EXHIBIT 10.32

ASSET PURCHASE AGREEMENT

By and Between

COGENT FINANCIAL GROUP

a California corporation,

as Seller,

And

COGENT ACQUISITION COMPANY, LLC

a Delaware limited liability company

as Buyer

Dated as of

March 14, 2007

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ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT (this “Agreement”) dated as of March 14, 2007, by and
between Cogent Acquisition Company, LLC, a Delaware limited liability company,
(“Buyer”), and Cogent Financial Group, a California corporation (“Seller”).

RECITALS:

A. Seller is engaged in activities of a consumer financial servicer and owns the
residual interest in certain consumer obligations and certain other assets
relating to the servicing of such consumer obligations.

B. Substantially all assets of Seller, including the consumer obligations, are
encumbered by a first and senior security interest in favor of SageCrest, except
with respect to certain accounts assigned to or encumbered by an interest in
favor of Dubhe I, LLC, a Delaware limited liability company. The amount of the
indebtedness owed by Seller to SageCrest is not less than the Purchase Price (as
provided herein).

C. Seller desires to transfer certain of its assets to Buyer and Buyer desires
to purchase certain of Seller’s assets for the consideration provided herein.

D. Seller is not transferring and Buyer is not assuming any Liabilities (as
defined herein) of Seller, except for the Assumed Liabilities.

NOW THEREFORE, in consideration of the foregoing, of the mutual promises,
covenants and conditions of the parties herein set forth, and for other good and
valuable consideration, the receipt and adequacy of which the parties do hereby
acknowledge, the parties agree as follows:

SECTION 1. DEFINITIONS

As used herein, the following words and terms shall have the meanings ascribed
to them below:

“Account Collateral” shall have the meaning ascribed to it in Section 2.l(e).

“Accounts” shall have the meaning ascribed to it in Section 2.l(c).

“Assumed Employee Liabilities” shall have the meaning ascribed to it in
Section 2.2(a).

“Assumed Liabilities” means those Liabilities identified in Section 2.2.

Buyer” shall mean Cogent Acquisition Company, a Delaware limited liability
company.

“Buyer’s Affiliates” shall have the meaning ascribed to it in Section 10.2.

“Claim” shall have the meaning ascribed to it in Section 10.2.

 

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“Closing” shall have the meaning ascribed to it in Section 11.1.

“Closing Date” shall mean the date that the Closing occurs.

“Code” shall mean the Internal Revenue Code of 1986, as amended, or any
regulations thereunder.

“Confidential Information” shall mean and include, without limitation all
information concerning a Person’s products, costs, prices, sales marketing and
distribution methods, properties and assets, liabilities, finances, employees,
customer and vendor lists and related information, and all other information not
previously disclosed to the public directly by the Person. “Confidential
Information” shall not include any Confidential Information to the extent that
such Confidential Information: (i) is generally known to the public at the time
of disclosure or becomes generally known through no wrongful act on the part of
the Person charged with preserving the confidentiality of such Confidential
Information; (ii) was known by the Person charged with preserving the
confidentiality of such Confidential Information prior to the disclosure to such
Person of the Confidential Information; (iii) becomes known to the Person
charged with preserving the confidentiality of such Confidential Information
through disclosure by sources, other than such Person or its affiliates or
professional advisers, having the legal right to disclose such Confidential
Information; or (iv) is required to be disclosed by the Person charged with
preserving the confidentiality of such Confidential Information to comply with
applicable Law; provided, that the such Person provides prior written notice of
such disclosure to the Person to which such Confidential Information relates,
and takes reasonable and lawful actions to avoid and/or minimize the extent of
such disclosure.

“Dubhe” has the meaning ascribed in the recitals hereto.

“Dubhe Accounts” shall have the meaning ascribed to it in Section 3.l(b).

“Employee Plans/Agreements” shall have the meaning ascribed to it in
Section 6.11.

“Financial Statements” shall have the meaning ascribed to it in Section 6.5.

“GAAP” shall mean generally accepted accounting principles consistently applied.

“Governmental Entity” shall mean any court, arbitration, department, commission,
legislature, board, bureau, agency, authority, instrumentality or other body,
whether federal, state, municipal, foreign, quasi-governmental agency or
self-regulatory authority.

“Indemnified Party” shall have the meaning ascribed to it in Section 10.4(a).

“Indemnifying Party” shall have the meaning ascribed to it in Section 10.4(a).

“Law” shall mean any law, statute, rule, regulation, ruling, decision, caselaw,
ordinance, decree, order or any other official act of any Governmental Entity.

“Liability” or “Liabilities” shall mean and include any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost,
expense, obligation or responsibility, fixed or unfixed, known or unknown,
contingent, asserted or unasserted, liquidated or unliquidated, secured or
unsecured, accrued or not accrued.

 

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“Lien” shall mean any mortgage, lien, security interest, pledge, encumbrance,
charge whether statutory or otherwise.

“Litigation” shall have the meaning ascribed to it in Section 6.13.

“Material Adverse Effect” shall mean a material adverse effect (a) on the
business, assets, condition (financial or otherwise), or in the results of
operations; (b) on the ability of a party to perform under this Agreement or any
other agreement or document contemplated hereunder; or (c) upon the legality,
validity, binding effect or enforceability against a party hereto of this
Agreement or any other agreement or document contemplated hereunder. Each
determination of whether a Material Adverse Effect has occurred shall be made in
good faith by the person or persons making such determination and shall take
into account all relevant facts and circumstances existing as of the date of
determination.

“PAL” means Paramount Alliance Limited, a California corporation.

“Person” shall mean any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust,
unincorporated organization or any government or agency or political subdivision
thereof.

“Premises” shall mean those premises covered by the Premises Lease.

“Premises Lease” shall have the meaning ascribed to such real property lease
identified on Schedule 2.1(b) .

“Provider Assignment Agreements” shall have the meaning ascribed to it in
Section 2.l(f).

“Purchase Price” shall have the meaning ascribed to it in Section 4.1.

“Purchase Price Accounts” shall mean those certain Accounts that are not in
default designated by Buyer and approved by Seller (which approval shall not be
unreasonably withheld) for which the aggregate original purchase price paid to
the assignors of such accounts is the sum of $390,000.00, identified on Schedule
6.9(j).

“Purchased Assets” shall have the meaning ascribed to them in Section 2.1.

“Purchased Books and Records” shall have the meaning ascribed to them in
Section 2.1(o).

“SageCrest” shall mean SageCrest II, LLC a Delaware limited liability company.

“SageCrest Entities” shall have the meaning ascribed to it in Section 11.2(f) .

“Schlegel” shall mean Theodore Schlegel, an individual.

 

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“Securities Act” shall mean the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.

“Seller’s Affiliates” shall have the meaning ascribed to it in Section 10.3.

“Seller Employees” shall have the meaning ascribed to it in Section 6.11(a) .

“Seller Contracts” shall have the meaning ascribed to it in Section 2.1(b).

“Knowledge” shall mean an individual shall be deemed to have knowledge of a
particular fact or matter if: (a) the individual either Schlegel, Alice Nothern,
Doug Swets, or Justin Betance, or an employee who would be reasonably expected
to report such Knowledge to an officer, director, or manager, and (b) either
(i) that individual is actually aware of that fact or matter, and (ii) a prudent
business person could be expected to discover or otherwise become aware of that
fact or matter in the course of exercising reasonable care in conducting its
business or operating the assets of the business, or conducting a reasonable
investigation regarding the accuracy of any such fact or matter.

“Taxes” shall mean any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.

“$390,000 Investors” shall mean, collectively, those individuals or entities who
are the beneficiaries of certain debt instruments owed by Seller in an aggregate
principal sum of approximately $390,000, identified on Schedule 6.9(j).

“Trade Rights” shall mean and include: (A)(i) all trademark rights, business
identifiers, trade dress, service marks, trade names, and brand names; (ii) all
copyrights and all other rights associated therewith and the underlying works of
authorship; (iii) all contracts or agreements granting any right, title, license
or privilege under the intellectual property rights of any third party; (iv) all
know-how, discoveries, improvements, designs, trade secrets, employee covenants
and agreements respecting intellectual property and non-competition and all
other types of intellectual property; and (v) all registrations of any of the
foregoing, all applications therefor, all goodwill associated with any of the
foregoing, and all claims for infringement or breach thereof, and (B) all
telephone numbers (business, cell, and facsimile), internet domain names and
sites, and rights to mail or post office boxes or services.

“Transfer” shall mean any transfer, assignment, sale, hypothecation, pledge,
gift or other disposition.

SECTION 2. ASSETS ACQUIRED; LIABILITIES ASSUMED

2.1 Assets Acquired. Seller agrees to sell, assign, grant, transfer, and deliver
to Buyer (and to the extent PAL is required to act, shall cause PAL to sell,
assign, grant, transfer and deliver to Buyer), and Buyer agrees to purchase,
acquire and accept from Seller, on the terms and conditions set forth in this
Agreement, the following assets (“Purchased Assets”):

(a) All of Seller’s rights, title and interest in the equipment, furniture and
fixtures owned, utilized or held for use by Seller listed on Schedule 2.l(a).

 

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(b) All of Seller’s rights, title and interest under certain leases and
contracts (other than those referred to in Section 2.l(c) below) listed on
Schedule 2.l(b), but only to the extent that such contracts are assumable by
Buyer pursuant to the terms of such contracts (the “Seller Contracts”). Buyer,
at its sole discretion, shall be permitted to exclude any contract or lease from
Schedule 2.l(b) within 30 days after the Closing Date by providing Seller notice
of such exclusion. Notwithstanding the foregoing, Buyer shall be responsible for
those certain Seller Contracts as specifically designated as mandatory Seller
Contracts in Schedule 2.l(b).

(c) All of Seller’s rights, title and interest in the consumer accounts listed
on Schedule 2.l(c) (collectively with the Account Collateral, the “Accounts”).

(d) All of Seller’s rights to service the Accounts.

(e) All of Seller’s and PAL’s rights, title and interest (a) to claims, causes
of action, judgments, liens, and similar rights relating to recovery of the
Accounts, and (b) in assets that are the subject of such Accounts or that
constitute security interests or other interests in assets that are collateral
for such Accounts, including without limitation all motor vehicles, original
documentation relating to such rights and interests, including certificates of
title, and all rights to recover upon or take any act with respect to such
interests or assets, identified on Schedule 2.l(e), other than those identified
on Schedule 3.1 (collectively, the “Account Collateral.

(f) All of Seller’s and PAL’s rights, title and interest in contracts and
agreements with assignors of retail installment sale contracts and accounts
providing for the assignment of such contracts and accounts, existing as of the
Closing Date as identified on Schedule 2.l(f), other that those identified on
Schedule 3.1 (“Provider Assignment Agreements”).

(g) All of Seller’s rights, title and interest in leasehold improvements
installed or purchased by Seller in or on the Premises.

(h) All of Seller’s rights, title and interest in any Trade Rights identified in
Schedule 6.12(a) and any and all derivations thereof, and all rights to use or
allow others to use such name(s) and/or derivations, other than those certain
Trade Rights identified on Schedule 6.12(b).

(i) All of Seller’s rights, title and interest in computer source codes,
programs and other software of Seller, including all machine readable code,
printed listings of code, documentation and related property and information of
Seller related to servicing the Accounts.

(j) [Intentionally omitted.]

 

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(k) All of Seller’s and PAL’S rights, title and interest in deposits, whether in
the possession of Seller, or PAL, or third parties, pursuant to any contract or
agreement, including the deposit in connection with the Premises Lease,
including without limitation such deposits identified on Schedule 2.l(k)(i), but
excluding the deposits and funds identified on Schedule 3.1.

(1) All of Seller’s rights, title and interest in those certain, lock box and
cash management accounts and agreements and related collection services and mail
and post offices boxes, and other agreements with financial institutions, banks
and service providers for the handling of funds, including without limitation
such deposits accounts and arrangements listed on Schedule 2.1(1).

(m) All of Seller’s rights, title and interest in notes receivable and any other
obligation in favor of Seller existing as of the Closing Date not otherwise
excluded on Schedule 3.1(c) identified in Schedule 2.l(m), including without
limitation that certain note payable in the principal amount of $338,170.78 by
Douglas Garcia that is due and payable to Seller.

(n) All of Seller’s rights, title and interest in cash and cash equivalents
existing as of the Closing Date, including without limitation all funds in the
deposit accounts and cash management accounts identified in Schedule 2.1(1) as
of the Closing Date, and all security deposits, all as identified on Schedule
2.1(n), excluding such cash and cash equivalent identified on Schedule 3.1.

(o) Subject to Section 13, all of Seller’s books and records relating to the
Accounts and/or the servicing of the Accounts (the “Purchased Books and
Records”).

2.2 Assumed Liabilities. Buyer shall assume and be liable for only the following
debts, contracts, agreements, commitments, obligations, and Liabilities of
Seller (“Assumed Liabilities”):

(a) Accrued sick leave and vacation benefits of Seller’s employees as of the
Closing Date and the severance pay owing to Douglas B. Swets as of the Closing
Date but in each case only as specifically listed and in such amounts as set
forth on Schedule 2.2(a) (“Assumed Employee Liabilities”).

(b) All security deposits paid by Account debtors in connection with the
Accounts as identified on Schedule 2.2(b).

(c) Any sales or transfer Taxes attributable to or arising from the transfer of
the Purchased Assets by Seller to Buyer, and excluding without limitation income
and franchise taxes of the Seller.

(d) The payments in Schedule 2.2(d) for obligations of Seller through the
Closing Date.

(e) Liabilities arising solely under a Purchased Asset, but only to the extent
such Liabilities accrue from and after the Closing Date and are otherwise
expressly assumed hereunder.

 

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(f) All of the Liabilities listed on Schedule 2.2(f).

SECTION 3. EXCLUDED ASSETS AND LIABILITIES

3.1 Excluded Assets. Excluded from this sale and purchase are any properties or
assets that are not Purchased Assets including, but not limited to, (a) the
items otherwise located in the Premises listed on the attached Schedule 3.l(a),
(b) any Account listed on Schedule 3.l(b), including without limitation the
accounts or obligations that are subject to a senior interest in favor of Dubhe
as identified on Schedule 3.l(b)(i) (the “Dubhe Accounts”); and (c) all other
items listed on Schedule 3.l(c).

3.2 Excluded Liabilities. Other than the Assumed Liabilities, Buyer shall not
assume and shall not be liable for, and Seller shall retain and remain solely
liable for and obligated to discharge, all of the debts, contracts, agreements,
commitments, obligations and any other Liability of Seller but only if and to
the extent accruing prior to the Closing Date, including, without limitation,
the following:

(a) Any Liability for breaches by Seller of any contract or any other
instrument, contract or purchase order or any liability for payments or amounts
due under any contract, agreement, lease, license, commitment or any other
instrument, contract or purchase order;

(b) Any Liability or obligation for Taxes attributable to or imposed upon Seller
for any period, or attributable to or imposed upon the Accounts;

(c) Any Liability or obligation for or in respect of any loan, other
indebtedness for money borrowed, or account payable of Seller;

(d) Any Liability or obligation arising as a result of any legal or equitable
action or judicial or administrative proceeding initiated at any time, to the
extent relating to any action or omission by or on behalf of Seller, including,
without limitation, any Liability for violation of any consumer lending Law,
violations of federal or state securities or other Laws;

(e) Any Liability or obligation arising out of any “employee benefit plan,” as
such term is defined by the Employee Retirement Income Security Act of 1974
(“ERISA”) or other employee benefit plans;

(f) Any Liability or obligation for making payments of any kind (including as a
result of the termination of employment by Seller of employees, or other claims
arising out of the terms and conditions of employment with Seller, or for
vacation or severance pay or otherwise) to employees of Seller or in respect of
payroll taxes for employees of Seller;

(g) Any Liability or obligation for making payments of any kind with respect to
any Excluded Asset, whether to customers, lenders, vendors, employees, borrowers
or other third parties;

(h) Any Liability or obligation of Seller incurred in connection with the making
or performance of this Agreement and the transactions contemplated hereby;

 

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(i) Any Liability or obligation for trade accounts or debts;

(j) Any Liability or obligation to Seller’s borrowers or accrued debtors under
any Account or Excluded Asset;

(k) Any Liability or obligation under any Seller Contract that arises after the
Closing that relates to a breach of such Seller Contract by Seller that occurred
prior to the Closing;

(1) Any Liability or obligation under any of the Employee Plans/Agreements of
Seller;

(m) Any Liability or obligation arising out of or relating to any employee
grievance; and

(n) Any Liability or obligation to indemnify, reimburse, or advance payments to
any officer, director, employee or agent of Seller.

SECTION 4. PURCHASE PRICE - PAYMENT

4.1 Purchase Price. The purchase price (the “Purchase Price”) for the Purchased
Assets shall be the sum of (a) $55,024,768.07 and, (b) the aggregate sum of the
original provider paid amounts of the Purchase Price Accounts.

4.2 Payment of Purchase Price. The Purchase Price set forth in Section 4.l(a)
shall be paid by Buyer by delivery by Buyer to SageCrest on behalf of Seller;
and the Purchase Price set forth in Section 4.1(b) shall be paid by delivery of
the Purchase Price Accounts to Seller for the sole benefit of the $390,000
Investors identified on Schedule 6.9(j) to satisfy and retire any debt owed to
the $390,000 Investors.

SECTION 5. NO SUCCESSOR AND FRAUDULENT TRANSFER

5.1 Seller acknowledges that (i) Seller has received adequate consideration for
the Purchased Assets; (ii) Buyer will not have any corporate management,
officers or directors in common with Seller; and (iii) Seller is not receiving
any equity in Buyer

5.2 Seller is not entering into this Agreement or any of the other agreements
referenced in this Agreement with the intent to defraud, delay or hinder its
creditors.

SECTION 6. REPRESENTATIONS AND WARRANTIES OF SELLER

Seller makes the following representations and warranties to Buyer, each of
which is true and correct on the date hereof, which shall remain true and
correct to and including the Closing Date.

6.1 Corporate Existence. Except as identified in Schedule 6.1, Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. Seller has all requisite corporate power and
authority to own or lease, and to operate its assets, and to carry on its
business as now being conducted to enter into this Agreement and the other
documents and

 

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instruments to be executed and delivered by Seller pursuant hereto and to carry
out the transactions contemplated hereby and thereby. Seller is duly licensed or
qualified to do business as a foreign corporation, and is in good standing, in
each jurisdiction wherein the character of the properties owned or leased by it,
or the nature of its business, makes such licensing or qualification necessary.

6.2 Authorization. The execution, delivery, and performance of this Agreement
have been duly authorized and approved by all requisite corporate action on the
part of Seller, and this Agreement constitutes a valid and binding agreement of
Seller enforceable against Seller in accordance with its terms.

6.3 No Violation. Seller’s execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not
(i) violate Seller’s Articles of Incorporation or Bylaws; (ii) violate any Law
applicable to Seller or its assets, nor, will it violate or conflict with, or
constitute a default, or result in the creation of any Lien on any of the
Purchased Assets under any note, contract or other agreement or instrument to
which Seller is a party or by which Seller or its assets are bound, the
violation of which shall have a Material Adverse Effect, or (ii) (except for
consents to be acquired prior to the Closing), require any authorization,
consent, approval, exemption or other action by or notice by or to any
Government Entity or third party, the failure to obtain which shall have a
Material Adverse Effect.

6.4 Assigned Agreements. Seller has no knowledge of any facts that would
establish that Seller Contracts (including all the agreements relating to the
Accounts and servicing of the Accounts) and Provider Assignment Agreements were
not entered into in the ordinary course of Seller’s business and are not in full
force and effect in accordance with their terms. Except as set forth in Schedule
6.4, Seller is not in default of any Seller Contract or Provider Assignment
Agreement. Except as set forth in Schedule 6.4, Seller has all requisite
corporate power and authority to assign to Buyer the rights of Seller under the
Accounts and the service rights to the Accounts, Provider Assignment Agreements
and subject to the terms of the Seller Contracts, all other Seller Contracts.

6.5 Financial Statements. Seller has delivered to Buyer true and complete copies
of the financial statements of Seller consisting of (i) balance sheet of Seller
as of December 31, 2006, and the related statement of income and cash flow for
the year then ended (including the notes contained therein or annexed thereto),
a complete and accurate copy of which is attached as Schedule 6.5 (“Financial
Statements”). The Financial Statements (subject to normal year end adjustments
and absence of footnotes) (including all notes and schedules contained therein
or annexed thereto) are true, complete and accurate, have been prepared in
accordance with GAAP, have been prepared in accordance with the books and
records of Seller, and Fairly present, in accordance with GAAP, the assets,
liabilities and financial position, the results of operations and cash flows of
Seller as of the dates and for the years and periods indicated. The financial
books and records are true and correct in all material respects.

 

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6.6 Tax Matters

(a) Provisions For Taxes. Except as set forth in Schedule 6.6 (a), the
provisions made for Taxes on the Financial Statements is sufficient for the
payment of all Taxes, whether or not disputed at the date of the Financial
Statements. Since the date of the Financial Statements, Seller has not incurred
any Taxes other than Taxes incurred in the ordinary course of business
consistent in type and amount with past practices of Seller.

(b) Tax Returns Filed. Except as set forth for Schedule 6.6 (b), all Tax returns
required to be filed by or on behalf of Seller have been timely filed and when
filed were true and correct in all material respects, and the Taxes shown as due
thereon were paid or adequately accrued. Seller has duly withheld and paid all
Taxes which it is required to withhold and pay relating to salaries and other
compensation heretofore paid to the employees of Seller.

(c) Tax Audits. Except as set forth for Schedule 6.6 (c), the federal and state
income tax returns of Seller have not been audited by the Internal Revenue
Service or any state taxing authorities and Seller has not received from the
Internal Revenue Service or from the tax authorities of any state, county, local
or other jurisdiction any notice of underpayment of taxes or other deficiency
which has not been paid nor any objection to any return or report filed by
Seller. There are outstanding no agreements or waiver extending the statutory
period of limitations applicable to any tax return or report.

(d) Other. Seller has not (i) applied for any tax ruling, (ii) entered into a
closing agreement with any taxing authority, (iii) filed an election under
Section 338(g) or Section 338(h)(l0) of the Code (nor has a deemed election
under Section 338(e) of the Code occurred), or (iv) been a party to any tax
allocation or tax sharing agreement.

6.7 Absence of Undisclosed Liabilities. Except as and to the extent specifically
disclosed in the Financial Statements or in Schedule 6.7, Seller does not have
any Liabilities other than commercial liabilities and obligations incurred since
the date of the Financial Statements in the ordinary course of business and
consistent with past practice and none of which has or will have a Material
Adverse Effect. Except as and to the extent described in the Financial
Statements, Seller, without any independent investigation, has no Knowledge of
any basis for the assertion against Seller of any Liability and there are, to
Seller’s Knowledge, no circumstances, conditions, happenings, events or
arrangements, contractual or otherwise, which may give rise to Liabilities,
except commercial liabilities and obligations incurred in the ordinary course of
Seller’s business and consistent with past practice.

6.8 Compliance With Laws and Permits.

(a) Compliance. Seller to its knowledge (including each and all of its
operations, practices, properties and assets) is in compliance with all
applicable Laws, including, without limitation, those applicable to consumer
lending transactions, discrimination in employment, occupational safety and
health, trade practices, competition and pricing, zoning, building and
sanitation, employment, retirement and labor relations, and product advertising
Laws, except where the failure to so comply will not have a Material Adverse
Effect. Seller has not received notice of any violation or alleged violation of,
and to its knowledge is subject to no Liability for past or

 

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continuing violation of, any Laws. To Seller’s knowledge, no event has occurred
or circumstance exists that may constitute or result in a violation by Seller
of, or a failure on the part of Seller to comply with any Law, except where the
failure to so comply will not have a Material Adverse Effect. All reports and
returns required to be filed by Seller with any Government Entity have been
filed, and were accurate and complete when filed, except where the failure to so
comply will not have a Material Adverse Effect.

(b) Licenses and Permits. Seller has all licenses, permits, approvals,
authorizations and consents of all Government Entities and all certification
organizations required for the conduct of the business (as presently conducted)
and operation of the Premises, except where the failure to so obtain such
licenses, permits, approvals, authorizations, and consents will not have a
Material Adverse Effect. Seller (including its operations, properties and
assets) is and has been in compliance with all such permits and licenses,
approvals, authorizations and consents.

6.9 Title; Accounts; Account Collateral; Other Assets.

(a) Marketable Title. Except as set forth on Schedule 6.9: (i) Seller has good
and marketable title to all the Purchased Assets, free and clear of all Liens;
and (ii) subject to the terms of the Seller Contracts with respect to the Seller
Contracts, (A) none of the Purchased Assets are subject to any restrictions with
respect to the transferability thereof; (B) Seller has complete and unrestricted
power and right to sell, assign, convey and deliver the Purchased Assets to
Buyer as contemplated hereby, and (C) at Closing, Buyer will receive good and
marketable title to all the Purchased Assets, free and clear of all Liens of any
nature whatsoever except as set forth on Schedule 6.9(a).

(b) Accounts Generally. Seller has the complete and unrestricted power and the
unqualified right to sell, assign and deliver the servicing of the Accounts to
Buyer. Upon consummation of the transactions contemplated by this Agreement,
Buyer will acquire the right to service the Accounts free and clear of any Liens
and there exists no restriction to Seller on the use or transfer of the Accounts
to Buyer. No Person other than Seller has any right or interest in the Accounts,
including the right to grant interests in Accounts to third parties. No
restrictions will exist as of the Closing Date that would operate to restrict
Buyer’s right to resell the servicing of the Accounts.

(c) Accounts. Schedule 2.l(c) identifies all accounts and other obligations that
are subject to the senior interests of SageCrest, Schedule 3.l(b)(i) identifies
all of the Dubhe Accounts, and Schedule 3.l(b) together with Schedules 2.l(c)
and 3.l(b)(i) identify all of the accounts and other obligations owed to
SageCrest, Cogent, Dubhe, or other parties serviced by Cogent as of the Closing
Date, including the Accounts.

(d) Providers Agreements. Schedules 2.l(f) and 3.l(c) together identify all of
the Provider Assignment Agreements between assignors of accounts receivable and
either Cogent or parties for whom Cogent is servicing accounts receivable.

(e) Security Deposits. Schedules 2.1(n) and 3.l(c) together identify all of the
security deposits and obligations owed or potentially owed by Cogent to third
parties.

 

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(f) Account Collateral. Schedule 2.l(e) identifies all of the Account
Collateral, including without limitation all Account Collateral consisting of
motor vehicles, existing as of the Closing Date, the location of all such
Account Collateral, and the location and possessor of certificates of title
relating to such Account Collateral, and to the extent Account Collateral is
indicated on Schedule 2.l(e) as repossessed and sold (or that Seller does not
hold title), that Seller has actually received proceeds of such Account
Collateral.

(g) Notes Receivables and Obligations. Schedule 2.1(m) and 3.1(b) identifies all
of the notes receivable and other obligations owed to Seller as of the Closing
Date.

(h) No Representation Regarding Account Status. Seller does not make any
representation with respect to the current status of the Accounts as of the
Closing Date.

(i) $390,000 Investors. Schedule 6.9(j) identifies all of the present $390,000
Investors and all of the notes held by the $390,000 Investors.

6.10 Labor Matters. Seller has not experienced any labor disputes, union
organization attempts or any work stoppage due to labor disagreement in
connection with its business. (a) Seller is in compliance with all applicable
Laws respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to so comply will not
have a Material Adverse Effect, and is not engaged in any unfair labor practice;
(b) there is, no unfair labor practice charge or complaint against Seller
pending or threatened; (c) there is no labor strike, dispute, request for
representation, slowdown or stoppage actually pending or threatened against or
affecting Seller; (d) no grievance which might have a Material Adverse Effect,
nor any arbitration proceeding arising out of or under collective bargaining
agreements, is pending and no such basis for a claim therefor exists; and
(e) there are not, administrative charges or court complaints against Seller
concerning alleged employment discrimination or other employment related matters
pending or threatened before the U.S. Equal Employment Opportunity Commission or
any Government Entity.

6.11 Employee Benefit Plans.

(a) Disclosure. The term “Employee Plans/Agreement” means all pension, thrift,
savings, profit sharing, retirement, incentive bonus or other bonus, medical,
dental, life, accident insurance, benefit, employee welfare, disability, group
insurance, stock purchase, stock option, stock appreciation, stock bonus,
executive or deferred compensation, hospitalization and other similar fringe or
employee benefit plans, programs and arrangements, and any employment or
consulting contracts, “golden parachutes,” collective bargaining agreements,
severance agreements or plans, vacation and sick leave plans, programs,
arrangements and policies, including, without limitation, all “employee benefit
plans” (as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”)), all employee manuals, and all written or
binding oral statements of policies, for the benefit of, or relate to, any
persons (“Seller Employees”) employed by Seller. No Employee Plan/Agreement is a
“multiemployer plan” (as defined in Section 4001 of ERISA), and Seller has never
contributed nor been obligated to contribute to any such multiemployer plan.

 

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(b) Terminations, Proceedings, Penalties, etc. Seller has no Employee
Plan/Agreement subject to the provisions of Title IV of ERISA.

(c) Prohibited Transactions, etc. There have been no “prohibited transactions”
within the meaning of Section 406 or 407 of ERISA or Section 4975 of the Code
for which a statutory or administrative exemption does not exist with respect to
any Employee Plan/Agreement, and no event or omission has occurred in connection
with which Seller or any of its assets or any Employee Plan/Agreement, directly
or indirectly, could be subject to any Liability under ERISA, the Code or any
other Law applicable to any Employee Plan/Agreement, or under any agreement,
instrument, Law pursuant to which Seller is required to indemnify any person
against liability incurred under any such Law or Order.

(d) Controlled Group; Affiliated Service Group: Leased Employees. Seller is not
and never has been a member of a controlled group of corporations as defined in
Section 414(b) of the Code or in common control with any unincorporated trade or
business as determined under Section 414(c) of the Code. Seller is not and never
has been a member of an “affiliated service group” within the meaning of
Section 414(m) of the Code. There are not and never have been any leased
employees within the meaning of Section 414(n) of the Code who perform services
for Seller, and no individuals are expected to become leased employees with the
passage of time.

(e) Payments and Compliance. Except as set forth in Schedule 6.1l(e), with
respect to each Employee Plan/Agreement, (i) all payments due from Seller to
date have been made and all amounts properly accrued to date as a Liability of
Seller which have not been paid have been properly recorded on the books of
Seller and are reflected in the Financial Statements; (ii) Seller has complied
with, and each such Employee Plan/Agreement conforms in form and operation to,
all Laws, including but not limited to ERISA and the Code, in all respects and
all reports and information relating to such Employee Plan/Agreement required to
be filed with any Governmental Entity have been timely filed,; (iii) all reports
and information relating to each such Employee Plan/Agreement required to be
disclosed or provided to participants or their beneficiaries have been timely
disclosed or provided; and (iv) there are no actions, suits or claims pending
(other than routine claims for benefits) or threatened with respect to such
Employee Plan/Agreement, except where the failure to comply with the foregoing
will not have a Material Adverse Effect.

(f) Post-Retirement Benefits. Except as set forth in Schedule 6.11(e), no
Employee Plan/Agreement provides benefits, including, without limitation, death
or medical benefits (whether or not insured) with respect to current or former
Seller Employees beyond their retirement or other termination of service other
than (i) coverage mandated by applicable law, (ii) death or retirement benefits
under any Employee Plan/Agreement that is an employee pension benefit plan,
(iii) deferred compensation benefits accrued as liabilities on the books of
Seller (including the Financial Statements), (iv) disability benefits under any
Employee Plan/Agreement that is an employee welfare benefit plan and which have
been fully provided for by insurance or otherwise or (v) benefits in the nature
of severance pay.

(g) No Triggering of Obligations. Except as provided for in Schedule 6.1l(g),
the consummation of the transactions contemplated by this Agreement will not
(i) entitle any current or former employee of Seller to severance pay, or any
other payment,

 

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(ii) accelerate the time of payment or vesting, or increase the amount of
compensation due to any such employee or former employee or (iii) result in any
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code for which an exemption is not available.

6.12 Trade Rights. Schedule 6.12(a) lists all Trade Rights in which Seller now
has any interest, specifying whether such Trade Rights are owned, controlled,
used or held (under license or otherwise) by Seller, and also indicating which
of such Trade Rights are registered. Seller has not registered or filed an
application or taken any other act toward registration of a Trade Right, other
than those Trade Rights specifically identified on Schedule 6.12(a) as
registered. Except as identified in Schedule 6.12(a), Seller has not granted any
license or made any assignment of any Trade Right. Seller is not infringing and
has not infringed any Trade Rights of another in the operation of the business
of Seller, nor to Seller’s Knowledge, is any other person infringing the Trade
Rights of Seller. To Seller’s Knowledge, there is no Litigation pending or
threatened to challenge Seller’s right, title and interest with respect to its
continued use and right to preclude others from using any Trade Rights of
Seller.

6.13 Litigation. There is no claim, action, litigation, suit, proceeding,
arbitration, or governmental, administrative, regulatory or self-regulatory
proceeding, investigation, or inquiry (“Litigation”) pending or to Knowledge of
Seller threatened against Seller, its business or any of its assets. Except as
set forth in Section 6.13, to Seller’s Knowledge, no event has occurred or
circumstance exists that is reasonably likely to give rise or serve as a basis
for the commencement of any such litigation. There is no order, injunction,
judgment, decree, ruling or arbitration award of any Governmental Entity
outstanding or to Seller’s Knowledge threatened to which Seller is subject.
Except as set forth in Schedule 6.13, there are no unresolved debtor complaints
or actions related to any of the Accounts, nor are there any customer complaints
or actions that are currently pending or threatened verify.

6.14 Solvency. Seller is not in liquidation, has no application or order made
for its winding up or dissolution, no resolution passed or steps taken to pass a
resolution for its winding up or dissolution, has not been appointed a receiver,
receiver and manager, administrator, liquidator, provisional liquidator,
official manager or administrator to it or any of its assets.

6.15 No Governmental Order. No Governmental Entity has issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement.

SECTION 7. REPRESENTATIONS OF BUYER

Buyer represents and warrants to Seller as follows:

7.1 Corporate Existence. Buyer is a limited liability company duly organized and
validly existing under the Laws of the state of Delaware. Buyer has all
requisite corporate power and authority to enter into this Agreement and the
other documents and instruments to be executed and delivered by Buyer pursuant
hereto and to carry out the transactions contemplated hereby and thereby.

 

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7.2 Authorization. The execution, delivery, and performance of this Agreement
have been duly authorized and approved by all requisite corporate action. When
duly executed and delivered by Buyer, this Agreement will constitute the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms.

7.3 No Violation. Buyer’s execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not
(i) violate Buyer’s Articles of Incorporation or Bylaws, or any Law, regulation
or court order applicable to Buyer or its assets, nor will it violate or
conflict with, or constitute a default under any note, contract or other
agreement or instrument to which Buyer is a party or by which Buyer or its
assets are bound, or (ii) (except for consents to be acquired prior to Closing)
to Buyer’s Knowledge, require any authorization, consent, approval, exemption or
other action by or notice to any Governmental Entity or third party.

7.4 Litigation. There is no Litigation pending or to Knowledge of Buyer
threatened against Buyer, its business or any of its assets. To Buyer’s
Knowledge, no event has occurred or circumstance exists that is reasonably
likely to give rise or serve as a basis for the commencement of any such
Litigation. There is no order, injunction, judgment, decree, ruling or
arbitration award of any Governmental Entity outstanding or to Buyer’s Knowledge
threatened to which Buyer is subject.

7.5 No Governmental Order. No Governmental Entity has issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement.

SECTION 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER

The obligations of Buyer to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, before or at the Closing Date, of each
of the following conditions, any one or portion of which may be waived in
writing by Buyer:

8.1 Representations, Warranties, and Covenants of Seller. All representations
and warranties made in this Agreement by Seller shall be true and correct as of
the Closing Date as fully as though such representations and warranties had been
made in all material respects (provided that any representation or warranty
qualified by material or Material Adverse Effect shall be true in all respects,
provided together that the representation in Section 6.2 shall be true in all
respects, on and as of the Closing Date, and, as of the Closing Date, Seller
shall not have violated and shall not have failed to perform any covenant or
obligation in any material respect contained in this Agreement.

8.2 Consents and Regulatory Approvals. Seller will prior to Closing obtain all
consents necessary for the consummation of the transactions contemplated hereby.
Seller shall obtain prior to Closing all consents and approvals necessary under
any Law, including all Governmental Entity approvals, to consummate the
transactions contemplated by this Agreement.

 

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8.3 No Suits or Actions. As of the Closing Date, no Litigation shall have been
threatened or instituted to restrain, enjoin, or otherwise prevent the
consummation of this Agreement or the contemplated transactions.

8.4 Releases. Seller shall procure a release of the Lien in favor of Sagecrest
on the Purchased Assets.

SECTION 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

The obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, before or at the Closing Date, of each
the following conditions, any one or portion of which may be waived in writing
by Seller.

9.1 Representations, Warranties and Covenants of Buyer. All representations and
warranties made in this Agreement by Buyer shall be true and correct in all
material respects (provided that any representation or warranty qualified by
material or Material Adverse Effect shall be true in all respects), as of the
Closing Date as fully as though such representations and warranties had been
made on and as of the Closing Date, and Buyer shall not have violated and shall
not have failed to perform any covenant or obligation in any material respect
contained in this Agreement.

9.2 No Suits or Actions. As of the Closing Date, no Litigation shall have been
threatened or instituted to restrain, enjoin, or otherwise prevent the
consummation of this Agreement or the contemplated transactions.

SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION

10.1 Survival of Representations and Warranties. All representations and
warranties made in this Agreement, including but not limited to the
representations and warranties set forth in Sections 6 and 7, shall survive the
Closing of this Agreement for a period of 18 months.

10.2 Indemnification by Seller. (a) In addition to any other rights or remedies
that Buyer may have at law or equity, Seller shall subject to Section 10.2 (c),
defend, indemnify and hold harmless Buyer, and their directors, officers,
employees and (“Buyer’s Affiliates”) and their respective successors and
assigns, from and against any and all Claims asserted against, resulting from,
imposed upon, or incurred by Buyer, Buyer’s Affiliates, or the Purchased Assets
pursuant to this Agreement, directly or indirectly, by reason of, arising out of
or resulting from:

(i) the inaccuracy or breach of any representation or warranty of Seller
contained in or made pursuant to this Agreement;

(ii) the breach of any covenant or obligation of Seller contained in this
Agreement;

 

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(iii) except for Assumed Liabilities, any claim of or against Buyer or
Sagecrest, or the Purchased Assets arising from the actions or omissions of
Seller otherwise than in accordance with this Agreement, occurring prior to the
Closing Date;

(b) As used in this Section 10, the term “Claim” shall include (i) all
Liabilities; (ii) all losses, damages (including, without limitation,
consequential and punitive damages), judgments, awards, penalties and
settlements; (iii) all demands, claims, suits, actions, causes of action,
proceedings and assessments, whether or not ultimately determined to be valid;
and (v) all costs and expenses (including, without limitation, interest
(including prejudgment interest in any litigated or arbitrated matter), court
costs and fees and expenses of attorneys and expert witnesses) of investigating,
defending or asserting any of the foregoing or of enforcing this Agreement;

(c) The indemnification by Seller as provided in this Section 10.2 shall be
effective with only with respect to all Claims indemnified by Seller which are
in excess of the aggregate Claims that would be the subject of the
indemnification by Seller under this Section 10.2 in the amount of $50,000, in
which case all Claims will be subject to the indemnification.

10.3 Indemnification by Buyer. (a) In addition to any other rights or remedies
that Seller may have at law or equity, Buyer shall subject to Section 10.3 (b)
defend, indemnify, and hold harmless Seller and its directors, officers,
employees, shareholders and (“Seller’s Affiliates”), its successors and assigns
from and against any and all Claims asserted against, resulting from, imposed
upon, or incurred by Seller or Seller Affiliates, directly or indirectly, by
reason of, arising out of or resulting from:

(i) the inaccuracy or breach of any representation or warranty of Buyer
contained in or made pursuant to this Agreement; and

(ii) the breach of any covenant or obligation of Buyer contained in this
Agreement.

(b) the indemnification by Buyer as provided in this Section 10.3 shall be
effective with only with respect to all Claims indemnified by Buyer which are in
excess of the aggregate Claims that would be the subject of the indemnification
by Buyer under this Section 10.3 in the amount in excess of $50,000, in which
case all Claims will be subject to the indemnification.

10.4 Indemnification of Third-Party Claims. The following provisions shall apply
to any Claim subject to indemnification which is (i) a suit, action,
arbitration, proceeding, or investigation filed or instituted by any third
party, or (ii) any other form of proceeding investigation, inquiry or assessment
instituted by any Government Entity:

(a) Notice and Defense. The party or parties to be indemnified (whether one or
more, the “Indemnified Party”) will give the party from whom indemnification is
sought (the “Indemnifying Party”) written notice of any such Claim. Failure to
give such notice shall not affect the Indemnifying Party’s duty or obligations
under this Section 10, except to the extent the Indemnifying Party is prejudiced
thereby. The Indemnifying Party will undertake the defense thereof by legal
counsel chosen by the Indemnifying Party, with the consent of the Indemnified
Party which consent shall not be unreasonably withheld. Failure of the
Indemnified Party to

 

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provide its consent or reasons to withhold consent as required in the preceding
sentence within 10 calendar days after receipt of notice by the Indemnifying
Party of its choice of legal counsel shall be deemed as the consent of the
Indemnified Party. The assumption of defense shall not constitute an admission
by the Indemnifying Party of its indemnification obligation hereunder with
respect to such Claim, and its undertaking to pay directly all costs, expenses,
damages, judgments, awards, penalties and assessments incurred in connection
therewith. So long as the Indemnifying Party is defending any such Claim
actively and in good faith, the Indemnified Party shall not settle such Claim.
The Indemnified Party shall make available to the Indemnifying Party or its
representatives all records and other materials required by them and in the
possession or under the control of the Indemnified Party, for the use of the
Indemnifying Party and its representatives in defending any such Claim, and
shall in other respects give reasonable cooperation in such defense.

(b) Failure to Defend. If the Indemnifying Party, within a reasonable time after
notice of any such Claim, fails to defend such Claim actively and in good faith,
the Indemnified Party will (upon further notice) have the right to undertake the
defense, compromise or settlement of such Claim or consent to the entry of a
judgment with respect to such Claim, on behalf of and for the account and risk
of the Indemnifying Party, and the Indemnifying Party shall thereafter have no
right to challenge the Indemnified Party’s defense, compromise, settlement or
consent to judgment.

(c) Indemnified Party’s Rights. Anything in this Section 10 to the contrary
notwithstanding, (i) if there is a reasonable probability that a Claim may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right to defend, compromise or settle such Claim with the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld, and
(ii) the Indemnifying Party shall not, without the written consent of the
Indemnified Party, settle or compromise any Claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party of a release from all
Liability in respect of such Claim.

10.5 Payment. The Indemnifying Party shall promptly pay the Indemnified Party
any amount due under this Section 10. Upon judgment, determination, settlement
or compromise of any third party Claim, the Indemnifying Party shall pay
promptly on behalf of the Indemnified Party, and/or to the Indemnified Party in
reimbursement of any amount theretofore required to be paid by it, the amount so
determined by judgment, determination, settlement or compromise and all other
Claims of the Indemnified Party with respect thereto, unless in the case of a
judgment an appeal is made from the judgment.

SECTION 11. CLOSING

11.1 Time and Place. The Closing of the purchase and sale contemplated by this
Agreement (the “Closing”) shall be at the offices of Buchalter Nemer located at
1000 Wilshire Boulevard, Suite 1500, Los Angeles, California 90017 on March 14,
2007 at a time mutually acceptable to the parties.

 

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11.2 Obligations of Seller at Closing. At the Closing and contemporaneously with
the performance by Buyer of its obligations described in Section 11.3, Seller
shall deliver to Buyer the following:

(a) Bills of sale, assignments, properly endorsed certificates of title, and
other instruments of transfer, in form and substance reasonably satisfactory to
counsel for Buyer, necessary to transfer and convey all of the Purchased Assets
to Buyer.

(b) Possession of the Premises;

(c) All books and records related to the Purchased Assets and Seller Contracts,
including without limitation all documents and files relating to the Accounts;

(d) Evidence of the release of all Liens;

(e) Copies of all executed consents required by this Agreement;

(f An indemnification agreement by Schlegel in favor of Buyer, SageCrest and
certain affiliates and related entities of SageCrest as designated by SageCrest
(collectively, “SageCrest Entities”), in form and substance acceptable to
SageCrest;

(g) A release by Seller and Schlegel in favor of SageCrest Entities, in form and
substance acceptable to SageCrest Entities;

(h) A release by Dubhe and $390,000 Investors in favor of SageCrest Entities, in
form and substance acceptable to SageCrest Entities;

(i) Certified resolutions of the board of directors and Shareholders authorizing
the performance by Seller of transactions contemplated herein; and

(j) Such other certificates and documents as may be called for by the provisions
of this Agreement or reasonably requested by Buyer and its legal counsel.

11.3 Obligations of Buyer at Closing. At the Closing and contemporaneously with
the performance by Seller of its obligations described in Section 11.2, Buyer
shall deliver to Seller the following:

(a) The Purchase Price Accounts;

(b) Licenses to the Trade Rights set forth in that “Trade Right License
Agreement;”

(c) Payment of the amounts set forth in Schedule 2.2(d);

(d) Termination of the guarantee of Schlegel;

(e) A release in favor of Seller and Schlegel by SageCrest and its Affiliates
(as defined in that certain Mutual Release of even date herewith), in form and
substance acceptable to Cogent and Schlegel, but excluding any release with
respect to gross negligence or willful misconduct by any Schlegel Party (as that
term is defined in that certain Mutual General Relase of even date

 

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herewith), or fraud by Schlegel, or any obligation, representation, or warranty
relating to or arising from this Agreement or the transactions and other
documents contemplated herein;

(f) Certified resolutions of Buyer authorizing the performance by Buyer of
transactions contemplated herein; and

(g) Such other certificates and documents as may be called for by the provisions
of this Agreement.

SECTION 12. BOOKS AND RECORDS

Other than the Purchased Books and Records, the Purchased Assets do not include
the books of account and financial records of the business of Seller. Other than
the Purchased Books and Records, possession and custody of books of account and
financial records that are currently in the physical custody and control of
Seller shall remain with Seller. All books and records relating to Seller that
either are currently in the control and custody shall be available to Buyer for
inspection by Buyer and its representatives, upon reasonable notice to Seller
and at Buyer’s sole expense. With respect to the Purchased Books and Records,
Buyer or its successors and assigns shall be entitled to retain physical
custody, possession and control of the Purchased Books and Records, and to the
extent Buyer has possession and control of the Purchased Books and Records, the
Purchased Books and Records shall be available for inspection by Seller and its
representatives, upon reasonable notice to Buyer at Seller’s sole expense,
solely for the purpose of enabling, and for so long as is necessary to enable,
Seller to comply with any reporting, tax or other requirements under applicable
Law.

SECTION 13. TERMINATION OF AGREEMENT

13.1 Mutual Consent. This Agreement may be terminated by mutual written consent
of the parties to this Agreement.

13.2 Breach of Representations and Warranties; Failure of Conditions. Buyer may
elect by notice to Seller, and Seller may elect by notice to Buyer, to terminate
this Agreement if:

(a) The terminating party shall have discovered a material error, misstatement,
or omission in the representations and warranties made in this Agreement by the
other party, which shall not have been cured by such other party within five
(5) days after written notice to such other party specifying in detail such
asserted error, misstatement, or omission, or by the Closing Date, whichever
first occurs. In the event an error is of such a nature that it is impossible to
remedy it within five (5) days after receipt of such notice, a party may not
terminate this Agreement if the other party has taken all steps necessary to
cure the error within five (5) days of receipt of notice, and the error will be
cured merely by the passage of time.

(b) All of the conditions precedent of the terminating party’s obligations under
this Agreement, have not occurred and have not been waived by the terminating
party on or prior to the Closing Date.

 

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13.3 Closing Notwithstanding the Right to Terminate. The party with a right to
terminate this Agreement pursuant to Section 14.2 shall not be bound to exercise
such right, and its failure to exercise such right shall not constitute a waiver
of any other right it may have under this Agreement, including but not limited
to remedies for breach of a representation, warranty, or covenant.

SECTION 14. SPECIAL COVENANTS AND CONDITIONS

14.1 Confidentiality. The parties agree to observe the following covenants with
respect to confidentiality:

(a) The parties agree that no disclosure of this Agreement or the terms and
conditions hereof shall be made to any third party without the consent of Buyer
and Seller, as applicable, except; (i) to directors, officers, employees,
agents, auditors or advisors of Buyer and Seller or their respective affiliates
who are provided such information in connection with the consummation of the
transactions contemplated by this Agreement, and who have been informed, and
have agreed to comply with, the disclosure restrictions contained herein;
(ii) when required by Law or as may be required or appropriate in response to
any summons or subpoena or in connection with any litigation or administrative
proceeding, Buyer or Seller, as the case may be; or (iii) to Account debtors to
redirect payments and other matters relating to the Accounts to Buyer to the
extent necessary.

(b) Seller shall, and shall cause each of its directors and officers to, and
shall use its best efforts to cause each of its employees and affiliates to,
hold in confidence, and not disclose (or permit or suffer its personnel to
disclose) to any person outside its organization, any Confidential Information
concerning (i) any Account debtor or Account, (ii) any other Purchase Asset, or
(iii) for a period extending for 2 years after the Closing, Buyer or any of its
affiliates. Seller shall disclose such Confidential Information only to persons
within its organization, in either case who have a need to know such
Confidential Information in connection with the consummation of the transactions
contemplated by this Agreement; provided that Seller may disclose Confidential
Information (y) when required by Law or as may be required or appropriate in
response to any summons or subpoena or in connection with any litigation or
administrative proceeding; or (z) in connection with any claim involving the
subject matter of this Agreement or any request for indemnification pursuant to
this Agreement.

14.2 Further Assurances. After the Closing Date, Buyer and Seller shall, and
each shall cause their respective affiliates to, assist and cooperate with the
other, including making available to the other party, at reasonable times and
upon reasonable advance notice, relevant records and appropriate personnel in
connection with any investigation or the preparation of or participation in a
defense, negotiation or settlement relating to any pending, future or threatened
claim, litigation or proceeding by a Governmental Entity involving the conduct
or interest of such other party or its affiliates or predecessors, including
employee and tax matters.

14.3 Transition Services Agreement. Seller and Buyer shall enter into an
agreement that provides for the designation of certain responsibilities and
handling of events with respect to the transactions contemplated under this
Agreement.

 

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14.4 Use of Name; License. Prior to Closing, Seller shall change its corporate
name from “Cogent Financial Group” to another name that would not be construed
with any Trade Right. Except for the Trade Right retained by the Seller pursuant
to this Agreement, Seller shall not be permitted to use any Trade Right,
including trade name without the express written consent of Buyer pursuant an
agreement in form and substance acceptable to Buyer.

14.5 Relocation of Seller. In the event Buyer obtains the rights to possession
of the Premises, whether by assignment of the Premises Lease or sublease, or
otherwise, Seller and Seller’s Affiliates shall be permitted to retain
possession of that certain portion of the Premises designated as Suite 740 for a
period not to exceed 30 days from the Closing Date without charge.

14.6 Reimbursement of Relocation Expenses. Upon the Closing Date, Buyer shall
deliver to Seller cash in the amount of $50,000 to reimburse Seller for costs
and expenses relating to Seller’s relocation from the Premises.

14.7 License For Use of Software. Seller and Buyer shall enter into a license
agreement pursuant to which Seller shall be granted by Buyer a limited,
non-exclusive right to use certain Purchased Assets consisting of software for
the purpose of servicing accounts receivable.

SECTION 15. EFFECTIVE DATE

15.1 Effective Date. Upon the Closing, the effective date of the transactions
contemplated hereunder shall be December 31, 2006.

SECTION 16. MISCELLANEOUS

16.1 Binding Effect. This Agreement shall be binding upon the parties and their
heirs, personal representatives, successors, and assigns, and shall inure to
their benefit.

16.2 Amendment. This Agreement may be amended only by a written instrument
executed by the party against whom enforcement is sought.

16.3 Notices. All notices or other communications required or permitted by this
Agreement shall be in writing and shall be deemed given if delivered personally
to the party for whom such notice was intended, or by mail, postage pre-paid,
certified or registered, return receipt requested, to the respective parties at
the following addresses, or at such other address that a party shall specify by
notice given to the other parties in accordance with this section:

 

To Seller:    Coastal Financial Group   

3900 Kilroy Airport Way, Suite 117

Long Beach, CA 90806

   Attn: Theodore Schlegel

 

22

--------------------------------------------------------------------------------

with copy to:    Brian L. Davidoff, Esq.   

Rutter Hobbs & Davidoff Incorporated

1901 Avenue of the Stars

Suite 1700

Los Angeles, CA 90067

To Buyer:    Cogent Acquisition Company, LLC   

3 Pickwick Plaza

Greenwich, CT 06830

Attn: Nicholas Prouty

with copy to:   

William S. Brody, Esq.

Buchalter Nemer

1000 Wilshire Blvd, Suite 1500

Los Angeles, CA 90017

16.4 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

16.5 Severability. If any provision of this Agreement shall be invalid or
unenforceable in any respect for any reason, the validity and enforceability of
any such provision in any other respect and of the remaining provisions of this
Agreement shall not be in any way impaired.

16.6 No Third-Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to confer on any person, other than the parties to this
Agreement, any right or remedy of any nature whatsoever.

16.7 Nonwaiver. The waiver by any party of a breach or violation of any
provision of this Agreement shall not operate or be construed as a waiver of any
other provision or any subsequent breach of the same provision. No waiver shall
be binding unless executed in writing by the party making the waiver.

16.8 Exhibits and Schedules. All exhibits and schedules attached hereto are, by
this reference, incorporated herein and made a part hereof as if set forth in
their entirety.

16.9 All obligations on the part of the parties by the terms or context hereof
to be performed subsequent to Closing shall survive the Closing for the period
set forth in Section 10.1.

16.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the state of California.

16.11 Entire Agreement. This Agreement contains the entire understanding between
the parties with respect to subject matter set forth herein and this Agreement
supersedes all prior and contemporaneous negotiations and agreements.

 

23

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

BUYER:

COGENT ACQUISITION COMPANY, LLC,

a Delaware limited liability company

By:  

LOGO [g65366ex1032_p25a.jpg]

SELLER:

COGENT FINANCIAL GROUP,

a California corporation

By:  

LOGO [g65366ex1032_p25b.jpg]

 

S-1

Asset Purchase Agreement

--------------------------------------------------------------------------------

SCHEDULE 2.1 (a)

EQUIPMENT. FURNITURE AND FIXTURES

Furniture

Large brown credenza

2 wooden desks, brown, 1 with return

Glass coffee table

8 black desks

Computer table

3 black 2 drawer lateral files

3 leather chairs

1 black side table

1 safe

1 fireproof file cabinet

8 black desks

5 drawer lateral file, beige

2 self wooden bookcase, brown

3 large 2 door metal cabinets

2 drawer lateral file, beige

Kitchen Equipment

Microwave oven

Toaster oven

Computers

 

Computer Type

 

Service Tag

 

Monitor

 

Printer

Dell PowerEdge 400SC

  HQG8041   FP   HP 6110

Custom

  n/a   FP  

Dell Dimension 3000

  GZVHY61   FP  

Custom

  n/a   FP  

Custom

  n/a   FP  

Dell Dimension 3000

  GB3BL71   FP  

Dell Dimension 3000

  GN43T81   FP   Lexmark 7350

Dell Dimension 2400

  C3DQ641   FP  

Dell Dimension 3100

  74T9PB1   FP  

Dell Dimension 2400

  JCFX241   FP  

Dell Dimension 1100

  6VX8Q91   FP  

Custom

  n/a   FP  

Dell Dimension 3000

  CZBHY61   FP   Brother 3800

--------------------------------------------------------------------------------

Computer Type

 

Service Tag

 

Monitor

 

Printer

Dell Dimension 1100

  4VX8Q91   FP  

Dell Dimension 2400

  F3DQ641   FP  

Dell Dimension 1100

  2WX8Q91   FP  

Dell Dimension 3000

  CH43T81   FP  

Dell Dimension 3000

  7SBTP81   CRT  

Dell Dimension 3000

  F68V571   CRT  

Dell Dimension 3000

  4SBTP81   CRT  

n/a

  n/a   n/a   Lexmark 7350

Dell Dimension 3100

  47ZMV81   FP  

Dell Dimension 3000

  JB3BL71   CRT   Brother 2820

Dell Dimension 2400

  7VZMJ41   CRT  

Dell Dimension 4600

  8CWQP41   FP   HP LJ 6P

Dell Dimension 3000

  FN43T81   FP  

Dell Dimension 2400

  J00TT51   FP  

Dell Dimension 1100

  8VX8Q91   FP   Brother 3800

Custom

  n/a   CRT  

Dell PowerEdge 400SC

  JQGB041   CRT   HP 6110

Dell Dimension 2400

  D32CD51   FP   Lexmark E232

Dell Dimension 4600

  CCWQP41   FP  

Dell Dimension 3000

  6SBTP81   FP   Ricoh AP400

Dell Dimension B110

  CLF4391   FP  

Dell Dimension B110

  8LF4391   FP  

Dell Dimension 2400

  JLLX051   FP   Ricoh AP400

Dell Dimension 2400

  17D5851   FP  

Dell Dimension 3000

  FZBHY61   CRT  

Custom

  n/a   FP  

Dell Dimension 3000

  B68V571   CRT  

Dell Dimension 2400

  3VZMJ41   FP   Brother 7220

Custom

  n/a   FP  

Dell Optiplex 170L

  HX63491   FP  

Dell Dimension 2400

  4R53F41   FP  

Dell Dimension 4700

  C87D561   FP   Lexmark C752

Dell Dimension 2400

  7R53F41   FP  

Dell Dimension 4700

  J72P771   FP   HP 6110

Dell Dimension 2400

  310TT51   FP  

Custom

  n/a   CRT  

--------------------------------------------------------------------------------

Computer Type

 

Service Tag

 

Monitor

 

Printer

Custom

  n/a   FP  

Dell Dimension 1100

  9VX8Q91   FP  

Dell Dimension 2400

  G017351   FP  

Dell Optiplex 170L

  FX63491    

Dell Dimension 4700

  H72P771    

Server Equipment

Computer Type

 

Service Tag

Dell Power Edge 2600   9YMYN31 Dell Power Edge 1850   B5BDR91 Dell Power Edge
850   848L591 Dell Power Edge 850   F4TK591 Dell Power Edge 750   75CDZ61 Dell
Power Edge 1750   CTFMF41 4 Custom built servers   no serial number 5 Lacie
External HD’s   used for backup 3 Western Digital External HD’s   used for
backup Cisco Pix 515E Firewall   firewall 6APC Back-ups xs 1500   UPS batteries
3 Cisco Switches catalyst 2900   switches 2 Dell Power Connect 2724/2324  
switches Linksys Wireless G router   wireless networking

Miscellaneous Computer Equipment

Equipment Model

 

Type

Hewlett Packard LJ 1320N   network labels printer Brother Fax 2820   fax Brother
Fax 2820   fax Ricoh AP 610 N   network printer Brother 3240C   fax InFocus
Model LP425Z   3dw94700241   projector Premier paper folding machine   66415  
Paper Folder Sharp TV with VCR 521483   TV Ricoh 2045eSP   network printer Ricoh
2045eSP   network printer Ricoh 2018   network printer Software  

MC2000 proprietary software

 

--------------------------------------------------------------------------------

SCHEDULE 2.1(b)

SELLER CONTRACTS

AccounTemps General Conditions of Assignment

*AT&T Comprehensive Service Order No. 346974

*AT&T Pricing Schedule – Business Network

*AT&T Pricing Schedule – Internet

*Avaya Lease Agreement-phone equipment

California DMV Commercial Vehicle Requester Services Agreement

*Cingular Cell Phone Agreement

CourtQuest, Inc. Application and Employment Services Agreement

*Dell Financial Services Equipment Lease - Account No. 001-6340820-001

GeoTracer Agreement

Hartman Insurance Services Agreement

Nu Skin United States, Inc. Scanner Lease Agreement

Pacific Motor Sales - Consignment Agreement

PAL Servicing Agreement

PAL Software Lease

Paychex Payment Agreement

Paychex Retirement Services Agreement

Paychex Master Custody Agreement

*PFSC Backup Servicing Agreement

*Pitney Bowes Lease Agreement

*Pitney Bowes Work Statement

*Premises Lease dated 8/16/04 as amended

*Swets Employment Agreement

*Verizon Cell Phone Agreement*

*Wells Fargo Credit Card Terminal Equipment Lease Agreement

*Wells Fargo OPS (On Line Processing Services) Agreement

*Provider Agreements per the attached Schedule 2.1 (f) Adobe pdf list

*700 Credit Services Agreement

 

* Items marked are Mandatory Seller Contracts which Buyer shall assume whether
or not such contracts are assignable by their terms. If Buyer cannot assume such
Mandatory Seller Contracts, Buyer shall nevertheless be responsible to indemnify
Seller for obligations under such Mandatory Seller Contracts from and after the
Closing Date

--------------------------------------------------------------------------------

SCHEDULE 2.1(C)

ACCOUNTS

See attached electronic copy of Accounts through February 28, 2007 and updated
through March 12, 2007.

--------------------------------------------------------------------------------

SCHEDULE 2.1(e)

VEHICLE COLLATERAL

 

(a) See attachment of judgments, liens and other enforcement actions.

 

(b) See attached electronic copy of motor vehicles liens.

--------------------------------------------------------------------------------

SCHEDULE 2.1(f)

PROVIDER ASSIGNMENT AGREEMENTS

Attached in electronic format is a list of all providers to Seller. However
several of the providers have no written agreement with Seller and if they do
have an agreement such an agreement cannot be located. The lack of such an
agreement may effect the enforceability of an Account from such provider.

--------------------------------------------------------------------------------

SCHEDULE 2.1(g)

LEASEHOLD IMPROVEMENTS

 

8/19/2004    Ocean Beach Investors, L.P.    $ 19,757.20 11/16/2004    Boise
Workspace    $ 4,482.00 1/1/2005    The Home Depot    $ 697.39 1/19/2005   
Boise Workspace    $ 810.57 6/23/2005    Ocean Beach Investors, L.P.    $
14,391.54 7/7/2005    Ocean Beach Investors, L.P.    $ 16,678.98 3/1/2006   
Ocean Beach Investors, L.P.    $ 1,417.00                 $ 58,234.68          

Represents payments for the buildout of suite 770 and expansion space.

 

* No assurance is given that the leasehold improvements or the lease for the
business premises of Seller at 5150 East Pacific Coast Highway, Long Beach,
California, 90804 can be assigned.

--------------------------------------------------------------------------------

SCHEDULE 2.1(k)(i)

SELLER DEPOSITS

Letter of credit for deposit for lease agreement for premises at 5150 East
Pacific Coast Highway, Long Beach, California, 90804 in account no 3189499688 at
Wells Fargo Bank.

--------------------------------------------------------------------------------

SCHEDULE 2.1(l)

BANK ACCOUNTS

 

Bank

 

Account Number

 

Description

Wells Fargo   4121111595   Lockbox Account Wells Fargo   4121111603   Cash
Holding Account Wells Fargo   4121131908   Disbursement account Wells Fargo  
4121301956   Provider Payment Account Wells Fargo   7191319131   Remote Payments
Accounts* Wells Fargo   4121131890   Old Deposit Account Wells Fargo  
7868723888   PayPal Account* Wells Fargo   3189499688   Savings Bank of America
  09759-43371   Remote Payments Accounts* Citibank   200917177   Cash account*
Wells Fargo   4121169197   PAL account*

 

* The accounts are not being transferred to Buyer as part of the Agreement but
are remaining with Seller.

--------------------------------------------------------------------------------

SCHEDULE 2.1(m)

OBLIGATIONS RECEIVABLE TO SELLER

 

Description

   Amount

Due from SageCrest, servicing fees

   $ 875,603

Misc. Receivable, Redline Towing

   $ 64,000      *

A/R Post Funding Charges

   $ 248,812      *

A/R Post Funding Servicing Fees

   $ 676,438

Promissory Note, Douglas Garcia

   $ 338,170.78

Employee Loan Agreements:

  

Abril

  

Bumbers

  

Cabral

  

Depugh

  

Duran, M.

  

Harrell

  

Lozano

  

Martinez

  

Monroy

  

Moreno

  

Duran, P.

  

Ponce

  

Rivas

  

Rodriguez

  

Ruelas

  

Shepard

  

Washington

  

 

* These amounts are showing on the Seller’s books and records but should have
been written off after the Seller sued Southeast Emergency Physicians
Association (“SEPA”) and later entered into a settlement agreement with SEPA.
These amounts are not collectible.

--------------------------------------------------------------------------------

SCHEDULE 2.1(n)

EXCLUDED BANK ACCOUNTS AND FUNDS

 

Bank

 

Account Number

 

Description

Wells Fargo   1350966142   Investor Funds Account Wells Fargo   341-2767463  
Old Investment Account Wells Fargo   7191319131   Citibank   200917177   To
obtain Citibank letter of credit required     under the office building lease
Bank of America   0975943371   Cash account Wells Fargo   7868723888   PayPal
Account Wells Fargo   3189499688   Savings Wells Fargo   4121169197   PAL
account

--------------------------------------------------------------------------------

SCHEDULE 2.2(a)

ASSUMED EMPLOYEE LIABILITIES

 

Description

   Amount

Vacation time accrued thru 3/13/07

   $ 59,205.71

Estimated wages, 2/26/07 - 3/13/07

   $ 81,413.18

February employee bonus & commission

   $ 8,984.17

D. Swets contract buy out

   $ 70,000.00

Employer payroll tax on all above items

   $ 26,352.36

Employer match on 401k, above wages

   $ 2,196.20

Plus the following benefits:

  

Medical lnsurance - Employer & Employee paid

  

Dental lnsurance - Employee Paid

  

STD/LTD - Employer Paid

  

Vision Plan - Employee paid

  

Life & ADD - Employer paid

  

Term Life lnsurance (voluntary plan)

  

401(k) Plan

  

Flexible Spending Account

  

--------------------------------------------------------------------------------

SCHEDULE 2.2(b)

DEPOSITS BY THIRD PARTIES

See information as part of Schedule 2.l(c)

See also attached summary.

--------------------------------------------------------------------------------

SCHEDULE 2.2 (d)

ACCOUNTS PAYABLE

 

Invoices in house, unpaid

  

A-1 Recovery

   125

Able Auto Adjustors

   10,277

Accountemps

   4,554

AFLAC

   676

Allen Matkins Leck Gamble

   2,293

Ampco System Parking

   100

AT&T

   117

Avaya Financial Services

   1,421

Buchalter, Nemer, Fields & Younger

   929

Cal Choice Benefits Administrator

   7,706

Cintas Document Management

   285

Curtis 1000

   828

Dell Financial Services

   275

Drivtrac

   518

E. Wireless Communications

   466

Ellen Stern

   2,732

Global Connect

   1,610

KC Office Services

   160

Michael P. Allen & Assoc

   7,035

--------------------------------------------------------------------------------

National Creditors Connection

   230

Orange Commercial Credit

   825

PCS, Inc.

   1,270

Pitney Bowes Credit Corp

   12,682

Pitney Bowes, Inc.

   546

Portfolio Financial Servicing

   1,500

Ricoh Business Systems

   650

RPM Vehicle Remarketing

   4,970

Rutter, Hobbs, Davidoff Inc

   54,236

Schlegel Financial Consulting Fee

   7,865

Seaside Printing

   844

Simons Services & Recovery

   2,068

Skyline Exhibits Los Angeles

   927

Staples Business Advantage

   1,240

State Compensation Insurance Fund

   1,793

Stephen & Stein

   745

Sunset Detectives, Inc.

   800

Transunion

   50

Vea Recovery Services

   8,675

Verizon Wireless

   431

Worldwide Express

   699

Services thru 3/13/07, invoices not yet received

  

700 Credit

   10,163

--------------------------------------------------------------------------------

Accurint

   3,185

Accountemps

   3,907

AFLAC

   676

AT & T- MDCD

   4,191

AT & T: 497

   4,518

AT & T Data

   600

Cingular Wireless

   498

Dell Financial Services

   275

DHL

   179

eFax Corporate

   610

E. Wireless Communications

   467

Experion

   75

Equifax

   50

RPM Vehicle Remarketing

   600

Staples

   600

Verizon California

   122

Verizon Wireless

   86

State Compensation Insurance Fund

   1,793

Jon Stein, CPA

   1,828

Worldwide Express

   365

Ienhance

   1,500

Misc post funding providers

   250

Citicard- 1198

   979

American Express 71009

   2,488

--------------------------------------------------------------------------------

Paychex, payroll processing fee

   890

Other Misc. Accruals

  

Rodney Morris- settlement accepted

   20,000

Legal- Rodney Morris settlement

   5,000

Payable to Gulf Imaging & SEPA

   40,000

Payable to Boublik, interest paid semi-annually

   7,666

Samuel Tucker Settlement

   2,647

Rutter, Hobbs, Davidoff

Estimated March invoice

   30,000

Scheinrock Advisory Group

   20,000

--------------------------------------------------------------------------------

SCHEDULE 2.2(f)

ASSUMED LIABILITIES

 

1. All liabilities and obligations accruing after the Closing Date under those
certain Seller Contracts designated as mandatory Seller Contracts on Schedule
2.1(b).

 

2. Any and all obligations to perform under the Accounts listed on Schedule
2.1(c) accruing after the Closing Date.

 

3. Any and obligations to perform under the Provider Assignment Agreement listed
on Schedule 2.1(f), other than those identified on Schedule 3.1, accruing after
the Closing Date.

 

4. All Assumed Employee Liabilities listed on Schedule 2.2(a) and Section 2.2(a)
of the Agreement.

 

5. Any and all obligations to credit or reimburse for the deposits and other
funds paid by account debtors listed on Schedule 2.2(b) and Section 2.2(b) of
the Agreement.

 

6. All accounts payable listed on Schedule 2.2(d) and Section 2.2(d) of the
Agreement.

 

7. All triggered obligations listed on Schedule 6.11(g).

--------------------------------------------------------------------------------

8.

SCHEDULE 3.1

EXCLUDED ASSETS

Schedule 3.1(a)

Personal Property:

Ted Schlegel’s personal office furniture

 

  •  

2 drawer lateral file

 

  •  

Credenza

 

  •  

Round desk

 

  •  

5 arm chairs

 

  •  

1 upholstered chair

 

  •  

7 pieces of artwork

 

  •  

3 drawer file

 

  •  

Computer desk

 

  •  

Side table

 

  •  

2 larqe potted plants, 1 empty pot

 

  •  

Table lamp

 

  •  

Globe

 

  •  

Leather desk set- 2 in/out trays, notepad holder, desk pad

3 lateral file cabinets

Computers & Equipment:

 

  •  

Dell Dimension 3100 HBYMV81 with flat panel

 

  •  

Dell Dimension E520 DJ5SCC1 (AMS Server)

 

  •  

Dell Dimension 3000 1C3BL71 with flat panel

 

  •  

Dell Dimension 2400 1X74Q71 with flat panel

 

  •  

Dell Dimension 1100 7VX8Q91 with flat panel

 

  •  

Dell Dimension B110 FLF4391 with flat panel

 

  •  

Dell Dimension (Ted’s) with flat panel

 

  •  

Vonage Phone Router

 

  •  

Ricoh AP 610 N Network Printer

 

  •  

Refrigerator - small

Insurance policies:

 

  •  

Commercial Liability

 

  •  

D & O

 

  •  

E & O

 

  •  

Keyman

--------------------------------------------------------------------------------

SCHEDULE 3.1(b)

All accounts receivable assigned to Dubhe or being serviced by Seller for Dubhe-
See attached electronic copy of such accounts

Purchase Price Accounts

All Accounts being collected by Paramount Alliance Limited for Southeast
Physicians Alliance Association and Gulf Imaging Associates, P.A.

SCHEDULE 3.1(c)

Trade Names:

The SurgiCredit name

PAL

Paramount Alliance

Edgewater Financial

Other Assets and Agreements:

All assets owned by Edgewater Financial.

All assets owned by PAL

Auto Master software

Garcia Promissory Note in the amount of $1,588,983.17

All agreements between Seller and Paramount Alliance Limited

All agreements between Seller and Edgewater Financial Group

California Finance Lender & Broker License File No. 603 6490*

City of Long Beach Business License*

Louisiana License NOT 11357-0

Sales tax refunds on any foreclosed vehicles that were financed by Dubhe

Excluded bank accounts identified in Schedule 2.1(n)

Hessman confidentiality agreement

Any tax refund that may be payable to Seller

Historical records in storage on P2 of parking lot of the 5150 E. PCH All
insurance policies and proceeds therefrom

--------------------------------------------------------------------------------

The following telephone numbers:

 

(562) 684-0714

   Efax               

(866) 270-4700

   PAL               

(562)592-0010

   Edgewater               

(562) 608-8406

   Edgewater               

(619) 405-6919

   Cell               

310-804-0613

   Cell               

310-804-0612

   Cell               

P.O.Box 90452

   PAL               

--------------------------------------------------------------------------------

SCHEDULE 6.1

QUALIFICATION

The Seller’s qualification in Texas has lapsed and is in the process of being
reinstated.

--------------------------------------------------------------------------------

SCHEDULE 6.4

ASSIGNED AGREEMENTS

Pitney Bowes Lease Agreement

Due to issues concerning the performance of the equipment Seller stopped paying
this lease beginning with the October 2006 payment. Negotiations were initiated
to void the agreement. Pitney Bowes has to date refused to come to the table and
negotiate a buyout of the lease. $12,637.90 per the statement of account dated
February 13, 2007 is the amount for the lease to be brought current.

Seller in unaware whether the Seller Contracts are assignable. Seller makes no
representation or warranty that the Seller Contracts can be assigned to Buyer,
with or without the consent to the other party to such Seller Contract.

--------------------------------------------------------------------------------

SCHEDULE 6.5

FINANCIAL STATEMENTS

See Balance Sheet, Income Statement and Statement of Cash Flows for the period
ended December 31, 2006 (the “Financial Statements)

--------------------------------------------------------------------------------

SCHEDULE 6.6

Tax Matters

Schedule 6.6(a)

There is no provision on the Financial Statements or on prior years financial
statements for payment of taxes.

Schedule 6.6(b)

Filing of Tax Returns

All tax returns required to be filed have been timely filed with the exception
of the fye 12/31/05 return which was filed late.

All returns filed were true and correct in all material aspects and any taxes
shown as due were paid.

All taxes relating to salaries have been withheld and paid as required.

SCHEDULE 6.6(c)

TAX AUDITS

County of Los Angeles, Office of the Assessor Escape Assessment for 2005 & 2006
Total $1,951.64

State of California Franchise Tax Board Audit of tax year 12/31/02 interest
expense. Additional tax paid 11/21/06; Penalty and interest paid 1/30/07

--------------------------------------------------------------------------------

SCHEDULE 6.7

DISCLOSED LIABILITIES

Rodney Morris settlement payment plus attorneys fees-approx $25,000

Liability to Gulf Imaging- $40,000

Samuel Tucker small claims judgment $2,600

--------------------------------------------------------------------------------

SCHEDULE 6.9

MARKETABLE TITLE

As disclosed in Scheduled 2.1(f) several of the providers have no written
agreement with Seller and if they do have an agreement such an agreement cannot
be located

Seller has received verbal threats of litigation as a result of the activities
of third party collector Vocational Recovery Solutions, LLC.

Seller in unaware whether the Seller Contracts are assignable. Seller makes no
representation or warranty that the Seller Contracts can be assigned to Buyer,
with or without the consent to the other party to such Seller Contract.

--------------------------------------------------------------------------------

SCHEDULE 6.9(J)

$390,000 INVESTORS

 

Theodore F. Schlegel

   $ 100,000

Michael Boublik

   $ 100,000

Cimbolo Family Trust

   $ 50,000

Justin Betance

   $ 40,000

Keith Kretschmer

   $ 100,000

--------------------------------------------------------------------------------

SCHEDULE 6.11(e)

EMPLOYEE PAYMENTS

See Schedule 6.11(g)

--------------------------------------------------------------------------------

SCHEDULE 6.11(g)

TRIGGERED OBLIGATIONS

 

Vacation time accrued thru 3/13/07

   $ 59,205.71

Estimated wages, 2/26/07 - 3/13/07

   $ 81,413.18

February employee bonus & commission

   $ 8,984.17

D. Swets contract buy out

   $ 70,000.00

Payroll tax on above

   $ 26,352.36

Employer match on 401k, above wages

   $ 2,196.20

--------------------------------------------------------------------------------

SCHEDULE 6.12

TRADE RIGHTS

 

Trademarks & Names:

   Cogent Financial Group-    corporate name Medicredit-    trademark
Medicredit.com    corporate name Denticredit    trademark AtNeed Credit   
trademark MC 2000    PAL AGENCY*    fictitious business name Paramount Alliance,
Ltd*.    Corporate name Edgewater Financial*    Surgicredit*    trademark

Business Licenses:

California Finance Lender & Broker License File No. 603 6490*

City of Long Beach Business License*

California Department of Motor Vehicles Commercial Requester Account

Louisiana License NOT 11357-0*

 

* These tradenames and other rights are not being assigned to Buyer but are
being retained by Seller

--------------------------------------------------------------------------------

SCHEDULE 6.13

LITIGATION

Seller has received verbal threats of litigation as a result of the activities
of third party collector Vocational Recovery Solutions, LLC. Seller can give no
assurance that these borrower complaints are resolved or that they will not
ultimately result in litigation.