<PAGE>
FORM 10-Q/A
-----------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 28, 1996
or
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number: 0-12046
STREAMLOGIC CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 95-3093858
- -------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
21329 Nordhoff Street, Chatsworth, California 91311
- -------------------------------------------------------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (818) 701-8400
----------------------------
Not Applicable
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months or for such shorter period that the
Registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
October 10, 1996: 16,930,790 shares of Common Stock, $1.00 Par Value
--------------------------------------------------------------------
<PAGE>
PART II - OTHER INFORMATION
---------------------------
STREAMLOGIC CORPORATION
-----------------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits
--------
2.1 Asset Purchase Agreement, dated June 7, 1996 between
StreamLogic Corporation and FWB Software, Inc., a California
corporation doing business under the name "FWB
Incorporated".
2.2 Amendment No. 1 to Asset Purchase Agreement, dated July 3,
1996 between StreamLogic Corporation and FWB Software, Inc.
4.5 Amendment No. 3 to Rights Agreement (Previously filed with
the Commission on Form 10-Q on August 12, 1996.)
27 Article 5 FDS for 1st Quarter 10-Q (Previously filed with
the Commission on Form 10-Q on August 12, 1996.)
b) Reports on Form 8-K
-------------------
A Report on Form 8-K was filed by the Company on May 13, 1996 and
dated May 13, 1996 pursuant to Item 7 of Form 8-K ("Financial
Statements and Exhibits") and Item 8 of Form 8-K ("Change in Fiscal
Year"), and amendment Number 1 thereto on Form 8-K/A was filed on
May 28, 1996. The report related to Amendment No. 2 to Rights
Agreement which was filed as an exhibit to such report and the
Company's determination to change its fiscal year from that used in
its most recent filing with the Securities and Exchange Commission.
<PAGE>
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, thereunto duly authorized, on October 16, 1996.
STREAMLOGIC CORPORATION
By /s/ J. Larry Smart
-----------------------
J. Larry Smart
President and Chief
Executive Officer
By /s/ Lee N. Hilbert
-----------------------
Lee N. Hilbert
Chief Financial Officer
<PAGE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT"), dated June 7, 1996, by and
between StreamLogic Corporation, a Delaware corporation ("Buyer"), and FWB
Software, Inc., a California corporation doing business under the name "FWB
Incorporated" ("Seller").
RECITALS
--------
Seller is in the business of developing, assembling and distributing certain
mass-storage solutions, including its SledgeHammer Disk Arrays and SCSI
JackHammer Accelerator Boards ("HARDWARE BUSINESS"), as well as developing,
making and distributing software both for use with its mass-storage solutions
and as standalone products, including its RAID Toolkit, CD ROM Toolkit/TM/ and
HardDisk Toolkit/TM/ products ("SOFTWARE BUSINESS").
Buyer is interested in buying, and Seller is willing to sell to Buyer,
Seller's assets and business related to Seller's Hardware Business, upon and
subject to the terms and conditions of this Agreement.
A subsidiary of Buyer ("SUB") and Seller are as of this date also entering
into an Operating Agreement of FWB Software, LLC ("LLC AGREEMENT") under which
Sub and Seller are forming a California limited liability company (the
"COMPANY") to acquire and operate the Software Business previously conducted by
Seller.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained in this Agreement, the parties agree
as follows:
ARTICLE 1
TRANSFER OF ASSETS
Subject to the terms and conditions set forth in this Agreement, Seller
agrees to sell, convey, transfer, assign, and deliver to Buyer, and Buyer agrees
to purchase from Seller, the following assets, properties, and business of
Seller relating to Sellers' Hardware Business (collectively "THE ASSETS"):
<PAGE>
1.1 REAL PROPERTY LEASE. The lease of the real property more fully
described on SCHEDULE 1.1 together with all rights and privileges under such
lease (the "REAL PROPERTY LEASE") to the real property subject to such leases
(the "LEASED REAL PROPERTY");
1.2 EQUIPMENT. All the machinery, tools, dies, appliances, vehicles,
furniture, equipment (including essential replacement parts) and other tangible
personal property of every kind and description that are located upon or within
the, Leased Real Property, are owned by Seller, and are utilized in connection
with Seller's Hardware Business upon or within the Leased Real Property, a
current list of which is attached hereto as SCHEDULE 1.2 (collectively the
"OWNED EQUIPMENT");
1.3 LEASED EQUIPMENT. All of Seller's rights as of the Closing to office
furnishings, computer equipment and other tangible assets listed in SCHEDULE 1.3
hereto (collectively the "LEASED EQUIPMENT") which are covered by the equipment
leases listed in SCHEDULE 1.3 hereto (collectively the "EQUIPMENT LEASES");
1.4 INVENTORIES. All of Seller's finished goods and raw materials (whether
expensed or not), including work in process, consumable manufacturing supplies,
spare parts and repair materials related to the Hardware Business, that are
actually on hand as of the Closing date, whether on or within the Leased Real
Property or enroute thereto or elsewhere, (collectively the "INVENTORY") (a
summary of such items on hand as of April 27, 1996 is attached hereto as
SCHEDULE 1.4);
1.5 ACCOUNTS RECEIVABLE. All of Seller's accounts receivable arising out of
the operation of Seller's Hardware Business in the ordinary course and unpaid as
of the Closing date (collectively the "ACCOUNTS RECEIVABLE") (a summary of such
receivables as of April 27, 1996 is attached hereto as SCHEDULE 1.5);
1.6 CASH. Eighty five percent (85%) of any cash or cash equivalents held by
Seller immediately prior to Closing;
1.7 OTHER INTANGIBLES. All (a) trade secrets, patents, patent applications,
designs, models, schematics, and technical know-how and other related
intellectual property rights used by Seller solely in the Hardware Business, (b)
the trade names, trademarks, and service marks listed in SCHEDULE 1.7 attached
hereto, and the goodwill of the business associated therewith, and (c) all of
Seller's rights under contracts to be assumed by Buyer pursuant to Article 3.
In no event shall any copyrights, patents, patent applications, trade secrets or
other intellectual property rights relating to Seller's software or firmware or
Software Business, including without limitation those listed in SCHEDULE 1.7A
attached hereto be included within the scope of "Assets", regardless of whether
such items are used, sold or included with the products of Seller's Hardware
Business;
1.8 BOOKS AND RECORDS. All papers and records in Seller's care, custody, or
control relating to any or all of the above described Assets and the operation
thereof, including but not limited to all specifications, environmental control
records, sales records, accounting and financial records, maintenance and
production records, and plans and designs of buildings, structures, fixtures and
equipment related to the above described Assets, except for such papers
2
<PAGE>
and records which also relate to Seller's Software Business, copies of which
Seller shall provide to Buyer as required for Buyer's financial or tax
accounting; and
1.9 PREPAIDS. Those certain prepaid expenses, credits, deposits and other
prepayments related to Seller's Hardware Business (collectively "PREPAIDS") (a
summary of which as of April 27, 1996 is attached hereto as SCHEDULE 1.9).
ARTICLE 2
PURCHASE PRICE
2.1 PAYMENT OF PURCHASE PRICE. In consideration for the transfer and
assignment by Seller of the Assets and in consideration of the representations,
warranties and covenants of Seller set forth herein, Buyer shall
(a) deliver to Seller at the Closing Five Million Dollars ($5,000,000)
less the amount (if any) of indebtedness to Citibank, FSB assumed by Buyer at
the Closing, payable in cash, as more fully described in Section 10.3 hereof;
and
(b) assume and discharge, and indemnify Seller against, liabilities and
obligations of Seller under the Note, Real Property Lease, Equipment Lease, and
all other liabilities and obligations of Seller assumed by Buyer under Article
3.
The parties agree that the Purchase Price (defined as the sum of the amounts
specified in Clauses (a) and (b) above) shall be allocated as set forth on
SCHEDULE 2 and that such allocation will be used by the parties in reporting the
transaction contemplated by this Agreement for Federal and state tax purposes.
2.2 TAXES. Buyer shall pay all sales, use and transfer taxes arising out
of the transfer of the Assets and shall pay its portion, prorated as of the
Closing date, of state and local real and personal property taxes of the
business. Seller shall not be responsible for any taxes of any kind related to
the operation of the Hardware Business for any period after the Closing date.
ARTICLE 3
ASSUMPTION OF LIABILITIES
3.1 ASSUMED LIABILITIES. Subject to the provisions of Section 3.3 below, as
of the Closing, Buyer shall assume, perform and carryout, and hold Seller
harmless against, all of the following debts, obligations and liabilities of
Seller:
(a) The Amended and Restated Credit Agreement, effective as of November
23, 1994, between Seller and Citibank, FSB, as amended (the "CREDIT
AGREEMENT"),and all Notes given by Seller thereunder (collectively the "NOTE")
in the aggregate amount not to exceed Three Million Seven Hundred Thousand
Dollars ($3,700,000), including all accrued interest payable thereon;
3
<PAGE>
(b) the Real Property Lease;
(c) all of Seller's trade and accounts payable and accrued liabilities
incurred in ordinary course of Seller's business and arising out of Seller's
Hardware Business owed to third parties as of the Closing (collectively
"ACCOUNTS PAYABLE") (a summary of which as of April 27, 1996 is attached hereto
as SCHEDULE 3.1);
(d) all of Seller's warranty, support and maintenance obligations
(including without limitation obligations relating to product returns) to its
customers of products incurred in the ordinary course of Seller's Hardware
Business;
(e) all of Seller's obligations under supply and distribution agreements
relating to the Hardware Business, and all other contracts related to the
Hardware Business, listed in SCHEDULE 3.0 (including all of Seller's obligations
under unfulfilled purchase orders related to the Hardware Business as of the
Closing); and
(f) any severance payments and termination benefits (excluding accrued
vacation) paid to employees of Seller's who are not retained by Seller for its
Software Business and do not become employees of Buyer as of the Closing.
3.2 EQUIPMENT LEASES. Buyer shall, at its option, either (i) assume and
carry on the obligations of Seller to the lessors under the Equipment Leases
with respect to Leased Equipment, with each such lessor's consent, or (ii) pay
in full to Seller (or the lessors) the full amount payable with respect to the
Leased Equipment under the Equipment Leases, and in either event obtain a
release from each lessor of all of Seller's obligations under the Equipment
Leases with respect to Leased Equipment.
3.3 DISCLAIMER. The debts, obligations and liabilities assumed by Buyer
under Sections 3.1 and 3.2 shall be referred to collectively as the "ASSUMED
LIABILITIES". Except for Assumed Liabilities, no liabilities, debts or
obligations of Seller, of any nature or kind, known or unknown, absolute or
contingent, shall be assumed by Buyer. Seller agrees to indemnify and hold
Buyer harmless against all debts, claims, liabilities and obligations of Seller
not expressly assumed by Buyer hereunder.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Schedule of Exceptions attached hereto as
SCHEDULE 4, Seller hereby represents and warrants to Buyer that the following
facts and circumstances are and, except as contemplated hereby, at all times up
to the Closing date will be true and correct, and hereby acknowledge that such
facts and circumstances constitute the basis upon which Buyer is induced to
enter into and perform this Agreement. Each representation and warranty set
forth in this Article 4 shall survive the Closing and any investigation made by
or on behalf of Buyer.
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Seller is a corporation
duly organized, validly existing, and in good standing under the laws of
California, has all necessary
4
<PAGE>
corporate powers to own its properties and to carry on its business as now owned
and operated by it, and is duly qualified to transact intrastate business and is
in good standing in all jurisdictions in which the nature of its business or of
its properties makes such qualification necessary.
4.2 REAL PROPERTY. SCHEDULE 1.1 to this Agreement is a complete and
accurate legal descriptions of each parcel of real property leased to Seller,
and used by Seller in connection with the Hardware Business. The Real Property
Lease is valid and in full force, and to Seller's knowledge there does not exist
any material default or event that with notice or lapse of time, or both, would
constitute a material default under that lease. All the buildings, fixtures and
leasehold improvements used by Seller in its Hardware Business are located on
the Real Property. Seller is in compliance with all applicable federal, state,
and local laws relating to emissions, discharges and releases of hazardous
materials into the environment and the generation, treatment, storage,
transportation and disposal of hazardous wastes, the noncompliance with which
would be likely to have a material adverse effect on the Hardware Business.
4.3 INVENTORY. The Inventory consists of items of a quality and quantity
useable and salable in the ordinary course of business by Seller, except for
obsolete and slow-moving items and items below standard quality, all of which
have been written down on the books of Seller to net realizable market value or
have been provided for by adequate reserves. All items included in the
Inventories are the property of Seller, except for sales made in the ordinary
course of business; for each of these sales either the purchaser has made full
payment or the purchaser's liability to make payment is reflected in the
Accounts Receivable. Except as set forth in SCHEDULE 4.6, no items included in
the Inventory have been pledged as collateral or are held by Seller on
consignment from others.
4.4 ACCOUNTS RECEIVABLE. The Accounts Receivable arose from bona fide sales
and deliveries of goods, performance of services or other transactions in the
ordinary course of Seller's business. SCHEDULE 1.5 is a complete and current
summary of the Accounts Receivable arising out of the Seller's Hardware Business
as of April 27, 1996, based on a reasonable allocation of accounts receivable
between Seller's Hardware Business and Software Business.
4.5 TANGIBLE PERSONAL PROPERTY. The Owned Equipment and Leased Equipment
described in Sections 1.2 and 1.3 of this Agreement constitute all of the items
of tangible personal property used by Seller in connection with its Hardware
Business, except Inventory and tangible personal property used by Seller in
connection with its Software Business listed in SCHEDULE 4.5.
4.6 TITLE TO ASSETS. Except for the matters set forth in SCHEDULE 4.6,
Seller has good and marketable title to all its Assets and interests in Assets,
whether real, personal, mixed, tangible, and intangible; and all assets are free
and clear of mortgages, liens, pledges, charges, encumbrances, equities, claims,
easements, rights of way, covenants, conditions, or restrictions, except for
minor matters that, in the aggregate, are not substantial in amount and do not
materially detract from or interfere with the present or intended use of any of
these Assets, nor materially impair business operations. Seller is in quiet
possession of the Leased Real Property.
5
<PAGE>
4.7 CUSTOMERS AND SALES. SCHEDULE 4.7 to this Agreement is a correct and
current list of all current OEMs and other resellers of the products of Seller's
Hardware Business together with summaries of the sales made to each customer
during the most recent fiscal year. Seller has received no notice of
termination or intended termination from any OEM, reseller, or customer who,
during the most recent fiscal year has represented five percent (5%) or more of
the annual sales of Seller's Hardware Business.
4.8 EXISTING EMPLOYMENT CONTRACTS. SCHEDULE 4.8 to this Agreement is a list
of all employment contracts and collective bargaining agreements, and all
pension, bonus, profit-sharing, stock option, or other agreements or
arrangements providing for employee remuneration or benefits to which Seller is
a party or by which Seller is bound, which relate to Employees as defined in
Section 7.3. All these contracts and arrangements are in full force and effect,
and neither Seller nor any other party is in material default under them. There
have been no claims of material defaults and, to the Seller's best knowledge,
there are no facts or conditions which if continued, or upon notice, will result
in a material default under these contracts or arrangements. There is no
pending or, to the Seller's best knowledge, threatened labor dispute, strike, or
work stoppage affecting Seller's Hardware Business.
4.9 INSURANCE POLICIES. SCHEDULE 4.9 to this Agreement is a description of
all insurance policies held by Seller concerning the Assets. All these policies
are in the respective principal amounts set forth in SCHEDULE 4.9. Seller has
maintained and now maintains (i) insurance on all the Assets of a type
customarily insured, covering property damage and loss of income by fire or
other casualty, and (ii) adequate insurance protection against all liabilities,
claims, and risks against which it is customary to insure.
4.10 COMPLIANCE WITH LAWS. To the best of Seller's knowledge, Seller has
complied with, and is not in violation of, applicable federal, state, or local
statutes, laws, and regulations (including, without limitation, any applicable
building, zoning, or other law, ordinance, or regulation) affecting its Assets
or the operation of its Hardware Business.
4.11 LITIGATION. Except as set forth in SCHEDULE 4.11 there is no suit,
action, arbitration, or legal, administrative, or other proceeding, or
governmental investigation pending or, to the Seller's best knowledge,
threatened, against or affecting Seller's Hardware Business or the Assets. The
matters set forth in SCHEDULE 4.10 if decided adversely to Seller will not
result in a material adverse change in the business of Seller's Hardware
Business or the Assets.
4.12 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Except as set forth in
SCHEDULE 4.12, neither the entry into this Agreement nor the consummation of the
transactions contemplated hereby will result in or constitute any of the
following: (i) a breach of any term or provision of this Agreement; (ii) a
default or an event that, with notice or lapse of time or both, would be a
default, breach, or violation of the articles of incorporation or bylaws of
Seller or any lease, license, promissory note, conditional sales contract,
commitment, indenture, mortgage, deed of trust, or other agreement, instrument,
or arrangement to which Seller is a party or by which Seller or the Assets are
bound; (iii) an event that would permit any party to terminate any agreement or
to accelerate the maturity of any indebtedness or other obligation of Seller;
(iv) the creation or imposition of any lien, charge, or encumbrance on any of
the Assets; or (v) the
6
<PAGE>
violation of any law, regulation, ordinance, judgment, order, or decree
applicable to or affecting Seller or the Assets, in each case except as such as
would not result in a material adverse effect on Seller or the Assets. Seller's
March 30, 1996 financial statements were prepared in accordance with GAAP.
4.13 AUTHORITY AND CONSENTS. Except as set forth in SCHEDULE 4.13, Seller
has the right, power, legal capacity and authority to enter into, and perform
its obligations under this Agreement, and no approvals or consents of any other
persons are necessary in connection with it. The execution and delivery of this
Agreement by Seller have been duly authorized by all necessary corporate action
of Seller (including any necessary action by Seller's security holders), and
this Agreement constitutes a legal, valid and binding obligation of Seller
enforceable in accordance with its terms.
4.14 INFORMATION FURNISHED TO BUYER FOR BULK TRANSFER NOTICE. SCHEDULE 4.13
is a true, complete and correct list of all names and business addresses used by
Seller within the preceding three years, and accurately sets forth the present
location of the Assets.
4.15 WARRANTY RESERVES. Warranty reserves are calculated using a formula
which when applied to Seller's Hardware Business has historically resulted in
adequate reserves and comply with GAAP where applicable.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Buyer represents and
warrants that Buyer is a corporation duly organized, existing, and in good
standing under the laws of Delaware, has all necessary corporate powers to own
its properties and to carry on its business as now owned and operated by it, and
is duly qualified to transact intrastate business and is in good standing in all
jurisdictions in which the nature of its business or of its properties makes
such qualifications necessary.
5.2 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Neither the entry into
this Agreement nor the consummation of the transactions contemplated hereby will
result in or constitute any of the following: (i) a breach of any term or
provision of this Agreement; (ii) a default or an event that, with notice or
lapse of time or both, would be a default, breach, or violation of the articles
of incorporation or bylaws of Buyer or any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust, or
other agreement, instrument, or arrangement to which Buyer is a party or by
which Buyer or its assets are bound; (iii) an event that would permit any
party to terminate any agreement or to accelerate the maturity of any
indebtedness or other obligation of Buyer; (iv) the creation or imposition of
any lien, charge, or encumbrance on any of Buyer's assets; or (v) the violation
of any law, regulation, ordinance, judgment, order, or decree applicable to or
affecting Buyer or its assets, in each case except as such would not result in
an adverse material effect on buyer.
5.3 AUTHORITY AND CONSENTS. Buyer has the right, power, legal capacity and
authority to enter into, and perform its obligations under this Agreement, and
no approvals or consents of any
7
<PAGE>
other persons, other than those referred to in Section 6.7, are necessary in
connection with it. The execution and delivery of this Agreement by Buyer will
prior to the Closing have been duly authorized by all necessary corporate action
of Buyer (including any necessary action by Buyer's security holders), and this
Agreement constitutes a legal, valid and binding obligation of Buyer enforceable
in accordance with its terms.
ARTICLE 6
SELLER'S OBLIGATIONS BEFORE CLOSING
Seller covenants that, except as otherwise agreed in writing by Buyer, from
the date of this Agreement until the Closing:
6.1 BUYER'S ACCESS TO PREMISES AND INFORMATION. Buyer and its counsel,
accountants, and other representatives shall be entitled to have full access
during normal business hours to all Seller's properties, books, accounts,
records, contracts, and documents of or relating to the Assets. Seller shall
furnish or cause to be furnished to Buyer and its representatives all data and
information concerning the business, finances, and properties of Seller related
to the Hardware Business that may reasonably be requested.
6.2 CONDUCT OF BUSINESS IN NORMAL COURSE. Seller shall carry on its
business and activities diligently and in substantially the same manner as they
previously have been carried on, and shall not make or institute any unusual or
novel methods of manufacture, purchase, sale, lease, management, accounting or
operation that will vary materially from the methods used by Seller as of the
date of this Agreement. Without limiting the foregoing, Seller shall not enter
into any agreements for the purchase of supplies, raw materials, equipment,
spare parts or the like at prices higher than generally prevailing in the
industry or enter into any agreements for the sale of goods at prices lower than
generally prevailing in the industry. Seller shall not pay any dividend or make
other distribution to its shareholders, except those necessary to meet
shareholders' tax liabilities with respect to the business; provided that Seller
may continue to pay current salary and benefits in the ordinary course to Norman
Fong.
6.3 PRESERVATION OF BUSINESS AND RELATIONSHIPS. Seller shall use its best
efforts, without making any commitments on behalf of Buyer, to preserve its
business organization intact, to keep available to Seller its present officers
and employees, and to preserve its present relationships with suppliers,
customers, and others having business relationships with it, except in the
course of implementing the transactions contemplated by this Agreement and the
formation of the Company under the LLC Agreement.
6.4 MAINTENANCE OF INSURANCE. Seller shall continue to carry its existing
insurance, subject to variations in amounts required by the ordinary operations
of its business. At the request of Buyer and at Buyer's sole expense, the
amount of insurance against fire and other casualties which, at the date of this
Agreement, Seller carries on any of the Assets or in respect of its operations
shall be increased by such amount or amounts as Buyer shall specify.
8
<PAGE>
6.5 EMPLOYEES AND COMPENSATION. Seller shall not do, or agree to do, any of
the following acts: (i) grant (except in the ordinary course) any increase in
salaries payable or to become payable to any Employee, (ii) increase benefits
payable to any Employee under any bonus or pension plan or other contract or
commitment, or (iii) modify any collective bargaining agreement affecting
Employees to which Seller is a party or by which it may be bound. Seller shall
permit Buyer to contact Employees at all reasonable times for the purpose of
discussing with such Employees prospective employment by Buyer on or after the
Closing date, and Seller shall use its best efforts to encourage all Employees
to accept any employment offered by Buyer.
6.6 NEW TRANSACTIONS. Seller shall not do or agree to do any of the
following acts with regard to the Hardware Business:
(a) Enter into any contract, commitment, or transaction not in the usual
and ordinary course of such business; or
(b) Enter into any contract, commitment, or transaction in the usual and
ordinary course of business involving an amount exceeding $50,000, individually,
or $100,000 in the aggregate, without the prior consent of Buyer, which consent
shall not be unreasonably withheld; or
(c) Make any capital expenditures in excess of $10,000 for any single
item or $20,000 in the aggregate, or enter into any leases of capital equipment
or property under which the annual lease charge is in excess of $10,000; or
(d) Sell or dispose of any capital assets with a net book value in excess
of $5,000 individually, or $10,000 in the aggregate.
6.7 CONSENT OF OTHERS. As soon as reasonably practical after the execution
and delivery of this Agreement, and in any event on or before the Closing date,
Seller shall use its best efforts to assist Buyer in obtaining the written
consent of the persons described in SCHEDULE 4.13 to this Agreement.
6.8 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. Seller shall use its
best efforts to assure that all representations and warranties set forth in this
Agreement will be true and correct as of the Closing date as if made on that
date and that all conditions precedent to Closing shall have been met.
6.9 SALES AND USE TAX ON PRIOR SALES. Seller agrees to furnish to Buyer a
clearance certificate from the California Board of Equalization and any related
certificates that Buyer may reasonably request as evidence that all sales and
use and other tax liabilities of Seller (other than income tax liabilities)
accruing before the Closing date have been fully satisfied or provided for.
6.10 MAINTENANCE OF INVENTORY. Seller shall maintain normal quantities of
consumable manufacturing supplies, spare parts and repair materials and shall
maintain total other inventories and supplies of book value not less than $2.9
million or more than $4.5 million.
9
<PAGE>
ARTICLE 7
BUYER'S OBLIGATIONS BEFORE CLOSING
Buyer covenants that, except as otherwise agreed in writing by Seller, from
the date of this Agreement until the Closing:
7.1 CONFIDENTIALITY AGREEMENT. Buyer shall enter into a confidentiality
agreement with Seller in the form of EXHIBIT 7.1 on the date of this Agreement.
7.2 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. Buyer shall use its
best efforts to assure that all representations and warranties set forth in this
Agreement will be true and correct as of the Closing date as if made on that
date and that all conditions precedent to Closing shall have been met.
7.3 EMPLOYEES. Prior to the Closing, Buyer will offer to hire, effective as
of the Closing, such of the current employees of Seller as it may deem
appropriate, except those employees, approximately forty-two (42) in number,
involved in the Seller's Software Business whom Seller identifies to Buyer at
least ten (10) days prior to the Closing. All terms of each offer to such
person shall be determined by the Buyer in its sole discretion and nothing
herein shall constitute an agreement to assume or be bound by any previous or
existing agreement between Seller and any of Seller's employees or a guaranty
that any employee of Seller to whom an offer of employment is made shall be
entitled to remain in the employment of Buyer for any specified period of time.
Any employee of Seller to whom an offer of employment is made by Buyer and who
accepts such offer shall become an employee of Buyer as of the Closing, such
employees being referred to in this Agreement as "EMPLOYEES." Buyer shall pay
(or credit) Employees for vacation accrued while employed by Seller. Seller
shall remain liable and Buyer shall not assume or otherwise have any liability
or obligation under any pension or other benefits plans of Seller.
7.4 CONSENTS. As soon as reasonably practical after the execution and
delivery of this Agreement, and in any event on or before the Closing, Buyer,
with Seller's best efforts at assistance, will obtain the written consent of the
persons described in SCHEDULE 4.13 to this Agreement to the assignment to and
assumption of the contracts identified in SCHEDULE 4.13 by Buyer, and furnish to
Seller copies of those consents.
ARTICLE 8
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to purchase the Assets under this Agreement are
subject to the satisfaction, at or before the Closing, of all the conditions set
out below in this Article 8.
8.1 ACCURACY OF SELLER'S REPRESENTATIONS AND WARRANTIES. All representations
and warranties by Seller in this Agreement or in any written statement that
shall be delivered to Buyer by Seller under this Agreement shall be true on and
as of the Closing date as though made at that time.
10
<PAGE>
8.2 CONDITION OF ASSETS. From the date hereof and through the Closing Date,
the Assets shall not have been materially or adversely affected in any way as a
result of any fire, accident, storm or other casualty or labor or civil
disturbance or act of God or the public enemy, and at Closing the net balance of
Inventory, Accounts Receivable, Cash and Prepaids less Accounts Payable shall
not be less than $3.2 million.
8.3 CONSUMMATION OF LLC AGREEMENT. Seller and Sub shall have completed the
closing contemplated under the terms of that certain LLC Agreement dated of even
date herewith between Sub and Seller.
ARTICLE 9
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligations of Seller to sell and transfer the Assets under this
Agreement are subject to the satisfaction, at or before the Closing, of all the
following conditions:
9.1 ACCURACY OF BUYER'S REPRESENTATIONS AND WARRANTIES. All representations
and warranties by Buyer in this Agreement or in any written statement that shall
be delivered to Seller by Buyer under this Agreement shall be true on and as of
the Closing date as though made at that time.
9.2 NECESSARY CONSENTS. Buyer shall have received all consents necessary
for it to assume the obligations under the Note, the Real Property Lease, and
all other contracts, leases and other agreements listed in SCHEDULE 4.13 that
require the other party's consent to assignment to Buyer and Buyers' assumption
of obligations thereunder.
9.3 RELEASE OF PERSONAL GUARANTEES OF NORMAN FONG. Buyer shall have
furnished to Seller releases, in form satisfactory to Seller, releasing any
personal guarantee or other obligation of Seller's President, Norman Fong, under
any of the obligations listed in SCHEDULE 9.3.
9.4 CONSUMMATION OF LLC AGREEMENT. Seller and Sub shall have completed the
closing contemplated under the terms of that certain LLC Agreement dated of even
date herewith between Sub and Seller.
ARTICLE 10
THE CLOSING
10.1 TIME, PLACE AND MANNER OF CLOSING. The transfer of the Assets by
Seller to Buyer shall take place at the offices of McCutchen, Doyle, Brown &
Enersen, One Embarcadero Place, Palo Alto, California at 9 a.m. local time,
---
on July 1, 1996, or at such other place and/or time as the parties may
------
agree (the "Closing"). The Closing shall take place simultaneously with the
11
<PAGE>
Closing under the LLC Agreement, and the parties agree that no part of the
Closing shall be deemed to have occurred unless and until the Closing under the
LLC Agreement shall have occurred. In the event that the conditions specified
in this Agreement have not been fulfilled by such date, Buyer or Seller may
extend the Closing to a time not later than 9 a.m. local time, on July 16, 1996.
--- -------
Buyer and Seller may waive any or all of their respective conditions to Closing
in accordance with Section 14.11 hereof; provided, however, that no such waiver
of a condition shall constitute a waiver by the waiving party of any of its
other rights or remedies, at law or in equity, if the other party shall be in
default of any of its representations, warranties, or covenants under this
Agreement. All transactions at the Closing shall be deemed to take place
simultaneously, and no party shall have any obligation to deliver any document
or take any action contemplated by this Agreement to be delivered or taken at
the Closing unless at the Closing there occurs simultaneously each and every
other transaction contemplated by this Agreement to occur at the Closing.
10.2 SELLER'S OBLIGATIONS AT THE CLOSING. At the Closing, Seller shall
deliver or cause to be delivered to Buyer:
(a) Assignments in recordable form of the Real Property Lease, properly
executed and acknowledged by Seller, and accompanied by the consent of lessor
required by this Agreement and the lease being assigned;
(b) Instruments of assignment and transfer of all of the other Assets
of Seller to be transferred hereunder, in form and substance satisfactory to
Buyer's Counsel;
(c) An OEM License Agreement in the form attached as EXHIBIT 10.2A,
granting Buyer certain non-exclusive rights to distribute Seller's software
products and firmware bundled with the products of the Hardware Business;
(d) A Trademark License Agreement, in the form attached as EXHIBIT
10.2B, granting Buyer certain non-exclusive rights to use the Seller's "FWB"
trademark.
Simultaneously with the consummation of the transfer, Seller, through its
officers, agents, and employees, shall put Buyer into full possession and
enjoyment of all the Assets to be conveyed and transferred by this Agreement.
Seller, at any time before or after the Closing date, shall execute,
acknowledge, and deliver any further deeds, assignments, conveyances, and other
assurances, documents, and instruments of transfer, reasonably requested by
Buyer and shall take any other action consistent with the terms of this
Agreement that may reasonably be requested by Buyer for the purpose of
assigning, transferring, granting, conveying, and confirming to Buyer, or
reducing to possession, any or all property and assets to be conveyed and
transferred by this Agreement.
10.3. BUYER'S OBLIGATIONS AT THE CLOSING. At the Closing, Buyer shall
deliver to Seller the following instruments and documents against delivery of
the items specified in Section 13.1:
(a) A certified or bank cashier's check, or a wire transfer of
immediately available funds, in the amount set forth in Section 2.1(a);
12
<PAGE>
(b) A release from the Note Holder releasing Seller of any further
obligations under the Note and releasing Norman Fong of any further obligation
under his personal guarantee of the Note, together with a release of Norman Fong
from any and all other obligations listed in SCHEDULE 9.3;
(c) A release from the lessor of the Real Property Lease releasing the
Seller from any further obligations under that lease;
(d) A sublease agreement, signed by Buyer, between Buyer and Seller in
the form of attached EXHIBIT 10.3(d); and
(e) Releases from the lessors under the Equipment Leases as required
under Section 3.2.
ARTICLE 11
SELLER'S OBLIGATIONS AFTER THE CLOSING
11.1 NON-COMPETE/RIGHT OF FIRST REFUSAL ON HARDWARE SALES. Seller agrees
that for a period of two (2) years following the Closing date, Seller shall not
engage in the business of selling mass-storage devices of parallel adapter cards
that connect to such mass-storage devices which are substantially similar to
current products of Seller's Hardware Business. Seller further agrees that if
Seller engages in the business of selling other mass storage devices or adapter
cards that connect to such mass storage devices during the same two (2) year
period, Seller shall prior to appointing any third party to be a distributor of
such devices or adapter cards offer Buyer the opportunity to be an exclusive
distributor of such products (in the worldwide). Buyer shall notify Seller
within ten (10) days of receiving such offer whether Buyer wishes to be such a
distributor, in which event the parties shall negotiate in good faith the terms
and conditions of a distribution agreement for such products. If after sixth
(60) days the parties cannot reach agreement, Seller may offer non-exclusive
distribution rights to third parties provided that Buyer retains the right to be
a non-exclusive distributor on no less favorable terms for such two year period.
11.2 SELLER'S INDEMNITIES. Seller shall indemnify, defend, and hold
harmless Buyer against and in respect of any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties, and reasonable attorneys' fees,
that Buyer shall incur or suffer, which arise, result from, or relate to any
breach of, or failure by Seller to perform, any of their representations,
warranties, covenants, or agreements in this Agreement or in any schedule,
certificate, exhibit, or other instrument furnished or to be furnished under
this Agreement. Notwithstanding any other provision of this Agreement, Seller
shall not be liable to Buyer on any warranty, representation, or covenant made
by Seller in this Agreement, or under any of their indemnities in this
Agreement, regarding any single claim, loss, expense, obligation, or other
liability that does not exceed $37,500; provided, however, that when the
aggregate amount of all such claims, losses, expenses, obligations, and
liabilities not exceeding $37,500 each reaches $500,000, Seller shall thereafter
be liable in full for all such breaches and indemnities regarding all those
claims, losses, expenses, obligations, and liabilities, provided that in any
event Seller's liability for all claims, losses, expenses, obligations, and
liabilities shall in the aggregate not exceed $1,500,000. Any claim for
indemnity under this Agreement
13
<PAGE>
must be asserted by Buyer within two (2) years after the Closing date, except
for alleged breaches of Seller's covenant under Section 11.4 which must be
asserted within six (6) years after the Closing date.
11.3 ACCESS TO RECORDS. From and after the Closing, Seller shall allow
Buyer, and its counsel, accountants and other representatives, such access to
records which after the Closing are in the custody or control of Seller as Buyer
reasonably requires in order to comply with its obligations under the law or
under contracts assumed by Buyer pursuant to this Agreement.
11.4 NONSOLICITATION OF EMPLOYEES. Seller shall not, prior to the fifth
anniversary of the Closing, solicit any Employee to leave the employment of
Buyer.
11.5 DEPOSIT OF CHECKS. Seller shall cooperate with Buyer in making all
necessary or desirable arrangements after the Closing so that checks and other
payments on accounts receivable purchased by Buyer pursuant to this Agreement
may be deposited into Buyer's bank accounts without endorsement by Seller.
11.6 NON-USE OF HAMMER MARK. Seller shall not use the word hammer or a
depiction of a hammer alone or in connection with other words or symbols as a
trademark in connection with Seller's products, provided that Seller will be
entitled to use existing materials in connection with sales in its Software
Business for ninety (90) days after Closing.
ARTICLE 12
BUYER'S OBLIGATIONS AFTER THE CLOSING
12.1 COVENANT TO PERFORM ASSUMED LIABILITIES. Buyer shall perform all its
Assumed Liabilities.
12.2 BUYER'S INDEMNITIES. Buyer shall indemnify, defend, and hold harmless
Seller against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and deficiencies,
including interest, penalties, and reasonable attorneys' fees, that Seller shall
incur or suffer, which arise, result from, or relate to any breach of, or
failure by Buyer to perform, any of their representations, warranties,
covenants, or agreements in this Agreement or in any schedule, certificate,
exhibit, or other instrument furnished or to be furnished under this Agreement.
Notwithstanding any other provision of this Agreement, Buyer shall not be liable
to Seller on any warranty, representation, or covenant made by Buyer in this
Agreement, or under any of its indemnities in this Agreement, regarding any
single claim, loss, expense, obligation, or other liability that does not exceed
$37,500; provided, however, that when the aggregate amount of all such claims,
losses, expenses, obligations, and liabilities not exceeding $37,500 each
reaches $500,000, Buyer shall thereafter be liable in full for all such breaches
and indemnities regarding all those claims, losses, expenses, obligations, and
liabilities, provided that in any event Buyer's liability for all claims,
losses, expenses, obligations, and liabilities shall in the aggregate not exceed
$1,500,000. Any claim for indemnity under this Agreement must be asserted by
Seller within two (2) years after the Closing date, except for
14
<PAGE>
alleged breaches of Seller's covenant under Section 11.4 which must be asserted
within six (6) years after the Closing date.
12.3 NONSOLICITATION OF EMPLOYEES. Buyer shall not, prior to the fifth
anniversary of the Closing, solicit any employee of Seller to leave the
employment of Seller.
12.4 SEVERANCE PAYMENTS. Buyer shall pay any severance payments or
termination benefits assumed by Buyer under Section 3.1(e).
12.5 ACCESS TO RECORDS. From and after the Closing, Buyer shall allow
Seller, and its counsel, accountants and other representatives, such access to
records which after the Closing are in the custody or control of Buyer as Seller
reasonably requires in order to comply with its obligations under law or
financial or tax accounting.
ARTICLE 13
COSTS
13.1 EXPENSES. Buyer shall pay all costs and expenses incurred by Seller in
negotiating and preparing this Agreement and in closing the transactions
contemplated by this Agreement, including investment bankers' and attorneys'
fees, in an amount not to exceed the lesser of $100,000 plus the fee charged
Seller by Needham & Co., or $400,000. Except as so provided, each party shall
pay all costs and expenses incurred or to be incurred by it in negotiating and
preparing this Agreement and in closing and carrying out the transactions
contemplated by this Agreement.
13.2 FINDER'S OR BROKER'S FEES. Each of the parties represents and warrants
that it has dealt with no broker or finder in connection with any of the
transactions contemplated by this Agreement, and, insofar as it knows, no broker
or other person is entitled to any commission or finder's fee in connection with
any of these transactions, except that Needham & Co. is representing Seller and
is entitled to a fee for such representation.
ARTICLE 14
MISCELLANEOUS
14.1 HEADINGS. The subject headings of the Articles and Sections of this
Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
14.2 PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third parties to any party to this
Agreement, nor shall any provision give any third parties any right of
subrogation or action over against any party to this Agreement.
15
<PAGE>
14.3 ASSIGNMENT. This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective heirs, legal representatives,
successors, and assigns.
14.4 RECOVERY OF LITIGATION COSTS. If any legal action or any arbitration
or other proceeding is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default, or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled.
14.5 SURVIVAL OF PROVISIONS. All representations, warranties, covenants,
and agreements of the parties contained in this Agreement, or in any instrument,
certificate, opinion, or other writing provided for in it, shall survive the
Closing.
14.6 NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail registered or certified, postage
prepaid, and properly addressed as follows:
To Seller at: FWB Software Inc.
1555 Adams Drive
Menlo Park, California 94025
Attention: President
with copy to: McCutchen, Doyle, Brown & Enersen
Three Embarcadero Center
San Francisco, California 94111
Attention: Gary H. Moore
To Buyer at: StreamLogic Corporation
21329 Nordhoff Street
Chatsworth, California 91311
Attention: Chief Executive Officer
with copy to: Latham & Watkins
650 Town Center Drive
Costa Mesa, California 92626-1925
Attention: David C. Flattum
Any party may change its address for purposes of this Section by giving the
other parties written notice of the new address in the manner set forth above.
14.7 GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of California, except that this Agreement
shall be given a fair and reasonable
16
<PAGE>
construction in accordance with the intention of the parties and without regard
to, or aid of, Section 1654 of the California Civil Code.
14.8 ANNOUNCEMENTS. Seller will not make any announcements to the public or
to employees of Seller concerning this Agreement or the transactions
contemplated hereby without the prior approval of Buyer, which will not be
unreasonably withheld. Notwithstanding any failure of Buyer to approve it,
Seller may make an announcement of substantially the same information as
theretofore announced to the public by Buyer, or any announcement required by
applicable law, but Seller shall in either case notify Buyer of the contents
thereof reasonably promptly in advance of its issuance.
14.9 REFERENCES. Unless otherwise specified, references to Sections or
Articles are to Sections or Articles in this Agreement.
14.10 CURRENCY. All dollar amounts set forth herein are expressed in terms
of United States dollars.
14.11 ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement constitutes
the entire agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No supplement,
modification, or amendment of this Agreement shall be binding unless executed in
writing by all the parties. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver. No
waiver shall be binding unless executed in writing by the party making the
waiver.
14.12 NON-ASSIGNABLE CONTRACTS. Nothing in this Agreement shall be
construed as an attempt or agreement to assign any contract which is in law or
by its terms non-assignable or non-assignable without the consent of the other
party or parties thereto, unless such consent shall be given as provided in this
Agreement.
14.13 COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it as
of the day and year first above written.
StreamLogic Corporation
By /s/ J. Larry Smart
-------------------------------------
Its Chairman and Chief Executive Officer
FWB Software, Inc.
By /s/ Norman Fong
-------------------------------------
Its President
18
<PAGE>
The following schedules are omitted from this filing with the Commission.
The Company agrees to furnish to the Commission a copy of any of such omitted
schedules upon the Commission's request.
LIST SCHEDULES AND EXHIBITS
SCHEDULE 1.1 Description of Leased Real Property
SCHEDULE 1.2 Owned Equipment
SCHEDULE 1.3 Leased Equipment
SCHEDULE 1.4 Inventory
SCHEDULE 1.5 Accounts Receivable
SCHEDULE 1.7 Transferred Trademarks, Trade Names, and Service Marks
SCHEDULE 1.7A Non-Transferred Intangibles
SCHEDULE 1.9 Prepaids
SCHEDULE 2.0 Allocation of Purchase Price
SCHEDULE 3.0 Contracts Assumed by Buyer
SCHEDULE 3.1 Accounts Payable
SCHEDULE 4.0 Exceptions
SCHEDULE 4.5 Tangible Personal Property Retained by Seller
SCHEDULE 4.6 Interests in Assets Held by Third Parties
SCHEDULE 4.7 Current OEMs and Resellers
SCHEDULE 4.8 Employee Contracts
SCHEDULE 4.9 Insurance Policies Relating to Assets
SCHEDULE 4.11 Threatened or Pending Litigation
SCHEDULE 4.12 Breaches or Defaults Resulting from this Agreement
SCHEDULE 4.13 Contracts Requiring Consent for Assignment
SCHEDULE 4.14 Information Required for Bulk Transfer Notice
SCHEDULE 9.3 Personal Obligations of Norman Fong
19
<PAGE>
EXHIBIT 7.1 Confidentiality Agreement
EXHIBIT 10.2A OEM License Agreement
EXHIBIT 10.2B Trademark License Agreement
EXHIBIT 10.3d Sublease
20
<PAGE>
EXHIBIT 2.2
AMENDMENT NO. 1 TO
ASSET PURCHASE AGREEMENT
FWB Software, Inc. ("Seller") and StreamLogic Corporation ("Buyer")
pursuant to the authority reserved by them in Section 14.11 of that certain
Asset Purchase Agreement dated June 7, 1996 by and between Seller and Buyer (the
"Purchase Agreement") hereby agree to amend the Purchase Agreement as follows.
Capitalized terms used in this Amendment No. 1 without definition shall have the
meanings ascribed to such terms in the Purchase Agreement:
1. In lieu of Buyer's assumption of the Credit Agreement as contemplated
by Sections 2.1(b) and 3.1(a) of the Purchase Agreement, Buyer shall pay off all
indebtedness and other amounts due and owing under the Credit Agreement at the
Closing and, notwithstanding Section 2.1(a) of the Purchase Agreement, the
amount of such payment shall be deducted from the Purchase Price in lieu of a
deduction of the amount assumed by Buyer with respect to the Credit Agreement.
2. The first sentence of Section 4.14 of the Purchase Agreement is amended
in its entirety to read as follows:
"SCHEDULE 4.14 is a true, complete and correct list of all
names and business addresses used by the Seller within the
preceding three years, and accurately sets forth the present
locations of the Assets."
3. Buyer has waived satisfaction of the condition to Closing set forth in
the last clause of Section 8.2 of the Purchase Agreement and Buyer agrees that
it will not make any claims against Seller for indemnification for Seller's
failure to satisfy such condition.
<PAGE>
4. Notwithstanding Section 10.1 of the Purchase Agreement, the
Closing shall be postponed until 10:00 a.m. on July 8, 1996 (or such later time
and date as the parties may agree to), but the Purchase Agreement and all
documents contemplated thereby or executed in connection therewith shall be
dated as of July 1, 1996, the Closing contemplated by the Purchase Agreement
shall be deemed to have taken place at 12:01 a.m. on July 1, 1996 and the Buyer
shall be deemed to have acquired the Assets at 12:01 a.m. on July 1, 1996.
5. In furtherance of Section 11.5 of the Purchase Agreement, Seller
shall cause Buyer to become a joint signatory on Seller's main Citibank bank
account, which shall be used as a clearing account for receivables which may be
owing to either Buyer or Seller as of the Closing. In addition, Seller will
open a new separate account over which it will have sole signatory authorization
for the deposit of the Purchase Price and other business purposes.
6. Buyer acknowledges that Seller is increasing its inventory
reserve as of June 30, 1996 by $150,000 to a total reserve of $500,000, which
Buyer and Seller agree is an adequate reserve for purposes of the Purchase
Agreement, provided that Seller shall not be excused for fraud or
misrepresentation. Buyer further acknowledges that it has satisfied itself with
respect to the recall of Sledgehammer Pro by MountainGate and agrees that no
additional reserve is to be accrued for purposes of the Purchase Agreement.
Buyer further agrees to accept the amount of "Prepaids" set forth in Schedule
1.9 of the Purchase Agreement.
7. Subject to the carrier's approvals, Seller agrees to retain its
employees whom Buyer hires as of the Closing under Seller's existing health plan
until such health plan expires in October 1996 in order to give Buyer time to
establish coverage for such employees under Buyer's health plan. Buyer shall
pay to Seller the coverage costs under such health plan applicable to such
employees, calculated on an individual-by-individual basis.
2
<PAGE>
8. Seller and Buyer acknowledge that Buyer has been unable to obtain
the third party consents required by Section 9.2 of the Purchase Agreement and
the releases required by Section 9.3 of the Purchase Agreement. Seller agrees to
waive those requirements provided Buyer agrees to (i) assume Seller's
obligations under the contracts, leases and other agreements listed in SCHEDULE
4.13 (other than the Citibank Credit Agreement), (ii) indemnify and defend
Seller from and against any and all claims, obligations, liabilities, costs and
expenses incurred by Seller and arising from the obligations assumed by Buyer
and (iii) to use its best efforts to obtain such consents and releases after the
Closing. To the extent Seller retains the use of leased equipment, Seller shall
sublease such equipment from Buyer and Buyer's indemnification shall not extend
to the equipment retained by Seller.
9. The Real Property Lease shall be transferred to Buyer on the
terms set forth in the letter to Buyer from ETAK dated July 3, 1996. Seller
shall be released from the Real Property Lease and its security deposit shall be
returned to Seller in accordance with the terms of the Real Property Lease.
10. Seller and Buyer acknowledge that the attached Schedules 1.2,
1.3, 1.4, 1.5, 1.9, 2.0, 3.0, 3.1, 4.0, 4.5, 4.7, 4.8, 4.13, 4.14 and 9.3 and
the attached Exhibits 10.2A, 10.2B and 10.3d supersede and replace in their
entirety the corresponding schedules and exhibits of the Purchase Agreement.
11. The term of the Trademark License Agreement shall be two (2)
years from its Effective Date. The dollar amount set forth in clause (1) of
Section 2.1(b) of the Operating Agreement shall be $7,500,000 (instead of
$8,000,000) and the dollar amounts set forth in clause (2) shall be $6,000,000
and $9,000,000.
3
<PAGE>
12. Seller agrees that it will not license RAID Toolkit 1.9 to
Mountain Gate for the first six months after the Closing.
13. The relocation reimbursement proceeds of $375,000 to be paid by
ETAK shall be allocated $250,000 to Buyer and $125,000 to Seller.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1
as of July 3rd, 1996.
---
FWB SOFTWARE, INC.
By /s/ Norman Fong
---------------------------
Its Norman Fong, President
---------------------------
StreamLogic Corporation
By /s/ Lee Hilbert
---------------------------
Its Chief Financial Officer
---------------------------
4
