SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-20786
ALBARA CORPORATION
(Exact name of registrant as specified in its charter)
Colorado 84-1076959
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
610 South Frazier
Conroe, Texas, 77301 (409) 539-2992
(Address of principal executive offices) (Issuer's Telephone Number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, no
par value
Check whether the issuer (1) has filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such
report(s), and (2) has been subject to such filing requirements for the past 90
days.
(1) Yes No X (2) Yes X No
------ -------- -------- -------
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: December 31, 1998 - $0.
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the average bid and asked prices of such stock, as of a
specified date within the past 60 days: $120,000 based on 1,003,483 shares held
by non-affiliates and a price of $0.12 per share, which is the average of the
bid and ask price listed on the Bulletin Board for a share of stock on May 16,
1999. As of May 16, 1999, 1,461,503 shares of common stock, no par value,
were outstanding.
Documents incorporated by reference: A description of "Documents Incorporated by
Reference" is contained in Item 13 of this report.
<PAGE>
TABLE OF CONTENTS
PART I
- -------
ITEM 1. DESCRIPTION OF BUSINESS
ITEM 2. DESCRIPTION OF PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
PART II
- --------
ITEM 5. MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. FINANCIAL STATEMENTS
ITEM 8. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
PART III
- ---------
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS; COMPLIANCE WITH SECTION
16 (a) OF THE EXCHANGE ACT
ITEM 10. EXECUTIVE COMPENSATION
ITEM 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
ITEM 12. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
PART IV
- --------
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
<PAGE>
PART I
------
ITEM 1. DESCRIPTION OF BUSINESS
-------------------------------
Albara Corporation
------------------
Albara Corporation is a Colorado corporation organized in January, 1988.
In 1995 and in 1996, Albara Corporation, through its operating subsidiaries,
Micro Business Solutions, Inc., d/b/a "Hardware That Fits", and Software
Technologies, Inc., d/b/a "Helix Technologies", marketed laser printer
consumables and developed, published and marketed software for the Apple
Macintosh microcomputer (the "Macintosh") which is manufactured by Apple
Computer, Inc. ("Apple"). Marketing of its products was performed via direct
response marketing, authorized dealers and value-added resellers. Direct
response marketing is a segment of the retail business where sales are solicited
via advertising and direct mailings supplemented by telephone communications
with little or no face-to-face contact between the seller and the buyer.
During the 1994 through 1997 period, the Company's marketing was directed
to users of the Macintosh. The Company's sales were made primarily to domestic
customers and were generated principally through direct response mail campaigns.
The Company sold to individuals, businesses of all sizes, governmental entities
and academic institutions.
In December 1997, due to diminishing sales, the Company sold its Helix
technology to an independent third party, The Chip Merchant, and discontinued
all of its remaining operations. The Company sold its Helix technology along
with related trademarks and for the sum of $120,000. On December 31, 1997, the
Company disposed of its two operating subsidiaries to the President of the
Company, Mr. Real Provencher. The transaction was a non-cash transaction
resulting in transferring $245,000 in assets and $334,000 in liabilities to Mr.
Provencher for a net increase to the Company's stockholder equity of $89,000,
the amount by which such liabilities exceeded such assets. In addition, in
early January 1998, one of the Company's former operating subsidiaries now owned
by Mr. Provencher paid the Company $120,000 from the proceeds of the sale of
Helix technology in satisfaction of its outstanding liability to the Company.
Since January 1998, the Company has been a development stage company and no
longer has operations of any kind.
<PAGE>
Hardware That Fits
------------------
General Information
- --------------------
In 1996 and 1997, Micro Business Solutions, Inc. operated under the
licensed trade name "Hardware That Fits" and sold consumables (i.e., toner and
developer) for RealTech laser printers through the direct response market to
consumers. The operations of Hardware That Fits were discontinued on December,
31, 1997, due diminishing sales and the subsidiary was disposed of at that time
as described above.
Reorganization of Hardware That Fits
- ----------------------------------------
On August 25, 1993, due to an ongoing dispute with Dataproducts Corporation
("Dataproducts"), Hardware That Fits filed a voluntary Chapter 11 petition
seeking protection under the U.S. Bankruptcy Laws via an ongoing business
reorganization. The petition was filed in the United States Bankruptcy Court
for the Southern District of Texas and was identified by case number
93-46428-H2-11. The bankruptcy filing did not affect either the Company or it's
other operating subsidiary, Helix Technologies, which continued to operate
outside of bankruptcy.
On June 3, 1994, Hardware That Fits submitted an amended Plan of
Reorganization (the "Plan") to the Bankruptcy Court. Substantially all of the
liabilities incurred prior to the petition filing date, August 25, 1993, were
either discharged or were exchanged for 100,000 shares of common stock in the
Company. On August 16, 1994, the Bankruptcy Court approved and confirmed the
Plan. This action by the court resulted in Hardware That Fits' emergence from
bankruptcy effective September 15, 1994.
Marketing
- ---------
The reorganization of Hardware That Fits necessitated a substantially
reduced marketing effort in 1994 and 1995. During 1992 and the first half of
1993, Hardware That Fits sold over 5,000 RealTech laser printers. Many of these
printers were still in service in early 1996 and generated an ongoing demand for
consumables and service. Marketing efforts in 1996 were confined to selling
those established customers the printer consumables (i.e., toner and developer)
they would need for their RealTech printers. By late 1996 and into 1997, very
few of these printers were still in service resulting in little ongoing demand
for consumables.
<PAGE>
Competitors to Hardware That Fits
- -------------------------------------
Numerous competitors both large and small including office supply stores
and large mailorder suppliers existed in competition to Hardware That Fits any
of which have significantly greater capital resources than the Company.
Helix Technologies
------------------
General Information
- --------------------
Software Technologies, Inc., the Company's other operating subsidiary,
operating under the trade name "Helix Technologies", developed, published and
marketed proprietary computer software for the Macintosh. In March 1992, Helix
Technologies acquired the Helix technology and other associated assets from
Odesta Corporation. The Helix technology has been in development since 1982 and
was introduced in 1984 as the first database product for use with the Macintosh.
Helix Technologies marketed one product, Helix Express, using the Helix
technology. Helix Express is a relational database development environment for
the Macintosh. Utilizing Helix Express, database applications could be
programmed ranging from simple applications such as a Christmas card list or
recipe file list to complex fully integrated multi-user business applications.
The Helix technology along with related trademarks and copyrights were sold
to an independent third party, The Chip Merchant, in December, 1997. After the
completion of that sale the subsidiary was disposed of as described above.
Marketing
- ---------
Helix Technologies primarily relied on direct response mail campaigns
targeted to existing customers of its products. The bulk of its revenues were
generated from sales of Helix Express upgrades made to existing customers. In
addition, Helix Technologies maintained business relationships with product
distributors in Europe and Australia. All of its products sold to international
distributors are, in turn, resold to local dealers in those countries. This form
of distribution is widely utilized by companies that publish proprietary
software.
Competitors to Helix Technologies
- ------------------------------------
Helix Technologies had several significant competitors in the Macintosh
database field: Claris (a subsidiary of Apple), whose Filemaker Pro is the
recognized market leader in terms of units sold, followed by Acius, with Fourth
Dimension, and Microsoft with its Foxbase product.
<PAGE>
Employees
---------
During 1998, the only employees of the Company were its Officers.
ITEM 2. DESCRIPTION OF PROPERTIES
---------------------------------
The principal offices of the Company are located at 610 South Frazier,
Conroe, Texas 77301. The Company purchased this property in December 1990.
The property consists of an 0.84 acre tract of land improved with a warehouse
and retail building containing approximately 19,800 square feet. The mortgage
payable collateralized by this real estate has a principal balance of $208,445
at December 31, 1996, bears interest at 9% and is payable in monthly
installments of about $4,750 through April, 2001. In the opinion of the
Company's officers and directors (the "Management"), this property is adequately
insured. The federal tax basis for this property is $740,437 based on cost plus
improvements with a life of 31 years claimed utilizing straight line
depreciation. The annual realty taxes total approximately $9,200.
This property was sold in November, 1998. The Company currently occupies
approximately 1,400 square feet on a month-to-month basis at this same location.
No other offices are maintained by the Company. The Company does not own or
lease any other real property and has no intention of doing so in the
foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
-------------------------
Suit was filed by The Chip Merchant against the Company, the Company's
President, Mr. Provencher, and the Company's former subsidiary, Software
Technologies, Inc., in September, 1998, in the 359th District Court of
Montgomery County, Texas, for unspecified damages alleging that certain items
sold to The Chip Merchant in December, 1997, were never delivered. This lawsuit
was withdrawn by The Chip Merchant in May, 1999.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------
NONE.
<PAGE>
PART II
-------
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
--------------------------------------------
STOCKHOLDER MATTERS
-------------------
During the 1996 through 1998 period, the Company's common stock traded on
the over-the-counter market and was quoted in the National Quotation Bureau,
Inc.'s "Pink Sheets" and "Bulletin Board". The range of high and low bid
quotations for the Common Stock for the two most recently completed fiscal years
and the current fiscal year are provided below. The volume of trading in the
Company's Common Stock has been limited and the bid prices as reported may not
be indicative of the value of the Common Stock or of the existence of an active
trading market. These over-the-counter market quotations reflect inter-dealer
prices without retail markup, markdown or commissions and may not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
1997 Fiscal Year High Bid Low Bid
- ---------------- -------- -------
<S> <C> <C>
First Quarter $ 0.18 $0.09
Second Quarter $ 0.18 $0.09
Third Quarter $ 0.18 $0.09
Fourth Quarter $ 0.09 $0.01
1998 Fiscal Year
- ----------------
First Quarter $ 0.01 $0.01
Second Quarter $ 0.01 $0.01
Third Quarter $ 0.01 $0.01
Fourth Quarter $ 0.05 $0.04
1999 Fiscal Year
- ----------------
First Quarter $ 0.09 $0.04
</TABLE>
On May 16, 1999, the reported bid for the Company's Common Stock was $0.10.
The number of record holders of the Company's Common Stock on May 16, 1999, was
183.
<PAGE>
The Company has never paid dividends with respect to the Common Stock and
currently does not have any plans to pay cash dividends in the future. There
are no contractual restrictions on the Company's present or future ability to
pay dividends. Future dividend policy is subject to the discretion of the Board
of Directors and is dependent upon a number of factors, including future
earnings, capital requirements and the financial condition of the Company. The
payment of future dividends will also be restricted to the extent of $20,000 in
liquidation preference inuring to the benefit of the holders of the Company's
Series F Preferred Stock. The Colorado Corporation Code provides that a
corporation may not pay dividends if the payment would reduce the remaining net
assets of the corporation below the corporation's stated capital plus amounts
constituting a liquidation preference to other security holders.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------
The following discussion should be read in conjunction with the Financial
Statements and related notes thereto included elsewhere in this Form 10-KSB. The
operations discussed below were discontinued in December, 1997, and the
subsidiaries conducting these operations were disposed of at that time. The
Company has not conducted business operations of any kind since the disposition
of these operating subsidiaries. The following discussion covers operations as
conducted in 1996 and 1995, but they do not in anyway represent current
operations of the Company nor should they be assumed indicative of the future
prospects of the Company. Since December 31, 1997, the Company has been a
development stage company with no operations.
1996 Compared to 1995: Results of Operations
- ------------------------ -----------------------
Revenues: Total revenues for the year ended December 31, 1996, decreased
$473,000 from $1,620,000 to $1,147,000, a 29% decrease compared to 1995.
Hardware That Fits serviced customers that purchased RealTech Laser Printers in
1991 and 1992. The decrease in revenues is primarily due to an erosion of this
customer base as these printers are retired or replaced. Helix Technologies'
revenues also decreased when compared to 1995 due to an erosion of their
existing customer base.
Gross profit: Gross profit for the year ended December 31, 1996, decreased
$409,000, from $1,417,000 to $1,008,000, a decrease of 29% compared to 1995. The
gross profit margin (i.e. gross profit as a percentage of revenues) for the year
ended December 31, 1996, when compared to 1995, remained at about the same level
of 88%.
<PAGE>
General and administrative expenses: General and administrative expenses
for the year ended December 31, 1996, increased $9,000, from $1,395,000 to
$1,404,000, a 1% increase compared to 1995. Hardware That Fits reduced
personnel costs substantially from 1995 to 1996 as its work force was reduced
from four full-time employees in the first quarter of 1995 to two in the first
quarter of 1996. Other expenses were reduced primarily due to the lower
business volume, and smaller employee base. Helix Technologies reduced its work
force from 12 employees in the first quarter of 1995 to 10 employees in the
first quarter of 1996, thereby reducing its personnel expenses accordingly. A
series of direct mail campaigns to potential new customers was tested in the
first half of 1996 resulting in an increase in marketing related expenditures.
In the third quarter, an increase in marketing related expenditures occurred as
a result of out sourcing certain tasks which had been performed within the
Company in 1995. Furthermore, a substantial increase in amortization expense
was charged to operations as estimates of future expected revenues from
capitalized Product Master Development Cost were reduced.
Net Income/Loss: Net loss for the year ended December 31, 1996, was $302,000 as
compared to net income of $132,000 in 1995.
Liquidity and Capital Resources
- ----------------------------------
Since inception, the Company has suffered from limited availability of
working capital. Bank lines of credit have been limited and in some instances
have required the personal guaranty of the Company's President, Mr. Provencher.
The Company has relied on a variety of sources to expand its business
operations, including the issuance of Common Stock and Preferred Stock, trade
credit agreements, "floor plan" credit arrangements for the purchase of
inventory, and the acquisition of property and equipment using a combination of
cash, preferred stock and a mortgage payable over ten years. During the period
1996 through 1998, the Company has not had access to any external sources of
working capital and has relied on the sale of assets to provide its limited
working capital. The balance of working capital requirements have been met by
internally generated cash flows.
In July 1992, Hardware That Fits and Helix Technologies entered into two
separate telephone system lease agreements. The leases entered into by
Hardware That Fits and Helix Technologies are presented in the accompanying
financial statements as capital leases and had an outstanding balance at
December 31, 1996, of approximately $54,000. Although Helix Technologies did
fulfill its lease obligation and eventually exercised its purchase option in
1996, Hardware That Fits made no payments on its capital lease in 1996. In 1997
Hardware That Fits reached a settlement with the leasing company providing for a
nominal payment in exchange for a full release of all liens by the leasing
company.
<PAGE>
On April 16, 1993, the Company entered into a loan transaction with Barbara
A. Provencher, Secretary and Director of the Company. The Company borrowed
$150,000 bearing interest at prime rate plus 2% (i.e., 8% per annum in 1996).
The Company agreed to make monthly principal and interest installment payments
of $12,500 with a final payment of the remaining principal and interest due on
October 15, 1993. The Company repaid this obligation in full in early 1999. At
December 31, 1996, 1997 and 1998, the note payable had a balance of
approximately $22,000, $29,000 and $3,000, respectively.
On December 31, 1997, the Company sold its Helix technology along with
related trademarks and copyrights to an independent third party, The Chip
Merchant for the sum of $120,000. After the completion of that sale the
subsidiary was disposed of. The cash from the sale of Helix technology was paid
to the Company in early January, 1998 (see below).
On December 31, 1997, the Company disposed of its two operating
subsidiaries to the President of the Company, Mr. Real Provencher. The
transaction was a non-cash transaction resulting in transferring $245,000 in
assets and $334,000 in liabilities to Mr. Provencher for a net increase to the
Company's stockholder equity of $89,000. In addition, in early January 1998, one
of the Company's former operating subsidiaries now owned by Mr. Provencher, paid
the Company $120,000 from the proceeds of the sale of Helix technology in
satisfaction of its outstanding liability to the Company.
In November 1998, the Company sold its land and building for the sum of
$401,000 net of certain selling expenses. After repayment of the outstanding
mortgage balance and taxes of $177,000, this transaction provided the Company
$216,000 of cash.
As of December 31, 1996, 1997 and 1998, the Company had net tax loss
carryforwards of approximately $281,000, $194,000 and $528,000 respectively
which begin to expire in 2008. (See Note D in the Financial Statements and
related notes included elsewhere in this Form 10-KSB for additional information
about the Company's tax position).
Plan of Operation
- -------------------
The Company does not currently have any external sources of working
capital. Management has not entered into any commitments for research and
development or for capital expenditures. However, the limited working capital
availability of the company will suffice to cover general and administrative
expenses excluding salaries for its officers for approximately one year. No
additional employees are expected in the foreseeable future.
<PAGE>
While the Company has not engaged in any business activities since December
1997, Management believes that it may be possible to recover some value for the
stockholders by restructuring the Company to effect a business combination
transaction with a suitable privately-held company that has both business
history and operating assets.
Management believes the Company will offer owners of a suitable privately-held
company the opportunity to acquire a controlling interest in a public company at
substantially less cost than would otherwise be required to conduct an initial
public offering. Nevertheless, Management is not aware of any empirical
statistical data that would independently confirm or quantify Management's
beliefs concerning the perceived value of a merger or acquisition transaction
for the owners of a suitable privately-held company. The owners of any existing
business selected for a business combination with the Company will incur
significant costs and expenses, including the costs of preparing the required
business combination agreements and related documents, the costs of preparing a
Current Report on Form 8-K describing the business combination transaction and
the costs of preparing the documentation associated with any future reporting
under the Securities Act.
The Company expects to initiate a search for a suitable privately-held
company in 1999. If successful, this type of business combination is often
referred to as a "blind pool" because stockholders will not ordinarily have an
opportunity to analyze the various business opportunities presented to the
Company, or to approve or disprove the terms of any business combination
transaction that may be negotiated by Management on behalf of the Company.
Consequently, the Company's potential success will be heavily dependent on the
efforts and abilities of its officers and directors, who will have virtually
unlimited discretion in searching for, negotiating and entering into a business
combination transaction. Management has had limited experience in effecting
these type of business combinations. Although Management believes the Company
will be able to enter into a business combination within 12 months, there can be
no assurance as to how much time will elapse before a business combination is
effected, if ever. The Company will not restrict its search to any specific
business, industry or geographical location, and the Company may participate in
a business venture of virtually any kind or nature.
Management anticipates that the selection of a business opportunity for the
Company will be complex and extremely risky, because of general economic
conditions, rapid technological advances being made in some industries, and
shortages of available capital. Management believes there are numerous
privately-held companies seeking the perceived benefits of a publicly traded
corporation. Such perceived benefits may include facilitating debt financing or
improving the terms on which additional equity may be sought, providing
liquidity for the principals of the business, creating a means for providing
incentive stock options or similar benefits to key employees, providing
liquidity for all stockholders and other factors.
<PAGE>
Potential opportunities may occur in many different industries and at
various stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex. Management anticipates that the Company will be able to participate
in only one business venture. This lack of diversification should be considered
a substantial inherent risk because it will not permit the Company to offset
potential losses from one venture against gains from another. Moreover, due to
the Company's lack of any meaningful financial, managerial or other resources,
Management believes the Company will not be viewed as a suitable business
combination partner for either developing companies or established businesses
that are in need of substantial additional capital.
Acquisition Opportunities
- --------------------------
In implementing a particular business combination transaction, the Company
may become a party to a merger, consolidation, reorganization, joint venture,
franchise or licensing agreement with another corporation or entity. It may also
purchase stock or assets of an existing business. After the consummation of a
business combination transaction, it is likely that the present stockholders of
the Company will only own a small minority interest in the combined companies.
In addition, as part of the terms of the acquisition transaction, all of the
Company's officers and directors will ordinarily resign and be replaced by new
officers and directors without vote of the stockholders. Management does not
intend to obtain the approval of the stockholders prior to consummating any
acquisition other than a statutory merger that requires a stockholder vote.
It is anticipated that any securities issued in a business combination
transaction will be issued in reliance on exemptions from registration under
applicable Federal and state securities laws. In some circumstances, however, as
a negotiated element of a business combination, the Company may agree to
register such securities either at the time the transaction is consummated or at
some specified time thereafter. The issuance of substantial additional
securities and their potential sale into any trading market that may develop may
have a depressive effect on such market. While the actual terms of a transaction
to which the Company may be a party cannot be predicted, it may be expected that
the parties to the business transaction will find it desirable to avoid the
creation of a taxable event and thereby structure the acquisition in a so called
"tax free" reorganization under Sections 368 or 351 of the Internal Revenue Code
of 1986, as amended (the "Code"). In order to obtain tax free treatment under
the Code, it may be necessary for the owners of the acquired business to own 80%
or more of the voting stock of the surviving entity. In such event the
stockholders of the Company would retain less than 20% of the combined
companies, which could result in significant dilution in the equity of such
stockholders. The Company intends to structure any business combination
transaction in such manner as to minimize federal and state tax consequences to
the Company and any target company.
<PAGE>
As part of the Company's investigation of potential business opportunities,
Management may visit and inspect material facilities, obtain independent
analysis or verification of certain information provided, check references of
management and key personnel, and take other reasonable investigative measures,
to the extent of the Company's limited resources and Management's limited
expertise. The manner in which the Company participates in an opportunity will
depend on the nature of the opportunity, the respective needs and desires of the
Company and other parties, and the relative negotiating strength of the Company
and such other management.
With respect to any business combination negotiations, Management will
ordinarily focus on the percentage of the Company which target company
stockholders would acquire in exchange for their ownership interest in the
target company. Depending upon, among other things, the target company's assets
and liabilities, the Company's current stockholders will in all likelihood only
own a small minority interest in the combined companies upon completion of the
business combination transaction. Any business combination effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's current stockholders.
Upon completion of a business combination transaction, there can be no
assurance that the combined companies will have sufficient funds to undertake
any significant development, marketing and manufacturing activities.
Accordingly, the combined companies may be required to either seek additional
debt or equity financing or obtain funding from third parties, in exchange for
which the combined companies might be required to issue a substantial equity
position. There is no assurance that the combined companies will be able to
obtain additional financing on terms acceptable to the combined companies.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business opportunity the costs
incurred in the related investigation would not be recoverable. Furthermore,
even if an agreement is reached for the participation in a specific business
opportunity, the failure to consummate that transaction may result in the loss
to the Company of the related costs incurred.
<PAGE>
ITEM 7. INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Independent Auditors' Report F-2
Consolidated Balance Sheet as of December 31, 1996 F-3
Consolidated Statements of Operations for the
years ended December 31, 1996 and 1995 F-5
Consolidated Statements of Changes in Stockholders'
Equity for the years ended December 31, 1996 and 1995 F-7
Consolidated Statements of Cash Flows for the
years ended December 31, 1996 and 1995 F-9
Notes to Consolidated Financial Statements F-11
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
and Stockholders of
Albara Corporation
We have audited the accompanying consolidated balance sheet of Albara
Corporation as of December 31, 1996, and the related consolidated statements of
operations, changes in stockholders' equity, and of cash flows for the years
ended December 31, 1996 and 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether these financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Albara Corporation
as of December 31, 1996, and the results of its operations and its cash flows
for the years ended December 31, 1996 and 1995, in conformity with generally
accepted accounting principles.
Thomas Leger & Co. L.L.P.
Houston, Texas
March 3, 1999
F-2
<PAGE>
ALBARA CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
<PAGE>
<TABLE>
<CAPTION>
ALBARA CORPORATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
------------------------------
ASSETS
1996
----------
<S> <C>
CURRENT ASSETS
Cash $ 28,626
Accounts receivable, net of allowance for
doubtful accounts of $8,272 25,305
Inventory 37,232
----------
Total current assets 91,163
----------
OTHER ASSETS
Product master development costs, net of accumulated
amortization of $791,726 343,304
Deposits 3,933
----------
Total other assets 347,237
----------
PROPERTY, PLANT AND EQUIPMENT (NOTE B)
Land 52,900
Building 740,437
Furniture and fixtures 480,150
----------
Total property and equipment 1,273,487
----------
Less accumulated depreciation 715,987
----------
Property and equipment, net 557,500
----------
TOTAL ASSETS $ 995,900
----------
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
ALBARA CORPORATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
--------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
1996
------------
<S> <C>
CURRENT LIABILITIES
Accounts payable $ 154,305
Accrued expenses 119,781
Notes payable to stockholder/director (Note B) 22,035
Current maturities of long-term debt (Note B) 85,298
------------
Total current liabilities 381,419
------------
LONG-TERM DEBT, net of current maturities
(Note B) 205,258
------------
Total liabilities 586,677
------------
STOCKHOLDERS' EQUITY (Note C)
Preferred stock, convertible no par value -
Series C, 185 shares authorized and issued -
Series F, 250 shares authorized, 195 shares issued 14,625
Common stock, no par value, 6,666,667 shares
authorized, 1,461,503 shares issued 3,825,048
Accumulated deficit (3,430,450)
------------
Total stockholders' equity 409,223
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 995,900
------------
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
ALBARA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
1996 1995
----------- -----------
<S> <C> <C>
REVENUES $1,146,750 $1,619,796
COST OF SALES 138,778 202,456
----------- -----------
GROSS PROFIT 1,007,972 1,417,340
----------- -----------
GENERAL AND ADMINISTRATIVE EXPENSES
Marketing and advertising 124,869 62,893
Personnel 554,353 700,345
Delivery, net of amounts collected 10,957 29,288
Depreciation and amortization 445,542 272,035
Other (Note G) 268,759 330,857
----------- -----------
Total general and administrative expenses 1,404,480 1,395,418
----------- -----------
INCOME (LOSS) FROM OPERATIONS (396,508) 21,922
----------- -----------
OTHER INCOME (EXPENSE)
Interest expense (22,430) (29,644)
Other (Note I) 108,252 62,212
----------- -----------
Total other income (expense) 85,822 32,568
----------- -----------
NET INCOME (LOSS) BEFORE REORGANIZATION ITEMS,
FEDERAL INCOME TAX BENEFIT (310,686) 54,490
----------- -----------
REORGANIZATION GAIN (EXPENSE)
Professional fee (1,658) (49,482)
Other expenses - (3,585)
Gain from collection of preference claims 9,971 130,484
----------- -----------
Total reorganization gain 8,313 77,417
----------- -----------
NET INCOME (LOSS) (302,373) 131,902
FEDERAL INCOME TAX (Note D) - -
----------- -----------
NET INCOME (LOSS) $ (302,373) $ 131,902
----------- -----------
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
ALBARA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
-----------------------------------------------
1996 1995
----------- ----------
<S> <C> <C>
INCOME (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE (NOTE C)
Primary $ (0.204) $ 0.090
----------- ----------
Fully diluted $ (0.204) $ 0.090
----------- ----------
AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING
Primary 1,478,503 1,471,244
Fully diluted 1,478,503 1,471,244
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
ALBARA CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
--------------------------------------------------------------
EARNINGS
COMMON STOCK PREFERRED (ACCUMULATED TOTAL
NOTES SHARES AMOUNT STOCK DEFICIT) EQUITY
----- --------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Balance, December 31, 1994 1,357,336 $3,583,011 $ 255,837 $(3,259,979) $ 578,869
Net consolidated income - - - 131,902 131,902
Issuance of restricted common stock to
officers/employees as a bonus 27,500 825 - - 825
--------- ---------- ---------- ------------ ----------
Consolidated Balance, December 31, 1995 1,384,836 3,583,836 255,837 (3,128,077) 711,596
Net consolidated (loss) - - - (302,373) (302,373)
Issuance of restricted common stock to
officers / employees as a bonus 7,500 - - - -
Issuance of common stock in conversion
of preferred stock C 69,167 241,212 (241,212) - -
--------- ---------- ---------- ------------ ----------
Consolidated balance, December 31, 1996 1,461,503 $3,825,048 14,625 $(3,430,450) $ 409,223
========= ========== ========== ============ ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-7
<PAGE>
<TABLE>
<CAPTION>
ALBARA CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
-------------------------------------------------------------
PREFERRED STOCK
SERIES C SERIES E SERIES F
NOTE SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---- ------ ------- ------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Balance,
December 31, 1994 and 1995 C 185 $ - 50 $ 239,337 220 $16,500
Cancellation of Series E and
issuance of common stock - - - (50) (239,337) - -
Cancellation of Series F and
issuance of common stock - - - - - (25) (1,875)
------ ------- ------- ---------- ------- --------
Consolidated balance,
December 31, 1996 C 185 $ - - $ - 195 $14,625
------ ------- ------- ---------- ------- --------
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-8
<PAGE>
<TABLE>
<CAPTION>
ALBARA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(302,373) $ 131,902
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 445,542 272,035
Write-off of equipment - 9,757
Gain on sale of investment - (36,893)
Common stock issued - 825
Changes in operating working capital (44,764) (222,270)
---------- ----------
Total adjustments 400,778 23,454
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 98,405 155,356
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Addition to property and equipment (3,097) (19,460)
Product master development costs (150,570) (112,189)
Other (2,191) (439)
Proceeds from sale of investment - 111,893
Purchase of certificate of deposit - (5,000)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (155,858) (25,195)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from certificate of deposit 5,000 -
Proceeds from short-term and long-term borrowings 4,869 13,396
Repayments of short-term and long-term debt (36,442) (124,105)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (26,573) (110,709)
---------- ----------
NET INCREASE (DECREASE) IN CASH DURING THE YEARS (84,026) 19,452
Cash beginning of year 112,652 93,200
---------- ----------
Cash end of year $ 28,626 $ 112,652
---------- ----------
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-9
<PAGE>
<TABLE>
<CAPTION>
ALBARA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
1996 1995
--------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH FLOW FROM CHANGES
IN OPERATING WORKING CAPITAL
Accounts receivable $ 86,939 $ (36,288)
Prepaid expenses - 4,176
Inventory (24,445) 7,622
Accounts payable (14,082) (106,069)
Accrued expenses (93,176) (91,711)
--------- ----------
CHANGES IN OPERATING WORKING CAPITAL $(44,764) $(222,270)
========= ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during period for interest $ 20,562 $ 29,644
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Common stock issued to officer/employee of subsidiary
as a bonus $ - $ 825
Revision of accrued expenses $108,252 $ -
SUPPLEMENTAL SCHEDULE OF NET CASH USED BY
REORGANIZATION ITEMS
Professional fees paid for services rendered in
connection with Chapter 11 reorganization $ 1,658 $ 49,482
Gain from collection of preference claims (9,971) (130,484)
Other - 3,585
--------- ----------
$ (8,313) $ (77,417)
========= ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-10
<PAGE>
ALBARA CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
HISTORY AND NATURE OF BUSINESS
- ----------------------------------
Albara Corporation and its operating subsidiaries (collectively, the Company)
markets laser printer consumables and develops, publishes and markets software
for the Apple Macintosh microcomputer (the Macintosh), which is manufactured by
Apple Computer, Inc. The laser printer consumables and software are sold via
direct response marketing, authorized dealers and value added resellers. The
Company has two operating subsidiaries, Micro Business Solutions, Inc. (MBSI)
and Software Technologies, Inc. (STI). MBSI does business and advertises under
the trade name "Hardware That Fits". STI develops, and publishes database
software for use in the Macintosh, and advertises under the trade name "Helix
Technologies." The subsidiaries were disposed of on December 31, 1997.
PRINCIPLES OF CONSOLIDATION
- -----------------------------
The consolidated financial statements include the accounts of the Company.
Significant intercompany accounts and transactions have been eliminated.
Certain 1995 amounts have been reclassified to permit comparison to 1996.
USE OF ESTIMATES
- ------------------
The presentation of financial statements in conformity with generally accepted
accounting principles required management to make estimates and assumptions that
affect the reported amounts of asset and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimated.
INVENTORY
- ---------
Inventory is stated at the lower of cost or market, with cost determined using
the first-in, first-out (FIFO) method.
PRODUCT MASTER DEVELOPMENT COSTS
- -----------------------------------
Costs of internally developed software are expensed until the technological
feasibility of the software has been established. Thereafter, all software
development costs are capitalized and subsequently reported at the lower of
unamortized cost or net realizable value. The annual amortization is the
greater of the amounts determined from the following methods: the ratio of
current gross revenue to current and future gross revenue; and the straight-line
method over the products' remaining estimated useful lives. Amortization
expense is recorded in depreciation and amortization in the accompanying
financial statements.
F-11
<PAGE>
ALBARA CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
CONTINUED
PROPERTY AND EQUIPMENT
- ------------------------
Property and equipment are stated at cost less accumulated depreciation, which
is computed using the straight-line method over lives ranging from 5 to 31
years. Expenditures for major acquisitions and improvements are capitalized
while expenditures for maintenance and repairs are charged to operations. The
cost of assets sold or retired and any related accumulated depreciation are
eliminated from the accounts, and any resulting gain or loss is included in
operations. All remaining property was disposed of in 1998.
INCOME TAXES
- -------------
The Company has adopted SFAS No. 109, "Accounting for Income Taxes," which
requires an asset and liability approach to financial accounting and reporting
for income taxes. The difference between the financial statement and tax bases
of assets and liabilities is determined annually. Deferred income tax assets
and liabilities are computed for those differences that have future tax
consequences using the currently enacted tax laws and rates that apply to the
periods in which they are expected to affect taxable income. Valuation
allowances are established, if necessary, to reduce the deferred tax asset to
the amount that will more likely than not be realized. Income tax expense is
the current tax payable or refundable for the period plus or minus the net
change in the deferred tax assets and liabilities.
See Note D for additional information about the Company's tax position.
REVENUE RECOGNITION
- --------------------
Revenue is recognized when the product is shipped to the customer. The Company
has no significant remaining obligations to its customers following the date of
shipment. Refunds are allowed on some items within thirty days of the shipment
date of the product, and the revenue amounts presented in the accompanying
consolidated financial statements are net of all refunds made during the period.
CONCENTRATIONS OF CREDIT RISK
- --------------------------------
The Company maintains its cash accounts in several banks located in the Houston,
Texas and Chicago, Illinois metropolitan areas. The cash balances are insured
by the FDIC up to $100,000 at each bank. At December 31, 1996 the Company did
not have any deposits in excess of $100,000 in a bank.
The Company sold its products to businesses and individuals throughout the
United States, Europe and Australia. Sales are made using major credit cards,
or through the extension of credit to the Company's most credit-worthy
customers. The Company maintains adequate reserves for potential credit losses,
and such losses, which have been minimal, have been within Management's
estimates.
F-12
<PAGE>
ALBARA CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
CONTINUED
STATEMENTS OF CASH FLOWS
- ---------------------------
The Company considers all cash investments with maturities of three months or
less to be cash equivalents.
NOTE B - NOTES PAYABLE AND LONG-TERM DEBT
Notes payable to stockholder/director in the amount of $22,035 at December 31,
1996 is the balance due on a note in the original amount of $150,000 due on
demand payable at $12,500 per month including interest at a local bank's prime
plus 2%. If payment was not demanded the maturity date was October, 1993, which
was extended to April, 1994. The note calls for accelerated payments and
additional interest if the note is in default. Interest has been accrued at the
rate of 8% for the year 1996. Payments were not made on the note during 1996.
Payments were made in 1998.
Long-term debt at December 31, 1996 consists of the following:
<TABLE>
<CAPTION>
<S> <C>
Mortgage payable(1) $208,445
Capital lease obligation (see Note E) 54,096
Notes payable to vendor (2) 28,015
--------
Total 290,556
Less current maturities 85,298
--------
Long-term debt $205,258
========
<FN>
(1) The mortgage payable is collateralized by real estate, bears interest at
9% and is payable in monthly installments of about $4,750 through April, 2001.
The Company entered into an agreement during 1996 to pay interest only.
(2) Notes payable in the original amount of $35,000 with interest to a
vendor resulting from the Plan of Reorganization of the bankruptcy discussed in
Note H.
</TABLE>
F-13
<PAGE>
ALBARA CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
NOTE B - NOTES PAYABLE AND LONG-TERM DEBT CONTINUED
The Company is not making payments on the capital lease obligation and note
payable to vendor. All past due payments have been included is current
maturities of long-term debt.
Aggregate annual maturities of the long-term debt described above for each of
the next five years is as follows:
1997 $ 3,187
1998 205,258
-----------
$ 208,445
===========
NOTE C - CAPITAL STRUCTURE
The Company is authorized to issue any class of stock, including 6,666,667 of
Common Stock, no par value, and up to 10,000,000 shares of preferred stock, no
par value, in one or more series. In establishing a preferred stock series, the
Board of Directors shall assign it a distinctive designation so as to
distinguish it from the shares of all other series and classes, shall fix the
number of shares in each series, and the preferences, rights and restrictions
thereof.
The Company has issued six series of preferred stock, designated sequentially as
Series A through Series F. All shares of Series A, Series B, Series D, and
Series E Preferred Stock that were issued have been redeemed and canceled by the
Company and are no longer outstanding. The following is a description of the
relative rights and privileges of the series of Preferred Stock that were
outstanding on December 31, 1996.
SERIES C CONVERTIBLE PREFERRED STOCK
- ----------------------------------------
The holder of 185 shares of Series C convertible preferred stock (Real
Provencher) has the right to 6,407 votes per share. The 185 shares of Series C
convertible preferred stock is convertible into approximately 1,185,000 of the
Company 's common stock at the option of the holder upon occurrence of certain
events including change in control of the Company. The Company has reserved
approximately 1,185,000 shares of its common stock for the possible conversion.
SERIES E CONVERTIBLE PREFERRED STOCK
- ----------------------------------------
Series E Convertible Preferred Stock was converted to 66,667 shares of the
Company's common stock during 1996.
F-14
<PAGE>
ALBARA CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
NOTE C - CAPITAL STRUCTURE CONTINUED
SERIES F CONVERTIBLE PREFERRED STOCK
- ----------------------------------------
Under the terms of a private placement debt agreement, the Company issued 220
shares of Series F convertible preferred stock. The preferred stock was
ascribed a $16,500 value and considered a debt issue cost and has been amortized
to operations. The special rights of the Series F preferred stock are:
- - Holders are entitled to receive dividends on a pro rata basis with holders
of the Company's common stock.
- - Holders are entitled to a preference of $100 per share on any liquidation
of the Company, and shall share pro rata with the holders of the Company's
common stock in any remaining amounts distributed.
- - Holders have the option to convert each share into 100 shares of the
Company's common stock after August 31, 1993.
In 1996, 25 shares of Series F were redeemed.
INCENTIVE STOCK OPTION PLAN AND COMMON STOCK WARRANTS
- ------------------------------------------------------------
STOCK OPTIONS - The Company has 132,500 shares of common stock subject to issue
- --------------
under its Incentive Stock Option Plan with an exercise price of $.50 at December
31, 1996. All options expired during 1997.
STOCK WARRANTS - The Company has granted an aggregate of 40,018 shares of its no
- --------------
par value common stock to be issued upon exercise of warrants issued as
compensation for services to non-employee directors, and for other matters
described below. See Note F for description of the stock warrants issued
to the non-employee directors.
See Note F for reissuance of certain warrant and issuance of new warrants.
F-15
<PAGE>
ALBARA CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
NOTE C - CAPITAL STRUCTURE CONTINUED
Following is a summary of the stock warrants activity for the year ended
December 31, 1996.
<TABLE>
<CAPTION>
1996
------------
<S> <C>
Outstanding at beginning of period 58,352
Cancelled 18,334
------------
Outstanding at end of period 40,018
============
Exercisable 35,018
============
Price range per share $.50 to 3.60
============
</TABLE>
The Company applies the Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for stock option and warrants. Accordingly, no
compensation cost has been recognized for the stock option agreements. All
stock options granted during 1996 expired in 1996. If any had been outstanding
at year end, compensation cost would have been determined based upon the fair
value at the grant dates for awards under those plans consistent with the method
of FASB Statement 123, and pro forma information presented.
NET INCOME (LOSS) PER SHARE
- -------------------------------
Primary income (loss) per common and common equivalent share is computed by
dividing income (loss) after taxes by the weighted average number of common and
common equivalent shares outstanding during each year. The convertible
preferred stock and stock warrants are common stock equivalents; however, only
Series F preferred stock are considered in the computation since all other
outstanding common stock equivalents are either anti-dilutive or have not met
certain conditions. Fully diluted income (loss) per share is computed by
dividing income (loss) after taxes by all potentially dilutive securities.
NOTE D - FEDERAL INCOME TAXES
Because of tax losses, the Company did not pay any federal income tax.
Reconciliation of the statutory federal income tax with the income tax provision
follows:
<TABLE>
<CAPTION>
1996 1995
---------- ---------
<S> <C> <C>
Income taxes computed at statutory
rates $(102,807) $ 44,848
Increase (decrease) in valuation
allowance 102,807 (44,848)
---------- ---------
Taxes on income $ - $ -
========== =========
</TABLE>
F-16
<PAGE>
ALBARA CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
NOTE D - FEDERAL INCOME TAXES CONTINUED
The Company's deferred tax position reflects the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax reporting. Significant
components of the Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------
<S> <C>
Deferred tax liabilities:
Product master development costs $ 116,726
Tax over book depreciation 68,860
-------------------
Total deferred tax liabilities 185,586
-------------------
Deferred tax assets:
Net operating loss carryforward 433,002
Write-down of long-term assets 123,750
Valuation allowance (371,166)
-------------------
Total deferred tax asset (185,586)
-------------------
Net deferred tax asset $ -
===================
</TABLE>
Deferred income tax benefit resulted from the following differences:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Product master development costs $(69,166) $(22,802)
Depreciation 310 (9,474)
Bad debts - 3,918
Utilization of (increase) in net operating loss (33,951) 73,207
Valuation allowances 102,807 (44,849)
--------- ---------
Total deferred tax expense $ - $ -
========= =========
</TABLE>
As of December 31, 1996, the Company has tax loss carryforwards of about
$1,281,000 which, start expiring in 2007.
F-17
<PAGE>
ALBARA CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
NOTE E - LEASE AGREEMENTS
The Company leases one telephone system as well as other equipment and certain
office facilities under lease obligations. The telephone system is presented in
the accompanying financial statements as capital leases while other leases are
presented as operating leases.
CAPITAL LEASES - The Company made no payments during 1996 and does not
- ---------------
anticipate making any in the future.
Current portion of capital lease obligation $ 54,096
=============
Assets recorded under capital leases and the accumulated amortization thereon
are set out below. The capitalized leases are included in the caption
"furniture and fixtures" in the accompanying balance sheet.
Capitalized lease amounts $ 100,000
Accumulated amortization (86,000)
--------------
Net capitalized leases $ 14,000
==============
OPERATING LEASES - Rent expense for the office facilities and equipment under
- -----------------
operating leases referred to above amounted to about $41,000 and $49,000 for the
years ended December 31, 1996 and 1995.
NOTE F - RELATED PARTY TRANSACTIONS
Discussed below are related party transactions not included in other notes to
the financial statements.
The Company has a license agreement with Mr. Provencher through July, 1999
covering the license of the trade names "Software That Fits" and "Software and
Hardware That Fits". The license fee is paid to Mr. Provencher at the rate of
$1,000 per month.
F-18
<PAGE>
ALBARA CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
NOTE F - RELATED PARTY TRANSACTIONS CONTINUED
As part of his compensation, Mr. Kenneth Shapiro, as a non-employee director,
received two warrants in which he is fully vested to purchase 3,334 shares per
warrant of the Company's common stock at a price of $3.60 per share. Each
warrant has been issued for time in service for the years 1991 through 1993.
One warrant will expire each year in 1997 and 1998. Mr. Shapiro received in
1991, as additional compensation associated with a contemplated underwriting, a
warrant to purchase 10,000 shares of common stock at the price of $3.60 per
share. This warrant was exercisable immediately and expired on December 31,
1996 (see Note C).
As part of his compensation, Mr. Robert Vallis, as a non-employee director, has
received various warrants. On January 30, 1995 all of Mr. Vallis' previous
warrants were canceled and two warrants were issued to purchase 23,350 shares of
the Company's common stock at a price of $.50 per share with a vesting date of
January 30, 1995 and expiring in 2005. In addition, he received three warrants
for 5,000 shares each to purchase the Company's common stock at $.50 per share.
These warrants were issued for time in service as a non-employee director in
each of the years 1995 through 1996. Each warrant will become fully vested on
the last day of that calendar year, will become immediately exercisable on the
first business day of the following year, and will expire ten years after
becoming vested.
Mr. Vallis term as a director expired in 1996, as a result, all warrants which
had been previously issued for future services expired.
NOTE G - COMPOSITION OF CERTAIN ACCOUNT GROUPINGS
The composition of general and administrative expenses-other is set out below:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Telephone costs $ 36,000 $ 34,000
Professional fees 21,000 50,000
Bad debt expense - 4,000
Rent 38,000 50,000
Insurance 27,000 24,000
Credit card expense 18,000 22,000
Other 128,759 146,857
-------- --------
$268,759 $330,857
======== ========
</TABLE>
F-19
<PAGE>
ALBARA CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
----------------------------------------------
NOTE H - PROCEEDING UNDER CHAPTER 11
On August 25, 1993, a wholly-owned subsidiary, MBSI, (the "Debtor") filed a
petition for relief under Chapter 11 of the federal bankruptcy laws in the
United States Bankruptcy Court for the Southern District of Texas.
On August 16, 1994 the Bankruptcy Court approved and confirmed a Plan of
Reorganization ("Plan") which was submitted for consideration by MBSI on June 3,
1994. This action by the court resulted in MBSI's emergence from bankruptcy
effective September 15, 1994. The Bankruptcy Court issued its Final Decree
January 16, 1998.
NOTE I - OTHER INCOME
Other income consists primarily of renegotiated legal fees.
F-20
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH
------------------------------------------
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
---------------------------------------------------
NONE.
<PAGE>
PART III
--------
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
------------------------------------------------------------
PERSONS; COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
-----------------------------------------------------------
Executive Officers and Directors
- --------- -------- --- ---------
<TABLE>
<CAPTION>
Name Age Position with the Company Since
- --------------------- --- --------------------------------- ---------
<S> <C> <C> <C>
Barbara A. Provencher 41 Secretary and Director Nov. 1988
Real Provencher 46 President, Chief Executive Nov. 1988
Officer, Chief Financial Officer,
Director
</TABLE>
All directors of the Company will hold office until the next annual meeting
of the shareholders and until their successors have been elected and qualified.
The officers of the Company are elected by the Board of Directors at the
first meeting after each annual meeting of the Company's shareholders, and hold
office until their successors are elected and shall have qualified, or until
resignation or removal from office.
Summary of Experience and Responsibilities
- ----------------------------------------------
Real Provencher - Mr. Provencher has served as President, Chief Executive
-----------------
Officer, Chief Financial Officer and Director of the Company since November
1988, of Hardware That Fits since August 1989 and of Helix Technologies since
March 1992. In addition to his responsibilities as President, Mr. Provencher
owns and operates a franchise called "The Alternative Board" specializing in
small business consulting and CEO coaching. Mr. Provencher possesses a Master
of Management Science degree from Stevens Institute of Technology, as well as
Bachelor and Master degrees in Civil Engineering from Tufts University.
Barbara A. Provencher - Ms. Provencher was elected as a director of the
-----------------------
Company in November 1988 and has been employed as a sales manager by the
Company's subsidiary, Hardware That Fits, from August 1989 through March, 1995.
Since 1995, Ms. Provencher has owned and operated a privately held company
called "Rolisher & Associates, Inc." which specializes in direct marketing of
services to consumers on a national basis. Ms. Provencher is the wife of Mr.
Provencher.
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
- ------------------------------------------------------------------------------
Section 16(a) of the Exchange Act, requires the Company's officers,
directors and persons who beneficially own more than ten percent of the Common
Stock to file reports of securities ownership and changes in such ownership with
the Securities and Exchange Commission. Officers, directors and greater than
ten percent beneficial owners also are required by rules promulgated by the
Securities and Exchange Commission to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely upon review of the copies of such forms furnished to the
Company, or written representations that no Form 5 filings were required, the
Company believes that during 1996 all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with except that Mr. Provencher inadvertently failed to
file a Form 4 with the Securities and Exchange Commission on a timely basis with
respect to the conversion in October of 50 shares of Series E Convertible
Preferred stock into 66,667 shares of Common Stock. A Form 4 regarding such
transaction was filed by Mr. Provencher in May, 1999.
ITEM 10. EXECUTIVE COMPENSATION
-------------------------------
The following tables set forth the compensation paid to the Chief Executive
Officer of the Company and the President of the Company's subsidiary for fiscal
years 1996, 1997, and 1998. There were no other executive officers of the
Company that received in excess of $100,000 in cash compensation.
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Long-Term
Compensation
Annual Compensation (Awards)
-------------------------- --------
Name and Other Annual(1) Stock All Other
Principal Position Year Salary Bonus Compensation Options Compensation
- -------------------- --------------- -------- --------- --------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Real Provencher 1998 $120,000 0 - 0 -
Chief Executive 1997 120,000 0 - 0 -
Officer 1996 120,000 0 - 0 -
Robert Shumate(2) 1996 106,000 0 - 0 -
President, Helix
Technologies
<FN>
(1) Excludes perquisites and other benefits, unless the aggregate amount of such compensation
is the lessor of $50,000 or 10% of the total of annual salary and bonus reported for the named
executive officer.
(2) Mr. Shumate resigned from the Company in August, 1997.
</TABLE>
<PAGE>
License Agreement
- ------------------
In July 1989, the Company entered into a license agreement with Mr.
Provencher, President of the Company, covering the license of the tradenames
"Software That Fits", "Hardware That Fits" and "Software and Hardware That Fits"
by the Company during a ten year period for the sum of $120,000 to be paid
monthly at the rate of $1,000 per month. In 1996, and 1997, Mr. Provencher was
paid $12,000 per year in connection with this license agreement. This cash
license fee was in addition to the compensation shown above. This liability was
retained by the Company's former subsidiary when it was disposed of on December
31, 1997. Therefore, no payment was made by the Company to Mr. Provencher in
1998 in connection with this obligation.
Accrued and unpaid Compensation
- ----------------------------------
At December 31, 1996, 1997 and 1998, the unpaid but accrued balance
associated with salaries, bonus and vacation was approximately $51,000, $75,000
and $142,000 respectively.
Employment Agreement
- ---------------------
In July 1995, the Board of Directors approved a three year employment
agreement (the "Employment Agreement") with Mr. Provencher to act as its
President and Chief Executive Officer which includes a base salary of $120,000
per year. The Employment Agreement also provides Mr. Provencher with, among
other items, an automobile allowance, disability insurance, life insurance and
major medical insurance. Although this employment agreement has expired, the
Company continues to operate as if the agreement had been extended indefinitely.
As a condition to entering into the Employment Agreement, the Company
agreed to revise the conversion provisions of the Preferred Convertible Series C
stock that is exclusively held by Mr. Provencher. Each share of Series C stock
is convertible into 6,407 shares of common stock of the Company at the option of
the holder conditioned on: (a) the Company achieving certain profitability
targets; or (b) the Company disposing of substantially all of its assets; or (c)
a change of control of the Company. In return, Mr. Provencher agreed to forfeit
all stock options which had been previously awarded to him by the Company (i.e.,
approximately 83,500).
<PAGE>
Deferred Compensation Plan
- ----------------------------
On July 1, 1995, the Company adopted a Deferred Compensation Plan. The
purpose of the Plan is to provide a means by which certain key employees may
elect to defer receipt of designated percentages or amounts of their
compensation and to provide a means for certain other deferrals of compensation.
The Plan is intended to be a plan which is unfunded within the meaning of
Sections 201(2) and 301(a)(3) of the ERISA Act of 1974. In 1996, 1997 and 1998,
Mr. Provencher elected to defer $12,000 per year of the compensation shown above
pursuant to this plan.
Incentive Stock Option Plan
- ------------------------------
On February 26, 1988, the Company adopted an Incentive Stock Option Plan
(the "Plan"), under which options granted are intended to qualify as "incentive
stock options" under Section 422A of the Internal Revenue Code of 1986, as
amended (the "Code"). The Plan was further modified by vote of the Company's
shareholders at the annual Company shareholder's meeting which was held on June
3, 1989. Pursuant to the modified Plan, options to purchase up to 166,667
shares of the Company's Common Stock may be granted to employees of the Company.
The Plan is administered by the Board of Directors, which is empowered to
determine the terms and conditions of each option, subject to the limitation
that the exercise price cannot be less than the market value of the Common Stock
on the date of the grant (110% of the market value in the case of options
granted to an employee who owns 10% or more of the Company's outstanding Common
Stock) and no option can have a term in excess of 10 years (5 years in the case
of options granted to an employee who owns 10% or more of the Company's
outstanding Common Stock).
None of the options granted under this plan have ever been exercised.
Furthermore, all outstanding option grants under this plan expired in 1997.
Non-employee Director Compensation
- ------------------------------------
One of the Company's directors in 1996, Mr. Robert Vallis, was not an
employee of the Company. Mr. Vallis' term as a director expired in July, 1996.
On January 30, 1995, as part of his compensation, Mr. Vallis was issued
three warrants to purchase 15,000 shares in the aggregate of the Company's
common stock at a price of $0.50 per share. These three warrants have been
issued for time in service in each of three successive years: 1995, 1996 and
1997. Each such warrant became fully vested on the last day of its respective
calendar year, became immediately exercisable on the first business day of the
following year, and would expire ten years after becoming vested. Since Mr.
Vallis' term as a director expired in July, 1996, warrants for service in 1997
were automatically terminated upon the completion of Mr. Vallis' term in 1996.
<PAGE>
Indemnification and Limitation of Liability
- -----------------------------------------------
The Company's Articles of Incorporation include provisions which eliminate
or limit the personal liability of the Company's directors except in situations
when a director shall be liable for (i) a breach of Section 7-5-114 of the
Colorado Corporation Code, including liability for improper dividends or
distributions; (ii) a breach of loyalty; (iii) failure to act in good faith;
(iv) intentional misconduct or knowing violation of the law; or (v) obtaining an
improper personal benefit. In addition, the Articles of Incorporation allow
for the indemnification of any director or officer to the fullest extent
permitted by the Colorado Corporation Code as in effect at the time of the
conduct of such person.
In addition to the general indemnification provisions discussed above, the
Company's employment agreement with Mr. Provencher includes an indemnification
provision in which the Company agrees to indemnify, defend and hold harmless Mr.
Provencher against and in respect to any and all claims, actions, demands,
judgments, losses, costs, expenses, liabilities and penalties connected,
directly or indirectly with any personal guaranty entered into or executed by
Mr. Provencher guaranteeing indebtedness or obligations of the Company or its
subsidiaries.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
-------------------------------------------------
OWNERS AND MANAGEMENT
---------------------
The following tables and footnotes set forth information, as of May 16,
1999, with respect to the beneficial ownership and voting control of the
Company's equity securities by (i) all directors individually, (ii) all officers
and directors as a group, (iii) each of the named executive officers and (iv)
each person known by the Company to be a beneficial owner of more than five
percent of any class of voting equity stock of the Company. The following
shareholders have sole voting and investment power with respect to the shares,
unless indicated otherwise.
Beneficial Ownership
- ---------------------
<TABLE>
<CAPTION>
PREFERRED
STOCK
COMMON STOCK Series C
--------------- ---------------
Name and address # of % of # of % of
of beneficial owner(1) shares Class shares Class
- ------------------------- ------- ------- ------ -------
<S> <C> <C> <C> <C>
Barbara A. Provencher (3) 0 0 0 0
610 South Frazier
Conroe, Texas 77301
Real Provencher (2) 458,020 31% 185 100%(a)
610 South Frazier
Conroe, Texas 77301
All Executive Officers 458,020 31%(a) 185 100%(a)
and Directors as a
Group (2 persons)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Voting Control
- ---------------------------
Percent of Total Votes in
Number of Votes in Matters Matters Submitted to
Name Submitted to Shareholders Shareholders
- --------------------------- --------------------------- -------------------------
<S> <C> <C>
Real Provencher 1,643,315 (a) 62%
Barbara A. Provencher 0 0
All Executive Officers and
Directors as a Group 1,643,315 (a) 62%
(2 persons)
<FN>
(a) Each share of Series C Convertible Preferred Stock has the right to 6,407
votes, in all matters that come before the shareholders. Mr. Provencher is the
owner of all of the issued and outstanding shares of Series C Convertible
Preferred Stock.
(1) The Company currently has two series of Preferred Stock: Series C, and
Series F Convertible Preferred Stock. The shares of Series F Convertible
Preferred Stock do not have any voting rights. None of the issued and
outstanding shares of Series F Convertible Preferred Stock are owned or
beneficially held by a director, officer or person known by the Company to be a
beneficial owner of more than five percent of any class of equity stock of the
Company as of the date of this annual report.
(2) The amounts of Common Stock listed do not include shares of Common Stock to
be received upon conversion of the Series C Convertible Preferred Stock. The
terms and conditions of the Series C Convertible Preferred Stock is set forth in
the Notes to Financials.
(3) Ms. Provencher owns, as community property, one half of the shares of stock
set forth beside the name of her husband, Mr. Provencher, and may be deemed the
beneficial owner of such shares.
</TABLE>
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------
In July 1989, the Company entered into a license agreement with Mr.
Provencher, President of the Company, covering the license of the tradenames
"Software That Fits", "Hardware That Fits" and "Software and Hardware That Fits"
by the Company during a ten year period for the sum of $120,000 to be paid
monthly at the rate of $1,000 per month. In 1996, and 1997, Mr. Provencher was
paid $12,000 per year in connection with this license agreement.
On April 16, 1993, the Company entered into a loan transaction with Barbara
A. Provencher, Secretary and Director of the Company. The Company borrowed
$150,000 bearing interest at prime rate plus 2% (i.e., 8% per annum in 1995).
The Company agreed to make monthly principal and interest installment payments
of $12,500 with a final payment of the remaining principal and interest due on
October 15, 1993. The Company repaid this obligation in full in early 1999. At
December 31, 1996, 1997 and 1998, the note payable had a balance of
approximately $22,000, $29,000 and $3,000.
On December 31, 1997, the Company disposed of its two operating
subsidiaries to the President of the Company, Mr. Real Provencher. The
transaction was a non-cash transaction resulting in transferring $245,000 in
assets and $334,000 in liabilities to Mr. Provencher for a net increase to the
Company's stockholder equity of $89,000, the amount by which such liabilities
exceeded such assets. In addition, in early January 1998, one of the Company's
former operating subsidiaries now owned by Mr. Provencher paid the Company
$120,000 in satisfaction of an outstanding liability to the Company.
<PAGE>
PART IV
-------
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
(a) Financial Statements and Financial Statement schedules See Index
to Financial Statements at page F-1, Item 7 of this Report.
(b) Exhibits.
<TABLE>
<CAPTION>
Exhibit No.
- -----------
<C> <S>
1.1 Underwriting Agreement (incorporated herein by reference to Albara's
Registration Statement No. 33-53708 on Form S-1 dated January 12, 1993).
2.1 MBSI's Plan of Reorganization as confirmed (incorporated herein by
reference to Albara's 1994 Annual Report on Form 10-KSB).
2.2 MBSI's Disclosure Statement (incorporated herein by reference to Albara's
1994 Annual Report on Form 10-KSB).
2.3 * MBSI's Final Decree Statement.
3.1 Articles of Incorporation and Bylaws (incorporated herein by reference to
Albara's 1989 Form S-18 Registration Statement).
3.2 Articles of Amendment to the Articles of Incorporation, as filed with the
Colorado Secretary of State on December 31, 1990 (incorporated herein by
reference to Albara's Registration Statement No. 33-53708 on Form S-1 dated
January 12, 1993).
3.3 Articles of Amendment to the Articles of Incorporation, as filed with the
Colorado Secretary of State on September 4, 1991 (incorporated herein by
reference to Albara's Registration Statement No. 33-53708 on Form S-1 dated
January 12, 1993).
<PAGE>
3.4 Statement Establishing Series of Preferred Stock, and designating Series A
and Series B Convertible Preferred Stock, as filed with the Colorado
Secretary of State on November 7, 1988 (incorporated herein by reference to
Albara's Registration Statement No. 33-53708 on Form S-1 dated January 12,
1993).
3.5 Statement Establishing Series of Preferred Stock and designating Series D
Convertible Redeemable Preferred Stock, as filed with the Colorado
Secretary of State on May 18, 1989 (incorporated herein by reference to
Albara's Registration Statement No. 33-53708 on Form S-1 dated January 12,
1993).
3.6 Statement Establishing Series of Preferred Stock, and designating Series C
Convertible Redeemable Preferred Stock, as filed with the Colorado
Secretary of State on February 6, 1990 (incorporated herein by reference to
Albara's Registration Statement No. 33-53708 on Form S-1 dated January 12,
1993).
3.7 Statement Establishing Series of Preferred Stock, and designating Series E
Convertible Preferred Stock, as filed with the Colorado Secretary of State
on November 21, 1990 (incorporated herein by reference to Albara's
Registration Statement No. 33-53708 on Form S-1 dated January 12, 1993).
3.8 Statement Establishing Series of Preferred Stock, and designating Series F
Convertible Preferred Stock, as filed with the Colorado Secretary of State
August 27, 1992 (incorporated herein by reference to Albara's Registration
Statement No. 33-53708 on Form S-1 dated January 12, 1993).
3.9 Certificate of Correction, as filed with the Colorado Secretary of State on
September 11, 1992 (incorporated herein by reference to Albara's
Registration Statement No. 33-53708 on Form S-1 dated January 12, 1993).
4.5 Warrant Agreements Issued to Non-Employee Directors on January 30, 1995
(incorporated herein by reference to Albara's 94 Annual Report on Form
10-K).
4.6 Warrant Agreements Issued to Non-Employee Directors on April 4, 1993
(incorporated herein by reference to Albara's 1995 Annual Report on Form
10-KSB).
<PAGE>
10.1 Incentive Stock Option Plan (incorporated herein by reference to Albara's
1988 Form S-18 Registration Statement).
10.2 Employment Agreement with Mr. Provencher (incorporated herein by reference
to Albara's Registration Statement No. 33-53708 on Form S-1 dated January
12, 1993).
10.3 First Amendment to Employment Agreement with Mr. Provencher (incorporated
herein by reference to Albara's Registration Statement No. 33-53708 on Form
S-1 dated January 12, 1993).
10.4 Tradename License Agreement (incorporated herein by reference to Albara's
Post-Effective Amendment No. 2 to the Form S-18 Registration Statement).
10.10 WilTel Communications Systems, Inc. telephone lease agreement with
NorthCon Technologies, Inc. (incorporated herein by reference to Albara's
Registration Statement No. 33-53708 on Form S-1 dated January 12, 1993).
10.11 WilTel Communications System, Inc. telephone lease agreement with Micro
Business Solutions, Inc. (incorporated herein by reference to Albara's
Registration Statement No. 33-53708 on Form S-1 dated January 12, 1993).
10.12 Mutual Release Agreement between Dataproducts Corporation, Micro Business
Solutions, Inc, Albara Corporation and Real Provencher, Individual
(incorporated herein by reference to Albara's 1994 Annual Report on Form
10-KSB).
10.13 Order approving compromise of claims between Micro Business Solutions,
Inc. and Capetronic Computer U.S.A. [HK], Inc. (incorporated herein by
reference to Albara's 1994 Annual Report on Form 10-KSB).
10.14 Employment Agreement with Mr. Provencher dated July 1, 1995 (incorporated
herein by reference to Albara's 1995 Annual Report on Form 10-KSB).
10.15 Deferred Compensation Plan (incorporated herein by reference to Albara's
1995 Annual Report on Form 10-KSB).
<PAGE>
10.16 Split-Dollar Agreement with Mr. Real Provencher dated July 1, 1995
(incorporated herein by reference to Albara's 1995 Annual Report on Form
10-KSB).
10.17 Split-Dollar Agreement with Ms. Barbara A. Provencher dated July 1, 1995
(incorporated herein by reference to Albara's 1995 Annual Report on Form
10-KSB).
10.18 *Earnest Money Contract covering sale of land and building located at 610
South Frazier, Conroe, TX 77301.
10.19 *Asset Purchase Agreement covering the sale of Helix technology to The
Chip Merchant.
11 *Statement RE: Computation of Earnings per Share
16.1 Letter regarding change in Certifying Accountant (incorporated herein by
reference to Albara's Registration Statement No. 33-53708 on Form S-1 dated
January 12, 1993).
22 *Subsidiaries of the Company.
28.4 Promissory Note payable to the Company from MBSI (incorporated herein by
reference to Albara's 1989 Annual Report on Form 10-K).
28.15 Real Estate Lien Note payable to Fred A. Grams and wife, Alberta Betty
Grams from the Company (incorporated herein by reference to Albara's 1990
Annual Report on Form 10-K).
28.22 Promissory Note payable to Barbara Provencher from the Company
(incorporated herein by reference to Albara's 1993 Annual Report on Form
10-KSB).
28.23 Promissory Note payable to the Company from STI (incorporated herein by
reference to Albara's 1994 Annual Report on Form 10-KSB).
<FN>
* Filed herewith.
</TABLE>
(c) Reports on Form 8-K.
NONE
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Albara Corporation has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ALBARA CORPORATION
By: /S/ Real Provencher
---------------------
Real Provencher
President
DATE: June 3, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Albara Corporation
and in the capacities and on the date indicated.
President, Chief
/S/ Real Provencher Executive Officer
- --------------------- and Director June 3, 1999
Real Provencher
Secretary
/S/ Barbara A. Provencher and Director June 3, 1999
- --------------------------------
Barbara A. Provencher
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
Exhibit No.
- -----------
<C> <S>
1.1 Underwriting Agreement (incorporated herein by reference to Albara's
Registration Statement No. 33-53708 on Form S-1 dated January 12, 1993).
2.1 MBSI's Plan of Reorganization as confirmed (incorporated herein by
reference to Albara's 1994 Annual Report on Form 10-KSB).
2.2 MBSI's Disclosure Statement (incorporated herein by reference to Albara's
1994 Annual Report on Form 10-KSB).
2.3 * MBSI's Final Decree Statement.
3.1 Articles of Incorporation and Bylaws (incorporated herein by reference to
Albara's 1989 Form S-18 Registration Statement).
3.2 Articles of Amendment to the Articles of Incorporation, as filed with the
Colorado Secretary of State on December 31, 1990 (incorporated herein by
reference to Albara's Registration Statement No. 33-53708 on Form S-1 dated
January 12, 1993).
3.3 Articles of Amendment to the Articles of Incorporation, as filed with the
Colorado Secretary of State on September 4, 1991 (incorporated herein by
reference to Albara's Registration Statement No. 33-53708 on Form S-1 dated
January 12, 1993).
3.4 Statement Establishing Series of Preferred Stock, and designating Series A
and Series B Convertible Preferred Stock, as filed with the Colorado
Secretary of State on November 7, 1988 (incorporated herein by reference to
Albara's Registration Statement No. 33-53708 on Form S-1 dated January 12,
1993).
<PAGE>
3.5 Statement Establishing Series of Preferred Stock and designating Series D
Convertible Redeemable Preferred Stock, as filed with the Colorado
Secretary of State on May 18, 1989 (incorporated herein by reference to
Albara's Registration Statement No. 33-53708 on Form S-1 dated January 12,
1993).
3.6 Statement Establishing Series of Preferred Stock, and designating Series C
Convertible Redeemable Preferred Stock, as filed with the Colorado
Secretary of State on February 6, 1990 (incorporated herein by reference to
Albara's Registration Statement No. 33-53708 on Form S-1 dated January 12,
1993).
3.7 Statement Establishing Series of Preferred Stock, and designating Series E
Convertible Preferred Stock, as filed with the Colorado Secretary of State
on November 21, 1990 (incorporated herein by reference to Albara's
Registration Statement No. 33-53708 on Form S-1 dated January 12, 1993).
3.8 Statement Establishing Series of Preferred Stock, and designating Series F
Convertible Preferred Stock, as filed with the Colorado Secretary of State
August 27, 1992 (incorporated herein by reference to Albara's Registration
Statement No. 33-53708 on Form S-1 dated January 12, 1993).
3.9 Certificate of Correction, as filed with the Colorado Secretary of State on
September 11, 1992 (incorporated herein by reference to Albara's
Registration Statement No. 33-53708 on Form S-1 dated January 12, 1993).
4.5 Warrant Agreements Issued to Non-Employee Directors on January 30, 1995
(incorporated herein by reference to Albara's 94 Annual Report on Form
10-K).
4.6 Warrant Agreements Issued to Non-Employee Directors on April 4, 1993
(incorporated herein by reference to Albara's 1995 Annual Report on Form
10-KSB).
10.1 Incentive Stock Option Plan (incorporated herein by reference to Albara's
1988 Form S-18 Registration Statement).
10.2 Employment Agreement with Mr. Provencher (incorporated herein by reference
to Albara's Registration Statement No. 33-53708 on Form S-1 dated January
12, 1993).
<PAGE>
10.3 First Amendment to Employment Agreement with Mr. Provencher (incorporated
herein by reference to Albara's Registration Statement No. 33-53708 on Form
S-1 dated January 12, 1993).
10.4 Tradename License Agreement (incorporated herein by reference to Albara's
Post-Effective Amendment No. 2 to the Form S-18 Registration Statement).
10.10 WilTel Communications Systems, Inc. telephone lease agreement with
NorthCon Technologies, Inc. (incorporated herein by reference to Albara's
Registration Statement No. 33-53708 on Form S-1 dated January 12, 1993).
10.11 WilTel Communications System, Inc. telephone lease agreement with Micro
Business Solutions, Inc. (incorporated herein by reference to Albara's
Registration Statement No. 33-53708 on Form S-1 dated January 12, 1993).
10.12 Mutual Release Agreement between Dataproducts Corporation, Micro Business
Solutions, Inc, Albara Corporation and Real Provencher, Individual
(incorporated herein by reference to Albara's 1994 Annual Report on Form
10-KSB).
10.13 Order approving compromise of claims between Micro Business Solutions,
Inc. and Capetronic Computer U.S.A. [HK], Inc. (incorporated herein by
reference to Albara's 1994 Annual Report on Form 10-KSB).
10.14 Employment Agreement with Mr. Provencher dated July 1, 1995 (incorporated
herein by reference to Albara's 1995 Annual Report on Form 10-KSB).
10.15 Deferred Compensation Plan (incorporated herein by reference to Albara's
1995 Annual Report on Form 10-KSB).
10.16 Split-Dollar Agreement with Mr. Real Provencher dated July 1, 1995
(incorporated herein by reference to Albara's 1995 Annual Report on Form
10-KSB).
<PAGE>
10.17 Split-Dollar Agreement with Ms. Barbara A. Provencher dated July 1, 1995
(incorporated herein by reference to Albara's 1995 Annual Report on Form
10-KSB).
10.18 *Earnest Money Contract covering sale of land and building located at 610
South Frazier, Conroe, TX 77301.
10.19 *Asset Purchase Agreement covering the sale of Helix technology to The
Chip Merchant.
11 *Statement RE: Computation of Earnings per Share
16.1 Letter regarding change in Certifying Accountant (incorporated herein by
reference to Albara's Registration Statement No. 33-53708 on Form S-1 dated
January 12, 1993).
22 *Subsidiaries of the Company.
28.4 Promissory Note payable to the Company from MBSI (incorporated herein by
reference to Albara's 1989 Annual Report on Form 10-K).
28.15 Real Estate Lien Note payable to Fred A. Grams and wife, Alberta Betty
Grams from the Company (incorporated herein by reference to Albara's 1990
Annual Report on Form 10-K).
28.22 Promissory Note payable to Barbara Provencher from the Company
(incorporated herein by reference to Albara's 1993 Annual Report on Form
10-KSB).
28.23 Promissory Note payable to the Company from STI (incorporated herein by
reference to Albara's 1994 Annual Report on Form 10-KSB).
<FN>
* Filed herewith.
</TABLE>
<PAGE>
EXHIBIT 2.3
MBSI's Final Decree Statement
-----------------------------
<PAGE>
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF TEXAS
FILED
JAN 21 1998
MICHAEL N. MILBY, CLERK
UNITED STATES BANKRUPTCY COURT
SOUTHERN TEXAS
____________ DISTRICT OF _____________
In re MICRO BUSINESS SOLUTIONS INC.
A NEVADA CORPORATION Bankruptcy Case No. 93-46428-H2-11
DEBTOR*
Social Security No. :
Employer Tax I.D. No.: 76 - 0282289
FINAL DECREE
The estate of (lie above named debtor has been fully administered.
[ ] The deposit required by the plan has been distributed.
IT IS ORDERED THAT:
[ ] ______________________________________________________________
(name of trustee)
is discharged as trustee of the estate of the above-named debtor and
the bond is cancelled;
[XX] the chapter 11 case of the above named debtor is closed; and
--
[ ] [other provisions as needed]
January 16, 1998 Wesley Steen
- ------------------ -----------------------------
Date Bankruptcy Judge
*Set forth all names. including trade names, used by the debtor within the last
6 years. (Bankruptcy Rule 1005). For joint debtors set forth both social
security numbers.
<PAGE>
EXHIBIT 10.18
Earnest Money Contract
610 South Frazier
-----------------
<PAGE>
TEXAS ASSOCIATION OF REALTORS
COMMERCIAL IMPROVED PROPERTY EARNEST MONEY CONTRACT
THIS FORM IS FURNISHED BY THE TEXAS ASSOCIATION OF REALTORS
FOR USE BY ITS MEMBERS. USE OF THIS FORM BY PERSONS WHO ARE NOT MEMBERS
OF THE TEXAS ASSOCIATION OF REALTORS IS NOT AUTHORIZED.
Texas Association of REALTORS , Inc., 1995
1. PARTIES: ALBARA CORPORATION
(Seller) agrees to sell and convey to DON WALLIS (Buyer) and Buyer agrees
to buy from Seller the Property described below.
2. PROPERTY: The real property situated in MONTGOMERY County, Texas,
described as follows or as described on attached exhibit:
608 & 610 SOUTH FRAZIER, CONROE, TEXAS
CONROE LUMBER CO. LT2
Together with: (a) all buildings, improvements, fixtures, and all property
of every kind and character and description (personal or real) owned by Seller
located on, attached to, or used in connection with the Property; (b) all
rights, privileges and appurtenances pertaining thereto, including any right,
title, and interest of Seller in and to adjacent streets, alleys, and
rights-of-way; (c) Seller's interest in and to all leases or rents and security
deposits; (d) Seller's interest in and to all licenses and permits with respect
to the Property; (e) Seller's interest in all third party warranties or
guaranties, if transferable, relating to the Property or to any tangible
personal property and fixtures located on, attached to, or used in connection
with the Property; and (f) Seller's interest in any trade names, if
transferable, used in connection with the Property. The property sold by this
contract is called the "Property." The metes and bounds description determined
by the survey of the Property under paragraph 6(b) shall replace any exhibit
describing the perimeter boundaries of the Property if it differs from the
exhibit. NOTICE: Any property to be excluded from the sale should be described
----------------------------------------------------------------------
in paragraph 11.
- ------------------
3. SALES PRICE:
(a) Cash portion of Sales Price payable by Buyer $ 92,000.00
(b) Sum of all financing described in paragraph 4 $ 368,000.00
(c) Sales Price [sum of (a) and (b)] $ 460,000.00
4. FINANCING: The portion of the Sales Price not payable in cash shall
be paid as follows:
Page 1 of 9
<PAGE>
[x] THIRD PARTY FINANCING: Buyer shall apply for a third party first
lien note of $368,000 payable at [x] monthly [ ] quarterly [ ] ________
-----------------
intervals for not less than 15 years with the initial interest rate not to
exceed 9 % per annum. Within 10 days after the Effective Date of this contract
Buyer shall apply for all third party financing and shall make every reasonable
effort to obtain financing approval. Financing approval shall be deemed to have
been obtained when the lender has determined that Buyer has satisfied all of
lender's financial conditions (those items relating to Buyer's ability to
qualify for approval of a loan). If financing approval is not obtained within
45 days after the Effective Date, this contract shall terminate and the Earnest
Money shall be refunded to Buyer. Each note to be executed hereunder shall be
secured by vendor's and deed of trust liens.
Page 2 of 9
<PAGE>
5. EARNEST MONEY: Buyer shall deposit $ 2000.00 as Earnest Money with FIRST
--------- -----
SURETY (Escrow Agent) at LOOP 336, CONROE (Address) on the Effective Date of
- ------ ----------------
this contract. The Earnest Money shall be deposited in an [ ] interest [x]
non-interest bearing account in a federally insured financial institution chosen
by Escrow Agent and any interest shall be credited to Buyer. If Buyer fails to
deposit the Earnest Money as required by this contract, Buyer shall be in
default.
6. TITLE POLICY AND SURVEY:
[x] (a) TITLE POLICY: Seller shall furnish to Buyer at Seller's expense
an Owner Policy of Title Insurance (the Title Policy) issued by a licensed title
----------------
company (the Title Company) in the amount of the Sales Price, dated at or after
- -------
closing, insuring Buyer against loss under the provisions of the Title Policy,
subject only to those title exceptions permitted by this contract, or as may be
approved by Buyer in writing, and the standard printed exceptions contained in
the promulgated form of Title Policy; provided however that: (1) the exception
as to area and boundaries [ ] shall [x] shall not be deleted except for any
shortages in area at the expense of [x] Buyer [ ] Seller; and (2) the exception
as to restrictive covenants shall be endorsed "None of Record", unless
restrictions are approved by Buyer. Within 21 days after the Title Company
--
receives a copy of this contract Seller shall furnish Buyer a commitment for
Title Insurance (the Commitment) including copies of recorded documents
evidencing title exceptions. Seller authorizes the Title Company to deliver the
Commitment and related documents to Buyer at Buyer's address. Buyer shall have
10 days after receipt of the Commitment and legible copies of documents
- --
evidencing title exceptions required by this contract to object in writing to
matters disclosed in the Commitment other than the standard printed exceptions
as described or limited in this paragraph.
[x] (b) SURVEY REQUIRED: (Check (1) or (2) only)
[x] (1) Within 3 days after: [ ] the Effective Date of this
---
contract; [ ] the date by which Buyer is required to complete inspections,
studies or assessments in paragraph 7(b); (Check (1) or (2) only):
[x] (i) Buyer may obtain a survey of the Property at Buyer's
expense.
[ ] (ii) Seller, at Seller's expense, shall furnish to Buyer
a survey of the Property dated after the Effective Date of this contract.
Buyer may, within 3 days after Buyer's receipt of the survey object in
-
writing to any matter which constitutes a defect or encumbrance to title on the
survey or if the survey shows any part of the Property to lie in a 100-year
floodplain area.
Page 3 of 9
<PAGE>
[ ] (2) Within _________ days after the Effective Date of this
contract, Seller shall furnish Buyer a true and correct copy of Seller's
existing survey of the Property dated ___________________. The survey [check
(i) or (ii)]: (i) [ ] shall be recertified no earlier than ___________________
at the expense of [ ] Buyer [ ] Seller; (ii) [ ] shall not be recertified.
Within ________ days after Buyer receives a copy of the survey or after Buyer
receives a copy of the recertified survey, whichever is later, Buyer may object
in writing to any matter shown on the survey which constitutes a defect or
encumbrance to title or if the survey shows any part of the Property to lie in a
100-year floodplain area.
The survey required by this paragraph 6(b) shall be made by a Registered
Professional Land Surveyor acceptable to the title company and any lender. The
survey shall: (i) identify the Property by metes and bounds or platted lot
description; (ii) show that the survey was made and staked on the ground with
corners permanently marked; (iii) set forth the dimensions and total area of the
property; (iv) show the location of all improvements, highways, streets, roads,
railroads, rivers, creeks, or other waterways, fences, easements, and rights of
way on the Property with all easements and rights of way referenced to their
recording information; (v) show any discrepancies or conflicts in boundaries,
any visible encroachments, and any portion of the Property lying within the 100
year floodplain as shown on the current Federal Emergency Management Agency map;
and (vi) contain the surveyor's certificate that the survey is true and correct.
Buyer's failure to object under paragraph 6(a) or 6(b) within the time allowed
shall constitute a waiver of Buyer's right to object except that the
requirements in Schedule C of the Commitment shall not be deemed to have been
waived. If objections are made by Buyer, or any third party lender, Seller
shall cure the objections within 20 days after the date Seller receives them.
The Closing Date shall be extended as necessary to cure objections. If
objections are not cured by the extended Closing Date, this contract shall
terminate and the Earnest Money shall be refunded to Buyer unless Buyer elects
to waive the objections.
7. PROPERTY CONDITION/FEASIBILITY STUDIES: (Check (a) or (b) only)
[ ] (a) PRESENT CONDITION:
[ ] (1) Buyer accepts the Property in its present "as-is"
condition. Buyer shall pay for any repairs required by a lender.
[ ] (2) Buyer accepts the Property in its present condition
provided that Seller, at Seller's expense, shall complete the following repairs
prior to closing: ___________________________________________________________
________________________________________________________________________________
________________________. Buyer shall pay for any other repairs required by a
lender.
[x] (b) INSPECTIONS AND FEASIBILITY STUDIES: Within 15 days after the
--
Effective Date of this contract Buyer, at Buyer's expense, may complete or cause
to be completed inspections of the Property (including all improvements and
fixtures) by inspectors of Buyer's choice. Inspections may include but are not
limited to: (i) physical property inspections including, but not limited to,
structural pest control, mechanical, structural, electrical, or plumbing
inspections; (ii) economic feasibility studies; (iii) any type of environmental
assessment or engineering study including the performance of tests such as soils
tests, air sampling, or paint sampling; and (iv) compliance inspections to
determine compliance with zoning ordinances, restrictions, building codes, and
statutes (e.g., ADA, OSHA, and others). Seller shall permit Buyer and Buyer's
inspectors access to the Property at reasonable times. Seller shall pay for
turning utilities on for inspections. If Buyer determines, in Buyer's sole
judgment, that the Property is not suitable for any reason for Buyer's intended
use or is not in satisfactory condition, then Buyer may terminate this contract
by providing written notice of termination and copies of all reports and
inspections, studies, or assessments completed or caused to be completed by
Buyer under this paragraph to Seller within the time required to complete the
inspections, studies, or assessments under this paragraph, and the Earnest Money
shall be refunded to Buyer less the sum of $ N/A to be retained by Seller as
---
independent consideration for Buyer's right to terminate under this paragraph.
If Buyer does not terminate this contract within the time required any
objections with respect to the inspections, studies and assessments under this
paragraph shall be deemed waived by Buyer. If this contract does not close
through no fault of Seller, Buyer shall restore the Property to its original
condition if altered due to inspections, studies, or assessments completed by
Buyer or Buyer's inspectors. Within _____ days after the Effective Date of this
contract Seller shall deliver to Buyer (strike any not to be delivered):
(1) a current rent roll of all leases affecting the Property
certified by Seller to be true and correct;
Page 4 of 9
<PAGE>
(2) copies of all leases pertaining to the Property, including any
modifications, supplements, or amendments to the leases;
(3) a current inventory of all tangible personal property and
fixtures owned by Seller and located on, attached to, or used in connection with
the Property;
(4) copies of all notes and deeds of trust assumed or taken
subject to by Buyer;
(5) copies of all service, maintenance and management agreements
relating to the ownership and operation of the Property;
(6) copies of all warranties and guaranties relating to the
Property, or any part thereof, or to the tangible personal property and fixtures
owned by Seller and located on, attached to, or used in connection with the
Property;
(7) copies of all fire, hazard, liability, and other insurance
policies held by Seller on or affecting the Property;
(8) copies of all leasing or other commission agreements with
respect to the Property that are being assumed by Buyer;
(9) a copy of the "as-built" plans and specifications of the
Property;
(10) copies of all invoices for utilities and repair expenses
incurred by Seller for operation of the Property for each month for the
preceding two (2) years prior to the Effective Date of this contract;
(11) a copy of Seller's income and expense statement for the
Property from _________________________ to ___________________________; and
(12) copies of all previous environmental assessments, studies, or
analyses affecting the Property in Seller's possession.
8. BROKER'S REPRESENTATION AND FEES: KELLER WILLIAMS (Listing Broker): [x]
---------------
represents Seller only; [ ] acts as an intermediary between Seller and Buyer.
Any other broker represents: [ ] Seller as Listing Broker's Subagent; [ ]
Buyer only. Seller shall pay Listing Broker (choose only one):
[ ] (a) the fee specified by separate agreement between Listing Broker
and Seller.
[x] (b) a total cash fee of either $21,000.00 or N/A % of the total
---------- ---
Sales Price in Montgomery County, Texas on closing of this sale, which Escrow
----------
Agent shall pay from Seller's proceeds of the sale. If Seller defaults, the
cash fee shall be due and payable in full. If Buyer defaults, Escrow Agent is
authorized to pay Listing Broker one-half of any Earnest Money Seller receives
under this contract not to exceed the amount of the cash fee.
9. CLOSING:
(a) The closing of the sale shall be on or before October 30, 1998 or
----------------
within 7 days after objections to title or the survey have been cured, whichever
date is later (the Closing Date); however, if financing or assumption approval
has been obtained pursuant to paragraph 4, the Closing Date shall be extended up
to 15 days only if necessary to comply with lender's closing instructions (for
example, survey, insurance policy, property repairs, closing documents). If
either party fails to close this sale by the Closing Date, the non-defaulting
party shall be entitled to exercise the remedies contained in paragraph 15.
(b) At closing Seller shall furnish, at Seller's expense (strike any
not to be furnished):
(1) tax statements showing no delinquent taxes on the Property;
(2) a [ ] General [ ] Special Warranty Deed conveying good and
indefeasible title to the Property showing no additional exceptions to those
permitted in paragraph 6;
(3) a Bill of Sale with warranties to title conveying title, free
and clear of all liens, to any personal property defined as part of the Property
in paragraph 2 and conveyed by this contract;
Page 5 of 9
<PAGE>
(4) an assignment of leases to or on the Property duly executed by
Seller;
(5) to the extent assignable, an assignment duly executed by
Seller of any licenses and permits, maintenance, management or other contracts,
and any warranties or guaranties defined as part of the Property in paragraph 2
or conveyed by this contract;
(6) a current rent roll of the Property certified by Seller;
(7) to the extent assignable, an assignment duly executed by
Seller of any one or more of the insurance policies held by Seller pertaining to
the Property; and
(8) evidence that the person executing this contract is legally
capable and authorized to bind Seller.
10. POSSESSION: Seller shall deliver possession of the Property to Buyer on
closing and funding in its present or required repaired condition, ordinary wear
- -------------------
and tear excepted Any possession by Buyer prior to closing or Seller after
closing that is not authorized by a separate written lease agreement, shall
establish a landlord-tenant at sufferance relationship between the parties.
11. SPECIAL PROVISIONS:
(1) Concurrent with the closing of this contract, the parties enter
into a separate lease agreement providing for the Seller to lease back the
building from the Buyer for a period of one year.
(2) Pallet racks are included in the sale.
12. SALES EXPENSES: To be paid in cash at or prior to closing:
(a) Seller's Expenses: Releases of existing liens, including
prepayment penalties and recording fees; release of Seller's loan liability; tax
statements or certificates; preparation of deed; one-half of escrow fee; and
other expenses stipulated to be paid by Seller under other provisions of this
contract.
(b) Buyer's Expenses: All loan fees or expenses (e.g., fees for
application, origination, discount, appraisal, assumption, recording, tax
service, mortgagee title policies, credit reports, document preparation and the
like); preparation and recording of deed of trust to secure assumption; required
premiums for flood and hazard insurance; interest on all periodic installment
payment notes from date of disbursements to one payment period prior to dates of
first monthly payments; one-half of escrow fee; fees for copies and delivery of
title commitment and related documents; and other expenses stipulated to be paid
by Buyer under other provisions of this contract.
(c) If any sales expense exceeds the amount stated in this contract to
be paid by either party, either party may terminate this contract unless either
party agrees to pay such excess.
13. PRORATIONS AND ESTOPPEL CERTIFICATES:
(a) PRORATIONS: Insurance (at Buyer's option) if a transfer is
permitted by the insurance carrier, interest on any assumed loan, current taxes,
and any rents shall be prorated through the Closing Date. If the amount of the
ad valorem taxes for the year in which the sale is closed is not available on
the Closing Date, proration of taxes shall be made on the basis of taxes
assessed in the previous year, with a subsequent cash adjustment of such
proration to be made between Seller and Buyer, if necessary, when actual tax
figures are available. If Buyer is assuming payment of or taking subject to any
existing loan on the Property, all reserve deposits for the payment of taxes,
insurance premiums, and other charges, shall be transferred to Buyer by Seller
and Buyer shall pay to Seller the amount of such reserved deposits at closing.
(b) ESTOPPEL CERTIFICATES: Within 45 days after the Effective Date of
--
this Contract, Seller shall deliver to Buyer estoppel certificates signed not
earlier than ____________________ by each tenant leasing space in the Property
stating that, as of the date signed: no default exists under the terms of the
lease agreement by either lessor or lessee; the amount of any rental payments
made in advance, if any; the amount of any security deposits made, if any; the
amount of any offsets against rent, if any; and that the tenant has no defenses
against the payment of rent accruing under the terms of the lease agreement. If
Seller is unable to deliver the estoppel certificates in accordance with the
terms of this paragraph without fault by the specified time, Buyer may: (i)
terminate this contract and the Earnest Money shall be refunded to Buyer; (ii)
extend the time for performance up to 15 days and the Closing Date shall be
extended as necessary; or (iii) waive Seller's requirement to deliver the
estoppel certificates.
Page 6 of 9
<PAGE>
(c) Seller shall, at closing, tender to Buyer any security deposits,
prepaid expenses, and advanced rental payments paid by any and all tenants.
14. CASUALLTY LOSS AND CONDEMNATION:
(a) If any part of the Property is damaged or destroyed by fire or
other casualty loss, Seller shall restore the Property to its previous condition
as soon as reasonably possible, but in any event by the Closing Date. If Seller
is unable to do so without fault, Buyer may: (i) terminate this contract and
the Earnest Money shall be refunded to Buyer; (ii) extend the time for
performance up to 15 days and the Closing Date shall be extended as necessary;
or (iii) accept the Property in its damaged condition and accept an assignment
of insurance proceeds. Provisions of the Texas Property Code to the contrary
shall not apply.
(b) If prior to closing condemnation proceedings are commenced against
any portion of the Property, Buyer may: (i) terminate this contract by written
notice to Seller within ______ days after Buyer is advised of the condemnation
proceeding and the Earnest Money shall be refunded to Buyer; or (ii) appear and
defend in the condemnation proceeding and any award in condemnation shall, at
Buyer's election, become the property of Seller and the sales price shall be
reduced by the same amount or any award shall become the property of Buyer and
the sales price shall not be reduced.
15. DEFAULT: If Buyer fails to comply with this contract, Buyer shall be in
default. Seller may either: enforce specific performance, seek other relief as
may be provided by law, or both; or terminate this contract and receive the
Earnest Money as liquidated damages, thereby releasing the parties from this
contract. If Seller is unable without fault to make any noncasualty repairs,
deliver the estoppel certificates, or deliver the Commitment within the time
allowed, Buyer may either terminate this contract and receive the Earnest Money
as the sole remedy or extend the time for performance up to 15 days and the
Closing Date shall be extended as necessary. If Seller fails to comply with
this contract for any reason, Seller shall be in default and Buyer may either
enforce specific performance, seek such other relief as may be provided by law,
or both; or terminate this contract and receive the Earnest Money, thereby
releasing the parties from this contract.
16. ATTORNEY FEES: If, Buyer, Seller, Listing Broker, Other Broker, or
Escrow Agent is a prevailing party in any legal proceeding brought under or with
relation to this contract or this transaction, such party shall be entitled to
recover from the non-prevailing parties all costs of such proceeding and
reasonable attorney fees. The provisions of this paragraph shall survive
closing.
17. ESCROW: If either party makes demand for the payment of the Earnest
Money, Escrow Agent has the right to require from all parties and brokers a
written release of liability of Escrow Agent for disbursement of the Earnest
Money. Any refund or disbursement of Earnest Money under this contract shall be
reduced by the amount of unpaid expenses incurred on behalf of the party
receiving the Earnest Money, and Escrow Agent shall pay the same to the
creditors entitled thereto. At closing, the Earnest Money shall be applied
first to any cash down payment, then to Buyer's closing costs and any excess
refunded to Buyer. Demands and notices required by this paragraph shall be in
writing and delivered by hand delivery or by certified mail, return receipt
requested.
18. MATERIAL FACTS:
(a) Seller shall convey the Property on closing: (i) with no liens,
assessments, Uniform Commercial Code or other security interests against the
Property which will not be satisfied out of the Sales Price unless securing
payment of any loans assumed by Buyer; (ii) without any assumed loans in
default; and (iii) with no parties in possession of any portion of the Property
as lessees, tenants at sufferance, or trespassers except tenants under the
written leases delivered to Buyer pursuant to this contract.
(b) To the best of Seller's knowledge and belief (choose (1) or (2)
only):
[ ] (1) Seller is not aware of any material defects to the
Property except as stated in the attached Property Condition Statement.
[x] (2) Seller is not aware of:
(i) any material defects to the Property except: roof
----
leak in middle of building.
- -------------------------------
Page 7 of 9
<PAGE>
(ii) any environmental hazards or conditions affecting
the Property which would violate any federal, state or local statutes,
regulations, ordinances or other requirements and more specifically, but without
limitation, whether: (1) the Property is or has ever been used for the storage
or disposal of hazardous substances or materials or toxic waste, a dump site or
landfill, or the housing of any underground tanks or drums; (2) radon, asbestos
insulation or fireproofing, ureaformaldehyde foam insulation, lead-based paint
or other pollutants or contaminants of any nature now exist or have ever existed
on the Property; (3) wetlands, as defined by federal or state law or regulation
are on the Property; and (4) threatened or endangered species or their habitat,
as defined by the Texas Parks and Wildlife Department or the U.S. Fish and
Wildlife Service, are on the property; except as follows: ______________
________________________________________________________________________________
____________.
(c) Each written lease to be furnished to Buyer under this contract
(the leases) shall be in full force and effect according to its terms without
amendment or modification that is not disclosed to Buyer in writing. All the
leases shall contain the entire written or oral agreements of any kind for the
leasing, rental, or occupancy of any portion of the Property. Seller shall
disclose in writing to Buyer: (i) any lease modifications, amendments, or
defaults made subsequent to the date the leases are furnished to Buyer but prior
to closing; (ii) any failure by Seller to comply with all of Seller's
obligations under the leases; (iii) any facts or circumstances that would
constitute a default by Seller under any lease or entitle any tenant to offsets
or damages; (iv) any lease in which tenant does not actually occupy the premises
leased; (v) if any rent under any lease has been collected in advance of the
current month; (vi) if any concessions, bonuses, free rents, rebates, or other
matters affect the rental for any tenant; (vii) if any of the leases or rentals
or other sums payable under the leases have been assigned or otherwise
encumbered, except as security for loan(s) assumed or taken subject to as
provided in this contract; and (viii) if any tenant under any lease is in
default.
19. NOTICES: All notices shall be in writing and effective when
hand-delivered, mailed by certified mail return receipt requested, or sent by
facsimile transmission to:
Buyer at 242 BASSWOOD DR. Seller at 610 S. FRAZIER
---------------------- --------------------
SPRING, TX 77386 CONROE, TX 77301
- -------------------------------- -------------------------------
- -------------------------------- -------------------------------
Phone (281) 367-5005 Phone (409) 539-2992
- -------------------------------- -------------------------------
Fax (281) 292-5384 Fax (409) 539-4141
- -------------------------------- -------------------------------
20. FEDERAL TAX REQUIREMENT: If Seller is a "foreign person", as defined by
applicable law, or if Seller fails to deliver an affidavit that Seller is not a
"foreign person", then Buyer shall withhold from the sales proceeds at closing
an amount sufficient to comply with applicable tax law and deliver the same to
the Internal Revenue Service, together with appropriate tax forms. Internal
Revenue Service regulations require filing written reports if cash in excess of
specified amounts is received in the transaction.
21. DISPUTE RESOLUTION: The parties agree to negotiate in good faith in an
effort to resolve any dispute related to this contract that may arise. If the
dispute cannot be resolved by negotiation, the dispute shall be submitted to
mediation before the parties resort to arbitration or litigation and a mutually
acceptable mediator shall be chosen by the parties to the dispute who shall
share the cost of mediation services equally.
22. AGREEMENT OF THE PARTIESS: This contract shall be binding on the
parties, their heirs, executors, representatives, successors, and assigns. This
contract shall be construed under and in accordance with laws of the State of
Texas. This contract contains the entire agreement of the parties and cannot be
changed except by written agreement. If this contract is executed in a number
of identical counterparts, each counterpart is deemed an original and all
counterparts shall, collectively, constitute one agreement. Buyer [ ] may [ ]
may not assign this contract. If Buyer assigns this contract Buyer shall be
relieved of any future liability under this contract only if the assignee
assumes in writing all obligations and liability of Buyer under this contract.
Addenda which are part of this contract are: __________________________
________________________________________________________________________________
____________.
23. TIME: Time is of the essence in this contract. Strict compliance with
the times for performance in this contract is required.
24. EFFECTIVE DATE: The Effective Date of this contract for the purpose of
performance of all obligations shall be the date this contract is receipted by
the Escrow Agent after all parties have executed this contract.
Page 8 of 9
<PAGE>
25. MISCELLANEOUS:
(a) Buyer should have an Abstract covering the Property examined by an
attorney of Buyer's selection, or Buyer should be furnished with or obtain a
Title Policy.
(b) If the Property is situated in utility or other statutorily created
district providing water, sewer, drainage, or flood control facilities and
services, Chapter 50 of the Texas Water Code requires Seller to deliver and the
Buyer to sign the statutory notice relating to the tax rate, bonded
indebtedness, or standby fee of the district prior to final execution of this
contract.
(c) If the Property adjoins or shares a common boundary with the
tidally influenced submerged lands of the state, Section 33.135 of the Texas
Natural Resources Code, requires a notice regarding coastal area property to be
included in the contract.
(d) Buyer should not rely upon any oral representations about the
Property from any source. Seller and any broker have no knowledge of any
defects in the Property other than what has been disclosed in this contract or
other writing.
(e) Brokers are not qualified to render property inspections, surveys,
engineering studies, environmental assessments, or inspections to determine
compliance with zoning, governmental regulations, or laws. Buyer should seek
experts to render such services. Selection of inspectors and repairmen is the
responsibility of the Buyer and not the Broker.
26. CONTRACT AS OFFER: The execution of this contract by the first party
constitutes an offer to buy or sell the Property. Unless accepted by the other
party by 5:00 p.m. (in the time zone in which the Property is located) on
____________________, the offer shall lapse and be null and void.
This is intended to be a legally binding contract, READ IT CAREFULLY. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY BROKER OR ITS AGENTS OR EMPLOYEES AS
TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS DOCUMENT OR
TRANSACTION. CONSULT YOUR ATTORNEY BEFORE SIGNING.
Buyer's Seller's
Attorney ___________________________ Attorney _____________________________
ALBARA CORPORATION
/S/ D. Wallis 9-4-1998 by: /S/ Real Provencher
- -------------------------------------- --------------------------------------
Buyer Seller
As: President
______________________________________ ______________________________________
Buyer Seller
AGREEMENT BETWEEN BROKERS
Listing Broker agrees to pay __________________________________________________,
Other Broker, a fee of $_________________ or ________ % of the Sales Price when
the Listing Broker's fee is received. Escrow Agent is authorized and directed
to pay Other Broker from Listing Broker's fee at closing. This Agreement
Between Brokers supersedes any prior offers and agreements for compensation
between Brokers.
______________________________________ ______________________________________
Other Broker License No. Listing Broker License No.
By: __________________________________ By: _________________________________
______________________________________ ______________________________________
Other Broker's Address Phone No. Listing Broker's Address Phone No.
RECEIPT
On this day, 9-30-98, Escrow Agent acknowledges receipt of: (a) [x] Contract;
-------
and (b) [ ] Earnest Money in the form of _____________________________.
Escrow Agent: FIRST SURETY TITLE CO. By: CATHY MOORE
------------------------- -----------
Address: 2040 LOOP 336 W. #200 CONROE 77304 Phone: 409-756-6300
---------------------------------------- ------------
Page 9 of 9
<PAGE>
AMENDMENT TO EARNEST MONEY CONTRACT
-----------------------------------
STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF MONTGOMERY
That the undersigned parties, for good and other sufficient consideration,
the receipt and sufficiency of which are acknowledged, agree as follows:
1. That certain Earnest Money Contract dated on or about September 4, 1998,
executed by Albara Corporation, as Seller, and Don Wallis, as Buyer, for the
sale and purchase of 608 and 610 S. Frazier Street, Conroe, Montgomery County,
Texas, is amended as follows:
(a) Buyer shall be entitled to a credit against the purchase price in
the amount of $33,500.00 for payment of one years prepaid rent under that
certain Lease Agreement dated September 30, 1998, between Don Wallis as Landlord
and Rolisher & Assoc., Inc., as Tenant, for the lease of 610 S. Frazier Street.
Said credit shall be reflected on the closing statement as a credit to the Buyer
and a charge to the Seller.
(b) The Buyer is amended to include Darlene Wallis.
2. Except as herein set forth, the Earnest Money Contract is continued in
full force and effect.
Dated effective the 31st day of October, 1998.
SELLER: ALBARA CORPORATION
By: /s/ Real Provencher
---------------------------
Name: Real Provencher
-------------------------
Title: President
------------------------
BUYER: /s/ DONALD DAVID WALLIS
------------------------------
DONALD DAVID WALLIS
/s/ DARLENE WALLIS
------------------------------
DARLENE WALLIS
<PAGE>
GENERAL WARRANTY DEED WITH VENDOR'S LIEN
----------------------------------------
THE STATE OF TEXAS
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF MONTGOMERY
That ALBARA CORPORATION, a Texas corporation formerly knows as Marin Fund,
Inc. (the "Grantor"), for and in consideration of the sum of TEN AND NO/100
-------
DOLLARS ($10.00) and other good and valuable consideration to Grantor paid by
DONALD DAVID WALLIS and wife, DARLENE WALLIS, whose mailing address is 242
Basswood Drive, Spring, Texas 77386 (collectively, the "Grantees"), the receipt
--------
and sufficiency of which are hereby acknowledged, and the further consideration
of a sum of money in the amount of $241,998.83 paid to Grantor by The Grams
Family Trust (the "Payee"), at the instance and request of Grantees, the receipt
-----
of which is hereby acknowledged and confessed, as evidence of which Grantees
have executed and delivered one certain promissory note (the "Note") of even
----
date herewith in the original principal sum of $241,998.83, payable to the order
of the Payee, the payment of the Note secured by that certain Deed of Trust (the
"Deed of Trust") to Robert L. Page, Trustee of even date herewith covering the
---------------
Property (as hereinafter defined), and by the Vendor's Lien herein retained, has
GRANTED, BARGAINED, SOLD and CONVEYED and by these presents does GRANT, BARGAIN,
SELL and CONVEY unto Grantees the tract or parcel of land in Montgomery County,
Texas, more particularly described on Exhibit "A" attached hereto and
------------
incorporated herein for all purposes, together with (i) any and all improvements
located thereon; (ii) any and all appurtenant easements or rights of way
affecting said real property and any of Grantor's rights to use same; (iii) any
and all rights of ingress and egress to and from said real property and any of
Grantor's rights to use same; (iv) any and all mineral rights and interests of
Grantor relating to said real property (present or reversionary); and (v) any
and all rights to the present or future use of wastewater, wastewater capacity,
drainage, water or other utility facilities to the extent same pertain to or
<PAGE>
benefit said real property or the improvements located thereon, including
without limitation, all reservations of or commitments or letters covering any
such use in the future, whether now owned or hereafter acquired; (vi) all right,
title and interest of Grantor, if any, in and to (a) any and all roads, streets,
alleys and ways (open or proposed) affecting, crossing, fronting or bounding
said real property, (b) any and all strips, gores or pieces of property
abutting, bounding or which are adjacent or contiguous to said real property
(whether owned or claimed by deed, limitations or otherwise), (c) any and all
air rights relating to said real property, and (d) any and all reversionary
interests in and to said real property (hereinafter collectively referred to as
"Property"). Notwithstanding anything contained herein to the contrary,
--------
Grantor is granting, selling and conveying the rights described in (iii) and
(vi) directly above, without warranty (whether statutory, express or implied).
This conveyance is made by Grantor and accepted by Grantees subject only to
the matters listed on Exhibit "B" attached hereto and incorporated herein for
-----------
all purposes, but only to the extent that the same are currently valid and
enforceable against the Property.
TO HAVE AND TO HOLD the Property, subject to the matters herein set forth,
together with all and singular the rights and appurtenances thereto in anywise
belonging, unto Grantees, their heirs and assigns forever; and Grantor does
hereby bind itself, its successors and assigns, to WARRANT AND FOREVER DEFEND
all and singular the Property unto Grantees, their heirs and assigns, against
every person whomsoever lawfully claiming or to claim the same or any part
thereof.
But is it expressly agreed and stipulated that the Vendor's Lien as well as
Superior Title in and to the Property are hereby retained until the Note and all
amounts due thereunder and under the Deed of Trust are fully paid according to
the face, tenor, effect and reading thereof, at which time this General Warranty
Deed shall become absolute. Said Vendor's Lien and Superior Title herein
retained are hereby transferred, assigned, sold and conveyed without recourse to
the Payee.
-2-
<PAGE>
All taxes assessed against the Property for the year 1998 have been
prorated between the parties, and Grantees hereby assume and agree to pay such
taxes in full.
EXECUTED this 4th day of November, 1998.
------
GRANTOR:
ALABARA CORPORATION
By: /s/ Real Provencher
-------------------------------------
Printed Name: Real Provencher
---------------------------
Title: President
----------------------------------
THE STATE OF TEXAS
COUNTY OF MONTGOMERY
This instrument was acknowledged before me on the 4th day of November,
------
1998, by REAL PROVENCHER, President of Albara Corporation, a Texas corporation,
on behalf of said corporation.
/s/ Lela B. Mills
----------------------------------
Notary Public in and for
The State of T E X A S
[NOTARY PUBLIC, STATE OF TEXAS SEAL]
My Commission Expires:
JAN 25, 2001
_________________________
After recording, return to:
_________________________
_________________________
_________________________
-3-
<PAGE>
EXHIBIT B
1. Building line 25 feet wide along the front property line of subject
property, as reserved by instrument recorded in Volume 214, Page 336 of the Deed
Records of Montgomery County, Texas.
2. Building line 10 feet wide along the side street property line of
subject property, as reserved by instrument recorded in Volume 214, Page 336 of
the Deed Records of Montgomery County, Texas.
3. Easement 5 feet wide along the rear property line of the subject
property for the use of public utilities, as imposed by instrument recorded in
Volume 214, Page 336 of the Deed Records of Montgomery County, Texas.
4. A stated one-half (1/2) of one-eighth (1/8) non-participating
royalty interest in all of the oil, gas and other minerals in and under the
herein described property reserved by Conroe Lumber Company, in instrument
recorded in Volume 212, Page 372 of the Deed Records of Montgomery County,
Texas.
5. Terms, conditions and stipulations contained in any and all Lease
Agreements, whether of record or not.
6. Vendor's Lien retained in Deed dated December 5, 1990, filed for
record in the office of the County Clerk, on December 10, 1990, under Clerk's
File No. 9052188 of the Real Property Records of Montgomery County, Texas, from
Fred A. Grams and wife, Alberta Betty Grams to Marin Fund, Inc., securing the
payment of one note of even date therewith in the principal sum of $375,000.00,
provided; said note being additionally secured by a Deed of Trust of even date
therewith to Robert L. Page, Trustee, filed for record in the office of the
County Clerk, on December 10, 1990, under Clerk's File No. 9052189 of the Real
Property Records of Montgomery County, Texas.
<PAGE>
EXHIBIT "A"
Being 0.7551 acre of land in the John Bricker Survey, A-71, Montgomery County,
Texas, and being out of and a part of Lot 2, Block "P", Conroe Lumber
Corporation Subdivision, map of which is recorded in Volume 4, Page 11 of the
Map Records; said 0.7751 acres being more particularly described as follows:
BEGINNING at a 1-1/2" iron pipe found in the East Right-of-Way line of State
Highway No. 75 (Frazier Street) for the Northwest corner of said Lot 2, same
being the Northwest corner of the herein described tract;
THENCE N. 74 00' 00" E., for a distance of 364.84 feet (called 365.00) to a
3/4" iron pipe found for the Northeast corner of Lot 2, same being the Northeast
corner of the herein described tract;
THENCE S. 15 41' 19" E., along the East line of said Lot 2 for a distance of
90.20 feet, (called S. 16 E., 90.00) to a 1/2" iron rod found for the Southeast
corner of the herein described tract;
THENCE S. 74 03' 18" W., (called S. 74 W) for a distance of 365.89 feet to a
1/2" iron pipe found in the aforementioned East Right-of-Way line for the
Southwest corner of the herein described tract and being N. 15 01' 05" W.,
10.42 feet (called 10.00 feet) from a 1/2" iron pipe found for the southwest
corner of said Lot 2;
THENCE N. 15 01' 05" W., along said Right-of-Way line for a distance of 89.86
feet (called 90.00 feet) to the Point of Beginning and containing in all 0.7551
acre of land, 32,891 square feet.
together with a non-exclusive right-of-way easement for the free and
uninterrupted use, liberty and privilege of passing in, along, over and across
the real property described as follows:
Being a centerline description of a 10 foot easement out of Lot 2, Block P,
Conroe Lumber Corporation Subdivision, map of which is recorded in Volume 4,
Page 11, of the County Map Records; said centerline being described more
particularly as follows:
BEGINNING at a point on the East right-of-way line of State Highway No. 75 and
being N. 15 30' 0" W., a distance of 5.00 feet from the southwest corner of said
Lot 2;
THENCE N. 74 00' 00" E., 5.0 feet North of and parallel to the South line of
said Lot 2 for a distance of 265.00 feet to the point of termination of the
herein described easement.
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
THIS PURCHASE AND SALE AGREEMENT is entered into as of December 31, 1997
(the "Effective Date") among The Chip Merchant, Inc., a California corporation
("Buyer"), Software Technologies, Inc., a Nevada corporation dba Helix
Technologies (the "Seller"), Albara. Corporation, a Colorado corporation
("Shareholder"), and R al Provencher, an individual ("Provencher"), with
reference to the following facts:
A. Seller is engaged in the business of software development,
marketing, sales and support services (the "Business").
B. Seller owns all right, title, and interest in and to
relational database, development environment software known as Helix Express
that allows users to develop information management systems, along with related
software programs, updates and patches, including but not limited to, Helix
Express Runtime Engine, and Helix PowerMover, which software is more
particularly described on Exhibit A attached hereto ("Software").
C. Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, all of Sellers right, title and interest in and to the Software and
related intellectual property rights, and other information owned by Seller
relating to the Software.
NOW, THERFFORE, in consideration of the foregoing facts and the mutual
promises set forth below, the parties agree as follows:
1. Sale and Purchase of Assets. Subject to the terms and conditions
-------------------------------
set forth in this agreement, Seller hereby agrees to sell to Buyer, and Buyer
hereby agrees to purchase from Seller, all right, title and interest in and to:
(i) the Software, including without limitation in written and electronic form
all source code, object code, file formats, object libraries, algorithms,
macros, and technical and user documentation, the design and the "look and feel"
of the screen displays and the user interface; all work in process; all patent,
copyright, trademark, trade secret right and other intellectual property rights
in and to the Software, any and all versions, modifications, corrections,
adaptions. translations enhancements, improvements or derivative works thereof,
and the program that creates the enabling keys; (ii) any rights to the
"HelixTech" domain names; (iii) copies of all customer information, sales
history, registration, mailing lists, and developer information related to the
Software ("Customer Information"), (iv) a copy of Seller's customer list
(Customer List"), and (v) copies of all financial, research and development,
employee., subcontractor and vendor records related to the Software ("Other
Records") (collectively, the "Assets").
1
<PAGE>
2. No Assumption of Ljability. Buyer shall not assume or be
------------------------------
obligated to perform any liability or obligation of Seller, whether or not such
liability arises out of or in connection with the sale of the Assets hereunder.
3. Purchase Price. The purchase price (the "Purchase Price") for
---------------
the Assets shall be One Hundred and Twenty Thousand Dollars ($120,000. 00),
payable in cash on the Effective Date. The Purchase Price shall be allocated to
the Assets as set forth on Exhibit A. Each of the parties shall report this
transaction for tax purposes in accordance with such allocation.
4. Closing. The closing shall take place at the offices of
--------
Sheppard, Mullin, Richter & Hampton LLP, 501 West Broadway, 19th Floor, San
Diego, California 92101-3598 on the Effective Date, at 10:00 A.M., California
time, or such other date, place or time as may be agreed upon between the
parties, such date being reffered to herein as the "Closing Date" or "Closing";
provided, however, that the Closing shall not occur until after each of the
conditions set forth in Section 5 and 6 hereto have been satisfied.
4.1 Transfer of Possession. On the Effective Date, Seller will
-------------------------
put Buyer into full possession of the Software and Customer List, including
delivery of the Software configured in source code, together with all technical
and user documentation and the compiler for the package. Buyer shall have access
to the Customer Information and the Other Records in accordance with Section 9.1
below. Seller shall execute and provide slich assignments, assumptions and other
instruments of transfer, in form and substance reasonably satisfactory to Buyer,
with such other appropriate instruments of title and consents of third parties
as Buyer shall reasonably request in order to effectively transfer the Assets
and the Contracts.
4-2 Further Assistance. Seller at any time after the
--------------------
Effective Date shall execute, acknowledge and deliver any other assignments,
conveyances and other assurances, documents and insruments of transfer or
assumption, reasonably requested by Buyer and will take any other action
consistent with the terms of this agreement that may reasonably be requested by
Buyer for the purpose of better transferring to Buyer or reducing to possession
the Assets or the assumption of the Assumed Liabilities by Buyer.
4.3 License Agreement. As of the Effective Date, Buyer
-------------------
shall, as licensor, grant to Seller, as licensee, an exclusive, worldwide,
nontransferable license to reproduce the Software for resale to end users,
distributors, and dealers which are sublicensees, in accordance with the terms
and conditions off the License Agreement attached as Exhibit B hereto ("License
Agreement"). The term of the License Agreement shall commence upon the Effective
Date and shall expire on July 1, 1998, or upon an earlier termination date
mutually agreed to by Seller and Buyer ("License Termination Date"). If the
License Termination Date occurs prior to June 1, 1998, Buyer shall deliver a
payment in the amount of Five Thousand Dollars ($5,000) to Seller. The License
2
<PAGE>
Agreement shall provide that Seller shall, provided Seller is not in breach of
any of the terms and conditions of this agreement or the License Agreement, be
exclusively entitled to all revenues from sales of the Software and/or
derivative works for the time period through the License Termination Date.
5. Conditions Precedent to the Closing by Buyer. The obligation of Buyer to
---------------------------------------------
consummate this agreement is subject to the fulfillment at or prior to the
Closing Date of the conditions set forth below.
5.1 Representations and Warranties. The representations and
--------------------------------
warranties of Seller shall be true and correct in all material respects as of
the Closing Date as though made on and as of the Closing Date and Seller shall
have performed or compiled with all of its covenants, terms and conditions to be
performed prior to Closing.
5.2 No Action. No action or proceeding shall have been
-----------
instituted prior to or at the Closing before any court or other governmental
body, or instituted or threatened by any public authority, or any individual or
entity with whom Seller has a contractual relationship pertaining to the
acquisition by Buyer of the Assets, the results of which could prevent,
materially delay or make illegal the consummation of such purchase.
5.3 Material Damage. Prior to the Closing, no material
-----------------
damage, destruction, casualty or loss (whether or not covered by insurance) and
no other event or condition materially and adversely affecting the Assets, shall
have, occurred.
5.4 Authorization by the Seller. The execution and delivery
-----------------------------
of this agreement by the Seller and the performance of the transactions
contemplated herein shall have been duly authorized by the Seller's board of
directors and shareholders and Buyer shall have received copies of all
resolutions of the board of directors and shareholders pertaining to such
authorization, certified by the Seller's secretary.
5.5 Ownership of Software and Assets. Buyer shall have
---------------------------------
received from Seller evidence satisfactory to Buyer in its sole and absolute
discretion that Seller owns all rights, title and interest in and to the
Software and Assets, and if applicable, that Seller has acquired all rights,
including all copyrights, to the Software from the original developer of the
program, and demonstrate to Buyer that the Software does not contain any
copyright notices or other legends or claims of ownership other than the
copyright notice of Seller that will be deleted after the sale.
5.6 Other Assignments. Seller shall have executed and
------------------
delivered to Buyer a Bill of Sale for the Assets in the form of Exhibit C and an
Assignment of Trademarks and Service Marks and an Assignment of Copyrights in
the form of Exhibit D, each duly executed by Seller.
3
<PAGE>
6. Conditions Precedent to the Closing by Seller. The
----------------------------------------------------
obligation of Seller to consummate this agreement and to sell the Assets as
provided herein is subject to fulfillment at or prior to the Closing Date of the
conditions set conditions set forth below.
6.1 Representations and Warranties. The representations and
-------------------------------
warranties of Buyer shall be true and correct in all material respects as of the
CLosing Date as though made on and as of the Closing Date, and Buyer shall have
performed or complied with all of its covenants, terms and conditinos to be
performed by Buyer prior to Closing.
6.2 No Action. No action or proceeding shall have been
-----------
instituted prior to or at the Closing Date before any court or other
governmental body, or instituted or threatened by any public authority
pertaining to the acquisition by Buyer of the Assets hereunder, the results of
which could prevent or make illegal the consummation of such purchase.
6.3 Other Agreements. Buyer shall have executed and delivered
----------------
to Seller an Assignment and Assumption Agreement in the form of Exhibit E duly
executed by Buyer.
7. Seller's Representations and Warranties. Seller represents and
------------------------------------------
warrants to Buyer, jointly and severally, the accuracy and copleteness of the
matters set forth in this Section 7 as of the Effective Date, except as
disclosed on Schedule 7 hereto.
7.1 Organization and Standing. Seller is a corporation duly
----------------------------
organized, validly existing and in good standing under the laws of the State of
Nevada, and has all requisite corporate power and authority to carry on its
business, to own its properties, to enter into this agreement and to carry out
the provisions hereof.
7.2 Obligations. Seller has no commitments, arrangements, or
------------
agreements with any other party, which by their terms or effect would interfere
with or preclude the carrying out of its obligations under this agreement.
7.3 No Infringement. No patents, copyrights, trade secrets or
-----------------
other rights of others are or may be infringed by the Software. Seller further
represents and warrants that it has not and will not use any rights of any third
pary in the development of the Software, including any work-in-progress and any
future work done for Buyer, without a license acceptable to Buyer and shall
obtain an appropriate assignment of each such license so that Buyer has the
right to maintain and modify any third party software included in the source
code. Seller and Shareholder, jointly and severally, shall indemnify, defend
and hold Buyer, its directors, officers, shareholders, employees, agents and
4
<PAGE>
representatives and affiliates harmless from and against any and all liability,
loss, damage, cost or expense, including attorneys' fees and disbursements,
resulting from any misappropriation or alleged misappropriation of any rights
incorporated in the Software; provided that the right of indemnification shall
not apply with respect to any modifications to the Software made by Buyer.
7.4 No Self-Help or Unauthorized Code. No portion of the
--------------------------------------
source code for the Software contains or will contain any back door, time bomb,
drop dead device or other software routine designed to disable a computer
program automatically with the passage of time or under the positive control of
a person other than Buyer (collectively, "Self-Help Code"). No portion of the
source code for the Software contains or will contain any virus, Trojan horse
worm or other software routines designed to permit unauthorized access to
disable, erase or otherwise harm software, hardware or data or to perform any
other such actions (collectively, "Unauthorized Code").
7.5 Ownership of Seller. The sole shareholder of Seller is
----------------------
Shareholder.
7.6 No Breach. The execution, delivery, performance and
-----------
compliance by Seller with this agreement will not (with or without the giving of
notice or passage of time) result in any material breach of, constitute a
default under, or result in the imposition of any lien or encumbrance upon any
asset or property of Seller pursuant to any material agreement or other
instrument to which Seller is a party or by which Seller or any of its
properties, assets or rights is bound or affected.
7.7 Authorization and Binding Effect. The execution, delivery
----------------------------------
and performance of this agreement by the Seller and the consummation of the
transactions contemplated by this agreement have been all duly authorized by the
board of directors of the Seller and all the corporate acts, proceedings and
approvals required of the Seller, its officers, directors and shareholders for
all of the foregoing have been duly taken and remain in effect. This agreement
constitutes the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms.
7.8 Compliance with Laws and Other Instruments. Seller has, to
-------------------------------------------
its knowledge, complied in all material respects with all laws, regulations and
ordes applicable to the Assets and has all material permits and licenses
required thereby. There is no term or provision of any mortgage, indenture,
contract, agreement or instrument to which Seller is a party or by which it is
bound, or to its knowledge, of any provision of any state or federal judgement,
decree, order, statue, rule or regulation applicable to or binding upon Seller,
the Assets, which materially adversely affect or, so far as Seller may now
foresee, in the future is reasonably likely to materially adverely affect, the
Assets.
5
<PAGE>
7.9 Litigation. There is no pending or, to the best of
-----------
Seller's knowledge, threatened, suit, action , arbitration or legal or other
proceeding, or governmental investigation, against or affecting the Business or
the Asset.
7.10 Title to and Condition of Assets. Seller will have on the
---------------------------------
Closing Date good and marketable title to all of the Assets, subject to no liens
or encumbrances, whether by mortgage, security interest, pledge, lien, condition
sale agreement, encumbrance, charge or otherwise, and at the Closing will
deliver to Buyer full legal title thereto free and clear of all liens and
encumbrances. All intellectual property rights in connection to the Software
are listed on Exhibit A.
7.11 Tax Returns. All payroll tax and sales tax returns have
-------------
been accurately prepared and duly and timely filed and all other required
federal, state and local tax returns of Seller with respect to Business and the
Assets have been accurately prepared and duly filed (with the exception of the
state and federal income tax returns for 1996) and all taxes required to be
paid with respect to the Business and the Assets for the periods covered for
which returns are required to have been filed on or before the date of this
agreement have been paid.
7.12 Brokers or Finders. Seller has retained no broker or
---------------------
finder in connection with the transactions contemplated by this agreement.
7.13 Material Misstatements or Omissions. None of the
---------------------------------------
representations or warranties made by Seller (or the employees, agents or
representatives of Seller) in this agreement nor any document, statement,
certificate or schedule furnished or to be furnished by Seller (or the
employees, agents or representatives of Seller) to Buyer pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of material fact, or omits or will omit to state a material
fact necessary to make the statements of fact contained herein or therein not
misleading.
8. Buyer's Representations and Warranties. Buyer represents and
------------------------------------------
warrants to Seller the accuracy and completeness of the matters set forth in
this Section 8 as of the Effective Date.
8.1 Authorization and Binding Effect. The execution, delivery
----------------------------------
and performance of this agreement by Buyer and the consummation of the
transactions contemplated by this agreement have been duly authorized by the
board of directors of Buyer, and the corporate acts, proceedings and approvals
required of the Buyer, its officers, diectors and shareholders for all of the
foregoing have been duly taken and remain in effect. This agreement constitutes
the legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms.
6
<PAGE>
8.2 Organization. Buyer is a corporation duly organized,
-------------
validly existing and in good standing under the laws of the State of California.
8.3 Execution and Performance of Agreement. The execution and
----------------------------------------
performace by Buyer of this agreement and the transactions contemplated hereby
will not violate any provision of, or result in the berach of, any contract,
agreement or instrument by which Buyer is or will as of the Closing Date be
bound.
8.4 No Broker. Buyer has not incurred any obligations to any
-----------
broker or agent in connection with this transaction.
9, Covenants of Seller. Seller covenants to Buyer as set forth
----------------------
below.
9.1 Access to Information. Seller shall provide Buyer and
------------------------
Buyer's representatives reasonable access to the Business Records and Seller's
directors, officers, employees, agents and representatives prior to the Closing.
For a period of two (2) years following the Closing, Seller shall permit Buyer
and Buyer's representatives, including its accountants, to have reasonable
access at Buyer's expense to Seller's books, records and data relating to the
Business and the Assets (collectively, "Business Records") for the period prior
to the Effective Date of which Buyer has no copy in connection with the
preparation of Buyer's or any affiliate of Buyer's financial reports, tax
returns, tax audits, the defense or prosecution of litigation (including
arbitration) or any other reasonable need of Buyer to consult such records and
data.
9.2 Covenant Not to Compete. Except pursuant to the License
---------------------------
Agreement, for a period of 3 years after the Effective Date, Seller, jointly and
severally, shall not, at any time, directly or indirectly, within the countries
listed on Exhibit E hereto, every other State of the United States and every
other nation throughout the world, (i) own, manage, operate, control or be
connected in any manner with the ownership, management, operation or control of
any persno or entity that engages in the business of developing software
competitive with the Software, (ii) engage in any activity which is in
competition with the Busines as conducted on the Effective Date, and (iii)
interfere with, disrupt or attempt to disrupt the relationship, contractual or
otherwise, between the BUyer and any customer or prospective customer, supplier,
lessee or employee of the Buyer, all so long as the BUyer continues to engage in
the substantially the same business anywhere in the above-named geographical
locations; provided, however that nothing contained in this Section 9.2 shall
prohibit Licensee from the sale and distribution (but not the development) of
---
competing software after the License Termination Date to customers other than
those listed on the Customer List.
9.3 Name. After the Effective Date, Seller shall not use or
-----
adopt the name "Helix" or "Helix Technology" or any variant thereof except as
permitted by the License Agreement. Seller shall take all reasonable actions
required by Buyer in order to assist Buyer in the adoption, use and protection
of such name or variant thereof.
7
<PAGE>
9.4 Compliance. Seller will use its reasonable business
-----------
efforts to cause each of the conditions in Sections 5 and 6 to be timely
satisfied.
10. Survival of Representations. The representations and
------------------------------
warranties made by Seller herein, except as they may be fully performed prior to
or contemporaneously with the Effective Date or License Termimation Date, shall
survive until the first anniversary date of the Effective Date. The
repesentations and warranties made by Buyer herein, except as they may be fully
performed prior to or contemporaneously with the Effective Date or License
Termination Date, shall survive until the first anniversary date of the
Effective Date. The representations and warranties made by the Shareholder
herein, except as may be fully performed prior to or contemporaneously with the
Effective Date or License Termination Date, shall survive until the License
Termination Date.
11. Indemnification
---------------
11.1 Seller. Seller and Shareholder, jointly and severally,
-------
shall defend, indemnify and hold harmless Buyer (and its directors, officers,
employees, affiliates and assignments) from and against any and all claims,
liabilities, judgements, penalties, losses, costs, damages, demands and
expenses, including attorneys' fees (collectively, "Losses") arrising by reason
of, or in connection with, (i) any act or omission of Seller which constitutes a
breach of Seller's representations and warranties contained in this agreement,
(ii) any liability of Seller not assumed by Buyer herein, (iii) any liability
with respect to the Assets or the Business, (iv) any liability in connection
with the employment of employees of the Business, (v) any liability for
warranties and guaranties related to the Assets; provided, however, that
Seller's and Shareholder's aggregate liability hereunder shall not exceed the
Purchase Price and shall only arise to the extent aggergate Losses exceed
Twenty-Five Thousand Dollars ($25,000).
11.2 Procedure. In the event that Buyer may be entitled to
----------
indemnification hereunder with respect to any asserted claim of, or obligation
or liability to, any third party, Buyer shall notify Seller and/or Shareholder
thereof, describing the matters involved in reasonable detail. Seller and
Shareholder, jointly and severally, shall be entitled to assume the defense
thereof upon written notice to Buyer, provided, however, that once the defense
thereof is assumed by Seller and Shareholder, Seller and Shareholder shall keep
Buyer advised of all developments in the defense thereof and in any related
litigation, and Buyer shall be entitled at all times to participate in the
defense thereof at its own expense.
11.3 Provencher's Indemnification Obligation. Provencher shall
----------------------------------------
defend, indemnify and hold harmless Buyer (and its directors, officers,
employees, affiliates and assigns) from and against any and all claims,
liabilities, judgements, penalties, losses, costs, damages, demands and
expenses, including attorney's fees (collectively, "Losses") arising by reason
8
<PAGE>
of, or in connection with, any breach or alleged breach of Shareholder's or
Seller's representations, warranties and covenants contained in Section 7.11.
Provencher expressly agrees that the validity of this indemnification obligation
and the obligations of Provencher hereunder shall in no way be terminated,
affected or impaired by reason of assertion by Buyer against Seller of any of
the rights or remedies reserved to Buyer pursuant to the agreement. Buyer may
not modify the agreement with Seller without the written consent of Provencher.
The liability of Provencher hereunder is primary and may be enforced by Buyer
before or after proceeding against Seller and shall not be subject to deduction
for any claim of offset, counterclaim or defense which Seller may have against
Buyer. For purposes of Provencher's indemnification obligation under this
Section 11.3, the representations and warranties contained in Section 7.11 shall
be deemed to survive indefinitely and the limitations on liability set forth in
Section 11.1 shall not apply.
12. Sales Taxes. Seller shall pay all taxes arising out of the
-------------
transfer of the Assets to Buyer pursuant to this agreement; except that Buyer
shall pay any California sales or use taxes arising out of such transfer. Buyer
shall not be responsible for any sales, use, business, occupation, withholding
or similar tax or any taxes of any kind related to the Assets or the Business
for any period prior to the Effective Date.
13. General Provisions.
--------------------
13.1 Arbitration.
------------
(1) Any controversy or claim arising out of this agreement,
or any breach of this agreement, including any controversy or claim as to
arbitrability or recission, shall be settled by arbitration in accordance with
the commercial arbitration rules of the American Arbitration Association.
(2) Such arbitration in connection with any controversy or
claim brought by Seller shall be conducted in San Diego, California. Such
arbitration in connection with any controversy or cliam brought by Buyer shall
be conducted in Houston, Texas.
(3) Any judgement upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof. The arbitrators shall
not, under any circumstance, have any authority to award punitive, exeplary or
similar damages.
(4) Either party may pursue the remedy of specific
performance of this agreement, or seek a preliminary or permanant injunction
against the breach of this agreement or in aid of thie exercise of any power
granted hereunder, or any combination thereof, in any court having jurisdiction
thereof without resort to arbitration.
9
<PAGE>
(5) In connection with any controversy or claim brought by
Buyer, the parties hereby consent to the jurisdiction of the United States
District Court in Houston, Texas.
13.2 Notices. All notices, requests, consents, and other
--------
communications required or permitted hereunder shall be in writing and shall be
personally delivered or mailed by using first-class, registered, or certified
mail, postage prepaid, to the following addresses or to such other address as
the parties hereto may designate in writing:
To BUYER: The Chip Merchant, Inc.
4870 Viewridge Avenue
San Diego, CA 92123
Phone No.: (619) 614-4790
Facsimile No.: (619) 654-2707
Attention: Mr. Brian Turner
with a copy to: Sheppard, Mullin, Richter & Hamptn LLP
501 West Broadway, 19th Floor
San Diego, California 92101-3598
Phone No.: (619) 338-6500
Facsimile No.: (619) 234-3815
Attention: Amy L. Trenckino, Esquire
To SHAREHOLDER: Albara Corporation
610 South Frazier
Conroe, Texas 77301
Phone No.: (409) 539-2992
Facsmilile No.: (409) 539-4141
Attention: Mr. Real Provencher
To SELLER: Software Technologies, Inc.
610 South Frazier
Conroe, Texas 77301
Phone No.: (409) 760-2400
Facsimile No.: (409) 539-4141
Attention: Mr. Real Provencher
10
<PAGE>
with a copy to: Brown Parker & Leahy, LLP
1200 Smith, Suite 3600
Houston, Texas 77002
Phone No.: (713) 654-8111
Facsimile No.: (713) 654-1871
All such notices, requests, consents and other communications shall be deemed to
be properly given if delivered personally or, if sent by mail, three business
days after the same has been deposited in mail, addressed and postage prepaid as
set forth above.
13.3 Counterparts. This agreement may be executed in any
-------------
number of counterparts, each of which when executed by the parties hereto and
delivered shall be deemed to be an original, and all such counterparts taken
together shall be deemed to be but one and the same instrument.
13.4 Governing Law. This agreement shall be governed by, and
---------------
contrued and enforced in accordance with, the internal laws of the State of
California.
13.5 Integration and Construction. This agreement shall
-------------------------------
comprise the complete and integrated agreement of the parties hereto and shall
supersede all prior agreements, written or oral, on the subject matter hereof.
This agreement has been drafted with the joint participation of the parties
hereto and shall be contrued to be neither against nor in favor of Seller or
Buyer in accordance with the fair meaning thereof.
13.6 Waivers and Amendments. No amendment, modification,
-------------------------
supplement, termination or waiver of any provision of this agreement, and no
consent to any departure therefrom, may in any event be effective unless in
writing and signed by the party or parties affected thereby, and then only in
the specific instance and for the specific purpose given.
13.7 Attorneys' Fees.
-----------------
(1) Each party to this agreement shall bear its own legal
fees and any and all other expenses relating to the transactions contemplated in
this agreement.
(2) If any party institutes any arbitration, action or
proceeding to enforce this agreement this agreement or any provision hereof or
for damages by reason of any alleged breach of this agreement or of any
provision hereof or for a declaration of rights hereunder, then the prevailing
party in any such arbitration, action or proceeding shall be entitled to receive
from the other party all costs and expenses, including reasonable attorneys'
fees, incurred by the prevailing party in connection with such action or
proceeding.
11
<PAGE>
13.8 Headings. The headings of this agreement are for
---------
convenience of reference only and shall not affect the construction of any
provision of this agreement.
13.9 Exhibits and Schedules. Each Exhibit and Schedule
-------------------------
referred to herein and attached hereto is an integral part of this agreement and
is incorporated herein by this reference.
13.10 Successors and Assigns. This agreement and the
-------------------------
provisions hereof shall be binding upon and inure to the benefit of each of the
parties and their successors and assigns.
13.11 No Assignment. Seller agrees that it shall neither
---------------
assign nor transfer any of its rights, privileges or obligations hereunder nor
delegate its duties hereunder (including without limitation, by operation of
law, such as, for example, by sale of the business or assets, merger or
consolidation) without the prior written consent of Buyer which consent may not
be unreasonably withheld. Buyer may assign its rights and delegate its duties
under this agreement, without the consent of Seller. All representations,
warranties, covenants and agreements of the parties shall bind their respective
successors and assignees and shall inure to the benefit of their respective
successors and permitted assignees.
12
<PAGE>
13.12 Severability. The invalidity or unenforceability of any
-------------
provision of this agreement shall not affect the validity or enforceability of
any other provision.
IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement effective on the date first set forth above.
BUYER SELLER
The Chip Merchant, Inc Software Technologies, Inc.,.
a California corporation a Nevada corporation
/S/ Real Provencher
By /S/ Brian Turner By Real Provencher
---------------------------- ---------------------------
Its Brian Turner President Its President
------------------------- ---------------------------
[Print Name and Title] [Print Name and Title]
SHAREHOLDER
Albara Corporation
a Colorado corporation
/S/ Real Provencher
By Real Provencher
---------------------------
Its President
---------------------------
[Print Name and Title]
PROVENCHER
/S/ Real Provencher
---------------------------------
Real Provencher, an Individual
13
<PAGE>
<TABLE>
<CAPTION>
LIST OF EXHIBITS
Exhibits
- --------
<S> <C>
Exhibit A - The Assets
Exhibit B - License Agreement
Exhibit C - Bill of Sale
Exhibit D - Assignment of Copyrights; Assignment of Trademarks and Service Marks
Exhibit E - Countries
</TABLE>
Schedules
- ---------
Schedule 7 - Disclosure Exceptions
14
<PAGE>
Exhibit A
THE ASSET
---------
Purchase Price
I. Software All versions of the related database $119,000
development environment. software known as
Helix Express that allows user to develop
information management systems, along will all
related software programs, updates and patches.
II. Intellectual Property: $ 100
-----------------------
(a) Trademark
HELIX Trademark, Federal Registration No. 1,682,683
DOUBLE HELIX Trademark, Federal Registration No. 1,643,484
HELIX Illinois Registration No. 62,723
FIFLIX Trademark, Registration in Japan No. 3,123,936
TIMIX Trademark, Registration in France
Common law trademarks,: Helix Technologies, HelixTech, Multiuser
Helix, Network Helix, Helix Mauix, Multimedia Helix, Helix Express
French version, Helix Express Japanese version, Helix Tracker, Helix
Helper. Custom Helper, Helix Express, Helix Express Client, I Helix
Express Server, Runtime Helix, Helix Utility, Helix Update Collection,
Helix Converter, Helix Multicopy Appletalk, Helix PowerMover, Helix
Installer, Helix Translator, Helix TimeSavers.
(b) Copyrights:
-----------
Helix Express v.3.5 Copyright, federal registration 97,005,191
Helix: Expressv.4.0 Copyright, federal registration 97,005,192
Copyrights in software, documentation and marketing materials
III. Customer Information (defined in Section 1) $100
------------------------------------------------
A-1
<PAGE>
IV. Other Records (defined in Section 1) $100
V. Convenant Not to Compete (included in Exhibit $700
For purchase price allocation
A-2
<PAGE>
Exhibit B
LICENSE AGREEMENT
-----------------
B-1
<PAGE>
LICENSE AGREEMENT
-----------------
This LICENSE AND SERVICE AGREEMENT ("Agreement") is entered into as of
December 31, 1997, by and between The Chip Merchant Inc., a California
Corporation and Software Technologies. Inc., a Nevada Corporation dba Helix
Technologies ("LICENSEE").
RECITALS
--------
A. LICENSEE is engaged in the business of software marketing,
sales and support services (the "Business").
B. In accordance with that certain Asset Purchase Agreement dated
as of December 31, 1997 ("Purchase Agreement") CHIP, as Buyer, purchased from
LICENSEE, as Seller, all right, title and interest in and to relational database
development environment software known as Helix Express (TM) that allows users
to develop information management systems, along with related software programs,
updates and patches, including but not limited to, Helix Express Runtime Engine,
and Helix PowerMover.
C. CHIP desires to grant to LICENSEE, and LICENSEE desires to
secure from CHIP, an exclusive nontransferable license to reproduce copies of
the Software (as hereinafter defined) for resale to end users, distributors, and
dealers which are sublicensees of the Software.
NOW THEREFORE, in consideration of the foregoing and the mutual promises and
conditions set forth here the parties agree as follows:
I General References.
1.1 Definitions.
------------
As used herein:
(a) "Affiliate" of CHIP or LICENSEE means (i) any entity or
other Person in which CHIP or LICENSEE, or, as applicable, CHIP's or LICENSEE's
franchisee, partner, joint venturers, principals, stockholders or directors has
a direct or indirect substantial ownership interest; (ii) any entity or other
Person that is directly or indirectly controlled by CHIP or LICENSEE; or
-1-
<PAGE>
(iii) any subsidiary of such a Person under United States
generally accepted accounting principles consistently applied.
(b) "Assets" means collectively, the Software, the Marks, all
customer, sales history, registration, mailing lists, and developer information
related to the Software.
(c) "Marks" includes the trademarks "Helix Express", "Helix
Express Runtime Engine", "Helix PowerMover", and other trademarks and service
marks related to the Software as more particularly described on Exhibit "A"
attached hereto.
(d) "Person" includes an individual, corporation,
partnership, trust, association or other entity or Organization.
(e) "Software" means collectively, Helix Express (TM), and
any derivative works created by CHIP (other than for internal use by CHIP) and
related software programs, including Helix Express Runtime Engine and Helix
PowerMover, configured in machine executable form and any and all prior
versions, corrections, modifications, improvements, patches, updates or
enhancements, and any related documentation, including without limitation,
technical or user documentation. Software does not include, and CHIP has no
obligation to provide to LICENSEE, the source code for any of the Software or
any explanatory documentation relating to the source code, including Dow charts,
logic diagrams, internal. specifications or source code commentary or notes.
1.2 Use of Defined Terms. Any defined terms used in the plural
---------------------
preceded by the definite article shall be taken to encompass all members of the
relevant class. Any defined terms used in the singular preceded by "any" shall
be taken to indicate any number of the members of the relevant class,
1.3 References. References herein to a Section shall refer,
-----------
unless the context otherwise requires, to a Section of this Agreement,
2. Term. The term of this Agreement shall commence upon the
-----
effective Date as such term is defined in the Purchase Agreement and shall
expire on July 1, 1998, or upon an earlier termination date mutually agreed to
by CHIP and LICENSEE, or upon termination pursuant to Section 10 of this
Agreement ("License Termination Date"), In accordance with Section 5.3 of the
Purchase Agreement, if the License Termination Date
-2-
<PAGE>
occurs prior to June 1, 1999, CHIP shall deliver a payment in the amount of Five
Thousand Dollars ($5,000) to LICENSEE.
3. Grant.
------
3.1 Scope of the License. For the term of this Agreement and
-----------------------
subject to the other terms and conditions of this Agreement, CHIP hereby grants
to LICENSEE the exclusive, nontransferable, royalty-free right and license to
(i) reproduced copies of the Software for resale to end users, distributors, and
dealers which are sublicensees worldwide, and (ii) use the Marks in connection
with the activities set forth in (i).
3.2 Tradename and Marks. LICENSEE shall have the right to use
--------------------
the tradename "Helix Technologies" and the Marks in connection. with the license
of the Software granted hereunder. LICENSEE shall also have, the right to label
and package the Software, and to develop instructions, manuals, training,
advertising, sales and marketing literature, including but not limited to any
webpage and any other written Or electronic form of documentation for the
Software. CHIP shall be the owner and retain exclusive title to the tradename
"Helix Technologies" and the Marks.
3.3 Limitations on the Scope of the License. This Agreement
-------------------------------------------
confer upon LICENSEE the right to (1) modify, create derivatives of, customize
or translate any of die Software or Marks, or (2) use any Software for any
purpose other than as ex1ressly authorized in this Agreement.
3.4 No Sublicenses. Except for the limited exclusive right to
----------------
reproduce copies of the Software for resale to end users, distributors, and
dealers which are sublicenses, this Agreement does not confer upon the
LICENSEE the right or license to grant sublicenses to any Person with respect to
the Software., Mark-,, or Assets, without the prior written consent of CMP.
3.5 Title. Nothing contained in this Agreement shall be
------
construed was a direct or indirect assignment or grant to LICENSEE or any other
Person of any right, title or interest in anti to the Software, Marks, or Assets
or any copyright trade secret or other intellectual property nights in and to
the Software or any part thereof 6ther than the licenses expressly granted
tinder this Agreement and LICENSEE acknowledges that U11P owns the Software,
Marks, and Assets, including all copyright trade secret and other intellectual
property rights in such Software. LICENSEE hereby acknowledges that any rights
or interests that it acquires through the, use of the Software, Marks, and
Assets, including any use not authorized by this Agreement, shall inure to the
benefit of CHIP. UCENSEE shall not, directly or indirectly, take any action
challenging, questioning or
-3-
<PAGE>
opposing the validity of any of the copyright, trade secret or other
intellectual property rights of CHIP in the Software. LICENSEE shall not seek or
obtain any registration of any patents or copyrights with respect to the
Software or any corrections, modifications, improvements, updates or
enhancements thereto or derivatives thereof,
3.6 Relationship of Parties. The relationship between CHIP and
------------------------
LICENSEE is that of licensor and licensee of rights to use certain software,
intellectual property and tangible personal property. In its capacity as
licensee, LICENSEE shall be acting only as an independent contractor.
Accordingly, LICENSEE shall have no authority, either express or implied, to
make any commitment or representation on behalf of CHIP or incur any debt or
obligation on behalf of CHIP. 'Me parties acknowledge that this Agreement does
not constitute a joint venture or franchise under United States federal or state
law, and does not create a fiduciary relationship between the parties.
4. Revenues from Software Sales. For the term of this Agreement,
--------------------------------
and provided LICENSEE is not in default of any of the terms and conditions of
the Purchase Agreement and this Agreement, LICENSEE shall continue to receive
all revenues generated from reproductions of the Software. LICENSEE shall be
responsible for collecting such revenues accrued prior to the License
Termination Date, and LICENSEE hereby agrees to promptly forward to CHIP any
such amounts received for sales of the Software that occur subsequent to the
License Termination Date. LICENSEE. shall not be entitled to revenues received
from the reproduction or sale of any Software or subsequent versions thereof
that occur after the License Termination Date. In the unanticipated event that
CHIP receives revenues from third parties generated from the sale, reproduction
or distribution of the Software prior to the License Termination Date, CHIP
shall remit the amount of such revenues to LICENSEE; provided, however, that
nothing herein shall prohibit LICENSEE from receiving revenues, from sales. of
the Software made by LICENSEE prior to the License Termination Date which may
not have been received by LICENSEE prior to the License Termination Date.
5. Confidential Information
-------------------------
5.1 Confidentiality CHIP and LICENSEE shall maintain in
---------------
confidence all proprietary information of the other party to this Agreement
disclosed to CT-TIP or LICENSEE under this Agreement. CHIP and LICENSEE shall
not disclose any proprietary information to any other Person or, use such
proprietary information for its own use or for any other Person's benefit other
than as permitted expressly by this Agreement without the prior written consent
of the owner of the proprietary information. CHM and LICENSEE shall abide by the
reasonable confidentiality restrictions imposed by the other party from time to
time for such proprietary information,
-4-
<PAGE>
5.2 Precautions. LICENSEE shall take such precautions,
-----------
contractual or otherwise, as shall be reasonably calculated to keep strictly
secret and confidential any proprietary information related to the Software and
prevent unauthorized disclosure of such proprietary information by LICENSEE's
and its Affiliates' employees, consultants. independent contractors and other
agents or representatives. LICENSEE shall use, with regard to the Software, the
higher of the standard of care that LICENSEE uses to protect its own proprietary
information or the standard of care that a prudent business person would
exercise to protect valuable proprietary information. Disclosure to LICENSEE's
and its Affiliates' employees, consultants, independent contractors and other
agents or representatives shall be made only on a need to know basis in a manner
6onsistent with the standard of care set forth above and only to an individual
who has signed a confidentiality and nondisclosure agreement in such form as
required by d-UP and with CTITP having the night to enforce such agreement as
the third party beneficiary of such agreement. After termination of this
Agreement, LICENSEE, it-, Affiliates and their successors and assigns shall not
directly or indirectly use or divulge any proprietary information related to the
Software and any other proprietary information of CMP and, within ten (10) days
following request therefore, shall return to CHIP all copies (in whatever media
or means of storage, including electronic storage.) of the Software in its
possession or in the possession of its Affiliates or their successors or
~-;signs or any employees, consultants., independent contractor-, and other
agents and representatives of LICENSEE, its Affiliates or their successors or
assigns, and such delivery shall constitute a representation and warranty by
LICENSEE that it has returned all such copies.
5.3 Continuation. To the extent the Software is not disclosed
------------
pursuant to the provisions. of Section 5.4 hereof, the obligations under this
Section shall remain in effect after termination of this Agreement even though
any or all of the other pro-visions of this Agreement may be terminated.
5.4 Exceptions. Notwithstanding the confidentiality provisions
----------
in Sections 5.1, 5.2 and 5.3 above, a party may disclose proprietary information
of the other party with the prior written consent of such other party or (i)
pursuant to art older of a court or other governmental authority or in
accordance with applicable securities laws requiring disclosures providing that
the disclosing party first notifies the other party of the order or disclosure
obligation and assists the other party in taking reasonable steps to seek a
protective order or other appropriate relief, (ii) after the proprietary
information on becomes available in die public domain other than by Mason of
breach of this Section 5; (iii) after the disclosing party has obtained the
proprietary information lawfully from an independent source and the disclosing
party is able to document the independent source; and (iv) the party intending
to disclose has a good faith belief that it is required by law to disclose such
-5-
<PAGE>
information provided that such party first notifies the other party of such good
faith belief and provided that such party shall not so disclose if the other
party provides the party intending to make the disclosure with an opinion of
independent counsel to the other party that disclosure is not required by law.
5.5 Equitable Remedy LICENSEE understands and agrees
-----------------
that, due to the unique nature of the Software, CHIP will suffer irreparable
harm if LICENSEE, its, Affiliates, or any of the directors, officers,
shareholders, consultants,~ independent contractors, employees, agents or other
representatives of LICENSEE fail to comply with any of LICENSEES obligations
under this Section 5 and that monetary damages would be inadequate to
compensate. fully CHIP for any such breach. Accordingly, LICENSEE agrees that in
the event of breach or threatened breach of LICENSEE'S obligations under this
Section 5, CIEP shall. be entitled to injunctive relief to enforce the terms of
this Section, without the proof of actual damages or the posting of any bond, in
addition to any other remedies available at law or in equity.
6. Covenants of LICENSEE As a condition of the rights and license
-----------------------
granted herein and as a condition to the continuing exercise of such rights and
licenses, LICENSEE covenants to each of the following:
6.1 Books and Records. LICENSEE shall keep accurate books and
--------------------
records regarding LICENSEE's use of the Software, Marks and Assets in sufficient
detail to enable CHIP to determine whether LICENSEE has complied with this
Agreement, CHIP or its agents or representatives shall have the right, during
regular business hours and upon reasonable request, to inspect and copy at
CHIP's own expense, such books and records.
6.2 Customer Information. LICENSEE shall maintain all
----------------------
customer, sales, registration, mailing lists, and developer information
("Customer Information") and, within ten (10) days following request therefore,
LICENSEE shall provide CHIP copies as requested by CHIP, of the Customer
Information (in whatever media or means of storage).
6.3 For the term of this Agreement LICENSEE shall conduct the
business in the ordinary and usual course and consistent with past practices of
the Business.
7. Warranties.
-----------
7.1 No Warranties/Disclaimer of Implied Warranties. LICENSEE
-------------------------------------------------
acknowledges that LICENSEE is familiar with the Software having owned rights, to
the
-6-
<PAGE>
Software prior to the Closing Date as defined in the Purchase Agreement and that
CHIP MAKES NO REPRESENTATIONS OR WARRAN'HFS WITH RESPECT TO THE SOFTWARE, AND
THE SOFTWARE LICENSED UNDER THIS AGREEMENT IS PROVIDED "AS IS" WITIOUT WARRANTY
OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, THE
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE AND
WARRANTIES AGAINST INTERFERENCE AND AGAINST INFRINGEMENT
7.2 Limitation on Remedies. In no event will CHIP be liable to
----------------------
LICENSEE for any damages, including any lost profits, lost savings or other
incidental or consequential damages, arising out of the use or inability to use
the Software, including the loss of any data or the cost of restoring or
reconstructing any data, even if CHIP has been advised of the possibility of
such damages or of my claim of any other Person.
8. Enforcement of Intellectual Property Rights.
------------------------------------------------
8.1 Notice of Infringement. LICENSEE shall inform CHIP of
-------------------------
known or suspected third party activities, that infringe or may infringe the
copyright, trade secret, trademark or other intellectual property right in the
Software, Marks, or Assets.
8.2 CHIP Right to Prosecute. CHIP shall have the, exclusive right,
------------------------
but not the obligation, to commence and prosecute litigation or other
proceedings to enforce its rights in the Software, Marks, and Assets. All
expenses of such litigation or other proceedings shall be borne by CHIP except
that CHIP shall be entitled to recover from LICENSEE any expenses it incurs in
enforcing its rights against LICENSEE. All recoveries resulting from the
litigation or other proceedings shall be for the benefit of CHIP. LICENSEE shall
make itself and its employees and other personnel under its or its Affiliate's
control available to testify in any litigation or other proceedings, execute and
verify such lawful papers and make such lawful oath and otherwise cooperate to
the extent reasonably required by CHIP to obtain and enforce proper protection
for the Software, Marks, and Assets.
9. Indemnification.
----------------
9.1 LICEN5EE. LICENSEE shall defend, indemnify, and hold
---------
harmless CHIP (and its directors, officers, employees, Affiliates and assigns)
from and against any and all claims, liabilities, judgments, penalties, losses,
costs, damages, demands. and expenses, including attorneys' fees (collectively,
"Losses") arising by reason of, or in connection with, (i) any use of the
Software, Marks or Assets that is not in accordance with this Agreement that.
violates the rights, of any third party, (ii) any claims or demands
-7-
<PAGE>
of third parties, including customers of LICENSEE, arising in connection with
any activities of LICENSEE or its employees, agents, representatives or
Affiliates, or in connection with the operation of the Business or sales of the
Software (including any warranty claims), and (iii) claims or demands for injury
to property or persons made by any person in connection with the operation of
the Business.
9.2. Procedure. In the event that CHIP may be entitled to
----------
indemnification hereunder with respect to any asserted claim of, or obligation
or liability to, any third party, CHIP shall notify LICENSEE thereof, describing
the matters involved in reasonable detail. LICENSEE shall be entitled to assume
the defense thereof upon written notice to CHIP, provided, however, that once
the defense thereof is assumed by LICENSEE, LICENSEE shall keep CHIP advised of
all developments in the defense thereof and in any related litigation, and CHIP
shall be entitled at all times to participate in the defense thereof at its own
expense.
10. Termination.
------------
10.1 Failure to Perform Obligations. If either party fails to
--------------------------------
perform any of its obligations under this Agreement including in the case of
LICENSEE any payment obligation or covenant default the other party may, in
addition to any other remedy it may have, terminate this Agreement by giving
thirty (30) days written notice to the defaulting party of its intention to do
so, specifying the default and intended effective date of the termination
notice. Such termination notice shall be effective to terminate this Agreement
on the stated date unless the defaulting party has cured the alleged default(s)
within the thirty (30) day cure period.
10.2 Effect of Termination. The parties expressly agree and
------------------------
understand that termination of this Agreement shall in no way relieve any party
from obligations incurred prior to the date of termination. LICENSEE further
agrees that upon termination, neither LICENSEE nor any Affiliate of LICENSEE
shall use the Software, Marks, or Assets.
11. Taxes. LICENSEE shall be responsible for collection,
------
remittance and payment of any and all applicable taxes, withholding obligations,
charges, excises, imposts, levies, assessments or fees (excluding any income
taxes payable by CHIP) due in connection with the rights and licenses granted
in this Agreement. LICENSEE shall provide certified proof of payment to CHIP
within ten days of payment thereof.
12. Miscellaneous.
--------------
-8-
<PAGE>
12.1 Arbitration.
------------
(1) Any controversy or claim arising out of this agreement,
or any breach of this agreement, including any controversy or claim as to
arbitrability or rescission, shall be settled by arbitration in accordance with
the commercial arbitration rules of the American Arbitration Association,
(2) Such arbitration in connection with any controversy or
claim brought by LICENSEE shall be conducted in San Diego, California. Such
arbitration in connection with any controversy or claim brought by CHIP shall be
conducted in Houston, Texas.
(3) Any judgment upon the award rendered by the arbitrators
maybe entered in any court having jurisdiction thereof. The arbitrators shall
not, under any circumstance, have any authority to award punitive, exemplary or
similar damages.
(4) Either party may pursue the remedy of specific
performance of this agreement or seek a preliminary or permanent injunction
against the breach of this agreement or in aid of the exercise of any power
granted hereunder, or any combination thereof, in any court having jurisdiction
thereof without resort to arbitration.
(5) In connection with any controversy or claim brought under
this section by LICENSEE, the parties hereby consent to the jurisdiction of the
United States District Court, Southern District of California, in San Diego,
California, for all purposes.
In connection with any controversy or claim brought by CHIP,
the parties hereby consent to the jurisdiction of the United States District
Court in Houston, Texas.
12.2 Notices. Any notice, request, demand, or other
--------
communication required or permitted under this Agreement shall be deemed to be
properly given by the sender and received by the addressee (i) if personally
delivered; (ii) three (3) business days after deposit in the mails if mailed by
certified or registered air mail, postage prepaid; or (iii) twenty-four hours
after being sent by facsimile with confirmation sent as provided in (ii) above,
addressed as follows, and in the case of facsimile transmission, to the
appropriate facsimile number shown below:
-9-
<PAGE>
To CHIP: The Chip Merchant, Inc.
4870 Viewridge Avenue
San Diego, CA 92123
Phone No.: (619) 614-4790
Facsimile No.: (619) 654-2707
Attention: Mr. Brian Turner
with a copy to: Sheppard, Mullin, Richter & Hampton LLP
501 West Broadway, 19th Floor
San Diego, California 92101-3598
Phone No.: (619) 338-6500
Facsimile No.: (619) 234-3815
Attention: Amy L. Tranckino, Esquire
To LICENSEE: Software Technologies, Inc.
610 South Fazier
Conroe, Texas 77301
Phone No.: (409) 760-2400
Facsimile No.: (409) 539-4141
Attention: Mr. Real Provencher
with a copy to: Brown. Parker & Leahy, LLP
1200 Smith, Suite -1600
Houston, Texas 77002
Phone No.: (713) 654-8 111
Facsimile No.- (713) 654-1871
Attention: Charles D. Powell, Esquire
or to such other address or facsimile number as from time to time may be given
in the manner permitted above.
12.3 Captions. The captions in this Agreement are for
---------
convenience and reference only and the words contained therein shall in no way
be hold to explain, modify, amplify or aid in the interpretation, construction
or meaning of the provisions of this Agreement.
12.4 Counterparts. This Agreement may be executed in any
-------------
number of counterparts, each of which when executed by the parties hereto and
delivered shall be deemed to he an original and all such counterparts taken
together shall be deemed to be but one and the same instrument.
-10-
<PAGE>
12.5 Governing. This Agreement shall be governed by, and
---------
construed and enforced in accordance with, the internal laws of the State of
California.
12.6 Attorney's Fees.
-----------------
(1) Each party to this agreement shall bear its own legal
fees and any and all other expenses relating to the transactions. contemplated
in this agreement.
(2) If any party institutes any arbitration, action or
proceeding to enforce this agreement or any provision hereof or for damages by
reason of any alleged breach of this agreement or of any provision hereof or for
a declaration of rights hereunder, then the prevailing party in any such
arbitration, action or proceeding shall be entitled to receive from the other
party all costs and expenses, including reasonable attorneys' fees, incurred by
the prevailing party in connection with such action or proceeding.
12.7 No Material Representations. LICENSEE acknowledges that
------------------------------
CHIP has not made any material representations other than as specifically
recited herein that have induced LICENSEE to enter into this Agreement, and
LICENSEE has not relied upon any written materials or documentation provided to
LICENSEE by CHIP or by any employee, consultant, independent contractor or other
agent of CHIP.
12.8 Authority. Each individual executing this Agreement on
----------
behalf of CHIP and LICENSEE represents and warrants that he or she is duty
authorized to execute and deliver this Agreement on behalf of said party and
that this Agreement is binding upon said party in accordance with its terms.
12.9 Waiver. The waiver by either of the parties, express or
-------
implied, of any right under this Agreement or any failure to perform under this
Agreement by the other party, shall not constitute or be deemed a waiver of any
other right under this Agreement or of any other failure to perform. under this
Agreement by the other party, whether of a similar or dissimilar nature.
12.10 Severability. Should any part or provision of this
-------------
Agreement be held unenforceable or in conflict with the law of any jurisdiction,
the validity of the remaining parts or provisions shall not be affected by such
holding.
-11-
<PAGE>
12.11 Entire Agreement. The Purchase Agreement and this
------------------
Agreement set forth the entire agreement and understanding of the parties
relating to the subject matter contained herein and therein and merge all prior
and contemporaneous discussions and agreements between the parties. No claim or
oral agreement in respect hereto and thereto shall be considered as any part
hereof or thereof. No modification of any of the provisions hereof or thereof
shall be valid unless in writing and signed by authorized representatives of the
party against whom such modification is sought to be enforced.
12.12 No Assignment. LICENSEE agrees that the licenses granted
--------------
herein shall inure to the sole benefit of the parties hereto, as expressly
authorized herein. The LICENSEE agrees that it shall neither assign nor
transfer any of its rights, privi1eges or obligations hereunder nor delegate its
duties hereunder to a third party which is not an affiliate of LICENSEE without
the prior written consent of CHIP. LICENSEE further agrees that no assignment or
transfer shall be effected by operation of law, such as, for example, by merger,
consolidation, sale of the business or assets, or by acquisition of a majority
of the voting stock of LICENSEE by a third party, without the prior written
consent of CHIP. CHIP may assign its rights and delegate its duties under this
Agreement, without the consent of LICENSEE. All representations, warranties,
covenants and agreements of the parties shall bind their respective successors
and assignees and shall inure to the benefit of their respective successors and
permitted assignees.
-12-
<PAGE>
12.13 Further Assurances. The parties agree to execute,
--------------------
acknowledge and deliver all such further instruments as may he necessary or
appropriate from time to time in order to carry out the intent and purpose of
this Agreement.
IN WITNESS WHEREOF, the parties executed this Agreement as of the date
first above written.
"CHIP":
THE CHIP MERCHANT, INC.,
a California corporation
By /s/ Brian Turner
------------------
Brian Turner President
---------------------------
[Printed Name and Title]
"LICENSEE":
SOFTWARE TECHNOLOGIES, INC.,
a Nevada corporation
By /s/ Real Provencher
---------------------
Real Provencher, President
-----------------------------
[Printed Name and Title]
-13-
<PAGE>
EXHIBIT "A"
Marks
-----
Trademarks
- ----------
HELIX Trademark, Federal Registration No. 1,682,683
DOUBLE HELIX Trademark, Federal Registration No. 1,643,484
HELIX Illinois Trademark, Registration No. 62,723
HELIX Trademark, Registration in Japan No. 3,123,936
HELIX Trademark, Registration in France
Common law trademarks: Helix Technologies, HelixTech, Multiuser Helix, Network
Helix, Helix Matrix, Multimedia Helix, Helix Express French version, Helix
Express Japanese version, Helix Tracker, Helix Helper, Custom Helper, Helix
Express, Helix Express Client, Helix Express Server, Runtime Helix, Helix
Utility, Helix Update Collection, Helix Converter, Helix Multicopy Appletalk,
Helix PowerMover, Helix Installer, Helix Translator, Helix TimeSavers.
A-1
<PAGE>
Exhibit C
BILL OF SALE
------------
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are
hereby acknowledged, and pursuant to that certain Asset Purchase Agreement dated
as of December 31, 1997 (the "Asset Purchase Agreement"), among The Chip
Merchant, Inc., a California corporation ("Buyer"), Software Technologies, Inc.,
a Nevada corporation dba Helix Technologies ("Seller"), Albara Corporation, and
Real Provencher, Seller does hereby grant, bargain, transfer, sell, assign,
convey and deliver to Buyer all right, title and interest in and to the Assets,
as such terms are defined in the Asset Purchase Agreement.
Seller, for itself and its successors and assigns, hereby represents and
warrants that except as otherwise set forth in the Asset Purchase Agreement,
Seller is the owner absolutely of the Assets, that the Assets are free and clear
of and from all encumbrances, that it has good right to sell and assign the
Assets to Buyer as aforesaid, and will warrant and defend the same to Buyer
against the lawful claims and demands of all persons in accordance with and
subject to the limitations of the Asset Purchase Agreement,
Seller hereby covenants and agrees that at any time and from time to time
forthwith upon the written request of Buyer, Seller will do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered, each and all of such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may reasonably be required by
Buyer in order to assign, transfer, set over, convey, assure and confirm unto
and vest in Buyer, its successors and assigns, title to the Assets sold,
conveyed, transferred and delivered by this Bill of Sale'
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of December
31, 1997.
Software Technologies, Inc.,
a Nevada Corporation
By /s/ Real Provencher
-----------------------
Its President
-----------------------
[Print Name and Title]
C-1
<PAGE>
State of Texas
--------
County of Montgomery
-------------
On 12-31-97 before me, Margaret Hoffart Notary Public, personally
------------- -----------------
appeared Real Provencher
--------------------,
personally known to me or proved to me on the basis of satisfactory
- ---- ------
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
no the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Margaret Hoffart
--------------------------------------
Notary Public in and for said
County and State
C-2
<PAGE>
Exhibit D
ASSIGNMENT OF COPYRIGHTS
------------------------
Software Tecbnologies, Inc., a Nevada corporation dba Helix Technologies
("Assignor") for valuable consideration, does hereby sell, transfer, assign and
convey to The Chip Merchant, Inc., a California corporation ("Assignee"), all of
Assignor's right, title and interest, in and to the works (including all
copyrights and applications for copyrights therein), set forth on Schedule 1
attached hereto and indorporated by reference herein, including any rights to
secure renewals and extensions thereof for the United States of America and all
countries of the world.
This Assignment of Copyrights (the "Assignment") is issued pursuant to the
terms of that certain Asset Purchase Agrement, dated the date hereof, by and
among Assignee, Assignor, Albara Corporation, and Real Provencher (the
"Agreement"), and this Assignment shall not be construed to expand, defeat,
impair or limit the rights or remedies of the parties under the Agreement.
Software Technologies, Inc.,
a Nevada Corporation
By: /s/ Real Provencher 12/31/97
------------------------------------
An Authorized Signatory Date
Sworn to before me this 31 day of
December, 1997
/s/ Margaret Hoffart
- --------------------------------
Notary Public
D-1
<PAGE>
Schedule 1
----------
Copyrights
- ----------
Helix Express v.3.5 Copyright, federal registration 97,005,191
Helix Express v.4.0 Copyright, federal registration 97,005,192
Copyrights in software, documentation and marketing materials
D-2
<PAGE>
ASSIGNMENT OF TRADEMARKS AND SERVICE MARKS
------------------------------------------
Software Tecbnologies, Inc., a Nevada corporation dba Helix Technologies
("Assignor") for valuable consideration, does hereby sell, transfer, assign and
convey to The Chip Merchant, Inc., a California corporation ("Assignee"), all of
Assignor's right, title and interest, in and to the trademarks and service marks
set forth on Schedule 1 attached hereto and indorporated by reference herein,
and the registrations and applications thereof and therefor, together with the
goodwill of the business symbolized therby, for the United States of America and
all countries of the world.
This Assignment of Copyrights (the "Assignment") is issued pursuant to the
terms of that certain Asset Purchase Agrement, dated the date hereof, by and
among Assignee, Assignor, Albara Corporation, and Real Provencher (the
"Agreement"), and this Assignment shall not be construed to expand, defeat,
impair or limit the rights or remedies of the parties under the Agreement.
Software Technologies, Inc.,
a Nevada Corporation
By: /s/ Real Provencher 12/31/97
------------------------------------
An Authorized Signatory Date
Sworn to before me this 31 day of
December, 1997
/s/ Margaret Hoffart
- --------------------------------
Notary Public
D-3
<PAGE>
Schedule 1
----------
HELIX Trademark, Federal Registration No. 1,682,683
DOUBLE HELIX Trademark Federal Registration No. 1,613,484
HELIX Ilinois Trademark, Registration No. 62,723
HELIX Trademark, Registration in Japan No. 3,123,936
HELIX Trademark, Registration M' France
Common law trademarks: Helix Technologies, HelixTech, Multiuser Helix, Network
Helix, Helix Matrix, Multimedia Helix, Helix, Helix Express French
version,.Helix Express Japanese version, Helix Tracker, Helix Helper, Custom
Helper, Helix Express, Helix Express Clientm helix Express Server, Runtime
Helix, Helix Utility, Helix Update Collection, Helix Converter, Helix Multicopy
Appletalk, Helix PowerMover, Helix Installer, Helix Translator, Helix
TimeSavers.
D-4
<PAGE>
Exhibit E
CALIFORNIA COUNTIES
--------------------
Alameda Orange
Alpine Placer
Amador Plumas
Butte Riverside
Calaveras Sacramento
Colusa San Benito
Contra Costa San Bernardino
Del. Norte San Diego
E I Dorado San Francisco
Fresno San Joaquin
Glenn San Luis Obispo
Humboldt San Mateo
Imperial Santa Barbara
Inyo Santa Clara
Kern Santa Cruz
Kings Shasta
lake Sierra
Lassen Siskiyou
Los Angeles Solano
Madera Sonoma.
Marin Stanislaus
Mariposa Slitter
Mendocino Tehama
Merced Trinity
Modoc Tulare
Mono Tuolumne
Monterey Ventura
Napa Yolo
Nevada Yuba
<PAGE>
EXHIBIT 11
Computation of Earnings Per Share
---------------------------------
Following is a computation by year of income (loss) per common and common
equivalent share.
<TABLE>
<CAPTION>
For the year ended 1995 -
-------------------------
<S> <C> <C>
Beginning balance, outstanding all year 1,357,336 16,288,032
Shares issued January 30, 1995 to an officer of a subsidiary 27,500 302,500
Common stock equivalent (Series E) all year 66,700 800,400
Common stock equivalent (Series F) all year 22,000 264,000
-----------
17,654,933
Weighted average outstanding during 1995 1,471,244
Net Income $ 131,907
Per Share Amount $ 0.090
For the year ended 1996 -
- ------------------------------------------------------------
Beginning balance, outstanding all year 1,384,836 16,618,032
Shares issued April 4, 1996 to an employee of a subsidiary 7,500 59,604
Shares issued October, 1996 for conversion of Series E 66,700 200,100
Common stock equivalent (Series E) through October, 1996 66,700 600,300
Common stock equivalent (Series F) all year 19,500 234,000
Shares issued April, 1996 for conversion of Series F 2,500 7,500
Common stock equivalent (Series F) through April, 1996 2,500 22,500
-----------
17,742,036
Weighted average outstanding during 1996 1,478,503
Net Income $ (302,373)
Per Share Amount $ (0.204)
</TABLE>
<PAGE>
Exhibit 22
----------
SUBSIDIARIES OF THE COMPANY
MICRO BUSINESS SOLUTIONS, INC.
A Nevada corporation
d/b/a MBSI
d/b/a Software and Hardware That Fits
d/b/a Software That Fits
d/b/a Hardware That Fits
d/b/a MBSI Leasing
610 South Frazier
Conroe, Texas 77301
(409) 539-3959
800-972-3018
SOFTWARE TECHNOLOGIES, INC.
A Nevada corporation
d/b/a Helix Technologies
In 1996:
744 Pinecrest Drive
Prospect Heights, IL 60070
(708) 465-0242
800-364-4354
In 1997:
610 South Frazier
Conroe, Texas 77301
(409) 760-2400
800-364-4354
NOTE: On December 31, 1997, the Company disposed of its two operating
subsidiaries.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 29
<SECURITIES> 0
<RECEIVABLES> 33
<ALLOWANCES> 8
<INVENTORY> 37
<CURRENT-ASSETS> 91
<PP&E> 1273
<DEPRECIATION> 716
<TOTAL-ASSETS> 996
<CURRENT-LIABILITIES> 381
<BONDS> 205
<COMMON> 3825
0
15
<OTHER-SE> (3430)
<TOTAL-LIABILITY-AND-EQUITY> 996
<SALES> 1147
<TOTAL-REVENUES> 1147
<CGS> 139
<TOTAL-COSTS> 139
<OTHER-EXPENSES> 1347
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22
<INCOME-PRETAX> (303)
<INCOME-TAX> 0
<INCOME-CONTINUING> 1147
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (303)
<EPS-BASIC> (.20)
<EPS-DILUTED> (.20)
<PAGE>
</TABLE>
