EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
between
FOCUS ENHANCEMENTS, INC.,
FOCUS ACQUISITION CORP.
and
PC VIDEO CONVERSION, INC.
July 29, 1998
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT, made and entered into as of this twenty-nineth day of
July, 1998, by and among FOCUS Enhancements, Inc., a Delaware corporation with
its principal place of business at 000 Xxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000
("FOCUS"), and Focus Acquisition Corp. ("FAC") (FOCUS and FAC hereinafter
referred to collectively as the "Buyer"), and PC Video Conversion, Inc., a
California corporation with its principal place of business at 00000 Xxxxxx
Xxxxx, Xxxxx X, Xxxxxx Xxxx, XX 00000 (the "Seller").
Preliminary Statement
This Agreement contemplates a transaction in which the Buyer will
purchase certain of the assets (and assume certain of the liabilities) of the
Seller for the consideration set forth below, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Basic Transaction
1.01. Purchase of Assets. On the Closing Date, as hereinafter defined, Buyer
will purchase and acquire from Seller, and Seller will sell, transfer,
convey and deliver to Buyer, all of the assets of Seller integral to
the operations of Seller (the "Assets"), including, without limitation,
the following:
a) Real Estate. Buyer agrees to assume the lease of the property
located at 00000 Xxxxxx Xxxxx, Xxxxx X Xxxxxx Xxxx, XX 00000
(hereinafter referred to as "Lease"), together with all tenant
improvements thereto and all fixtures and other installations
within such property and any rights of tenant arising from the
use, occupancy or leasing of such property and necessary to
continue the operation of the Seller.
b) Tangible Personal Property. All tangible personal property
used in the operation of the Seller, including, but not
limited to, all of the following:
i) All equipment, vehicles, machinery, tools, storage
racks and bins, furniture and fixtures, computer
hardware and disks, telephone systems, portable
phones, communication devices, Seller forms, display
materials, maintenance machinery and equipment, test
equipment, and other tangible personal property, all
of which shall be fully inventoried (collectively the
"Fixed Assets"); and
ii) All current inventory of the Seller held for resale
including all components thereof, such as raw
materials, work-in-process, finished goods, office
supplies, maintenance supplies, packaging materials,
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spare parts and similar items, manuals, computer
disks and software, all of which shall be fully
inventoried (collectively, the "Inventory").
c) Intangible Property. All intangible property ("Intangible
Property") including, but not limited to:
i) All accounts (less Three Hundred Thousand Dollars
($300,000)), accounts receivable, notes and notes
receivable existing on the Closing Date (as
hereinafter defined), including any security held for
the payment thereof (the "Accounts Receivable");
ii) Such contract rights of the Seller as Buyer may elect
to acquire after examination of same, including,
without limitation, all rights arising under purchase
orders placed by Seller with vendors and purchase
orders from customers accepted by Seller, rights
under any warranty agreements and rights under any
insurance contract;
iii) All goodwill and going concern value of the Seller,
including, without limitation, all customer lists,
vendor lists, pricing data, warranty records,
advertising and marketing materials and other trade
information of whatever type;
iv) All intellectual property including, without
limitation, (i) all inventions (whether patentable or
unpatentable and whether or not reduced to practice),
all improvements thereto, and all patents, patent
applications, and patent disclosures, together with
all reissuances, continuations,
continuations-in-part, revisions, extensions, and
reexaminations thereof along with any foreign
couterparts; (ii) all copyrightable works, all
copyrights, and all applications, registrations, and
renewals in connection therewith, (iii) all mask
works and all applications, registrations, and
renewals in connection therewith, (iv) all trade
secrets and confidential business information
(including ideas, research and development, know-how,
formulas, compositions, manufacturing and production
processes and techniques, technical data, designs,
drawings, specifications, customer and supplier
lists, pricing and cost information, and business and
marketing plans and proposals), (v) all computer
software (including data and related documentation),
(vi) customer lists; (vii) all licenses and goodwill
associated therewith, sublicenses and other
agreements (as licensor or licensee) relating to any
of the foregoing kinds of property, and rights
thereunder; and (vii) rights to any "know-how" or
disclosure or use of ideas, remedies against
infringements thereof, and rights to protection of
interest therein under the laws of all jurisdictions;
(viii) all other proprietary rights, and (ix) all
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copies and tangible embodiments thereof (items listed
in clauses (i)-(ix) shall be referred to herein as
"Intellectual Property");
v) All rights of Seller to any software licensed to
Seller; provided that if such licenses are not
transferable without licensor's consent, Seller shall
obtain such consent and/or a new license agreement in
the name of Buyer on substantially the same terms
currently available to Seller;
vi) All licenses and permits of any type whatsoever used
in the Seller or the release of same so as to permit
the issuance to the Buyer of such license or permit
applicable to the Seller;
vii) all trademarks, service marks, trade dress, logos,
and trade names, together with all translations,
adaptations, derivations, and combinations thereof
and including all goodwill associated therewith, and
all applications, registrations, and renewals in
connection therewith related in any manner to the
Seller; and
viii) all rights under the contracts, agreements, leases,
licenses and other instruments that are set forth on
Schedule 1.01( c)(viii) attached hereto together with
any consent necessary to transfer any of the
foregoing (collectively, the "Contract Rights").
ix) Any other assets integral to the operations of
Seller.
1.02. Purchase Price. In full consideration for the conveyance and transfer
to Buyer of the Acquired Assets, at the Closing FOCUS shall:
(i) issue to Seller within five (5) business days following the
Closing Date one hundred twenty-two thousand seven hundred
ninety-six (122,796) shares (the "Shares") of common stock,
$0.01 par value per share of the FOCUS (the "Common Stock"),
which Shares will not have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and
will bear legends restricting transfer in accordance with the
Securities Act.;
(ii) pay to Seller Seven Hundred Thousand Dollars ($700,000);
(iii) tender a promissory note ("Note") to Seller in the amount of
One Million Dollars ($1,000,000) payable over a period of
thirty-six (36) months together with interest on the
outstanding principal balance payable at the rate of three and
one half (3 1/2%) percent interest per annum. Payments on the
note shall be made on a monthly basis for a total of
thirty-six (36) installments, the first installment of which
shall be due on the first day of the first month immediately
following the Closing Date. Payment of principal and interest
under the above-described Note and interest shall be secured
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by assets in accordance with a Security Agreement in
substantially the form attached hereto as Exhibit F;
(iv) assume certain accounts payable of Seller, as specified on
Schedule 1.02(iv) attached hereto (the "Assumed Accounts
Payable"), totaling __________________________________
Thousand Dollars ($_____,000) (The amounts identified in
clauses (i)-(iv) of this Section 1.02 shall be referred to
herein as the "Purchase Price".).
1.03 Employment. Xxxxx Xxxx shall enter into a three (3) year employment
agreement with FAC in a form substantially equivalent to that of
Exhibit C.
1.04. Allocation. The Purchase Price shall be allocated by the Buyer, with
the concurrence of the Seller, among the Assets within 120 days after
the Closing Date.
1.05. Liabilities of Seller. Except for the Assumed Accounts Payable, Buyer
is not assuming any liabilities or obligations of Seller and Buyer will
have no responsibility with respect to any obligation or liability
(whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, or due or
to become due) (collectively, "Liability") not specifically assumed
pursuant to this Agreement.
1.06. The Closing Date. The closing (the "Closing") shall occur on July 29 ,
1998 at 10 a.m. at the offices of Focus Enhancements, Inc., 000 Xxxxx
Xxxx, Xxxxxxx, Xxxxxxxxxxxxx, 00000, or such other date, time or place
as shall be mutually agreed upon by Buyer and Seller. The transfer of
the Assets by Seller to Buyer shall be deemed to occur, and the payment
of the Purchase Price shall occur, at 10 a.m., Boston time, on the date
of the Closing (the "Closing Date").
1.07. Sales Taxes. Seller shall pay all sales, transfer and documentary taxes
and expenses, if any, payable in connection with the sale, transfer and
deliveries to be made to Buyer hereunder.
1.08. Further Assurances. At any time and from time to time after the
Closing, at Buyer's request and without further consideration, Seller
promptly shall execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation, and take such other action, as
Buyer may reasonably request to more effectively transfer, convey and
assign to Buyer, and to confirm Buyer's title to, all of the Assets, to
put Buyer in actual possession and operating control thereof, to assist
Buyer in exercising all rights with respect thereto and to carry out
the purpose and intent of this Agreement.
2. Representations and Warranties of Seller. Seller makes the following
representations and warranties to Buyer, each of which shall be deemed
to be independently material and to have been relied upon by Buyer.
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2.01. Organization and Authority. Seller is a corporation duly organized,
validly existing and in good standing under the corporate and tax laws
of the State of California and has the corporate power to own its
properties and to carry on its business as and where it is now being
conducted, to execute and deliver this Agreement and the agreements
contemplated herein, and to consummate the transactions contemplated
thereby. Seller is duly licensed or qualified and in good standing as a
foreign corporatio in all jurisdictions where the character of the
properties owned by Seller or the nature of the business transacted by
it make such license or qualification necessary, except where the
failure to so qualify would not have a material adverse effect on the
operations or financial condition of Buyer.
2.02. Authorization. Seller has taken all actions necessary to authorize and
permit the execution, delivery and performance of this Agreement and
the agreements contemplated herein by Seller, and the consummation by
Seller of the transactions contemplated hereby and thereby. This
Agreement constitutes the valid and binding obligation of Seller,
enforceable against it in accordance with its terms, except as
enforcement may be subject to applicable bankruptcy, insolvency,
moratorium and other laws affecting creditors generally and by general
equitable principles.
2.03 Noncontravention. The execution and delivery of this Agreement or the
agreements contemplated herein, and the consummation by Seller of the
transactions contemplated hereby or thereby, will not, with or without
the giving of notice or the passage of time or both, (i) conflict with
the Articles of Organization or Bylaws of Seller, (ii) conflict with
any agreement or instrument to which the Seller is a party or by which
it may be bound, or (iii) violate the provisions of any law, rule or
regulation applicable to Seller. Schedule 2.03 attached hereto sets
forth a true, correct and complete list of all consents, assignments,
waivers and/or approvals of third parties required in connection with
the consummation by Seller of the transactions contemplated by this
Agreement and the sale, transfer, conveyance and/or delivery by Seller
of the Assets to Buyer.
2.04. Title to Assets; Condition and Location; Sufficiency. Seller has good
and marketable title to all of the Assets, free and clear of any and
all liens, security interests, encumbrances and claims. All of the
Assets are located in 00000 Xxxxxx Xxxxx, Xxxxx X, Xxxxxx Xxxx, XX
00000, except as set forth on Schedule 2.04 attached hereto. The Assets
are adequate to conduct the business operations currently conducted by
Seller.
2.05. Financial Statements. Seller has previously delivered to Buyer (i) its
unaudited balance sheet, statement of income and cash flow as of and
for the fiscal year ended December 31, 1997 (the "Year-End Financial
Statements"), and (ii) its unaudited balance sheet (the "Current
Balance Sheet"), statement of income and cash flow for the seven months
ended July 31, 1998 (together with the Current Balance Sheet, the
"Current Financial Statements"). The Year-End Financial Statements and
the Current Financial Statements have been prepared in accordance with
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generally accepted accounting principles and fairly present the
financial condition of Seller in all material respects.
2.06 Accounts Receivable. Schedule 2.06 attached hereto sets forth a true,
correct and complete list of the Accounts Receivable, including an
aging thereof as of the date of the Current Financial Statements.
Schedule 2. 06, as updated pursuant to Section 6.08 hereof, shall set
forth a true, correct and complete list of Accounts Receivable as of
the Closing Date, including an aging thereof. All accounts receivable
shown on Schedule 2. 06 constitute bona fide accounts receivable
resulting from the sale of the Company's products in the ordinary
course of business. Such Accounts Receivable were and are not subject
to any conditions to payment or to any offsets, counterclaims, defenses
or returns except as shown as an allowance for doubtful accounts on the
Financial Statements. No account debtors or note debtors have been
delinquent in payment by more than ninety (90) days except as otherwise
reflected on the books and records maintained by Seller or have refused
or threatened to refuse to make payment except as disclosed in writing
to Buyer.
2.07 Inventory. The Inventory reflected on the June 30, 1998 Balance Sheet
was purchased or acquired in the ordinary and regular course of the
Company's business and are maintained for resale to customers in a
manner substantially similar to past practices. Such inventory has been
consistently valued at the lower of cost consistently with prior
periods. The Inventory consists, and will at the Closing Date consist,
of those items as described in Schedule 2.07, subject to use and sale
in the ordinary course of business of Seller, from the date of Schedule
2.07 to the Closing. The phrase "the ordinary course of business," as
used in this Agreement, shall mean the conduct of the business of
Seller in the manner in which Seller conducted its business during the
year preceding execution of this Agreement, following usual accounting
practices, making ordinary accruals, incurring ordinary liabilities or
expenditures, and making ordinary contract commitments.
2.08. Fixed Assets. Schedule 2.08 attached hereto sets forth a true, correct
and complete list of all Fixed Assets with an individual fair market
value in excess of One Thousand Dollars ($1,000) as of the date hereof,
including a description thereof. Schedule 2.08, as updated pursuant to
Section 6.08 hereof, shall set forth a true, correct and complete list
of all Fixed Assets as of the Closing Date, including a description
thereof. Except as set forth on Schedule 2.08, all of the Fixed Assets
(i) are in good operating condition and repair, normal wear and tear
excepted, (ii) taken in their entirety, are suitable and adequate for
the conduct of the operations of Seller as conducted on the date
hereof, and (iii) have been maintained normally and on a consistent
basis.
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2.09 Intangible Property.
(a) Schedule 2.09 attached hereto sets forth a true, correct and
complete list and, where appropriate, a description of, all
Intangible Property. Except as set forth on Schedule 2.09,
true, correct and complete copies of all licenses and other
agreements relating to the Intangible Property have been
previously delivered by the Seller to the Buyer.
(b) Except as otherwise disclosed in Schedule 2.09, the Seller is
the sole and exclusive owner of all Intangible Property and
all designs, permits, labels and packages used on or in
connection therewith. The Intangible Property owned by Seller
is sufficient to conduct its business as presently conducted
and as conducted during the past two years and, when
transferred to Buyer pursuant to this Agreement, will be
sufficient to permit Buyer to conduct the business of Seller
as presently conducted. There is no litigation pending or, to
Seller's knowledge, threatened that might result in a denial
of the right of Seller to use any of the Intangible Property.
Seller has not received notice of, nor has knowledge of any
basis for, a claim against Seller that any of its operations,
activities, products or publications infringes on any
Intellectual Property right of a third party, or that it is
illegally or otherwise using the Intellectual Property rights
of others. Seller has no disputes with or claims against any
third party for infringement by such third party of any
Intangible Property. Seller has taken all steps reasonably
necessary to protect its right, title and interest in and to
the Intangible Property. To the best of Seller's knowledge,
there are no Intellectual Property rights owned or held by any
officer, agent, employee or any person associated with Seller,
or in which any such person has an exclusive or protectable
right, that are valuable to or useful in Seller's business.
2.10 Assumed Liabilities; Third-Party Consents. None of the obligations of
Seller to be assumed by Buyer pursuant to Sections 1. 05 hereof is in
default by any party thereto, and none involves an obligation on the
part of Seller to perform more than six months following the Closing
Date. With the exception of those contracts listed on Schedule 2.10,
which require the consent of the party identified on Schedule 2.10,
there are no contracts being assigned pursuant to this Agreement that
require the consent of a third party.
2.11. Condition of Business. Except as set forth on Schedule 2.11 attached
hereto, since December 31, 1997 Seller has not entered into any
transaction that is not in the ordinary course of business, and for the
12 months preceding the date hereof, the business of Seller has not
been subject to any strikes, picketing or other organized labor
activity.
2.12. Bulk Transfer. Buyer waives all of its rights that it would otherwise
have pursuant to the bulk transfer laws of the State of California and
Seller shall indemnify Buyer and hold Buyer harmless against and in
respect of any claim for undisclosed payables or other liabilities, and
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also in respec of all expenses of any character (including attorney's
fees) incurred by Buyer in connection with the defense and/or
settlement of actions or claims related thereto. Seller agrees that any
amounts owing to Buyer due to the indemnity granted hereunder shall be
deductible from the balance of the Note upon written notice to Seller.
Seller will not be responsible for any settlement made by Buyer without
Seller's consent, which consent will not be unreasonably withheld,
conditioned or delayed.
2.13. Undisclosed Liabilities. Except as and to the extent (i) incurred in
the ordinary course of business after the date of the Year-End
Financial Statements and not material, either individually or in the
aggregate, or (ii) representing ordinary course purchases of inventory,
there are no Liabilities of Seller affecting any of the Assets. Seller
further represents that no promises with respect to financial
obligations have been made to Seller's employees.
2.14. Litigation. Except as set forth on Schedule 2.14 attached hereto, there
is no action or suit in law or equity, nor proceeding by any
administrative or governmental agency, now pending nor, to the
knowledge of Seller, threatened, nor any outstanding order, writ,
injunction or decree of any court or administrative or governmental
agency, affecting any of the Assets or the business or condition
(financial or otherwise) of Seller.
2.15. Product Warranty. Each product manufactured, sold, leased or delivered
by Seller has been in conformity with all applicable contractual
commitments and all express and implied warranties, and Seller has no
known Liability (and there is no known basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand against Seller giving rise to any Liability) for
replacement or repair thereof or other damages in connection therewith,
subject only to the reserve for product warranty claims set forth on
the face of the Current Balance Sheet (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of Seller. No product
manufactured, sold, leased or delivered by Seller is subject to any
guaranty, warranty or other indemnity beyond the applicable standard
terms and conditions of sale or lease. Schedule 2.15 attached hereto
includes copies of the standar terms and conditions of sale or lease
for Seller (containing applicable guaranty, warranty and indemnity
provisions).
2.16. Compliance with Laws. Seller is not to the best of Seller's knowledge
in violation of any federal, state or local law, including, without
limitation, wage and hour, employment and occupational safety
legislation and environmental protection legislation.
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2.17. Indebtedness, Powers of Attorney and Guarantees. Except as set forth in
Schedule 2.17 attached hereto, Seller has no outstanding indebtedness
affecting the Assets, other than trade or business obligations incurred
in the ordinary course of business on usual credit terms. Seller has no
general or special powers of attorney outstanding (whether as grantor
or grantee) nor is a party to any contract of surety, guaranty or
similar engagement by which it may be made to answer for the debt of
another person.
2.18. Taxes and Payroll. Seller has paid all real and personal property,
franchise, income and other taxes due or payable in connection with its
business, has collected or paid all sales taxes, has withheld all
amounts required to be withheld from the payroll of its employees, and
has paid all salaries, bonuses and other payments due to each of its
employees. Seller has timely filed all federal, state and local tax
returns required to be filed by it, and such tax returns are true,
correct and complete. No examination of such tax returns is currently
in progress, no requests for waiver of the time to assess any such
taxes are pending, and no deficiencies have been asserted or assessed
as a result of any audit by the Internal Revenue Service or any
national, state or local taxing authority and no such deficiency or
audit has been proposed or threatened. Seller has not waived any
statute of limitations in respect of any such taxes or agreed to any
extension of time with respect to a tax assessment or deficiency.
2.19. Insurance. The Assets are insured against loss or damage by fire or
other casualty at such levels as is customary for businesses engaged in
the same business as Seller.
2.20. Employee Relations. Seller is not a party to any written or oral
agreement with any labor union in connection with the business of
Seller, and there is not currently, nor has there been within the 12
months prior to this Agreement, any effort to organize any employees of
Seller.
2.21. Accuracy of Schedules. All schedules, certificates, exhibits and other
documents which have been furnished pursuant to this Agreement to Buyer
or its counsel are true, correct and complete in all material respects.
2.22. Diligence Request. All documents, certificates, and statements
requested described on the due diligence list, attached hereto as
Schedule 2.22, has been furnished to Buyer or its counsel and such
documents, certificates, and statements are true, correct and complete
in all material respects.
2.23. Disclosure. No representation or warranty by the Seller contained in
this Agreement or in any certificate, schedule, exhibit or other
document delivered to Buyer pursuant to this Agreement contains any
untrue statement of a material fact or omits to state a material fact
required to make the statements contained in this Agreement or in any
said certificate, schedule, annex, exhibit or document not materially
misleading, and all such representations and warranties considered
together are not materially misleading in any respect.
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3. Representations and Warranties of Buyer. Buyer makes the following
representations and warranties to the Seller, each of which shall be
deemed to be independently material and to have been relied upon by the
Seller:
3.01. Organization and Authority. Buyer is a corporation duly organized,
validly existing and in good standing under the corporate and tax laws
of the State of Delaware and has the corporate power to own its
properties and to carry on its business as and where it is now being
conducted, to execute and deliver this Agreement and the agreements
contemplated herein, and to consummate the transactions contemplated
thereby. Buyer is duly licensed or qualified and in good standing as a
foreign corporation in all jurisdictions where the character of the
properties owned by Buyer or the nature of the business transacted by
it make such license or qualification necessary, except where the
failure to so qualify would not have a material adverse effect on the
operations or financial condition of Buyer.
3.02. Authorization. Buyer has taken all actions necessary to authorize and
permit the execution, delivery and performance of this Agreement and
the agreements contemplated herein by Buyer, and the consummation by
Buyer of the transactions contemplated hereby and thereby. This
Agreement constitutes the valid and binding obligation of Buyer,
enforceable against it in accordance with its terms, except as
enforcement may be subject to applicable bankruptcy, insolvency,
moratorium and other laws affecting creditors generally and by general
equitable principles.
3.03. Noncontravention. The execution and delivery of this Agreement or the
agreements contemplated herein, and the consummation by Buyer of the
transactions contemplated hereby or thereby, will not, with or without
the giving of notice or the passage of time or both, (i) conflict with
the Articles of Organization or Bylaws of the Buyer, (ii) conflict with
any agreement or instrument to which Buyer is a party or by which it
may be bound, or (iii) violate the provisions of any law, rule or
regulation applicable to Buyer.
3.04. Organization. Buyer agrees that all current employees of Seller will be
offered a comparable position with FAC performing similar duties. Each
employee shall be compensated as he/she was compensated one (1) month
prior to the Closing Date and each employee shall be credited with
their current seniority for the calculation of benefits. Seller agrees
to remain liable for all pension benefits due to each employee prior to
the Closing Date.
4. Covenants of Seller. Seller covenants and agrees with Buyer as follows:
4.01. Conduct of Business. From and after the date hereof and until the
Closing Date, Seller shall carry on its business diligently and
substantially in the same manner as heretofore conducted, except as
agreed to in writing by Buyer. All of the property of Seller shall be
used, operated, repaired and maintained in a normal business manner
consistent with past practice.
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4.02. Compliance with Laws. From and after the date hereof and until the
Closing Date, Seller will comply in all material respects with all laws
and regulations that are applicable to it, the ownership of the Assets
or to the conduct of its business, and will perform and comply with all
contracts, commitments and obligations by which it is bound.
4.03. Preservation of Business. For a period of one hundred eighty (180) days
after the Closing Date, Seller shall assist and cooperate, to such
extent as is reasonable under the circumstances, with Buyer to preserve
for Buyer the goodwill of suppliers, customers, employees and others
having business relations with Seller prior to the Closing Date. After
said 180-day period, Seller agrees not to interfere with Buyer and its
relations with suppliers, customers, employees and others.
4.04. Curing Defaults. Promptly upon discovery of any breach or default under
any representation, warranty or agreement made by the Seller and
contained in this Agreement of such a nature that it can be cured prior
to the Closing Date, the Seller will make reasonable efforts to cure
such breach or default.
4.05. Cooperation; Further Assurances. Seller will cooperate in the orderly
consummation of the transactions contemplated by this Agreement,
including, without limitation, permitting Buyer and its representatives
full access, at all reasonable times and in a manner so as not to
interfere with the normal business operations of Seller, to all
premises, properties, personnel, books, records, contracts and
documents of Seller pertaining to the Assets, and will execute all
documents and perform all acts reasonably necessary or appropriate to
carry out the intent of this Agreement.
4.06. Proprietary Information.
(a) Seller shall hold in confidence, and use its best efforts to
have all of the officers, directors and personnel of Seller
hold in confidence, all knowledge and information of a secret
or confidential nature with respect to the business of Seller,
and shall not disclose, publish or make use of the same
without the consent of Buyer, except to the extent that such
information shall have become public knowledge other than by
breach of this Agreement by Seller.
(b) Seller agrees that the remedy at law for any breach of this
Section 4.06 would be inadequate and that such breach would
cause irreparable harm to Buyer, and therefore Buyer shall be
entitled (without the requirement of posting any bond) to
injunctive relief in addition to any other remedy it may have
upon breach of any provision of this Section 4.06.
4.07. No Solicitation or Hiring of Former Employees. Except as provided by
law, for a period of five years after the Closing Date, Seller shall
not solicit any person who was an employee of Buyer on the Closing Date
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to terminate his or her employment with Buyer or to become an employee
of Seller or hire any person who was an employee of Buyer on the date
hereof or on the Closing Date.
4.08. Non-Competition Agreement.
(a) In further consideration of the Purchase Price, for a period
of two ( 2) years following the termination of employment
under Section 1.03 above , Seller agrees that neither Seller
nor any affiliate of Seller shall, without the prior written
consent of the Buyer, (i) manufacture, market or sell any
product that has the same or substantially the same form,
function and primary application as any existing or proposed
product manufactured by Seller on or prior to the Closing Date
or (ii) engage in any business competitive with the business
of Seller as conducted on the date hereof or on the Closing
Date, in the United States of America or any other country in
which Seller conducted its business during the two years prior
to the Closing Date. (The agreement contained in this Section
4.08(a) shall be referred to herein as the "Non-Competition
Agreement".)
(b) The parties hereto agree that the consideration, duration and
scope of the Non-Competition Agreement are reasonable. In the
event that any court determines that the duration or the
geographic scope, or both, are unreasonable, the parties
hereto agree that the provision shall remain in full force and
effect for the greatest time period and in the greatest area
that would not render it unenforceable. The parties intend
that this Non-Competition Agreement shall be deemed to be a
series of separate covenants, one for each and every county of
each and every state of the United States of America and each
and every political subdivision of each and every country
outside the United States of America where this provision is
intended to be effective. Seller agrees that damages are an
inadequate remedy for any breach of this provision and that
Buyer shall, whether or not it is pursuing any potential
remedies at law, be entitled to equitable relief in the form
of preliminary and permanent injunctions without bond or other
security upon actual or threatened breach of this
Non-Competition Agreement.
4.09. Best Efforts to Obtain Satisfaction of Conditions. Seller shall use its
best efforts to obtain the satisfaction of the conditions specified in
this Agreement.
5. Covenants of Buyer.
5.01. Current Public Information. Buyer shall use its best efforts to make
all filings when required under the Securities Act and the Securities
and Exchange Act of 1934, as amended.
5.02. Best Efforts to Obtain Satisfaction of Conditions. Buyer shall use its
best efforts to obtain the satisfaction of the conditions specified in
this Agreement.
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6. Conditions Precedent to Buyer's Obligations. The obligations of Buyer
to be performed under this Agreement are subject to the fulfillment,
prior to or at the Closing, of the following conditions precedent, each
of which may be waived in writing in the sole discretion of Buyer:
6.01. Representations and Warranties. The representations and warranties of
Seller made in this Agreement shall be true and correct as of the
Closing in all material respects.
6.02. Compliance with Agreement. Seller shall have performed and complied
with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing, and Buyer
shall have been furnished with a certificate of an authorized
representative of Seller, dated the Closing Date, to that effect.
6.03. Opinion of Counsel for Seller. Buyer shall have received an opinion
from the Law Office of Xxxx Xxxxx, dated the Closing Date, in form and
substance satisfactory to counsel for Buyer, and in substantially the
form annexed hereto as Exhibit A.
6.04. Governmental Approvals. Any governmental agency, department, bureau,
commission and similar body, the consent, authorization or approval of
which is necessary under any applicable law, rule, order or regulation
for the consummation by Seller of the transactions contemplated by this
Agreement and the sale, transfer, conveyance and delivery of the Assets
to Buyer shall have consented to, authorized, permitted or approved
such transactions.
6.05. Consents of Lenders and Other Third Parties. The Seller shall have
received all requisite consents and approvals of all lenders and other
third parties whose consent or approval is required in order for Seller
to consummate the transactions contemplated by this Agreement,
including, without limitation, those set forth on Schedule 2.03.
6.06. Adverse Proceedings. No action or proceeding by or before any court or
other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever that shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement
or that might affect the right of the Buyer to own or use the Assets
after the Closing.
6.07. Certificate of Examination. Seller shall have submitted to Buyer
certificates of examination by a reputable company or lawyer
satisfactory to Buyer of the indices in the State of California
applicable to the appropriate recording files of financial statements,
conditional sales agreement, chattel mortgages, lease agreements,
notices of assignment of loans and mortgages receivable, factors'
liens, trust receipts, and federal tax liens showing there are no
liens, mortgages, encumbrances, charges or other rights of third
parties of record with respect to any of the Assets. Seller agrees to
provide a certificate of examination from the Secretary of State of the
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State of California that are consistent with the aforementioned
certificates of examination by a reputable company or lawyer within
fifteen (15) business days of the Closing.
6.08 Update. Seller shall have provided Buyer with a true, correct and
complete list and amount, as of the Closing Date, of:
(a) Accounts Receivable, including an aging thereof;
(b) Inventory;
(c) Fixed Assets;
(d) all unfilled orders with respect to customers of Seller; and
(e) all shipments by Seller made during the period from the date
of this Agreement to the Closing Date,
none of which information shall be materially different from the
information supplied by Seller as of the date hereof on Schedules 2.06,
2.07 and 2.08.
6.09 Closing Deliveries. Buyer shall have received at or prior to the
Closing each of the following:
(a) A xxxx of sale pertaining to the Assets substantially in the
form annexed hereto as Exhibit B;
(b) Such instruments of conveyance, assignment and transfer, and
such other deeds, conveyances and documents as may be
necessary and appropriate to effect the transfer to, and to
vest in, Buyer, good, clear, record and marketable title to
the Assets and all rights of use and ownership therein and
thereto;
(c) All documents contemplated by Sections 6.02-6.05, 6.07 and
6.08;
(d) All technical data, formulations, product literature,
contracts, files and other data and documents pertaining to
the Assets;
(e) A certificate of the Secretary of the State of California as
to the legal existence and good standing (including with
respect to the payment of tax) of Seller in California;
(f) A certificate of the Secretary of Seller attesting to the
incumbency of Seller's officers, the authenticity of the votes
authorizing the transactions contemplated by this Agreement,
and the authenticity and continuing validity of the charter
documents of Seller; and
(g) Such other documents, instruments or certificates as Buyer may
reasonably request.
7. Conditions Precedent to Seller's Obligations. The obligations of Seller
to be performed under this Agreement on or before the Closing are
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subject to the fulfillment, prior to or at the Closing, of the
following conditions precedent, each of which may be waived in writing
in the sole discretion of Seller:
7.01. Representations and Warranties. The representations and warranties of
Buyer made in this Agreement shall be true and correct as of the
Closing in all material respects.
7.02. Compliance with Agreement. Buyer shall have performed and complied with
all agreements and conditions required by this Agreement to be
performed or complied with by Buyer prior to or at the Closing, and
Seller shall have been furnished with a certificate of an authorized
representative of Buyer, dated the Closing Date, to that effect.
7.03. Governmental Approvals. Any governmental agency, department, bureau,
commission and similar body, the consent, authorization or approval of
which is necessary under any applicable law, rule, order or regulation
for the consummation by Buyer of the transactions contemplated by this
Agreement and the sale, transfer, conveyance and delivery of the Assets
to Buyer shall have consented to, authorized, permitted or approved
such transactions.
7.04. Adverse Proceedings. No action or proceeding by or before any court or
other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever that shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement
or that might affect the right of the Buyer to own or use the Assets
after the Closing.
7.05. Registration Rights. At or prior to Closing, Buyer and Seller shall
have entered into registration rights agreement substantially in the
form annexed hereto as Exhibit D.
7.06. Closing Deliveries. Seller shall have received at or prior to the
Closing each of the following:
(a) Payment of the Purchase Price, including, without limitation,
certificates representing the Shares registered in the name of
Seller and the promissory note;
(b) An assumption agreement pertaining to the Assumed Liabilities
substantially in the form annexed hereto as Exhibit E;
(c) All documents contemplated by Sections 7.02-7.03 and 7.05; and
(d) Such other documents, instruments or certificates as Seller
may reasonably request.
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8. Warranty.
In connection with any products or services of Seller shipped
or performed prior to the Closing, Buyer does not assume any Liability
or obligation for (i) any warranty (express or implied), (ii) any
damage, injury or loss, consequential or otherwise, resulting from
product defects or defects in the services provided, or (iii) any
warranty of merchantability or fitness for a particular purpose.
9. Expenses; Brokers and Finders.
9.01. Expenses. Except as otherwise provided in Sections 1. 07 and 11, Buyer,
on the one hand, and Seller, on the other hand, shall each pay its own
expenses in connection with this Agreement and the transactions
contemplated hereby.
9.02. Brokers and Finders. Seller represents to Buyer and Buyer represents to
Seller, that no fee is due to any broker or finder in connection with
the transactions contemplated by this Agreement and each party shall
indemnify the other and hold it harmless against and in respect of any
claim for brokerage or other commissions relative to this Agreement, or
to the transactions contemplated hereby, and also in respect of all
expenses of any character incurred by Seller in connection with this
Agreement or such transactions.
10. Termination of Agreement.
10.1. Termination by Lapse of Time. This Agreement shall terminate at 5 p.m.,
Boston time, on July 31, 1998 if the transactions contemplated hereby
have not been consummated, unless such date is extended by the written
consent of all of the parties hereto.
10.2. Termination by Agreement of the Parties. This Agreement may be
terminated by the mutual written agreement of the parties hereto. In
the event of such termination by agreement, Buyer shall have no further
obligation or Liability to Seller under this Agreement, and Seller
shall have no further obligation or Liability to Buyer under this
Agreement; provided, however, that this Section 10, the survival and
indemnification provisions set forth in Section 11 hereto and the
expenses provisions set forth in Section 9 hereto shall remain in full
force and effect.
10.3. Termination by Reason of Breach. This Agreement may be terminated by
Seller, if at any time prior to the Closing there shall occur a
material breach of any of the representations, warranties or covenants
of Buyer or the failure by Buyer to perform any condition or obligation
hereunder; and may be terminated by Buyer, if at any time prior to the
Closing there shall occur a material breach of any of the
representations, warranties or covenants of Seller or the failure of
Seller to perform any condition or obligation hereunder.
11. Survival and Indemnification.
11.01. Survival and Materiality of Covenants. All covenants, agreements,
representations and warranties made herein and in certificates
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delivered pursuant hereto shall be deemed to have been material and
relied upon by the party to which made, and shall survive the Closing
Date. All representations, warranties, covenants and agreements made by
Seller in this Agreement shall survive the Closing, and any
investigation at any time made by or on behalf of Buyer; provided,
however, that the representations and warranties of the parties hereto
shall terminate two years from the date of this Agreement. The parties
acknowledge that in entering into this Agreement, they have not relied
on any representations, warranties or covenants other than as expressed
or referred to or incorporated herein.
11.02. Indemnification.
(a) By Buyer. Buyer covenants and agrees with Seller that it will
defend and hold Seller harmless from and against any and all
losses, damages, costs, expenses or other Liabilities,
including reasonable attorneys' fees, arising from the breach
of any one or more of the representations, warranties,
obligations, covenants and agreements made by Buyer in this
Agreement, and Buyer will reimburse Seller in the full amount
of any sum (including reasonable costs, expenses and
attorneys' fees) that Seller pays or becomes obligated to pay
at any time as a result of such breach.
(b) By Seller. Seller covenants and agrees with Buyer that it will
defend and hold Buyer harmless from and against any and all
losses, damages, costs, expenses or other Liabilities,
including reasonable attorneys' fees, arising from any of the
following:
(i) the breach of any one or more of the representations,
warranties, obligations, covenants and agreements
made by Seller;
(ii) any claims against, or Liabilities or obligations of,
Seller, or any claims against the Assets not
specifically assumed by Buyer pursuant to Section
1.04 of this Agreement;
(iii) any warranty claim, product repair or replacement
relating to (y) products manufactured or sold by
Seller prior to the Closing Date or (z) Seller's
business or operation prior to the Closing Date,
other than an Assumed Liability;
(iv) any product liability claim related to (y) products
manufactured or sold by Seller prior to the Closing
Date or (z) the Seller's business or operation prior
to the Closing Date, whether arising from alleged
negligence, breach of warranty or otherwise; and
(v) any tax Liabilities or obligations of any kind or
nature whatsoever of Seller, whether relating to any
period prior to or after the Closing Date.
(c) Amount of Indemnification. In the performance of any of the
foregoing indemnities, the indemnifying party will pay to, or
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reduce any claim against, the other party in the amount which
would then be required to establish the other party in the
position that it would have held had each such representation
or warranty been true, complete and correct, had each such
obligation been fulfilled, and had each such covenant and
agreement been fully performed. The foregoing notwithstanding,
the aggregate amount of indemnification paid by an
indemnifying party shall not exceed the Purchase Price.
(d) Notice of Right to Indemnification. If at any time after the
Closing any party has reason to believe that it is entitled to
indemnification under this Agreement, or any claim or dispute
exists that could, unless successfully defended, entitle such
party to indemnification, the party entitled to
indemnification shall give notice to the other party of the
facts entitling such party to indemnification and the nature
of the claim or dispute. The party receiving notice shall have
the right, a its own expense and through counsel of its
choice, to defend, settle or compromise any claim or dispute
that would entitle the other party to indemnification. If the
party receiving notice refuses or fails to promptly defend or
compromise any such claim or dispute, the party giving notice
shall have the right to defend, settle or compromise such
claim and may seek indemnification from the other party under
this Agreement.
(e) Security for Indemnification; Right of Offset. To secure the
indemnifications and obligations set forth in or contemplated
in this Agreement, a party to this Agreement entitled to
indemnification from the other party to this Agreement, or
entitled to payment of any sum from the other party, shall be
entitled to offset against and deduct from any amount due to
such other party the amount of any damages, costs, expenses or
other liabilities against which the party entitled to
indemnification has been indemnified and/or any payment due
from the other party.
12. Confidentiality. All information not previously disclosed to the public
or generally known to persons engaged in the respective businesses of
Seller or Buyer that shall have been furnished by Buyer or Seller to
the other party in connection with the transactions contemplated hereby
shall not be disclosed to any person other than their respective
employees, directors, attorneys, accountants or other designated
representatives, including certain financial institutions and advisors,
or other than as contemplated herein. In the event that the
transactions contemplated by this Agreement shall not be consummated,
all such information that is in documentary form shall be returned to
the party furnishing the same, including, to the extent reasonably
practicable, all copies or reproductions thereof which may have been
prepared, and neither party shall at any time thereafter disclose to
third parties, or use, directly or indirectly, for its own benefit, any
such information, written or oral, about the business of the other
party hereto.
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13. Miscellaneous.
13.01. Notices. All notices required or permitted to be given in connection
with the transactions contemplated by this Agreement shall be in
writing and shall be deemed to have been sufficiently given if
delivered personally, sent by facsimile or nationally recognized
overnight delivery service, or mailed by certified mail, postage
prepaid, addressed to:
If to Seller:
Xxxxx Xxxx
000 Xx Xxx Xxxxx
Xxxxxx Xxxx, XX 00000
With a copy to:
Xxxx Xxxxx, Esq.
Suite 301
0000 Xxx Xxxxxxx
Xxx Xxxx, XX 00000
If to Buyer:
Attention: Xxxxxx X. Xxxxxx
Chairman of the Board & CEO
Focus Enhancements, Inc.
000 Xxxxx Xxxx
Xxxxxxx, XX 00000
With a copy to:
Attention: General Counsel
Focus Enhancements, Inc.
000 Xxxxx Xxxx
Xxxxxxx, XX 00000
or to such other address or addresses as either party shall notify the
other of in writing. Notice shall be deemed to have been given upon
delivery if delivered personally or by facsimile, one business day
after being sent by overnight delivery with a nationally recognized
overnight delivery service, or if mailed, three business days following
deposit in the mail.
13.02. Modification of Agreement. This Agreement, including the Schedules and
Exhibits hereto, contains the entire agreement and understanding of the
parties hereto and may not be altered, modified or changed in any
manner whatsoever except by a writing signed by authorized officers of
Seller and Buyer.
13.03. Governing Law. This Agreement is intended to take effect as a sealed
instrument and shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
13.04. Headings. The Section headings in this Agreement are for convenience
only and shall not affect the construction hereof.
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13.05. Counterparts. This Agreement may be executed and delivered in a number
of counterparts, each of which, when so executed and delivered, shall
be deemed an original and all of which shall together constitute one
and the same agreement.
13.06. Exhibits. All Schedules, Exhibits and documents referred to herein are
hereby incorporated herein by this reference and shall become a part of
this Agreement.
13.07. Assigns. Any purported assignment of this Agreement by any party shall
have no force or effect whatsoever unless the prior written consent of
the other party to this Agreement is first obtained; provided, however,
that Buyer may assign this Agreement, and its rights and obligations
hereunder, to a parent, subsidiary or affiliate.
13.08. Specific Performance. Each of the parties acknowledges and agrees that
the consideration relating hereto is unique and that either party may
have no adequate remedy at law if the other party fails to perform its
obligations hereunder and further acknowledges that the aggrieved party
will be entitled in such event to require specific performance of this
Agreement in addition to any other rights and remedies which it may
have at law or in equity, without limitation.
13.09. Severability. If any provision of this Agreement shall be held invalid,
illegal or unenforceable as applied to any particular case, such
circumstance shall not affect the enforceability of any such provision
in any other case, nor shall it affect the validity or enforceability
of any other provision of this Agreement.
13.10. Jurisdiction. Any action to enforce, arising out of, or relative in any
way to the provisions of this Agreement may be brought and prosecuted
in such court or courts located within the Commonwealth of
Massachusetts as is provided by law, and Seller consents to the
jurisdiction of said court or courts and to service of process by
registered mail, return receipt requested, or by any other manner
provided by law.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
FOCUS ENHANCEMENTS, INC.
By: ________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
PC VIDEO CONVERSION, INC.
By: ________________________
Name: Xxxxx Xxxx
Title: President
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