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                                                                    EXHIBIT 10.1


                            ASSET PURCHASE AGREEMENT

         THIS PURCHASE AGREEMENT ("Agreement") is entered into as of December
31, 1999, by and among ALPHA MICROSYSTEMS, a California corporation doing
business as AlphaServ.com (the "Seller") and R.E. MAHMARIAN ENTERPRISES, LLC, a
California limited liability company (the "Buyer").


                                R E C I T A L S :

         WHEREAS, among the business operations of Seller are the following: (i)
multi-vendor computer hardware and software maintenance and repair services
throughout the United States and Canada via a network of field offices linked to
a national dispatch and advisory center through its "Alpha Micro Services
Division" ("AMSO"); and (ii) the manufacture and sale of computer hardware,
including hardware based upon its proprietary Alpha Micro Operating System
("AMOS") through a network of value added resellers (the "VAR Business") (AMSO,
AMOS and the VAR Business being collectively referred to herein as the
"Business").

         WHEREAS, Seller desires to sell and Buyer desires to purchase certain
of the assets associated with the Business, and Seller desires to assign and
delegate to Buyer and Buyer will be willing to assume certain of the liabilities
and obligations associated with the Business, all upon the terms and conditions
set forth herein. The sale of such assets, and the assignment and assumption of
such liabilities and obligations, are hereinafter together referred to as the
"Acquisition."

         NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:

                                   ARTICLE I
                PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES

SECTION 1.01. PURCHASE AND SALE OF ASSETS.

         (a) Agreement to Purchase and Sell. On and subject to the terms and
conditions of this Agreement, Buyer agrees to purchase from Seller and Seller
agrees to sell, transfer, convey and deliver to Buyer, all of the Acquired
Assets at the Closing for the consideration specified herein.

         (b) Acquired Assets and Retained Assets. Other than the "Retained
Assets" set forth under separate headings with respect to Seller on Schedule
1.01-A, the term "Acquired Assets" shall mean all right, title and interest in
and to all of the tangible and


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intangible assets of the Business owned as of the Closing Date by Seller which
are set forth on the following Schedules which have been prepared under separate
headings to list or describe the Acquired Assets as of the date hereof, and
which Schedules, together with every other Schedule referred to in this
Agreement, shall be updated as of the Closing Date:

                  (i) Personal Property. The tangible and intangible personal
         property owned by Seller, arising out of or in connection with the
         ownership, marketing, sale and/or operation of the Business
         (collectively, "Personal Property"), a list of all such items of
         tangible Personal Property being transferred pursuant to this Agreement
         is set forth on Schedule 1.01-B and a list of all such items of
         intangible Personal Property being transferred pursuant to this
         Agreement is set forth on Schedule 1.01-C.

                  (ii) Permits and Licenses. To the extent assignable or
         transferable by Seller, the authorizations, approvals, variances,
         permits, licenses in connection with the management or operation of the
         Business, issued by or in favor of any federal, state, local, municipal
         or other governmental, quasi-governmental, or private authorities,
         districts or jurisdictions (including the applications and/or documents
         filed, and/or fees paid, in connection therewith) (collectively,
         "Permits and Licenses"), a list and description of which Permits and
         Licenses is set forth on Schedule 1.01-D.

                  (iii) Leases. Seller's interests with respect to the Business
         as lessor, master lessor, lessee or sublessee in, to and under leases,
         subleases, occupancy agreements, concessions and licenses to which
         Seller is a party, together with any and all guaranties of Seller's
         interest as a tenant or subtenant under any such leases and all rents,
         rentals and security deposits (collectively, the "Leases"), a list of
         which Leases being transferred pursuant to this Agreement is set forth
         on Schedule 1.01-E.

                  (iv) Contracts. The (A) personal property leases and equipment
         leases, (B) maintenance contracts, (C) labor union contracts,
         employment agreements and management agreements, and (D) other
         contracts and agreements to which Seller is a party or by which the
         Acquired Assets are bound (collectively, "Contracts"), a list of which
         Contracts being transferred pursuant to this Agreement is set forth on
         Schedule 1.01-F.

                  (v) Accounts Receivable and Other Assets. The outstanding
         receivables, security and utility deposits, prepaid expenses and other
         assets of the Business as of the Closing Date that are set forth on
         Schedule 1.01-G.

         SECTION 1.02. ASSUMPTION OF LIABILITIES. Upon the terms and subject to
the conditions contained herein, effective on the Closing Date, Buyer will
assume all of the obligations and liabilities of Seller which are related to the
Business and the Acquired Assets, including those obligations and liabilities
set forth on Schedule 1.02. The obligations and liabilities set forth on
Schedule 1.02 together with the obligations and liabilities otherwise assumed by
Buyer pursuant


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to this Agreement are collectively referred to as the "Assumed Liabilities".
Buyer shall not assume any obligations or liabilities of the Seller other than
those specifically described in this Section 1.02 and otherwise assumed by Buyer
pursuant to this Agreement.

         SECTION 1.03. PURCHASE PRICE. As and in consideration of the sale,
transfer, assignment, conveyance and delivery of the Acquired Assets and the
promises and agreements made by Seller on the Closing Date, Buyer shall deliver
to or for the benefit or for the account of the Seller the following:

                  (a) Accounts Receivable. The accounts receivable in the amount
         set forth on Schedule 1.01A which have been retained by Seller.

                  (b) Assumption of Liabilities. Assumption documents with
         respect to the Assumed Liabilities.

                  (c) Contingent Payment.

                           (i) In the event that Buyer, at any time following
                  the Closing Date, engages in any transaction or series of
                  transactions involving (A) the sale of all or substantially
                  all of the Business or Acquired Assets, (B) a public offering
                  of any of the securities of Buyer or any affiliate of Buyer,
                  (C) the merger, acquisition, joint venture, business
                  partnering of Buyer or any affiliate with any other person or
                  entity as a result of which Buyer or the Managing Member of
                  Buyer is not in control of the entity that survives any such
                  merger or acquisition or is not in control of the entity that
                  controls such joint venture of the partnering relationship, or
                  (D) any sale/lease-back transactions involving all or
                  substantially all of the Business or the Acquired Assets, or
                  (E) any financings of all or substantially all of the Business
                  or the Acquired Assets that are non-recourse to Buyer (each a
                  "Triggering Event"), then Buyer shall pay to Seller an amount
                  (the "Contingent Payment") equal to the greater of Five
                  Hundred Thousand Dollars ($500,000) or ten percent (10%) of
                  the gross cash proceeds and ten percent (10%) "in kind" of any
                  noncash proceeds received by Buyer in connection with any such
                  Triggering Event. The Contingent Payment shall only be payable
                  with respect to the first of any such Triggering Event to
                  occur.

                           (ii) Buyer shall provide Seller with prompt written
                  notice of its intention to engage in any activity reasonably
                  calculated to result in a Triggering Event and shall, during
                  the pendency of closing any such Triggering Event, deliver to
                  Seller such information, financial or otherwise, as Seller may
                  reasonably request in order to assess the Triggering Event and
                  to calculate the amount of the Contingent Payment to be paid
                  to Seller upon the closing of such Triggering Event.

         SECTION 1.04. ALLOCATION OF PURCHASE PRICE. The Buyer and Seller agree
to report this transaction for tax purposes in accordance with the allocation of
the Purchase Price set forth on Schedule 1.04 which shall be attached to this
Agreement or the Closing Date, and to execute IRS Form 8594 reflecting the same,
which form shall be appropriately filed with the Internal


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Revenue Service as soon as practicable thereafter and in any event by the date
the same is due. If the Buyer and Seller are, however, unable to agree on such
allocations, each party shall be free to make such allocations as it reasonably
determines to be appropriate.

                                   ARTICLE II
                                   THE CLOSING

         SECTION 2.01. THE CLOSING. The closing of the transactions contemplated
by this Agreement ("Closing") shall occur on or before January 31, 2000 (or such
earlier date as the third party consents are obtained), unless a later date is
agreed to by Buyer and Seller ("Closing Date"). At least two (2) Business Days
prior to the Closing Date, Seller shall deliver all of the updated Schedules to
Buyer. The Closing shall take place at the offices of Allen Matkins Leck Gamble
& Mallory LLC, 18400 Von Karman, Third Floor, Irvine, California 92612,
commencing at 5:00 p.m. California time on the Closing Date.

         SECTION 2.02. ACTIONS TO BE TAKEN AT CLOSING. The following actions
shall be taken by the respective parties at the Closing:

                  (a) Actions to be Taken by Seller. Seller shall take the
         following actions and deliver the following to Buyer:

                           (i) Bills of Sale. Duly executed bills of sale with
                  respect to all of the Personal Property.

                           (ii) Assignment of Leases. Duly executed assignments
                  of all Leases in form and substance reasonably satisfactory to
                  Buyer, together with the originals of all Leases; provided,
                  however, that with respect to any Lease that is not assigned
                  to Buyer on the Closing Date, Seller shall maintain, until the
                  expiration of the term of such Lease, the contractual
                  relationship established therein, to the extent reasonably
                  practicable.

                           (iii) Assignments of Contracts. Duly executed
                  assignments of the Contracts in form and substance reasonably
                  satisfactory to Buyer; provided, however, that with respect to
                  any Contract that is not assigned to Buyer on the Closing Date
                  and which Contract is not a contract for service or
                  maintenance, Seller shall maintain until the expiration of the
                  term of such Contract, the contractual relationship
                  established therein, to the extent reasonably practicable and,
                  with respect to any Contract that is a contract for service or
                  maintenance, Seller shall maintain to the extent reasonably
                  practicable, the contractual relationship established therein
                  for a one (1) year period following the Closing Date unless
                  such Contract expires earlier in accordance with its terms or
                  is otherwise terminated other than by Seller.

                           (iv) Consents. All of the governmental or third-party
                  notices, consents, waivers and approvals set forth on Schedule
                  2.02, which are required for the valid transfer of the
                  Acquired Assets.


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                           (v) Books and Records. All of Seller's books, records
                  and files relating to the Acquired Assets and the Business;
                  provided, however, that such books and records shall be
                  jointly held by Buyer and Seller until such time as Seller
                  shall have filed its Annual Report on Form 10-K with the
                  Securities Exchange Commission and thereafter Seller shall
                  have continuing access to such books and records with respect
                  to its financial reporting/accounting and tax requirements.

                           (vi) License Agreement. A license agreement
                  substantially in the form attached hereto as Exhibit A
                  ("License Agreement") providing Buyer with the right to use
                  the AlphaCONNECT technology as currently being utilized by the
                  Business, solely for Buyer's internal use in the continuing
                  operation of the Business (but not to provide for resale or
                  distribution) for a term of up to five (5) years at a license
                  fee of $2,000 per month.

                           (vii) Licenses and Permits. Originals or copies of
                  all Licenses and Permits related to the Business.

                           (viii) Sublease. An agreement, substantially in the
                  form of Exhibit B attached hereto, to sublease the space
                  presently occupied by the Business as 2722 South Fairview
                  Street, Santa Ana, CA 92704 for a term expiring on December
                  31, 2000 which shall provide for free rent during the three
                  (3) month period following the Closing Date, and thereafter
                  shall provide for Buyer to pay an amount of rent determined on
                  the basis of the pro rata amount of space utilized by Buyer,
                  which space shall constitute at least 60% of available square
                  footage.

                           (ix) Updated Schedules. Revised copies of each of the
                  Schedules prepared by Seller and delivered on the date of this
                  Agreement, which Schedules shall be updated to the Closing
                  Date.

                           (x) Tradename and Other Licenses. Subject only to the
                  Seller's right to use and the currently existing rights of
                  others, Buyer shall receive an exclusive, fully paid,
                  perpetual, world wide license to use the name Alpha
                  Microsystems (and all associated logos, marks and trade dress
                  related to the Business) in all forms of business.

                  (b) Actions to be Taken by Buyer. Buyer shall take the
         following actions:

                           (i) Assumption Agreement. Deliver to Seller duly
                  executed Assumption Agreements with respect to the Assumed
                  Liabilities substantially in the form attached hereto as
                  Exhibit C.

                           (ii) Updated Schedules. Revised copies of each of the
                  Schedules prepared by Buyer and delivered on the date of this
                  Agreement, which Schedules shall be updated to the Closing
                  Date.

                  (c) Actions to be Taken by Buyer and Seller with Respect to
         Employees. Those persons who are employed by Seller as of the Closing
         Date as employees of the


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         Business (which persons shall be set forth on Schedule 2.02(c) as
         prepared by Buyer and delivered to Seller prior to the Closing Date)
         shall be terminated as employees of record of Seller and shall be
         simultaneously hired as employees of record of Buyer under comparable
         compensation, terms and conditions of employment, including credit for
         time of service with Seller for purposes of future severance, vacation
         and sick pay accrual. Seller shall be responsible for all applicable
         accrued wage and bonus obligations to employees up to the Closing Date
         when such employees are terminated by Seller and simultaneously
         employed by Buyer. Buyer shall be responsible for all wages, vacation,
         bonuses, sick pay and severance obligations to employees of Buyer
         accruing with respect to periods following their employment by Buyer on
         the Closing Date and shall be responsible for all of Seller's accrued
         vacation, sick pay and severance obligations with respect to such
         employees for all periods up to the Closing Date.

                  (d) Actions to Be Taken by Both Buyer and Seller. Buyer and
         Seller each shall do or cause to be done such other matters and things,
         including the execution and delivery of additional documents of
         assignment and assumption, as shall be necessary or reasonably
         expeditious to close the transactions contemplated herein in the manner
         contemplated herein. To the extent that a form of any document to be
         delivered hereunder is not attached as a schedule hereto, the
         instrument shall be in form and substance, and shall be executed and
         delivered in a manner, reasonably satisfactory to the Buyer and Seller.

         SECTION 2.03. CONDITIONS TO OBLIGATION OF BUYER. The obligation of
Buyer to consummate the Closing shall be subject to satisfaction of the
following conditions (any one or more of which may be waived by Buyer, but only
in a writing signed by Buyer):

                  (a) Accuracy of Representations and Warranties. The
         representations and warranties set forth in Article III shall be true
         and correct in all material respects at and as of the Closing Date with
         the same force and effect as if they had been made on the Closing Date.

                  (b) Compliance with Covenants. Seller shall have performed and
         complied with all of its covenants hereunder in all material respects
         through the period ending on the Closing Date.

                  (c) Legal Restraint. No action, suit, or proceeding shall be
         pending or threatened before any court or quasi-judicial or
         administrative agency of any federal, state, commonwealth, local, or
         foreign jurisdiction wherein an unfavorable judgment, order, decree,
         stipulation, injunction, or charge would (i) prevent consummation of
         any of the transactions contemplated by this Agreement, (ii) cause any
         of the transactions contemplated by this Agreement to be rescinded
         following consummation, or (iii) affect adversely the right of Buyer to
         own any material portion of the Acquired Assets (and no such judgment,
         order, decree, stipulation, injunction, or charge shall be in effect).

                  (d) Compliance Certificate. Seller shall have delivered to
         Buyer a certificate executed by Seller's Chief Executive Officer and
         Chief Financial Officer to the effect that


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         the conditions specified above in subsections (a)-(c) are satisfied in
         all respects to their knowledge after reasonable inquiry.

                  (e) Consents. Seller shall have procured all of the
         third-party consents set forth on Schedule 2.02, provided, however,
         that with respect to any Contract that is not consented to on the
         Closing Date and which contract is not a contract for service or
         maintenance, Seller shall maintain until the expiration of the term of
         such Contract, the contractual relationship established therein, to the
         extent reasonably practicable and, with respect to any Contract that is
         a contract for service or maintenance, Seller shall maintain to the
         extent reasonably practicable, the contractual relationship established
         therein for a one (1) year period following the Closing Date unless
         such Contract expires earlier in accordance with its terms or is
         otherwise terminated other than by Seller.

                  (f) Illegality. No statute, rule, regulation, executive order
         or decree shall have been enacted, promulgated or enforced (and not
         repealed, superseded or otherwise made inapplicable) by any
         governmental authority or private person or entity which prohibits the
         consummation of the transactions contemplated by this Agreement or
         which would prohibit or impair the acquisition of the Acquired Assets.

                  (g) Sale and Transfer of Assets. Seller shall have delivered
         to Buyer good and sufficient bills of sale, which shall be in form and
         substance satisfactory to Buyer, selling, delivering and transferring
         to Buyer all of Seller's right, title and interest to the Acquired
         Assets.

                  (h) Assignments of Agreements. Seller shall have delivered to
         Buyer good and sufficient assignments of the Leases and Contracts;
         provided, however, that with respect to any Contact that is not
         assigned to Buyer on the Closing Date and which Contract is not a
         contract for service or maintenance, Seller shall maintain until the
         expiration of the term of such Contract, the contractual relationship
         established therein, to the extent reasonably practicable and, with
         respect to any Contract that is a contract for service or maintenance,
         Seller shall maintain to the extent reasonably practicable, the
         contractual relationship for a one (1) year period following the
         Closing Date unless such Contract expires earlier in accordance with
         its terms or is otherwise terminated other than by Seller.

                  (i) Other Assignment and Transfer Documentation. Seller shall
         have delivered to Buyer such other separate instruments of sale,
         assignment or transfer that Seller and Buyer may reasonably deem
         necessary or appropriate in order to perfect, confirm or evidence in
         Buyer title to all or any part of the Acquired Assets.

                  (j) Certified Board Resolutions. Seller shall have delivered
         to Buyer copies of the resolutions adopted by Seller's board of
         directors approving the execution of this Agreement and the
         consummation of the transactions contemplated hereby, which resolutions
         shall be certified by the Secretary of Seller.


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                  (k) Actions Taken at Closing. Seller shall have taken all of
         the actions contemplated by Section 2.02(a) at the Closing and all
         actions required of Seller at the Closing under Section 2.02(c).

         SECTION 2.04. CONDITIONS TO OBLIGATION OF SELLER. The obligation of
Seller to consummate the Closing shall be subject to satisfaction of the
following conditions (any one or more of which may be waived by Seller, but only
in a writing signed by Seller):

                  (a) Accuracy of Representations and Warranties. The
         representations and warranties set forth in Article IV shall be true
         and correct in all material respects at and as of the Closing Date with
         the same force and effect as if they had been made on the Closing Date.

                  (b) Compliance with Covenants. Buyer shall have performed and
         complied with all of its covenants hereunder in all material respects
         through the period ending on the Closing Date.

                  (c) Legal Restraint. No action, suit, or proceeding shall be
         pending or overtly threatened before any court or quasi-judicial or
         administrative agency of any federal, state, commonwealth, local, or
         foreign jurisdiction wherein an unfavorable judgment, order, decree,
         stipulation, injunction, or charge would (i) prevent consummation of
         any of the transactions contemplated by this Agreement or (ii) cause
         any of the transactions contemplated by this Agreement to be rescinded
         following consummation (and no such judgment, order, decree,
         stipulation, injunction, or charge shall be in effect).

                  (d) Compliance Certificate. Buyer shall have delivered to
         Seller a certificate executed by Buyer's Managing Member to the effect
         that the conditions specified above in subsections (a)-(c) are
         satisfied in all respects.

                  (e) Illegality. No statute, rule, regulation, executive order
         or decree shall have been enacted, promulgated or enforced (and not
         repealed, superseded or otherwise made inapplicable) by any
         governmental authority which prohibits the consummation of the
         transactions contemplated by this Agreement.

                  (f) Assumption of Liability. Buyer shall have delivered to
         Seller such instruments of assumption that Seller may reasonably deem
         necessary or appropriate in order to perfect, confirm or evidence the
         assumption by Buyer of the Assumed Liabilities.

                  (g) Certified Consents and Actions. Buyer shall have delivered
         to Seller copies of the Buyer's Managing Member consents and any other
         actions approving the execution of this Agreement and the consummation
         of the transactions contemplated hereby.

                  (h) Actions Taken at Closing. Buyer shall have taken all of
         the actions contemplated by Section 2.02(b) at the Closing and all
         actions required of Buyer under Section 2.02(c).


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                  (i) Fairness Opinion. Seller shall have received a fairness
         opinion (the "Fairness Opinion") from an investment banking firm chosen
         by Seller, which Fairness Opinion shall state that the terms of the
         transactions contemplated by this Agreement are fair, from a financial
         point of view, and which Fairness Opinion shall be in form and
         substance reasonably satisfactory to Seller.

                  (j) Lender and Preferred Shareholder Consent. Seller shall
         have received the written consent of each of Imperial Bank and
         Hampshire Equity Partners with respect to the sale of the Business and
         the Acquired Assets, in form and substance reasonably satisfactory to
         Seller.

                                  ARTICLE III
                    REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller represents and warrants to Buyer that the statements contained
in this Article III are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this Article III), except as set forth in the disclosure schedule
accompanying this Agreement which shall be prepared by Seller and delivered to
Buyer prior to the Closing Date hereof ("Disclosure Schedule III"). Disclosure
Schedule III will be arranged in paragraphs corresponding to the Section numbers
contained in this Article III.

         SECTION 3.01. DUE ORGANIZATION, AUTHORIZATION, ETC. Seller is a
corporation, duly organized and validly existing and in good standing under the
laws of the State of California. Seller is qualified to do business and is in
good standing under the laws of each state where such qualification is necessary
in connection with the Business. Seller has the right, power and authority to
make and perform its obligations under this Agreement, and the execution,
delivery and performance of this Agreement does not violate the articles of
incorporation or bylaws of Seller or any material contract, agreement or
commitment to which Seller is a party or by which the Business or the Acquired
Assets are bound. The execution and delivery of this Agreement and the
performance by Seller of its obligations hereunder have been duly authorized by
all necessary action on the part of Seller. This Agreement constitutes the valid
and binding obligation of Seller, enforceable against Seller in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization and other similar laws of general applicability relating to
creditors' rights and to general equity principles. No consent, approval, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency, commission, regulatory authority or other governmental
authority or instrumentality, whether domestic or foreign (each a "Governmental
Entity"), is required by or with respect to Seller in connection with the
execution, delivery and performance of this Agreement which has not been
obtained prior to execution of this Agreement.

         SECTION 3.02. NO CONFLICT OR DEFAULT. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will violate any statute, regulation or ordinance of any
governmental authority, or conflict with or result in the breach of any
provision of the articles of incorporation or bylaws of Seller, of any material
agreement, contract, writ, order, decree or instrument to which Seller is a
party or by which Seller, the Business or the Acquired Assets are bound, or
constitute a default (or an event which,


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with the lapse of time or the giving of notice, or both, would constitute a
default) thereunder, or result in the creation or imposition of any lien, charge
or encumbrance, or restriction of any nature whatsoever with respect to the
Business or the Acquired Assets or give to others any rights of termination,
acceleration or cancellation in or with respect to the Business or the Acquired
Assets.

         SECTION 3.03. COMPLIANCE WITH LAW. As of the date of this Agreement,
there has been no order issued, investigation or proceeding pending, or to the
knowledge of Seller, threatened, or notice served with respect to any violation
of any law, ordinance, order, writ, decree, injunction, judgment, rule,
regulation, decision or requirement applicable to the Business or the Acquired
Assets.

         SECTION 3.04. TAXES. The Business and the Acquired Assets have no Tax
(as defined below), deficiency or claim outstanding or assessed against any of
them, or, to the knowledge of Seller, proposed to be assessed against them, and,
to the knowledge of Seller, there is no basis for any such deficiency or claim,
which is reasonably likely to result in the imposition of any lien, claim or
encumbrance on the Acquired Assets or Business or against Buyer. For purposes of
this Agreement, "Tax" shall mean any federal, state, local, commonwealth, or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax, exaction fee, assessment or charge of any kind whatsoever, or any
payment in lieu thereof, including any interest, penalty, or addition thereto,
whether disputed or not.

         SECTION 3.05. LITIGATION. There is no material litigation, arbitration,
action, suit or proceeding, administrative or judicial, pending or, to the
knowledge of Seller, threatened against the Business or the Acquired Assets, at
law or in equity except as may be set forth on Schedule 3.05 which shall also
set forth a true, correct and complete list of material contingent liabilities
affecting the Business and the Acquired Assets, including, without limitation, a
description of any such material contingent liability made against or known to
Seller with respect to the Business or the Acquired Assets.

         SECTION 3.06. TANGIBLE ASSETS. Seller owns good and marketable title to
all tangible assets included within the Acquired Assets.

         SECTION 3.07. ABSENCE OF DEFAULTS. Seller is not in material default of
any material obligations or liabilities pertaining to the Acquired Assets or the
Business, nor is there any state of facts or circumstances or condition or event
known to Seller which, after notice or lapse of time or both, would constitute
or result in any such material default.

         SECTION 3.08. TITLE TO AND CONDITION OF ACQUIRED ASSETS.

                  (a) The Acquired Assets include all assets of Seller that are
         material to the ownership and operation of the Business, except for the
         Retained Assets.

                  (b) Seller has good and marketable title to, or, in the case
         of leased properties and assets, valid leasehold interests in, all of
         the Acquired Assets free and clear of any


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         Liens, except for such imperfections of title and encumbrances, if any,
         which are not substantial in character, amount or extent, and which do
         not materially detract from the value, or materially interfere with the
         present use or contemplated development, marketing and use of the
         property subject thereto or affected thereby. For purposes of this
         Agreement, the term "Lien" means, with respect to any asset, any
         mortgage, lien, pledge, charge, security interest or encumbrance of any
         kind in respect of such asset. Seller has possession (either directly
         or through employees, agents, or consultants) of all of the Acquired
         Assets, except for such portions thereof which, considered in the
         aggregate, do not represent a material portion of Acquired Assets,
         considered as a whole, the absence of which, disappearance of which, or
         failure to have or otherwise possess which do not materially interfere
         with the conduct, development or marketing of the Business, except as
         the Business may relate to the Retained Assets.

         SECTION 3.09. SUBSEQUENT CHANGES. Seller will promptly give Buyer
notice of any event or occurrence which would cause any of Seller's above
representations and warranties to cease to be true or correct in any respect
prior to the Closing Date.

         SECTION 3.10. FINANCIAL STATEMENTS. Seller has delivered to Buyer the
financial statements and information and the reports requested by Buyer which
are listed on Schedule 3.10.

         SECTION 3.11. NO INFRINGEMENT. To Seller's knowledge, there is no
infringement by Seller upon the trademarks, trade names, patents, service marks,
trade secrets, copyrights or other intellectual property rights of others, and
no claim with respect thereto is pending or, to the knowledge of Seller,
threatened against Seller.

         SECTION 3.12. EMPLOYEES AND LABOR RELATIONS.

                  (a) Schedule 3.12-A lists the name of each employee of Seller
         whose time is dedicated primarily to the Business and their positions
         and present compensation levels, exclusive of bonuses and benefits.

                  (b) Except with respect to unemployment compensation claims
         and except as provided on Schedule 3.12-B, with respect to the
         Business, there are no pending or, to the knowledge of Seller,
         threatened claims against Seller by any employee or former employee,
         and there are no material labor controversies pending or, to the
         knowledge of Seller, threatened between Seller and any of the employees
         of Seller or any labor union or other collective bargaining unit
         representing any of such employees, and Seller is not aware of any
         basis for such controversies.

                  (c) Seller is not a party to any collective bargaining or
         union contract in connection with its operation of the Business; and,
         except as provided on Schedule 3.12-C, Seller is not a party to or
         bound by any consulting or employment contracts with any of the persons
         employed by the Business.

         SECTION 3.13. EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule
3.13, with respect to the Business, Seller has not established, does not
maintain and is not obligated to make contributions to or under, or to otherwise
participate in: (i) any bonus or other type of incentive


                                       11
<PAGE>   12

compensation plan or arrangement; (ii) any pension, profit sharing, retirement
or other plan, program or arrangements; or (iii) any other employee benefit plan
program, including, but not limited to, those plans or programs described in
Section (3)of ERISA (collectively, the "Employee Benefit Plan(s)") with respect
to those Employee Benefit Plans listed on Schedule 3.13 hereto:

                  (a) Each such Employee Benefit Plan (and related trust,
         insurance contract or fund) complies in form and to the knowledge of
         Seller, in operation in all respects with the applicable requirements
         of ERISA and the Internal Review Code of 1986, as amended (the "Code"),
         except where the failure to comply would not have a material adverse
         effect on the Seller.

                  (b) With respect to each Employee Benefit Plan that Seller
         maintains or has ever maintained or to which it contributes, ever has
         contributed or ever has been required to contribute:

                           (i) Except as set forth in Schedule 3.13, no such
                  Employee Benefit Plan is now or was ever subject to Title IV
                  of ERISA.

                           (ii) No action, suit, proceeding, hearing or
                  investigation with respect to the administration or the
                  investment of assets of any Employee Pension Plan (other than
                  routine claims for benefits) is pending or, to the knowledge
                  of the Seller threatened, except where the action, suit,
                  proceeding, hearing or investigation would not have a material
                  adverse effect on Seller.

                  (c) Seller does not contribute to and has not contributed to
         and has not been required to contribute to any Multiemployer Plan as
         defined in Section 3(37)(A) of ERISA, and has no liability (including
         withdrawal liability) under any Multiemployer Plan.

                  (d) Seller does not have any obligation to provide health or
         other welfare benefits to former, retired or terminated employees,
         except as specifically required under Section 4980B of the Code. With
         respect to all of its past and present employees, Seller has complied
         in all material respects with the notice and continuation requirements
         of Part 6 of Subtitle B of Title I of ERISA and of Section 4980B of the
         Code.

         SECTION 3.14. BROKERS, FINDERS. The transactions contemplated hereby
were not submitted to Seller by any broker, finder or other person entitled to a
commission, fee or like payment thereon, and the actions of Seller have not
given rise to any claim by any person against Buyer, the Acquired Assets or the
Business for a commission, fee or like payment.

                                   ARTICLE IV
                     REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer represents and warrants to Seller that the statements contained
in this Article IV are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article IV).


                                       12
<PAGE>   13

         SECTION 4.01. ORGANIZATION OF BUYER. Buyer is a limited liability
company duly organized and validly existing, and in good standing under the laws
of the state of California.

         SECTION 4.02. AUTHORITY. Buyer has full power and authority to enter
into this Agreement, perform its obligations hereunder and consummate the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered and constitutes the valid and binding obligations of
Buyer, enforceable against Buyer in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization and
other similar laws of general applicability relating to creditors' rights and to
general equity principles. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Buyer in connection with the execution, delivery and
performance of this Agreement.

         SECTION 4.03. NO CONFLICT OR DEFAULT. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby and thereby, will violate any statute, regulation or
ordinance of any governmental authority, or conflict with or result in the
breach of any provision of the charter or bylaws of Buyer or of any material
agreement, deed, contract, mortgage, indenture, writ, order, decree or
instrument to which Buyer is a party or by which it is bound, or constitute a
default (or an event which, with the lapse of time or the giving of notice, or
both, would constitute a default) thereunder.

         SECTION 4.04. LITIGATION. There is no claim, litigation, action, suit
or other administrative or judicial proceeding pending, and, to the knowledge of
Buyer, there is no material litigation, action, suit, or other administrative or
judicial proceeding threatened, against Buyer that would in any manner impair
Buyer's ability to close the Acquisition, acquire the Acquired Assets, assume
the Assumed Liabilities, or that in any manner challenges or seeks to prevent,
enjoin, alter or materially delay any of the transactions contemplated hereby.

         SECTION 4.05. NO RELIANCE. Buyer possesses the level of sophistication
requisite to its determination to enter into the transactions contemplated by
this Agreement and has based such determination upon its own independent
investigation as to the financial and other merits of such transactions and not
in reliance upon the accuracy or completeness of any financial information,
documents or other information, written or oral, other than the representations
and warranties contained in Article III hereof. Buyer has sought the advice of
its legal counsel, tax advisors and business and investment advisors in
analyzing the merits and risks of the transactions contemplated by this
Agreement.

         SECTION 4.06. NO IMPLIED WARRANTIES. Buyer understands, agrees and
acknowledges that the Acquired Assets are being purchased and sold on an "AS IS,
WHERE IS" basis. ALL IMPLIED WARRANTIES EXISTING UNDER ANY APPLICABLE LAW WITH
RESPECT TO THE ACQUIRED ASSETS OR TO THE SALE THEREOF ARE HEREBY EXPRESSLY
DISCLAIMED AND NEGATED BY SELLER. PARTICULARLY, BUT WITHOUT LIMITING THE
FOREGOING, SELLER HEREBY NEGATES AND DISCLAIMS ANY IMPLIED WARRANTY OF
MERCHANTABILITY AND ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE AND
ANY IMPLIED WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MODELS. BUYER AND
SELLER AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE


                                       13
<PAGE>   14

DISCLAIMERS OF IMPLIED WARRANTIES CONTAINED IN THIS SECTION ARE "CONSPICUOUS"
DISCLAIMERS FOR THE PURPOSE OF ANY APPLICABLE LAW, RULE OR ORDER.

         SECTION 4.07. BROKERS, FINDERS. The transactions contemplated hereby
were not submitted to Buyer by any broker, finder or other person entitled to a
commission, fee or like payment thereon, and the actions of Buyer have not given
rise to any claim by any person against Seller for a commission, fee or like
payment.

                                    ARTICLE V
                              PRE-CLOSING COVENANTS

         The parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:

         SECTION 5.01. GENERAL. Each of the parties will use its reasonable good
faith efforts to take all action and to do all things consistent with the
provisions of this Agreement that are necessary, proper, or advisable to
consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth in Article II).

         SECTION 5.02. NOTICES AND CONSENTS.

                  (a) The parties will give any notices to third parties and
         governmental authorities, and the parties will use their commercially
         reasonable efforts, without cost or liability to such parties, to
         obtain any third-party and governmental consents, that may be required
         in connection with the consummation of the Acquisition; except to the
         extent that such party is otherwise maintaining the contractual
         relationship to which such notice or consent relates, in accordance
         with the provisions of this Agreement relating thereto.

                  (b) Each of the parties will take any additional action,
         consistent with the provisions of this Agreement and without cost or
         liability to such parties, that may be reasonably necessary, proper or
         advisable in connection with any other notices to, filings with, and
         authorizations, consents and approvals of governments, governmental
         agencies and third parties that it may be required to give, make or
         obtain.

         SECTION 5.03. PRE-CLOSING OPERATION OF THE BUSINESS. Seller shall
operate the Business in the ordinary course consistent with Seller's past
practice and maintain the Acquired Assets in normal operating condition and
repair in a manner consistent with Seller's past practice, with only such
material deviations as shall be approved by Buyer, which approval shall not be
unreasonably withheld. Without limiting the generality of the foregoing, during
said period Seller shall not do any of the following, unless otherwise consented
to by Buyer in writing, which consent shall not be unreasonably withheld:

                  (a) Transfer any of the Acquired Assets or create or, except
         as existing on the date hereof, permit or suffer to exist on any of the
         Acquired Assets any Liens, except in each case in the ordinary course
         of business consistent with Seller's past practice.


                                       14
<PAGE>   15

                  (b) Enter into, extend or renew any material Contracts or any
         other contracts or other commitments regarding the Acquired Assets or
         the Assumed Liabilities of the type that would be required to be
         disclosed under this Agreement in a Schedule, other than in the
         ordinary course of business consistent with Seller's past practice.

         SECTION 5.04. NOTICE OF DEVELOPMENTS. Seller shall give prompt written
notice to Buyer of any material development affecting the Acquired Assets or
Assumed Liabilities or affecting the business, financial condition, operations,
results of operations or future prospects of the Business. Each party will give
prompt written notice to the others of any material development affecting the
ability of the parties to consummate the transactions contemplated by this
Agreement.

         SECTION 5.05. CONFIDENTIALITY. After the date hereof and prior to the
Closing, no party to this Agreement will directly or indirectly make or cause to
be made any public announcement or disclosure, or issue any notice with respect
to this Agreement or the transactions contemplated hereby without advising the
other parties hereto and providing such parties with a reasonable opportunity to
comment thereon.

                                   ARTICLE VI
                             POST-CLOSING COVENANTS

         The parties agree as follows with respect to the period following the
Closing:

         SECTION 6.01. FURTHER ASSURANCES. In case at any time after the Closing
any further action is necessary or desirable to carry out the intent of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as the other
party reasonably may request, all at the cost and expense of the requesting
party (unless the action requested is made the obligation of the requested party
pursuant to another provision of this Agreement); provided that nothing
contained in this Section 6.01 is intended to negate, impair, or diminish any
indemnification right or obligation under Article VII. In addition, after the
Closing Buyer and Seller shall provide notice of the Acquisition to parties with
whom Seller has contractual relationships regarding the Business advising them
of the Acquisition and of appropriate addresses for future notices to Seller and
to Buyer.

         SECTION 6.02. SHARING OF CONTRACT RIGHTS. The parties recognize that
certain of Seller's existing contracts, agreements and arrangements will relate
directly or indirectly to both Acquired Assets and Retained Assets. Accordingly,
the parties agree that they shall cooperate in good faith in the post-Closing
administration of such contracts, agreements and understandings with a view
toward allocating those rights and obligations thereunder relating to the
Acquired Assets to Buyer and allocating those rights and obligations thereunder
relating to the Retained Assets to Seller.

         SECTION 6.03. EMPLOYMENT MATTERS. Buyer covenants and agrees that it
shall (i) maintain the employment of Seller's former employees set forth on
Schedule 2.02(c) at sufficient levels for at least ninety (90) days following
the Closing Date, in order that no notice or other obligations are created under
the WARN Act; (ii) comply with any and all state or


                                       15
<PAGE>   16

federal laws and/or notice obligations (including under the WARN Act) which
arise from any acts or omissions of Buyer after the Closing Date; and (iii)
assume all liability under Section 4980(B) of the Code including liability for
continuation coverage for those employees of Seller terminated by Seller prior
to the Closing Date.

         SECTION 6.04. ACCESS TO BOOKS AND RECORDS. Buyer shall provide to
Seller after the Closing Date such access to the books, records and files
transferred to Buyer hereunder as Seller shall reasonably request.

         SECTION 6.05. PERIODIC FINANCIAL STATEMENTS. From the Closing Date and
until such time as a Triggering Event has occurred, Buyer shall provide Seller
with copies of all of Buyer's consolidated periodic financial statements and
reports on a monthly basis until the first anniversary of this Agreement and
thereafter on a quarterly basis.

         SECTION 6.06. DIVIDEND RESTRICTION. For the twelve (12) month period
following the closing Date, Buyer shall not make any dividend or other
distribution to any member or to any holder of its securities and shall not pay
excessive compensation to the extent it would be a "deemed distribution" under
the Code.

                                  ARTICLE VII
                                 INDEMNIFICATION

         SECTION 7.01. SURVIVAL. All of the representations, warranties and
covenants of Buyer and Seller contained in this Agreement (other than the
provisions of Sections 1.03(c), 7.02 and 7.03(b)-(d), which shall survive and
operate in accordance with their respective terms) shall survive the Closing and
continue in full force and effect until the first anniversary of the Closing
Date (the "Expiration Date").

         SECTION 7.02. INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER. In the
event Seller breaches any of its representations, warranties, and covenants
contained in this Agreement, and provided that Buyer makes a written claim for
indemnification against Seller on or prior to the Expiration Date, then Seller
agrees to indemnify Buyer up to an aggregate ceiling amount of $1,000,000 from
and against the entirety of any Damages Buyer may suffer through and after the
date of the claim for indemnification resulting from, arising out of, relating
to, in the nature of, or caused by the breach; provided, however, that the
amount of such Damages either on a per occurrence basis or in the aggregate for
multiple occurrences is greater than or equal to $25,000. For purposes of this
Agreement, "Damages" shall mean all out-of-pocket charges, complaints, actions,
suits, proceedings, hearings, investigations, claims, demands, judgments,
orders, decrees, stipulations, injunctions, losses, damages, punitive damages,
treble damages, dues, deficiencies, penalties, fines, costs, amounts paid in
settlement, liabilities, obligations, taxes, liens, losses, expenses, interests,
and fees, including but not limited to, all fees, disbursements and expenses of
counsel, experts and consultants and court costs in defending against any
complaint, claim or action.

         SECTION 7.03. INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER.

                  (a) In the event Buyer breaches any of its representations,
         warranties, and covenants contained in this Agreement, and provided
         that Seller makes a written claim


                                       16
<PAGE>   17

         for indemnification against Buyer on or prior to the Expiration Date,
         then Buyer agrees to indemnify Seller from and against the entirety of
         any Damages Seller may suffer through and after the date of the claim
         for indemnification resulting from, arising out of, relating to, in the
         nature of, or caused by the breach; provided, however, that the amount
         of such Damages either on a per occurrence basis or in the aggregate
         for multiple occurrences is greater than or equal to $25,000.

                  (b) Buyer agrees to indemnify Seller from and against any and
         all Damages Seller may suffer resulting from, arising out of, relating
         to, in the nature of, or caused by any Assumed Liability; it being
         understood and agreed by Buyer that Seller shall have no
         responsibility, liability or obligation of any kind whatsoever with
         respect to any of the Assumed Liabilities after the Closing Date.

                  (c) Buyer agrees to indemnify Seller from and against any and
         all Damages Seller may suffer resulting from, arising out of, relating
         to, in the nature of, or caused by any act or omission or strict
         liability relating to the Business or the Acquired Assets occurring
         after the Closing Date.

                  (d) Buyer agrees to indemnify Seller from and against any and
         all Damages Seller may suffer resulting from, arising out of, relating
         to, in the nature of, or caused by any act or omission or strict
         liability relating to the termination or employment by Buyer of any of
         the Seller's prior employees, Buyer's failure to employ any of Seller's
         prior employees and/or Buyer's employment of any other employees after
         the Closing Date.

                  (e) The aggregate ceiling amount of Buyer's indemnification
         pursuant to this Section 7.03 shall be $1,000,000.

         SECTION 7.04. MATTERS INVOLVING THIRD PARTIES.

                  (a) If any third party shall notify any party hereto (the
         "Indemnified Party") with respect to any matter which may give rise to
         a claim for indemnification against the other party hereto (the
         "Indemnifying Party") under this Article VII, then the Indemnified
         Party shall notify the Indemnifying Party thereof promptly; provided,
         however, that no delay on the part of the Indemnified Party in
         notifying the Indemnifying Party shall relieve the Indemnifying Party
         from any liability or obligation hereunder unless (and then solely to
         the extent) the Indemnifying Party thereby is damaged. In the event the
         Indemnifying Party notifies the Indemnified Party within 15 days after
         the Indemnified Party has given notice of the matter that the
         Indemnifying Party is assuming the defense thereof, (i) the
         Indemnifying Party will defend the Indemnified Party against the matter
         with counsel of the Indemnifying Party's choice reasonably satisfactory
         to the Indemnified Party, (ii) the Indemnified Party may retain
         separate co-counsel at its sole cost and expense (except that the
         Indemnifying Party will be responsible for the fees and expenses of the
         separate co-counsel to the extent the Indemnified Party reasonably
         concludes that the counsel the Indemnifying Party has selected has a
         conflict of interest), (iii) the Indemnified Party will not consent to
         the entry of any judgment or enter into any settlement with respect to
         the matter without the written consent of the Indemnifying Party (not
         to be withheld unreasonably), and (iv) the Indemnifying Party will not
         consent


                                       17
<PAGE>   18

         to the entry of any judgment with respect to the matter, or enter into
         any settlement which does not include a provision whereby the plaintiff
         or claimant in the matter releases the Indemnified Party from all
         liability with respect thereto, without the written consent of the
         Indemnified Party (not to be withheld unreasonably). In the event the
         Indemnifying Party fails to notify the Indemnified Party within 15 days
         after the Indemnified Party has given notice of the matter that the
         Indemnifying Party is assuming the defense thereof, the Indemnified
         Party may defend against, or enter into any settlement with respect to,
         the matter in any manner it reasonably may deem appropriate.

                  (b) With respect to those third party claims referred to in
         Section 7.04(a) above, Seller and Buyer agree that they shall work
         together to coordinate their defense efforts; provided, however, that
         such agreement shall in no way restrict the ability of Buyer to take
         any necessary action to cause Seller to be added as a co-defendant to
         any legal action. If Damages shall at any time be assessed against
         Buyer in connection with any such third-party claim and as a result
         thereof Seller shall make an indemnification payment to Buyer pursuant
         to Section 7.02 above, then Buyer agrees that it shall take all
         necessary action to cause Seller to be subrogated to Buyer's rights as
         against third parties with respect to such claim, including rights to
         equitable contribution, up to an amount equal to the amount of the
         indemnification payment actually made by Seller.

                                  ARTICLE VIII
                                   TERMINATION

         SECTION 8.01. TERMINATION OF AGREEMENT. This Agreement may be
terminated prior to Closing in the manner provided below:

                  (i) Buyer and Seller may terminate this Agreement by mutual
         written consent at any time prior to the Closing.

                  (ii) If Buyer is not in material breach of its obligations
         under this Agreement, Buyer may terminate this Agreement by giving
         written notice to Seller at any time prior to the Closing in the event
         that Seller is in breach of any material representation, warranty or
         covenant contained in this Agreement in any material respect and such
         breach has not been promptly cured after such notice has been
         delivered, which notice shall be in reasonable detail.

                  (iii) If Seller is not in material breach of its obligations
         under this Agreement, Seller may terminate this Agreement by giving
         written notice to Buyer at any time prior to Closing in the event that
         Buyer is in breach of any material representation, warranty or covenant
         contained in this Agreement in any material respect and such breach has
         not been promptly cured after such notice has been delivered, which
         notice shall be in reasonable detail.

                  (iv) Seller may terminate this Agreement at any time prior to
         the Closing Date if it does not receive the Fairness Opinion or the
         consent of either of Imperial Bank or Hampshire Equity Partners.


                                       18
<PAGE>   19

In the event this Agreement is terminated by Buyer pursuant to Section 8.01(ii)
or by Seller pursuant to Section 8.01(iv), Seller shall pay Buyer a termination
fee in the amount of $50,000. In the event this Agreement is terminated by
Seller pursuant to Section 8.01(iii) or by Buyer other than pursuant to Section
8.01(ii), Buyer shall pay Seller a termination fee in the amount of $200,000.

         SECTION 8.02. EFFECT OF TERMINATION. If any party shall terminate this
Agreement pursuant to Section 8.01 above, all obligations of the parties
hereunder shall terminate, except as set forth in Section 5.05. Notwithstanding
the foregoing, in the event of a breach of this Agreement by any party hereto,
nothing herein shall limit the remedies at law or in equity of the other parties
with respect thereto.

                                   ARTICLE IX
                                  MISCELLANEOUS

         SECTION 9.01. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any person or entity other than the actual
parties hereto, and their respective successors and permitted assigns.

         SECTION 9.02. ENTIRE AGREEMENT. This Agreement (together with the
Schedules hereto) constitutes the entire understanding and agreement of the
parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect hereto.

         SECTION 9.03. SUCCESSION AND ASSIGNMENT. Buyer shall not assign their
rights under this Agreement without Seller's prior written consent, which Seller
shall not unreasonably withhold as to an assignment to a wholly owned subsidiary
of Buyer, provided that no such assignment shall relieve Buyer of any obligation
hereunder and Buyer shall continue to be fully liable and responsible therefor.
Seller shall not assign its respective rights and obligations under this
Agreement without Buyer's prior written consent. Any other attempted transfer or
assignment of this Agreement shall be null and void.

         SECTION 9.04. HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.

         SECTION 9.05. NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if it is sent by
registered or certified mail, postage prepaid, or sent by prepaid overnight
courier or confirmed telecopier, and addressed to the intended recipient as set
forth below:


                                       19
<PAGE>   20

         If to Seller:      Alpha Microsystems
                            2722 South Fairview St.
                            Santa Ana, California  92704
                            (Ph)  714-957-8500
                            (Fax)  714-957-8705
                            Attn:  Douglas Tullio
                                   Chief Executive Officer

         with copy to:      Allen Matkins Leck Gamble & Mallory LLP
                            18400 Von Karman, 4th Floor
                            Irvine, California  92612
                            (Ph)  949-553-1313
                            (Fax)  949-553-8354
                            Attn:  Gregory W. Preston, Esq.

         If to Buyer:       R.E. Mahmarian Enterprises LLC
                            21 Caballeros Road
                            Rolling Hills, California  90274
                            Attn:  Richard E. Mahmarian
                                   Managing Member

         with copy to:      Williams & Kilkowski
                            1900 Avenue of the Stars, 25th Floor
                            Los Angeles, California  90067-4506
                            (Ph)  310-282-8995
                            (Fax)  310-282-8930
                            Attn:  Lee D. Williams, Esq.

Such communications shall be effective when they are received by the addressee
thereof. Any party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other party notice in the manner herein set forth.

         SECTION 9.06. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the State of California.

         SECTION 9.07. AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
Buyer and Seller. No waiver by any party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.

         SECTION 9.08. SEVERABILITY. Any provision of this Agreement which is
found by a court of competent jurisdiction to be illegal, invalid or
unenforceable shall be deemed severed from the Agreement and shall not affect
the continuing legality, validity or enforceability of the remaining terms and
provisions.


                                       20
<PAGE>   21

         SECTION 9.09. CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party. Any
reference to any federal, state, commonwealth, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Nothing in the Schedules
attached to and made part of this Agreement shall be deemed adequate to disclose
an exception to a representation or warranty made herein unless a reasonable
person would conclude that the particular Schedule relating to such warranty or
representation identifies the exception with sufficient detail and particularity
to give reasonable notice thereof or, if the disclosure is made in a different
Schedule and not in the particular Schedule relating to such warranty or
representation, such Schedule identifies such exception with sufficient
particularity so that a reasonable person reading this Agreement and Schedules
with the keen interest that could normally be attributed to someone making a
commitment as substantial as that the Buyer will be making by closing based on
the terms of this Agreement and Schedules hereto would recognize the matter as
an exception to such warranty and representation. The parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance.

         SECTION 9.10. TRANSFER TAXES. Seller shall pay, or cause to be paid,
all sales, use, transfer, stamp, duties, recording and similar taxes, if any,
required to be paid in connection with the sale of the Acquired Assets pursuant
to this Agreement.

         SECTION 9.11. INCORPORATION OF SCHEDULES. The Schedules identified in
this Agreement are incorporated herein by reference and made part hereof.

         SECTION 9.12. TIME OF THE ESSENCE. Time is of the essence of every
provision of this Agreement.

         SECTION 9.13. ATTORNEYS' FEES. In the event of any litigation between
Buyer and Seller arising under or relating to this Agreement or the transactions
contemplated hereby, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and court costs incurred, including but not limited
to attorneys' fees after the award, and prior to the payment, of any judgment or
other settlement.

         SECTION 9.14. BUSINESS DAY. The term "Business Day" shall mean any day
other than a Saturday, Sunday or day on which banks in California are authorized
to be closed for business.

         SECTION 9.15. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

         SECTION 9.16. FAX SIGNATURES. This Agreement may be executed by the
Seller's and Buyer's signatures transmitted by facsimile ("fax"), and copies of
this Agreement executed and delivered by means of faxed signatures shall have
the same force and effect as copies hereof executed and delivered with original
signatures. Seller and Buyer may rely upon faxed signatures as if such
signatures were originals. Seller and Buyer executing and delivering this
Agreement by fax shall promptly thereafter deliver a counterpart signature page
of this


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Agreement containing any such party's original signature. Seller and Buyer agree
that a faxed signature page may be introduced into evidence in any proceeding
arising out of or related to this Agreement as if it were an original signature
page.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                                     SELLER:

                                     ALPHA MICROSYSTEMS,
                                     A CALIFORNIA CORPORATION

                                     By:
                                           -------------------------------------
                                           Douglas Tullio
                                           Chief Executive Officer

                                     BUYER:

                                     R.E. MAHMARIAN ENTERPRISES, LLC
                                     A CALIFORNIA LIMITED LIABILITY COMPANY


                                     By:
                                           -------------------------------------
                                           Richard E. Mahmarian
                                           Managing Member



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