Struggling Kaypro Corp is now beset by legal problems to add to its commercial woes, and Microbytes Daily reports that just days after the Solana Beach, California company completed a sale and lease-back transaction on its main premises, a Los Angeles property company has obtained a court order freezing funds in four bank accounts assigned to Kaypro and its chairman, Andrew Kay. After an ex parte hearing last week, a San Diego Superior Court Judge signed a temporary restraining order to prevent Kaypro and Kay from dispersing funds that may be owed to the Los Angeles estate agent, DMC Financial Corp. The judge’s order affects two accounts each at Sanwa Bank and Southwest Bank and restricts up to $1m of Kaypro’s funds – $250,000 in each account, according to DMC president Desmond Kramer. The lawsuit stems from Kaypro’s efforts to met its capital famine by the sale and leaseback deal on its Solana Beach property. DMC claims that it contracted with Kaypro via a consultant to present possible buyers to Kay, and if a deal resulted, DMC was to receive a commission of 3% of its value. DMC says it made the introduction to Kaypro of Los Angeles-based Signature Group, the firm that paid $6m for the premises two weeks ago. But DMC says Kay led it to believe that Kaypro was not pursuing the Signature Group offer and instead wanted DMC to arrange a loan, and that he learned of completion of the sale and leaseback only from news reports – and that when he telephoned to collect, Kay denied any agreement to pay DMC a commission. A hearing on the dispute has been set for Wednesday next week. The suit filed against Kaypro also asks for punitive damages of $300,000, but DMC says that it just wants to get its commission on the deal and its legal costs. DR-DOS But that is not the only day Kaypro faces in court: Microsoft Corp has filed a suit in US District Court demanding payment of nearly $1m, including about $748,000 in royalties, minimum commitments and other fees under 1985 and 1988 licence agreements, and has notified Kaypro that the it is no longer licensed to use, copy, market or ship any Microsoft products, in particular, MS-DOS, Works and Windows. The 1988 agreement, which covers Microsoft Works and Windows, was terminated on March 24, while the 1985 agreement was cancelled on February 22, according to the court documents. Kaypro says that as soon as it received the letters from Microsoft, it immediately complied, and is now using Monterey, California-based Digital Research’s compatible alternative, DR-DOS – saying that it finds it much superior to MS-DOS. More importantly, it costs Kaypro only $5 a copy where it was having to pay $25 a time to use MS-DOS. Kaypro says it believes that Microsoft has overstated the amount that it owes, suggesting that the figure is more like $150,000. They have grossly exaggerated the situation. We are very upset with them and we might countersue them, said a Kaypro spokesman.
