EXHIBIT 2.5
CONFORMED COPY
PURCHASE AND SALE AGREEMENT
between
FOCUS ENHANCEMENTS, INC.
and
DIGITAL VISION, INC.
March 31, 1998
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT, made and entered into as of this 31st day of March,
1998, by and among FOCUS Enhancements, Inc., a Delaware corporation with its
principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Buyer"), and Digital Vision, Inc., a Massachusetts corporation with its
principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (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) all accounts (including without limitation any bank
accounts, checks, cash equivalents and any cash on hand) (collectively,
the "Accounts"), all unfilled purchase orders (the "Back Log") and
accounts receivable existing on the Closing Date, including any
security held for the payment thereof (the "Accounts Receivable");
(b) all inventories including, without limitation, raw
materials, (including, without limitation, all PCI-related raw
materials), all work-in-process, all finished goods (including, without
limitation, 250 completed PCI boards in the possession of Seller),
office supplies, maintenance supplies, packaging materials, spare parts
and similar items (collectively, the "Inventory") that exist on the
Closing Date. Notwithstanding the foregoing, Inventory shall not
include certain inventory in the possession of New Wave Manufacturing,
Inc., which is known to and acceptable to Buyer;
(c) all tangible assets of Seller (the "Fixed Assets"),
including without limitation all machinery, computer hardware and other
equipment, tools, and maintenance
machinery and equipment, whether or not reflected as capital assets in
the accounting records of Seller except non-PCI-related test equipment;
(d) all intangible property rights of Seller (the "Intangible
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, as well as any foreign applications claiming priority
therefrom, (ii) 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, (iii) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection
therewith, (iv) all mask works and all applications, registrations, and
renewals in connection therewith, (v) 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), (vi) all
computer software (including data and related documentation), (vii) all
other proprietary rights, and (viii) all copies and tangible
embodiments thereof (items listed in clauses (i)-(viii) shall be
referred to herein as "Intellectual Property"), and 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, or 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; and
(e) all rights under the contracts, agreements, licenses and
other instruments that are set forth on Schedule 1.01(e) attached
hereto, (collectively, the "Contract Rights").
1.02. Purchase Price. In full consideration for the conveyance and
transfer to Buyer of the Acquired Assets, at the Closing Buyer shall (i) issue
to Seller on the Closing Date 350,000 shares (the "Shares") of common stock,
$0.01 par value per share of the Buyer (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 Flagship Bank and Trust Company, Seller's
commercial lender (the "Lender"), the amount owed to Lender by Seller (the "Loan
Pay-Off Amount"), provided, however, that the Loan Pay-Off Amount shall not
exceed Three Hundred Twenty-Nine Thousand Nine Hundred Fifty-Three Dollars
($329,953) plus interest; and (iii) assume certain accounts payable of Seller,
as specified on Schedule 1.02(iii) attached hereto (the "Assumed Accounts
Payable"), totaling Eighty Thousand Dollars ($80,000), which amount shall be the
combined sum of the amount of the Accounts described in Section 1.01(a) hereof
and such amount contributed
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by Buyer (if necessary) and deposited by Buyer and Seller into an escrow
account, for whom Seller's attorney shall serve as escrow agent (the "Escrow
Account") to be used exclusively to pay the Assumed Accounts Payable. Any sums
remaining in the Escrow Account following satisfaction of all claims specified
on Schedule 1.02(iii) hereto shall be returned to Buyer, provided however, that
Buyer shall have no right to receive any balance remaining in the Escrow Account
once claims equaling Eighty Thousand Dollars ($80,000) have been paid. (The
amounts identified in clauses (i)-(iii) of this Section 1.02 shall be referred
to herein as the "Purchase Price".)
1.03. 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.
1.04. Liabilities of Seller. Except for the Loan Pay-Off Amount, 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.
1.05. The Closing Date. The closing (the "Closing") shall occur on
March 31, 1998 at 10 a.m. at the offices of ▇▇▇▇▇▇▇▇ & Worcester LLP, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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").
1.06. Sales Taxes. Seller shall pay all sales, transfer and documentary
taxes, if any, payable in connection with the sale, transfer and deliveries to
be made to Buyer hereunder.
1.07 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.
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 Commonwealth of
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Massachusetts 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 corporation 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, (except
to the extent that Buyer and Seller understand that Buyer, Seller and Lender
shall either enter into a loan modification agreement acceptable to Buyer or
Lender shall waive in writing any conflict with the existing loan
documentation), 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. Notwithstanding the forgoing,
the obligations, rights and remedies of parties may be limited by the
application of bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting the enforcement generally of the
rights and remedies of creditors and secured parties or the obligations of
debtors, and general principles of equity.
2.04. Title to Assets; Condition and Location; Sufficiency. Except as
set forth on Schedule 2.04 attached hereto, and subject to that certain
Assumption Agreement by and between Buyer, Seller and Lender of even date hereto
(the "Flagship Bank Agreement"), Seller has good and marketable title to all of
the Assets, free and clear of any and all liens, security interests,
encumbrances and claims. The Assets are adequate to conduct the business
operations currently conducted by Seller, except that Buyer is not taking any
non-PCI related products or inventory from New Wave, Inc.
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
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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 two months ended February 28, 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
generally accepted accounting principles and fairly present the financial
condition of Seller in all material respects.
2.06 Accounts Receivable. Schedule 2.05 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 2.05, 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.
2.07 Inventory. The Inventory consists, and will at the Closing Date
consist, of those items as described in Section 1.01(b), of this agreement.
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. 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.
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
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no disputes with or claims against any third party for infringement by
such third party of any 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; Except for and to the extent that, Buyer
incurs liabilities under agreements assumed by Buyer, (including those
liabilities contained in the Flagship Bank Agreement), Buyer assumes no
liabilities.
2.11. Undisclosed Liabilities. Except as and to the extent (i) that
Buyer is aware of Seller's defaults under the Flagship Bank Agreement, that
certain Lease as amended by that certain Agreement dated January 31, 1995 by and
between Seller and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee, Bridge Realty Trust
("Landlord"), for a premises located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
(the "Lease"), and all such agreements listed on Schedule 1.01(e), or (ii) such
Liabilities are not individually or in the aggregate material, there are no
Liabilities of Seller (including without limitation any Liabilities for taxed
owed to any governmental entity, pension liability or any other Liability
arising out of any state or federal statute, rule or regulation) affecting any
of the Assets.
2.12. Litigation. Except as set forth on Schedule 2.12 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. (The schedule
called for in this section may be satisfied by an officer of the corporation
making such written notification on any accounts payable report or other
appropriate schedule in order to indicate which accounts of seller are subject
to such threats. In so far as a schedule is to be created, it will also list
threats made by Lender, if appropriate and the notice of eviction filed by
Landlord.)
2.13. 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 Liability
(and there is no basis for any present of 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 2.13 attached hereto includes copies of the standard terms and
conditions of sale or lease for Seller (containing applicable guaranty, warranty
and indemnity provisions).
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2.14. Compliance with Laws. As of the Closing Date, 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.
2.15. Indebtedness, Powers of Attorney and Guarantees. Except for the
Flagship Bank Agreement, 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.
2.16. 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.
2.17. 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.
2.18. 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, subject to
disclosures made up to the time of Closing.
2.19. Disclosure. Subject to disclosures made up to the time of
Closing, 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 Commonwealth of Massachusetts 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 Stock Issuance. The Common Shares are duly authorized and, upon
issuance in accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable, and free from all taxes, liens, claims and
encumbrances and will not be subject to preemptive rights or other similar
rights of stockholders of the Company and will not impose personal liability on
the holders thereof.
3.04. SEC Documents. Except as set forth on Schedule 3.04, since
December 31, 1997, the Company has timely filed (within applicable extension
periods) all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (all of the
foregoing and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein, being
hereinafter referred to herein as the "SEC Documents"). As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the statements made in any such SEC Documents is, or has
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been, required to be amended or updated under applicable law (except for such
statements as have been amended or updated in subsequent filings made prior to
the date hereof).
3.05. Absence of Certain Changes. Since December 31, 1997, there has
been no material adverse change and no material adverse development in the
business, properties, operations, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, except as
disclosed in Schedule 3.05 or in the SEC Documents filed prior to the date
hereof.
3.06. 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.
4. Covenants of Seller.
Seller covenants and agrees with Buyer as follows:
4.01. Compliance with Laws. 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.
4.02. Preservation of Business. For a period of ninety (90) 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 90-day period, Seller agrees
not to interfere with Buyer and its relations with suppliers, customers,
employees and others.
4.03. 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.
4.04. 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.
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4.05. 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 a breach of this Section 4.06 would
cause Buyer irreparable harm and that the remedy at law for any breach
of this Section 4.06 would be inadequate and that Buyer shall be
entitled to injunctive relief in addition to any other remedy it may
have upon breach of any provision of this Section 4.06.
4.06. 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 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.
4.07. Non-Competition Agreement.
(a) In further consideration of the Purchase Price, for a
period of five (5) years following the Closing Date, 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
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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.
4.08. 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.
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 ▇▇▇▇ & ▇▇▇▇ LLP, 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,
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including, without limitation, the consent of Lender to such loan modification
agreement as shall be acceptable to Buyer. Such consent shall include no
requirement for Buyer to guarantee a loan nor shall it require securitization of
assets beyond those conveyed hereunder. Further, the consent of the Lender must
allow Buyer a minimum of one (1) year to pay the Loan Pay-Off Amount.
6.06. Adverse Proceedings. No action or proceeding not discharged
within ten (10) days, 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 Closing Deliveries. Buyer shall have received at or prior to the
Closing each of the following:
(a) A ▇▇▇▇ 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, (subject
to such interests held by Lender under the Flagship Bank Agreement),
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 and 6.07;
(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 Commonwealth of
Massachusetts as to the legal existence and good standing (including
with respect to the payment of tax) of Seller in Massachusetts;
(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.
6.08. Consent of Manufacturer. The Sellers shall have received and
shall supply to Buyer a consent from New Wave Manufacturing, Inc.
("Manufacturer") that assures Buyer access
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to certain PCI-related Inventory held by Manufacturer and willingness of
Manufacturer to continue to manufacture products conveyed hereunder.
7. Conditions Precedent to Seller's Obligations.
The obligations of Seller to be performed under this Agreement on or
before the Closing 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 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 C.
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;
(b) An assumption agreement pertaining to the Assumed
Liabilities substantially in the form annexed hereto as Exhibit D;
(c) All documents contemplated by Sections 7.02, 7.03 and
7.05; and
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(d) Such other documents, instruments or certificates as
Seller may reasonably request.
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 1.06 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 April 15, 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.
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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
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;
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(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, except for assumed liabilities,
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
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, at 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 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
16
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.
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 to Seller if
delivered personally, sent by facsimile or nationally recognized overnight
delivery service, or mailed by certified mail, postage prepaid, addressed to:
Digital Vision, Inc.
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and to Buyer if delivered personally, sent by facsimile or nationally recognized
overnight delivery service, or mailed by certified mail, postage prepaid,
addressed to:
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FOCUS Enhancements, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
FOCUS Enhancements, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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.
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.
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13.07. Assigns. Any purported assignment of this Agreement by Seller
shall have no force or effect whatsoever unless the prior written consent of
Buyer is first obtained; Buyer may assign this Agreement, and its rights and
obligations hereunder, at its sole discretion.
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 shall be brought and prosecuted
in such court or courts located within the exclusive jurisdiction of The
Commonwealth of Massachusetts as is provided by law, and Seller consents to such
exclusive 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
FOCUS ENHANCEMENTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇.▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
DIGITAL VISION, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
President
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