COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT is dated as of January
11, 2002 (this "Purchase Agreement" or "Agreement"), by and between FOCUS
ENHANCEMENTS, INC., a Delaware corporation, having its principal place of
business located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Company"), and each of the Investors listed on Schedule A hereto (the
"Investor", and collectively the "Investors").
W I T N E S S E T H
WHEREAS, the Company wishes to sell to the respective Investors, and
such respective Investors are willing to buy from the Company, subject to the
terms and conditions set forth herein, Two Million Four Hundred Thirty-Four
Thousand Four Hundred Ninety (2,434,490) shares of Common Stock, par value $.01
per share (the "Common Stock"), of the Company.
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreement contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
A. Definitions. As used herein, each of the following terms has the
meaning set forth below, unless the context otherwise requires:
(i) "Closing Date" means the date of the closing of the
purchase and sale of the Shares, as provided herein.
(ii) "Company Control Person" means each director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Company pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act
(as hereinafter defined).
(iii) "Effective Date" means the effective date of the
Registration Statement covering the Registrable Securities (as those terms are
defined in the Registration Rights Agreement) relating to the Shares.
(iv) "Escrow Funds" means the Purchase Price delivered to the
Escrow Agent as contemplated by Sections 5(b) and (c) hereof.
(v) "Last Audited Date" means December 31, 2000.
(vi) "Investor Control Person" means each director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Investor pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.
(vii) "Majority In Interest" means Investors owning in excess
of 51% of the Common Stock on the relevant date.
(viii) "Material Adverse Effect" means an event or combination
of events, which individually or in the aggregate, would reasonably be expected
to (w) adversely affect the legality, validity or enforceability of the Shares
or any of the Transaction Agreements, (x) have or result in a material adverse
effect on the results of operations, assets, or financial condition of the
Company and its subsidiaries, taken as a whole, (y) adversely impair the
Company's ability to perform fully on a timely basis its obligations under any
of the Transaction Agreements or the transactions contemplated thereby, or (z)
materially and adversely affect the value of the rights granted to the Investors
in the Transaction Agreements.
(ix) "Principal Trading Market" means the NASDAQ SmallCap
Market.
(x) "Registration Rights Agreement" means the Registration
Rights Agreement in the form annexed hereto as Annex IV, as executed by each
Investor and the Company simultaneously with the execution of this Agreement.
(xi) "Shares" means the shares of Common Stock.
(xii) "Transaction Agreements" means this Purchase Agreement,
the Joint Escrow Instructions, the Registration Rights Agreement, and the Common
Stock Purchase Warrants (as defined below) and includes all ancillary documents
referred to in those agreements.
(xiii) "1933 Act" or "Securities Act" means the Securities Act
of 1933, as amended.
(xiv) "1934 Act" or "Exchange Act" means the Securities
Exchange Act of 1934, as amended.
1. PURCHASE AND SALE; MUTUAL DELIVERIES. (a) Upon the following terms
and conditions, the Company shall issue and sell to the Investors and the
Investors shall purchase from the Company that number of shares of Common Stock
equal to Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000.00) (the
"Aggregate Amount") divided by the Purchase Price (as hereinafter defined),
resulting in an aggregate of 2,434,490 shares (the "Shares") to be issued upon
the payment of the Purchase Price by the respective Investors in the amounts and
denominations set forth in Annex I. The Shares are part of an aggregate issuance
of 2,434,490 shares of Common Stock on substantially similar terms. The Purchase
Price is $1.1296 per share. The Company's obligation to sell the Shares to each
Investor and each Investor's obligation to purchase Shares from the Company is
several and represents a separate agreement. Upon receipt of the Purchase Price,
the Company shall deliver to the Investor one or more certificates representing
the Shares, bearing substantially the following legend:
THE SECURITIES REPRESENTED HEREBY (THE "SECURITIES") HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OFFERED FOR SALE
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IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
(b) (i) The Investor acknowledges that (1) the Shares have not been and
are not being registered under the provisions of the 1933 Act and, except as
provided in the Registration Rights Agreement or otherwise included in an
effective registration statement, the Shares have not been and are not being
registered under the 1933 Act, and may not be transferred unless (A)
subsequently registered thereunder or (B) the Investor shall have delivered to
the Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Shares to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Shares made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of such Shares
under circumstances in which the seller, or the Person through whom the sale is
made, may be deemed to be an underwriter, as that term is used in the 1933 Act,
may require compliance with some other exemption under the 1933 Act or the rules
and regulations of the Securities and Exchange Commission ("Commission" or the
"SEC") thereunder; and (3) neither the Company nor any other Person is under any
obligation to register the Shares (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or to comply with the terms and conditions
of any exemption thereunder.
(ii) Within three (3) business days (such third business day,
the "Delivery Date") after the business day on which the Company has received
both the notice of sale (by facsimile or other delivery) and the original Common
Stock certificate (and if the same are not delivered to the Company on the same
date, the date of delivery of the second of such items) from a given Investor,
the Company at its expense, (i) shall deliver, and shall cause legal counsel
selected by the Company to deliver, to its transfer agent (with copies to
Investor) an appropriate instruction and opinion of such counsel, for the
delivery of unlegended Shares issuable pursuant to the registration statement
for the Shares; provided that such registration statement at the time of sale
has been declared effective by the Commission and is current (the "Unlegended
Shares"); and (ii) transmit the certificates representing the Unlegended Shares
(together, unless otherwise instructed by the Investor, with Common Stock not
sold), to the Investor at the address specified in a notice of sale (which
address may be the Investor's address for notices as contemplated by Section 9
hereof or a different address) via express courier, by electronic transfer or
otherwise.
(iii) In lieu of delivering physical certificates representing
the Unlegended Shares, if the Company's transfer agent is participating in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer program,
upon request of an Investor and its compliance with the provisions contained in
this paragraph, so long as the certificates therefor do not bear a legend and
the Investor thereof is not obligated to return such certificate for the
placement of a legend thereon, the Company shall use its best efforts to cause
its transfer agent to
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electronically transmit the Unlegended Shares by crediting the account of such
Investor's Prime Broker with DTC through its Deposit Withdrawal Agent Commission
system.
(c) The Company shall also deliver, or cause to be delivered, the
original or execution copies of this Purchase Agreement.
(d) There are no preemptive rights of any shareholder of the Company,
as such, to acquire the Warrants or the Shares. No party has a currently
exercisable right of first refusal which would be applicable to any or all of
the transactions contemplated by the Transaction Agreements.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each respective Investor that:
(a) The Company has the corporate power and authority to enter into
this Purchase Agreement, and to perform its obligations hereunder. The execution
and delivery by the Company of this Purchase Agreement and the consummation by
the Company of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of the Company. This Purchase
Agreement has been duly executed and delivered by the Company and constitute the
valid and binding obligation of the Company enforceable against it in accordance
with its respective terms, subject to the effects of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and to general equitable principles.
(b) Except as set forth in the SEC Documents (as hereinafter defined),
there is no pending, or to the knowledge of the Company, threatened, judicial,
administrative or arbitral action, claim, suit, proceeding or investigation
which might affect the validity or enforceability of this Purchase Agreement or
which involves the Company and which if adversely determined, could reasonably
be expected to have a material adverse effect on the Company and its
subsidiaries taken as a whole.
(c) No consent or approval of, or exemption by, or filing with, any
party or governmental or public body or authority is required in connection with
the execution, delivery and performance under this Purchase Agreement or the
taking of any action contemplated hereunder or thereunder.
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation.
(e) The execution, delivery and performance of this Purchase Agreement
by the Company, and the consummation of the transactions contemplated hereby,
will not (i) violate any provision of the Company's certificate of incorporation
or bylaws, (ii) violate, conflict with or result in the breach of any of the
terms of, result in a material modification of the effect of, otherwise, give
any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default under, any contract or
other agreement to which the Company is a party or by or to which the Company or
any of the Company's assets or properties
4
may be bound or subject, (iii) violate any order, judgment, injunction, award or
decree of any court, arbitrator or governmental or regulatory body by which the
Company, or the assets or properties of the Company are bound and (iv) to the
Company's knowledge, violate any statute, law or regulation.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each Investor
hereby represents and warrants to the Company that:
(a) The Investor has the corporate power and authority to enter into
this Purchase Agreement and to perform its obligations hereunder. The execution
and delivery by the Investor of this Purchase Agreement, and the consummation by
the Investor of the transactions contemplated hereby, have been duly authorized
by all necessary corporate action on the part of the Investor. This Purchase
Agreement has been duly executed and delivered by the Investor and constitutes
the valid and binding obligation of the Investor, enforceable against it in
accordance with its respective terms, subject to the effects of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and to general equitable principles.
(b) The execution, delivery and performance by the Investor of this
Purchase Agreement, and the consummation of the transactions contemplated
hereby, do not and will not breach or constitute a default under any applicable
law or regulation or of any agreement, judgment, order, decree or other
instrument binding on the Investor.
(c) The Investor has such knowledge and prior substantial investment
experience in financial and business matters, including investment in non-listed
and non-registered securities, and has had the opportunity to engage the
services of an investment advisor, attorney or accountant to read the SEC
Documents and to evaluate the merits and risks of investment in the Company and
the Shares.
(d) The Investor is an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D promulgated under the 1933 Act.
(e) [RESERVED]
(f) The Investor is acquiring the Shares, the Warrants (as defined in
Section 4(n)) and the shares of Common Stock issuable upon exercise of the
Investor Warrants (the "Warrant Shares") solely for the Investor's own account
for investment and not with a view to or for sale in connection with a
distribution of any of the Shares or the Warrant Shares (the Shares, Warrants
and Warrant Shares collectively, the "Shares").
(g) The Investor does not have a present intention to sell the Shares,
nor a present arrangement or intention to effect any distribution of any of the
Shares to or through any person or entity for purposes of selling, offering,
distributing or otherwise disposing of any of the Shares.
5
(h) The Investor may be required to bear the economic risk of the
investment indefinitely because none of the Shares may be sold, hypothecated or
otherwise disposed of unless subsequently registered under the Securities Act
and applicable state securities laws or an exemption from registration is
available. Any resale of any of the Shares can be made only pursuant to (i) a
registration statement under the Securities Act which is effective and current
at the time of sale or (ii) a specific exemption from the registration
requirements of the Securities Act. In claiming any such exemption, the Investor
will, prior to any offer or sale or distribution of any Shares advise the
Company and, if requested, provide the Company with a favorable written opinion
of counsel, in form and substance satisfactory to counsel to the Company, as to
the applicability of such exemption to the proposed sale or distribution.
(i) The Investor understands that the exemption afforded by Rule 144
promulgated by the Commission under the Securities Act ("Rule 144") will not
become available for at least one year from the date of payment for the Shares
and any sales in reliance on Rule 144, if then available, can be made only in
accordance with the terms and conditions of that rule, including, among other
things, a requirement that the Company then be subject to, and current, in its
periodic filing requirements under the Exchange Act, and, among other things, a
limitation on the amount of shares of Common Stock that may be sold in specified
time periods and the manner in which the sale can be made; that, while the
Company's Common Stock is registered under the Exchange Act and the Company is
presently subject to the periodic reporting requirements of the Exchange Act,
there can be no assurance that the Company will remain subject to such reporting
obligations or current in its filing obligations; and that, in case Rule 144 is
not applicable to a disposition of the Shares, compliance with the registration
provisions of the Securities Act or some other exemption from such registration
provisions will be required.
(j) The Investor understands that legends shall be placed on the
certificates evidencing the Shares to the effect that the Shares have not been
registered under the Securities Act or applicable state securities laws and
appropriate notations thereof will be made in the Company's stock books. Stop
transfer instructions will be placed with the transfer agent of the Shares.
(k) Except as set forth in the Term Sheet between the Company and
Vfinance, Investments, Inc. dated December 27, 2001, the Investor has taken no
action which would give rise to any claim by any person for brokerage
commission, finder's fees or similar payments by Investor relating to this
Purchase Agreement or the transactions contemplated hereby. The Company shall
have no obligation with respect to such fees or with respect to any claims made
by or on behalf of other persons for fees of a type contemplated in this Section
3(k) that may be due in connection with the transactions contemplated hereby.
The Investor shall indemnify and hold harmless the Company, its employees,
officers, directors, agents, and partners, and their respective Affiliates, from
and against all claims, losses, damages, costs (including the costs of
preparation and attorney's fees) and expenses suffered in respect of any such
claimed or existing fees, as and when incurred.
6
4. COVENANTS OF THE COMPANY. (a) The Company covenants and agrees to
enter into a Registration Rights Agreement governing the registration of the
Shares with the Investors dated as of the date hereof.
(b) Current Public Information. The Company has furnished or made
available to each Investor true and correct copies of all registration
statements, reports and documents, including proxy statements (other than
preliminary proxy statements), filed with the Commission by or with respect to
the Company since December 31, 2000 and prior to the date of this Agreement,
pursuant to the Securities Act or the Exchange Act (collectively, the "SEC
Documents"). The SEC Documents are the only filings made by or with respect to
the Company since December 31, 2000 pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act or pursuant to the Securities Act. The Company has
filed all reports, schedules, forms, statements and other documents required to
be filed under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act since
December 31, 2000 and prior to the date of this Agreement.
(c) SEC Documents. The Company has not provided to the Investor any
information which according to applicable law, rule or regulation, should have
been disclosed publicly prior to the date hereof by the Company but which has
not been so disclosed. As of their respective dates or their restated dates (if
so restated), the SEC Documents complied, and all similar documents filed with
the SEC prior to the Closing Date will comply, in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
rules and regulations of the SEC promulgated thereunder and other federal, state
and local laws, rules and regulations applicable to such SEC Documents, and none
of the SEC Documents contained, nor will any similar document filed with the SEC
prior to the Closing Date contain, any untrue statement of a material fact or
omit 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. The financial statements of the Company included
in the SEC Documents, as of the dates thereof (or the restated dates, if so
restated), complied, and all similar documents filed with the SEC prior to the
Closing Date will comply, as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC and
other applicable rules and regulations with respect thereto. Such financial
statements were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements as permitted by Form
10-QSB of the SEC) and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(d) Absence of Certain Changes. Since the Last Audited Date, there has
been no material adverse change and no Material Adverse Effect, except as
disclosed in the Company's SEC Documents. Since the Last Audited Date, except as
provided in the Company's SEC Documents or disclosed in the Transaction
Documents, the Company has not (i) incurred or become subject to any material
liabilities (absolute or contingent) except liabilities incurred in
7
the ordinary course of business consistent with past practices; (ii) discharged
or satisfied any material lien or encumbrance or paid any material obligation or
liability (absolute or contingent), other than current liabilities paid in the
ordinary course of business consistent with past practices; (iii) declared or
made any payment or distribution of cash or other property to shareholders with
respect to its capital stock, or purchased or redeemed, or made any agreements
to purchase or redeem, any shares of its capital stock; (iv) sold, assigned or
transferred any other tangible assets, or canceled any debts or claims, except
in the ordinary course of business consistent with past practices; (v) suffered
any substantial losses or waived any rights of material value, whether or not in
the ordinary course of business, or suffered the loss of any material amount of
existing business; (vi) made any changes in employee compensation, except in the
ordinary course of business consistent with past practices; or (vii) experienced
any material problems with labor or management in connection with the terms and
conditions of their employment.
(e) Absence of Litigation. Except as disclosed in the Company's SEC
Documents, (i) there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body pending or, to the knowledge of the
Company, threatened against or affecting the Company before or by any
governmental authority or nongovernmental department, commission, board, bureau,
agency or instrumentality or any other Person, wherein an unfavorable decision,
ruling or finding would have a Material Adverse Effect or which would adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, any of the Transaction Agreements;
(ii) the Company is not aware of any valid basis for any such claim that (either
individually or in the aggregate with all other such events and circumstances)
could reasonably be expected to have a Material Adverse Effect; or (iii) there
are no outstanding or unsatisfied judgments, orders, decrees, writs, injunctions
or stipulations to which the Company is a party or by which it or any of its
properties is bound, that involve the transaction contemplated herein or that,
alone or in the aggregate, could reasonably be expect to have a Material Adverse
Effect.
(f) [RESERVED]
(g) [RESERVED]
(h) No Undisclosed Liabilities or Events. The Company has no
liabilities or obligations other than those disclosed in the Transaction
Agreements or the Company's SEC Documents or those incurred in the ordinary
course of the Company's business since the Last Audited Date, or which
individually or in the aggregate, do not or would not have a Material Adverse
Effect. No event or circumstances has occurred or exists with respect to the
Company or its properties, business, operations, financial condition, or results
of operations, which, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed. There are no proposals currently
under consideration or currently anticipated to be under consideration by the
Board of Directors or the executive officers of the Company which proposal would
(x) change the certificate of incorporation or other charter document or by-laws
of the Company, each as currently in effect, with or without shareholder
approval, which change would reduce or otherwise adversely affect the rights and
powers of the shareholders of the Common Stock or (y)
8
materially or substantially change the business, assets or capital of the
Company, including its interests in subsidiaries.
(i) Trading in Securities. The Company specifically acknowledges that,
except to the extent specifically provided herein or in any of the other
Transaction Agreements (but limited in each instance to the extent so
specified), and subject to applicable state and federal securities laws, the
Investor retains the right (but is not otherwise obligated) to buy, sell, engage
in hedging transactions or otherwise trade in the Shares of the Company,
including, but not necessarily limited to, the Shares, at any time before,
contemporaneous with or after the execution of this Purchase Agreement or from
time to time and in any manner whatsoever permitted by applicable federal and
state securities laws.
(j) Fees to Brokers, Finders and Others. Except as set forth in the
Term Sheet between the Company and vFinance, Investments, Inc. dated December
27, 2001, the Company has taken no action which would give rise to any claim by
any person for brokerage commission, finder's fees or similar payments by the
Company relating to this Purchase Agreement or the transactions contemplated
hereby. Investor shall have no obligation with respect to such fees or with
respect to any claims made by or on behalf of other persons for fees of a type
contemplated in this Section 4(j) that may be due in connection with the
transactions contemplated hereby. The Company shall indemnify and hold harmless
each of Investor, its employees, officers, directors, agents, and partners, and
their respective Affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees, as and when incurred.
(k) Use of Proceeds. The Company will use the proceeds received
hereunder (excluding amounts paid by the Company for legal fees, finder's fees
and escrow fees in connection with the sale of the Shares) for the purposes
contemplated by the schedule attached hereto as Annex VII, and, unless
specifically consented to in advance in each instance by a majority in interest
of the Investors, the Company shall not, directly or indirectly, use such
proceeds for any loan to or investment in any other corporation, partnership
enterprise or other Person, including any of its Affiliates, or for the
repayment of any outstanding loan by the Company to any other party or for any
purpose constituting a material change from such schedule.
(l) [RESERVED]
(m) [RESERVED]
(n) Warrants. The Company agrees to issue to the respective Investors
at the Closing, transferable divisible warrants (the "Investor Warrants") to
purchase up to 243,449 shares of Common Stock in the form attached as Annex VI
hereto. Such Investor Warrants shall bear an exercise price per share of Common
Stock equal to $1.36 and shall be exercisable, immediately upon issuance, and
for a period of four (4) years thereafter.
(o) [RESERVED]
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(p) [RESERVED]
5. DELIVERY OF SHARES. (a) In accordance with the Joint Escrow
Instructions, attached hereto as Annex II and made a part hereof, promptly
following the delivery by the respective Investor of the respective Purchase
Price for the Shares in accordance with Section 1 hereof, the Company will
irrevocably instruct its transfer agent to issue to such Investor legended
certificates representing the Shares.
(b) Form of Payment; Delivery of Certificates:
(i) The respective Investor shall pay the Purchase Price for
the Shares by delivering immediately available good funds in United States
Dollars to the Escrow Agent no later than the date prior to the Closing Date.
(ii) No later than the Closing Date, but in any event promptly
following payment by the respective Investor to the Escrow Agent of the Purchase
Price, the Company shall deliver the Shares, each duly executed on behalf of the
Company and issued in the name of the respective Investor, to the Escrow Agent.
(iii) By signing this Agreement, each respective Investor and
the Company, subject to acceptance by the Escrow Agent, agrees to all of the
terms and conditions of, and becomes a party to, the Joint Escrow Instructions,
all of the provisions of which are incorporated herein by this reference as if
set forth in full.
(c) Method of Payment. Payment into escrow of the Purchase Price shall
be made by wire transfer of funds to:
Bank of New York
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ABA# ▇▇▇▇▇▇▇▇▇
For credit to the account of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Account No.: 637-▇▇▇▇▇▇▇
Re: FOCUS Transaction
(d) [RESERVED]
(e) [RESERVED]
6. CLOSING DATE.
(a) The Closing Date shall occur on the date which is the first NYSE
trading day after each of the conditions contemplated by Sections 7 and 8 hereof
shall have either been satisfied or been waived by the party in whose favor such
conditions run.
10
(b) The closing of the purchase and issuance of the Shares shall occur
on the Closing Date at the offices of the Escrow Agent and shall take place no
later than 3:00 P.M., New York time, on such day or such other time as is
mutually agreed upon by the Company and a majority in interest of the Investors.
(c) Notwithstanding anything to the contrary contained herein, the
Escrow Agent will be authorized to release the Escrow Funds to the Company and
to others and to release the other Escrow Property on the Closing Date upon
satisfaction of the conditions set forth in Sections 7 and 8 hereof and as
provided in the Joint Escrow Instructions.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
Each Investor understands that the Company's obligation to sell the
Shares to such Investor pursuant to this Agreement on the Closing Date is
conditioned upon:
(a) The execution and delivery of this Purchase Agreement and the
Registration Rights Agreement by such Investor;
(b) Delivery by such Investor to the Escrow Agent of good funds as
payment in full of an amount equal to the Purchase Price for the Shares in
accordance with this Purchase Agreement;
(c) The accuracy on such Closing Date of the representations and
warranties of such Investor contained in this Purchase Agreement, each as if
made on such date, and the performance by such Investor on or before such date
of all covenants and agreements of the Investor required to be performed on or
before such date; and
(d) There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
8. CONDITIONS TO THE INVESTORS' OBLIGATION TO PURCHASE.
The Company understands that the respective Investor's obligation to
purchase the Shares on the Closing Date is conditioned upon:
(a) The execution and delivery of this Purchase Agreement and the other
Transaction Agreements by the Company;
(b) Delivery by the Company to the Escrow Agent of the Certificates in
accordance with this Purchase Agreement;
(c) The accuracy in all material respects on such Closing Date of the
representations and warranties of the Company contained in this Purchase
Agreement, each as if made on such date, and the performance by the Company on
or before such date of all covenants and agreements of the Company required to
be performed on or before such date;
11
(d) On such Closing Date, the Registration Rights Agreement shall be in
full force and effect and the Company shall not be in default thereunder;
(e) On such Closing Date, the respective Investor shall have received
an opinion of counsel for the Company (and delivered to the Escrow Agent), dated
the Closing Date, in form, scope and substance reasonably satisfactory to the
Investor, substantially to the effect set forth in Annex III attached hereto;
(f) There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained; and
(g) From and after the date hereof to and including such Closing Date,
each of the following conditions will remain in effect: (i) the trading of the
Common Stock shall not have been suspended by the SEC or on the Principal
Trading Market; (ii) no minimum prices shall been established for Shares traded
on the Principal Trading Market; and (iii) there shall not have been any
material adverse change in any financial market that, in the reasonable judgment
of the Investor, makes it impracticable or inadvisable to purchase the Shares.
In addition, on the Closing Date, trading in Common Stock or in securities
generally on the Principal Trading Market shall not have been suspended or
limited.
9. NOTICES. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given upon personal delivery or seven (7) business days after deposit in the
United States Postal Service, by (a) advance copy by fax, and/or (b) mailing or
delivery by express courier or registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other addresses as a party may designate by ten
days advance written notice to each of the other parties hereto.
COMPANY: FOCUS ENHANCEMENTS, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇▇ D'Addio, President
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Manatt, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇. ▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Investor: As set forth on the execution page hereto.
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with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
10. SEVERABILITY. If a court of competent jurisdiction determines that
any provision of this Purchase Agreement is invalid, unenforceable or illegal
for any reason, such determination shall not affect or impair the validity,
legality and enforceability of the other provisions of this Purchase Agreement
in any other jurisdiction. If any such invalidity, unenforceability or
illegality of a provision of this Purchase Agreement becomes known or apparent
to any of the parties hereto, the parties shall negotiate promptly and in good
faith in an attempt to make appropriate changes and adjustments to such
provision specifically and this Purchase Agreement generally to achieve as
closely as possible, consistent with applicable law, the intent and spirit of
such provision specifically and this Purchase Agreement generally.
11. EXECUTION IN COUNTERPARTS. This Purchase Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same Purchase Agreement. A facsimile signature of
this Agreement shall be legal and binding on all parties hereto.
12. JURY TRIAL WAIVER. The Company and the Investors hereby waive a
trial by jury in any action, proceeding or counterclaim brought by either of the
Parties hereto against any of the others in respect of any matter arising out or
in connection with the Transaction Agreements.
13. GOVERNING LAW: MISCELLANEOUS.
(a) This Purchase Agreement shall be deemed to be a contract made under
the laws of the State of Delaware for contracts to be wholly performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the jurisdiction of the federal courts
whose districts encompass any part of the State of California, Santa ▇▇▇▇▇
County in connection with any dispute arising under this Purchase Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions.
(b) Failure of any party to exercise any right or remedy under this
Purchase Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
(c) This Purchase Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto.
(d) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
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(e) The headings of this Purchase Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Purchase Agreement.
(f) This Agreement may be amended only by an instrument in writing
signed by both parties; no waiver shall be effective unless signed by the person
charged with making such waiver.
(g) This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof.
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and each
Investor's representations and warranties herein shall survive the execution and
delivery of this Purchase Agreement and the delivery of the Certificates and the
payment of the Purchase Price, and shall inure to the benefit of each respective
Investor and the Company and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
respective Investor (if an entity, by one of its officers thereunto duly
authorized) as of the date set forth below.
AMOUNT AND PURCHASE PRICE OF COMMON STOCK: $ *
SHARES: *
--------------
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Common Stock and
Warrant Purchase Agreement to be duly executed on its behalf this * day of
January, 2002.
Address for Notices
*
------------------------------ --------------------------------
Address Printed Name of Investor
By: *
------------------------------ -----------------------------
Telecopier No. (Signature of Authorized Person)
----------------
------------------------------ Printed Name and Title
If Investor is a partnership, corporation, limited liability company or
other entity:
I. Jurisdiction where Investor's investment decision was made:
_ Jurisdiction of mailing address listed above
_ Other: ____________________________
II. Jurisdiction of Incorporation or Organization: _______________
----------------------
* Purchaser Shares Price
--------- ------ -----
Stone Street Limited Partnership 221,317 $ 250,000
Folkinburg Investments 995,928 1,125,000
Boat Basin Investments LLC 88,527 100,000
Papell Holdings Limited 1,128,718 1,275,000
--------- ---------
Total 2,434,490 $2,750,000
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As of the date set forth below, the undersigned hereby accepts this
Purchase Agreement and represents that the foregoing statements are true and
correct and that it has caused this Purchase Agreement to be duly executed on
its behalf.
FOCUS ENHANCEMENTS, INC.
By: /s/ ▇▇▇▇▇▇▇ D'Addio
--------------------------------------------------
Name: ▇▇▇▇▇▇▇ D'Addio
Title: President and Chief Executive Officer
Date: January 11, 2002
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