EXHIBIT 10.1 ASSET PURCHASE AGREEMENT

Exhibit 10.1

ASSET PURCHASE AGREEMENT

 

By this Asset Purchase Agreement, Game Financial Corporation, a Minnesota corporation (“Game Financial”), Chex Services, Inc., a Minnesota corporation (“Chex”), and FastFunds Financial Corporation, a Nevada corporation (“FastFunds” and sometimes referred to collectively with Chex as the “Chex Entities” and individually as a “Chex Entity”), agree as follows:

 

1.   Introduction . The Chex Entities desire to sell certain assets used in connection with the Business, including Contracts and the Software, and Game Financial desires to purchase those assets, all as further described and upon the terms and conditions set forth in this Agreement.

 

2.   Effective Date . This Agreement is effective as of December 22, 2005 (the “Effective Date”).

 

3.   Definitions . When used in this Agreement, the following capitalized terms shall have the respective meanings set forth below:

 

“ Action ” means any claim, action, suit, complaint, counter-claim, petition, set-off, administrative proceeding, arbitral action, governmental inquiry, criminal prosecution or other investigation, whether conducted by or before a Governmental Authority or other Person.

 

“ Actual Cash Amount ” has the meaning set forth in Subsection 4.3(c) .

 

“ Affiliate ” means, with respect to a Person: (i) any other Person directly or indirectly controlling, controlled by, or under common control with, such Person; (ii) any other Person that owns or controls five percent (5%) or more of any class of equity securities (including any equity securities issuable upon the exercise of any option or convertible security) of such Person or any of its Affiliates; or (iii) any director, partner, member, executive officer, or limited liability company manager of such Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by,” and “under common control with”) means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

 

“ Agreement ” means this Asset Purchase Agreement and all of its schedules and exhibits.

 

“ Ancillary Agreements ” means, collectively the (i) the Bills of Sale and Assignment Agreements; (ii) all documents, agreements, instruments and papers described in Subsection 9.1 ; (iii) the assumption of liability documents described in Subsection 9.2(e) , (iii) the Voting Agreements of the date hereof, executed by FastFunds and Equitex (the “Voting Agreements”), and (iv) the Guaranty Agreement, of the date hereof, between Equitex and Game Financial (the “Guaranty Agreement”).

 

“ Acquisition Proposal ” has the meaning set forth in Subsection 11.3(c) .

 

“ Assets ” has the meaning set forth in Subsection 4.1(a) .

 

“ Assumed Contracts ” means the Material Business Contracts that Game Financial will assume pursuant to this Agreement, which are listed on Schedule 3 .

 

 

 

“ Assumed Liabilities ” has the meaning set forth in Subsection 4.2(a) .   

 

“ Balance Sheet ” has the meaning set forth in Subsection 6.10 .

 

“ Basket ” has the meaning set forth in Subsection 10.7.

 

“ Benefit Plan ” means any Plan that is sponsored, maintained or contributed to or required to be contributed to by Chex or a Chex Entity or to which Chex or a Chex Entity is a party, or with respect to which Chex or a Chex Entity has any other similar comparable obligation or liability (fixed, contingent or otherwise), whether written or oral, for the benefit of any Business Employee.

 

“ Bills of Sale and Assignment Agreements ” has the meaning set forth in Subsection 9.1(e) .

 

“ Business ” means the Chex Entities’ business of providing cash-access financial services, including full booth financial services, check cashing and electronic cash conversion, automated teller machine access, and credit/debit card cash advances primarily in gaming establishments throughout the world, including the provision of those services in: Arizona, Antigua, California, Connecticut, Cyprus, Florida, Michigan, Minnesota, Nebraska, New Mexico, North Dakota, Oklahoma, Ontario, St. Maarten, Texas and Wisconsin.

 

“ Business Day ” means any day other than Saturday, Sunday or any day on which a U.S. national banking association is required or authorized to be closed.

 

“ Business Employees ” has the meaning set forth in Subsection 6.8(b) .

 

“ Business Insurance Policies ” has the meaning set forth in Subsection 6.15 .

 

“ Business Licenses ” has the meaning set forth in Subsection 4.1(a)(ii) .

 

“ Chex ” has the meaning set forth in the preamble to this Agreement.

 

“ Chex Entities ” has the meaning set forth in the preamble to this Agreement.

“ Chex Indemnified Party ” has the meaning set forth in Subsection 10.1 .

 

“ Chex Marks ” means all Marks of the Chex Entities used in connection with the Business, including those names, marks and logos set forth in Schedule 4.1(a)(v) and the names “Chex,” “FastFunds,” ChexGuard, and CreditGuard.

 

“ Closing ” has the meaning set forth in Subsection 5.1 .

 

“ Closing Cash Payment ” has the meaning set forth in Subsection 5.2 .

 

“ Closing Date ” has the meaning set forth in Subsection 5.1 .

 

 

“ Confidentiality Agreement ” means the June 24, 2005 Confidentiality Agreement executed by Equitex, FastFunds and Certegy, Inc.

 

“ Contract ” means any contract, agreement, indenture, note, bond, instrument, lease, conditional sales contract, mortgage, license, franchise agreement, concession agreement, insurance policy, security interest, guaranty, binding commitment or other agreement or arrangement, whether written or oral.

 

“ Effective Date ” has the meaning set forth in Section 2 .

 

“ Environmental Law ” means any applicable Law relating to pollution, the protection of human health and/or the environment, or the spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of a Hazardous Substance into the environment.

 

“ Equitex ” means Equitex, Inc., a Delaware corporation and stockholder of FastFunds.

 

“ Estimated Cash Amount ” has the meaning set forth in Subsection 4.3(c) .  

 

“ Excluded Assets ” has the meaning set forth in Subsection 4.1(b) .

 

“ Excluded Liabilities ” has the meaning set forth in Subsection 4.2(b) .

 

“ FastFunds ” has the meaning set forth in the preamble to this Agreement.

“ Fidelity ” means Fidelity National Financial, Inc. and/or Fidelity National Information Services, Inc.

 

“ Financial Information ” has the meaning set forth in Subsection 6.10 .

 

“ GAAP ” means United States generally accepted accounting principles, as in effect from time to time.

 

“ Game Financial ” has the meaning set forth in the preamble to this Agreement.

 

“ Game Financial Indemnified Party ” has the meaning set forth in Subsection 10.2 .

 

“ Governmental Authority ” means any government, any governmental entity, department, commission, board, agency or instrumentality, and any court, tribunal or judicial body, in each case whether federal, state, county, provincial, local or foreign.

 

“ Governmental Order ” means any statute, rule, regulation, order, judgment, injunction, decree, stipulation or determination issued, promulgated or entered by or with any Governmental Authority of competent jurisdiction.

 

“ Guaranty Agreement ” has the meaning given above.

 

 

“ Hazardous Substance ” means petroleum, petroleum by-products, polychlorinated biphenyls and any other chemicals, materials, substances or wastes that are currently defined or regulated as hazardous substances, hazardous materials, hazardous wastes, extremely hazardous wastes, restricted hazardous wastes, toxic substances, toxic pollutants, toxic air pollutants, hazardous air pollutants, pollutants, or contaminants under any Environmental Law.

 

“ Indemnified Claim ” has the meaning set forth in Subsection 10.3(a) .

 

“ Indemnified Party ” has the meaning set forth in Subsection 10.3(a) .

 

“ Indemnifying Party ” has the meaning set forth in Subsection 10.3(a) .

 

“ Indemnity Notice Period ” has the meaning set forth in Subsection 10.3(a) .

 

“ Information Statement ” has the meaning set forth in Subsection 8.15(b) .

 

“ Intellectual Property ” means any: (i) patents, patent applications, patent disclosures and improvements thereto; (ii) Marks; (iii) copyrights and copyrightable works, and any registrations and applications for registration thereof; and (iv) URL’s and Internet web sites, and the hypertext markup language (“HTML”) files, graphics, text files and documentation associated with such Internet web sites.

 

“ Knowledge ” means, with respect to any representation, warranty or statement by a party contained herein, that such representation, warranty or statement is made to the actual knowledge of the party and its executive management after a reasonable investigation.

 

“ Law ” means any applicable federal, state, county, provincial, local or foreign statute, law, ordinance, regulation, rule, code or rule of common law.

 

“ Liability ” means any indebtedness, obligation or other liability (whether absolute, accrued, matured, contingent, known, or unknown, fixed or otherwise, or whether due or to become due), including, without limitation, any fine, penalty, judgment, award or settlement respecting any judicial, administrative or arbitration proceeding, damage, loss, claim or demand with respect to any Law.

 

“ License ” means any franchise, approval, permit, order, authorization, consent, license, registration or filing, certificate, variance and any other similar right obtained from or filed with any Governmental Authority or private organization.

 

“ Lien ” means any security interest, pledge, mortgage, lien, charge, adverse claim of ownership or use, restriction on transfer (such as a right of first refusal or other similar right), defect of title, or other encumbrance of any kind or character.

 

“ Losses ” has the meaning set forth in Subsection 10.1 .

 

“ Marks ” means all imprints, titles, names, trade names, service marks, trade dress, logos, trade names, corporate names and domain names, the goodwill associated therewith, and any registrations and applications for registration thereof.

 

 

 

“ Material Adverse Change ” means any change in or effect on the Assets or the Business that is, individually or in the aggregate, materially adverse to the Business, Assets or the operation, prospects, condition (financial or otherwise) or results of the Business or Assets.

 

“ Material Business Contracts ” has the meaning set forth in Subsection 6.6(a) .

 

“ Merger ” means the merger transaction entered into and effected on June 7, 2004 among FastFunds (f/k/a Seven Ventures, Inc.), Seven Ventures Newco, Inc., a Minnesota corporation, and Chex.

 

“ Notice of Superior Proposal ” has the meaning set forth in Subsection 11.3(c) .

 

“ Organizational Documents ” means: (a) the articles or certificate of incorporation or registration and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (e) any amendment to the foregoing.

 

“ Original Disclosure Schedules ” has the meaning set forth in Subsection 8.18(a) .

 

“ Permitted Liens ” means: (i) mechanics’ and materialmen’s liens and workmen’s, repairmen’s, warehouseman’s and carriers’ liens arising in the ordinary course of business, the obligations of which are not overdue or otherwise delinquent; and (ii) Liens for Taxes not yet due and payable or being contested in good faith (it being understood that all Tax Liabilities of the Chex Entities are Excluded Liabilities).

 

“ Person ” means any individual, general or limited partnership, firm, corporation, limited liability company or partnership, association, trust, unincorporated organization or other entity.

 

“ Plan ” means any deferred compensation, bonus or other incentive compensation plan, program, agreement or arrangement; any severance or termination pay, medical, surgical, hospitalization, life insurance and other “welfare” plan, fund or program; any profit-sharing, stock bonus or other “pension” plan, fund or program; any employment, termination or severance agreement or arrangement; and any other employee benefit plan, fund, program, agreement or arrangement.

 

“ Proprietary Rights ” means: (i) Intellectual Property rights; (ii) trade secrets and confidential business information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, databases, analytics, research and development information, software, drawings, specifications, designs, plans, proposals, technical data, marketing plans and customer and supplier lists and information; (iii) copies of tangible embodiments thereof (in whatever form or medium); and (iv) licenses granting any rights with respect to any of the foregoing.

 

“ Prospects ” has the meaning given in Section 12.15 .

 

 

“ Purchase Price ” has the meaning set forth in Subsection 4.3(a) .

 

“ Recipients ” has the meaning set forth in Subsection 8.3 .

 

“ Required Consents ” has the meaning set forth in Subsection 6.3 .

“ Software ” has the meaning set forth in Subsection 4.1(a)(x) .

“ Stockholders Approval ” has the meaning set forth in Subsection 8.15(a).

 

“ Stockholders Meeting ” has the meaning set forth in Subsection 8.15(b) .

 

“ Stub Statements ” has the meaning set forth in Subsection 6.10 .

“ Subsidiary ” means, with respect to any Person, any corporation, general or limited partnership, limited liability company, joint venture or other legal entity of any kind of which such Person (either alone or through or together with one or more of its other Subsidiaries) owns, directly or indirectly, more than 50% of the stock or other equity interests, the holders of which are: (i) generally entitled to vote for the election of the board of directors or other governing body of such legal entity; or (ii) generally entitled to share in the profits or capital of such legal entity.

 

“ Supplemental Disclosure Schedule ” has the meaning set forth in Subsection 8.18 .

 

“ Superior Proposal ” has the meaning set forth in Subsection 11.3(c) .

 

“ Tax ” means any federal, state, county, provincial, local or foreign income, gross receipts, sales, use, ad valorem, employment, severance, transfer, gains, profits, excise, franchise, property, capital stock, premium, minimum and alternative minimum or other taxes, fees, levies, duties, assessments or charges of any kind or nature whatsoever imposed by any Governmental Authority (whether payable directly or by withholding), together with any interest, penalties (civil or criminal), additions to or additional amounts imposed by, any Governmental Authority with respect thereto.

 

“ Tax Return ” means a report, return, or other information required to be supplied to a Governmental Authority with respect to any Tax.

 

“ Termination Date ” has the meaning set forth in Subsection 11.1 .

 

“ Termination Fee ” has the meaning set forth in Subsection 11.3(b) .

 

“ Transferred Employees ” has the meaning set forth in Subsection 8.7 .

 

“ Voting Agreements ” has the meaning given above.

 

“ 3 in 1 Software ” means any Chex Entities’ ATM software operating on an ATM wherein: (i) a consumer can be denied access to cash or other item of value at said ATM based upon any pre-set limit, including issuer or association imposed restraints on the consumer’s use of his or her credit card, charge card, on-line debit card, off-line debit card or other access device but can subsequently be granted access to the same account, or another account, for the desired cash or item of value following a prompt,

 

 

question or a roll-over wherein the consumer uses the same or a different credit card, charge card, on-line debit card, off-line debit card or access device (even if classified as the same transaction type); and (ii) the cash or item of value is provided to the consumer at a money location separate from the ATM terminal running the Chex Entities’ ATM software.

 

4.   Purchase and Sale .

 

(a)   Purchase and Sale . Subject to the terms and conditions set forth in this Agreement, at the Closing Game Financial shall purchase from the Chex Entities and the Chex Entities shall irrevocably sell, convey, transfer, assign and deliver to Game Financial, free and clear of all Liens, other than Permitted Liens, all right, title and interest in and to the following assets (collectively, the “Assets”): (i)  the tangible assets described in Schedule 6.4 ; (ii) all Licenses issued to or possessed by a Chex Entity or required for the operation of the Business or use of the Assets and all rights thereunder (each, a “Business License” and, collectively, the “Business Licenses”), except as set forth on Schedule 4.1(a)(ii) ; (iii) all rights in, to and under the Assumed Contracts; (iv) all marketing, sales and promotional literature, market research studies, and subscriber research; books, records, files, documents, financial records, bills, accounting, internal and audit records relating to the Business (excluding Tax Returns); personnel records relating to Transferred Employees (but only to the extent permitted under applicable law); databases, operating manuals, customer and supplier lists and files relating to the Business, including customer lists, documents and records relating to past, present and prospective clients, such lists to be in both printed form and computer media ; (v) all Intellectual Property and Proprietary Rights used or useful in connection with the Business and the Chex Marks, all of which are set forth on Schedule 4.1(a)(v) , and all goodwill associated therewith, rights thereunder, remedies against infringements thereof, and rights under applicable Laws of all jurisdictions; (vi) all prepaid expenses, deposits and charges relating to the Business, except as otherwise specified on Schedule 4.1(a)(vi) ; (vii) all rights, claims, credits, causes of action or rights of set-off against third parties relating to the Business or Assets, including claims pursuant to warranties, awards, advances, bonds, deposits, representations and guarantees made by suppliers, manufacturers, contractors and other third parties in connection with products or services purchased by or furnished for the Business but not, in any event, claims under the Business Insurance Policies (subject to Subsection 8.9 below) or any Contracts included in the Excluded Assets or the litigation against Lisa Maulson (MN Case No. CT-03-020211) and the Howards (FL Case No. CACE 05-09184); (viii) all claims, rights and choses in action relating to the Assets against any Person, whether matured or unmatured, direct or indirect, known or unknown, absolute or contingent; (ix) all software, software systems, web-site applications, databases and database systems, whether owned, leased, or licensed and relating to the Business, including, but not limited to, all editorial, sales and design software, all of which are listed on Schedule 4.1(a)(ix) (the “Software”); (x) all accepted bids, work in process and outstanding proposals relating to the Business or Assets; (xi) all goodwill associated with the Business and/or the Assets; and (xii) all tangible and intangible property used in or useful to the Business other than the property identified on Schedule 4.1(a)(xii) .

 

(b)   Excluded Assets . Notwithstanding anything to the contrary in this Agreement, the Assets shall not include the following assets owned by a Chex Entity (together with the assets listed on exclusionary schedules under Subsection 4.1 above, collectively referred to as the “Excluded

 

 

Assets”): (i) all cash, cash equivalents (including checks) and securities (including ownership and equity participation rights in other companies), vault cash, and cash on hand in automated teller machines; (ii) all bank and other depository accounts; (iii) all accounts receivable and receivables due from Chex Affiliates; (iv) refunds of Taxes and Tax loss carry forwards; (v) Business Insurance Policies or other insurance policies relating to the Business, any refunds paid or payable in connection with the cancellation or discontinuance of any insurance policies applicable to the Business, and any claims made under any such insurance policies (other than “occurrence” based claims which are subject to Subsection 8.9 ); (vi) the Benefit Plans and rights in assets associated with or allocated to the Benefit Plans ; (vii) rights under this Agreement, the Ancillary Agreements, the Purchase Price, or any agreement, certificate, instrument or other document executed and delivered by Game Financial in connection with the transactions contemplated by this Agreement; (viii) Chex Entities’ corporate record and minute books, stock registers, stock-transfer records and related files and records;(ix) the Maulson and Howard litigation described Subsection 4.1(a)(vii) above); and (x) the royalty-free, non-exclusive, non-transferable (except to a parent or subsidiary of a Chex Entity) right to retain a copy to use the customer database of the Chex Entities transferred to Game Financial (and for such use, the right to make and retain a copy thereof), but only for non-gaming-related purposes and only consistent with Subsection 8.11 below; provided, however, that the terms and conditions of this right to use shall be as mutually agreed by the parties prior to Closing (and the parties shall negotiate in good faith with respect to that agreement) and that such right is conditioned on being consistent with applicable Law.

 

(a)   Assumption . Subject to the terms and conditions set forth in this Agreement, at the Closing Game Financial shall assume from the Chex Entities only (I) the Liabilities contained in Schedule 4.2(a) , and (II) the following Liabilities that exist at Closing to the extent that they relate to the Business and the Assets (collectively, the “Assumed Liabilities”): all Liabilities first arising after the Closing Date and not resulting from the transactions contemplated by this Agreement under: (A) the Assumed Contracts, and (B) all Contracts entered into after the Effective Date of this Agreement that are not Assumed Contracts but that Game Financial has agreed to assume, in accordance with the terms of this Agreement; except to the extent 1) they arise out of any breach, act, omission or default by a Chex Entity; or 2) the associated Liabilities should have been paid, performed or otherwise discharged on or prior to the Closing Date. It is understood and agreed that nothing in this subsection shall constitute a waiver or release of any claims arising out of the contractual relationships between the Chex Entities and Game Financial.

 

(b)   Excluded Liabilities . Except for the Assumed Liabilities, Game Financial shall not assume or in any way be responsible for any Liabilities of the Chex Entities or their Affiliates (whether or not disclosed on a schedule). Without limiting the foregoing, and notwithstanding anything in Subsection 4.2(a) to the contrary, the Assumed Liabilities shall not include, and Game Financial shall not assume, any of the following Liabilities (collectively, “Excluded Liabilities”) of the Chex Entities or their Affiliates: (i) any Liabilities with respect to the Excluded Assets; (ii) any Liabilities with respect to Taxes of any nature; (iii) any Liabilities or responsibilities relating to the employment or termination of employment by a Chex Entity or its Affiliate of any Person attributable to any action or inaction by a Chex Entity or its Affiliates on or prior to the Closing Date, including with respect to any Benefit Plan or arrangement of the Chex Entities or their Affiliates, or any severance retention, stay bonus or similar obligations owed by a Chex Entity or its Affiliates to any Person (including any Transferred

 

 

Employees); (iv) any Liability in connection with this Agreement or any other agreement for legal, accounting or broker’s fees, Taxes or other transaction costs incurred in connection with this Agreement or the consummation of the transactions contemplated by this Agreement; (v) any Liability owed to any shareholder or former shareholder of a Chex Entity or to any of their current or former Affiliates; (vi) any obligations with respect to bank accounts; (vii) any Liabilities resulting from any Action (whether or not pending or threatened on the date hereof and whether or not disclosed on any schedule); (viii) any Liabilities arising under or in connection with the Assumed Contracts that result from an act, omission, breach or default by a Chex Entity or its Affiliates; (ix) any Liabilities for indebtedness of borrowed money, letters of credit, capital leases or installment purchases; (x) any Liabilities under any applicable Environmental Law with respect to the time period prior to the Closing Date; (xi) any Liability associated with or arising under a Material Business Contract that is not an Assumed Contract, whether such Liability arises before or after Closing; (xii) all accounts payable; and (xiii) any other Liabilities not expressly assumed by Game Financial in this Agreement. The Chex Entities and their Affiliates will discharge when due all of their respective obligations and liabilities that are not expressly assumed by Game Financial in this Agreement.

(a)   Purchase Price . The purchase price (“Purchase Price”) for the Assets shall be: (i) Fourteen Million Dollars (US $14,000,000) in cash, subject to adjustments as provided in Subsection 4.3(b) , and (ii) the assumption by Game Financial of the Assumed Liabilities pursuant to Subsection 4.2 .

 

(b)   Prorations . The purchase price shall be adjusted at and as of Closing as follows: (i) it shall be increased to reflect the value of prepaid liabilities which are part of the Assets, (ii) it shall be decreased to reflect the value of accrued but unpaid amounts in connection with the Assumed Liabilities. These are described on Schedule 4.1(a)(vi) .

 

(c)   Cash Allocation . At Closing, the Chex Entities shall transfer to Game Financial, free and clear of all Liens, all cash, including vault cash, booth cash, and cash in automated teller machines. Game Financial and the Chex Entities shall cooperate to calculate as precisely as possible the amount of such cash estimated to be transferred at Closing at least one (1) Business Day prior to Closing (the “Estimated Cash Amount”). At Closing, Game Financial shall, in addition to the Purchase Price, pay to Chex an amount equal to the Estimated Cash Payment by wire transfer of immediately available funds. Within fifteen (15) Business Days after the Closing Date, a mutually acceptable independent company hired for the purpose of determining the actual cash amount shall then calculate the final amount of such cash actually transferred at Closing (the “Actual Cash Amount”) . If the Actual Cash Amount is greater than the Estimated Cash Amount, then Game Financial shall pay the difference to Chex, and if the Actual Cash Amount is less than the Estimated Cash Amount, then Chex shall pay Game Financial the difference. Such payments shall be made within five (5) Business Days after the final determination by the above-described company. Game Financial and Chex shall equally share the costs of hiring the above-described independent company.

 

(d)   Allocation of Purchase Price . The Purchase Price shall be allocated by the parties within thirty (30) days following the Closing through arm’s-length negotiation and in a manner that properly reflects the fair market value of the Assets. The allocations made pursuant to this subsection

 

 

will be binding on all parties for all Tax purposes in connection with the purchase and sale of the Assets and will be consistently reflected by each party on its respective Tax Returns.

 

4.4   Procedures for Non-Transferable Assets . If any property or right included in the Assets or the Assumed Liabilities is not assignable or transferable without the consent of a third party, and that consent is not obtained prior to the Closing Date, this Agreement, the Ancillary Agreements and any related instruments of transfer shall not constitute an assignment or transfer, and Game Financial shall not assume any of the Chex Entities’ associated obligations, but the Chex Entities shall diligently use their best efforts to obtain such consent as soon as possible after the Closing Date. With respect to each such property or right for which a necessary consent was not obtained prior to the Closing Date, the Chex Entities shall use commercially reasonable efforts to otherwise obtain for Game Financial, at no additional cost to Game Financial, the benefits of such property or right until such consent is obtained.

 

5.   Closing .

 

5.2   Closing Deliveries of Game Financial . At the Closing, upon satisfaction or waiver of the conditions set forth in Subsection 9.1 , Game Financial shall deliver: (i) Fourteen Million Dollars (US$14,000,000) of the Purchase Price (“Closing Cash Payment”) by wire transfer of immediately available funds to Chex, the instructions for which shall be provided to Game Financial a reasonable time prior to Closing; and (ii) each of the instruments, certificates and other documents set forth in Subsection 9.2 .

 

5.3   Closing Deliveries of the Chex Entities . At the Closing, upon satisfaction or waiver of the conditions set forth in Subsection 9.2 , the Chex Entities shall deliver to Game Financial each of the instruments, certificates, items and documents set forth in Subsection 9.1 .

6.   Representations and Warranties of the Chex Entities . The Chex Entities prepared and delivered (or caused to be prepared and delivered on its behalf) the schedules included in this Agreement that set forth any and all exceptions or supplemental information to the various representations, warranties and covenants contained in Sections 6 and 8 of this Agreement (“Schedules”), and delivered documents and materials pursuant to or in connection with this Agreement, and any and all modifications or amendments to those documents and materials were delivered with the Schedules. The disclosures set forth in the Schedules qualify or supplement only those representations, warranties and covenants specifically referenced and referred to in the relevant Schedule, and a disclosure or supplement related to any particular representation, warranty or covenant shall not qualify or supplement any other representation, warranty or covenant unless expressly stated. To induce Game Financial to enter into this Agreement and to

 

 

consummate the transactions contemplated by this Agreement, subject to the qualifications set forth in each relevant Schedule, the Chex Entities, jointly and severally, represent and warrant to Game Financial that each of the following is true and correct as of the Effective Date and will be true and correct as of the Closing Date:

6.1   Organization and Share Ownership . Chex is a corporation duly organized, validly existing, and in good standing under the Laws of Minnesota. FastFunds is a corporation duly organized, validly existing, and in good standing under the Laws of Nevada. The Chex Entities have all requisite corporate authority to own, operate or lease the Assets as they are now owned, operated or leased, and to conduct the Business as presently conducted. The Chex Entities have furnished true and complete copies of their respective Organizational Documents. Schedule 6.1(i) lists all jurisdictions in which the Chex Entities are qualified to conduct business as foreign corporations, and no qualifications to do business other than those listed on Schedule 6.1(i) were required to operate the Business or own the Assets without material adverse effect on the Business. The Chex Entities do not have any Subsidiaries, and do not, directly or indirectly, own or have the right to acquire any equity interest in any other Person, except as described on Schedule 6.1(i) . Schedule 6.1(i) also lists: (i) all locations with respect to the Business or Assets where the Chex Entities currently own or lease real property, have an office, or place of business; and (ii) all trade names under which the Chex Entities and their respective predecessors have operated, if different from their present legal name, at any time since October 1, 1995. Schedule 6.1(ii)   lists all the authorized equity securities of Chex and FastFunds, and all the issued and outstanding equity securities of Chex and FastFunds. FastFunds owns all the issued and outstanding equity securities of Chex, and no other Person has any rights to obtain or vote the equity securities of Chex, except as set forth on Schedule 6.1(ii) . As of the date of this Agreement and the record date for determining eligibility to vote on this Agreement and the transactions contemplated hereby Equitex owns and will own at least 73% of the issued and outstanding common stock of FastFunds, and Equitex’s vote (as the majority shareholder of FastFunds) in favor of this Agreement and the transactions contemplated hereby constitutes the requisite FastFunds stockholder approval therefor. Only holders of FastFunds common stock issued and outstanding on such record date shall have or will have voting rights with respect to the transactions contemplated by this Agreement. Neither FastFunds nor the Assets constitute all or substantially all the business, operations or assets of Equitex.

6.2   Authority . Each Chex Entity has all requisite corporate power and authority to: (i) enter into and deliver this Agreement; (ii) perform its obligations under this Agreement and each Ancillary Agreement; and (iii) consummate the transactions contemplated by this Agreement and each Ancillary Agreement to which it is a party. The execution and delivery of this Agreement and each Ancillary Agreement by the Chex Entities, the performance by them of their obligations under this Agreement and each Ancillary Agreement, and the consummation by them of the transactions contemplated by this Agreement and each Ancillary Agreement have been duly authorized by all necessary corporate and stockholder action. This Agreement has been, and the Ancillary Agreements have been or shall be (as the case may be), duly executed and delivered by the Chex Entities. This Agreement constitutes, and each of the Ancillary Agreements to which a Chex Entity is a party when so executed and delivered, will constitute a legal, valid and binding obligation of such Chex Entity, enforceable against it in accordance with its terms.

 

 

6.3   Required Consents . Except as specified on Schedule 6.3 (the “Required Consents”), no consent, order, authorization, approval, declaration or filing, including, without limitation, any consent, approval or authorization of or declaration or filing with any Governmental Authority or other Person or any party to an Assumed Contract or other Contract that will be an Assumed Liability, is required on the part of any Chex Entity for or in connection with the execution, delivery or performance of this Agreement or the conduct of the Business by Game Financial after the Closing, or to prevent a default under any Contract relating to the Business to which a Chex Entity is a party. The Chex Entities have no reason to believe that any of the Required Consents will not be obtained. Subject to obtaining the Required Consents, the execution, delivery and performance of this Agreement and each Ancillary Agreements by the Chex Entities will not result in any violation of, be in conflict with, or constitute a default (with or without the giving of notice and/or passage of time) under, any Organizational Document, License, Law, Contract, or Governmental Order to which a Chex Entity is a party or by which a Chex Entity is bound; nor will these actions result in: (i) the creation or acceleration of any Lien on any of the Assets of Chex; (ii) the acceleration or creation of any material obligation of Chex; or (iii) the forfeiture of any material right or privilege of Chex or the Business. Neither this Agreement nor the transactions contemplated hereby give rise to dissenters, appraisal or similar rights for the shareholders of FastFunds or Equitex. The transactions contemplated hereunder will give rise to dissenters’ rights in favor of FastFunds as the sole shareholder of Chex, which FastFunds agrees not to assert and hereby irrevocably waives with respect to this Agreement and the transactions contemplated hereby. Without limiting the generality of the foregoing, the Chex Entities have obtained all necessary consents and approvals for entering into this Agreement and the Ancillary Agreements and consummating the transactions contemplated herein and therein, from Equitex, Pandora and Whitebox.

6.4   Equipment and Tangible Property . Schedule 6.4 contains a list of all equipment and tangible personal property (except for non-capitalized leased equipment) of the Chex Entities used in the Business, other than any equipment and tangible personalty comprising Excluded Assets. All such property is adequate and usable for the purpose for which it is currently used, is in good operating condition and repair, and has been properly maintained. All lessors of the Assets have performed and satisfied their respective duties and obligations under the leases governing the use of those Assets, and no Chex Entity has brought or threatened any Action against any relevant lessor for failure to perform and satisfy its duties and obligations under any such lease.

6.5   Intellectual Property and Proprietary Rights . Schedule 4.1(a)(v) contains a complete and accurate list of all Intellectual Property and Proprietary Rights used in the operation of the Business, and all such Intellectual Property and Proprietary Rights are included in the Assets. There is no reasonably foreseeable or threatened loss or expiration of any Intellectual Property or Proprietary Rights included in the Assets. The Chex Entities have taken commercially reasonable and appropriate actions to maintain and protect such Intellectual Property and Proprietary Rights. The Chex Entities have good and marketable title to, or valid and continuing licenses to use, Intellectual Property and Proprietary Rights and other intangible assets used in the operation of the Business free and clear of all Liens. As of the Closing Date, the Chex Entities shall have assigned all ownership in the Intellectual Property and Proprietary Rights listed in Schedule 4.1(a)(v) to Game Financial, and such Intellectual Property and Proprietary Rights are not and will not be subject to any Liens. That Intellectual Property and those Proprietary Rights include all of the Intellectual Property and Proprietary Rights necessary and/or used to conduct the Business as currently conducted and proposed to be conducted. To the Knowledge of the

 

 

Chex Entities, the Business and the Assets do not infringe upon the Proprietary Rights or other rights or interests of any Person. There are no present or threatened Actions relating to infringement of Proprietary Rights by any Person. Except as set forth in Schedule 6.5 , there are no pending or threatened proceedings or litigation or other adverse claims by any Person against a Chex Entity relating to the ownership or use of any Proprietary Rights used in the operation of the Business or the Intellectual Property listed in Schedule 4.1(a)(v) . Except as listed on Schedule 6.5 , to the Knowledge of the Chex Entities, no Person has or is currently infringing or diluting any of the rights of the Chex Entities in or to that Intellectual Property and Proprietary Rights. Except as set forth on Schedule 6.5 , no such Intellectual Property or Proprietary Rights have been abandoned, and none are subject to any outstanding Governmental Order, written restriction or agreement restricting their scope of use. Except as indicated on Schedule 6. 5, each of the registered Chex Marks, Intellectual Property and Proprietary Rights set forth in Schedule 4.1(a)(v) were duly registered, and those registrations remain in full force and effect. Except as set forth on Schedule 6.5 , to the Knowledge of the Chex Entities, there are no material infringing or diluting uses of any of the Chex Marks, Intellectual Property or Proprietary Rights included in the Assets. Except as set forth on Schedule 6.5 , no Chex Entity has granted any license (other than such licenses and permissions for one-time or limited use granted in the ordinary course of business) to any Person to use any of the Intellectual Property or Proprietary Rights listed in Schedule 4.1(a)(v) . That Intellectual Property and those Proprietary Rights are not subject to any transfer, assignment, site, equipment, or other operational limitation. All assigned Intellectual Property and Proprietary Rights include, to the extent applicable, the source code, system documentation, statements of principles of operation and schematics, as well as any pertinent commentary, explanation, program (including compilers), techniques, tools, and higher level or “proprietary” language used for development, maintenance, implementation and/or use, so that a trained computer programmer could develop, maintain, support, compile and use all releases or separate versions. There are no agreements or arrangements in effect with respect to the marketing, distribution, licensing or promotion of the assigned Intellectual Property and Proprietary Rights by any Person other than as disclosed in Schedule 6.6(a)(i) . All employees, agents, consultants or contractors who contributed to or participated in the creation or development of any assigned Intellectual Property and Proprietary Rights: (i) are a party to a “work-for-hire” agreement under which a Chex Entity or its predecessor in interest is deemed to be the original owner/author of all property rights therein; or (ii) have executed an assignment or an agreement to assign to a Chex Entity or its predecessor in interest all right, title and interest in such material. All of the foregoing representations and warranties in this Subsection 6. 5 are subject to the qualification contained in the last sentence of Subsection 6.26 below.

6.6   Material Business Contracts and Assumed Contracts .

(a)   Listing . Schedule 6.6(a) contains a complete and accurate list of the following Contracts that relate to the Business (each, a “Material Business Contract” and, collectively, the “Material Business Contracts”): (i) Contracts with respect to which there is any Liability that equals or exceeds ten thousand dollars (US$10,000.00), contingent or otherwise, or which may extend for a term of greater than one (1) year after the Closing Date; (ii) Contracts with any Person that purport to restrict the use of the Assets or the Business’ information or restrict the use of the Software in any location, including any covenant not to compete or any Contracts imposing exclusive dealing obligations; (iii) employment, collective bargaining, severance, stay bonuses, retention, consulting, employee benefit and similar plans and agreements; (iv) agreements under which a Chex Entity is obligated to indemnify or hold harmless, or entitled to indemnification from, any other Person, or agreements under which a Chex

 

 

Entity is obligated to pay liquidated damages; (v) Contracts between a Chex Entity and any stockholder, director, officer or employee or other Affiliate; (vi) Contracts under which the amount payable by a Chex Entity is dependent on the revenues or income or similar measure of the Business, or in which a Chex Entity is obligated to pay royalties, commissions or similar payments to any person or entity; (vii) pledges, security agreements, sale/leaseback arrangements and equipment leases; (viii) License and other similar arrangements where a Chex Entity is either licensee or licensor with respect to any Intellectual Property or Proprietary Rights of the Business; (ix) Contracts to which a Chex Entity is a party relating to the borrowing of money, the capital lease or purchase on an installment basis of any Asset, or the guarantee of any of the foregoing, if any of the foregoing has or could create a Lien on the Assets; (x) joint venture, strategic alliance, partnership or other similar agreements; (xi) barter, currency, interest rate swap, hedge or broker Contracts; (xii) any Contracts relating to the lease, license or rental of any data, information or lists, whether a Chex Entity is the provider or consumer of such information; (xiii) all material agreements with suppliers, vendors, manufacturers, contractors and other third parties in connection with the Business; (xiv) any Contract that restricts the ability of persons to compete with the Business or with a Chex Entity, including any Contract granting exclusive rights to a Chex Entity; and (xv) to the extent not already specifically listed, any other Contract or agreement material to the Business. Schedule 6.6(a) includes, with respect to each Material Business Contract, the names of the parties, the date thereof, and the title of the Agreement. The Chex Entities have furnished Game Financial with copies of all Material Business Contracts (or written summaries, in the case of Material Business Contracts that are oral), including all amendments, modifications or supplemental arrangements, and any further information that Game Financial has reasonably requested in connection therewith. Notwithstanding anything else to the contrary in this Agreement or the Schedules, there are no sales agency, distributorship, agency, joint marketing or similar agreements pursuant to which a Person has the right to receive, from and after Closing, royalties, retention payments, commissions or similar payments with respect to the Assets, Assumed Contracts or the sales or income generated therefrom (collectively, “Ongoing Commissions”), except as disclosed on Schedule 6.6(a), paragraph (xvi) . The parties and third party beneficiaries to the Assumed Contracts are only Chex and/or FastFunds and the end-user Person purchasing services from Chex or FastFunds. No sales representative, agent, distributor or similar Person is a party to or third party beneficiary of any of the Assumed Contracts (except that First American Financial Solutions is a party to cash access service agreements with Hawks Prairie Casino and Northstar Casino).

 

(b)   Except as set forth in Schedule 6.6(b) : (i) each Assumed Contract represents a valid, binding and enforceable obligation of the applicable Chex Entity in accordance with its respective terms and represents a valid, binding and enforceable obligation of each of the parties thereto; (ii) there have been no amendments, modifications or supplemental arrangements to or with respect to any Assumed Contract; (iii) there is no event that has occurred or existing condition (including the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement) that, upon the happening of an event and/or the passage of time, would constitute a material default or breach under any Assumed Contract by the Chex Entity that is a party, or would cause the acceleration of any obligation of that Chex Entity, give rise to any right of termination or cancellation by any party other than such Chex Entity, cause the creation of any Liens on any of the Assets, or give rise to a right of indemnification by any party other than such Chex Entity; (iv) to the Knowledge of the Chex Entities, none of the Material Business Contracts, individually or in the aggregate, constitutes an unlawful restraint of trade under any applicable Law; and (v) no Chex Entity is aware of: (A) any supplier or client of the Business that intends to discontinue or substantially diminish or change its

 

 

relationship with the Business or the terms of its relationship with the Business, (B) any supplier of the Business that intends to increase prices or charges for goods or services presently supplied, or (C) any supplier to the Business that is likely to become unable to continue its relationship with the Business, or supply the goods or services that it currently supplies to the Business, without significant change in the terms and conditions of its arrangement with the Business. No Chex Entity has reason to believe that any party to an Assumed Contract will not timely fulfill all of its obligations thereunder in all material respects.

 

6.7   Business Licenses . The Chex Entities own or possesses all right, title and interest in and to all Business Licenses that are necessary as of the Effective Date for the ownership, maintenance and operation of the Business and Assets, and neither the Chex Entities nor their predecessors have been since December 31, 1998, in violation of such Business Licenses.  Schedule 6.7 contains a list of all Business Licenses necessary for the ownership, maintenance and operation of the Business and Assets, with the following identifying information: the Governmental Authority issuing such Business License, the Business License number, the dates of issuance and their duration, and the type of Business License. All such Business Licenses are in full force and effect, and no Chex Entity is in material violation of the terms of any such Business License. Except as indicated on Schedule 6. 7, no loss or expiration of any such Business License is pending or threatened.  

 

6.8   Business Employees .  

 

(a)   Schedule 6.8 lists all employees of a Chex Entity who, as of the Effective Date, have employment duties primarily related to the Business, including (and designating as such) any employee that is an inactive employee on paid or unpaid leave of absence, short-term disability or long-term disability, and indicating the date and location of employment, current title, compensation, and other benefits accrued as of a recent date. No employee of a Chex Entity is obligated under any Contract, or subject to any Governmental Order, that would interfere with that employee's duties to a Chex Entity or to Game Financial (if such employee is a Transferred Employee)   or that would conflict or interfere with the Business.

 

(b)   Each employee set forth in Schedule 6.8 that remains employed by a Chex Entity immediately prior to the Closing (whether actively or inactively), and each additional employee that is hired to work primarily in the Business following the Effective Date, but prior to Closing, who remains employed by a Chex Entity immediately prior to the Closing (whether actively or inactively), is referred to herein individually as a “Business Employee” and, collectively, as the “Business Employees.” No Business Employees are or have been covered by a union or collective bargaining agreement with respect to their employment by a Chex Entity or are represented by a labor organization. There are no existing, pending or threatened strikes, work stoppages or lockouts related to the Business Employees. There has been no attempt by any union or other labor organization to organize employees of any Chex Entity at any time in the past five (5) years. There are no union organizational campaigns in progress with respect to the Business Employees or any questions concerning representation with respect to such Business Employees. There are no unfair labor practice charges or complaints pending or threatened against any Chex Entity with any Governmental Authority. The Chex Entities have complied with all applicable Laws regarding wages, hours, health and safety, payment of national insurance, withholding and other taxes, maintenance of worker’s compensation insurance, labor

 

 

and employment relationships, employment discrimination, and other applicable employment and employment related practices.

(c)   The transactions contemplated by this Agreement and the Ancillary Agreements do not trigger or violate the Worker Adjustment and Retraining Notification Act or any similar state or local requirement.

 

(a)   Schedule 6.9(a) contains a true and complete list of each Benefit Plan. Except as set forth on Schedule 6.9(a) , there are no benefits to which any Business Employee is entitled and there are no benefits or Benefit Plans to which a Chex Entity has any obligation. There are no benefits or Benefit Plans for which Game Financial will have any obligation after the Closing Date. The Chex Entities have delivered to Game Financial a copy of each Benefit Plan, a summary plan description, and other written plan material (or if unwritten, a reasonably detailed description of such Benefit Plan).

(b)   Except as set forth in Schedule 6.9(b) , the consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event: (i) entitle any Business Employee any bonus, severance pay, unemployment compensation or any other payment; (ii) accelerate the time for payment or vesting under any Benefit Plan; (iii) accelerate the time of payment or vesting, or increase the amount of any compensation or benefits due to any Business Employee; (iv) increase or secure (by way of trust or other vehicle) any benefits payable under any Benefit Plan. The Chex Entities shall be solely liable and responsible for the payment of any bonus, severance pay, unemployment compensation or any other payments listed on Schedule 6.9(b) .

(c)   With respect to each Benefit Plan: (i) the Benefit Plan has been operated, managed, administered and enforced in accordance with its governing documents and all applicable Laws, regulations and rulings; (ii) no breach of fiduciary duty has occurred with respect to which a Chex Entity or any Benefit Plan may be liable or otherwise damaged in any material respect; (iii) no material disputes nor any audits or investigations by any Governmental Authority are pending or are threatened, and no such completed audit, if any, has resulted in the imposition of any Tax, interest or penalty; (iv) all contributions, premiums, and other payment obligations have been accrued on the combined Financial Information of the Chex Entities in accordance with GAAP, and, to the extent due, have been made on a timely basis, in all material respects; (v) each Benefit Plan that purports to provide benefits that qualify for tax-favored treatment under applicable Law satisfies the requirements of such Law; (vi) no Action (other than for routine claims for benefits) are pending or threatened against any of the Benefit Plans or any fiduciary, administrator, sponsor (in their capacities as such), or other party-in-interest thereof; (vii) the Chex Entities have expressly reserved in itself the right to amend, modify or terminate such Benefit Plan, or any portion of it, at any time without Liability to the relevant Chex Entity; and (viii) no such Benefit Plan requires a Chex Entity to continue to employ any Business Employee or director.

 

 

6.10   Financial Information . The income statements and balance sheets, together with any related notes and schedules, for each of the years ended December 31, 2003 and December 31, 2004, and the statements of income and cash flow, together with any related notes and schedules, for the periods then ended and the auditor’s report thereon, for FastFunds as reviewed by Gelfond Hochstadt Pangburn, P.C. (including related Chex financial statements) (collectively, the “Year-End Statements”), and unaudited statements of income for the nine (9) month period ending September 30, 2005 (“Stub Statements”) and an unaudited balance sheet for the Business as of September 30, 2005 (“Balance Sheet” and, collectively with all of the foregoing financial information, the “Financial Information”) are publicly available as (i) exhibits to that certain current report on Form 8-K filed by FastFunds with the SEC on September 14, 2004, (ii) contained in FastFunds’ annual report on Form 10-K filed with the SEC on April 15, 2005, and (iii) contained in FastFunds’ quarterly report on Form 10-Q filed with the SEC on November 14, 2005. The Financial Information (as defined herein) and other financial information provided to Game Financial and its Affiliates have been prepared from books and records maintained consistent with past practice and in accordance with GAAP. Each of the Year-End Income Statements and the Stub Statements, and the other Financial Information (as defined herein) and other financial information provided to Game Financial or its Affiliates are complete and accurate in all material respects and fairly represent the financial condition of the Business as of the respective dates thereof. To the Knowledge of the Chex Entities, they have disclosed to Game Financial all material facts relating to the preparation of the Financial Information (as defined herein) and other financial information provided to Game Financial or its Affiliates.

6.11   Real Property . The Assets do not include any real property or any interest in real property, including leases, subleases, easements or licenses.

6.12   Litigation; Governmental Orders . Except as set forth in Schedule 6.12 , there are no, and for four (4) years prior to the Effective Date there have been no, pending or threatened Actions (or any basis therefor) by any Person or Governmental Authority against any Chex Entity that relates to, or could affect, the Business, revenues or the Assets, or against any director, officer or shareholder of a Chex Entity that relates to the foregoing, nor, to the Knowledge of the Chex Entities, is there any basis for any of the foregoing. No Chex Entity is subject to or bound by any Governmental Order relating to the Business or the Assets. No director, officer or shareholder of a Chex Entity is subject to or bound by any Gov