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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
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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.
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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
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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
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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
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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:
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(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
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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.
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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
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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.
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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.
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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;
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(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
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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:
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(a) Xxxx of Sale. Originally executed xxxx 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.
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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
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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.
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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.
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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
xxxx Panda without the slogan "Right from the Start". Buyer acknowledges that
Seller has advised Buyer that Seller has independently registered and used the
xxxx "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
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
ATTN: Chief Financial Officer
Fax No.: (000) 000-0000
With a copy Allen, Matkins, Xxxx, Xxxxxx & Xxxxxxx LLP
to: 000 Xxxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
ATTN: Xxxxx Xxxxx Xxxx, Esq.
Fax No: (000) 000-0000
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If to Buyer: Pacific Triangle Software, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
ATTN: Xxxxx X. Xxxxx
Fax No.: (000) 000-0000
With a copy Xxxx Xxxx Xxxx & Freidenrich
to: 000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
ATTN: Xxxx X. Xxxxxxxxx, Esq.
Fax No.: (000) 000-0000
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.
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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/ Xxxxx X. Xxxxx
-------------------------- --------------------------
Its: Chief Financial officer Its: President
-------------------------- --------------------------
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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
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