Exhibit 99.01
MERGER AGREEMENT
THIS MERGER AGREEMENT (the “ Agreement ”) is
made and entered into as of the 29 th day of September,
2006, by and between the following:
PeriNet Technologies, LLC, a Pennsylvania limited liability
company, (hereinafter, “ PeriNet ” or “
Target ”); and
SoftNet Technology Corp., a Nevada corporation (hereinafter “
SoftNet ”).
W I T N E S S
E T H
WHEREAS, subject to the terms and conditions of this Agreement,
PeriNet shall merge into, and with, SoftNet with SoftNet being the
sole surviving entity; and
WHEREAS, the Board of Directors of SoftNet deems it desirable and
in the best interests of SoftNet and its stockholders that the
Target merge into, and with, SoftNet in consideration of the
payment to PeriNet of Three Hundred Thousand dollars ($300,000) in
cash to be paid in the following manner: (i) $100,000 on the Merger
Date; (ii) $100,000 90 days thereafter; and (iii) $100,000 180 days
thereafter, and issuance by SoftNet to the individual Members,
pro rata , of PeriNet, on an earned out basis, of a maximum
of two million one hundred thousand dollars ($2,100,000)
worth of unregistered, restricted, SoftNet Common Stock (the
“ SoftNet Shares ”); and
WHEREAS, the parties to this Agreement agree to conduct the merger
pursuant to IRC 368(A)(1)(a); and
WHEREAS, SoftNet and PeriNet desire to provide for certain
undertakings, conditions, representations, warranties, and
covenants in connection with the transactions contemplated by this
Agreement; and
WHEREAS, PeriNet and its Members on the one hand and the Board of
Directors of SoftNet on the other hand have approved and adopted
this Agreement, subject to the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto do
hereby agree as follows:
SECTION 1
DEFINITIONS
1.1 “
Agreement ”, “ PeriNet ”, “
SoftNet ”, “ SoftNet Shares ”, and
“ Target ”, respectively, shall have the
meanings defined in the foregoing preamble and recitals to this
Agreement.
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1.2 “ Merger Date
” shall mean 10:00 a.m., local time, September 29, 2006, at
the New Jersey offices of SoftNet, the date on which the parties
hereto shall close the transactions contemplated herein; however,
the parties can change the Merger Date and place of Merger to such
other time and place as the parties shall mutually agree, in
writing. As of the Merger Date, all Exhibits to this
Agreement shall be complete.
1.3 “ Effective
Date ” shall mean July 1, 2006. All adjustments
shall be made as of the Effective Date.
1.4 “ 1933 Act
” shall mean the Securities Act of 1933, as amended.
1.5 “ 1934 Act
” shall mean the Securities Exchange Act of 1934, as
amended.
1.6 “ SEC
Documents ” shall have the meaning defined in Section 3.4
hereof.
1.7 “ Confidential
information ” shall have the meaning defined in Section
11.1 hereof.
SECTION 2
AGREEMENT FOR THE MERGER INTO SOFTNET
2.1 Substantive Terms of the
Merger.
PeriNet shall deliver to SoftNet one hundred percent (100%) of all
of the assets of the Target. SoftNet shall assume certain
liabilities of the Target subject only to the liens and/or
encumbrances set forth in this Agreement and/or the Exhibits
annexed hereto.
2.2 Consideration Paid
by SoftNet .
For all of the assets of the Target, SoftNet shall in consideration
of the payment to PeriNet of Three Hundred Thousand dollars
($300,000) in cash to be paid in the following manner: (i) $100,000
on the Merger Date; (ii) $100,000 90days thereafter; and (iii)
$100,000 180 days thereafter and issuance by SoftNet to the
individual Members of PeriNet, pro rat a, on an earned out
basis, of a maximum of two million one hundred thousand dollars
($2,100,000) worth of unregistered, restricted, SoftNet Common
Stock. The SoftNet Shares shall come with “piggy back”
registration rights so that in the event SoftNet files a
Registration Statement at any time in the future, SoftNet will
include the SoftNet Shares in such Registration Statement.
The exact number of shares due at the time of the Merger shall be
determined by taking $1,000,000 worth of the SoftNet Shares and
dividing that number by the average closing price for the five
trading days immediately prior to the Merger. The exact
number of shares due at the close of each calendar quarter shall be
determined by taking the earned portion of the SoftNet Shares and
dividing that number by the average closing price for the five
trading days immediately prior to the close of the calendar
quarter. The certificates representing the SoftNet Shares shall
bear the restrictive legend set forth in Rule 144 of the Rules and
Regulations of the 1933 Act and any appropriate legend required
under applicable state securities laws. The SoftNet Shares
shall be validly issued and outstanding, fully paid, and
non-assessable.
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The SoftNet Shares shall be earned as follows: (i) $1,000,000 worth
of SoftNet Shares at the time of the Merger; and (ii) for each
calendar quarter, beginning on the Merger Date, PeriNet shall earn
$250,000 worth of SoftNet Shares if the following revenue targets
are attained: Q4 2006 - $575,000; Q1 2007 - $735,000; Q2 2007 -
$940,000; and Q3 2007 - $1,200,000. In the event PeriNet
revenue is less then the revenue target but is at least 50% of the
revenue target, PeriNet shall earn 25% of the $250,000 quarterly
maximum earn out. For each additional 25% of the revenue
target which is attained, PeriNet shall earn an additional 25% of
the $250,000 quarterly maximum earn out ( e.g. if PeriNet
attains 75% of the revenue target, PeriNet shall earn 50% of the
quarterly maximum). In the event that the PeriNet revenue
exceeds 110% of the revenue target, PeriNet shall earn an
additional $25,000 worth of SoftNet Shares for that calendar
quarter in which 110% of the revenue target is exceeded.
SoftNet Shares shall be due 60 days following the close of each
calendar quarter and in no event sooner than any quarterly required
SEC Documents are filed.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SOFTNET
SoftNet, in order to induce PeriNet to execute this Agreement and
to consummate the transactions contemplated herein, represents and
warrants, to PeriNet, to the best of its knowledge, as follows, a
breach of which would be deemed a material breach of this
Agreement:
3.1 Organization and
Qualification . SoftNet is a corporation duly organized,
validly existing, and in good standing under the laws of Nevada,
with all requisite power and authority to own its property and to
carry on its business as it is now being conducted. SoftNet
is duly qualified as a foreign corporation and in good standing in
each jurisdiction where the ownership, lease, or operation of
property or the conduct of business requires such qualification,
except where the failure to be in good standing or so qualified
would not have a material, adverse effect on the financial
condition or business of SoftNet.
3.2 Authorization and
Validity . SoftNet has the requisite power and is duly
authorized to execute and deliver and to carry out the terms of
this Agreement. The board of directors and/or stockholders of
SoftNet have taken all action required by law, its Articles of
Incorporation and Bylaws, both as amended, or otherwise to
authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, subject to
the satisfaction or waiver of the conditions precedent set forth in
Section 8 of this Agreement. Assuming this Agreement has been
approved by all action necessary on the part of the Target, this
Agreement is a valid and binding agreement of SoftNet.
3.3 No Defaults
. SoftNet is not in default under or in violation of any
provision of its Articles of Incorporation or Bylaws, both as
amended. SoftNet is not in default under or in violation of
any material provision of any indenture, mortgage, deed of trust,
lease, loan agreement, or other agreement or instrument to which it
is a party or by which it is bound or to which any of its is
subject, if such default would have a material, adverse effect on
the financial condition or business of SoftNet. SoftNet is not in
violation of any statute, law, ordinance, order, judgment, rule,
regulation, permit, franchise, or other approval or authorization
of any court or governmental agency or body having jurisdiction
over it or any of its properties which, if enforced, would have
a
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material, adverse effect on the financial condition or business of
SoftNet. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated
herein, will conflict with or result in a breach of or constitute a
default under any of the foregoing or result in the creation of any
lien, mortgage, pledge, charge, or encumbrance upon any asset of
SoftNet and no consents or waivers thereunder are required to be
obtained in connection therewith in order to consummate the
transactions contemplated by this Agreement.
3.4 SEC Documents;
Financial Statements . As of the Merger Date, SoftNet has
filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to
the date hereof, together with any amendments or restatements
thereto, and all exhibits included therein and financial statements
and schedules thereto and documents incorporated by reference
therein being hereinafter referred to as the “ SEC
Documents ”). As of the Merger Date, the SEC
Documents substantially complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and
none of the SEC Documents, at the Merger Date, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. As of the Merger Date, the
financial statements of SoftNet included in the SEC Documents
substantially complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in substantial accordance with
generally accepted accounting principles, consistently applied,
during the periods involved (except ( i ) as may be
otherwise indicated in such financial statements or the notes
thereto, or ( ii ) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be
condensed or summary statements) and fairly present in all material
respects the financial position of SoftNet as of the dates thereof
and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by
or on behalf of SoftNet to PeriNet which is not included in the SEC
Documents, including, without limitation, contains any untrue
statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they are or were made, not
misleading. Neither the SoftNet nor any of its officers,
directors, employees or agents has provided PeriNet with any
material, non-public information.
3.5 Absence of Certain
Changes . Since the most recent filing by SoftNet with
the SEC, there has been no material adverse change and no material
adverse development in the business, properties, operations,
financial condition, results of operations or prospects of SoftNet.
SoftNet has not taken any steps, and does not currently expect to
take any steps, to seek protection pursuant to any bankruptcy law
nor does SoftNet have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy
proceedings.
3.6 Documents .
The copies of all agreements and other instruments that have been
delivered by SoftNet to PeriNet are true, correct, and complete
copies of such agreements and instruments and include all
amendments thereto.
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3.7 Disclosure .
The representations and warranties made by SoftNet herein and in
any schedule, statement, certificate, or document furnished or to
be furnished by SoftNet to PeriNet pursuant to the provisions
hereof or in connection with the transactions contemplated hereby,
taken as a whole, do not and will not as of their respective dates
contain any untrue statements of a material fact, or omit to state
a material fact necessary to make the statements made not
misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF PERINET
PeriNet, in order to induce SoftNet to execute this Agreement and
to consummate the transactions contemplated herein, represents and
warrants, to SoftNet, to the best of his knowledge, as follows, a
breach of which would be deemed a material breach of this
Agreement:
4.1 Organization and
Qualification . The Target is a Pennsylvania limited
liability company, duly organized, validly existing, and in good
standing under the laws of the state of Pennsylvania with all
requisite power and authority to own its property and assets and to
carry on its business as it is now being conducted. The
Target is qualified as a foreign limited liability company and is
in good standing in each jurisdiction where the ownership, lease,
or operation of property or the conduct of its business requires
such qualification, except where the failure to be in good standing
or so qualified would not have a material, adverse effect on the
financial condition and business of the Target.
4.2 Ownership of the
Target’s Membership Unit Interest . The Target is
authorized to issue two classes of Membership Units, one voting and
one non-voting. On the Merger Date, all of the Membership
Units (both voting and non-voting) outstanding are, or will be,
owned of record, and beneficially, in the following manner: (i)
Michael Piscopo (“Piscopo”) 41%; Elizabeth Piscopo 39%;
and Matthew Cox 20%. On or before the Merger Date the Target will
provide to SoftNet a true copy of the Target’s Operating
Agreement, as may be amended, to indicate the ownership interests
set forth herein. None of the Members who hold any Membership
Interest in PeriNet have granted any options, warrants, or
agreements of any kind relating to any Membership Units of the
Target.
4.3 Authorization and
Validity . PeriNet has the requisite power and is duly
authorized to execute and deliver and to carry out the terms of
this Agreement. Assuming this Agreement has been approved by
all action necessary on the part of the Target, this Agreement is a
valid and binding agreement of PeriNet and the Target.
4.4 The Target’s
Financial Statements .
(a)
The financial statements of the Target (as prepared by the Target)
for the past two fiscal years ending 2004 and 2005, and the year to
date portion of the current fiscal year ending December 31, 2006
and any notes thereto, fairly and accurately present the financial
condition and the results of operations, income, expenses, assets,
liabilities, changes in owners’ equity, and cash flows of the
Target, consistent with the past practices of the Target
(collectively, the “Target’s Financial
Statements”). PeriNet represents that there have been no
material changes to the financial condition of the Target since
the
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time of the year to date portion of the current fiscal year
ending December 31, 2006 provided to SoftNet to and including the
Merger Date.
(b)
The Target’s Financial Statements are capable of being
examined and reported upon with an unqualified opinion expressed by
an independent public or certified public accountant and will
comply with the requirements and standards set forth in Regulation
S-X, as promulgated and adopted by the Securities and Exchange
Commission.
4.5 Conduct and Transactions
of the Target. Since inception, the Target has conducted
the operations of its business consistent with past practice and
used its best efforts to maintain and preserve its properties, key
employees, and relationships with customers and suppliers.
Without limiting the foregoing, during such period the Target did
not:
(a)
Incur any liabilities except to maintain its facilities and assets
in the ordinary course of its business;
(b) Amend its
Articles of Formation or merge or consolidate with or into any
other corporation or sell all or substantially all of its
assets;
(e) Pay or incur
any obligation or liability, direct or contingent, except in the
ordinary course of its business;
(f) Incur any
indebtedness for borrowed money, assume, guarantee, endorse, or
otherwise become responsible for obligations of any other party, or
make loans or advances to any other party except in the ordinary
course of its business;
