyer will cause its subsidiary, Rocky Mountain Retail Systems, Inc.
("RMRS") to begin the process to enroll, as a member of RMRS, any
existing member of NCN ("Existing NCN Member") which submits a
completed application to RMRS prior to December 31, 2001 for
enrollment in accordance with the standard terms and conditions of
RMRS. Buyer's obligation to cause its subsidiary RMRS to enroll any
Existing NCN Member shall be conditioned and contingent upon receipt
of a completed application prior to December 31, 2001 and the
performance by the Existing NCN Member making application of all
activities that may be reasonably necessary in connection with the
RMRS enrollment process such as, but not limited to, the adapting the
Existing NCN Member's NCN data to RMRS format and compatibility. Buyer
represents and warrants that RMRS will use its best efforts to
complete the enrollment process for each Existing NCN Member in a
prompt manner. Buyer further represents and warrants that RMRS will
provide appropriate technical specifications to Seller for adapting
NCN Member's NCN data to RMRS format. Notwithstanding any or all of
the foregoing, RMRS shall have no obligation to enroll any Existing
NCN Member that was not an Existing NCN Member prior to March 01,2001.
(b) In the event NCN notifies Buyer in writing, pursuant to the provisions
of paragraph 6.(e) of its desire and intention to use any of the
Assets listed in Exhibit A, or any of the Names, Buyer agrees to lease
any such Assets and license of any such Names to NCN for a monthly
rental and license fee of $1,000.00 for the first calendar month
beginning 180 days after the date of closing of this Agreement. The
monthly rental and license fee shall increase each calendar month
thereafter by $1,000.00 per month until the monthly rental and license
fee is $10,000.00 per month. Thereafter, the monthly rental and
license fee shall remain at $10,000.00 per month. The term of the
lease of any of the Assets and license for the Names to NCN shall be
month-to-month terminable upon 30 days written notice, for any reason,
or no reason at all, by Buyer or NCN. The parties will enter into a
lease agreement and license agreement which will contain these term
and monthly rental and license fee provisions as well as the usual and
customary terms and conditions, including the requirement that the
Assets be maintained and insured at Seller's sole cost and expense
during the of the lease, and the right of NCN to grant a
non-exclusive, non-transferable license to any Existing NCN Member to
use any Name up to, but not after, December 31, 2001. However, any
such license agreement shall not require NCN or any Existing NCN
Member to be obligated to pay a license fee in connection with the use
of any Name by an Existing NCN Member pursuant to a grant of a
non-exclusive, non-transferable license from NCN. NCN's obligation to
pay a monthly license fee for the use of any Name shall be conditioned
upon the use of that Name by Seller but not by use of the Name by any
Existing NCN Member pursuant to a grant of a nonexclusive,
non-transferable license from NCN.
(c) Buyer agrees that neither it nor any of its subsidiaries, as a
shareholder of NCN will be entitled to participate in or receive any
distribution of any cash or capital stock paid by Buyer to Seller
hereunder.
(d) On and after the Closing Date, Buyer agrees to perform all of NCN's
"billing" functions to Existing NCN Members in connection with
activities and services provided by NCN to the Existing NCN Members
until such a time as Seller ceases business activities. Buyer's
commitment to perform these services is conditional upon transfer by
NCN of all its rights, title and interest in and to any and all
payments from Existing NCN Members to Buyer for and in connection with
all services or activities performed by NCN for Existing NCN Members.
Seller hereby disclaims any right, title or interest in and to all
monies payable to it by any Existing NCN Member in connection with
services or activities performed by NCN for any Existing NCN Member on
and after the Closing Date.
(e) Buyer agrees to maintain all 800 telephone numbers being used by NCN
in connection with the services and activities performed by NCN for
Existing NCN Members as of March 31, 2001. On or after May 1, 2001,
Buyer agrees to pay all costs and expenses under any written contract
with each telecommunications company which provides 800 telephone
number service to NCN. Buyer's obligations to maintain the 800
telephone numbers and pay all costs and fees shall terminate in the
event NCN ceases business activities as the phrase is defined in
paragraph 6(f) herein, unless the written contract with any
telecommunication company requires payment of costs and fees by NCN
after any date NCN ceases business activities.
8. CLOSING DATE; DEADLINE FOR EXECUTION BY SELLER. Seller acknowledges and
understands that NCN and all Shareholders must execute this Agreement and
deliver a fully executed copy of this Agreement, as well as the legal
opinion required in Section 6.(c), to Buyer no later than 12:00 p.m.
Pacific Daylight Time on Friday, April 27, 2001. In the event that a fully
executed copy of this Agreement and the required legal opinion is not
delivered to Buyer by this deadline, this Agreement and Buyer's obligations
hereunder shall be null, void, and of no force and effect. In the event
that a fully executed copy of this Agreement and the required legal opinion
is delivered to Buyer by this deadline, the Closing Date on which Seller's
and Buyer's respective duties hereunder must be performed will be April 30,
2001.
9. ENTIRE AGREEMENT; WAIVER; AMENDMENT. This Agreement may be amended only by
an instrument in writing signed by Seller and Buyer. This Agreement
constitutes the entire agreement between the parties pertaining to the
subject matter contained herein and supersedes all prior and
contemporaneous agreements, representations, and understandings of the
parties. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or
not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the waiver.
10. COUNTERPARTS. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11. ASSIGNMENT. This Agreement shall be binding on, and shall inure to the
benefit of, the parties to it and their respective heirs, legal
representatives, successors, and assigns; provided, however, that neither
NCN nor any shareholder may assign any of its rights under this Agreement.
No such assignment by NCN or any Shareholder shall relieve NCN or any such
Shareholder of any of its obligations or duties under this Agreement.
12. RECOVERY OF LITIGATION COSTS. If any legal action or any arbitration or
other proceeding is brought for the enforcement of this Agreement, or
because of an alleged dispute, breach, default, or misrepresentation in
connection with any of provisions of this Agreement, the prevailing party
or parties shall be entitled to recover reasonable attorneys' fees and
other costs incurred therein, in addition to any other equitable or legal
relief to which it or they may be entitled.
13. SEVERABILITY. If any provision of this Agreement is held to be invalid or
unenforceable by any court of final jurisdiction, it is the intent of the
parties that all other provisions of this Agreement be construed to remain
fully valid, enforceable, and binding on the parties.
14. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law of the State of California.
15. SECTION HEADINGS. Section headings are for convenient reference only and
shall not affect the meaning or have any bearing on the interpretation of
any provision of this Agreement.
16. NOTICE. Any notice given by any party under this Agreement shall be in
writing and delivered by deposit in the U.S. mail, postage prepaid, or sent
by facsimile transmission or other authenticated message, charges prepaid,
and addressed as follows:
TO SELLER: TO BUYER:
0000 X. Xxxxxx Xxxx 000 Xxxxxxx Xxxxxx XX, Xxxxx 0X
Xxxxxxxx, XX 00000 Xxxxxx Xxxxx, XX 00000
Attn: Xxxx Xxxxx, President Attn: Xxxx Xxxxxxx, President
Facsimile No.: Facsimile No.: 505/998-3146
Each party may change the address to which notices, requests and other
communications are sent by giving written notice of such changes to the
other party.
17. FURTHER ASSURANCE. At any time or from time-to-time upon the request of any
party, the other party will execute and deliver such further documents and
do such other acts as the requesting party may reasonably request in order
to effect fully the purposes of this Agreement and provide for the
performance of all contemplated acts and activities in accordance with the
terms of this Agreement.
18. JURY TRIAL WAIVER. In the event of any litigation, trial or other
proceeding arising out of, related to, or in connection with this
Agreement, the parties agree that any such litigation, trial or other
proceeding shall be tried and heard by the court only and not by a jury
trial.
19. CONFIDENTIALITY. The terms and conditions herein are to be treated as
confidential information between the parties and their respective officers,
directors, employees, agents, attorneys and representatives. Each party
shall exercise the highest degree of care to avoid the publication or
dissemination of the confidential information. The terms and conditions of
this Agreement shall only be used by each party and their respective
officers, directors, employees, agents, attorneys, and representatives in
the furtherance of this Agreement or the performance of its obligations
hereunder. The obligation of the parties not to disclose the terms of and
conditions herein shall survive the closing of this Agreement. Disclosure
of the terms and conditions of this Agreement pursuant to a valid order of
a court or other governmental body of the United States or any political
subdivision thereof is not prohibited, provided, however, that the party
making disclosure pursuant to said order shall first have given notice,
where practical, to the other party and shall either itself obtain, or
allow the other party an opportunity to obtain, a protective order
preventing or limiting such compelled disclosure.
20. INJUNCTIVE RELIEF. If any party commits a breach of any of the provisions
of this Agreement, the other parties shall have, in addition to all other
rights in law and equity, the right to have such provisions specifically
enforced by any court having equity jurisdiction. It is acknowledged and
agreed that any such breach shall cause irreparable injury to the other
parties and that money damages will not provide an adequate remedy.
21. RIGHTS CUMULATIVE. All rights and remedies existing in this Agreement are
cumulative to, and not exclusive of, any other rights or remedies available
under this Agreement or applicable law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
National Check Network, Inc. ("NCN") Electronic Clearing House, Inc. ("Buyer")
By: _________________________ By: _________________________
Signature & Title Signature & Title
NCN SHAREHOLDERS ("Shareholders")
_________________________ MAGIC SOFTWARE DEVELOPMENT, INC.
XXXXX XXXXXXXX 000 Xxxxxxx XX, Xxxxx 0X
Xxxxxxxxxxx, XX 00000
_________________________
XXXX XXXXXXXX BY: _________________________
COLLECTRITE, INC. XXXXXX PROPERTIES, LLC
BY: __________________________ BY: __________________________
Signature & Title Signature & Title
ROCKFORD MERCANTILE AGENCY, INC. ______________________________
XXXXX XXXXXX
BY: __________________________
Signature & Title
______________________________ ______________________________
XXX XXXX XXXX X. XXXX
_________________________ ______________________________
XXXXX XXXXXXX XXXXX X. XXXXXX
X.X. XXXX ASSOCIATES, INC. ______________________________
XXXX XXXX
______________________________
BY: _________________________ XXXXX XXXX
EXHIBIT A
ASSETS TO BE TRANSFERRED
A) Computer Equipment
Item Qty Serial Number NCN Asset# Picked Up By Date Picked Up
Apollo Case 1 NCN023 Xxxxx Xxxxxx/NCN 5/1/2000
Alarm Notification device 1 NCN027 Xxxxx Xxxxxx/NCN 5/1/2000
Battery Matrix UPS 3000 1 P94062807274 NCN031 Xxxxx Xxxxxx/NCN 5/1/2000
Battery Matrix UPS 3000 1 NCN032 Xxxxx Xxxxxx/NCN 5/1/2000
Battery Matrix UPS 3000 1 NCN033 Xxxxx Xxxxxx/NCN 5/1/2000
Battery Matrix UPS 3000 1 NCN034 Xxxxx Xxxxxx/NCN 5/1/2000
Battery Matrix UPS 3000 1 NCN035 Xxxxx Xxxxxx/NCN 5/1/2000
Battery Matrix UPS 3000 1 NCN036 Xxxxx Xxxxxx/NCN 5/1/2000
Battery Matrix UPS 3000 1 NCN037 Xxxxx Xxxxxx/NCN 5/1/2000
Kenmore A/C 1 22711290 NCN039 Xxxxx Xxxxxx/NCN 5/1/2000
T1 HT Comm Inc 1 10154536 NCN042 Xxxxx Xxxxxx/NCN 5/1/2000
3com Netbuilder II 1 1GA05293 NCN001 Xxxxx Xxxxxx/NCN 5/1/2000
Cray DCP9401 T1 1 466768010 NCN004 Xxxxx Xxxxxx/NCN 5/1/2000
Xylogics Micro Annex x1 1 00802D008164 NCN005 Xxxxx Xxxxxx/NCN 5/1/2000
Xylogics Micro Annex x1 1 30002D01000A Xxxxx Xxxxxx/NCN 5/1/2000
3com Remote Office Router 1 1SC02322
Cray CSU/DSU 1 9412060007
Cray Channel Bank 1 9605090043
Multitech Commplete Chassis 1 4933569
-2 RAS cards
S 1
-6 modem cards
Multitech Commplete Chassis 1 4933574
-3 RAS cards (1 spare) 1
-7 modems cards (1 spare) 1
Exabyte DLT Drive 1 19500024
Winchester Flash Disk 1 97057501
Pentium Computer 3
Raid 1
Zyxel Modems 5
US Robotics Modems 6
Hypercom Nac 1 34001845
Hypercom Nac 1 420142
Port Master 2e 1 1B04760
Port Master 2e 1 1A27046
Computer Racks 4
Infocus Lite pro 580 2AB0510714
B) Office Furniture & Equipment
STENO CHAIR 2
SIDE CHAIR 4
LATERAL FILE 2 DRAWER 1
6'X30" WORKSTATION 4
FILE (2 DRAWER) 4
BOOKCASE METAL 2
DESKS METAL 2
SECRETARIAL RETURNS 2
CABINET METAL 1
CONVENTION DISPLAY 1
COPIER MINOLTA 1
COMPUTER PC 4
S 2
MONITOR W/KEYBOARD 4
FAX 1
PRINTER 2
S 3
EXHIBIT B
BALANCE SHEET OF SELLER
EXHIBIT C
SHAREHOLDER ISSUEES OF BUYER'S COMMON CAPITAL STOCK *
("ECHO Shares")
S 4
