-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QLKY+UKzNGCbx7jGdsgU3vW4OULpB+Axch0pguIqbovKHXUH2fC0bie4zHu++q8m 9ukJb9DaLWIghwv9UWrHtg== 0000892569-97-000480.txt : 19970222 0000892569-97-000480.hdr.sgml : 19970222 ACCESSION NUMBER: 0000892569-97-000480 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970113 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970218 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALPHA MICROSYSTEMS CENTRAL INDEX KEY: 0000352869 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 953108178 STATE OF INCORPORATION: CA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-10558 FILM NUMBER: 97537465 BUSINESS ADDRESS: STREET 1: 3511 W SUNFLOWER AVE CITY: SANTA ANA STATE: CA ZIP: 92704 BUSINESS PHONE: 7149578500 8-K 1 FORM 8-K DATED JANUARY 13, 1997 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 --------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) January 13, 1997 ------------------------------- Alpha Microsystems - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) California 0-10558 95-3108178 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 2722 South Fairview Street, Santa Ana, California 92704 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (714) 957-8500 ----------------------------- Not Applicable - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 2 INFORMATION TO BE INCLUDED IN THE REPORT Item 2. Acquisition or Disposition of Assets. On January 13, 1997, Alpha Microsystems, a California corporation (the "Company" or "Registrant"), sold its Panda operation, which developed and marketed food service software for elementary and secondary schools, to privately-held Pacific Triangle Software, Inc. of San Mateo, California. Subsequently, on January 31, 1997, AlphaHealthCare, Inc., the Company's Oregon-based subsidiary which provided practice management solutions to the dental market, sold its operations to privately-held GLR Systems, Inc., dba UNIDENT Practice Performance Systems, based in Lincoln, Nebraska. The sale price for the Panda operations included $100,000 received at the Closing, $300,000 to be received over a period not to exceed five years, and additional earnout up to $600,000, based on amounts earned by the purchaser during the next five years as commissions for the sale of the Company's maintenance services, amounts earned from certain OEM agreements, and revenues from the license of the Panda software. As part of the transaction, Pacific Triangle Software, Inc. named the Company its sole preferred hardware maintenance service provider. The sale price for AlphaHealthCare's dental practice software operations consisted of $150,000 received at the Closing and a promissory note in the amount of $300,000 payable to AlphaHealthCare over a period not to exceed five years. Additionally, AlphaHealthCare is entitled to certain earnout amounts based upon amounts earned for software support to AlphaHealthCare customers and amounts earned by the purchaser as commissions for the sale of the Company's maintenance services over the next five years. As part of the transaction, GLR Systems, Inc. named the Company its sole preferred nationwide provider of maintenance services for its entire installed customer base, as well as its vendor of first choice for computer hardware and peripherals. In each case the purchase price was determined based upon the net assets of the operations as well as its past and projected financial performance. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (b) Pro Forma Financial Information. The following pro forma financial information is provided with this report: (i) Unaudited Pro Forma Condensed Consolidated Balance Sheets as of November 24, 1996 (ii) Unaudited Pro Forma Condensed Consolidated Statements of Operations for the Nine Months Ended November 24, 1996 (iii) Unaudited Pro Forma Condensed Consolidated Statements of Operations for the Fiscal Year Ended February 25, 1996 (iv) Notes to Pro Forma Condensed Consolidated Financial Information -2- EXHIBIT 2.12 3 (c) Exhibits. The following exhibits are included with this report:
Item Exhibit No. Agreement between Registrant and Pacific Triangle Software, Inc. dated January 13, 1997 2.1 Agreement between AlphaHealthCare and GLR Systems, Inc. dated January 27, 1997 2.2 Press Release dated January 15, 1997 20.1 Press Release dated February 4, 1997 20.2 Financial Data Schedule 27
-3- 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: February 18, 1997 ALPHA MICROSYSTEMS By: /S/Douglas J. Tullio ----------------------------------- Douglas J. Tullio, President and Chief Executive Officer -4- 5 ALPHA MICROSYSTEMS UNAUDITED PRO FORMA FINANCIAL DATA On January 13, 1997, Alpha Microsystems, a California corporation (the "Company" or "Registrant"), sold its Panda operation, which developed and marketed food service software for elementary and secondary schools, to privately-held Pacific Triangle Software, Inc. of San Mateo, California. Subsequently, on January 31, 1997, AlphaHealthCare, Inc., the Company's Oregon-based subsidiary which provided practice management solutions to the dental market, sold its operations to privately-held GLR Systems, Inc., dba UNIDENT Practice Performance Systems, based in Lincoln, Nebraska. The following Unaudited Pro Forma Condensed Consolidated Balance Sheet is presented as if the sale of the Panda and AlphaHealthCare operations had occurred on November 24, 1996. The following Unaudited Proforma Condensed Consolidated Statements of Operations for the nine months ended November 24, 1996 and the year ended February 25, 1996 are presented as if the sale of the Panda and AlphaHealthCare operations had occurred on February 25, 1996 and February 26, 1995, respectively. The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine months ended November 24, 1996 and the year ended February 25, 1996 are also presented as if the previously reported sale of Alpha Microsystems (Great Britain) Limited ("AMGB"), the Company's European subsidiary that was sold to Sanderson Electronics PLC ("Sanderson") in August 1996 occurred on February 25, 1996 and February 26, 1995, respectively. The pro forma adjustments represent the Company's determination of all material adjustments necessary to present fairly the Company's pro forma results of operations and financial position and are based on available information and certain assumptions considered reasonable in the circumstances. The following pro forma financial information should be read in conjunction with the historical financial statements and notes thereto of the Company filed on Forms 10-K and 10-Q for the respective periods. The pro forma results of operations are not necessarily indicative of the actual results that would have occurred had the sale been consummated at the beginning of the period indicated and do not purport to indicate results of operations as of any future date or for any future period. 6 ALPHA MICROSYSTEMS UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET NOVEMBER 24, 1996 (IN THOUSANDS, EXCEPT SHARE DATA)
Pro Forma Historical Adjustments Pro Forma Consolidated (Note A) Consolidated -------------- -------------- --------------- ASSETS Current assets: Cash and cash equivalents $ 8,688 $ 205 $ 8,893 Accounts receivable, net 3,263 (80) 3,183 Receivable from sale of subsidiary -- 300 300 Inventories 444 (99) 345 Note receivable 247 300 547 Prepaid expenses and other current assets 583 -- 583 -------- -------- ----------- Total current assets 13,225 626 13,851 Property and equipment, at cost 16,289 (317) 15,972 Less accumulated depreciation and amortization 12,932 (147) 12,785 -------- -------- ----------- Net property and equipment 3,357 (170) 3,187 Service contracts, net 420 -- 420 Software costs, net 802 (591) 211 Goodwill, net 15 -- 15 Other assets, net 56 (16) 40 -------- -------- ----------- $ 17,875 $ (151) $ 17,724 ======== ======== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,114 $ 19 $ 1,133 Deferred revenue 1,661 (108) 1,553 Other accrued liabilities 428 -- 428 Accrued salaries and wages 126 -- 126 Current portion of long-term debt 161 (16) 145 -------- -------- ----------- Total current liabilities 3,490 (105) 3,385 Long-term debt 89 (27) 62 Commitments and contingencies Shareholders' equity: Preferred stock, no par value; 5,000,000 shares authorized; none issued -- -- -- Common stock, no par value; 20,000,000 shares authorized; 10,752,192 shares issued and outstanding at November 24, 1996 30,813 -- 30,813 Accumulated deficit (16,579) (19) (16,598) Unamortized restricted stock plan expense (13) -- (13) Foreign currency translation adjustment 75 -- 75 -------- -------- ----------- Total shareholders' equity 14,296 (19) 14,277 -------- -------- ----------- $ 17,875 $ (151) $ 17,724 ======== ======== ===========
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information. 7 ALPHA MICROSYSTEMS UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Nine Months Ended November 24, 1996 (In thousands, except per share data)
Pro Forma Historical Adjustments Pro Forma Consolidated (Notes A and B) Consolidated ------------ --------------- ------------ Net sales: Product $ 6,940 $(2,051) $ 4,889 Service 11,725 (1,784) 9,941 -------- ------- -------- Total net sales 18,665 (3,835) 14,830 -------- ------- -------- Cost of sales: Product 3,716 (914) 2,802 Service 8,955 (1,171) 7,784 -------- ------- -------- Total cost of sales 12,671 (2,085) 10,586 -------- ------- -------- Gross Margin 5,994 (1,750) 4,244 Selling, general and administrative expense 6,730 (2,503) 4,227 Research and development expense 1,511 (393) 1,118 -------- ------- -------- Total operating expenses 8,241 (2,896) 5,345 -------- ------- -------- Income (loss) from operations (2,247) 1,146 (1,101) Interest income (163) (3) (166) Interest expense 29 (8) 21 Other (income) expense, net (230) (10) (240) Foreign exchange (gain) loss (24) 32 8 -------- ------- -------- Total other (income) expenses (388) 11 (377) -------- ------- -------- Income (loss) before taxes (1,859) 1,135 (724) (Benefit) provision for income taxes 28 4 32 -------- ------- -------- Net income (loss) $ (1,887) $ 1,131 $ (756) ======== ======= ======== Net income (loss) per share $ (0.19) $ 0.11 $ (0.08) ======== ======= ======== Number of shares used in the computation of per share amounts 9,929 9,929 9,929 ======== ======= ========
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information. 8 ALPHA MICROSYSTEMS UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Year Ended February 25, 1996 (In thousands, except per share data)
Pro Forma Historical Adjustments Pro Forma Consolidated (Notes A & B) Consolidated ------------ --------------- ------------ Net sales: Product $ 14,466 $(5,215) $ 9,251 Service 18,297 (4,572) 13,725 -------- ------- -------- Total net sales 32,763 (9,787) 22,976 -------- ------- -------- Cost of sales: Product 10,228 (4,332) 5,896 Service 12,739 (2,371) 10,368 -------- ------- -------- Total cost of sales 22,967 (6,703) 16,264 -------- ------- -------- Gross Margin 9,796 (3,084) 6,712 Selling, general and administrative expense 11,855 (6,523) 5,332 Research and development expense 2,093 (66) 2,027 -------- ------- -------- Total operating expenses 13,948 (6,589) 7,359 -------- ------- -------- Income (loss) from operations (4,152) 3,505 (647) Interest income (93) -- (93) Interest expense 38 (14) 24 Other (income) expense, net (466) (22) (488) Foreign exchange (gain) loss (76) 77 1 -------- ------- -------- Total other (income) expenses (597) 41 (556) -------- ------- -------- Income (loss) before taxes (3,555) 3,464 (91) (Benefit) provision for income taxes 20 (20) -- -------- ------- -------- Net income (loss) $ (3,575) $ 3,484 $ (91) ======== ======= ======== Net income (loss) per share $ (0.54) $ 0.53 $ (0.01) ======== ======= ======== Number of shares used in the computation of per share amounts 6,565 6,565 6,565 ======== ======= ========
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information. 9 ALPHA MICROSYSTEMS NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION (A) The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of November 24, 1996 reflects the sale of specified assets and liabilities of the Panda operation, and the operations of AlphaHealthCare, Inc., the Company's Oregon-based subsidiary. To reflect the appointment of Alpha Microsystems Service Operations (AMSO) as the sole preferred nationwide provider of maintenance service by GLR Systems for its entire installed base, and the designation of AMSO as GLR Systems' vendor of first choice for computer hardware and peripherals, the Company has recognized in the Unaudited Pro Forma Condensed Consolidated Statements of Operations revenue of $462,000 for the twelve months ended February 25, 1996 and $286,000 for the nine months ended November 24, 1996. (B) To reflect the three year agreement for hardware distribution between Sanderson Electronics PLC ("Sanderson") and the Company at comparable terms extended to Alpha Microsystems (Great Britain) Limited, the Company's European subsidiary that was sold to Sanderson on August 19, 1996, the Company has recognized in the Unaudited Pro Forma Condensed Consolidated Statements of Operations revenue of $1,147,000 for the twelve months ended February 25, 1996 and $473,000 for the nine months ended November 24, 1996. EX-2.1 2 AGREEMENT BETWEEN REGISTRANT AND PACIFIC TRIANGLE 1 AGREEMENT OF PURCHASE AND SALE This Agreement of Purchase and Sale ("Agreement") is made and entered into as of this 13th day of January, 1997, by and between ALPHA MICROSYSTEMS, a California corporation ("Seller"), and PACIFIC TRIANGLE SOFTWARE, INC., a California corporation ("Buyer"). R E C I T A L S : A. Seller provides software and hardware sales and support to the institutional food service marketplace (the "Food Service Business"). B. Seller desires to sell certain assets which are part of its Food Service Business as more specifically defined hereinbelow to Buyer, and Buyer desires to purchase such assets of Seller upon the terms and conditions set forth herein. AGREEMENT In consideration of their respective representations, warranties and agreements contained herein, the Parties hereto agree as follows: ARTICLE I DEFINITIONS 1.01 Accounts Receivable. The term "Accounts Receivable" herein shall mean those accounts receivable relating to the Food Service Business that comply with all of Seller's representations and warranties in Section 3.07. 1.02 Agreement. The term "Agreement" herein shall refer to this "Agreement of Purchase and Sale." 1.03 Annual Payments. The term "Annual Payments" herein is defined in Section 2.04(a)(ii). 1.04 Assigned Contracts. The term "Assigned Contracts" herein shall mean those contracts and outstanding bids expressly assigned to and assumed by Buyer and described on Exhibit "B" hereto (and the business and goodwill related thereto). 1.05 Assumed Liabilities. The term "Assumed Liabilities" is defined in Section 2.02 hereof. EXHIBIT 2.1 2 1.06 Buyer. The term "Buyer" herein shall refer to Pacific Triangle Software, Inc., a California corporation. 1.07 Closing or Closing Date. The term "Closing" or "Closing Date" herein is defined in Section 7.02 hereof. 1.08 Customer Lists. The term "Customer Lists" herein is defined in Section 3.03 hereof. 1.09 Earnout. The term "Earnout" is defined in Section 2.04(b) hereof. 1.10 Food Service Business. The term "Food Service Business" herein is defined in Recital A. 1.11 Insolvency Proceeding. The term "Insolvency Proceeding" herein shall mean any proceeding commenced by or against any person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moritoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangements or other relief. 1.12 Intellectual Property. The term "Intellectual Property" shall mean (a) any patent, patent application, copyright (whether registered or unregistered), copyright application, mask work, mask work application, trade secret, know-how, customer list, system, computer software, computer program, invention, design, blueprint, engineering drawing, proprietary product, technology, proprietary right or intangible asset relating to the Panda Business; (b) the proprietary rights in the Trademarks; and (c) any right to use or exploit any of the foregoing. 1.13 Inventory. The term "Inventory" herein shall mean the inventory described in Exhibit "H". 1.14 Maintenance Commissions. The term "Maintenance Commissions" shall mean all amounts due Buyer by Seller for the referral of hardware maintenance customers who execute hardware maintenance agreements with Seller's AMSO Division, based upon Seller's standard commission policy. 1.15 Net Software License Fees. The term "Net Software License Fees" shall mean the gross license fees received by Buyer from the license of the Panda Software, less the amount of any commissions paid to non-employee third parties or any credits or returns granted to distributors or end users of the Panda Software. 1.16 OEM Contracts. The term "OEM Contracts" refers to those contracts described as such on Exhibit "B". 1.17 OEM Contract Payments. The term "OEM Contract Payments" shall refer to all amounts payable to Seller, or to Buyer as Seller's assignee, under the OEM Contracts. 2 3 1.18 Panda Business. The term "Panda Business" shall mean the business related to the sale and support of the Panda Software. 1.19 Panda Software. The term "Panda Software" refers to the software developed by Seller which is commonly known by that name and marketed by Seller to the institutional food service business as such software is further described on Exhibit "M". 1.20 Panda Revenues. The term "Panda Revenues" is defined in Section 2.04(a)(ii)(B). 1.21 Prepaid Revenue. The term "Prepaid Revenue" herein is defined as cash received by Seller prior to Closing for services to be provided under Assigned Contracts subsequent to the Closing. 1.22 Purchase Price. The term "Purchase Price" herein is defined in Section 2.03 hereof. 1.23 Purchased Assets. The term "Purchased Assets" herein is defined in Section 2.01 hereof. 1.24 Seller. The term "Seller" herein will refer to Alpha Microsystems, a California corporation. 1.25 Software Support Contracts. The term "Software Support Contracts" herein will refer to all software support contracts pursuant to which Seller has agreed to provide software support services for the Panda Software as further described on Exhibit "B". 1.26 Tools and Equipment. The term "Tools and Equipment" herein shall mean the tools and equipment described in Exhibit "I". 1.27 Trade Payables. The term "Trade Payables" herein is defined in Section 2.08 hereof. 1.28 Trademarks. The term "Trademarks" herein shall mean the trademarks described in Exhibit "A" and the goodwill related thereto. ARTICLE II PURCHASE AND SALE 2.01 Purchase and Sale. At the Closing, and subject to all of the other terms and conditions set forth herein, Seller shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase from Seller, its entire right, title and interest in and to those assets of Seller's Food Service Business which are described on Exhibit "A" (the "Purchased Assets"). It is understood that the Purchased Assets shall not include the corporate charter, seal, minute books, financial records, stock transfer books or other records relating to the organization and existence 3 4 of Seller, or any other assets not specifically set forth on Exhibit "A". The Purchased Assets include all Intellectual Property developed or used by Seller in the conduct of the Panda Business. The entirety of the Purchased Assets shall be conveyed free and clear of all liens, trusts, encumbrances, charges, claims, security interests or other interests, conditional sales agreements and all other restrictions, except as contemplated by and set forth in the contracts listed on Exhibit "B". 2.02 Assumption of Liabilities. (a) Subject to the terms and conditions of this Agreement, Buyer shall assume and become responsible only for the following liabilities (collectively, the "Assumed Liabilities"). (i) All liabilities arising from actions or omissions occurring in the operation of the Panda Business after 5:00 p.m. on January 10, 1997, of any kind or nature whatsoever; (ii) All service and support obligations relating to the Assigned Contracts incurred prior to 5:00 p.m. on January 10, 1997 but to be rendered or delivered after 5:00 p.m. on January 10, 1997; (iii) All continuing obligations of Seller under the Assigned Contracts arising after 5:00 p.m. on January 10, 1997 and all liabilities of the Buyer for any breach, act or omission arising after 5:00 p.m. January 10, 1997 under the Assigned Contracts; and (iv) The Trade Payables listed on Exhibit "G". (b) Except as expressly set forth in Sections 2.02(ii) and (iv) above, Buyer shall not assume or become responsible for, any liability arising out of any action, event, condition or omission taken or caused by Seller or any of their predecessors in interest, agents or affiliates at any time, or arising from, occurring, or existing in respect of the Panda Business or its operations prior to 5:00 p.m. on January 10, 1997 and, except as expressly set forth above Seller shall remain liable for any and all liabilities or obligations (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated, whether due or to become due, and whether claims with respect thereto are asserted before or after the Closing) of Seller which are not Assumed Liabilities (collectively, the "Retained Liabilities"). Retained Liabilities include, without limitation: (i) All liabilities, of any kind or nature whatsoever, incurred in connection with the Panda Business prior to or arising out of or related to any action or circumstance before 5:00 p.m. on January 10, 1997, except as expressly set forth in Sections 2.02(ii) and (iv) above; (ii) All service, support and other obligations under the Assigned Contracts, and all liabilities for any breach, act or omission by Seller or 4 5 any circumstance or cause of action accruing or existing prior to 5:00 p.m. on January 10, 1997; (iii) All liabilities of Seller for costs and expenses incurred by Seller in connection with this Agreement or the consummation of the transactions contemplated by this Agreement; (iv) All Seller's liabilities or obligations under this Agreement or any other agreement entered into by the parties in connection herewith; (v) Any and all warranty claims based on the performance of the Panda Software accruing or existing prior to 5:00 p.m. on January 10, 1997; and (vi) Any claim by SNAP System alleging that the Panda Software violates any third party rights, including, without limitation, copyright, patent, trade secret and trademark rights or that the Panda Software constitutes unfair competition or interference with prospective economic advantage. 2.03 Purchase Price. Buyer shall deliver as the purchase price ("Purchase Price") for the Purchased Assets: (a) the sum of Four Hundred Thousand Dollars ($400,000); plus (b) such additional amounts as may be due pursuant to Section 2.04(b) below (the "Earnout"). 2.04 Payment of Purchase Price. Buyer shall deliver the Purchase Price to Seller as follows: (a) Guaranteed Purchase Price. Buyer shall deliver to Seller the sum of Four Hundred Thousand Dollars ($400,000) as follows: (i) Initial Payment. Buyer shall deliver to Seller at the Closing the sum of One Hundred Thousand Dollars ($100,000) by cashier's check or wire transfer (the "Initial Payment"). (ii) Subsequent Annual Payments. (A) Buyer shall deliver additional payments ("Annual Payments") as follows, on or before the date due:
Date Due Amount Due -------- ---------- January 1, 1998: $40,000 January 1, 1999: $50,000
5 6 January 1, 2000: $60,000 January 1, 2001: $70,000 January 1, 2002: $80,000
(B) Buyer shall pay to Seller as due or received (i) all amounts due Buyer as Maintenance Commissions through January 1, 2002; (ii) all amounts received as OEM Contract Payments through January 1, 2002; and (iii) ten percent (10%) of all Net Software License Fees received by Buyer through January 1, 2002 (collectively referred to as the "Panda Revenues"), up to an aggregate of Three Hundred Thousand Dollars ($300,000). To the extent the Maintenance Commissions, OEM Contract Payments and amounts due of Panda Revenues delivered by Buyer to Seller do not equal or exceed the amounts due as Annual Payments through the due date of the next Annual Payment, Buyer shall deliver the difference to Seller on or before the next due date by wire transfer or cashier's check. To the extent the Maintenance Commissions, OEM Contract Payments and amounts due of Panda Revenues delivered by Buyer to Seller exceed the amount due as the next Annual Payment, they shall be applied to the next and subsequent Annual Payments, until the total amount of Three Hundred Thousand Dollars ($300,000) due as Annual Payments has been delivered to Seller. Buyer hereby assigns to Seller all rights to receive such Maintenance Commissions and OEM Contract Payments directly. To the extent Buyer receives any such payments during any calendar quarter, Buyer agrees to deliver such payments to Seller within thirty (30) days after the end of such calendar quarter. Buyer agrees to execute an Assignment of OEM Contract Payments in the form of Exhibit "C" and an Assignment of Commissions in the form of Exhibit "D" to reflect such assignments. Buyer shall deliver the ten percent (10%) of Panda Revenues due Seller received each calendar quarter within thirty (30) days after the end of that calendar quarter. Late payments shall be subject to a late payment charge from the date due until paid equal to one and one-half percent (1-1/2%) per month, or if lower, the highest rate permitted by law. (b) Earnout. In addition to the Four Hundred Thousand Dollars ($400,000) which shall be delivered pursuant to Section 2.04(a) above, with respect to amounts that become due to Buyer following the payment by Buyer to Seller of all of the Annual Payments, Buyer shall pay for the Purchased Assets up to an additional Six Hundred Thousand Dollars ($600,000) (the "Earnout") as follows: (i) Buyer shall pay to Seller: 6 7 (A) fifty percent (50%) of all amounts due Buyer as Maintenance Commissions through January 1, 2002; (B) ten percent (10%) of all amounts due Buyer as OEM Contract Payments through January 1, 2002; and (C) ten percent (10%) of the Net Software License Fees received by Buyer. (ii) Buyer shall pay the amounts due under (B) and (C) as well as any amounts due under (A) received by Buyer within thirty (30) days after the end of the calendar quarter in which Buyer receives such amounts. Buyer hereby assigns to Seller the rights to receive fifty percent (50%) of Maintenance Commissions due Buyer by Seller so long as amounts are due Seller under this Section 2.04(b). Late payments shall be subject to a late payment charge from the date due until paid equal to one and one-half percent (1-1/2%) per month, or if lower, the highest rate permitted by law. (c) Adjustment to Purchase Price. The parties agree that the Purchase Price is premised on the book value of: (i) the Accounts Receivable and the Inventory, in the aggregate, less (ii) the Trade Payables and the Prepaid Revenue, in the aggregate, equaling One Hundred Thirty One Thousand Dollars ($131,000) (the "Book Value"). To the extent said Book Value is greater than $131,000, the Purchase Price shall be increased by the excess amount, and the increase in the Purchase Price shall be delivered with the initial payment at the Closing. To the extent said Book Value is less than $131,000, the Purchase Price shall be reduced by the difference, and the initial payment delivered at the Closing shall be reduced accordingly. Following the Closing, the parties shall follow the procedures set forth in Exhibit "N" with respect to collection of the Accounts Receivable and any adjustment to the Purchase Price as a result of a change in Book Value. 2.05 Security. Buyer agrees to grant Seller a security interest in the Purchased Assets as well as all extensions and proceeds thereof to secure Buyer's obligations hereunder, and shall sign a Security Agreement in the form of Exhibit "E" as well as appropriate UCC-1 Financing Statements to evidence same. 2.06 Sales Tax and Other Tax Liability. Buyer shall pay or cause to be paid all taxes, duties, imposts, levies, fees and other governmental exactions imposed upon or arising out of this Agreement and the consummation of the transactions contemplated hereunder. 2.07 Allocation of Purchase Price; Reporting Requirements. For tax purposes the Parties hereby agree to (i) allocate the Purchase Price payable hereunder in accordance with 7 8 Exhibit "F" hereto; and (ii) timely file Internal Revenue Purchased Form 8594, Asset Acquisition Statement, and otherwise report the transactions set forth herein in accordance with such allocations and with the provisions of Internal Revenue Code Section 1060 and comparable provisions of state law. 2.08 No Assumption of Liabilities Excepting Assigned Contracts and Trade Payables. Effective as of 5:00 p.m. on January 10, 1997, Buyer expressly assumes the Assigned Contracts and the obligation to pay the Trade Payables and agrees to perform all obligations thereunder. 2.09 Right of Seller to Audit. Seller shall have the right, for the sole purpose of determining whether the full amount due Seller as Earnout has been delivered, to audit Buyer's books and records. Audits shall be conducted not more than once in any twelve (12) month period. If any audit reveals that Buyer has underpaid Seller, then Buyer shall immediately deliver any underpayments. If any audit discloses underpayment of greater than five percent (5%) of amounts paid for such period, Buyer shall reimburse Seller its reasonable costs of such audit. ARTICLE III REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER As an inducement to Buyer to enter into this Agreement, Seller rIepresents and warrants to Buyer, and as to covenants agrees with Buyer, as of the date of execution of this Agreement and as of the Closing Date, as follows: 3.01 Organization. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of California, and has all requisite power and authority (corporate and other) to own its properties, to carry on its business as now being conducted, to execute and deliver this Agreement and the agreements contemplated herein and to consummate the transactions contemplated hereby. 3.02 Authority. All corporate action necessary to authorize and approve the execution and performance of this Agreement by Seller has been taken, and this Agreement constitutes a valid and binding agreement of Seller, enforceable in accordance with its terms. No authorizations, consents or approvals, whether of governmental bodies, creditors or otherwise, are necessary in order to enable Seller to enter into and perform this Agreement, excepting as will be obtained by Seller prior to the Closing. As of the Closing, consummation of the transactions herein contemplated will not conflict with or result in a breach of any of the terms or provisions of any agreement or instrument to which Seller is a party or by which Seller may be bound or to which any of the property or assets of Seller is subject, the Certificate of Incorporation or Bylaws of Seller, or any statute or any order, decree, judgment, award, rule or regulation applicable to Seller of any court or arbitrator or of any regulatory authority or other governmental body having jurisdiction over Seller, or result in the creation or imposition of any lien, charge or encumbrance upon any of the Purchased Assets. 8 9 3.03 Customer Lists. The customer lists delivered to Buyer at the Closing ("Customer Lists") shall constitute all of Seller's records (other than accounting records) as to the names, addresses and telephone numbers of customers to which Seller has licensed the Panda Software or for whom Seller has provided bids which continue as outstanding. 3.04 Inventory. The Inventory is in all material respects of good and marketable quality, free from material defects. Seller warrants that it has good title to the Inventory. 3.05 Proprietary Rights and Warranty Claims. (a) Seller has good, valid and marketable title to the Intellectual Property of Seller, free of all liens and other encumbrances, and has a valid right to use all Intellectual Property. Seller is the exclusive owner of all Intellectual Property. (b) The Panda Software and associated documentation are original works of authorship. Exhibit "M" correctly sets forth all patents, Trademarks and copyrights included as part of the Intellectual Property. (c) Seller has taken all commercially reasonable and customary measures and precautions necessary to protect and maintain the confidentiality and secrecy of all Intellectual Property (except such Intellectual Property whose value would be unimpaired by public disclosure) and otherwise to maintain and protect the value of all such Proprietary Assets. Seller has not (other than pursuant to the OEM contracts listed in Exhibit "B") disclosed or delivered to any individual or entity, or permitted the disclosure or delivery to any individual or entity of (i) the source code, or any portion or aspect of the source code, of the Panda Software, or (ii) the object code, or any portion or aspect of the object code of the Panda Software (other than pursuant to nonexclusive licenses to end users pursuant to the end user license agreements listed on Exhibit "M" in the ordinary course of business, copies of which have been provided to Buyer. (d) Seller is not infringing, misappropriating or making unlawful use of, and Seller has not at any time infringed, misappropriated or made any unlawful use of, or received any notice or other communication (in writing or otherwise), except from SNAP System of any actual, alleged, possible or potential infringement, misappropriation or unlawful use of any proprietary asset owned or used by any other third party. To Seller's knowledge, no third party is infringing, misappropriating or making any unlawful use of the Intellectual Property. (e) The Panda Software conforms in all material respects with any specification, documentation, performance standard, representation or statement made or provided with respect thereto by or on behalf of Seller. (f) The Intellectual Property constitutes all the proprietary assets necessary, in Seller's reasonable judgment, to enable Buyer to conduct the Panda Business in the manner in which such business has been and is being conducted. Seller has not licensed any of the Intellectual Property on an exclusive basis and Seller has not entered 9 10 into any covenant not to compete or contract limiting its ability to exploit fully any of the Intellectual Property or to transact the Panda Business in any market or geographical area or with any third party, except as set forth in the OEM Agreements. (g) All current and former employees of Seller involved in the development, modification, marketing or servicing of the Panda Software have executed and delivered to Buyer an agreement (containing no exceptions to or exclusions from the scope of its coverage) that is substantially identical to the forms of Confidential Information and Invention Assignment Agreements previously delivered to Buyer and all current and former consultants and independent contractors to Seller involved in the development, modification, marketing or servicing of the Panda Software have executed and delivered to Buyer an agreement (containing no exceptions to or exclusions from the scope of its coverage) that is substantially identical to the form of Consultant Confidential Information and Invention Assignment Agreement previously delivered to Buyer. To Seller's knowledge, no employee or independent contractor of Seller is in violation of any term of any employment contract, patent disclosure agreement or any other contract or agreement relating to the relationship of any such employee or independent contractor with Seller. (h) To Seller's knowledge, no product liability claims have been communicated in writing to or threatened against Seller. 3.06 Trademarks. The Trademarks included in the Purchased Assets shall be limited to the trademark "PANDA. Right From The Start". The Purchased Assets shall not include the right to use the slogan "Right From the Start" separately, but only when used with the trademark "PANDA. Right From The Start". 3.07 Bona Fide Accounts Receivable. The Accounts Receivable are bona fide existing obligations. Seller has not received notice of any actual or imminent Insolvency Proceeding of any account debtor listed on Exhibit "L". 3.08 Tools and Equipment. The tools and equipment included in the Purchased Assets (the "Tools and Equipment") shall include all tools and equipment described on Exhibit "I". The Tools and Equipment are delivered to and accepted by Buyer "AS IS". Seller warrants that it has good title to the Tools and Equipment. 3.09 Software Support Contracts. Seller is not in default under any of the Software Support Contracts described on Exhibit "B" and has performed all of the obligations under them which are or will be required to be performed prior to 5:00 p.m. on January 10, 1997. 3.10 Employees. Seller agrees that Buyer shall have the right to solicit and hire effective upon the Closing those employees of Seller listed on Exhibit "J". Seller makes no representations or warranties as to whether any of such employees will accept Buyer's offer of employment. Buyer shall have no liability for any termination costs or liability for any termination costs or liabilities arising by reason of the termination for any such employees, as employees of Seller. 10 11 3.11 Prepaid Revenue. Except as Seller has listed on Exhibit "K", Seller has not received any Prepaid Revenue. 3.12 Accounts Receivable. The Accounts Receivable are owned by Seller and represent valid obligations for the dollar amount shown on the books of Seller. Seller has no notice of any dispute of any Account Receivable nor of the bankruptcy or insolvency of any pay or of any Account Receivable. 3.13 Survival of Representations and Warranties. The covenants, representations, warranties and agreements by Seller contained in this Agreement shall survive the Closing Date, provided the representations and warranties (but not the covenants) shall terminate and expire on the close of business on the second anniversary of the Closing Date and shall be of no force or effect thereafter, except with respect to any claim with respect thereto under Section 9.02 of this Agreement, written notice of which shall have been delivered to Seller on or prior to the second anniversary of the Closing Date. 3.14 Disclosure. No statements by Seller contained in this Agreement, its exhibits and schedules nor any of the lists, statements, documents or information set forth in or attached to or to be delivered pursuant to this Agreement, contain any untrue statement of material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. ARTICLE IV REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BUYER As an inducement to Seller to enter into this Agreement, Buyer represents and warrants to Seller, and as to covenants herein agrees with Seller, as of the date of execution of this Agreement and as of the Closing Date, as follows: 4.01 Incorporation. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of California. 4.02 Authority. All corporate action necessary to authorize and approve the execution and performance of this Agreement by Buyer has been taken, and this Agreement constitutes a valid and binding agreement, enforceable against Buyer in accordance with its terms. No authorizations, consents or approvals, whether of governmental bodies, creditors or otherwise, are necessary in order to enable Buyer to enter into and perform this Agreement. Consummation of the transactions herein contemplated will not conflict with or result in a breach of any of the terms or provisions of any agreement or instrument to which Buyer is a party or by which Buyer may be bound or to which any of the property or assets of Buyer is subject, the Certificate of Incorporation or Bylaws of Buyer, or any statute or any order, decree, judgment, award, rule or regulation applicable to Buyer of any court or arbitrator or of any regulatory authority or other governmental body having jurisdiction over Buyer. 11 12 4.03 Brokers or Finders. Buyer has not entered into any agreement or incurred any obligation, directly or indirectly, for the payment of any broker's commissions or finder's fees in connection with this Agreement. 4.04 Financial Resources. Buyer has sufficient financial resources to be able to reasonably expect that it will be capable of fulfilling its obligations hereunder. 4.05 Survival of Representations and Warranties. The covenants, representations, warranties and agreements contained in this Agreement by Buyer shall survive the Closing Date, provided the representations and warranties (but not the covenants) shall terminate and expire on the close of business on the second anniversary of the Closing Date and shall be of no force or effect thereafter, except with respect to any claim with respect thereto under Section 9.02 of this Agreement, written notice of which shall have been delivered to Buyer on or prior to the second anniversary of the Closing Date. 4.06 Confidentiality. Buyer acknowledges that it will in the course of its due diligence prior to the Closing have access to and obtain confidential, nonpublic, proprietary information of Seller. Buyer agrees to maintain such confidential, nonpublic, proprietary information of Seller as confidential, not to disclose it prior to the Closing to any other person or entity, and not to use it prior to the Closing. To the extent such confidential, nonpublic, proprietary information of Seller is not included in the Purchased Assets, Seller agrees to maintain such confidential, nonpublic, proprietary information of Seller as confidential both before and after the Closing, not to disclose it either before or after the Closing to any other person or entity, and not to use it either before or after the Closing. ARTICLE V OBLIGATIONS PRIOR TO CLOSING 5.01 Conduct of Business. Until the Closing Date, Seller shall conduct its business with respect to the Purchased Assets only in the ordinary course of business, and Seller shall use all reasonable efforts to preserve intact its business with respect to the Purchased Assets, including, without limitation, the following: (a) maintaining its relationship with any person or entity having business relationships with such business and performing all of its obligations under the OEM Contracts and the Software Support Contracts; (b) paying when due all assessments, fees or charges applicable to the Purchased Assets; (c) not selling, disposing of, transferring or alienating any of the Purchased Assets or mortgaging, pledging, subject to a lien or security interest or otherwise encumbering any of the Purchased Assets; 12 13 (d) not incurring any indebtedness, liability or other obligation, contingent or otherwise with respect to the Purchased Assets, except as otherwise provided in this Agreement; (e) not entering into any new contracts or agreements or committing to any business proposals or arrangements relating to the Purchased Assets; or (f) complying in all material respects with all laws and regulations applicable to such business. ARTICLE VI CONDITIONS PRECEDENT TO CLOSING 6.01 Conditions Precedent to the Performance of Seller's Obligations. The obligations of Seller to sell the Purchased Assets pursuant to this Agreement are subject, at the option of Seller, to the fulfillment on or before the Closing Date of each of the following conditions: (a) Compliance with Terms. At the Closing Date, all of the terms, conditions and agreements herein to be complied with and performed by Buyer at or before the Closing Date shall have been complied with or performed in all material respects. (b) Accuracy of Representations and Warranties. Seller shall not have acquired information that there is any material error, misstatement or omission in any of the representations or warranties made herein by Buyer. The representations and warranties made by Buyer in this Agreement shall be correct and complete at and as of the Closing Date, with only those exceptions which have been approved in writing by Seller. (c) Delivery of Required Items. Buyer shall have delivered all items set forth in Section 8.02 below. (d) Transaction Legal. There shall be no order, decree or ruling by any court or governmental agency or threat thereof or any other fact or circumstance which might prohibit or render illegal the transactions contemplated by this Agreement. (e) Lender Consent. The consent of Seller's primary lender shall have been obtained. 6.02 Conditions Precedent to the Performance of Buyer's Obligations. The obligations of Buyer to purchase the Purchased Assets pursuant to this Agreement are subject to the fulfillment on or before the Closing Date of each of the following conditions: (a) Compliance with Terms. At the Closing Date, all of the terms, conditions and agreements herein to be complied with and performed by Seller at or 13 14 before the Closing Date shall have been complied with or performed in all material respects. (b) Accuracy of Representations and Warranties. Buyer shall not have acquired information that there is any material error, misstatement or omission in any of the representations or warranties made herein by Seller. The representations and warranties made by Seller in this Agreement shall be correct and complete at and as of the Closing Date, subject only to those exceptions which have been approved in writing by Buyer, in its sole and absolute discretion. (c) Transaction Legal. There shall be no order, decree or ruling by any court or governmental agency or threat thereof or any other fact or circumstance which might prohibit or render illegal the transactions contemplated by this Agreement. (d) Delivery of Required Items. Seller shall have delivered all items set forth in Section 8.01 below. ARTICLE VII TERMINATION 7.01 Termination. This Agreement may be terminated and abandoned at any time: (a) by mutual written consent of Buyer and Seller; (b) by Buyer, on the Closing Date, if any one or more of the conditions precedent to its obligations herein shall not have been fulfilled or waived in writing by Buyer, if any required delivery pursuant to Section 8.01 has not been made; and (c) by Seller, on the Closing Date, if any one or more of the conditions precedent to its obligations herein shall not have been fulfilled or waived in writing by Seller or if any required delivery pursuant to Section 8.02 has not been made. 7.02 Closing. Provided that all of the conditions to Closing have been fully satisfied or waived, the transactions contemplated by this Agreement shall be consummated at a closing to be held at the offices of Seller on January 13, 1997 (the "Closing Date") at 12:00 noon; Pacific Daylight Time, or at such other place or time as shall be mutually agreed upon in writing between Buyer and Seller (the "Closing"). ARTICLE VIII DELIVERIES AT CLOSING 8.01 Deliveries of Seller. At the Closing, Seller shall deliver to Buyer all of the following: 14 15 (a) Bill of Sale. Originally executed bill of sale and other instruments for the Purchased Assets of Seller in such form as in each case is reasonably satisfactory to Buyer. (b) Blanket Assignment. Blanket assignment by Seller to Buyer of all right, title and interest to the Assigned Contracts as well as such other assignments which Buyer reasonably believes are necessary to vest in Buyer all of Seller's right, title and interest in and to the Purchased Assets. (c) Customer Lists. The Customer Lists. (d) Assigned Contracts. The original or a true and correct copy of each Assigned Contract. (e) Purchased Assets. Possession of the Purchased Assets. 8.02 Deliveries of Buyer. At the Closing, Buyer shall deliver to Seller all of the following: (a) Initial Payment. The initial payment; (b) Assignment of OEM Contract Payments. The executed Assignment of OEM Contract Payments in the form of Exhibit "C"; (c) Assignment of Commissions. The executed Assignment of Commissions in the form of Exhibit "D"; and (d) Security Agreement. A Security Agreement in the form of Exhibit "E", a UCC-1 Financing Statement executed by Buyer evidencing the security interest granted therein, and such other documents as Seller reasonably believes are necessary to perfect its security interest in the Purchased Assets. ARTICLE IX POST-CLOSING COVENANTS; INDEMNIFICATION 9.01 Non-Compete. During the period commencing on the Closing Date and continuing until three (3) years after such Closing Date ("Non-Compete Period"), Seller shall not, directly or indirectly, as an owner of any equity, legal, beneficial or other interest, or otherwise, or on its own behalf, develop or provide to any other person or entity, any service, support or product which competes in any material respect with the Panda Business. For these purposes "competes" shall mean that (1) the service, support or product offers or has the same, or similar features and specifications, or (2) a customer of the Panda Business would purchase such service, support or product as a reasonable substitute for those offered by the Panda Business. 15 16 9.02 Indemnification by Buyer and Seller. (a) Indemnification by Seller. Seller hereby agrees to indemnify and hold Buyer, its officers, directors, shareholders, employees, agents, advisers, affiliates, associates and any successors thereto harmless from all claims, loss, damages, liability and expense of any kind (including, without limitation, reasonable attorneys' fees and expenses in connection with the contest of any claim and interest on any claim) which Buyer may incur or sustain by reason of the fact that (i) Seller should breach or fail to comply with any of the terms, conditions, covenants or agreements or any exhibits attached hereto or any of them contained herein, (ii) any representations or warranties made by Seller in this Agreement should prove to be false or erroneous, (iii) any claims, actions, suits, investigations or proceedings, pending or threatened, are or have been made or commenced by, against, involving, arising out of, relating to or affecting any part of the Purchased Assets or Seller's operation of its business, with respect to any obligation of Seller arising pursuant to the Retained Liabilities, or (iv) any action, arbitration, suit, proceeding, compromise, settlement, assessment or judgment arising out of or incidental to any of the matters indemnified against in this Section 9.02(a); provided, however, that Seller shall not be obligated to indemnify Buyer and hold it harmless with respect to any settlement of a claim to which Seller has not consented, which consent by Seller shall not unreasonably be withheld. (b) Indemnification by Buyer. Buyer hereby agrees to indemnify and hold Seller, its officers, directors, shareholders, employees, agents, advisers, affiliates and associates and successors thereto harmless from all loss, liability and expense (including without limitation, reasonable attorneys' fees and expenses in connection with the contest of any claim and interest on any claim) which Seller may incur or sustain by reason of the fact that (i) Buyer should breach or fail to comply with any of the terms, conditions, covenants or agreements or any exhibits attached hereto, or any of them contained herein, (ii) any representations or warranties made by Buyer in this Agreement should prove to be false or erroneous, (iii) any claims, actions or suits, are commenced by, against, involving, arising out of Buyer's performance or nonperformance of any obligations of Buyer arising pursuant to the Assumed Liabilities, (iv) any failure of Buyer to promptly pay when due any of the Trade Payables, (v) any claims, actions, suits, investigations or proceedings are made involving or arising out of the operation by Buyer of the business of Seller acquired hereunder, or the sale, transfer or other disposition by Buyer of all or any part of the Purchased Assets, from and after the Closing Date, or (vi) any action, suit, proceeding, compromise, settlement, assignment, judgment or arbitration arising out of or incidental to any of the matters indemnified against in this Section 9.02(b); provided, however, that Buyer shall not be obligated to indemnify a Seller Indemnified Party and hold it harmless under this Section 9.02(b) with respect to any settlement of a claim to which Buyer has not consented, if such consent has not been unreasonably withheld. (c) Right to Defend. If the facts giving rise to any such indemnification shall involve any actual claim or demand by any third party against a party entitled to indemnification hereunder (referred to hereinafter as an "Indemnified Party"), the indemnifying party shall be entitled to notice of and entitled (without prejudice to the right 16 17 of any Indemnified Party to participate at its own expense through counsel of its own choosing) to defend or prosecute such claim at its expense and through counsel of its own choosing if it gives written notice of its intention to do so no later than the time by which the interests of the Indemnified Party would be materially prejudiced as a result of its failure to have received such notice; provided, however, that if the defendants in any action shall include both the indemnifying party and Indemnified Party, and the Indemnified Party shall have reasonably concluded that counsel selected by the indemnifying party have a conflict or additional defenses, the Indemnified Party shall have the right to select separate counsel to participate in the defense of such action on its own behalf, at the expense of the indemnifying party. The Indemnified Party shall cooperate fully in the defense of such claim and shall make available to the indemnifying party pertinent information under its control relating thereto. 9.03 Payment of Indemnification Obligation. Seller hereby agrees that any claim for indemnification by Buyer under this Article IX or under any other provision of this Agreement may, at Buyer's option, be set off against any of Buyer's obligations to make any remaining payments to Seller under this Agreement, including, without limitation, the payments set forth in Section 2.03 of this Agreement. 9.04 Proprietary Information. Seller shall hold in confidence, and use its best efforts to have all of Seller's officers, directors, shareholders, and personnel, as appropriate, hold in confidence, all knowledge and information of a secret or confidential nature with respect to the Panda Business or the Purchased Assets and shall not disclose, publish or make use of the same without the consent of Buyer for a period of three (3) years after the Closing Date, except to the extent that such information (1) is now, or hereafter becomes, through to act or failure to act on the part of Seller, generally known or available; (2) is hereafter furnished to Seller by a third party which is entitled to disclose it to Seller, or (3) has been approved in writing, for release by Buyer. Seller agrees that the remedy at law for any breach of this Section 9.04 would be inadequate and that Buyer may be entitled to injunctive relief in addition to any other remedy available to Buyer. 9.05 Further Assurances. From time to time after the date hereof, at Buyer's request and without further consideration, Seller will execute and deliver such other further instruments of conveyance, assignment, transfer and consent, and take such other action as Buyer may reasonably request in order to more effectively carry out the intent and purpose of this Agreement, to establish and protect the rights created or intended to be created in favor of Buyer hereunder, and to establish and perfect Buyer's title to the Purchased Assets. 9.06 Buyer to Act as Agent for Seller. This Agreement shall not constitute an agreement to assign any claim, contract, license, lease, commitment, sales order, purchase order or permit if any attempted assignment of the same without the consent of the other party thereto or the issuer thereof would constitute a breach thereof or in any way affect the rights of Seller or Buyer thereunder. If such consent is not obtained or if any attempted assignment would be ineffective or would affect the Seller's rights thereunder so that Buyer would not in fact receive all such rights, then Buyer shall act as agent for Seller in order to obtain for Buyer the benefits thereunder. 17 18 9.07 Buyer Appointed Special Attorney-in-Fact for Seller. Effective at the Closing Date and except as otherwise limited below, Seller hereby constitutes and appoints Buyer, its successors and assigns, the true and lawful attorney of Seller, in the name of either Buyer or Seller (as the Buyer shall determine in its sole discretion) but for the benefit and at the expense of Buyer (except as otherwise herein provided), exclusively for the purposes of (a) instituting and prosecuting all proceedings which the Buyer may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to any of the Purchased Assets as provided for in this Agreement; (b) defending or compromising any and all actions, suits or proceedings in respect of any of the Purchased Assets, and to do all such acts and things in relation thereto as Buyer shall deem advisable; and (c) taking all action which Buyer may reasonably deem proper in order to provide for Buyer the benefits under any of the Purchased Assets where any required consent of another party to the sale or assignment thereof to Buyer pursuant to this Agreement shall not have been obtained. The Seller acknowledges that the foregoing powers are coupled with an interest and shall be irrevocable. The foregoing provisions of this Section 9.07 shall be applicable only if the Seller, upon first being notified in writing by the Buyer of a circumstance set forth in clauses (a), (b) or (c) of this Section 9.07 giving rise to a requirement by the Seller to institute or prosecute a proceeding pursuant to (a), to defend or compromise an action, suit or proceeding pursuant to (b) or to take action as provided in (c), fails to take appropriate action within thirty (30) days of such notification or within such shorter period as may be required to take action. 9.08 Preferred Hardware Maintenance Provider. Buyer hereby appoints Seller, effective upon the Closing, as its preferred hardware maintenance service provider for Buyer's customers. Buyer agrees (i) to issue a press release and send to all of its customers within sixty (60) days after the Closing a joint announcement with Seller, in a form approved by Buyer, in Buyer's sole discretion, that Seller is Buyer's sole preferred hardware maintenance service provider for hardware installations; and (ii) to recommend Seller as its sole preferred hardware maintenance service provider for hardware installations. 9.09 Software Support. To assist Buyer with Buyer's assumption of the ownership of the Panda Software, Seller agrees to provide Buyer the services set forth in Exhibit "O". 9.10 Transfer. Buyer agrees that, other than granting exclusive and nonexclusive licenses to third parties in the ordinary scope of Buyer's business, Buyer shall not transfer Buyer's interest in and to the Panda Software to a third party without Seller's consent prior to the payment to Seller of the Four Hundred Thousand Dollar ($400,000) guaranteed purchase price set forth in Section 2.04(a). Buyer further agrees that for the period of time during which the Earnout may be due to Seller pursuant to the terms of Section 2.04(b), Buyer shall only transfer all of Buyer's right, title and interest in and to the Panda Software to a third party under terms and conditions that obligate such third party to comply with the obligations of Sections 2.04(b). 9.11 Source Code License. The parties agree to negotiate in good faith the terms of a license to the source code for the Panda Software as necessary to enable Seller to fulfill the support obligations set forth in Section 9.09. 18 19 9.12 Trademark Usage and Amendment. Buyer agrees that to the extent the portion of the Trademarks that consist of the slogan "Right From The Start" can be deleted from the Trademarks without substantial negative impact on Buyer, that Buyer will (i) discontinue within eighteen (18) months the use of that portion of the Trademarks from marketing and other materials using the name "Panda", and (ii) make such filings or amendment and take such steps as Seller shall reasonably request, at Seller's expense, or as Buyer may elect, at Seller's expense not to exceed Four Thousand Dollars ($4,000), to register the mark Panda without the slogan "Right from the Start". Buyer acknowledges that Seller has advised Buyer that Seller has independently registered and used the mark "Right from the Start" since 1984 in connection with its general business operations. ARTICLE X GENERAL PROVISIONS 10.01 No Public Disclosure. Seller shall not disclose the terms of this Agreement without the prior written consent of Buyer except to (i) accountants or legal representatives with a need to know who agree to maintain the confidentiality of such information or (ii) as required by law. Notwithstanding the foregoing, Seller may disclose information about this Agreement to the extent required under the Securities Exchange Act of 1934, as amended. 10.02 Notification of Changes. Each party will promptly notify the other in writing of the existence or happening of any material fact, event or occurrence which may tend to alter the accuracy or completeness of any representation or warranty contained in this Agreement. 10.03 Notices. Except as otherwise expressly provided herein, any notice herein required or permitted to be given shall be in writing and shall be personally served or sent by overnight courier, by registered mail or certified mail, postage prepaid, or by prepaid telex, telecopy or telegram and shall be deemed to have been given when such writing is received by the intended recipient thereof. For the purposes hereof, the addresses of the parties hereto (until notice of a change thereof served as provided in this Section 10.02) shall be as follows: If to Seller: Alpha Microsystems 2722 South Fairview Street Santa Ana, California 92704 ATTN: Chief Financial Officer Fax No.: (714) 641-7678 With a copy Allen, Matkins, Leck, Gamble & Mallory LLP to: 515 South Figueroa Street, 7th Floor Los Angeles, California 90071 ATTN: Debra Dison Hall, Esq. Fax No: (213) 620-8816 19 20 If to Buyer: Pacific Triangle Software, Inc. 3182 Campus Drive, Suite 322 San Mateo, CA 94403 ATTN: David L. Swank Fax No.: (408) 395-7290 With a copy Gray Cary Ware & Freidenrich to: 400 Hamilton Avenue Palo Alto, CA 94301 ATTN: Mark F. Radcliffe, Esq. Fax No.: (415) 327-3699 10.03 Entire Agreement. This Agreement, together with its Exhibits, constitutes the entire understanding between the parties with respect to the subject matter hereof, superseding all negotiations, prior discussions and preliminary agreements, express or implied. This Agreement may not be changed except in writing executed by Buyer and Seller. 10.04 Attorneys' Fees. In the event of a bringing of an action or suit by a party hereto against the other party hereunder arising out of or related to this Agreement, including, without limitation, the indemnification provisions, the party in whose favor final judgment is entered shall be entitled to have and recover from the other party all Costs (as defined below), all of which shall be deemed to have accrued upon the commencement of such action. Any judgment or order entered in such action shall contain a specific provision providing for the recovery of all Costs incurred in enforcing, perfecting, and executing such judgment. For the purposes of this section, "Costs" shall include, without limitation, attorneys' fees, costs and expenses, including such costs and expenses incurred in the following: (i) postjudgment motions; (ii) contempt proceedings; (iii) garnishment, levy and debtor and third party examinations; (iv) discovery; and (v) bankruptcy litigation. 10.05 Waiver. No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or be construed as a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement. 10.06 Assignment. This Agreement shall not be assignable by any party without the consent of the other party. 10.07 Severability. If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall to any extent be found to be invalid, void or unenforceable, such provision shall be limited as necessary to render it valid and enforceable and the remaining provisions and any application thereof shall continue in full force and effect without being impaired or invalidated in any way. 10.08 Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall be binding upon and shall inure to the benefit of the parties hereto, their personal representatives, heirs, executors, administrators, successors and/or assigns. 20 21 10.09 Further Actions. Each party hereto agrees to take any and all actions reasonably necessary in order to carry out the provisions of this Agreement. 10.10 Construction. This Agreement shall be construed in accordance with its plain meaning and not against either party as the drafting party. The captions of the Sections of this Agreement are for convenience only and shall not be considered or referred to in resolving questions or interpretation. 10.11 Counterparts. This Agreement may be executed in one or more counterparts and counterparts signed in the aggregate by Buyer and Seller shall constitute a single original instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected herein as signatories. 10.12 Choice of Law. This Agreement shall be governed by, and construed in accordance with the laws of the State of California without regard to its conflicts of laws principles. IN WITNESS WHEREOF, the Party hereto have executed this Agreement as of the date first above written. "SELLER" "BUYER" ALPHA MICROSYSTEMS, a California PACIFIC TRIANGLE SOFTWARE, INC., a California corporation a California corporation By: [SIG] By: /s/ David L. Swank -------------------------- -------------------------- Its: Chief Financial officer Its: President -------------------------- -------------------------- 21 22 EXHIBITS Exhibit "A": Purchased Assets Exhibit "B": Assigned Contracts Exhibit "C": Assignment of OEM Contract Payments Exhibit "D": Assignment of Commissions Exhibit "E": Security Agreement Exhibit "F": Allocation of Purchase Price Exhibit "G": Trade Payables Exhibit "H": Inventory Exhibit "I": Tools and Equipment Exhibit "J": Employees Exhibit "K": Prepaid Revenue Exhibit "L": Accounts Receivable Exhibit "M": Panda Software Exhibit "N": Adjustments to Book Value Exhibit "O": Support Services 22 EX-2.2 3 AGREEMENT BETWEEN ALPHAHEALTHCARE AND GLR SYSTEMS 1 AGREEMENT OF PURCHASE AND SALE This Agreement is made and entered into as of this ___ day of January, 1997, by and between AlphaHealthCare, Inc., a California corporation ("Seller"), Alpha Microsystems, a California corporation, the sole shareholder of Seller ("Alpha Micro") and GLR Systems, Inc. dba UNIDENT Practice Performance Systems, a Nebraska corporation ("Buyer"). R E C I T A L S : A. Seller provides software and hardware sales and support to the Dental marketplace. B. Seller desires to sell certain assets as more specifically defined hereinbelow to Buyer and Buyer desires to purchase such assets of Seller upon the terms and conditions set forth herein. C. Alpha Micro owns all of the issued and outstanding stock of Seller, and as the sole shareholder of Seller, will receive benefit from the sale by Seller of such assets as set forth herein. AGREEMENT In consideration of their respective representations, warranties and agreements contained herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS 1.01 Agreement. The term "Agreement" herein shall refer to this "Agreement of Purchase and Sale." 1.02 "Alpha Micro" herein shall refer to Alpha Microsystems, a California corporation, which is the sole shareholder of Seller. 1.03 Assigned Contracts. The term "Assigned Contracts" herein shall mean those Contracts expressly assigned to and assumed by Buyer and described as "Assigned Contracts" on Exhibit "B" hereto. 1.04 Buyer. The term "Buyer" herein shall refer to GLR Systems, Inc. dba UNIDENT Practice Performance Systems, a Nebraska corporation. 1.05 Closing or Closing Date. The term "Closing" or "Closing Date" herein is defined in Section 7.02 hereof. EXHIBIT 2.2 2 1.06 Customer Lists. The term "Customer Lists" herein is defined in Section 3.03 hereof. 1.07 Excluded Assets. The term "Excluded Assets" herein is defined in Section 2.01 hereof. 1.08 Prepaid Revenue. The term "Prepaid Revenue" herein is defined as cash received by Seller prior to Closing for services to be provided under Software Support Contracts subsequent to the Closing. 1.09 Purchase Price. The term "Purchase Price" herein is defined in Section 2.02 hereof. 1.10 Purchased Assets. The term "Purchased Assets" herein is defined in Section 2.01 hereof. 1.11 Seller. The term "Seller" herein will refer to AlphaHealthCare, Inc., a California corporation. 1.12 Software. The term "Software" herein is defined in Section 3.05. 1.13 Spare Parts and Inventory. The term "Spare Parts and Inventory" herein is defined in Section 3.04 hereof. 1.14 Tools and Equipment. The term "Tools and Equipment" herein is defined in Section 3.07 hereof. 1.15 Software Support Contracts. The term "Software Support Contracts" herein will refer to all software support contracts pursuant to which Seller has agreed to provide software support services for the Focus Software as further described on Exhibit "B". 1.16 Trademarks. The term "Trademarks" shall be as defined in Section 3.06 ARTICLE II PURCHASE AND SALE 2.01 Purchase and Sale. At the Closing, and subject to all of the other terms and conditions set forth herein, Seller shall sell, transfer, convey and assign to Buyer, and Buyer shall purchase from Seller, its entire right, title and interest in and to all of the assets of Seller's dental marketplace business, including goodwill, property and assets of every kind and description, whether tangible or intangible, personal or mixed, whether or not same have any book value on the records of Seller, used in connection with the business of Seller, excepting as listed on Exhibit "A" attached hereto (the "Excluded Assets") (collectively, the "Purchased Assets"). Without limiting the generality of the foregoing, the Purchased Assets shall include (but not be limited to) those assets described on Exhibit "B". It is understood that the Purchased -2- EXHIBIT 2.2 3 Assets shall not include the corporate charter, seal, minute books, stock transfer books or other records relating to the organization and existence of Seller. The entirety of the Purchased Assets shall be conveyed free and clear of all liens, trusts, encumbrances, charges, claims, security interests, community property or other interests, conditional sales agreements and all other restrictions, except as set forth in the Assigned Contracts listed on Exhibit "B" attached hereto and incorporated herein by this reference. 2.02 Purchase Price. Buyer shall deliver as the purchase price ("Purchase Price") for the Purchased Assets the sum of Four Hundred Fifty Thousand Dollars ($450,000), plus (i) payments for the Accounts Receivable as described in Section 2.03(d) below; and (ii) an earnout as described in Section 2.03(c) below. 2.03 Payment of Purchase Price. Buyer shall deliver the Purchase Price to Seller as follows: (a) Cash at Closing. Buyer shall deliver to Seller at the Closing the sum of One Hundred Fifty Thousand Dollars ($150,000) by cashier's check or wire transfer. (b) Promissory Note. Buyer shall deliver to Seller at the Closing a Promissory Note in the principal amount of Three Hundred Thousand Dollars ($300,000) in the form of Exhibit "C" attached hereto (the "Promissory Note"), which shall bear interest at six percent (6%) per annum compounded, require annual payments of principal of Sixty Thousand Dollars ($60,000) plus accrued interest, and be secured by the Purchased Assets. As contemplated by the terms of the Promissory Note, Buyer shall also execute an Assignment of Commissions in the form of Exhibit "H" pursuant to which Buyer shall assign to Seller all amounts to which it would be otherwise entitled as commissions from Alpha Micro, to be applied against the amounts due under the Promissory Note and as earnout pursuant to Paragraph (c) below. Alpha Micro shall deliver to Seller by the twentieth (20th) day of each month a complete listing by customer of the commissions applied against the Promissory Note and the earnout. (c) Earnout. In addition to the amounts to be delivered to Seller pursuant to Paragraphs (a) and (b) above, Buyer shall deliver to Seller each year on or before March 15 with respect to the immediately preceding twelve month period commencing on the Closing Date or the anniversary thereof (an "annual period"), for a period of five (5) years after the Closing Date, an amount calculated as follows: (i) Ten percent (10%) of the aggregate of all amounts billed by Buyer to customers listed on the Customer Lists for software support during the preceding annual period (regardless of whether such support was for an AMOS based system, a windows platform or any other platform, and regardless of whether such support is pursuant to a periodic maintenance and support contract or on a time and materials basis); less Sixty Thousand Dollars ($60,000); plus -3- EXHIBIT 2.2 4 (ii) The amount earned by Buyer as maintenance commissions from Alpha Micro during the preceding annual period for hardware maintenance contracts, up to a maximum of Sixty Thousand Dollars ($60,000). By way of illustration, if for an annual period Buyer was due $30,000 in commissions from Alpha Micro, and billed customers on the Customer Lists $800,000 for software support (i) Seller would retain the $30,000 due Buyer as commissions and apply that sum against the Promissory Note; (ii) Buyer would pay to Seller under the Promissory Note for such annual period an additional $30,000 plus accrued interest; (iii) Buyer would owe to Seller as earnout for such annual period an additional $50,000 (calculated as follows: 10% of $800,000 is $80,000, less $60,000 equals $20,000, plus the $30,000 earned as maintenance commissions equals $50,000). By way of further illustration, if for an annual period Buyer was due $80,000 in commissions from Alpha Micro, and billed customers on the Customer Lists $700,000 for software support (i) Seller would retain the $80,000 due Buyer as commissions and apply $60,000 of that sum against the Promissory Note and $20,000 against the earnout; (ii) Buyer would owe to Seller as earnout an additional $70,000 (calculated as follows: 10% of $700,000 is $70,000, less $60,000 equals $10,000, plus the $60,000 earned as maintenance commissions equals $70,000), with Seller applying the $20,000 withheld by Alpha Micro and Buyer delivering an additional $50,000 to Seller. To the extent the amount due pursuant to this Paragraph (c) is less than zero, no amounts shall be due for that annual period to Seller. (d) Payment for Accounts Receivable. Buyer shall deliver to Seller for the Accounts Receivable amounts as follows: (i) One Hundred Thousand Dollars ($100,000), which shall be delivered as Accounts Receivable are collected, with all amounts received by Seller during each month from customers listed on the Accounts Receivable listing attached as Exhibit "H" to be delivered to Buyer within fifteen (15) days of the end of the month in which collected (to the extent of each customer's debt), together with a reconciliation of the amounts delivered, until One Hundred Thousand Dollars ($100,000) from Accounts Receivable has been delivered to Seller; and (ii) thereafter, sixty percent (60%) of all amounts received by Seller during each month from customers listed on the Accounts Receivable listing attached as Exhibit "H" to be delivered to Buyer within fifteen (15) days of the end of the month in which collected (to the extent of each customer's remaining debt), together with a reconciliation of the amounts delivered. This Section 2.03(d) shall apply only to the Accounts Receivable listed on Exhibit "H" hereto and shall not apply to accounts receivable arising after the Closing Date. 2.04 Security. Buyer agrees to grant Seller a security interest in the Purchased Assets as well as all extensions and proceeds thereof to secure Buyer's obligations under the Promissory Note, and shall sign a Security Agreement in the form of Exhibit "I" as well as appropriate UCC-1 Financing Statements to evidence same. -4- EXHIBIT 2.2 5 2.05 Sales Tax and Other Tax Liability. Buyer shall pay or cause to be paid all taxes, duties, imposts, levies, fees and other governmental exactions imposed upon or arising out of this Agreement and the consummation of the transactions contemplated hereunder. 2.06 Allocation of Purchase Price; Reporting Requirements. For tax purposes the parties hereby agree to (i) allocate the Purchase Price payable hereunder in accordance with Exhibit "E" hereto; and (ii) timely file Internal Revenue Service Purchased Form 8594, Asset Acquisition Statement, and otherwise report the transactions set forth herein in accordance with such allocations and with the provisions of Internal Revenue Code Section 1060 and comparable provisions of state law. 2.07 No Assumption of Liabilities; Assigned Contracts. Buyer is not assuming, nor shall it become liable for, any debts, liabilities, taxes or any other obligations of any kind of Seller, whether known or unknown, disclosed or undisclosed, with respect to the business of Seller or the Purchased Assets existing as of the Closing Date, or arising out of, or relating to, in any manner, the operation of the business of Seller before the Closing Date, except those Assigned Contracts set forth on Exhibit "B" hereto. Effective as of the Closing, Buyer expressly assumes the Assigned Contracts and agrees to perform all obligations thereunder. Buyer and Seller agree to cooperate in obtaining any necessary consents to the assignment of the Assigned Contracts. Upon the assumption by Buyer of the Assigned Contracts, Buyer shall be entitled to all of Seller's rights and benefits thereunder, and shall release Seller of its obligations to perform same. 2.08 Absence of Certain Consents. In the event that (i) any of the Assigned Contracts listed on Exhibit "B" are not assignable or transferable without the consent, waiver or approval of a third party, and (ii) such consent, waiver or approval is not obtained prior to the Closing, then this Agreement shall not constitute an assignment or transfer or an attempted assignment or transfer of such Assigned Contract if such assignment or transfer would constitute a breach thereof or would subject either Seller or Buyer to penalty or loss. Unless and until such consent, waiver or approval is obtained and an assignment becomes effective with respect to any such Assigned Contract, Buyer shall be deemed to be the agent of Seller to perform all of Seller's obligations and duties thereunder and will be entitled to all of the benefits under such Assigned Contract as if (and to the extent possible without constituting a breach thereof) Buyer were substituted for Seller thereunder. The terms of such agency shall, at Buyer's request, be set forth in one or more agreements, in form and substance mutually satisfactory to Buyer and Seller and containing terms customary to such an arrangement, to be entered into by Buyer and Seller at Closing. Seller covenants and agrees to (a) maintain its corporate existence and good standing until any such consent is obtained, (b) use its best efforts to cause Buyer to receive the benefits of any such Assigned Contract, and (c) enforce any rights of Seller thereunder against the other party or parties thereto, all at the request, under the direction, for the account and at the expense of Buyer. The failure to obtain any consent required to the Assigned Contracts as listed on Exhibit "B" shall not be grounds for Buyer to delay the Closing, and, in such case, Buyer shall perform Seller's obligations under the Assigned Contract after the Closing, so long as Buyer continues to enjoy the benefits of said Assigned Contract. -5- EXHIBIT 2.2 6 ARTICLE III REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER As an inducement to Buyer to enter into this Agreement, Seller and Alpha Micro jointly and severally represent and warrant to Buyer, and as to covenants agree with Buyer, as of the date of execution of this Agreement and as of the Closing Date, as follows: 3.01 Organization. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of California. 3.02 Authority. All corporate action necessary to authorize and approve the execution and performance of this Agreement by Seller has been taken, and this Agreement constitutes a valid and binding agreement of Seller, enforceable in accordance with its terms. No authorizations, consents or approvals, whether of governmental bodies, creditors or otherwise, are necessary in order to enable Seller to enter into and perform this Agreement, excepting as will be obtained by Seller prior to the Closing. As of the Closing, consummation of the transactions herein contemplated will not conflict with or result in a breach of any of the terms or provisions of any agreement or instrument to which Seller is a party or by which Seller may be bound or to which any of the property or assets of Seller is subject, the Articles of Incorporation or Bylaws of Seller, or any statute or any order, decree, judgment, rule or regulation applicable to Seller of any court or of any regulatory authority or other governmental body having jurisdiction over Seller, or result in the creation or imposition of any lien, charge or encumbrance upon any of the Purchased Assets. 3.03 Customer Lists. The customer lists delivered to Buyer at the Closing ("Customer Lists") shall constitute all of Seller's records (other than accounting records, of which the originals shall be retained by Seller and copies delivered to Buyer as requested by Buyer) as to the names, addresses and telephone numbers of customers to which Seller has provided products or services whether by contract or on a time and materials basis, and shall include originals or copies of Seller's records relating to the sales and payment history and contract terms for each customer. 3.04 Spare Parts and Inventory. The spare parts and inventory included in the Purchased Assets (the "Spare Parts and Inventory") shall include all spare parts and inventory held by Seller as of the Closing. The Spare Parts and Inventory as of the date shown on Exhibit "B" are as listed in Exhibit "B", and are shown on the corresponding financial statements delivered to Buyer as "Inventory". The Spare Parts and Inventory (including repossessed items) are delivered to and accepted by Buyer "AS IS". Seller has good and marketable title to the Spare Parts and Inventory, the Spare Parts and Inventory are not subject to any liens or encumbrances which will not be removed prior to Closing, and no spare parts or inventory have been disposed of by Seller within the two (2) months prior to the Closing except in the ordinary course of business, except as set forth on Exhibit "A". 3.05 Software. The Software included in the Purchased Assets and described on Exhibit "B" shall include, and be limited to, that Software marketed by Seller under the name -6- EXHIBIT 2.2 7 "Focus" as well as that software previously marketed by Seller under the name "Alpha 2000", and all prior versions, ancillary application products and enhancements and modifications thereto. The Software is delivered to and accepted by Buyer "AS IS". To the best of Seller's and Alpha Micro's knowledge, the Software does not infringe the rights of any other person or entity. Seller owns and has the right to transfer all right, title and interest in the Software to Buyer as contemplated herein, and has not granted any rights to (including any rights to license) the Software, other than nonexclusive licenses to end-users in the ordinary course of business. Buyer acknowledges that Seller terminated licensing of its Alpha 2000 as a result of its conclusion that without further development it was not commercially viable. None of the past or present employees, officers, directors or shareholders of Seller has any right in any of the Software included in the Purchased Assets listed in Exhibit "B" or in any of the inventories owned by Seller, whether or not patented or copyrighted, which have been or are used by Seller in its business. Seller is not liable nor has it made any contract whereby it may become liable, to any person for any royalty or other compensation for the use of any of the Software whether or not patented, trademarked, tradenamed or copyrighted relating to the Business, except as set forth in the Assigned Contracts on Exhibit "B". To Seller's and Alpha Micro's actual knowledge, there is no patent, copyright, technical development or invention owned by any other person which could materially adversely affect the Purchased Assets or the business as presently conducted by Seller. Seller has the unrestricted right to use the Software being transferred hereunder. 3.06 Tradenames. Listed on Exhibit "B" are all of Seller's intellectual property rights including (i) all assumed names, tradenames, trademark and/or servicemark registrations, applications for trademark and/or servicemark registrations but excluding the name "Alpha 2000" (the "Trademarks") and (ii) patents, applications for patents, copyrights and license agreements of Seller, governmental approvals and/or registrations. The foregoing, together with all of Seller's other proprietary information including trade secrets, trade dress, know-how product codes and specifications, operating data, customer lists and other information pertaining to the business are herein referred to as the "Intellectual Property Rights". The Tradenames included in the Purchased Assets shall include, and be limited to, "AlphaHealthCare" and "Focus" and the goodwill associated therewith and all variants thereof. In furtherance of the purchase and sale of the Purchased Assets hereunder, immediately upon the Closing, Seller and Alpha Micro shall cause Seller's corporate name to be changed to a name completely dissimilar to AlphaHealthCare, which name is included in the Intellectual Property rights, and thereafter neither Seller nor Alpha Micro shall adopt, use, cause to be used, where approved or sanctioned, the use of such name, or any name so similar as to cause confusion therewith, or any other tradename or assumed name included in the trademarks. To Seller's and Alpha Micro's actual knowledge, Seller has the unrestricted right to use the Intellectual Property Rights being transferred hereunder and all other names and marks set forth on Exhibit "B" and the date of first use claimed in each such registration is based upon bona fide sales of goods in interstate commerce, and Seller has used the trademarks continuously from the date of first use claimed to the date of this Agreement. 3.07 Tools and Equipment. The tools and equipment included in the Purchased Assets (the "Tools and Equipment") shall include all tools and equipment held by Seller as of the Closing. Seller's internal records reflect that the Tools and Equipment as of the date shown on Exhibit "B" are as listed in Exhibit "B"; however Seller does not warrant the accuracy of such listing.. The Tools and Equipment are delivered to and accepted by Buyer "AS IS". Seller has -7- EXHIBIT 2.2 8 good and marketable title to the Tools and Equipment, the Tools and Equipment are not subject to any liens or encumbrances except as shall be removed prior to the Closing, and no tools or equipment have been disposed of by Seller within the two (2) months prior to the Closing except in the ordinary course of business, except as set forth in Exhibit "A". 3.08 Assigned Contracts. Seller has heretofore delivered to Buyer true, correct and complete copies of each of the Assigned Contracts. Each of the Assigned Contracts is valid, binding, in full force and effect and, except for obtaining any consents, waivers or approval or giving any notice listed on Exhibit "B", is fully assignable to and assumable by Buyer, so that immediately after the Closing Buyer will be entitled to the full benefits thereof. Seller is not in any material default under any of the Assigned Contracts and has performed all of the obligations under them which are or will be required to be performed prior to the Closing. 3.09 Employees. Seller agrees that Buyer shall have the right, but not the obligation, to solicit and hire effective upon the Closing any of Seller's employees. Buyer shall have no liability for any termination costs or liability for any termination costs or liabilities arising by reason of the termination for any such employees, as employees of Seller. Further, Buyer shall have no liability arising from or relating to any employee benefit plan of Seller, the termination by Seller of any employee or the non-hiring by Buyer of any former employee of Seller. 3.10 Prepaid Revenue. Except as Seller has listed on Exhibit "F", Seller has not received any Prepaid Revenue. Except as Seller has listed on Exhibit "F", Seller has not received any Prepaid Revenue. Seller agrees to reimburse Buyer for any Prepaid Revenue for any goods or services it provides to customers related to any Prepaid Revenue which is not specifically listed on Exhibit "F". 3.11 Survival of Representations and Warranties. The covenants, representations warranties and agreements contained in this Agreement by Seller shall survive the Closing Date, provided the representations and warranties shall terminate and expire on the close of business on the second anniversary of the Closing Date and shall be of no force or effect thereafter, except with respect to any claim with respect thereto under Section 9.01 of this Agreement, written notice of which shall have been delivered to Seller on or prior to the second anniversary of the Closing Date. 3.12 Legal Proceedings, Etc. Except as set forth on Exhibit "G", there is no legal, equitable, administrative or arbitration action, suit, proceeding or known investigation pending or threatened against or affecting Seller or Alpha Micro or any of their respective assets which if adversely determined, could adversely affect the business of Seller, the Purchased Assets, or any condition, financial or otherwise, of Seller or the business, operations or properties, or the condition, financial or otherwise, of Buyer immediately after the Closing, or the ability of Seller to consummate the transactions contemplated hereby. There is no judgment, decree, injunction, rule or order of any court, governmental department, commission, agency, instrumentality or arbitrator outstanding against Alpha Micro or Seller, and there is no basis for action, suit, proceeding or investigation against Alpha Micro or Seller, affecting or in any way relating to the Purchased Assets. Neither Alpha Micro nor Seller is in default with respect to any order, injunction or decree of any court or governmental department, commission, board or agency. No such order, -8- EXHIBIT 2.2 9 injunction or decree is now in effect which restrains the operation of the business or the use of the Purchased Assets. There is no pending or ongoing with any federal or State income taxing authority any income tax examination or audit, nor has Seller received any notice of the intention of any taxing authority to conduct such an examination or audits. 3.13 Information from Seller. None of the information or documents contained in the Exhibits hereto are or will be, considered in the aggregate, false or misleading in any material respect or omit to state a material fact required to be stated in order to make any of the statements therein not misleading in the light of the circumstances under which they are provided to Buyer. All documents included in the Exhibits hereto are true, accurate and complete copies of the documents they are purported to represent. The delivery of any information or documents (or Buyer's otherwise obtaining information or documents) shall not abrogate, diminish, limit or release (i) any of the representations and warranties of Alpha Micro and Seller hereunder, or (ii) Buyer's reliance thereon in consummating the Closing hereunder. 3.14 Financial Statements. Seller has delivered to Buyer copies of unaudited financial statements for the prior two fiscal years (the information from which was included in Alpha Microsystems' audited financial statements) and the first three quarters of the current fiscal year. Such financial statements were prepared using generally accepted accounting principles ("GAAP") consistently applied (although they do not include all the disclosures contained in financial statements prepared in accordance with GAAP), and are, to the best of Seller's and Alpha Micro's knowledge, accurate, excepting that Seller has not verified the Fixed Assets reflected on such financial statements. 3.15 Brokers or Finders. Seller has not entered into any agreement or incurred any obligation, directly or indirectly, for the payment of any broker's commissions or finder's fees in connection with this Agreement, excepting that Seller has entered into an agreement with Philip D. Smith, fees to whom shall be Seller's sole responsibility. 3.16 Conduct of the Business Prior to Closing. Seller covenants and agrees that, prior to the Closing Date or the earlier termination of this Agreement, unless the Buyer shall otherwise agree in writing, it shall (i) conduct the operations of Seller only in the ordinary course of business and consistent with past practice; (ii) use its best efforts to maintain and preserve its business, assets, prospects, employees, customers and other advantageous business relationships; (iii) maintain the Purchased Assets in substantially their current state of repair, excepting normal wear and tear, (iv) through the Closing Date, maintain insurance covering the Purchase Assets of the same nature and level as that in effect on the date hereof, (v) make timely payments on accounts payable and other obligations of Seller in accordance with Seller's past practices; (vi) not, directly or indirectly, except in the ordinary course of business, sell, pledge, dispose of or encumber any of its assets; (vii) enter into any contract, agreement, commitment or arrangement except in the ordinary course of business; (viii) not, directly or indirectly enter into or terminate any material contract or agreement, release or relinquish any material contract right or modify any contract affecting the Purchased Assets; (ix) not take any action with respect to the grant of any severance or termination pay (otherwise than pursuant to policies or agreements of Seller in effect on the date hereof) or with respect to any increase of benefits payable under its severance or termination pay policies or agreements in effect on the date hereof; (x) not adopt or amend any -9- EXHIBIT 2.2 10 bonus, profit sharing, compensation, stock option, pension, retirement, deferred compensation, employment or other employee benefit plan, agreement, trust, fund or other arrangement for the benefit or welfare of any employee of Seller or increase in any manner the compensation or fringe benefits of any employee of the Seller. 3.17 Commissions From Alpha Micro. Based upon a commission rate of fourteen percent (14%) for hardware maintenance contracts, the commissions payable with respect to customers on the Customer Lists would for the full year prior to the Closing have resulted in revenues to Seller of not less than Thirty Thousand Dollars ($30,000). ARTICLE IV REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BUYER As an inducement to Seller to enter into this Agreement, Buyer represents and warrants to Seller, and as to covenants herein agrees with Seller, as of the date of execution of this Agreement and as of the Closing Date, as follows: 4.01 Incorporation. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Nebraska. 4.02 Authority. All corporate action necessary to authorize and approve the execution and performance of this Agreement by Buyer has been taken, and this Agreement constitutes a valid and binding agreement, enforceable against Buyer in accordance with its terms. No authorizations, consents or approvals, whether of governmental bodies, creditors or otherwise, are necessary in order to enable Buyer to enter into and perform this Agreement. Consummation of the transactions herein contemplated will not conflict with or result in a breach of any of the terms or provisions of any agreement or instrument to which Buyer is a party or by which Buyer may be bound or to which any of the property or assets of Buyer is subject, the Certificate of Incorporation or Bylaws of Buyer, or any statute or any order, decree, judgment, rule or regulation applicable to Buyer of any court or of any regulatory authority or other governmental body having jurisdiction over Buyer, or result in the creation or imposition of any lien, charge or encumbrance upon any of the Purchased Assets. 4.03 Brokers or Finders. Buyer has not entered into any agreement or incurred any obligation, directly or indirectly, for the payment of any broker's commissions or finder's fees in connection with this Agreement. 4.04 Survival of Representations and Warranties. The covenants, representations, warranties and agreements contained in this Agreement by Buyer shall survive the Closing Date, provided the representations and warranties shall terminate and expire on the close of business on the second anniversary of the Closing Date and shall be of no force or effect thereafter, except with respect to any claim with respect thereto under Section 9.01 of this Agreement, written notice of which shall have been delivered to Buyer on or prior to the second anniversary of the Closing Date. -10- EXHIBIT 2.2 11 4.05 Confidentiality. Buyer acknowledges that it will in the course of its due diligence, as contemplated by Article V below, it will have access to and obtain confidential, nonpublic, proprietary information of Seller. Buyer agrees to maintain such confidential, nonpublic, proprietary information of Seller as confidential, not to disclose it prior to the Closing to any other person or entity (except its advisors as is necessary relative to the transactions contemplated herein, who are held by Buyer to the same restrictions as set forth in this Section 4.05), and not to use it prior to the Closing. To the extent such confidential, nonpublic, proprietary information of Seller is not included in the Purchased Assets, Seller agrees to maintain such confidential, nonpublic, proprietary information of Seller as confidential both before and after the Closing, not to disclose it either before or after the Closing to any other person or entity, and not to use it either before or after the Closing. 4.06 Cooperation. Buyer agrees to provide such information as is required and otherwise to cooperate with Seller to obtain all consents required under the Assigned Contracts. ARTICLE V DUE DILIGENCE 5.01 Information and Records. Upon execution of this Agreement, Seller shall deliver or otherwise make available to Buyer for review all such information and records relating to the Purchased Assets as Buyer shall reasonably request. From the date hereof through the Closing Date, Seller shall afford to the officers, certified public accounts, lawyers and other representatives of Buyer, reasonable access, at all reasonable times and in a manner which is not unduly disruptive to Seller's normal business operations, to all properties, books and records of Seller, to the professional advisors of Seller and to such information as Buyer may reasonably request, and also that Buyer may have full opportunity to make such investigations as Buyer shall deem necessary to evaluate the Purchased Assets and the business of Seller. ARTICLE VI CONDITIONS PRECEDENT TO CLOSING 6.01 Conditions Precedent to the Performance of Seller's Obligations. The obligations of Seller to sell the Purchased Assets pursuant to this Agreement are subject, at the option of Seller, to the fulfillment on or before the Closing Date of each of the following conditions: (a) Compliance with Terms. At the Closing Date, all of the terms, conditions and agreements herein to be complied with and performed by Buyer at or before the Closing Date shall have been complied with or performed in all material respects. (b) Accuracy of Representations and Warranties. Seller shall not have acquired information that there is any material error, misstatement or omission in any of the representations or warranties made herein by Buyer. The representations and -11- EXHIBIT 2.2 12 warranties made by Buyer in this Agreement shall be correct and complete at and as of the Closing Date, with only those exceptions which have been approved in writing by Seller. (c) Delivery of Required Items. Buyer shall have delivered all items set forth in Section 8.02 below. (d) Transaction Legal. There shall be no order, decree or ruling by any court or governmental agency or threat thereof or any other fact or circumstance which might prohibit or render illegal the transactions contemplated by this Agreement. (e) Lender Consent. The consent of Seller's primary lender shall have been obtained. 6.02 Conditions Precedent to the Performance of Buyer's Obligations. The obligations of Buyer to purchase the Purchased Assets pursuant to this Agreement are subject to the fulfillment on or before the Closing Date of each of the following conditions: (a) Compliance with Terms. At the Closing Date, all of the terms, conditions and agreements herein to be complied with and performed by Seller at or before the Closing Date shall have been complied with or performed in all material respect. (b) Accuracy of Representations and Warranties. Buyer shall not have acquired information that there is any material error, misstatement or omission in any of the representations or warranties made herein by Seller. The representations and warranties made by Seller in this Agreement shall be correct and complete at and as of the Closing Date, subject only to those exceptions which have been approved in writing by Buyer, in its sole and absolute discretion. (c) Transaction Legal. There shall be no order, decree or ruling by any court or governmental agency or threat thereof or any other fact or circumstance which might prohibit or render illegal the transactions contemplated by this Agreement. (e) Delivery of Required Items. Seller shall have delivered all items set forth in Section 8.01 below. ARTICLE VII TERMINATION 7.01 Termination. This Agreement may be terminated and abandoned at any time: (a) by mutual written consent of Buyer and Seller; -12- EXHIBIT 2.2 13 (b) by Buyer, on the Closing Date, if any one or more of the conditions precedent to its obligations herein shall not have been fulfilled or waived in writing by Buyer, or if any required delivery pursuant to Section 8.01 has not been made; and (c) by Seller, on the Closing Date, if any one or more of the conditions precedent to its obligations herein shall not have been fulfilled or waived in writing by Seller or if any required delivery pursuant to Section 8.02 has not been made. 7.02 Closing. Provided that all of the conditions to Closing have been fully satisfied or waived, the transactions contemplated by this Agreement shall be consummated at a closing (the "Closing") to be held at the offices of Seller on January 31, 1997 (the "Closing Date") at 10:00 a.m., Pacific Standard Time, or at such other place or time as shall be mutually agreed upon in writing between Buyer and Seller, but in no case later than February 7, 1997. ARTICLE VIII DELIVERIES AT CLOSING 8.01 Deliveries of Seller. At the Closing, Seller shall deliver to Buyer all of the following: (a) Bill of Sale. Originally executed Bill of Sale for the Purchased Assets of Seller. (b) Blanket Assignment. Blanket assignment by Seller to Buyer of all right, title and interest to the Software Support Contracts as well as such other assignments which Buyer reasonably believes are necessary to vest in Buyer all of Seller's right, title and interest in and to the Purchased Assets. (c) Consents. The consent of the landlord to the assignment of the Lease for the premises as well as any consents received in connection with the assignment of the Assigned Contracts. (d) Customer Lists. The Customer Lists. (e) Software Support Contracts. The original or a true and correct copy of each Software Support Contract. (f) Closing Certificate. A certificate of its president certifying that the representations and warranties contained herein continue to be correct and complete as of the Closing Date. (g) Lease Assignments. Lease Assignments executed by Seller as contemplated by Section 2.07, together with any required consents thereunder which have been received. -13- EXHIBIT 2.2 14 (h) Covenant Not to Compete. Covenant Not to Compete executed in accordance with Section 9.05. (i) Acknowledgment of Assignment of Commissions. An Acknowledgment of Assignment of Commissions in the form of Exhibit "I" executed by Alpha Micro. (j) Subordination Agreement. A subordination agreement in favor of Union Bank subordinating Seller's interest in any assets of Buyer excepting the Purchase Assets, executed by Seller. 8.02 Deliveries of Buyer. At the Closing, Buyer shall deliver to Seller all of the following: (a) Initial Payment. The initial payment; (b) Promissory Notes. The executed Promissory Note in the form of Exhibit "C"; (c) Closing Certificate. A certificate of its president certifying that the representations and warranties contained herein continue to be correct and complete as of the Closing Date; (d) Lease Assignments. Lease Assignments executed by Buyer as contemplated by Section 2.07; (e) Assignment of Commissions. The executed Assignment of Commissions in the form of Exhibit "H"; and (f) Security Agreement. A Security Agreement in the form of Exhibit "I", and a UCC-1 Financing Statement executed by Buyer evidencing the security interest granted therein. (g) Assumption of Liabilities. An Assumption of Liabilities confirming Buyer's assumption of the Assigned Contracts. ARTICLE IX POST-CLOSING COVENANTS; INDEMNIFICATION 9.01 Indemnification by Buyer, Seller and Alpha Micro. (a) Indemnification by Seller. Seller and Alpha Micro hereby jointly and severally agree to indemnify and hold Buyer, its officers, directors, employees, agents, advisers, affiliates and associates harmless from all loss, damages, liability and expense (including reasonable attorneys' fees and expenses in connection with the contest of any claim and interest on any claim paid by Buyer pursuant to this subsection (a)), which -14- EXHIBIT 2.2 15 Buyer may incur or sustain by reason of the fact that (i) Seller or Alpha Micro should breach or fail to comply with any of the material terms, conditions, covenants or agreements or any exhibits attached hereto or any of them contained herein, (ii) any representations or warranties made by Seller or Alpha Micro in this Agreement should prove to be materially false or erroneous, (iii) any claims, actions, suits, investigations or proceedings, pending or threatened, are or have been made or commenced by, against, involving, arising out of, relating to or affecting any part of the Purchased Assets or Seller's operation of its business, with respect to any state of facts existing or any event occurring prior to the Closing Date, (iv) any claim, arbitration, action or suit by any employee of Seller terminated by Seller and not hired by Buyer, or (v) any action, arbitration, suit, proceeding, compromise, settlement, assessment or judgment arising out of or incidental to any of the matters indemnified against in this Section 9.01(a); provided, however, that Seller shall not be obligated to indemnify Buyer or any other person or entity entitled to indemnfication hereunder or hold it harmless with respect to any settlement of a claim to which Seller has not consented, which consent by Seller shall not unreasonably be withheld. (b) Indemnification by Buyer. Buyer hereby agrees to indemnify and hold Seller and Alpha Micro, their officers, directors, employees, agents, advisers, affiliates and associates harmless from all loss, liability and expense (including reasonable attorneys' fees and expenses in connection with the contest of any claim and interest on any claim paid by Seller pursuant to this subsection (b)), which Seller or Alpha Micro may incur or sustain by reason of the fact that (i) Buyer should breach or fail to comply with any of the material terms, conditions, covenants or agreements or any exhibits attached hereto, or any of them contained herein, (ii) any representations or warranties made by Buyer in this Agreement should prove to be materially false or erroneous, (iii) any claims, actions or suits, are commenced by, against, involving, arising out of Buyer's performance or nonperformance of the Assigned Contracts; (iv) any claims, actions, suits, investigations or proceedings are made involving or arising out of the operation by Buyer of the business of Seller acquired hereunder, or the sale, transfer or other disposition by Buyer of all or any part of the Purchased Assets, from and after the Closing Date, or (v) any action, suit, proceeding, compromise, settlement, assignment, judgment or arbitration arising out of or incidental to any of the matters indemnified against in this Section 9.01(b); provided, however, that Buyer shall not be obligated to indemnify a Seller or any other person or entity entitled to indemnfication hereunder or hold it harmless with respect to any settlement of a claim to which Buyer has not consented, which consent by Buyer shall not unreasonably be withheld. (c) Right to Defend. If the facts giving rise to any such indemnification shall involve any actual claim or demand by any third party against a party entitled to indemnification hereunder (referred to hereinafter as an "Indemnified Party"), the indemnifying Party shall be entitled to notice of and entitled (without prejudice to the right of any Indemnified Party to participate at its own expense through counsel of its own choosing) to defend or prosecute such claim at their expense and through counsel of their own choosing if they give written notice of their intention to do so no later than the time by which the interests of the Indemnified Party would be materially prejudiced as a result -15- EXHIBIT 2.2 16 of its failure to have received such notice; provided, however, that if the defendants in any action shall include both the indemnifying Party and Indemnified Party, and the Indemnified Party shall have reasonably concluded that counsel selected by the indemnifying Party have a conflict or additional defenses, the Indemnified Party shall have the right to select separate counsel to participate in the defense of such action on its own behalf, at the expense of the indemnifying Party. The Indemnified Party shall cooperate fully in the defense of such claim and shall make available to the indemnifying Party pertinent information under its control relating thereto. (d) Threshold; Offset Rights. Neither party shall claim, nor shall Buyer offset against amounts due under the Promissory Note, any amount for which it is entitled to indemnification pursuant to Section 9.01(a) or (b) unless the amount due with respect to any individual item equals or exceeds Seven Thousand Five Hundred Dollars ($7,500) and (ii) the party claiming that it is entitled to be indemnified has given the other(s) written notice of its claim and the underlying details and basis of such claim, and the item has not been cured to the reasonable satisfaction of the other party within sixty (60) days after receipt of such notice. 9 .02 Hardware Support. Nothing herein shall preclude Seller or Alpha Micro from providing hardware support or maintenance services to persons or entities included on the Customer Lists. Buyer hereby appoints Alpha Micro, effective upon the Closing and for five years thereafter, as its sole preferred hardware maintenance service provider for Buyer's customers. Buyer agrees (i) within sixty (60) days of the Closing Date to send written notices to its hardware customers recommending Alpha Micro to its customers for hardware maintenance and support; (ii) after the Closing Date to recommend Alpha Micro to its existing and new customers for hardware maintenance and support; and (iii) not to recommend any competitor of Alpha Micro to its customers to provide hardware maintenance or support. Should Alpha Micro cease to provide consistent, timely, professional and industry acceptable hardware maintenance and support at market competitive prices, Buyer shall give notice of such failure, with detailed backup, to Alpha Micro. Should Alpha Micro fail to remedy such failure within sixty (60) days, Buyer's obligations under this Section 9.02 shall cease. Additionally, Buyer agrees that Alpha Micro will be Buyer's first choice (and that Buyer will use Alpha Micro) to provide computer hardware and peripherals for Buyer's dental industry business, assuming consistent, timely, professional and industry acceptable service levels and market competitive pricing. 9.03 Accounts Receivable. Buyer agrees after the Closing to cooperate with and use commercially reasonable efforts such as it would assert on its own behalf to collect outstanding Accounts Receivable. Amounts received by any customer shall be applied first to outstanding Accounts Receivable arising prior to the Closing Date, and thereafter to accounts receivable arising after the Closing Date. To the extent payors remit amounts due as Accounts Receivable to Seller, Seller shall deliver all such amounts collected to Buyer within five (5) business days. Buyer agrees upon thirty (30) days' notice by Seller that if any customer included on the Customer Lists is delinquent in payments listed on the Accounts Receivable listing more than one hundred twenty (120) -16- EXHIBIT 2.2 17 days, that Buyer will cease providing services under any Software Support Contract to the extent permitted by law and such contract until such customer's debt is paid. 9.04 Maintenance Commissions. Alpha Micro agrees to pay to Buyer as commissions on maintenance contracts solicited for and obtained on behalf of Alpha Micro to provide hardware services, as follows: (a) with respect to customers on Seller's Customer List, at the rate of fourteen percent (14%) of amounts paid to Alpha Microsystems for hardware maintenance agreements, until the Promissory Note is fully paid and thereafter at Alpha Microsystems' standard commission rates; and (b) with respect to any other customers, at Alpha Microsystems' standard commission rates. Alpha Micro shall deliver to Seller by the twentieth (20th) day of each month a complete listing by customer of the commissions applied against the Promissory Note and the earnout. 9.05 Covenant Not To Compete. During the period commencing on the Closing Date and continuing until three (3) years after such Closing Date ("Non-Compete Period"), neither Seller nor Alpha Micro shall, (i) directly or indirectly, as an owner of any equity, legal, beneficial or other interest, or otherwise, or on its own behalf, develop or provide to any other person or entity, any practice management software specific to the dental industry or any support therefor; or (ii) solicit or offer employment to any person who was an employee of Seller at any time within the one (1) year prior to the Closing. Nothing herein shall be deemed to preclude Alpha Micro from providing hardware maintenance services or network support to any person or entity within the dental industry. Seller and Alpha Micro agree to execute a Covenant Not To Compete separate from this Agreement reflecting the terms hereof and deliver such Covenant Not To Compete to Buyer at the Closing. 9.06 Audit Rights. Seller shall be permitted not more than once in any six (6) month period, at its own expense, to perform an audit of Buyer's books, on not less than five (5) business days notice and during normal business hours. To the extent any such audit reveals that Buyer has underpaid Seller during the audit period by more than five percent (5%) of the amounts due Seller, Buyer shall reimburse Seller its reasonable costs of such audit. Buyer shall be permitted not more than once in any six (6) month period, at its own expense, to perform an audit of Alpha Micro's books, on not less than five (5) business days notice and during normal business hours. To the extent any such audit reveals that Alpha Micro has underpaid Buyer during the audit period by more than five percent (5%) of the amounts due Buyer, Alpha Micro shall reimburse Buyer its reasonable costs of such audit. -17- EXHIBIT 2.2 18 ARTICLE X GENERAL PROVISIONS 10.01 Notification of Changes. The party will promptly notify the other in writing of the, existence or happening of any material fact, event or occurrence which may tend to alter the accuracy or completeness of any representation or warranty contained in this Agreement. 10.02 Notices. Except as otherwise expressly provided herein, any notice herein required or permitted to be given shall be in writing and shall be personally served or sent by overnight courier, by registered mail or certified mail, postage prepaid, or by prepaid telex, telecopy (followed with telephonic confirmation that the telecopy was received at the intended site) or telegram and shall be deemed to have been given when such writing is received by the intended recipient thereof. For the purposes hereof, the addresses of the Party hereto (until notice of a change thereof served as provided in this Section 10.02) shall be as follows: If to Buyer: AlphaHealthCare 2722 South Fairview Street Santa Ana, California 92704 ATTN: Chief Financial Officer Fax No.: (714) 641-7678 With a copy Allen, Matkins, Leck, Gamble & Mallory LLP to: 515 South Figueroa Street, 8th Floor Los Angeles, California 90071 ATTN: Debra Dison Hall, Esq. Fax No: (213) 620-8816 If to Seller: GLR Systems, Inc. 201 North 8th Street, Suite 215 Lincoln, Nebraska 68508 Attn: Glenn A. Friendt Fax. No.: (402) 441-3066 With a copy Brashear & Ginn to: 800 Farnam Plaza 1623 Farnam Street Omaha, Nebraska 68102 ATTN: Kermit A. Brashear, Esq. Fax No: (402) 348-1111 10.03 Entire Agreement. This Agreement, together with its Exhibits, constitutes the entire understanding between the Party with respect to the subject matter hereof, superseding all negotiations, prior discussions and preliminary agreements. This Agreement may not be changed except in writing executed by Buyer and Seller. -18- EXHIBIT 2.2 19 10.04 Arbitration. Any matter arising under this Agreement shall be submitted to JAMS ("JAMS/Endispute") for binding arbitration by providing the complaining party providing written notice to JAMS and the other party. The Party may agree on a retired judge from the JAMS panel for the binding arbitration. If they are unable to agree, JAMS will provide a list of three available judges and each party may strike one. The remaining judge will serve as arbitrator. In connection with any arbitration, the discovery provisions set forth in Section 1283.05 of the California Code of Civil Procedure shall expressly be incorporated herein and applicable to such proceeding. 10.05 Attorneys' Fees. In the event of the bringing of any proceeding, including the provisions of Section 10.04, by a party hereto against another party or Party hereunder by reason of a beach of any of the covenants, conditions, agreements or provisions by the other party or Party arising out of this Agreement, the party in whose favor the final judgment decision shall be entered shall be entitled to have and record from the other party or Party all costs and expenses of suit, including reasonable attorneys' fees. 10.06 Waiver. No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or be construed as a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement. 10.07 Assignment. This Agreement shall not be assignable by any party without the consent of the other party, and such consent shall not be unreasonably withheld. 10.08 Severability. If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall to any extent be found to be invalid, void or unenforceable, such provision shall be limited as necessary to render it valid and enforceable and the remaining provisions and any application thereof shall continue in full force and effect without being impaired or invalidated in any way. 10.09 Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall be binding upon and shall inure to the benefit of the Party hereto, their personal representatives, heirs, executors, administrators, successors and/or assigns. 10.10 Further Actions. Each of the parties hereto agrees to take any and all actions reasonably necessary in order to carry out the provisions of this Agreement. 10.11 Construction. This Agreement shall be construed in accordance with its plain meaning and not against either party as the drafting party. The captions of the Sections of this Agreement are for convenience only and shall not be considered or referred to in resolving questions or interpretation. 10.12 Counterparts. This Agreement may be executed in one or more counterparts and counterparts signed in the aggregate by Buyer and Seller shall constitute a single original instrument. -19- EXHIBIT 2.2 20 10.13 Choice of Law. This Agreement shall be governed by, and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. "SELLER" "BUYER" ALPHAHEALTHCARE, a California GLR Systems, Inc. dba UNIDENT Practice corporation Performance Systems, a Nebraska corporation By:______________________________ By:______________________________ Its:__________________________ Its:_____________________________ -20- EXHIBIT 2.2 21 EXHIBITS Exhibit "A": Excluded Assets Exhibit "B": Purchased Assets and Assigned Contracts Exhibit "C": Promissory Note Exhibit "D": Deleted Exhibit "E": Allocation of Purchase Price Exhibit "F": Prepaid Revenue Exhibit "G": Legal Proceedings Exhibit "H": Accounts Receivable Exhibit "I": Assignment of Commissions Exhibit "J": Security Agreement EXHIBIT 2.2 EX-20.1 4 PRESS RELEASE DATED JANUARY 15, 1997 1 FOR RELEASE: JANUARY 15, 1997 AT 7:30 AM EST Contact: Erik Randerson (investors) Owen Daley (media) Allen & Caron/South Coast Communications (714) 252-8440 ALPHA MICROSYSTEMS SELLS PANDA SCHOOL FOODSERVICE SOFTWARE OPERATION TO PACIFIC TRIANGLE SOFTWARE SANTA ANA, CA (January 15, 1997) . . . . . Alpha Microsystems (Nasdaq NM:ALMI) announced today that it has sold its PANDA operation, which develops and markets foodservice software for elementary and secondary schools, to privately-held Pacific Triangle Software, Inc. of San Mateo, CA. Pacific Triangle Software is a developer and marketer of software and systems for the school foodservice market. The sales price for PANDA is approximately $1.0 million including contingent payments of $600,000. The sale is not expected to have a material impact on the Company's fiscal fourth quarter ending February 23, 1997. Further terms were not disclosed. In making the announcement, Alpha Microsystems President and CEO Douglas J. Tullio said, "The sale of the PANDA operation is another important step in our strategy to focus our efforts and resources on the AlphaCONNECT(TM) family of Internet/intranet products, which includes AlphaCONNECT Pro(TM) and AlphaCONNECT StockVue(TM), and on our North American services operation. We anticipate that the sale of PANDA will also help improve the future bottom-line performance of Alpha Microsystems." Alpha Microsystems Service Operation (AMSO) will continue to provide maintenance support services to the current base of PANDA customers and AMSO has been appointed the sole preferred nationwide provider of maintenance services by Pacific Triangle for its entire installed base throughout the US. Tullio added, "Pacific Triangle, through its Bon Appetit Software division, has developed an excellent following as a provider of quality solutions to the school foodservice market, and PANDA fits well into their strategic product thrust. We are pleased that AMSO will continue to provide maintenance services to the PANDA installed base and believe our appointment as the sole preferred service provider by Pacific Triangle could result in additional service opportunities for AMSO." Pacific Triangle President and CEO David L. Swank said, "The acquisition of the PANDA operation gives us a Windows-based software solution for those school districts that have selected Windows as their preferred operating environment. The installed base of PANDA customers on the West Coast also complements our existing base of Bon Appetit Software customers." Pacific Triangle Software, Inc. is a leader in providing industry specific software applications to school districts and other institutions. Its Bon Appetit Software division was a pioneer in the EXHIBIT 20.1 2 school foodservice applications market as a Business Partner of IBM serving both AS/400 and PC users. Alpha Microsystems serves the Internet and intranet markets through its software, services and technologies. The Company also provides products and services such as consulting, maintenance, software, hardware and networking, both directly and through value-added resellers and distributors. Alpha Microsystems has been in business for over 18 years and today has over 40 locations, as well as third party distribution channels worldwide. For more information, contact the Company's Web site at http://www.alphamicro.com Certain statements in this Press Release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. -2- EXHIBIT 20.1 EX-20.2 5 PRESS RELEASE DATED FEBRUARY 4, 1997 1 FOR RELEASE FEBRUARY 4, 1997 AT 7:30 A.M. EST Contact: Erik Randerson (investors) Owen Daley (media) Allen & Caron/South Coast Communications (714) 252-8440 ALPHA MICROSYSTEMS SELLS ALPHAHEALTHCARE OPERATION TO UNIDENT PRACTICE PERFORMANCE SYSTEMS SANTA ANA, CA (February 4, 1997). . . .Alpha Microsystems (Nasdaq NM: ALMI) announced today that it has sold its Oregon-based AlphaHeathCare operation, a provider of practice management solutions for the dental market, to privately-held UNIDENT Practice Performance Systems. UNIDENT, based in Lincoln, NE, is a developer and marketer of technology solutions for the dental market. The sales price for AlphaHealthCare is $450,000 plus contingent payments to be made over a five-year period. The sale is not expected to have a material impact on the Company's fiscal fourth quarter ending February 23, 1997. Further terms were not disclosed. In making the announcement, Alpha Microsystems President and CEO Douglas J. Tullio said, "The sale of AlphaHealthCare marks a concluding step in our divestiture efforts and allows us to more clearly focus our resources on the AlphaCONNECTO family of Internet/intranet products, and the North American services operation. We anticipate that the sale of AlphaHealthCare will also help improve the bottom-line performance of Alpha Microsystems." Alpha Microsystems Services Operations (AMSO) will continue to provide maintenance support services to the current base of AlphaHealthCare customers and AMSO has been appointed the sole preferred nationwide provider of maintenance services by UNIDENT for its entire installed base. AMSO has also been designated as UNIDENT's vendor of first choice for computer hardware and peripherals. Tullio added, "UNIDENT is a long-established, leading solutions and hardware supplier for the dental market and AlphaHealthCare fits well into their business model. We are pleased that AMSO will continue to provide maintenance services to AlphaHealthCare's installed base. In addition, we believe our appointment to sole preferred service provider, as well as vendor of first choice for UNIDENT, could result in additional service opportunities for AMSO." UNIDENT President Glenn Friendt commented, "We are excited about the opportunity to work with AlphaHealthCare clients throughout the country. By incorporating the capabilities of AlphaHealthCare into UNIDENT's current business, we can deliver an expanded set of technologies and the highest level of customer service to dentists from coast to coast." UNIDENT Practice Performance Systems is a developer and reseller of computer software, hardware and services to the dental profession. Since 1983, UNIDENT has helped dental EXHIBIT 20.2 2 practices around the country to implement, maintain and enhance electronic business and clinical information systems. For more information, contact UNIDENT at 800-344-6930. Alpha Microsystems serves the Internet and intranet markets through its software, services and technologies. The Company also provides products and services such as consulting, maintenance, software, hardware and networking, both directly and through value-added resellers and distributors. Alpha Microsystems has been in business for over 18 years and today has over 40 locations, as well as third party distribution channels worldwide. For more information, contact the Company's Web site at http://www.alphamicro.com Certain statements in this Press Release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. -2- EXHIBIT 20.2 EX-27 6 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS FEB-23-1997 FEB-25-1996 NOV-24-1996 8,893 0 3,329 (146) 345 13,851 15,972 (12,785) 17,724 3,385 0 0 0 30,813 (16,598) 17,724 4,889 14,830 2,802 10,586 5,345 0 21 (724) (32) (756) 0 0 0 (756) (.08) (.08)
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