<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) January 13, 1997
-------------------------------
Alpha Microsystems
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
California 0-10558 95-3108178
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2722 South Fairview Street, Santa Ana, California 92704
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (714) 957-8500
-----------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets.
On January 13, 1997, Alpha Microsystems, a California corporation (the
"Company" or "Registrant"), sold its Panda operation, which developed and
marketed food service software for elementary and secondary schools, to
privately-held Pacific Triangle Software, Inc. of San Mateo, California.
Subsequently, on January 31, 1997, AlphaHealthCare, Inc., the Company's
Oregon-based subsidiary which provided practice management solutions to the
dental market, sold its operations to privately-held GLR Systems, Inc., dba
UNIDENT Practice Performance Systems, based in Lincoln, Nebraska.
The sale price for the Panda operations included $100,000 received
at the Closing, $300,000 to be received over a period not to exceed five years,
and additional earnout up to $600,000, based on amounts earned by the purchaser
during the next five years as commissions for the sale of the Company's
maintenance services, amounts earned from certain OEM agreements, and revenues
from the license of the Panda software. As part of the transaction, Pacific
Triangle Software, Inc. named the Company its sole preferred hardware
maintenance service provider.
The sale price for AlphaHealthCare's dental practice software
operations consisted of $150,000 received at the Closing and a promissory note
in the amount of $300,000 payable to AlphaHealthCare over a period not to exceed
five years. Additionally, AlphaHealthCare is entitled to certain earnout amounts
based upon amounts earned for software support to AlphaHealthCare customers and
amounts earned by the purchaser as commissions for the sale of the Company's
maintenance services over the next five years. As part of the transaction, GLR
Systems, Inc. named the Company its sole preferred nationwide provider of
maintenance services for its entire installed customer base, as well as its
vendor of first choice for computer hardware and peripherals.
In each case the purchase price was determined based upon the net
assets of the operations as well as its past and projected financial
performance.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information. The following pro forma financial
information is provided with this report:
(i) Unaudited Pro Forma Condensed Consolidated Balance Sheets as of
November 24, 1996
(ii) Unaudited Pro Forma Condensed Consolidated Statements of
Operations for the Nine Months Ended November 24, 1996
(iii) Unaudited Pro Forma Condensed Consolidated Statements of
Operations for the Fiscal Year Ended February 25, 1996
(iv) Notes to Pro Forma Condensed Consolidated Financial Information
-2-
EXHIBIT 2.12
<PAGE> 3
(c) Exhibits. The following exhibits are included with this report:
<TABLE>
<CAPTION>
Item Exhibit No.
<S> <C>
Agreement between Registrant and Pacific Triangle
Software, Inc. dated January 13, 1997 2.1
Agreement between AlphaHealthCare and GLR Systems,
Inc. dated January 27, 1997 2.2
Press Release dated January 15, 1997 20.1
Press Release dated February 4, 1997 20.2
Financial Data Schedule 27
</TABLE>
-3-
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 18, 1997 ALPHA MICROSYSTEMS
By: /S/Douglas J. Tullio
-----------------------------------
Douglas J. Tullio,
President and Chief Executive Officer
-4-
<PAGE> 5
ALPHA MICROSYSTEMS
UNAUDITED PRO FORMA FINANCIAL DATA
On January 13, 1997, Alpha Microsystems, a California corporation (the
"Company" or "Registrant"), sold its Panda operation, which developed and
marketed food service software for elementary and secondary schools, to
privately-held Pacific Triangle Software, Inc. of San Mateo, California.
Subsequently, on January 31, 1997, AlphaHealthCare, Inc., the Company's
Oregon-based subsidiary which provided practice management solutions to the
dental market, sold its operations to privately-held GLR Systems, Inc., dba
UNIDENT Practice Performance Systems, based in Lincoln, Nebraska.
The following Unaudited Pro Forma Condensed Consolidated Balance Sheet
is presented as if the sale of the Panda and AlphaHealthCare operations had
occurred on November 24, 1996. The following Unaudited Proforma Condensed
Consolidated Statements of Operations for the nine months ended November 24,
1996 and the year ended February 25, 1996 are presented as if the sale of the
Panda and AlphaHealthCare operations had occurred on February 25, 1996 and
February 26, 1995, respectively. The Unaudited Pro Forma Condensed Consolidated
Statements of Operations for the nine months ended November 24, 1996 and the
year ended February 25, 1996 are also presented as if the previously reported
sale of Alpha Microsystems (Great Britain) Limited ("AMGB"), the Company's
European subsidiary that was sold to Sanderson Electronics PLC ("Sanderson") in
August 1996 occurred on February 25, 1996 and February 26, 1995, respectively.
The pro forma adjustments represent the Company's determination of all material
adjustments necessary to present fairly the Company's pro forma results of
operations and financial position and are based on available information and
certain assumptions considered reasonable in the circumstances.
The following pro forma financial information should be read in
conjunction with the historical financial statements and notes thereto of the
Company filed on Forms 10-K and 10-Q for the respective periods. The pro forma
results of operations are not necessarily indicative of the actual results that
would have occurred had the sale been consummated at the beginning of the period
indicated and do not purport to indicate results of operations as of any future
date or for any future period.
<PAGE> 6
ALPHA MICROSYSTEMS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
NOVEMBER 24, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Consolidated (Note A) Consolidated
-------------- -------------- ---------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,688 $ 205 $ 8,893
Accounts receivable, net 3,263 (80) 3,183
Receivable from sale of subsidiary -- 300 300
Inventories 444 (99) 345
Note receivable 247 300 547
Prepaid expenses and other
current assets 583 -- 583
-------- -------- -----------
Total current assets 13,225 626 13,851
Property and equipment, at cost 16,289 (317) 15,972
Less accumulated depreciation and
amortization 12,932 (147) 12,785
-------- -------- -----------
Net property and equipment 3,357 (170) 3,187
Service contracts, net 420 -- 420
Software costs, net 802 (591) 211
Goodwill, net 15 -- 15
Other assets, net 56 (16) 40
-------- -------- -----------
$ 17,875 $ (151) $ 17,724
======== ======== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,114 $ 19 $ 1,133
Deferred revenue 1,661 (108) 1,553
Other accrued liabilities 428 -- 428
Accrued salaries and wages 126 -- 126
Current portion of long-term
debt 161 (16) 145
-------- -------- -----------
Total current liabilities 3,490 (105) 3,385
Long-term debt 89 (27) 62
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value; 5,000,000
shares authorized; none issued -- -- --
Common stock, no par value; 20,000,000 shares
authorized; 10,752,192 shares issued and
outstanding at November 24, 1996 30,813 -- 30,813
Accumulated deficit (16,579) (19) (16,598)
Unamortized restricted stock
plan expense (13) -- (13)
Foreign currency translation
adjustment 75 -- 75
-------- -------- -----------
Total shareholders' equity 14,296 (19) 14,277
-------- -------- -----------
$ 17,875 $ (151) $ 17,724
======== ======== ===========
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated
Financial Information.
<PAGE> 7
ALPHA MICROSYSTEMS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended November 24, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Consolidated (Notes A and B) Consolidated
------------ --------------- ------------
<S> <C> <C> <C>
Net sales:
Product $ 6,940 $(2,051) $ 4,889
Service 11,725 (1,784) 9,941
-------- ------- --------
Total net sales 18,665 (3,835) 14,830
-------- ------- --------
Cost of sales:
Product 3,716 (914) 2,802
Service 8,955 (1,171) 7,784
-------- ------- --------
Total cost of sales 12,671 (2,085) 10,586
-------- ------- --------
Gross Margin 5,994 (1,750) 4,244
Selling, general and
administrative expense 6,730 (2,503) 4,227
Research and development
expense 1,511 (393) 1,118
-------- ------- --------
Total operating expenses 8,241 (2,896) 5,345
-------- ------- --------
Income (loss) from
operations (2,247) 1,146 (1,101)
Interest income (163) (3) (166)
Interest expense 29 (8) 21
Other (income) expense, net (230) (10) (240)
Foreign exchange (gain)
loss (24) 32 8
-------- ------- --------
Total other (income)
expenses (388) 11 (377)
-------- ------- --------
Income (loss) before taxes (1,859) 1,135 (724)
(Benefit) provision for
income taxes 28 4 32
-------- ------- --------
Net income (loss) $ (1,887) $ 1,131 $ (756)
======== ======= ========
Net income (loss) per share $ (0.19) $ 0.11 $ (0.08)
======== ======= ========
Number of shares used in the
computation of per share
amounts 9,929 9,929 9,929
======== ======= ========
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated
Financial Information.
<PAGE> 8
ALPHA MICROSYSTEMS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended February 25, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Consolidated (Notes A & B) Consolidated
------------ --------------- ------------
<S> <C> <C> <C>
Net sales:
Product $ 14,466 $(5,215) $ 9,251
Service 18,297 (4,572) 13,725
-------- ------- --------
Total net sales 32,763 (9,787) 22,976
-------- ------- --------
Cost of sales:
Product 10,228 (4,332) 5,896
Service 12,739 (2,371) 10,368
-------- ------- --------
Total cost of sales 22,967 (6,703) 16,264
-------- ------- --------
Gross Margin 9,796 (3,084) 6,712
Selling, general and
administrative expense 11,855 (6,523) 5,332
Research and development
expense 2,093 (66) 2,027
-------- ------- --------
Total operating expenses 13,948 (6,589) 7,359
-------- ------- --------
Income (loss) from
operations (4,152) 3,505 (647)
Interest income (93) -- (93)
Interest expense 38 (14) 24
Other (income) expense, net (466) (22) (488)
Foreign exchange (gain)
loss (76) 77 1
-------- ------- --------
Total other (income)
expenses (597) 41 (556)
-------- ------- --------
Income (loss) before taxes (3,555) 3,464 (91)
(Benefit) provision for
income taxes 20 (20) --
-------- ------- --------
Net income (loss) $ (3,575) $ 3,484 $ (91)
======== ======= ========
Net income (loss) per share $ (0.54) $ 0.53 $ (0.01)
======== ======= ========
Number of shares used in the
computation of per share
amounts 6,565 6,565 6,565
======== ======= ========
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated
Financial Information.
<PAGE> 9
ALPHA MICROSYSTEMS
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(A) The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of November
24, 1996 reflects the sale of specified assets and liabilities of the Panda
operation, and the operations of AlphaHealthCare, Inc., the Company's
Oregon-based subsidiary.
To reflect the appointment of Alpha Microsystems Service Operations (AMSO)
as the sole preferred nationwide provider of maintenance service by GLR Systems
for its entire installed base, and the designation of AMSO as GLR Systems'
vendor of first choice for computer hardware and peripherals, the Company has
recognized in the Unaudited Pro Forma Condensed Consolidated Statements of
Operations revenue of $462,000 for the twelve months ended February 25, 1996 and
$286,000 for the nine months ended November 24, 1996.
(B) To reflect the three year agreement for hardware distribution between
Sanderson Electronics PLC ("Sanderson") and the Company at comparable terms
extended to Alpha Microsystems (Great Britain) Limited, the Company's European
subsidiary that was sold to Sanderson on August 19, 1996, the Company has
recognized in the Unaudited Pro Forma Condensed Consolidated Statements of
Operations revenue of $1,147,000 for the twelve months ended February 25, 1996
and $473,000 for the nine months ended November 24, 1996.
<PAGE> 1
AGREEMENT OF PURCHASE AND SALE
This Agreement of Purchase and Sale ("Agreement") is made and entered
into as of this 13th day of January, 1997, by and between ALPHA MICROSYSTEMS, a
California corporation ("Seller"), and PACIFIC TRIANGLE SOFTWARE, INC., a
California corporation ("Buyer").
R E C I T A L S :
A. Seller provides software and hardware sales and support to the
institutional food service marketplace (the "Food Service Business").
B. Seller desires to sell certain assets which are part of its Food
Service Business as more specifically defined hereinbelow to Buyer, and Buyer
desires to purchase such assets of Seller upon the terms and conditions set
forth herein.
AGREEMENT
In consideration of their respective representations, warranties and
agreements contained herein, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 Accounts Receivable. The term "Accounts Receivable" herein shall
mean those accounts receivable relating to the Food Service Business that comply
with all of Seller's representations and warranties in Section 3.07.
1.02 Agreement. The term "Agreement" herein shall refer to this
"Agreement of Purchase and Sale."
1.03 Annual Payments. The term "Annual Payments" herein is defined in
Section 2.04(a)(ii).
1.04 Assigned Contracts. The term "Assigned Contracts" herein shall
mean those contracts and outstanding bids expressly assigned to and assumed by
Buyer and described on Exhibit "B" hereto (and the business and goodwill related
thereto).
1.05 Assumed Liabilities. The term "Assumed Liabilities" is defined in
Section 2.02 hereof.
EXHIBIT 2.1
<PAGE> 2
1.06 Buyer. The term "Buyer" herein shall refer to Pacific Triangle
Software, Inc., a California corporation.
1.07 Closing or Closing Date. The term "Closing" or "Closing Date"
herein is defined in Section 7.02 hereof.
1.08 Customer Lists. The term "Customer Lists" herein is defined in
Section 3.03 hereof.
1.09 Earnout. The term "Earnout" is defined in Section 2.04(b) hereof.
1.10 Food Service Business. The term "Food Service Business" herein is
defined in Recital A.
1.11 Insolvency Proceeding. The term "Insolvency Proceeding" herein
shall mean any proceeding commenced by or against any person or entity under any
provision of the United States Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency law, including assignments for the benefit of
creditors, formal or informal moritoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangements or other relief.
1.12 Intellectual Property. The term "Intellectual Property" shall
mean (a) any patent, patent application, copyright (whether registered or
unregistered), copyright application, mask work, mask work application, trade
secret, know-how, customer list, system, computer software, computer program,
invention, design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or intangible asset relating to the Panda
Business; (b) the proprietary rights in the Trademarks; and (c) any right to use
or exploit any of the foregoing.
1.13 Inventory. The term "Inventory" herein shall mean the inventory
described in Exhibit "H".
1.14 Maintenance Commissions. The term "Maintenance Commissions" shall
mean all amounts due Buyer by Seller for the referral of hardware maintenance
customers who execute hardware maintenance agreements with Seller's AMSO
Division, based upon Seller's standard commission policy.
1.15 Net Software License Fees. The term "Net Software License Fees"
shall mean the gross license fees received by Buyer from the license of the
Panda Software, less the amount of any commissions paid to non-employee third
parties or any credits or returns granted to distributors or end users of the
Panda Software.
1.16 OEM Contracts. The term "OEM Contracts" refers to those contracts
described as such on Exhibit "B".
1.17 OEM Contract Payments. The term "OEM Contract Payments" shall
refer to all amounts payable to Seller, or to Buyer as Seller's assignee, under
the OEM Contracts.
2
<PAGE> 3
1.18 Panda Business. The term "Panda Business" shall mean the business
related to the sale and support of the Panda Software.
1.19 Panda Software. The term "Panda Software" refers to the software
developed by Seller which is commonly known by that name and marketed by Seller
to the institutional food service business as such software is further described
on Exhibit "M".
1.20 Panda Revenues. The term "Panda Revenues" is defined in Section
2.04(a)(ii)(B).
1.21 Prepaid Revenue. The term "Prepaid Revenue" herein is defined as
cash received by Seller prior to Closing for services to be provided under
Assigned Contracts subsequent to the Closing.
1.22 Purchase Price. The term "Purchase Price" herein is defined in
Section 2.03 hereof.
1.23 Purchased Assets. The term "Purchased Assets" herein is defined
in Section 2.01 hereof.
1.24 Seller. The term "Seller" herein will refer to Alpha
Microsystems, a California corporation.
1.25 Software Support Contracts. The term "Software Support Contracts"
herein will refer to all software support contracts pursuant to which Seller has
agreed to provide software support services for the Panda Software as further
described on Exhibit "B".
1.26 Tools and Equipment. The term "Tools and Equipment" herein shall
mean the tools and equipment described in Exhibit "I".
1.27 Trade Payables. The term "Trade Payables" herein is defined in
Section 2.08 hereof.
1.28 Trademarks. The term "Trademarks" herein shall mean the
trademarks described in Exhibit "A" and the goodwill related thereto.
ARTICLE II
PURCHASE AND SALE
2.01 Purchase and Sale. At the Closing, and subject to all of the
other terms and conditions set forth herein, Seller shall sell, transfer,
convey, assign and deliver to Buyer, and Buyer shall purchase from Seller, its
entire right, title and interest in and to those assets of Seller's Food Service
Business which are described on Exhibit "A" (the "Purchased Assets"). It is
understood that the Purchased Assets shall not include the corporate charter,
seal, minute books, financial records, stock transfer books or other records
relating to the organization and existence
3
<PAGE> 4
of Seller, or any other assets not specifically set forth on Exhibit "A". The
Purchased Assets include all Intellectual Property developed or used by Seller
in the conduct of the Panda Business.
The entirety of the Purchased Assets shall be conveyed free and clear
of all liens, trusts, encumbrances, charges, claims, security interests or other
interests, conditional sales agreements and all other restrictions, except as
contemplated by and set forth in the contracts listed on Exhibit "B".
2.02 Assumption of Liabilities.
(a) Subject to the terms and conditions of this Agreement,
Buyer shall assume and become responsible only for the following
liabilities (collectively, the "Assumed Liabilities").
(i) All liabilities arising from actions or
omissions occurring in the operation of the Panda Business
after 5:00 p.m. on January 10, 1997, of any kind or nature
whatsoever;
(ii) All service and support obligations relating
to the Assigned Contracts incurred prior to 5:00 p.m. on
January 10, 1997 but to be rendered or delivered after 5:00
p.m. on January 10, 1997;
(iii) All continuing obligations of Seller under
the Assigned Contracts arising after 5:00 p.m. on January
10, 1997 and all liabilities of the Buyer for any breach,
act or omission arising after 5:00 p.m. January 10, 1997
under the Assigned Contracts; and
(iv) The Trade Payables listed on Exhibit "G".
(b) Except as expressly set forth in Sections 2.02(ii) and
(iv) above, Buyer shall not assume or become responsible for, any
liability arising out of any action, event, condition or omission
taken or caused by Seller or any of their predecessors in interest,
agents or affiliates at any time, or arising from, occurring, or
existing in respect of the Panda Business or its operations prior to
5:00 p.m. on January 10, 1997 and, except as expressly set forth above
Seller shall remain liable for any and all liabilities or obligations
(whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated, whether due or to become due, and whether
claims with respect thereto are asserted before or after the Closing)
of Seller which are not Assumed Liabilities (collectively, the
"Retained Liabilities"). Retained Liabilities include, without
limitation:
(i) All liabilities, of any kind or nature
whatsoever, incurred in connection with the Panda Business
prior to or arising out of or related to any action or
circumstance before 5:00 p.m. on January 10, 1997, except as
expressly set forth in Sections 2.02(ii) and (iv) above;
(ii) All service, support and other obligations
under the Assigned Contracts, and all liabilities for any
breach, act or omission by Seller or
4
<PAGE> 5
any circumstance or cause of action accruing or existing
prior to 5:00 p.m. on January 10, 1997;
(iii) All liabilities of Seller for costs and
expenses incurred by Seller in connection with this
Agreement or the consummation of the transactions
contemplated by this Agreement;
(iv) All Seller's liabilities or obligations under
this Agreement or any other agreement entered into by the
parties in connection herewith;
(v) Any and all warranty claims based on the
performance of the Panda Software accruing or existing prior
to 5:00 p.m. on January 10, 1997; and
(vi) Any claim by SNAP System alleging that the
Panda Software violates any third party rights, including,
without limitation, copyright, patent, trade secret and
trademark rights or that the Panda Software constitutes
unfair competition or interference with prospective economic
advantage.
2.03 Purchase Price. Buyer shall deliver as the purchase price
("Purchase Price") for the Purchased Assets:
(a) the sum of Four Hundred Thousand Dollars ($400,000);
plus
(b) such additional amounts as may be due pursuant to
Section 2.04(b) below (the "Earnout").
2.04 Payment of Purchase Price. Buyer shall deliver the Purchase Price
to Seller as follows:
(a) Guaranteed Purchase Price. Buyer shall deliver to Seller
the sum of Four Hundred Thousand Dollars ($400,000) as follows:
(i) Initial Payment. Buyer shall deliver to Seller
at the Closing the sum of One Hundred Thousand Dollars
($100,000) by cashier's check or wire transfer (the "Initial
Payment").
(ii) Subsequent Annual Payments.
(A) Buyer shall deliver additional
payments ("Annual Payments") as follows, on or before
the date due:
<TABLE>
<CAPTION>
Date Due Amount Due
-------- ----------
<S> <C>
January 1, 1998: $40,000
January 1, 1999: $50,000
</TABLE>
5
<PAGE> 6
<TABLE>
<S> <C>
January 1, 2000: $60,000
January 1, 2001: $70,000
January 1, 2002: $80,000
</TABLE>
(B) Buyer shall pay to Seller as due or received
(i) all amounts due Buyer as Maintenance Commissions through
January 1, 2002; (ii) all amounts received as OEM Contract
Payments through January 1, 2002; and (iii) ten percent
(10%) of all Net Software License Fees received by Buyer
through January 1, 2002 (collectively referred to as the
"Panda Revenues"), up to an aggregate of Three Hundred
Thousand Dollars ($300,000). To the extent the Maintenance
Commissions, OEM Contract Payments and amounts due of Panda
Revenues delivered by Buyer to Seller do not equal or exceed
the amounts due as Annual Payments through the due date of
the next Annual Payment, Buyer shall deliver the difference
to Seller on or before the next due date by wire transfer or
cashier's check. To the extent the Maintenance Commissions,
OEM Contract Payments and amounts due of Panda Revenues
delivered by Buyer to Seller exceed the amount due as the
next Annual Payment, they shall be applied to the next and
subsequent Annual Payments, until the total amount of Three
Hundred Thousand Dollars ($300,000) due as Annual Payments
has been delivered to Seller.
Buyer hereby assigns to Seller all rights to
receive such Maintenance Commissions and OEM Contract
Payments directly. To the extent Buyer receives any such
payments during any calendar quarter, Buyer agrees to
deliver such payments to Seller within thirty (30) days
after the end of such calendar quarter. Buyer agrees to
execute an Assignment of OEM Contract Payments in the form
of Exhibit "C" and an Assignment of Commissions in the form
of Exhibit "D" to reflect such assignments.
Buyer shall deliver the ten percent (10%) of Panda
Revenues due Seller received each calendar quarter within
thirty (30) days after the end of that calendar quarter.
Late payments shall be subject to a late payment charge from
the date due until paid equal to one and one-half percent
(1-1/2%) per month, or if lower, the highest rate permitted
by law.
(b) Earnout. In addition to the Four Hundred Thousand
Dollars ($400,000) which shall be delivered pursuant to Section
2.04(a) above, with respect to amounts that become due to Buyer
following the payment by Buyer to Seller of all of the Annual
Payments, Buyer shall pay for the Purchased Assets up to an additional
Six Hundred Thousand Dollars ($600,000) (the "Earnout") as follows:
(i) Buyer shall pay to Seller:
6
<PAGE> 7
(A) fifty percent (50%) of all amounts due Buyer
as Maintenance Commissions through January 1, 2002;
(B) ten percent (10%) of all amounts due Buyer as
OEM Contract Payments through January 1, 2002; and
(C) ten percent (10%) of the Net Software License
Fees received by Buyer.
(ii) Buyer shall pay the amounts due under (B) and (C) as
well as any amounts due under (A) received by Buyer within thirty (30)
days after the end of the calendar quarter in which Buyer receives
such amounts. Buyer hereby assigns to Seller the rights to receive
fifty percent (50%) of Maintenance Commissions due Buyer by Seller so
long as amounts are due Seller under this Section 2.04(b). Late
payments shall be subject to a late payment charge from the date due
until paid equal to one and one-half percent (1-1/2%) per month, or if
lower, the highest rate permitted by law.
(c) Adjustment to Purchase Price. The parties agree that the Purchase
Price is premised on the book value of:
(i) the Accounts Receivable and the Inventory, in the
aggregate, less
(ii) the Trade Payables and the Prepaid Revenue, in the
aggregate,
equaling One Hundred Thirty One Thousand Dollars ($131,000) (the "Book
Value"). To the extent said Book Value is greater than $131,000, the
Purchase Price shall be increased by the excess amount, and the
increase in the Purchase Price shall be delivered with the initial
payment at the Closing. To the extent said Book Value is less than
$131,000, the Purchase Price shall be reduced by the difference, and
the initial payment delivered at the Closing shall be reduced
accordingly. Following the Closing, the parties shall follow the
procedures set forth in Exhibit "N" with respect to collection of the
Accounts Receivable and any adjustment to the Purchase Price as a
result of a change in Book Value.
2.05 Security. Buyer agrees to grant Seller a security interest in the
Purchased Assets as well as all extensions and proceeds thereof to secure
Buyer's obligations hereunder, and shall sign a Security Agreement in the form
of Exhibit "E" as well as appropriate UCC-1 Financing Statements to evidence
same.
2.06 Sales Tax and Other Tax Liability. Buyer shall pay or cause to be
paid all taxes, duties, imposts, levies, fees and other governmental exactions
imposed upon or arising out of this Agreement and the consummation of the
transactions contemplated hereunder.
2.07 Allocation of Purchase Price; Reporting Requirements. For tax
purposes the Parties hereby agree to (i) allocate the Purchase Price payable
hereunder in accordance with
7
<PAGE> 8
Exhibit "F" hereto; and (ii) timely file Internal Revenue Purchased Form 8594,
Asset Acquisition Statement, and otherwise report the transactions set forth
herein in accordance with such allocations and with the provisions of Internal
Revenue Code Section 1060 and comparable provisions of state law.
2.08 No Assumption of Liabilities Excepting Assigned Contracts and
Trade Payables. Effective as of 5:00 p.m. on January 10, 1997, Buyer expressly
assumes the Assigned Contracts and the obligation to pay the Trade Payables and
agrees to perform all obligations thereunder.
2.09 Right of Seller to Audit. Seller shall have the right, for the
sole purpose of determining whether the full amount due Seller as Earnout has
been delivered, to audit Buyer's books and records. Audits shall be conducted
not more than once in any twelve (12) month period. If any audit reveals that
Buyer has underpaid Seller, then Buyer shall immediately deliver any
underpayments. If any audit discloses underpayment of greater than five percent
(5%) of amounts paid for such period, Buyer shall reimburse Seller its
reasonable costs of such audit.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER
As an inducement to Buyer to enter into this Agreement, Seller
rIepresents and warrants to Buyer, and as to covenants agrees with Buyer, as of
the date of execution of this Agreement and as of the Closing Date, as follows:
3.01 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, and has
all requisite power and authority (corporate and other) to own its properties,
to carry on its business as now being conducted, to execute and deliver this
Agreement and the agreements contemplated herein and to consummate the
transactions contemplated hereby.
3.02 Authority. All corporate action necessary to authorize and
approve the execution and performance of this Agreement by Seller has been
taken, and this Agreement constitutes a valid and binding agreement of Seller,
enforceable in accordance with its terms. No authorizations, consents or
approvals, whether of governmental bodies, creditors or otherwise, are necessary
in order to enable Seller to enter into and perform this Agreement, excepting as
will be obtained by Seller prior to the Closing. As of the Closing, consummation
of the transactions herein contemplated will not conflict with or result in a
breach of any of the terms or provisions of any agreement or instrument to which
Seller is a party or by which Seller may be bound or to which any of the
property or assets of Seller is subject, the Certificate of Incorporation or
Bylaws of Seller, or any statute or any order, decree, judgment, award, rule or
regulation applicable to Seller of any court or arbitrator or of any regulatory
authority or other governmental body having jurisdiction over Seller, or result
in the creation or imposition of any lien, charge or encumbrance upon any of the
Purchased Assets.
8
<PAGE> 9
3.03 Customer Lists. The customer lists delivered to Buyer at the
Closing ("Customer Lists") shall constitute all of Seller's records (other than
accounting records) as to the names, addresses and telephone numbers of
customers to which Seller has licensed the Panda Software or for whom Seller has
provided bids which continue as outstanding.
3.04 Inventory. The Inventory is in all material respects of good and
marketable quality, free from material defects. Seller warrants that it has good
title to the Inventory.
3.05 Proprietary Rights and Warranty Claims.
(a) Seller has good, valid and marketable title to the
Intellectual Property of Seller, free of all liens and other
encumbrances, and has a valid right to use all Intellectual Property.
Seller is the exclusive owner of all Intellectual Property.
(b) The Panda Software and associated documentation are
original works of authorship. Exhibit "M" correctly sets forth all
patents, Trademarks and copyrights included as part of the
Intellectual Property.
(c) Seller has taken all commercially reasonable and
customary measures and precautions necessary to protect and maintain
the confidentiality and secrecy of all Intellectual Property (except
such Intellectual Property whose value would be unimpaired by public
disclosure) and otherwise to maintain and protect the value of all
such Proprietary Assets. Seller has not (other than pursuant to the
OEM contracts listed in Exhibit "B") disclosed or delivered to any
individual or entity, or permitted the disclosure or delivery to any
individual or entity of (i) the source code, or any portion or aspect
of the source code, of the Panda Software, or (ii) the object code, or
any portion or aspect of the object code of the Panda Software (other
than pursuant to nonexclusive licenses to end users pursuant to the
end user license agreements listed on Exhibit "M" in the ordinary
course of business, copies of which have been provided to Buyer.
(d) Seller is not infringing, misappropriating or making
unlawful use of, and Seller has not at any time infringed,
misappropriated or made any unlawful use of, or received any notice or
other communication (in writing or otherwise), except from SNAP System
of any actual, alleged, possible or potential infringement,
misappropriation or unlawful use of any proprietary asset owned or
used by any other third party. To Seller's knowledge, no third party
is infringing, misappropriating or making any unlawful use of the
Intellectual Property.
(e) The Panda Software conforms in all material respects
with any specification, documentation, performance standard,
representation or statement made or provided with respect thereto by
or on behalf of Seller.
(f) The Intellectual Property constitutes all the
proprietary assets necessary, in Seller's reasonable judgment, to
enable Buyer to conduct the Panda Business in the manner in which such
business has been and is being conducted. Seller has not licensed any
of the Intellectual Property on an exclusive basis and Seller has not
entered
9
<PAGE> 10
into any covenant not to compete or contract limiting its ability to
exploit fully any of the Intellectual Property or to transact the
Panda Business in any market or geographical area or with any third
party, except as set forth in the OEM Agreements.
(g) All current and former employees of Seller involved in
the development, modification, marketing or servicing of the Panda
Software have executed and delivered to Buyer an agreement (containing
no exceptions to or exclusions from the scope of its coverage) that is
substantially identical to the forms of Confidential Information and
Invention Assignment Agreements previously delivered to Buyer and all
current and former consultants and independent contractors to Seller
involved in the development, modification, marketing or servicing of
the Panda Software have executed and delivered to Buyer an agreement
(containing no exceptions to or exclusions from the scope of its
coverage) that is substantially identical to the form of Consultant
Confidential Information and Invention Assignment Agreement previously
delivered to Buyer. To Seller's knowledge, no employee or independent
contractor of Seller is in violation of any term of any employment
contract, patent disclosure agreement or any other contract or
agreement relating to the relationship of any such employee or
independent contractor with Seller.
(h) To Seller's knowledge, no product liability claims have
been communicated in writing to or threatened against Seller.
3.06 Trademarks. The Trademarks included in the Purchased Assets shall
be limited to the trademark "PANDA. Right From The Start". The Purchased Assets
shall not include the right to use the slogan "Right From the Start" separately,
but only when used with the trademark "PANDA. Right From The Start".
3.07 Bona Fide Accounts Receivable. The Accounts Receivable are bona
fide existing obligations. Seller has not received notice of any actual or
imminent Insolvency Proceeding of any account debtor listed on Exhibit "L".
3.08 Tools and Equipment. The tools and equipment included in the
Purchased Assets (the "Tools and Equipment") shall include all tools and
equipment described on Exhibit "I". The Tools and Equipment are delivered to and
accepted by Buyer "AS IS". Seller warrants that it has good title to the Tools
and Equipment.
3.09 Software Support Contracts. Seller is not in default under any of
the Software Support Contracts described on Exhibit "B" and has performed all of
the obligations under them which are or will be required to be performed prior
to 5:00 p.m. on January 10, 1997.
3.10 Employees. Seller agrees that Buyer shall have the right
to solicit and hire effective upon the Closing those employees of Seller listed
on Exhibit "J". Seller makes no representations or warranties as to whether any
of such employees will accept Buyer's offer of employment. Buyer shall have no
liability for any termination costs or liability for any termination costs or
liabilities arising by reason of the termination for any such employees, as
employees of Seller.
10
<PAGE> 11
3.11 Prepaid Revenue. Except as Seller has listed on Exhibit "K",
Seller has not received any Prepaid Revenue.
3.12 Accounts Receivable. The Accounts Receivable are owned by Seller
and represent valid obligations for the dollar amount shown on the books of
Seller. Seller has no notice of any dispute of any Account Receivable nor of the
bankruptcy or insolvency of any pay or of any Account Receivable.
3.13 Survival of Representations and Warranties. The covenants,
representations, warranties and agreements by Seller contained in this Agreement
shall survive the Closing Date, provided the representations and warranties (but
not the covenants) shall terminate and expire on the close of business on the
second anniversary of the Closing Date and shall be of no force or effect
thereafter, except with respect to any claim with respect thereto under Section
9.02 of this Agreement, written notice of which shall have been delivered to
Seller on or prior to the second anniversary of the Closing Date.
3.14 Disclosure. No statements by Seller contained in this Agreement,
its exhibits and schedules nor any of the lists, statements, documents or
information set forth in or attached to or to be delivered pursuant to this
Agreement, contain any untrue statement of material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BUYER
As an inducement to Seller to enter into this Agreement, Buyer
represents and warrants to Seller, and as to covenants herein agrees with
Seller, as of the date of execution of this Agreement and as of the Closing
Date, as follows:
4.01 Incorporation. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of California.
4.02 Authority. All corporate action necessary to authorize and
approve the execution and performance of this Agreement by Buyer has been taken,
and this Agreement constitutes a valid and binding agreement, enforceable
against Buyer in accordance with its terms. No authorizations, consents or
approvals, whether of governmental bodies, creditors or otherwise, are necessary
in order to enable Buyer to enter into and perform this Agreement. Consummation
of the transactions herein contemplated will not conflict with or result in a
breach of any of the terms or provisions of any agreement or instrument to which
Buyer is a party or by which Buyer may be bound or to which any of the property
or assets of Buyer is subject, the Certificate of Incorporation or Bylaws of
Buyer, or any statute or any order, decree, judgment, award, rule or regulation
applicable to Buyer of any court or arbitrator or of any regulatory authority or
other governmental body having jurisdiction over Buyer.
11
<PAGE> 12
4.03 Brokers or Finders. Buyer has not entered into any agreement or
incurred any obligation, directly or indirectly, for the payment of any broker's
commissions or finder's fees in connection with this Agreement.
4.04 Financial Resources. Buyer has sufficient financial resources to
be able to reasonably expect that it will be capable of fulfilling its
obligations hereunder.
4.05 Survival of Representations and Warranties. The covenants,
representations, warranties and agreements contained in this Agreement by Buyer
shall survive the Closing Date, provided the representations and warranties (but
not the covenants) shall terminate and expire on the close of business on the
second anniversary of the Closing Date and shall be of no force or effect
thereafter, except with respect to any claim with respect thereto under Section
9.02 of this Agreement, written notice of which shall have been delivered to
Buyer on or prior to the second anniversary of the Closing Date.
4.06 Confidentiality. Buyer acknowledges that it will in the course of
its due diligence prior to the Closing have access to and obtain confidential,
nonpublic, proprietary information of Seller. Buyer agrees to maintain such
confidential, nonpublic, proprietary information of Seller as confidential, not
to disclose it prior to the Closing to any other person or entity, and not to
use it prior to the Closing. To the extent such confidential, nonpublic,
proprietary information of Seller is not included in the Purchased Assets,
Seller agrees to maintain such confidential, nonpublic, proprietary information
of Seller as confidential both before and after the Closing, not to disclose it
either before or after the Closing to any other person or entity, and not to use
it either before or after the Closing.
ARTICLE V
OBLIGATIONS PRIOR TO CLOSING
5.01 Conduct of Business. Until the Closing Date, Seller shall conduct
its business with respect to the Purchased Assets only in the ordinary course of
business, and Seller shall use all reasonable efforts to preserve intact its
business with respect to the Purchased Assets, including, without limitation,
the following:
(a) maintaining its relationship with any person or entity
having business relationships with such business and performing all of
its obligations under the OEM Contracts and the Software Support
Contracts;
(b) paying when due all assessments, fees or charges
applicable to the Purchased Assets;
(c) not selling, disposing of, transferring or alienating
any of the Purchased Assets or mortgaging, pledging, subject to a lien
or security interest or otherwise encumbering any of the Purchased
Assets;
12
<PAGE> 13
(d) not incurring any indebtedness, liability or other
obligation, contingent or otherwise with respect to the Purchased
Assets, except as otherwise provided in this Agreement;
(e) not entering into any new contracts or agreements or
committing to any business proposals or arrangements relating to the
Purchased Assets; or
(f) complying in all material respects with all laws and
regulations applicable to such business.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.01 Conditions Precedent to the Performance of Seller's Obligations.
The obligations of Seller to sell the Purchased Assets pursuant to this
Agreement are subject, at the option of Seller, to the fulfillment on or before
the Closing Date of each of the following conditions:
(a) Compliance with Terms. At the Closing Date, all of the
terms, conditions and agreements herein to be complied with and
performed by Buyer at or before the Closing Date shall have been
complied with or performed in all material respects.
(b) Accuracy of Representations and Warranties. Seller shall
not have acquired information that there is any material error,
misstatement or omission in any of the representations or warranties
made herein by Buyer. The representations and warranties made by Buyer
in this Agreement shall be correct and complete at and as of the
Closing Date, with only those exceptions which have been approved in
writing by Seller.
(c) Delivery of Required Items. Buyer shall have delivered
all items set forth in Section 8.02 below.
(d) Transaction Legal. There shall be no order, decree or
ruling by any court or governmental agency or threat thereof or any
other fact or circumstance which might prohibit or render illegal the
transactions contemplated by this Agreement.
(e) Lender Consent. The consent of Seller's primary lender
shall have been obtained.
6.02 Conditions Precedent to the Performance of Buyer's Obligations.
The obligations of Buyer to purchase the Purchased Assets pursuant to this
Agreement are subject to the fulfillment on or before the Closing Date of each
of the following conditions:
(a) Compliance with Terms. At the Closing Date, all of the
terms, conditions and agreements herein to be complied with and
performed by Seller at or
13
<PAGE> 14
before the Closing Date shall have been complied with or performed in
all material respects.
(b) Accuracy of Representations and Warranties. Buyer shall
not have acquired information that there is any material error,
misstatement or omission in any of the representations or warranties
made herein by Seller. The representations and warranties made by
Seller in this Agreement shall be correct and complete at and as of
the Closing Date, subject only to those exceptions which have been
approved in writing by Buyer, in its sole and absolute discretion.
(c) Transaction Legal. There shall be no order, decree or
ruling by any court or governmental agency or threat thereof or any
other fact or circumstance which might prohibit or render illegal the
transactions contemplated by this Agreement.
(d) Delivery of Required Items. Seller shall have delivered
all items set forth in Section 8.01 below.
ARTICLE VII
TERMINATION
7.01 Termination. This Agreement may be terminated and abandoned at
any time:
(a) by mutual written consent of Buyer and Seller;
(b) by Buyer, on the Closing Date, if any one or more of the
conditions precedent to its obligations herein shall not have been
fulfilled or waived in writing by Buyer, if any required delivery
pursuant to Section 8.01 has not been made; and
(c) by Seller, on the Closing Date, if any one or more of
the conditions precedent to its obligations herein shall not have been
fulfilled or waived in writing by Seller or if any required delivery
pursuant to Section 8.02 has not been made.
7.02 Closing. Provided that all of the conditions to Closing have been
fully satisfied or waived, the transactions contemplated by this Agreement shall
be consummated at a closing to be held at the offices of Seller on January 13,
1997 (the "Closing Date") at 12:00 noon; Pacific Daylight Time, or at such other
place or time as shall be mutually agreed upon in writing between Buyer and
Seller (the "Closing").
ARTICLE VIII
DELIVERIES AT CLOSING
8.01 Deliveries of Seller. At the Closing, Seller shall deliver to
Buyer all of the following:
14
<PAGE> 15
(a) Bill of Sale. Originally executed bill of sale and other
instruments for the Purchased Assets of Seller in such form as in each
case is reasonably satisfactory to Buyer.
(b) Blanket Assignment. Blanket assignment by Seller to
Buyer of all right, title and interest to the Assigned Contracts as
well as such other assignments which Buyer reasonably believes are
necessary to vest in Buyer all of Seller's right, title and interest
in and to the Purchased Assets.
(c) Customer Lists. The Customer Lists.
(d) Assigned Contracts. The original or a true and correct
copy of each Assigned Contract.
(e) Purchased Assets. Possession of the Purchased Assets.
8.02 Deliveries of Buyer. At the Closing, Buyer shall deliver to
Seller all of the following:
(a) Initial Payment. The initial payment;
(b) Assignment of OEM Contract Payments. The executed
Assignment of OEM Contract Payments in the form of Exhibit "C";
(c) Assignment of Commissions. The executed Assignment of
Commissions in the form of Exhibit "D"; and
(d) Security Agreement. A Security Agreement in the form of
Exhibit "E", a UCC-1 Financing Statement executed by Buyer evidencing
the security interest granted therein, and such other documents as
Seller reasonably believes are necessary to perfect its security
interest in the Purchased Assets.
ARTICLE IX
POST-CLOSING COVENANTS; INDEMNIFICATION
9.01 Non-Compete. During the period commencing on the Closing Date and
continuing until three (3) years after such Closing Date ("Non-Compete Period"),
Seller shall not, directly or indirectly, as an owner of any equity, legal,
beneficial or other interest, or otherwise, or on its own behalf, develop or
provide to any other person or entity, any service, support or product which
competes in any material respect with the Panda Business. For these purposes
"competes" shall mean that (1) the service, support or product offers or has the
same, or similar features and specifications, or (2) a customer of the Panda
Business would purchase such service, support or product as a reasonable
substitute for those offered by the Panda Business.
15
<PAGE> 16
9.02 Indemnification by Buyer and Seller.
(a) Indemnification by Seller. Seller hereby agrees to
indemnify and hold Buyer, its officers, directors, shareholders,
employees, agents, advisers, affiliates, associates and any successors
thereto harmless from all claims, loss, damages, liability and expense
of any kind (including, without limitation, reasonable attorneys' fees
and expenses in connection with the contest of any claim and interest
on any claim) which Buyer may incur or sustain by reason of the fact
that (i) Seller should breach or fail to comply with any of the terms,
conditions, covenants or agreements or any exhibits attached hereto or
any of them contained herein, (ii) any representations or warranties
made by Seller in this Agreement should prove to be false or
erroneous, (iii) any claims, actions, suits, investigations or
proceedings, pending or threatened, are or have been made or commenced
by, against, involving, arising out of, relating to or affecting any
part of the Purchased Assets or Seller's operation of its business,
with respect to any obligation of Seller arising pursuant to the
Retained Liabilities, or (iv) any action, arbitration, suit,
proceeding, compromise, settlement, assessment or judgment arising out
of or incidental to any of the matters indemnified against in this
Section 9.02(a); provided, however, that Seller shall not be obligated
to indemnify Buyer and hold it harmless with respect to any settlement
of a claim to which Seller has not consented, which consent by Seller
shall not unreasonably be withheld.
(b) Indemnification by Buyer. Buyer hereby agrees to
indemnify and hold Seller, its officers, directors, shareholders,
employees, agents, advisers, affiliates and associates and successors
thereto harmless from all loss, liability and expense (including
without limitation, reasonable attorneys' fees and expenses in
connection with the contest of any claim and interest on any claim)
which Seller may incur or sustain by reason of the fact that (i) Buyer
should breach or fail to comply with any of the terms, conditions,
covenants or agreements or any exhibits attached hereto, or any of them
contained herein, (ii) any representations or warranties made by Buyer
in this Agreement should prove to be false or erroneous, (iii) any
claims, actions or suits, are commenced by, against, involving, arising
out of Buyer's performance or nonperformance of any obligations of
Buyer arising pursuant to the Assumed Liabilities, (iv) any failure of
Buyer to promptly pay when due any of the Trade Payables, (v) any
claims, actions, suits, investigations or proceedings are made
involving or arising out of the operation by Buyer of the business of
Seller acquired hereunder, or the sale, transfer or other disposition
by Buyer of all or any part of the Purchased Assets, from and after the
Closing Date, or (vi) any action, suit, proceeding, compromise,
settlement, assignment, judgment or arbitration arising out of or
incidental to any of the matters indemnified against in this Section
9.02(b); provided, however, that Buyer shall not be obligated to
indemnify a Seller Indemnified Party and hold it harmless under this
Section 9.02(b) with respect to any settlement of a claim to which
Buyer has not consented, if such consent has not been unreasonably
withheld.
(c) Right to Defend. If the facts giving rise to any
such indemnification shall involve any actual claim or demand by any
third party against a party entitled to indemnification hereunder
(referred to hereinafter as an "Indemnified Party"), the indemnifying
party shall be entitled to notice of and entitled (without prejudice to
the right
16
<PAGE> 17
of any Indemnified Party to participate at its own expense through
counsel of its own choosing) to defend or prosecute such claim at its
expense and through counsel of its own choosing if it gives written
notice of its intention to do so no later than the time by which the
interests of the Indemnified Party would be materially prejudiced as a
result of its failure to have received such notice; provided, however,
that if the defendants in any action shall include both the
indemnifying party and Indemnified Party, and the Indemnified Party
shall have reasonably concluded that counsel selected by the
indemnifying party have a conflict or additional defenses, the
Indemnified Party shall have the right to select separate counsel to
participate in the defense of such action on its own behalf, at the
expense of the indemnifying party. The Indemnified Party shall
cooperate fully in the defense of such claim and shall make available
to the indemnifying party pertinent information under its control
relating thereto.
9.03 Payment of Indemnification Obligation. Seller hereby agrees that
any claim for indemnification by Buyer under this Article IX or under any other
provision of this Agreement may, at Buyer's option, be set off against any of
Buyer's obligations to make any remaining payments to Seller under this
Agreement, including, without limitation, the payments set forth in Section 2.03
of this Agreement.
9.04 Proprietary Information. Seller shall hold in confidence, and use
its best efforts to have all of Seller's officers, directors, shareholders, and
personnel, as appropriate, hold in confidence, all knowledge and information of
a secret or confidential nature with respect to the Panda Business or the
Purchased Assets and shall not disclose, publish or make use of the same without
the consent of Buyer for a period of three (3) years after the Closing Date,
except to the extent that such information (1) is now, or hereafter becomes,
through to act or failure to act on the part of Seller, generally known or
available; (2) is hereafter furnished to Seller by a third party which is
entitled to disclose it to Seller, or (3) has been approved in writing, for
release by Buyer. Seller agrees that the remedy at law for any breach of this
Section 9.04 would be inadequate and that Buyer may be entitled to injunctive
relief in addition to any other remedy available to Buyer.
9.05 Further Assurances. From time to time after the date hereof, at
Buyer's request and without further consideration, Seller will execute and
deliver such other further instruments of conveyance, assignment, transfer and
consent, and take such other action as Buyer may reasonably request in order to
more effectively carry out the intent and purpose of this Agreement, to
establish and protect the rights created or intended to be created in favor of
Buyer hereunder, and to establish and perfect Buyer's title to the Purchased
Assets.
9.06 Buyer to Act as Agent for Seller. This Agreement shall not
constitute an agreement to assign any claim, contract, license, lease,
commitment, sales order, purchase order or permit if any attempted assignment of
the same without the consent of the other party thereto or the issuer thereof
would constitute a breach thereof or in any way affect the rights of Seller or
Buyer thereunder. If such consent is not obtained or if any attempted assignment
would be ineffective or would affect the Seller's rights thereunder so that
Buyer would not in fact receive all such rights, then Buyer shall act as agent
for Seller in order to obtain for Buyer the benefits thereunder.
17
<PAGE> 18
9.07 Buyer Appointed Special Attorney-in-Fact for Seller. Effective at
the Closing Date and except as otherwise limited below, Seller hereby
constitutes and appoints Buyer, its successors and assigns, the true and lawful
attorney of Seller, in the name of either Buyer or Seller (as the Buyer shall
determine in its sole discretion) but for the benefit and at the expense of
Buyer (except as otherwise herein provided), exclusively for the purposes of (a)
instituting and prosecuting all proceedings which the Buyer may deem proper in
order to collect, assert or enforce any claim, right or title of any kind in or
to any of the Purchased Assets as provided for in this Agreement; (b) defending
or compromising any and all actions, suits or proceedings in respect of any of
the Purchased Assets, and to do all such acts and things in relation thereto as
Buyer shall deem advisable; and (c) taking all action which Buyer may reasonably
deem proper in order to provide for Buyer the benefits under any of the
Purchased Assets where any required consent of another party to the sale or
assignment thereof to Buyer pursuant to this Agreement shall not have been
obtained. The Seller acknowledges that the foregoing powers are coupled with an
interest and shall be irrevocable. The foregoing provisions of this Section 9.07
shall be applicable only if the Seller, upon first being notified in writing by
the Buyer of a circumstance set forth in clauses (a), (b) or (c) of this Section
9.07 giving rise to a requirement by the Seller to institute or prosecute a
proceeding pursuant to (a), to defend or compromise an action, suit or
proceeding pursuant to (b) or to take action as provided in (c), fails to take
appropriate action within thirty (30) days of such notification or within such
shorter period as may be required to take action.
9.08 Preferred Hardware Maintenance Provider. Buyer hereby appoints
Seller, effective upon the Closing, as its preferred hardware maintenance
service provider for Buyer's customers. Buyer agrees (i) to issue a press
release and send to all of its customers within sixty (60) days after the
Closing a joint announcement with Seller, in a form approved by Buyer, in
Buyer's sole discretion, that Seller is Buyer's sole preferred hardware
maintenance service provider for hardware installations; and (ii) to recommend
Seller as its sole preferred hardware maintenance service provider for hardware
installations.
9.09 Software Support. To assist Buyer with Buyer's assumption of the
ownership of the Panda Software, Seller agrees to provide Buyer the services set
forth in Exhibit "O".
9.10 Transfer. Buyer agrees that, other than granting exclusive and
nonexclusive licenses to third parties in the ordinary scope of Buyer's
business, Buyer shall not transfer Buyer's interest in and to the Panda Software
to a third party without Seller's consent prior to the payment to Seller of the
Four Hundred Thousand Dollar ($400,000) guaranteed purchase price set forth in
Section 2.04(a). Buyer further agrees that for the period of time during which
the Earnout may be due to Seller pursuant to the terms of Section 2.04(b), Buyer
shall only transfer all of Buyer's right, title and interest in and to the Panda
Software to a third party under terms and conditions that obligate such third
party to comply with the obligations of Sections 2.04(b).
9.11 Source Code License. The parties agree to negotiate in good faith
the terms of a license to the source code for the Panda Software as necessary to
enable Seller to fulfill the support obligations set forth in Section 9.09.
18
<PAGE> 19
9.12 Trademark Usage and Amendment. Buyer agrees that to the extent
the portion of the Trademarks that consist of the slogan "Right From The Start"
can be deleted from the Trademarks without substantial negative impact on Buyer,
that Buyer will (i) discontinue within eighteen (18) months the use of that
portion of the Trademarks from marketing and other materials using the name
"Panda", and (ii) make such filings or amendment and take such steps as Seller
shall reasonably request, at Seller's expense, or as Buyer may elect, at
Seller's expense not to exceed Four Thousand Dollars ($4,000), to register the
mark Panda without the slogan "Right from the Start". Buyer acknowledges that
Seller has advised Buyer that Seller has independently registered and used the
mark "Right from the Start" since 1984 in connection with its general business
operations.
ARTICLE X
GENERAL PROVISIONS
10.01 No Public Disclosure. Seller shall not disclose the terms of
this Agreement without the prior written consent of Buyer except to (i)
accountants or legal representatives with a need to know who agree to maintain
the confidentiality of such information or (ii) as required by law.
Notwithstanding the foregoing, Seller may disclose information about this
Agreement to the extent required under the Securities Exchange Act of 1934, as
amended.
10.02 Notification of Changes. Each party will promptly notify the
other in writing of the existence or happening of any material fact, event or
occurrence which may tend to alter the accuracy or completeness of any
representation or warranty contained in this Agreement.
10.03 Notices. Except as otherwise expressly provided herein, any
notice herein required or permitted to be given shall be in writing and shall be
personally served or sent by overnight courier, by registered mail or certified
mail, postage prepaid, or by prepaid telex, telecopy or telegram and shall be
deemed to have been given when such writing is received by the intended
recipient thereof. For the purposes hereof, the addresses of the parties hereto
(until notice of a change thereof served as provided in this Section 10.02)
shall be as follows:
If to Seller: Alpha Microsystems
2722 South Fairview Street
Santa Ana, California 92704
ATTN: Chief Financial Officer
Fax No.: (714) 641-7678
With a copy Allen, Matkins, Leck, Gamble & Mallory LLP
to: 515 South Figueroa Street, 7th Floor
Los Angeles, California 90071
ATTN: Debra Dison Hall, Esq.
Fax No: (213) 620-8816
19
<PAGE> 20
If to Buyer: Pacific Triangle Software, Inc.
3182 Campus Drive, Suite 322
San Mateo, CA 94403
ATTN: David L. Swank
Fax No.: (408) 395-7290
With a copy Gray Cary Ware & Freidenrich
to: 400 Hamilton Avenue
Palo Alto, CA 94301
ATTN: Mark F. Radcliffe, Esq.
Fax No.: (415) 327-3699
10.03 Entire Agreement. This Agreement, together with its Exhibits,
constitutes the entire understanding between the parties with respect to the
subject matter hereof, superseding all negotiations, prior discussions and
preliminary agreements, express or implied. This Agreement may not be changed
except in writing executed by Buyer and Seller.
10.04 Attorneys' Fees. In the event of a bringing of an action or suit
by a party hereto against the other party hereunder arising out of or related to
this Agreement, including, without limitation, the indemnification provisions,
the party in whose favor final judgment is entered shall be entitled to have and
recover from the other party all Costs (as defined below), all of which shall be
deemed to have accrued upon the commencement of such action. Any judgment or
order entered in such action shall contain a specific provision providing for
the recovery of all Costs incurred in enforcing, perfecting, and executing such
judgment. For the purposes of this section, "Costs" shall include, without
limitation, attorneys' fees, costs and expenses, including such costs and
expenses incurred in the following: (i) postjudgment motions; (ii) contempt
proceedings; (iii) garnishment, levy and debtor and third party examinations;
(iv) discovery; and (v) bankruptcy litigation.
10.05 Waiver. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or be construed as a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
10.06 Assignment. This Agreement shall not be assignable by any party
without the consent of the other party.
10.07 Severability. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall to any extent be found
to be invalid, void or unenforceable, such provision shall be limited as
necessary to render it valid and enforceable and the remaining provisions and
any application thereof shall continue in full force and effect without being
impaired or invalidated in any way.
10.08 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto, their personal representatives, heirs, executors,
administrators, successors and/or assigns.
20
<PAGE> 21
10.09 Further Actions. Each party hereto agrees to take any and all
actions reasonably necessary in order to carry out the provisions of this
Agreement.
10.10 Construction. This Agreement shall be construed in accordance
with its plain meaning and not against either party as the drafting party. The
captions of the Sections of this Agreement are for convenience only and shall
not be considered or referred to in resolving questions or interpretation.
10.11 Counterparts. This Agreement may be executed in one or more
counterparts and counterparts signed in the aggregate by Buyer and Seller shall
constitute a single original instrument. This Agreement shall become binding
when one or more counterparts hereof, individually or taken together, shall bear
the signatures of all of the parties reflected herein as signatories.
10.12 Choice of Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of California without regard
to its conflicts of laws principles.
IN WITNESS WHEREOF, the Party hereto have executed this Agreement as
of the date first above written.
"SELLER" "BUYER"
ALPHA MICROSYSTEMS, a California PACIFIC TRIANGLE SOFTWARE, INC.,
a California corporation a California corporation
By: [SIG] By: /s/ David L. Swank
-------------------------- --------------------------
Its: Chief Financial officer Its: President
-------------------------- --------------------------
21
<PAGE> 22
EXHIBITS
Exhibit "A": Purchased Assets
Exhibit "B": Assigned Contracts
Exhibit "C": Assignment of OEM Contract Payments
Exhibit "D": Assignment of Commissions
Exhibit "E": Security Agreement
Exhibit "F": Allocation of Purchase Price
Exhibit "G": Trade Payables
Exhibit "H": Inventory
Exhibit "I": Tools and Equipment
Exhibit "J": Employees
Exhibit "K": Prepaid Revenue
Exhibit "L": Accounts Receivable
Exhibit "M": Panda Software
Exhibit "N": Adjustments to Book Value
Exhibit "O": Support Services
22
<PAGE> 1
AGREEMENT OF PURCHASE AND SALE
This Agreement is made and entered into as of this ___ day of January,
1997, by and between AlphaHealthCare, Inc., a California corporation ("Seller"),
Alpha Microsystems, a California corporation, the sole shareholder of Seller
("Alpha Micro") and GLR Systems, Inc. dba UNIDENT Practice Performance Systems,
a Nebraska corporation ("Buyer").
R E C I T A L S :
A. Seller provides software and hardware sales and support to the
Dental marketplace.
B. Seller desires to sell certain assets as more specifically defined
hereinbelow to Buyer and Buyer desires to purchase such assets of Seller upon
the terms and conditions set forth herein.
C. Alpha Micro owns all of the issued and outstanding stock of Seller,
and as the sole shareholder of Seller, will receive benefit from the sale by
Seller of such assets as set forth herein.
AGREEMENT
In consideration of their respective representations, warranties and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 Agreement. The term "Agreement" herein shall refer to this
"Agreement of Purchase and Sale."
1.02 "Alpha Micro" herein shall refer to Alpha Microsystems, a
California corporation, which is the sole shareholder of Seller.
1.03 Assigned Contracts. The term "Assigned Contracts" herein shall
mean those Contracts expressly assigned to and assumed by Buyer and described as
"Assigned Contracts" on Exhibit "B" hereto.
1.04 Buyer. The term "Buyer" herein shall refer to GLR Systems, Inc.
dba UNIDENT Practice Performance Systems, a Nebraska corporation.
1.05 Closing or Closing Date. The term "Closing" or "Closing Date"
herein is defined in Section 7.02 hereof.
EXHIBIT 2.2
<PAGE> 2
1.06 Customer Lists. The term "Customer Lists" herein is defined in
Section 3.03 hereof.
1.07 Excluded Assets. The term "Excluded Assets" herein is defined in
Section 2.01 hereof.
1.08 Prepaid Revenue. The term "Prepaid Revenue" herein is defined as
cash received by Seller prior to Closing for services to be provided under
Software Support Contracts subsequent to the Closing.
1.09 Purchase Price. The term "Purchase Price" herein is defined in
Section 2.02 hereof.
1.10 Purchased Assets. The term "Purchased Assets" herein is defined
in Section 2.01 hereof.
1.11 Seller. The term "Seller" herein will refer to AlphaHealthCare,
Inc., a California corporation.
1.12 Software. The term "Software" herein is defined in Section 3.05.
1.13 Spare Parts and Inventory. The term "Spare Parts and Inventory"
herein is defined in Section 3.04 hereof.
1.14 Tools and Equipment. The term "Tools and Equipment" herein is
defined in Section 3.07 hereof.
1.15 Software Support Contracts. The term "Software Support Contracts"
herein will refer to all software support contracts pursuant to which Seller has
agreed to provide software support services for the Focus Software as further
described on Exhibit "B".
1.16 Trademarks. The term "Trademarks" shall be as defined in Section
3.06
ARTICLE II
PURCHASE AND SALE
2.01 Purchase and Sale. At the Closing, and subject to all of the
other terms and conditions set forth herein, Seller shall sell, transfer, convey
and assign to Buyer, and Buyer shall purchase from Seller, its entire right,
title and interest in and to all of the assets of Seller's dental marketplace
business, including goodwill, property and assets of every kind and description,
whether tangible or intangible, personal or mixed, whether or not same have any
book value on the records of Seller, used in connection with the business of
Seller, excepting as listed on Exhibit "A" attached hereto (the "Excluded
Assets") (collectively, the "Purchased Assets"). Without limiting the generality
of the foregoing, the Purchased Assets shall include (but not be limited to)
those assets described on Exhibit "B". It is understood that the Purchased
-2-
EXHIBIT 2.2
<PAGE> 3
Assets shall not include the corporate charter, seal, minute books, stock
transfer books or other records relating to the organization and existence of
Seller.
The entirety of the Purchased Assets shall be conveyed free and clear
of all liens, trusts, encumbrances, charges, claims, security interests,
community property or other interests, conditional sales agreements and all
other restrictions, except as set forth in the Assigned Contracts listed on
Exhibit "B" attached hereto and incorporated herein by this reference.
2.02 Purchase Price. Buyer shall deliver as the purchase price
("Purchase Price") for the Purchased Assets the sum of Four Hundred Fifty
Thousand Dollars ($450,000), plus (i) payments for the Accounts Receivable as
described in Section 2.03(d) below; and (ii) an earnout as described in Section
2.03(c) below.
2.03 Payment of Purchase Price. Buyer shall deliver the Purchase Price
to Seller as follows:
(a) Cash at Closing. Buyer shall deliver to Seller at the
Closing the sum of One Hundred Fifty Thousand Dollars ($150,000) by
cashier's check or wire transfer.
(b) Promissory Note. Buyer shall deliver to Seller at the
Closing a Promissory Note in the principal amount of Three Hundred
Thousand Dollars ($300,000) in the form of Exhibit "C" attached hereto
(the "Promissory Note"), which shall bear interest at six percent (6%)
per annum compounded, require annual payments of principal of Sixty
Thousand Dollars ($60,000) plus accrued interest, and be secured by
the Purchased Assets. As contemplated by the terms of the Promissory
Note, Buyer shall also execute an Assignment of Commissions in the
form of Exhibit "H" pursuant to which Buyer shall assign to Seller all
amounts to which it would be otherwise entitled as commissions from
Alpha Micro, to be applied against the amounts due under the
Promissory Note and as earnout pursuant to Paragraph (c) below. Alpha
Micro shall deliver to Seller by the twentieth (20th) day of each
month a complete listing by customer of the commissions applied
against the Promissory Note and the earnout.
(c) Earnout. In addition to the amounts to be delivered to
Seller pursuant to Paragraphs (a) and (b) above, Buyer shall deliver
to Seller each year on or before March 15 with respect to the
immediately preceding twelve month period commencing on the Closing
Date or the anniversary thereof (an "annual period"), for a period of
five (5) years after the Closing Date, an amount calculated as
follows:
(i) Ten percent (10%) of the aggregate of all
amounts billed by Buyer to customers listed on the Customer
Lists for software support during the preceding annual
period (regardless of whether such support was for an AMOS
based system, a windows platform or any other platform, and
regardless of whether such support is pursuant to a periodic
maintenance and support contract or on a time and materials
basis); less Sixty Thousand Dollars ($60,000); plus
-3-
EXHIBIT 2.2
<PAGE> 4
(ii) The amount earned by Buyer as maintenance
commissions from Alpha Micro during the preceding annual
period for hardware maintenance contracts, up to a maximum
of Sixty Thousand Dollars ($60,000).
By way of illustration, if for an annual period Buyer was
due $30,000 in commissions from Alpha Micro, and billed customers on
the Customer Lists $800,000 for software support (i) Seller would
retain the $30,000 due Buyer as commissions and apply that sum against
the Promissory Note; (ii) Buyer would pay to Seller under the
Promissory Note for such annual period an additional $30,000 plus
accrued interest; (iii) Buyer would owe to Seller as earnout for such
annual period an additional $50,000 (calculated as follows: 10% of
$800,000 is $80,000, less $60,000 equals $20,000, plus the $30,000
earned as maintenance commissions equals $50,000).
By way of further illustration, if for an annual period
Buyer was due $80,000 in commissions from Alpha Micro, and billed
customers on the Customer Lists $700,000 for software support (i)
Seller would retain the $80,000 due Buyer as commissions and apply
$60,000 of that sum against the Promissory Note and $20,000 against
the earnout; (ii) Buyer would owe to Seller as earnout an additional
$70,000 (calculated as follows: 10% of $700,000 is $70,000, less
$60,000 equals $10,000, plus the $60,000 earned as maintenance
commissions equals $70,000), with Seller applying the $20,000 withheld
by Alpha Micro and Buyer delivering an additional $50,000 to Seller.
To the extent the amount due pursuant to this Paragraph (c)
is less than zero, no amounts shall be due for that annual period to
Seller.
(d) Payment for Accounts Receivable. Buyer shall deliver to
Seller for the Accounts Receivable amounts as follows: (i) One Hundred
Thousand Dollars ($100,000), which shall be delivered as Accounts
Receivable are collected, with all amounts received by Seller during
each month from customers listed on the Accounts Receivable listing
attached as Exhibit "H" to be delivered to Buyer within fifteen (15)
days of the end of the month in which collected (to the extent of each
customer's debt), together with a reconciliation of the amounts
delivered, until One Hundred Thousand Dollars ($100,000) from Accounts
Receivable has been delivered to Seller; and (ii) thereafter, sixty
percent (60%) of all amounts received by Seller during each month from
customers listed on the Accounts Receivable listing attached as
Exhibit "H" to be delivered to Buyer within fifteen (15) days of the
end of the month in which collected (to the extent of each customer's
remaining debt), together with a reconciliation of the amounts
delivered. This Section 2.03(d) shall apply only to the Accounts
Receivable listed on Exhibit "H" hereto and shall not apply to
accounts receivable arising after the Closing Date.
2.04 Security. Buyer agrees to grant Seller a security interest in the
Purchased Assets as well as all extensions and proceeds thereof to secure
Buyer's obligations under the Promissory Note, and shall sign a Security
Agreement in the form of Exhibit "I" as well as appropriate UCC-1 Financing
Statements to evidence same.
-4-
EXHIBIT 2.2
<PAGE> 5
2.05 Sales Tax and Other Tax Liability. Buyer shall pay or cause to be
paid all taxes, duties, imposts, levies, fees and other governmental exactions
imposed upon or arising out of this Agreement and the consummation of the
transactions contemplated hereunder.
2.06 Allocation of Purchase Price; Reporting Requirements. For tax
purposes the parties hereby agree to (i) allocate the Purchase Price payable
hereunder in accordance with Exhibit "E" hereto; and (ii) timely file Internal
Revenue Service Purchased Form 8594, Asset Acquisition Statement, and otherwise
report the transactions set forth herein in accordance with such allocations and
with the provisions of Internal Revenue Code Section 1060 and comparable
provisions of state law.
2.07 No Assumption of Liabilities; Assigned Contracts. Buyer is not
assuming, nor shall it become liable for, any debts, liabilities, taxes or any
other obligations of any kind of Seller, whether known or unknown, disclosed or
undisclosed, with respect to the business of Seller or the Purchased Assets
existing as of the Closing Date, or arising out of, or relating to, in any
manner, the operation of the business of Seller before the Closing Date, except
those Assigned Contracts set forth on Exhibit "B" hereto. Effective as of the
Closing, Buyer expressly assumes the Assigned Contracts and agrees to perform
all obligations thereunder. Buyer and Seller agree to cooperate in obtaining any
necessary consents to the assignment of the Assigned Contracts. Upon the
assumption by Buyer of the Assigned Contracts, Buyer shall be entitled to all of
Seller's rights and benefits thereunder, and shall release Seller of its
obligations to perform same.
2.08 Absence of Certain Consents. In the event that (i) any of the
Assigned Contracts listed on Exhibit "B" are not assignable or transferable
without the consent, waiver or approval of a third party, and (ii) such consent,
waiver or approval is not obtained prior to the Closing, then this Agreement
shall not constitute an assignment or transfer or an attempted assignment or
transfer of such Assigned Contract if such assignment or transfer would
constitute a breach thereof or would subject either Seller or Buyer to penalty
or loss. Unless and until such consent, waiver or approval is obtained and an
assignment becomes effective with respect to any such Assigned Contract, Buyer
shall be deemed to be the agent of Seller to perform all of Seller's obligations
and duties thereunder and will be entitled to all of the benefits under such
Assigned Contract as if (and to the extent possible without constituting a
breach thereof) Buyer were substituted for Seller thereunder. The terms of such
agency shall, at Buyer's request, be set forth in one or more agreements, in
form and substance mutually satisfactory to Buyer and Seller and containing
terms customary to such an arrangement, to be entered into by Buyer and Seller
at Closing. Seller covenants and agrees to (a) maintain its corporate existence
and good standing until any such consent is obtained, (b) use its best efforts
to cause Buyer to receive the benefits of any such Assigned Contract, and (c)
enforce any rights of Seller thereunder against the other party or parties
thereto, all at the request, under the direction, for the account and at the
expense of Buyer. The failure to obtain any consent required to the Assigned
Contracts as listed on Exhibit "B" shall not be grounds for Buyer to delay the
Closing, and, in such case, Buyer shall perform Seller's obligations under the
Assigned Contract after the Closing, so long as Buyer continues to enjoy the
benefits of said Assigned Contract.
-5-
EXHIBIT 2.2
<PAGE> 6
ARTICLE III
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER
As an inducement to Buyer to enter into this Agreement, Seller and
Alpha Micro jointly and severally represent and warrant to Buyer, and as to
covenants agree with Buyer, as of the date of execution of this Agreement and as
of the Closing Date, as follows:
3.01 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of California.
3.02 Authority. All corporate action necessary to authorize and
approve the execution and performance of this Agreement by Seller has been
taken, and this Agreement constitutes a valid and binding agreement of Seller,
enforceable in accordance with its terms. No authorizations, consents or
approvals, whether of governmental bodies, creditors or otherwise, are necessary
in order to enable Seller to enter into and perform this Agreement, excepting as
will be obtained by Seller prior to the Closing. As of the Closing, consummation
of the transactions herein contemplated will not conflict with or result in a
breach of any of the terms or provisions of any agreement or instrument to which
Seller is a party or by which Seller may be bound or to which any of the
property or assets of Seller is subject, the Articles of Incorporation or Bylaws
of Seller, or any statute or any order, decree, judgment, rule or regulation
applicable to Seller of any court or of any regulatory authority or other
governmental body having jurisdiction over Seller, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the Purchased Assets.
3.03 Customer Lists. The customer lists delivered to Buyer at the
Closing ("Customer Lists") shall constitute all of Seller's records (other than
accounting records, of which the originals shall be retained by Seller and
copies delivered to Buyer as requested by Buyer) as to the names, addresses and
telephone numbers of customers to which Seller has provided products or services
whether by contract or on a time and materials basis, and shall include
originals or copies of Seller's records relating to the sales and payment
history and contract terms for each customer.
3.04 Spare Parts and Inventory. The spare parts and inventory included
in the Purchased Assets (the "Spare Parts and Inventory") shall include all
spare parts and inventory held by Seller as of the Closing. The Spare Parts and
Inventory as of the date shown on Exhibit "B" are as listed in Exhibit "B", and
are shown on the corresponding financial statements delivered to Buyer as
"Inventory". The Spare Parts and Inventory (including repossessed items) are
delivered to and accepted by Buyer "AS IS". Seller has good and marketable title
to the Spare Parts and Inventory, the Spare Parts and Inventory are not subject
to any liens or encumbrances which will not be removed prior to Closing, and no
spare parts or inventory have been disposed of by Seller within the two (2)
months prior to the Closing except in the ordinary course of business, except as
set forth on Exhibit "A".
3.05 Software. The Software included in the Purchased Assets and
described on Exhibit "B" shall include, and be limited to, that Software
marketed by Seller under the name
-6-
EXHIBIT 2.2
<PAGE> 7
"Focus" as well as that software previously marketed by Seller under the name
"Alpha 2000", and all prior versions, ancillary application products and
enhancements and modifications thereto. The Software is delivered to and
accepted by Buyer "AS IS". To the best of Seller's and Alpha Micro's knowledge,
the Software does not infringe the rights of any other person or entity. Seller
owns and has the right to transfer all right, title and interest in the Software
to Buyer as contemplated herein, and has not granted any rights to (including
any rights to license) the Software, other than nonexclusive licenses to
end-users in the ordinary course of business. Buyer acknowledges that Seller
terminated licensing of its Alpha 2000 as a result of its conclusion that
without further development it was not commercially viable. None of the past or
present employees, officers, directors or shareholders of Seller has any right
in any of the Software included in the Purchased Assets listed in Exhibit "B" or
in any of the inventories owned by Seller, whether or not patented or
copyrighted, which have been or are used by Seller in its business. Seller is
not liable nor has it made any contract whereby it may become liable, to any
person for any royalty or other compensation for the use of any of the Software
whether or not patented, trademarked, tradenamed or copyrighted relating to the
Business, except as set forth in the Assigned Contracts on Exhibit "B". To
Seller's and Alpha Micro's actual knowledge, there is no patent, copyright,
technical development or invention owned by any other person which could
materially adversely affect the Purchased Assets or the business as presently
conducted by Seller. Seller has the unrestricted right to use the Software being
transferred hereunder.
3.06 Tradenames. Listed on Exhibit "B" are all of Seller's
intellectual property rights including (i) all assumed names, tradenames,
trademark and/or servicemark registrations, applications for trademark and/or
servicemark registrations but excluding the name "Alpha 2000" (the "Trademarks")
and (ii) patents, applications for patents, copyrights and license agreements of
Seller, governmental approvals and/or registrations. The foregoing, together
with all of Seller's other proprietary information including trade secrets,
trade dress, know-how product codes and specifications, operating data, customer
lists and other information pertaining to the business are herein referred to as
the "Intellectual Property Rights". The Tradenames included in the Purchased
Assets shall include, and be limited to, "AlphaHealthCare" and "Focus" and the
goodwill associated therewith and all variants thereof. In furtherance of the
purchase and sale of the Purchased Assets hereunder, immediately upon the
Closing, Seller and Alpha Micro shall cause Seller's corporate name to be
changed to a name completely dissimilar to AlphaHealthCare, which name is
included in the Intellectual Property rights, and thereafter neither Seller nor
Alpha Micro shall adopt, use, cause to be used, where approved or sanctioned,
the use of such name, or any name so similar as to cause confusion therewith, or
any other tradename or assumed name included in the trademarks. To Seller's and
Alpha Micro's actual knowledge, Seller has the unrestricted right to use the
Intellectual Property Rights being transferred hereunder and all other names and
marks set forth on Exhibit "B" and the date of first use claimed in each such
registration is based upon bona fide sales of goods in interstate commerce, and
Seller has used the trademarks continuously from the date of first use claimed
to the date of this Agreement.
3.07 Tools and Equipment. The tools and equipment included in the
Purchased Assets (the "Tools and Equipment") shall include all tools and
equipment held by Seller as of the Closing. Seller's internal records reflect
that the Tools and Equipment as of the date shown on Exhibit "B" are as listed
in Exhibit "B"; however Seller does not warrant the accuracy of such listing..
The Tools and Equipment are delivered to and accepted by Buyer "AS IS". Seller
has
-7-
EXHIBIT 2.2
<PAGE> 8
good and marketable title to the Tools and Equipment, the Tools and Equipment
are not subject to any liens or encumbrances except as shall be removed prior to
the Closing, and no tools or equipment have been disposed of by Seller within
the two (2) months prior to the Closing except in the ordinary course of
business, except as set forth in Exhibit "A".
3.08 Assigned Contracts. Seller has heretofore delivered to Buyer
true, correct and complete copies of each of the Assigned Contracts. Each of the
Assigned Contracts is valid, binding, in full force and effect and, except for
obtaining any consents, waivers or approval or giving any notice listed on
Exhibit "B", is fully assignable to and assumable by Buyer, so that immediately
after the Closing Buyer will be entitled to the full benefits thereof. Seller is
not in any material default under any of the Assigned Contracts and has
performed all of the obligations under them which are or will be required to be
performed prior to the Closing.
3.09 Employees. Seller agrees that Buyer shall have the right, but not
the obligation, to solicit and hire effective upon the Closing any of Seller's
employees. Buyer shall have no liability for any termination costs or liability
for any termination costs or liabilities arising by reason of the termination
for any such employees, as employees of Seller. Further, Buyer shall have no
liability arising from or relating to any employee benefit plan of Seller, the
termination by Seller of any employee or the non-hiring by Buyer of any former
employee of Seller.
3.10 Prepaid Revenue. Except as Seller has listed on Exhibit "F",
Seller has not received any Prepaid Revenue. Except as Seller has listed on
Exhibit "F", Seller has not received any Prepaid Revenue. Seller agrees to
reimburse Buyer for any Prepaid Revenue for any goods or services it provides to
customers related to any Prepaid Revenue which is not specifically listed on
Exhibit "F".
3.11 Survival of Representations and Warranties. The covenants,
representations warranties and agreements contained in this Agreement by Seller
shall survive the Closing Date, provided the representations and warranties
shall terminate and expire on the close of business on the second anniversary of
the Closing Date and shall be of no force or effect thereafter, except with
respect to any claim with respect thereto under Section 9.01 of this Agreement,
written notice of which shall have been delivered to Seller on or prior to the
second anniversary of the Closing Date.
3.12 Legal Proceedings, Etc. Except as set forth on Exhibit "G", there
is no legal, equitable, administrative or arbitration action, suit, proceeding
or known investigation pending or threatened against or affecting Seller or
Alpha Micro or any of their respective assets which if adversely determined,
could adversely affect the business of Seller, the Purchased Assets, or any
condition, financial or otherwise, of Seller or the business, operations or
properties, or the condition, financial or otherwise, of Buyer immediately after
the Closing, or the ability of Seller to consummate the transactions
contemplated hereby. There is no judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against Alpha Micro or Seller, and there is no basis for
action, suit, proceeding or investigation against Alpha Micro or Seller,
affecting or in any way relating to the Purchased Assets. Neither Alpha Micro
nor Seller is in default with respect to any order, injunction or decree of any
court or governmental department, commission, board or agency. No such order,
-8-
EXHIBIT 2.2
<PAGE> 9
injunction or decree is now in effect which restrains the operation of the
business or the use of the Purchased Assets. There is no pending or ongoing with
any federal or State income taxing authority any income tax examination or
audit, nor has Seller received any notice of the intention of any taxing
authority to conduct such an examination or audits.
3.13 Information from Seller. None of the information or documents
contained in the Exhibits hereto are or will be, considered in the aggregate,
false or misleading in any material respect or omit to state a material fact
required to be stated in order to make any of the statements therein not
misleading in the light of the circumstances under which they are provided to
Buyer. All documents included in the Exhibits hereto are true, accurate and
complete copies of the documents they are purported to represent. The delivery
of any information or documents (or Buyer's otherwise obtaining information or
documents) shall not abrogate, diminish, limit or release (i) any of the
representations and warranties of Alpha Micro and Seller hereunder, or (ii)
Buyer's reliance thereon in consummating the Closing hereunder.
3.14 Financial Statements. Seller has delivered to Buyer copies of
unaudited financial statements for the prior two fiscal years (the information
from which was included in Alpha Microsystems' audited financial statements) and
the first three quarters of the current fiscal year. Such financial statements
were prepared using generally accepted accounting principles ("GAAP")
consistently applied (although they do not include all the disclosures contained
in financial statements prepared in accordance with GAAP), and are, to the best
of Seller's and Alpha Micro's knowledge, accurate, excepting that Seller has not
verified the Fixed Assets reflected on such financial statements.
3.15 Brokers or Finders. Seller has not entered into any agreement or
incurred any obligation, directly or indirectly, for the payment of any broker's
commissions or finder's fees in connection with this Agreement, excepting that
Seller has entered into an agreement with Philip D. Smith, fees to whom shall be
Seller's sole responsibility.
3.16 Conduct of the Business Prior to Closing. Seller covenants and
agrees that, prior to the Closing Date or the earlier termination of this
Agreement, unless the Buyer shall otherwise agree in writing, it shall (i)
conduct the operations of Seller only in the ordinary course of business and
consistent with past practice; (ii) use its best efforts to maintain and
preserve its business, assets, prospects, employees, customers and other
advantageous business relationships; (iii) maintain the Purchased Assets in
substantially their current state of repair, excepting normal wear and tear,
(iv) through the Closing Date, maintain insurance covering the Purchase Assets
of the same nature and level as that in effect on the date hereof, (v) make
timely payments on accounts payable and other obligations of Seller in
accordance with Seller's past practices; (vi) not, directly or indirectly,
except in the ordinary course of business, sell, pledge, dispose of or encumber
any of its assets; (vii) enter into any contract, agreement, commitment or
arrangement except in the ordinary course of business; (viii) not, directly or
indirectly enter into or terminate any material contract or agreement, release
or relinquish any material contract right or modify any contract affecting the
Purchased Assets; (ix) not take any action with respect to the grant of any
severance or termination pay (otherwise than pursuant to policies or agreements
of Seller in effect on the date hereof) or with respect to any increase of
benefits payable under its severance or termination pay policies or agreements
in effect on the date hereof; (x) not adopt or amend any
-9-
EXHIBIT 2.2
<PAGE> 10
bonus, profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust, fund
or other arrangement for the benefit or welfare of any employee of Seller or
increase in any manner the compensation or fringe benefits of any employee of
the Seller.
3.17 Commissions From Alpha Micro. Based upon a commission rate of
fourteen percent (14%) for hardware maintenance contracts, the commissions
payable with respect to customers on the Customer Lists would for the full year
prior to the Closing have resulted in revenues to Seller of not less than Thirty
Thousand Dollars ($30,000).
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BUYER
As an inducement to Seller to enter into this Agreement, Buyer
represents and warrants to Seller, and as to covenants herein agrees with
Seller, as of the date of execution of this Agreement and as of the Closing
Date, as follows:
4.01 Incorporation. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nebraska.
4.02 Authority. All corporate action necessary to authorize and
approve the execution and performance of this Agreement by Buyer has been taken,
and this Agreement constitutes a valid and binding agreement, enforceable
against Buyer in accordance with its terms. No authorizations, consents or
approvals, whether of governmental bodies, creditors or otherwise, are necessary
in order to enable Buyer to enter into and perform this Agreement. Consummation
of the transactions herein contemplated will not conflict with or result in a
breach of any of the terms or provisions of any agreement or instrument to which
Buyer is a party or by which Buyer may be bound or to which any of the property
or assets of Buyer is subject, the Certificate of Incorporation or Bylaws of
Buyer, or any statute or any order, decree, judgment, rule or regulation
applicable to Buyer of any court or of any regulatory authority or other
governmental body having jurisdiction over Buyer, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the Purchased Assets.
4.03 Brokers or Finders. Buyer has not entered into any agreement or
incurred any obligation, directly or indirectly, for the payment of any broker's
commissions or finder's fees in connection with this Agreement.
4.04 Survival of Representations and Warranties. The covenants,
representations, warranties and agreements contained in this Agreement by Buyer
shall survive the Closing Date, provided the representations and warranties
shall terminate and expire on the close of business on the second anniversary of
the Closing Date and shall be of no force or effect thereafter, except with
respect to any claim with respect thereto under Section 9.01 of this Agreement,
written notice of which shall have been delivered to Buyer on or prior to the
second anniversary of the Closing Date.
-10-
EXHIBIT 2.2
<PAGE> 11
4.05 Confidentiality. Buyer acknowledges that it will in the course of
its due diligence, as contemplated by Article V below, it will have access to
and obtain confidential, nonpublic, proprietary information of Seller. Buyer
agrees to maintain such confidential, nonpublic, proprietary information of
Seller as confidential, not to disclose it prior to the Closing to any other
person or entity (except its advisors as is necessary relative to the
transactions contemplated herein, who are held by Buyer to the same restrictions
as set forth in this Section 4.05), and not to use it prior to the Closing. To
the extent such confidential, nonpublic, proprietary information of Seller is
not included in the Purchased Assets, Seller agrees to maintain such
confidential, nonpublic, proprietary information of Seller as confidential both
before and after the Closing, not to disclose it either before or after the
Closing to any other person or entity, and not to use it either before or after
the Closing.
4.06 Cooperation. Buyer agrees to provide such information as is
required and otherwise to cooperate with Seller to obtain all consents required
under the Assigned Contracts.
ARTICLE V
DUE DILIGENCE
5.01 Information and Records. Upon execution of this Agreement, Seller
shall deliver or otherwise make available to Buyer for review all such
information and records relating to the Purchased Assets as Buyer shall
reasonably request. From the date hereof through the Closing Date, Seller shall
afford to the officers, certified public accounts, lawyers and other
representatives of Buyer, reasonable access, at all reasonable times and in a
manner which is not unduly disruptive to Seller's normal business operations, to
all properties, books and records of Seller, to the professional advisors of
Seller and to such information as Buyer may reasonably request, and also that
Buyer may have full opportunity to make such investigations as Buyer shall deem
necessary to evaluate the Purchased Assets and the business of Seller.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.01 Conditions Precedent to the Performance of Seller's Obligations.
The obligations of Seller to sell the Purchased Assets pursuant to this
Agreement are subject, at the option of Seller, to the fulfillment on or before
the Closing Date of each of the following conditions:
(a) Compliance with Terms. At the Closing Date, all of the
terms, conditions and agreements herein to be complied with and
performed by Buyer at or before the Closing Date shall have been
complied with or performed in all material respects.
(b) Accuracy of Representations and Warranties. Seller shall
not have acquired information that there is any material error,
misstatement or omission in any of the representations or warranties
made herein by Buyer. The representations and
-11-
EXHIBIT 2.2
<PAGE> 12
warranties made by Buyer in this Agreement shall be correct and
complete at and as of the Closing Date, with only those exceptions
which have been approved in writing by Seller.
(c) Delivery of Required Items. Buyer shall have delivered
all items set forth in Section 8.02 below.
(d) Transaction Legal. There shall be no order, decree or
ruling by any court or governmental agency or threat thereof or any
other fact or circumstance which might prohibit or render illegal the
transactions contemplated by this Agreement.
(e) Lender Consent. The consent of Seller's primary lender
shall have been obtained.
6.02 Conditions Precedent to the Performance of Buyer's Obligations.
The obligations of Buyer to purchase the Purchased Assets pursuant to this
Agreement are subject to the fulfillment on or before the Closing Date of each
of the following conditions:
(a) Compliance with Terms. At the Closing Date, all of the
terms, conditions and agreements herein to be complied with and
performed by Seller at or before the Closing Date shall have been
complied with or performed in all material respect.
(b) Accuracy of Representations and Warranties. Buyer shall
not have acquired information that there is any material error,
misstatement or omission in any of the representations or warranties
made herein by Seller. The representations and warranties made by
Seller in this Agreement shall be correct and complete at and as of
the Closing Date, subject only to those exceptions which have been
approved in writing by Buyer, in its sole and absolute discretion.
(c) Transaction Legal. There shall be no order, decree or
ruling by any court or governmental agency or threat thereof or any
other fact or circumstance which might prohibit or render illegal the
transactions contemplated by this Agreement.
(e) Delivery of Required Items. Seller shall have delivered
all items set forth in Section 8.01 below.
ARTICLE VII
TERMINATION
7.01 Termination. This Agreement may be terminated and abandoned at
any time:
(a) by mutual written consent of Buyer and Seller;
-12-
EXHIBIT 2.2
<PAGE> 13
(b) by Buyer, on the Closing Date, if any one or more of the
conditions precedent to its obligations herein shall not have been
fulfilled or waived in writing by Buyer, or if any required delivery
pursuant to Section 8.01 has not been made; and
(c) by Seller, on the Closing Date, if any one or more of
the conditions precedent to its obligations herein shall not have been
fulfilled or waived in writing by Seller or if any required delivery
pursuant to Section 8.02 has not been made.
7.02 Closing. Provided that all of the conditions to Closing have been
fully satisfied or waived, the transactions contemplated by this Agreement shall
be consummated at a closing (the "Closing") to be held at the offices of Seller
on January 31, 1997 (the "Closing Date") at 10:00 a.m., Pacific Standard Time,
or at such other place or time as shall be mutually agreed upon in writing
between Buyer and Seller, but in no case later than February 7, 1997.
ARTICLE VIII
DELIVERIES AT CLOSING
8.01 Deliveries of Seller. At the Closing, Seller shall deliver to
Buyer all of the following:
(a) Bill of Sale. Originally executed Bill of Sale for the
Purchased Assets of Seller.
(b) Blanket Assignment. Blanket assignment by Seller to
Buyer of all right, title and interest to the Software Support
Contracts as well as such other assignments which Buyer reasonably
believes are necessary to vest in Buyer all of Seller's right, title
and interest in and to the Purchased Assets.
(c) Consents. The consent of the landlord to the assignment
of the Lease for the premises as well as any consents received in
connection with the assignment of the Assigned Contracts.
(d) Customer Lists. The Customer Lists.
(e) Software Support Contracts. The original or a true and
correct copy of each Software Support Contract.
(f) Closing Certificate. A certificate of its president
certifying that the representations and warranties contained herein
continue to be correct and complete as of the Closing Date.
(g) Lease Assignments. Lease Assignments executed by Seller
as contemplated by Section 2.07, together with any required consents
thereunder which have been received.
-13-
EXHIBIT 2.2
<PAGE> 14
(h) Covenant Not to Compete. Covenant Not to Compete
executed in accordance with Section 9.05.
(i) Acknowledgment of Assignment of Commissions. An
Acknowledgment of Assignment of Commissions in the form of Exhibit "I"
executed by Alpha Micro.
(j) Subordination Agreement. A subordination agreement in
favor of Union Bank subordinating Seller's interest in any assets of
Buyer excepting the Purchase Assets, executed by Seller.
8.02 Deliveries of Buyer. At the Closing, Buyer shall deliver to
Seller all of the following:
(a) Initial Payment. The initial payment;
(b) Promissory Notes. The executed Promissory Note in the
form of Exhibit "C";
(c) Closing Certificate. A certificate of its president
certifying that the representations and warranties contained herein
continue to be correct and complete as of the Closing Date;
(d) Lease Assignments. Lease Assignments executed by Buyer
as contemplated by Section 2.07;
(e) Assignment of Commissions. The executed Assignment of
Commissions in the form of Exhibit "H"; and
(f) Security Agreement. A Security Agreement in the form of
Exhibit "I", and a UCC-1 Financing Statement executed by Buyer
evidencing the security interest granted therein.
(g) Assumption of Liabilities. An Assumption of Liabilities
confirming Buyer's assumption of the Assigned Contracts.
ARTICLE IX
POST-CLOSING COVENANTS; INDEMNIFICATION
9.01 Indemnification by Buyer, Seller and Alpha Micro.
(a) Indemnification by Seller. Seller and Alpha Micro hereby
jointly and severally agree to indemnify and hold Buyer, its officers,
directors, employees, agents, advisers, affiliates and associates
harmless from all loss, damages, liability and expense (including
reasonable attorneys' fees and expenses in connection with the contest
of any claim and interest on any claim paid by Buyer pursuant to this
subsection (a)), which
-14-
EXHIBIT 2.2
<PAGE> 15
Buyer may incur or sustain by reason of the fact that (i) Seller or
Alpha Micro should breach or fail to comply with any of the material
terms, conditions, covenants or agreements or any exhibits attached
hereto or any of them contained herein, (ii) any representations or
warranties made by Seller or Alpha Micro in this Agreement should
prove to be materially false or erroneous, (iii) any claims, actions,
suits, investigations or proceedings, pending or threatened, are or
have been made or commenced by, against, involving, arising out of,
relating to or affecting any part of the Purchased Assets or Seller's
operation of its business, with respect to any state of facts existing
or any event occurring prior to the Closing Date, (iv) any claim,
arbitration, action or suit by any employee of Seller terminated by
Seller and not hired by Buyer, or (v) any action, arbitration, suit,
proceeding, compromise, settlement, assessment or judgment arising out
of or incidental to any of the matters indemnified against in this
Section 9.01(a); provided, however, that Seller shall not be obligated
to indemnify Buyer or any other person or entity entitled to
indemnfication hereunder or hold it harmless with respect to any
settlement of a claim to which Seller has not consented, which consent
by Seller shall not unreasonably be withheld.
(b) Indemnification by Buyer. Buyer hereby agrees to
indemnify and hold Seller and Alpha Micro, their officers, directors,
employees, agents, advisers, affiliates and associates harmless from
all loss, liability and expense (including reasonable attorneys' fees
and expenses in connection with the contest of any claim and interest
on any claim paid by Seller pursuant to this subsection (b)), which
Seller or Alpha Micro may incur or sustain by reason of the fact that
(i) Buyer should breach or fail to comply with any of the material
terms, conditions, covenants or agreements or any exhibits attached
hereto, or any of them contained herein, (ii) any representations or
warranties made by Buyer in this Agreement should prove to be
materially false or erroneous, (iii) any claims, actions or suits, are
commenced by, against, involving, arising out of Buyer's performance
or nonperformance of the Assigned Contracts; (iv) any claims, actions,
suits, investigations or proceedings are made involving or arising out
of the operation by Buyer of the business of Seller acquired
hereunder, or the sale, transfer or other disposition by Buyer of all
or any part of the Purchased Assets, from and after the Closing Date,
or (v) any action, suit, proceeding, compromise, settlement,
assignment, judgment or arbitration arising out of or incidental to
any of the matters indemnified against in this Section 9.01(b);
provided, however, that Buyer shall not be obligated to indemnify a
Seller or any other person or entity entitled to indemnfication
hereunder or hold it harmless with respect to any settlement of a
claim to which Buyer has not consented, which consent by Buyer shall
not unreasonably be withheld.
(c) Right to Defend. If the facts giving rise to any such
indemnification shall involve any actual claim or demand by any third
party against a party entitled to indemnification hereunder (referred
to hereinafter as an "Indemnified Party"), the indemnifying Party
shall be entitled to notice of and entitled (without prejudice to the
right of any Indemnified Party to participate at its own expense
through counsel of its own choosing) to defend or prosecute such claim
at their expense and through counsel of their own choosing if they
give written notice of their intention to do so no later than the time
by which the interests of the Indemnified Party would be materially
prejudiced as a result
-15-
EXHIBIT 2.2
<PAGE> 16
of its failure to have received such notice; provided, however, that
if the defendants in any action shall include both the indemnifying
Party and Indemnified Party, and the Indemnified Party shall have
reasonably concluded that counsel selected by the indemnifying Party
have a conflict or additional defenses, the Indemnified Party shall
have the right to select separate counsel to participate in the
defense of such action on its own behalf, at the expense of the
indemnifying Party. The Indemnified Party shall cooperate fully in the
defense of such claim and shall make available to the indemnifying
Party pertinent information under its control relating thereto.
(d) Threshold; Offset Rights. Neither party shall claim, nor
shall Buyer offset against amounts due under the Promissory Note, any
amount for which it is entitled to indemnification pursuant to Section
9.01(a) or (b) unless the amount due with respect to any individual
item equals or exceeds Seven Thousand Five Hundred Dollars ($7,500)
and (ii) the party claiming that it is entitled to be indemnified has
given the other(s) written notice of its claim and the underlying
details and basis of such claim, and the item has not been cured to
the reasonable satisfaction of the other party within sixty (60) days
after receipt of such notice.
9 .02 Hardware Support. Nothing herein shall preclude Seller
or Alpha Micro from providing hardware support or maintenance services
to persons or entities included on the Customer Lists. Buyer hereby
appoints Alpha Micro, effective upon the Closing and for five years
thereafter, as its sole preferred hardware maintenance service
provider for Buyer's customers. Buyer agrees (i) within sixty (60)
days of the Closing Date to send written notices to its hardware
customers recommending Alpha Micro to its customers for hardware
maintenance and support; (ii) after the Closing Date to recommend
Alpha Micro to its existing and new customers for hardware maintenance
and support; and (iii) not to recommend any competitor of Alpha Micro
to its customers to provide hardware maintenance or support. Should
Alpha Micro cease to provide consistent, timely, professional and
industry acceptable hardware maintenance and support at market
competitive prices, Buyer shall give notice of such failure, with
detailed backup, to Alpha Micro. Should Alpha Micro fail to remedy
such failure within sixty (60) days, Buyer's obligations under this
Section 9.02 shall cease. Additionally, Buyer agrees that Alpha Micro
will be Buyer's first choice (and that Buyer will use Alpha Micro) to
provide computer hardware and peripherals for Buyer's dental industry
business, assuming consistent, timely, professional and industry
acceptable service levels and market competitive pricing.
9.03 Accounts Receivable. Buyer agrees after the Closing to
cooperate with and use commercially reasonable efforts such as it
would assert on its own behalf to collect outstanding Accounts
Receivable. Amounts received by any customer shall be applied first to
outstanding Accounts Receivable arising prior to the Closing Date, and
thereafter to accounts receivable arising after the Closing Date. To
the extent payors remit amounts due as Accounts Receivable to Seller,
Seller shall deliver all such amounts collected to Buyer within five
(5) business days. Buyer agrees upon thirty (30) days' notice by
Seller that if any customer included on the Customer Lists is
delinquent in payments listed on the Accounts Receivable listing more
than one hundred twenty (120)
-16-
EXHIBIT 2.2
<PAGE> 17
days, that Buyer will cease providing services under any Software
Support Contract to the extent permitted by law and such contract
until such customer's debt is paid.
9.04 Maintenance Commissions. Alpha Micro agrees to pay to
Buyer as commissions on maintenance contracts solicited for and
obtained on behalf of Alpha Micro to provide hardware services, as
follows:
(a) with respect to customers on Seller's Customer
List, at the rate of fourteen percent (14%) of amounts paid
to Alpha Microsystems for hardware maintenance agreements,
until the Promissory Note is fully paid and thereafter at
Alpha Microsystems' standard commission rates; and
(b) with respect to any other customers, at Alpha
Microsystems' standard commission rates.
Alpha Micro shall deliver to Seller by the twentieth (20th)
day of each month a complete listing by customer of the commissions
applied against the Promissory Note and the earnout.
9.05 Covenant Not To Compete. During the period commencing on the
Closing Date and continuing until three (3) years after such Closing Date
("Non-Compete Period"), neither Seller nor Alpha Micro shall, (i) directly or
indirectly, as an owner of any equity, legal, beneficial or other interest, or
otherwise, or on its own behalf, develop or provide to any other person or
entity, any practice management software specific to the dental industry or any
support therefor; or (ii) solicit or offer employment to any person who was an
employee of Seller at any time within the one (1) year prior to the Closing.
Nothing herein shall be deemed to preclude Alpha Micro from providing hardware
maintenance services or network support to any person or entity within the
dental industry. Seller and Alpha Micro agree to execute a Covenant Not To
Compete separate from this Agreement reflecting the terms hereof and deliver
such Covenant Not To Compete to Buyer at the Closing.
9.06 Audit Rights. Seller shall be permitted not more than once in any
six (6) month period, at its own expense, to perform an audit of Buyer's books,
on not less than five (5) business days notice and during normal business hours.
To the extent any such audit reveals that Buyer has underpaid Seller during the
audit period by more than five percent (5%) of the amounts due Seller, Buyer
shall reimburse Seller its reasonable costs of such audit. Buyer shall be
permitted not more than once in any six (6) month period, at its own expense, to
perform an audit of Alpha Micro's books, on not less than five (5) business days
notice and during normal business hours. To the extent any such audit reveals
that Alpha Micro has underpaid Buyer during the audit period by more than five
percent (5%) of the amounts due Buyer, Alpha Micro shall reimburse Buyer its
reasonable costs of such audit.
-17-
EXHIBIT 2.2
<PAGE> 18
ARTICLE X
GENERAL PROVISIONS
10.01 Notification of Changes. The party will promptly notify the
other in writing of the, existence or happening of any material fact, event or
occurrence which may tend to alter the accuracy or completeness of any
representation or warranty contained in this Agreement.
10.02 Notices. Except as otherwise expressly provided herein, any
notice herein required or permitted to be given shall be in writing and shall be
personally served or sent by overnight courier, by registered mail or certified
mail, postage prepaid, or by prepaid telex, telecopy (followed with telephonic
confirmation that the telecopy was received at the intended site) or telegram
and shall be deemed to have been given when such writing is received by the
intended recipient thereof. For the purposes hereof, the addresses of the Party
hereto (until notice of a change thereof served as provided in this Section
10.02) shall be as follows:
If to Buyer: AlphaHealthCare
2722 South Fairview Street
Santa Ana, California 92704
ATTN: Chief Financial Officer
Fax No.: (714) 641-7678
With a copy Allen, Matkins, Leck, Gamble & Mallory LLP
to: 515 South Figueroa Street, 8th Floor
Los Angeles, California 90071
ATTN: Debra Dison Hall, Esq.
Fax No: (213) 620-8816
If to Seller: GLR Systems, Inc.
201 North 8th Street, Suite 215
Lincoln, Nebraska 68508
Attn: Glenn A. Friendt
Fax. No.: (402) 441-3066
With a copy Brashear & Ginn
to: 800 Farnam Plaza
1623 Farnam Street
Omaha, Nebraska 68102
ATTN: Kermit A. Brashear, Esq.
Fax No: (402) 348-1111
10.03 Entire Agreement. This Agreement, together with its Exhibits,
constitutes the entire understanding between the Party with respect to the
subject matter hereof, superseding all negotiations, prior discussions and
preliminary agreements. This Agreement may not be changed except in writing
executed by Buyer and Seller.
-18-
EXHIBIT 2.2
<PAGE> 19
10.04 Arbitration. Any matter arising under this Agreement shall be
submitted to JAMS ("JAMS/Endispute") for binding arbitration by providing the
complaining party providing written notice to JAMS and the other party. The
Party may agree on a retired judge from the JAMS panel for the binding
arbitration. If they are unable to agree, JAMS will provide a list of three
available judges and each party may strike one. The remaining judge will serve
as arbitrator. In connection with any arbitration, the discovery provisions set
forth in Section 1283.05 of the California Code of Civil Procedure shall
expressly be incorporated herein and applicable to such proceeding.
10.05 Attorneys' Fees. In the event of the bringing of any proceeding,
including the provisions of Section 10.04, by a party hereto against another
party or Party hereunder by reason of a beach of any of the covenants,
conditions, agreements or provisions by the other party or Party arising out of
this Agreement, the party in whose favor the final judgment decision shall be
entered shall be entitled to have and record from the other party or Party all
costs and expenses of suit, including reasonable attorneys' fees.
10.06 Waiver. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or be construed as a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
10.07 Assignment. This Agreement shall not be assignable by any party
without the consent of the other party, and such consent shall not be
unreasonably withheld.
10.08 Severability. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall to any extent be found
to be invalid, void or unenforceable, such provision shall be limited as
necessary to render it valid and enforceable and the remaining provisions and
any application thereof shall continue in full force and effect without being
impaired or invalidated in any way.
10.09 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall be binding upon and shall inure to the benefit of the
Party hereto, their personal representatives, heirs, executors, administrators,
successors and/or assigns.
10.10 Further Actions. Each of the parties hereto agrees to take any
and all actions reasonably necessary in order to carry out the provisions of
this Agreement.
10.11 Construction. This Agreement shall be construed in accordance
with its plain meaning and not against either party as the drafting party. The
captions of the Sections of this Agreement are for convenience only and shall
not be considered or referred to in resolving questions or interpretation.
10.12 Counterparts. This Agreement may be executed in one or more
counterparts and counterparts signed in the aggregate by Buyer and Seller shall
constitute a single original instrument.
-19-
EXHIBIT 2.2
<PAGE> 20
10.13 Choice of Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"SELLER" "BUYER"
ALPHAHEALTHCARE, a California GLR Systems, Inc. dba UNIDENT Practice
corporation Performance Systems, a Nebraska
corporation
By:______________________________ By:______________________________
Its:__________________________ Its:_____________________________
-20-
EXHIBIT 2.2
<PAGE> 21
EXHIBITS
Exhibit "A": Excluded Assets
Exhibit "B": Purchased Assets and Assigned Contracts
Exhibit "C": Promissory Note
Exhibit "D": Deleted
Exhibit "E": Allocation of Purchase Price
Exhibit "F": Prepaid Revenue
Exhibit "G": Legal Proceedings
Exhibit "H": Accounts Receivable
Exhibit "I": Assignment of Commissions
Exhibit "J": Security Agreement
EXHIBIT 2.2
<PAGE> 1
FOR RELEASE: JANUARY 15, 1997 AT 7:30 AM EST
Contact: Erik Randerson (investors)
Owen Daley (media)
Allen & Caron/South Coast Communications
(714) 252-8440
ALPHA MICROSYSTEMS SELLS PANDA SCHOOL FOODSERVICE SOFTWARE OPERATION TO PACIFIC
TRIANGLE SOFTWARE
SANTA ANA, CA (January 15, 1997) . . . . . Alpha Microsystems (Nasdaq NM:ALMI)
announced today that it has sold its PANDA operation, which develops and markets
foodservice software for elementary and secondary schools, to privately-held
Pacific Triangle Software, Inc. of San Mateo, CA. Pacific Triangle Software is a
developer and marketer of software and systems for the school foodservice
market. The sales price for PANDA is approximately $1.0 million including
contingent payments of $600,000. The sale is not expected to have a material
impact on the Company's fiscal fourth quarter ending February 23, 1997. Further
terms were not disclosed.
In making the announcement, Alpha Microsystems President and CEO Douglas J.
Tullio said, "The sale of the PANDA operation is another important step in our
strategy to focus our efforts and resources on the AlphaCONNECT(TM) family of
Internet/intranet products, which includes AlphaCONNECT Pro(TM) and AlphaCONNECT
StockVue(TM), and on our North American services operation. We anticipate that
the sale of PANDA will also help improve the future bottom-line performance of
Alpha Microsystems."
Alpha Microsystems Service Operation (AMSO) will continue to provide maintenance
support services to the current base of PANDA customers and AMSO has been
appointed the sole preferred nationwide provider of maintenance services by
Pacific Triangle for its entire installed base throughout the US.
Tullio added, "Pacific Triangle, through its Bon Appetit Software division, has
developed an excellent following as a provider of quality solutions to the
school foodservice market, and PANDA fits well into their strategic product
thrust. We are pleased that AMSO will continue to provide maintenance services
to the PANDA installed base and believe our appointment as the sole preferred
service provider by Pacific Triangle could result in additional service
opportunities for AMSO."
Pacific Triangle President and CEO David L. Swank said, "The acquisition of the
PANDA operation gives us a Windows-based software solution for those school
districts that have selected Windows as their preferred operating environment.
The installed base of PANDA customers on the West Coast also complements our
existing base of Bon Appetit Software customers."
Pacific Triangle Software, Inc. is a leader in providing industry specific
software applications to school districts and other institutions. Its Bon
Appetit Software division was a pioneer in the
EXHIBIT 20.1
<PAGE> 2
school foodservice applications market as a Business Partner of IBM serving both
AS/400 and PC users.
Alpha Microsystems serves the Internet and intranet markets through its
software, services and technologies. The Company also provides products and
services such as consulting, maintenance, software, hardware and networking,
both directly and through value-added resellers and distributors. Alpha
Microsystems has been in business for over 18 years and today has over 40
locations, as well as third party distribution channels worldwide. For more
information, contact the Company's Web site at http://www.alphamicro.com
Certain statements in this Press Release constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof.
-2-
EXHIBIT 20.1
<PAGE> 1
FOR RELEASE FEBRUARY 4, 1997 AT 7:30 A.M. EST
Contact: Erik Randerson (investors)
Owen Daley (media)
Allen & Caron/South Coast Communications
(714) 252-8440
ALPHA MICROSYSTEMS SELLS ALPHAHEALTHCARE OPERATION TO UNIDENT PRACTICE
PERFORMANCE SYSTEMS
SANTA ANA, CA (February 4, 1997). . . .Alpha Microsystems (Nasdaq NM: ALMI)
announced today that it has sold its Oregon-based AlphaHeathCare operation, a
provider of practice management solutions for the dental market, to
privately-held UNIDENT Practice Performance Systems.
UNIDENT, based in Lincoln, NE, is a developer and marketer of technology
solutions for the dental market. The sales price for AlphaHealthCare is $450,000
plus contingent payments to be made over a five-year period. The sale is not
expected to have a material impact on the Company's fiscal fourth quarter ending
February 23, 1997. Further terms were not disclosed.
In making the announcement, Alpha Microsystems President and CEO Douglas J.
Tullio said, "The sale of AlphaHealthCare marks a concluding step in our
divestiture efforts and allows us to more clearly focus our resources on the
AlphaCONNECTO family of Internet/intranet products, and the North American
services operation. We anticipate that the sale of AlphaHealthCare will also
help improve the bottom-line performance of Alpha Microsystems."
Alpha Microsystems Services Operations (AMSO) will continue to provide
maintenance support services to the current base of AlphaHealthCare customers
and AMSO has been appointed the sole preferred nationwide provider of
maintenance services by UNIDENT for its entire installed base. AMSO has also
been designated as UNIDENT's vendor of first choice for computer hardware and
peripherals.
Tullio added, "UNIDENT is a long-established, leading solutions and hardware
supplier for the dental market and AlphaHealthCare fits well into their business
model. We are pleased that AMSO will continue to provide maintenance services to
AlphaHealthCare's installed base. In addition, we believe our appointment to
sole preferred service provider, as well as vendor of first choice for UNIDENT,
could result in additional service opportunities for AMSO."
UNIDENT President Glenn Friendt commented, "We are excited about the opportunity
to work with AlphaHealthCare clients throughout the country. By incorporating
the capabilities of AlphaHealthCare into UNIDENT's current business, we can
deliver an expanded set of technologies and the highest level of customer
service to dentists from coast to coast."
UNIDENT Practice Performance Systems is a developer and reseller of computer
software, hardware and services to the dental profession. Since 1983, UNIDENT
has helped dental
EXHIBIT 20.2
<PAGE> 2
practices around the country to implement, maintain and enhance electronic
business and clinical information systems. For more information, contact UNIDENT
at 800-344-6930.
Alpha Microsystems serves the Internet and intranet markets through its
software, services and technologies. The Company also provides products and
services such as consulting, maintenance, software, hardware and networking,
both directly and through value-added resellers and distributors. Alpha
Microsystems has been in business for over 18 years and today has over 40
locations, as well as third party distribution channels worldwide. For more
information, contact the Company's Web site at http://www.alphamicro.com
Certain statements in this Press Release constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof.
-2-
EXHIBIT 20.2
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-23-1997
<PERIOD-START> FEB-25-1996
<PERIOD-END> NOV-24-1996
<CASH> 8,893
<SECURITIES> 0
<RECEIVABLES> 3,329
<ALLOWANCES> (146)
<INVENTORY> 345
<CURRENT-ASSETS> 13,851
<PP&E> 15,972
<DEPRECIATION> (12,785)
<TOTAL-ASSETS> 17,724
<CURRENT-LIABILITIES> 3,385
<BONDS> 0
0
0
<COMMON> 30,813
<OTHER-SE> (16,598)
<TOTAL-LIABILITY-AND-EQUITY> 17,724
<SALES> 4,889
<TOTAL-REVENUES> 14,830
<CGS> 2,802
<TOTAL-COSTS> 10,586
<OTHER-EXPENSES> 5,345
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21
<INCOME-PRETAX> (724)
<INCOME-TAX> (32)
<INCOME-CONTINUING> (756)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (756)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
