ASSET PURCHASE
AGREEMENT
THIS
ASSET PURCHASE AGREEMENT ("Agreement") is entered into as of August
1, 2005, between GEORGE FREIDKIN, an individual doing business as
Cord Consulting Company ("Seller") and INDIGO TECHNOLOGY SERVICES,
INC., a Georgia corporation or assignee ("Buyer").
RECITALS
A.
Seller is the owner and operator of an information technology
consulting business (the "Business").
B.
Buyer is a wholly owned subsidiary of Softnet Technology Corp., a
Nevada corporation (“Softnet”)
C.
Seller wishes to sell and Buyer wishes to buy the Business on the
terms and conditions set forth in this Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Purchase of
Assets .
(a) Assets Included in
Sale . On the Closing Date, as defined below, Seller
shall sell and transfer to Buyer, and Buyer shall purchase from
Seller, all of Seller's right, title and interest in and to the
following assets in connection with the Business (collectively, the
"Assets"):
(i)
All customer agreements and rights under customer purchase
orders;
(ii)
all trademarks and trade names belonging or pertaining to the
Business, including, without limitation, use of the trade name,
"Cord Consulting Company".
(iii)
all books and records, all financial records, invoices and receipts
relating to the Business for the past 15 years (provided, however,
that a copy of each of the foregoing financial records may be
retained by Seller). Buyer agrees that Seller will have
access to these records, to be held in possession of Buyer for a
period of five years from the date of Closing, for the purpose of
making copies for Seller’s use;
(iv)
all client and vendor records and data of the Business for the past
15 years;
(v)
the Business' client, supplier and vendor lists, including contact
information for the past 15 years ; Seller is exempt from
transferring records for items which include and/or are commingled
with substantial amounts of personal information. However,
Buyer may require, and Seller will provide excerpts from such
records in order to meet Buyer’s audit requirements.
These include, but are not limited to:
-
Bank records of business transactions included in Sellers personal
Merrill Lynch Capital Management Account and/or other such personal
financial, investment, and bank accounts in which personal and
business transactions are commingled;
-
Business charges to Seller’s personal credit cards;
-
Records pertaining to Shurguard Storage in Atlanta, Georgia;
-
Personal Income Tax Filings which may contain business data from
Seller’s business;
-
Other similar documents, books, records and data as may be
identified during the transfer of the books and records; and
(vi) The goodwill of
the Business.
(b) Excluded
Assets and Liabilities . Buyer will not
purchase any other assets of the Business, including, cash or
accounts receivable of the Business other than those accounts
receivable related to client payments for services to be performed
after the date of the Closing.
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(c) Assumption of
Liabilities . Buyer will not assume any
liabilities or obligations of the Seller or the Business which were
created prior to the date of Closing, except for the obligation to
perform services under the customer contracts and purchase orders
set forth on Schedule 6(o)(ii ) (“Customer
Contracts”). Seller shall remain liable for any such
pre-existing liabilities and obligations after the
Closing.
(d) Accounts Receivable
. Schedule 1(d ) sets forth a complete and accurate
list of all Seller’s accounts receivable as of the date
hereof (the “Seller Receivables”). The Seller
shall be entitled to receive the benefit of all Seller Receivables.
If Buyer receives payment after the date hereof, from any customer
with respect to any Seller Receivable, Buyer will promptly deliver
the amount of such payment to Seller. Seller may,
independently of Buyer, forgive Seller Receivables and/or accept
alternative forms of compensation which will not “pass
through” the Buyer. In such event, Seller agrees to notify
Buyer of any such arrangements, and Buyer will adjust Buyer’s
books and records accordingly. With notice to Buyer, Seller
may levy service charges, as stated in the various contracts, with
such amounts to be collected by Buyer and remitted to Seller.
(e) Accounts Payable
. Schedule 1(e ) sets forth a complete and accurate
list of all Seller’s accounts payable as of the date hereof
(the “Seller Payables”). The Seller shall be
responsible for paying all Seller Payables. If, at any time,
Buyer pays any amount toward any Seller payable, upon notice to
Seller, Seller shall promptly reimburse Buyer for such amount.
2. Purchase
Price .
(a) Calculation of Purchase
Price . The purchase price for the Assets ("Purchase
Price") shall be $200,000.
(b) Allocation of Purchase
Price . The Purchase Price shall be allocated as set
forth on Schedule 2(b) attached hereto.
(c) Payment of Purchase
Price . The Purchase Price shall be paid as
follows:
(i) $25,000
in cash of which $8,333 is due on the 30 th day from the
execution of the Asset Purchase Agreement, $8,333 is due on the 60
th day from the execution of the Asset Purchase
Agreement, and $8,334 is due on the 90 th day from the
execution of the Asset Purchase Agreement ; and
(ii) ___________
shares of Softnet common stock (the “Shares”), as
calculated by calculating the average closing sale price for the
ten trading days prior to execution of the Asset Purchase
Agreement.
3. Seller's Covenant Not to
Compete . Seller agrees that, for a period of three
(3) years after the Closing, Seller shall not directly or
indirectly engage in, or have any interest in, or be employed by,
or act a consultant for, any person, firm, corporation or business
other than Buyer (whether as an employee, officer, director, agent,
security holder, creditor, consultant or otherwise) that engages in
any activity that is the same as, substantially similar to or
competitive with the Business, except that this covenant shall not
preclude Seller from passive investments in
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such parties (eg. purchase and/or owner of Microsoft stock or bonds
solely as a financial investment). The restrictions contained
in the previous sentence shall apply only in the United States of
America. After the first year, if the value of the Buyer’s
common stock paid to Seller falls below one-half of the value on
the date of closing for more than six consecutive months and Seller
holds at least 80% of the shares transferred on the Closing Date,
this “Covenant Not to Compete” may be terminated at the
option of the Seller. Seller agrees that, if Seller
terminates this covenant, Seller will give first right of refusal
to Buyer for the proposed business related services or ventures of
Seller. If the Seller sells more than 20% of the stock transferred
on the Closing Date, the “Covenant Not to Compete”
cannot be terminated.
4. Conditions
to Closing . The Closing shall be conditioned upon
the following:
(a) Seller's
delivery of all Assets free and clear of all liens, charges and
encumbrances; and
(b) Seller's
execution and delivery of each of the documents referred to in
Paragraph 7(c ) below.
5. Seller's
Representations and Warranties . Seller hereby
represents, warrants and covenants as follows, which
representations, warranties and covenants shall survive the
Closing:
(a) Title to
Assets . At Closing, Seller will convey to Buyer
good and marketable title to the Assets, free and clear of all
mortgages, liens, security interests, encumbrances, title defects,
or adverse claims of any kind. None of the Assets is subject
to a lease to or from a third party. The Assets, and the
operations and maintenance thereof, comply with any applicable
agreements and restrictive covenants and conform to all applicable
laws, and all work required to be done by Seller as tenant has been
duly performed. The Assets are in good operating condition
and repair, subject to ordinary wear and tear, and are sufficient
and adequate to permit Seller to conduct the Business as currently
conducted.
(b) Debts and
Liabilities . As of the date hereof, there are no
debts, liabilities, accounts payable or other obligations of Seller
associated with the Business.
(c)
Organization, Qualification and Business . The
Business is a sole proprietorship wholly owned by Seller and Seller
holds all licenses and permits necessary to own the assets of the
Business and to operate the Business as now owned and operated by
Seller; and neither the ownership of the assets of the Business nor
the nature of the Business requires Seller to be qualified in any
jurisdiction.
(d)
Authority . Seller has the requisite power and
authority to execute, deliver and carry out the provisions of this
Agreement and to perform its obligations hereunder, and all such
action has been duly and validly authorized by all necessary
proceedings on Seller’s part.
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(e) Execution
and Binding Effect . This Agreement has been duly and
validly executed and delivered by Seller and constitutes legal,
valid and binding obligations of Seller enforceable in accordance
with the terms hereof, except as the enforceability of this
Agreement may be limited by bankruptcy, insolvency or other similar
laws of general application affecting the enforcement of creditors'
rights or by general principles of equity limiting the availability
of equitable remedies.
(f)
Absence of Conflicts . Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated by this Agreement nor the performance of or compliance
with the terms and conditions hereof will (1) violate any law
or government regulation, (2) conflict with or result in a any
material breach or default under any agreement or instrument to
which Seller is a party or by which Seller or any of his properties
may be subject or bound, or (3) result in the creation or
imposition of any material lien upon any property of Seller.
(g)
Consents and Approvals . No authorization,
consent, approval, license, exemption or other action by, and no
registration, qualification, designation, declaration or filing
with any governmental agency or office is or will be necessary in
connection with the execution and delivery of this Agreement,
consummation of the transactions contemplated by this Agreement, or
performance of or compliance with the terms and conditions of this
Agreement.
(h)
Compliance with Laws . The Business is and has
been operated by Seller in compliance with all applicable permits,
licenses, laws and regulations (federal, state, local and foreign)
applicable to it, and all required reports and filings with
governmental authorities have been properly made where the failure
to comply or file would have a material adverse effect on the
Business, operations or financial condition of Seller or the
Business. Seller has not entered into any material agreement
with, had any material dispute with, or been investigated by, any
governmental authority or other third party that could materially
and adversely restrict the operation of its Business. To
Seller's knowledge, no hazardous materials have at any time been
generated, used, treated or stored on, released or transported to
or from, the Premises and Seller has not caused and does not know
that any Hazardous Materials (as hereinafter defined) exist on,
under or about the Premises. "Hazardous Materials" means any
chemical, substance, material, controlled substance, object,
condition, waste or combination thereof which is or may be
hazardous to human health or safety or to the environment due to
its radioactivity, ignitability, corrosivity, reactivity,
explosivity, toxicity, carcinogenicity, infectiousness or other
harmful or potentially harmful properties or effects.
(i)
Financial Statements and Practices . Seller makes
and keeps books, records and accounts, which, in reasonable detail,
accurately and fairly reflect transactions and dispositions of the
Assets. Seller has previously furnished to Buyer a profit and
loss statement for the period January 1, 2003, through
December 31, 2004 (collectively, the "Financial Statements").
The Financial Statements are true and correct in all respects, have
been prepared in accordance with the accounting method specified
therein and consistently followed by Seller throughout the periods
indicated, and accurately reflect the financial condition of Seller
and the results of the Business’s operations for the
respective periods indicated therein.
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(j)
Taxes . Seller has properly filed all federal,
foreign, state, local and other tax returns and reports with
respect to the Business, which are required to be filed by it, and
all of the foregoing are true, correct and complete. All
taxes, interest, and penalties due and payable as shown on such
returns or claimed to be due by any taxing authority have been
timely paid. There are no outstanding waivers or extensions
of time with respect to the assessment or audit of any tax or tax
return of Seller, or claims now pending or matters under discussion
with any taxing authority in respect of any tax of Seller.
(k)
Contracts . Schedule 6(l) hereto
contains a complete list of all material contracts, agreements,
written or oral arrangements and commitments of Seller, that are
related to the Business. Each of such contracts, agreements,
arrangements and commitments is a valid and binding obligation of
Seller and, to the best knowledge of Seller, of the other parties
thereto in accordance with its terms. There have been no
defaults or claims of default and, to the best knowledge of Seller,
there are no facts or conditions that have occurred which, through
the passage of time or the giving of notice would constitute a
default thereunder or would cause an acceleration of any obligation
of any party thereto or the creation of a lien or encumbrance upon
any Asset. Seller has not received notice that any party to
any of the agreements listed on Schedule 6(l) intends to
cancel or terminate any of these agreements.
(l)
Vendors . Schedule 6(m) is a true and
complete list of each of Seller's vendors relating to the Business
from whom the Seller made purchases during one or more of the
calendar years 2004 and 2005, showing with respect to each, the
name and address of such vendor. Seller is not required to
provide any bonding or other financial security arrangements in
connection with any transactions with any of its vendors in the
ordinary co
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