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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.
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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
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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 XXXX
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
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(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.
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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.
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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
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"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
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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,
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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 Xxxxxx X. Xxxxx, 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
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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.
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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
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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;
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(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) Xxxx of Sale. Originally executed Xxxx 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.
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(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
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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
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EXHIBIT 2.2
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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)
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EXHIBIT 2.2
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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.
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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
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
If to Seller: GLR Systems, Inc.
000 Xxxxx 0xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Fax. No.: (000) 000-0000
With a copy Xxxxxxxx & Xxxx
to: 000 Xxxxxx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
ATTN: Xxxxxx X. Xxxxxxxx, Esq.
Fax No: (000) 000-0000
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.
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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.
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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:_____________________________
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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
