SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 1997
ADVANCED ELECTRONIC SUPPORT PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
Florida 000-21889 59-2327-381
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(State or other (Commission File (I.R.S. Employer
jurisdiction Number) Identification
of incorporation) No.)
1810 N.E. 144th Street
North Miami, Florida 33181
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(Address of principal executive offices)
Registrant's telephone number, including area code: (305) 944-7710
N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
Effective as of September 30, 1997, Advanced Electronic Support
Products, Inc. (the "Registrant"), entered into an Asset Purchase Agreement (the
"Agreement") with Focus Enhancements, Inc. ("Focus"), pursuant to which the
Registrant acquired certain assets and inventory constituting the Networking
Division of Focus. Additionally, in exchange for certain assets of Focus'
Networking Division purchased by the Registrant, the Registrant issued to Focus
an aggregate 189,701 shares of its Common Stock (the "Shares"). In exchange for
certain inventory of Focus' Networking Division purchased by the Registrant,
the Registrant paid to Focus an aggregate $159,371.39 in cash, subject to a
warranty claims adjustment of $21,000.
At the closing, 18,970 of the Shares were placed in escrow for a period
of six months to secure any indemnification claims made by Registrant in
accordance with the terms of the Agreement and for the purpose of funding sales
allowances for sales made prior to the Closing Date, as such term is defined in
and as set forth in the Purchase Agreement. Pursuant to the Agreement, Focus may
demand that the Registrant register the Shares at any time after four months
following September 30, 1997, the effective date of the Agreement (the
"Effective Date"), subject to certain reimbursements of the registration costs
by Focus. The Registrant also granted Focus the right to register the Shares in
connection with any other applicable registration statement filed by the
Registration for a period of six months following the Effective Date.
In addition, as part of the assets purchased from Focus, the Registrant
obtained the use of the name "Focus Networking". The Registrant also obtained
the right to use certain packaging and marketing materials with the Focus logo
for up to six months from the Effective Date and may also use the "FOCUS" name
for up to one year from the Effective Date, all subject to certain restrictions
relating to competing with Focus.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
10.1 Asset Purchase Agreement, dated as of September
30, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ADVANCED ELECTRONIC SUPPORT
PRODUCTS, INC.
By: /S/ ROMAN BRISKIN
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Date: OCTOBER 15, 1997 Roman Briskin, Executive Vice President
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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10.1 Asset Purchase Agreement, dated as of September 30, 1997.
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ( this "Agreement"), is made and entered
into as of September 30, 1997 by and among FOCUS ENHANCEMENTS, INC., a Delaware
corporation with its principal place of business located at 142 North Road,
Sudbury, Massachusetts 01776 ("Seller"), and ADVANCED ELECTRONIC SUPPORT
PRODUCTS, INC., a Florida corporation with its principal place of business
located at 1810 N.E. 144th Street, North Miami, Florida 33181 ("Purchaser").
RECITALS
WHEREAS, Seller is the owner of, among other assets, certain supplier
lists, individual supplier contracts, customer lists, individual customer
contracts, inventory, accounts and relationships developed and used in its
networking business (the "Business"). Seller is prepared to sell said assets (as
more particularly described below) and the Business to Purchaser upon the terms
and conditions hereinafter set forth. Purchaser is prepared to purchase from
Seller said assets and the Business upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
agreements and conditions contained herein, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. ASSETS TO BE SOLD. Seller hereby agrees to sell, convey, grant,
assign, transfer and deliver to Purchaser at the Closing (as defined below in
SECTION 5), on the terms and subject to the conditions set forth in this
Agreement, all of Seller's right, title and interest in and to the assets
described below (the "Assets"):
1.1 SUPPLIER LISTS AND ACCOUNTS. All of Seller's supplier
lists ("Supplier Lists"), accounts, records and supplier relationships relating
to the Business, all as more particularly described on SCHEDULE 1.1 hereto; (The
parties hereto acknowledge that SCHEDULE 1.1 is not complete. Seller shall, as
soon as practicable but in no event more than ten (10) days after the Closing,
revise SCHEDULE 1.1 to reflect all open purchase orders from Seller's vendors
being transferred hereunder.)
1.2 CUSTOMER LISTS AND ACCOUNTS. All of Seller's customer
lists including address, contact person, telephone and telecopier numbers
("Customer Lists"), purchase orders or purchase commitments owed to Seller as of
the Closing Date (AS DEFINED BELOW IN SECTION 5), accounts, records and customer
relationships relating to the Business, all as more particularly described on
SCHEDULE 1.2 hereto; (The parties hereto acknowledge that SCHEDULE 1.2 is not
complete. Seller shall, as soon as practicable but in no event more than ten
(10) days after the Closing, revise SCHEDULE 1.2 to reflect (i) all of Seller's
customers of the Business to which sales
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were made in the twelve (12) month period prior to the Closing, and (ii) all
open purchase orders from Seller's customers being transferred hereunder.)
1.3 MARKETING AND ADVERTISING. All of Seller's prepaid
marketing and advertising materials and services, and customer relationships
relating to the Business, all as more particularly described on SCHEDULE 1.3
hereto;
1.4 INTELLECTUAL PROPERTY. All of Seller's right, title and
interest in and to the proprietary rights of Seller in the Business, including,
without limitation, the trade name "Focus Networking", any other trade names,
trademarks, service marks, logos, copyrights, licenses, patents, patent
applications, trade secrets, technology, know how, formulae, designs and
drawings, software, processes, operating rights and other intellectual property
used in the conduct of the Business or in connection with the Assets, as well as
any goodwill developed through the use thereof (collectively, the "Intellectual
Property"), as more particularly described on SCHEDULE 1.4 hereto.
2. INVENTORY TO BE SOLD.
(a) Seller hereby agrees to sell, convey, grant, assign,
transfer and deliver to Purchaser at the Closing (as defined below), on the
terms and subject to the conditions set forth in this Agreement, all of Seller's
right, title and interest in and to the inventory which Seller owns and uses in
the Business on the date hereof, which Purchaser has selected to purchase from
Seller, and each item of which is described and set forth on SCHEDULE 2.1(A)
hereto along with the item number, unless otherwise indicated at a price equal
to Seller's cost per item, PLUS 4 percent (4%) (the "Inventory"). It is
understood and agreed between the parties that Purchaser shall have the right
but not the obligation to purchase up to an aggregate of Two Hundred Fifty
Thousand and 00/100 Dollars ($250,000.00) of Seller's Inventory in accordance
with the costs set forth on SCHEDULE 2.1(A), provided, however, that Purchaser
agrees to purchase from Seller all of the Inventory related to Apple Computer,
Inc.'s Powerbook 1400 laptop computer as specifically identified in SCHEDULE
2.1(A). Purchaser shall bear the cost of shipping the Inventory to Purchaser's
locations.
(b) Seller shall retain the inventory which is described and
set forth on Schedule 2.1(b) ("Retained Inventory"). Notwithstanding any other
provision of this Agreement or the Covenant not to Compete, Seller may during
the one hundred and eighty (180) day period after the Closing: (i) use the name
"Focus Enhancements"; (ii) use existing packaging; and (iii) contact Seller's
customers of the Business, to sell and/or liquidate the Retained Inventory.
3. LIABILITIES.
(a) The parties expressly agree that Purchaser shall not
assume or otherwise become liable for any obligations or liabilities of Seller,
including without limitation: (a) federal, state, local, foreign or other taxes
attributable to the Business to the extent they relate to the Business prior to
the Closing Date; (b) any and all liabilities, obligations, duties and
warranties, absolute or
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contingent, known or unknown, whether in tort, contract, or for violation of any
law, statute, rule or regulation by Seller or any of its employees or agents,
relating to the operation of the Business prior to the Closing Date, including
but not limited to any and all claims or amounts due to Seller's customers or
distributors of the Business, in connection with certain provisions of Seller's
customer contracts relating to cooperative advertising, price protection, and
inventory rotation programs; (c) any and all liabilities and obligations to
employees of the Seller; (d) any and all liabilities of the Seller with respect
to or arising out of any employee benefit plan or any other plans or
arrangements for the benefit of employees that are sponsored or maintained by
the Seller or any affiliated company; (e) and any and all liabilities relating
to any default under any of the obligations, duties, warranties and liabilities
of Seller to the extent such default existed prior to the Closing Date.
(b) Purchaser, based upon and in reliance on the
representations made by Seller in Subsection 7.6(b) shall assume and be solely
responsible for any and all warranty claims made by customers of Seller after
the Closing with respect to products sold by the Business prior to the Closing
("Warranty Claims"), provided that such Warranty Claims are in the ordinary
course of business as defined in Subsection 7.6(b). In consideration of the
assumption of the Warranty Claims the Inventory Purchase Price, as defined
below, shall be reduced by $21,000 (the "Warranty Claims Adjustment").
4. PURCHASE PRICE.
4.1 PRICE FOR ASSETS. The purchase price for the Assets being
acquired hereunder shall be paid to Seller in shares of the common stock, $0.001
par value per share, of Purchaser ("Purchaser Common Stock") to be issued by
Purchaser at the Closing. The number of shares of Purchaser Common Stock that
will be issued by Purchaser to Seller as the purchase price for the Assets shall
be determined by dividing (a) Seven Hundred Thousand and 00/100 Dollars
($700,000.00) (the "Asset Purchase Price") by (b) the average closing sale price
of a share of Purchaser Common Stock on The NASDAQ SmallCap Market for the
thirty (30) consecutive calendar days which precede the Closing Date, as
reported (absent manifest error in the printing thereof) by the Wall Street
Journal (Eastern Edition).
4.2 PRICE FOR INVENTORY. The purchase price for the Inventory
being acquired hereunder shall be paid to Seller in the form of a company check
from Purchaser in the amount of One Hundred Fifty Nine Thousand, Three Hundred
and Seventy-One and 39/100 Dollars ($159,371.39) less the Warranty Claims
Adjustment (the "Inventory Purchase Price").
5. THE CLOSING.
5.1 TIME AND PLACE. Subject to and after fulfillment or waiver
of the conditions set forth in SECTIONS 10 AND 11 of this Agreement, the closing
of the purchase and sale of Assets and the Inventory (the "Closing") shall take
place at 10:00 a.m. on or before September 30, 1997 or on such date that the
parties hereto shall agree (the "Closing Date"), at the offices of Purchaser's
legal
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counsel, Akerman, Senterfitt & Eidson, P.A., in Miami, Florida or such other
location as the parties may agree.
5.2 PROCEDURE AT THE CLOSING. At the Closing, the parties
agree that the following shall occur:
(a) Seller shall have satisfied each of the conditions set
forth in SECTION 10.
(b) Purchaser shall have satisfied each of the conditions set
forth in SECTION 11.
(c) Seller shall execute and deliver to Purchaser such deeds,
bills of sale, endorsements, assignments, releases and other instruments, in
such form as is reasonably satisfactory to Purchaser and as shall be necessary
to vest in Purchaser good and marketable title to the Assets and Inventory,
including, without limitation, a Bill of Sale and Assignment in the form
attached hereto as EXHIBIT A, and Seller shall deliver to Purchaser immediate
possession of the Assets and Inventory. In addition, at Closing, Seller shall
duly execute and deliver to Purchaser a Covenant not to Compete, in the form
attached hereto as EXHIBIT B. Seller agrees to execute and deliver to Purchaser
from time to time such further and particular assignments, consents, or other
instruments in writing as Purchaser may request as appropriate or desirable to
confirm its title in and to any and all of the Assets and Inventory sold,
conveyed and assigned to Purchaser.
(d) At the Closing, Purchaser shall issue to Seller, for the
Asset Purchase Price, certificates representing the shares of Purchaser Common
Stock described in SECTION 4.1 and shall deliver such shares to Seller in the
following manner: (i) Purchaser shall deliver into escrow in accordance with
SECTION 12.3 certificates evidencing ten percent (10%) of the Asset Purchase
Price (the "Escrow Shares"), rounded to the nearest whole share, and (ii)
Purchaser shall deliver to Seller one or more certificates evidencing the
balance of the shares of Purchaser Common Stock described in SECTION 4.1. At the
Closing, Seller shall duly execute and deliver to Purchaser a sufficient number
of stock powers in blank, with signature guarantees, for use in connection with
the Escrow Shares. At the Closing, Purchaser shall also deliver to Seller, for
the Inventory Purchase Price, cash in the form of a company check from
Purchaser.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER. As a material
inducement to Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, Purchaser makes the following representations
and warranties to Seller:
6.1 CORPORATE STATUS. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and has the requisite power and authority to own or lease its properties
and to carry on its business as presently conducted. There is no pending or, to
the knowledge of Purchaser, threatened proceeding for the dissolution,
liquidation, insolvency or rehabilitation of Purchaser.
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6.2 CORPORATE POWER AND AUTHORITY. Purchaser has the corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Purchaser has taken all corporate action necessary to authorize its execution
and delivery of this Agreement, the performance of its obligations hereunder and
the consummation of the transactions contemplated hereby.
6.3 CAPITALIZATION. As of the Closing, the authorized capital
stock of Purchaser will consist of 20,000,000 shares of Common Stock, of which
1,732,500 shares are issued and outstanding and 497,781 shares are reserved for
issuance upon exercise of outstanding options and warrants; and 1,000,000 shares
of Preferred Stock, $.01 par value per share, of which no shares are issued and
outstanding. As of the Closing, all of the outstanding shares of Purchaser's
Common Stock are validly issued, fully paid and non-assessable.
6.4 PURCHASER COMMON STOCK. Upon consummation of the
transactions contemplated hereby and the issuance and delivery of certificates
representing the Shares of Purchaser Common Stock to Seller, such shares will be
validly issued, fully paid, non-assessable and free of preemptive rights or
similar rights of stockholders of Purchaser.
6.5 ENFORCEABILITY. This Agreement has been duly executed and
delivered by Purchaser and constitutes a legal, valid and binding obligation of
Purchaser enforceable against Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles.
6.6 NO CONFLICTS. Except as set forth on SCHEDULE 6.6 hereto,
the execution and delivery of this Agreement by Purchaser, the performance by
Purchaser of its obligations hereunder and the consummation by Purchaser of the
transactions contemplated by this Agreement will not (a) conflict with the
Articles of Incorporation or Bylaws of Purchaser, (b) violate or conflict with
any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any governmental authority or of any arbitration award
which is either applicable to, binding upon or enforceable against Purchaser or
the Purchaser Common Stock, (c) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
to terminate, amend, modify, abandon or accelerate, any contract which is
applicable to, binding upon or enforceable against Purchaser, (d) result in or
require the creation or imposition of any Lien (as defined below) upon or with
respect to any of the properties or assets of any of Purchaser, (e) give to any
individual or entity a right or claim against Purchaser or (f) require the
consent, approval, authorization or permit of, or filing with or notification
to, any governmental authority, any court or tribunal or any other person,
except any filings to be made with the Securities and Exchange Commission.
Without limitation on any of the foregoing, no consent or approval of or notice
to or other action by any governmental body or agency or any other person or
party is required in connection with the execution and delivery of this
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Agreement, or any other document delivered pursuant to or in connection with
this Agreement. No governmental licenses, consent or permits are required in
connection with issuance and delivery of the Purchaser Common Stock to Seller.
For the purposes of this Agreement, the term "Lien" means any mortgage, pledge,
security interest, encumbrance, lien or charge of any kind.
6.7 LITIGATION. There is no action, suit, or other legal or
administrative proceeding or investigation pending, or to the best knowledge of
Purchaser, threatened, anticipated or contemplated against, by or affecting the
Purchaser relating to the Business which would question the validity or
enforceability of this Agreement or the transactions contemplated thereby.
6.8 ACCURACY OF INFORMATION FURNISHED. No representation,
statement or information contained in this Agreement (including, without
limitation, the various Schedules attached hereto) or any agreement executed in
connection herewith or in any certificate delivered pursuant hereto or thereto,
contains or shall contain any untrue statement of a material fact or omits or
shall omit any material fact necessary to make the information contained therein
not misleading. Purchaser has provided Seller with true, accurate and complete
copies of all documents listed or described in the various Schedules attached
hereto.
6.9 UNDERWRITER'S CONSENT. Purchaser has notified in writing
the underwriters of its initial public offering of the issuance of Purchaser
Common Stock, and such underwriters have verbally approved such issuance.
6.10 SALES TAX AUDIT. The sales tax audit assessment referred
to in Purchaser's June 30, 1997 Form 10-Q has been resolved for less than
$25,000.
7. REPRESENTATIONS AND WARRANTIES BY SELLER. As a material
inducement to Purchaser to enter into this Agreement and to consummate the
transactions contemplated hereby, Seller makes the following representations and
warranties to Purchaser:
7.1 ORGANIZATION OF SELLER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite power and authority to own or lease its
properties and to carry on its business as now being conducted. Seller's
taxpayer identification number is 04-3186320. There is no pending or, to the
knowledge of Seller, threatened proceeding for the dissolution, liquidation,
insolvency or rehabilitation of Seller.
7.2 AUTHORITY. Seller has the corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. Seller has taken all corporate
action necessary to authorize the execution and delivery of this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby.
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7.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by Seller and constitutes a legal, valid and binding obligation of
Seller enforceable against Seller in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles.
7.4 NO CONFLICTS. Except as set forth in SCHEDULE 7.4 hereto,
the execution and delivery of this Agreement by Seller, the performance by
Seller of its obligations hereunder and the consummation by Seller of the
transactions contemplated by this Agreement will not (a) conflict with the
Certificate of Incorporation or Bylaws of Seller, (b) violate or conflict with
any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any governmental authority or of any arbitration award
which is either applicable to, binding upon or enforceable against Seller or the
Assets and/or Inventory, (c) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
to terminate, amend, modify, abandon or accelerate, any contract which is
applicable to, binding upon or enforceable against Seller, (d) result in or
require the creation or imposition of any Lien (as defined below) upon or with
respect to any of the properties or assets of any of Seller, (e) give to any
individual or entity a right or claim against Seller or (f) require the consent,
approval, authorization or permit of, or filing with or notification to, any
governmental authority, any court or tribunal or any other person, except any
filings to be made with the Securities and Exchange Commission. Without
limitation on any of the foregoing, except as set forth in SCHEDULE 7.4, no
consent or approval of or notice to or other action by any governmental body or
agency or any other person or party is required in connection with the execution
and delivery of this Agreement, the Bill of Sale and Assignment, the Covenant
Not to Compete or any other document delivered pursuant to or in connection with
this Agreement. No governmental licenses, consent or permits are required in
connection with selling and transferring the Assets and/or Inventory to
Purchaser. For the purposes of this Agreement, the term "Lien" means any
mortgage, pledge, security interest, encumbrance, lien or charge of any kind.
7.5 LITIGATION. There is no action, suit, or other legal or
administrative proceeding or investigation pending, or to the best knowledge of
Seller, threatened, anticipated or contemplated against, by or affecting the
Seller relating to the Business which would question the validity or
enforceability of this Agreement or the transactions contemplated thereby,
including, without limitation, Seller's title to or ability to convey a good,
marketable, and unencumbered title in the Assets and/or Inventory.
7.6 GOOD TITLE; ADEQUACY; CONDITION; AND WARRANTIES.
(a) Seller has, and at the Closing will have, good and
marketable title to the Assets and Inventory with full power to sell, transfer
and assign the same, free and clear of any Lien and by delivery of the Bill of
Sale and Assignment, as contemplated by SECTION 5.2(c), Seller will deliver to
Purchaser title to such Assets and Inventory free and clear of any Lien. Seller
covenants and agrees
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that it will warrant and defend the title to the property hereby sold to
Purchaser, its successors and assigns, against the lawful claims, demands and
charges of all persons whomsoever. The Assets and Inventory constitute in the
aggregate, substantially all of the assets and properties used in the Business.
The Inventory is packaged and in good sellable condition, has been stored in
accordance with manufacturers recommendations and is not obsolete except as so
indicated.
(b) All warranties offered by Seller on the Inventory are set
forth on SCHEDULE 7.6 hereto. During the one (1) year period immediately
preceding the Closing Date, warranty claims with respect to products sold by the
Business did not exceed the Warranty Claims Adjustment. Warranty Claims shall be
deemed to be in the "Ordinary Course of Business" so long as they do not on an
annual basis exceed the Warranty Claims Adjustment.
7.7 EMPLOYEES. Seller does not have any employment contracts,
agreements or arrangements with any of its employees that will affect Purchaser
or the Assets and/or the Inventory being acquired hereunder.
7.8 COMPLIANCE WITH LAWS. Seller is and has been in
compliance, in all material respects, with all laws, regulations and orders
applicable to it, its business and operations (as conducted by it now and in the
past), and its properties and assets (in each case owned or used by it now or in
the past), including, without limitation, all laws, regulations and orders
relating to health, safety and protection of the environment.
7.9 FINANCIAL INFORMATION; CONTRACTS; RECORDS. On and prior to
the date hereof, Seller has delivered to Purchaser information requested by
Purchaser relating to sales and gross margins of the Business, which information
is derived from the books and records of the Seller, such books and records are
accurate and complete in all material respects. Seller has no other material
relationship with suppliers or customers relating to the Business other than as
set forth in SCHEDULES 1.1 AND 1.2. On or prior to the date hereof, Seller has
delivered or made available to Purchaser true, complete and correct copies (in
all material respects) of all books, records, tax returns, supporting work
papers, federal, state and local taxing authority audit reports and
correspondence relating to the Business.
7.10 ACCURACY OF INFORMATION FURNISHED. No representation,
statement or information contained in this Agreement (including, without
limitation, the various Schedules attached hereto) or any agreement executed in
connection herewith or in any certificate delivered pursuant hereto or thereto,
contains or shall contain any untrue statement of a material fact or omits or
shall omit any material fact necessary to make the information contained therein
not misleading. Seller has provided Purchaser with true, accurate and complete
copies of all documents listed or described in the various Schedules attached
hereto.
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7.11 INVESTMENT INTENT; INVESTOR STATUS; SECURITIES DOCUMENTS.
Seller is acquiring the Purchaser Common Stock for its own account for
investment purposes only and not with a view to, or for the sale in connection
with, any distribution of any of the Purchaser Common Stock, except in
compliance with applicable state and federal securities laws. Seller has had the
opportunity to discuss the transactions contemplated hereby with Purchaser and
has had the opportunity to obtain such information pertaining to Purchaser as
has been requested, including but not limited to filings made by Purchaser with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended. Seller has such knowledge and experience in business or
financial matters that it is capable of evaluating the merits and risks of an
investment in the Purchaser Shares.
7.12 TAX MATTERS. The Seller has filed or obtained valid
extensions to file all tax returns, filings and information statements
(collectively, "Tax Returns") relating to taxes, fees and other assessments
imposed by federal, state or local governmental body or agency with taxing
authority (collectively, "Taxes") required to be filed prior to the date hereof,
except where the failure to file such returns, filings and information
statements would not have a material adverse effect on Seller or the Business,
and to the knowledge of Seller, all such Tax Returns have been prepared in
compliance with all applicable laws and regulations. All Taxes due and payable
by or with respect to Seller and the Business have been paid, and those Taxes
not yet due and payable are accrued on the books and records of Seller as of the
Closing and cash has been reserved by Seller for the payment thereof in full
when due and payable. There is no action, suit, proceeding, audit or claim now
in progress, pending or to the knowledge of Seller, threatened against or with
respect to Seller regarding Taxes. There are no Liens for Taxes (other than for
current Taxes not yet due and payable) upon the Seller or its assets as they
relate to the Business.
7.13 INTELLECTUAL PROPERTY. Except as set forth on SCHEDULE
1.4 Seller has full legal right, title and interest to the Intellectual Property
as described in SECTION 1.4 and has not granted any rights in or to the same to
any third party. To the knowledge of Seller and except as set forth on SCHEDULE
1.4, the conduct of the Business as presently conducted, and the conduct, use
and exploitation of the Intellectual Property, does not infringe or
misappropriate any rights held or asserted by any person or entity, and no
person or entity is infringing on the Intellectual Property. Except as set forth
on SCHEDULE 1.4, no payments are required for the continued use of the
Intellectual Property. None of the Intellectual Property has ever been declared
invalid or unenforceable, or is the subject of any pending or, to the knowledge
of Seller, threatened action for opposition, cancellation, declaration,
infringement, or invalidity, unenforceability or misappropriation or like claim,
action or proceeding.
8. ADDITIONAL AGREEMENTS.
8.1 FURTHER ASSURANCES; CLOSING DATE. Each party shall
execute and deliver such additional instruments and other documents and shall
take such further actions as may be necessary or appropriate to effectuate,
carry out and comply with all of the terms of this Agreement and the
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transactions contemplated hereby. The parties understand and agree that each
shall use their best efforts to close the transactions contemplated hereunder;
subject to Purchaser's due diligence of Seller's Business, on or before
September 30, 1997.
8.2 ACCESS TO INFORMATION. From the date hereof to the Closing
Date, Seller shall, and shall cause its directors, officers, employees,
auditors, counsel and agents to, afford Purchaser and Purchaser's officers,
employees, auditors, counsel and agents reasonable access at all reasonable
times to its properties, offices and other facilities, to its officers and
employees and to all books and records to the extent the same relates to the
Business, and shall furnish such persons with all financial, operating and other
data and information as may be requested. No information provided to or obtained
by Purchaser shall affect any representation or warranty in this Agreement.
8.3 NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt
notice to Purchaser of the occurrence or non-occurrence of any event which would
likely cause any representation or warranty contained herein to be untrue or
inaccurate, or any covenant, condition or agreement contained herein not to be
complied with or satisfied.
8.4 CONFIDENTIALITY; PUBLICITY. Except as may be required by
law or as otherwise permitted or expressly contemplated herein, no party hereto
or their respective affiliates, employees, agents and representatives shall
disclose to any third party this Agreement, the subject matter or terms hereof
or any confidential information or other proprietary knowledge concerning the
business or affairs of the other party which it may have acquired from such
party in the course of pursuing the transactions contemplated by this Agreement
without the prior written consent of the other party hereto; PROVIDED, that any
information that is otherwise publicly available, without breach of this
provision, or has been obtained from a third party, shall not be deemed
confidential information. No press release or other public announcement related
to this Agreement or the transactions contemplated hereby shall be issued by any
party hereto without the prior written approval of the other parties.
Notwithstanding anything in the foregoing to the contrary, each party may make
such public disclosure which it believes in good faith to be required by law or
by the terms of any listing agreement with or requirements of the respective
exchanges in which the parties are listed.
8.5 NO OTHER DISCUSSIONS. Seller and their affiliates,
employees, agents and representatives will not (a) initiate, encourage the
initiation by others of discussions or negotiations with third parties or
respond to solicitations by third persons relating to any merger, sale or other
disposition of any substantial part of the assets or inventory relating to the
Business (a "Competing Transaction"), or (b) enter into any agreement or
commitment (whether or not binding) with respect to any of the foregoing
transactions. Seller will immediately notify Purchaser if any third party
attempts to initiate any solicitation, discussion or negotiation with respect to
any of the foregoing transactions.
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8.6 FORWARDING INQUIRIES. Seller hereby agrees, represents and
covenants that it shall promptly refer to Purchaser any and all inquiries
received by Seller from third parties after the Closing Date in connection with
the Business for a period of two (2) years following the Closing Date.
8.7 SALE OF INVENTORY. Seller hereby represents and warrants
that, except as set forth on SCHEDULE 8.7, during the 180 days prior to the date
hereof, Seller has not sold, conveyed, granted, assigned, transferred or
delivered any inventory related to the Business for a price less than ninety
percent (90%) of Seller's normal sales prices as reflected in the records
provided to Purchaser hereunder.
8.8 RESTRICTIVE COVENANTS. At the Closing Seller shall enter
into a Covenant Not to Compete attached hereto at EXHIBIT B pursuant to which
Seller agrees not to compete with Purchaser and the Business for a period of
five (5) years from the Closing Date.
8.9 DELIVERY OF PROPERTY RECEIVED BY THE COMPANIES AFTER
CLOSING. Seller agrees that it will transfer or deliver to Purchaser, promptly
after the receipt thereof, any cash or other property which it receives after
the Closing Date in respect of any contracts, commitments, sales orders,
purchase orders or of any other items transferred or intended to be transferred
to Purchaser as part of the Assets and/or Inventory under this Agreement.
8.10 SELLER COOPERATION. Seller shall cooperate and in good
faith endeavor to introduce Purchaser to Seller's customers of the Business
and shall assist Purchaser in its efforts to execute customer contracts with
said customers.
9. CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to effect the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions, any or
all of which may be waived in whole or in part by Purchaser:
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of Seller contained in this
Agreement shall be true and correct at and as of the Closing Date with the same
force and effect as though made at and as of that time. Seller shall have
performed and complied with all of its obligations required by this Agreement to
be performed or complied with at or prior to the Closing Date. Seller shall have
delivered to Purchaser a certificate, dated as of the Closing Date and signed by
an executive officer of Seller, certifying that such representations and
warranties are true and correct and that all such obligations have been
performed and complied with.
9.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY.
Between the date hereof and the Closing Date, (a) there shall have been no
material adverse change to the Assets, Inventory or the Business, (b) there
shall have been no adverse federal, state or local legislative or
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regulatory change affecting in any material respect the Assets, Inventory or the
Business, and (c) none of the Assets or Inventory shall have been damaged by
fire, flood, casualty, act of God or the public enemy or other cause (regardless
of insurance coverage for such damage) which damages may have a material adverse
effect thereon, and Seller shall have delivered to Purchaser a certificate,
dated as of the Closing Date and signed by an executive officer of Seller, to
that effect.
9.3 CONSENTS. Seller shall have received consents to the
transactions contemplated hereby and waivers of rights to terminate or modify
any material rights or obligations of Seller from any person or entity from whom
such consent or waiver is required under any contract transferred hereunder.
Purchaser shall have received the necessary consents to the transactions hereby
from its lenders.
9.4 SECURITIES LAWS. Purchaser shall have received all
necessary consents and otherwise complied with any state Blue Sky or securities
laws applicable to the issuance of the Purchaser Common Stock in connection with
the transactions contemplated hereby.
9.5 EXECUTION AND DELIVERY OF DOCUMENTS. At the Closing,
Seller shall have executed and delivered those documents set forth in SECTION
5.2. In addition, Seller shall deliver (a) certificate(s) of legal existence and
corporate good standing of the Seller, issued by the Secretary of State of
Delaware; and (b) certificate(s) of the vote of the Board of Directors of the
Seller authorizing, approving and directing the execution, delivery and
performance by the Seller of this Agreement, and the transactions contemplated
hereby, in form and substance satisfactory to the Purchaser.
9.6 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other governmental
body which shall seek to restrain, prohibit, invalidate or collect damages
arising out of the transactions contemplated hereby, and which, in the judgment
of Purchaser, makes it inadvisable to proceed with the transactions contemplated
hereby.
9.7 DUE DILIGENCE REVIEW. Purchaser shall be satisfied with
the results of its due diligence review hereunder.
9.8 ESCROW AGREEMENT. Seller, Purchaser and Akerman,
Senterfitt & Edison, P.A. as Escrow Agent, shall have each executed the Escrow
Agreement in substantially the form as set forth as EXHIBIT 12.3.
10. CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligations of Seller
to effect the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions, any or
all of which may be waived in whole or in part by Seller.
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10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of Purchaser contained in
this Agreement shall be true and correct at and as of the Closing Date with the
same force and effect as though made at and as of that time except (a) for
changes specifically permitted by or disclosed pursuant to this Agreement, and
(b) that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date. Purchaser shall
have performed and complied with all of its obligations required by this
Agreement to be performed or complied with at or prior to the Closing Date.
Purchaser shall have delivered to Purchaser a certificate, dated as of the
Closing Date, and signed by an executive officer, certifying that such
representations and warranties are true and correct and that all such
obligations have been performed and complied with.
10.2 PURCHASER SHARES. At the Closing, Purchaser shall have
issued all of the shares of Purchaser Common Stock as set forth in SECTION
5.2(c).
10.3 CONSENTS. Seller shall have received consents to the
transactions contemplated hereby and waivers of rights to terminate or modify
any material rights or obligations of Seller from any person or entity from whom
such consent or waiver is required under any contract transferred hereunder.
Purchaser shall have received the necessary consents to the transactions hereby
from its lenders and the underwriter of its initial public offering.
10.4 SECURITIES LAWS. Purchaser shall have received all
necessary consents and otherwise complied with any state Blue Sky or securities
laws applicable to the issuance of the Purchaser Common Stock in connection with
the transactions contemplated hereby.
10.5 EXECUTION AND DELIVERY OF DOCUMENTS. At the Closing,
Purchaser shall have executed and delivered those documents set forth in SECTION
5.2. In addition, Purchaser shall deliver (a) certificate(s) of legal existence
and corporate good standing of the Purchaser, issued by the Secretary of State
of Florida; and (b) certificate(s) of the vote of the Board of Directors of the
Purchaser authorizing, approving and directing the execution, delivery and
performance by the Purchaser of this Agreement, the issuance of the Purchaser
Common Stock and the transactions contemplated hereby, in form and substance
satisfactory to the Seller.
10.6 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other governmental
body which shall seek to restrain, prohibit, invalidate or collect damages
arising out of the transactions contemplated hereby, and which, in the judgment
of Seller makes it inadvisable to proceed with the transactions contemplated
hereby.
10.7 ESCROW AGREEMENT. The parties to the Escrow Agreement
shall have executed and delivered the Escrow Agreement.
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11. REGISTRATION RIGHTS. The Seller shall have the following
registration rights with respect to the shares of Purchaser Common Stock issued
hereunder (the "Purchaser Shares") issued to Seller hereunder:
11.1 PIGGY-BACK REGISTRATION RIGHTS FOR PURCHASER SHARES;
FILING OF REGISTRATION STATEMENT.
(a) Within six (6) months from the date of this Agreement,
whenever Purchaser proposes to file a Registration Statement (as defined below),
it will, prior to such filing, give written notice to Seller of its intention to
do so and, upon the written request of Seller given within 5 days after the
Purchaser provides such notice (which request shall state the intended method of
disposition of the Registrable Shares (defined below), Purchaser shall use its
best efforts to cause all such Purchaser Shares (the "Registrable Shares") which
Purchaser has been requested by Seller to register to be registered under the
Securities Act of 1933, as amended (the "Securities Act"), to the extent
necessary to permit their sale or other disposition in accordance with the
intended methods of distribution specified in the request of Seller; PROVIDED,
HOWEVER, that Seller shall have the right to postpone or withdraw any
registration effected pursuant to this Section without any obligation to Seller
whatsoever.
(b) In connection with any registration under this SECTION 12
involving an underwritten offering, Purchaser shall not be required to include
any Registrable Shares in such registration unless the holder thereof accepts
the terms of the underwriting as agreed upon between Purchaser and the
underwriters of Purchaser. If, in the opinion of the managing underwriter, it is
appropriate because of marketing factors to limit the number of Registrable
Shares to be included in the offering, then Purchaser shall be required to
include in the registration only that number of Registrable Shares, if any,
which the managing underwriter believes should be included therein, and shall be
entitled to include before such Registrable Shares up to the number of Purchaser
Shares to be issued by Purchaser in the offering. If the number of Registrable
Shares to be included in the offering in accordance with the foregoing is less
than the total number of shares which the holder of Registrable Shares has
requested to be included, then the holder of Registrable Shares who has
requested registration and other holders of securities entitled to be included
in such registration shall participate in the registration pro rata based upon
their total ownership of shares of common stock of Purchaser subject to the
managing underwriter's discretion.
(c) For the purposes of this Section the term "Registration
Statement" means a registration statement filed by Purchaser with the Securities
and Exchange Commission (the "SEC") for a public offering and sale of common
stock of Purchaser (other than a Registration Statement on Form S-4, or its
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
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11.2 DEMAND REGISTRATION RIGHTS FOR PURCHASER SHARES; FILING
OF REGISTRATION STATEMENT. At any time after the four (4) month period following
the Closing Date if Purchaser has not filed a Registration Statement for the
Purchaser Shares, then Seller shall have the right to provide written notice to
Purchaser demanding Purchaser register the Purchaser Shares within sixty (60)
days after receipt of such written notice, subject to the following:
(a) The Seller acknowledges and agrees that the issuance of
Purchaser Shares may be subject to prior written consent of the underwriters of
Purchaser's initial public offering. Purchaser will use its reasonable efforts
to obtain consent from such underwriters to register the Purchaser Shares under
the Securities Act. Assuming such consent is obtained, and upon receipt of the
written demand notice from Seller to register the Purchaser Shares, Purchaser
will utilize reasonable efforts to cause the filing of such Registration
Statement. Purchaser will use reasonable efforts to have the Registration
Statement become effective and cause the Purchaser Shares to be registered under
the Securities Act, and registered, qualified or exempted under the state
securities laws of such jurisdictions as any Holder reasonably requests.
Notwithstanding the foregoing, Purchaser may delay filing a Registration
Statement, and may withhold efforts to cause the Registration Statement to
become effective, if Purchaser determines in good faith that such registration
might interfere with or affect the negotiation or completion of any transaction
that is being contemplated by Purchaser (whether or not a final decision has
been made to undertake such transaction) at the time the right to delay is
exercised.
(b) Seller shall pay only those expenses indicated below
incurred by Purchaser in connection with the registration, qualification and/or
exemption of the Purchaser Shares under this SECTION 11.2, including any SEC and
state securities law registration and filing fees, printing expenses, fees and
disbursements of Purchaser's counsel and accountants, transfer agents' and
registrars' fees, fees and disbursements of experts used by Purchaser in
connection with such registration, qualification and/or exemption, and expenses
incidental to any amendment or supplement to the Registration Statement or
prospectuses contained therein ("Registration Expenses"). The following
Registration Expenses shall be paid by Seller: (i) if a Registration Statement
is filed on Form S-1 prior to February 14, 1998, due to Seller's demand Seller
shall pay all reasonable Registration Expenses; (ii) if a Registration Statement
is filed after February 14, 1998, due to Seller's demand Seller shall pay up to
$20,000 of Registration Expenses. Purchaser shall not be liable for any sales,
broker's or underwriting commissions or other selling expenses incurred upon
sale by any Holder of any of the Purchaser Shares. Notwithstanding the
foregoing, in the event that shares of Purchaser Common Stock other than shares
held by Seller are included on the Registration Statement then Seller shall pay
only its pro-rata portion of expenses.
11.3 AMENDMENTS AND SUPPLEMENTS. Purchaser shall prepare and
promptly file with the SEC and promptly notify the Holders of the filing of such
amendments or supplements to the Registration Statement or prospectuses
contained therein as may be necessary to correct any statements or omissions if,
at the time when a prospectus relating to the Purchaser Shares is required to be
delivered under the Securities Act, any event shall have occurred as a result of
which any such
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prospectus or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. Purchaser shall also advise the Holders promptly
after it shall receive notice or obtain knowledge thereof, of the issuance of
any stop order by the SEC suspending the effectiveness of the Registration
Statement or the initiation or threatening of any proceeding for that purpose
and promptly use its reasonable best efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such stop order should be issued. If, after
a Registration Statement becomes effective, Purchaser advises the Holders that
Purchaser considers it appropriate that the Registration Statement be amended,
the Holders shall suspend any further sales of the Purchaser Shares until
Purchaser advises the Holders that the Registration Statement has been amended.
11.4 DURATION. Purchaser shall maintain the effectiveness of
the Registration Statement until such time as Purchaser reasonably determines,
based on an opinion of counsel, that the Holders will be eligible to sell all of
the Purchaser Shares then owned by the Holders without the need for continued
registration of the shares, in the three month period immediately following the
termination of the effectiveness of the Registration Statement. Purchaser's
obligations contained in this SECTION 12 shall terminate on the first
anniversary of the Closing Date.
11.5 FURTHER INFORMATION. If Purchaser Shares owned by a
Holder are included in any registration, such Holder shall furnish Purchaser
such information regarding itself as Purchaser may reasonably request and as
shall be required in connection with any registration, qualification or
compliance referred to in this Agreement.
12. AGREEMENT BY SELLER TO INDEMNIFY.
12.1 INDEMNIFICATION. Seller agrees to indemnify and hold
Purchaser harmless from and against the aggregate of all expenses, losses,
costs, deficiencies, liabilities and damages (including, without limitation,
related counsel and paralegal fees and expenses) incurred or suffered by
Purchaser (collectively "Indemnifiable Damages") resulting from or arising out
of (i) any breach of a representation or warranty made by Seller in or pursuant
to this Agreement, (ii) any breach of the covenants or agreements made by Seller
in or pursuant to this Agreement, or (iii) Seller's ownership or operation of
the Business, Assets and/or Inventory prior to Closing.
12.2 SURVIVAL; RELIANCE. Each of the representations and
warranties made by Seller in this Agreement or pursuant hereto shall survive the
closing of the transactions contemplated hereby until September 30, 1999.
Notwithstanding any knowledge of facts determined or determinable by the
Purchaser by investigation, the Purchaser shall have the right to fully rely on
the representations and warranties of Seller in this Agreement.
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12.3 ESCROW OF PURCHASER SHARES AND CASH. The Escrow Shares
shall be held in escrow, pursuant to the terms of the Escrow Agreement attached
hereto as EXHIBIT 12.3, for a period of six (6) months to secure the
indemnifications under this SECTION 12 by Seller and for the purpose of funding
any Warranty Claims not in the Ordinary Course of Business.
12.4 BASKET. The foregoing notwithstanding, the Seller shall
not be obligated to pay any claims under this Section 12 unless and until the
aggregate amount of all claims for indemnification sought by Purchaser exceeds
$25,000. Once the aggregate amount of claims exceeds $25,000, Purchaser shall be
entitled indemnity for ALL such amounts of such claims (including the first
$25,000).
13. AGREEMENT BY PURCHASER TO INDEMNIFY.
13.1 INDEMNIFICATION. Purchaser agrees to indemnify and hold
Seller harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, related
counsel and paralegal fees and expenses) incurred or suffered by Seller
(collectively "Indemnifiable Damages") resulting from or arising out of (i) any
breach of a representation or warranty made by Purchaser in or pursuant to this
Agreement, or (ii) any breach of the covenants or agreements made by Purchaser
in or pursuant to this Agreement, including in particular, Purchaser's
obligations under Section 11 of this Agreement.
13.2 SURVIVAL; RELIANCE. Each of the representations and
warranties made by Purchaser in this Agreement or pursuant hereto shall survive
the closing of the transactions contemplated hereby until September 30, 1999.
Notwithstanding any knowledge of facts determined or determinable by the Seller
by investigation, the Seller shall have the right to fully rely on the
representations and warranties of Purchaser in this Agreement.
13.3 BASKET. The foregoing notwithstanding, the Purchaser
shall not be obligated to pay any claims under this Section 13 unless and until
the aggregate amount of all claims for indemnification sought by Seller exceeds
$25,000. Once the aggregate amount of claims exceeds $25,000, Seller shall be
entitled indemnity for ALL such amounts of such claims (including the first
$25,000).
14. SECURITIES LAWS MATTERS.
14.1 DISPOSITION OF SHARES. Seller is acquiring the such
shares for its own account for investment purposes only and not with a view to,
or for the sale in connection with, any distribution of any of the Purchaser
Shares, except in compliance with applicable state and federal securities laws.
Seller has had the opportunity to discuss the transactions contemplated hereby
with Purchaser and have had the opportunity to obtain such information
pertaining to Purchaser as has been requested, including but not limited to
filings made by Purchaser with the Securities and
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Exchange Commission under the Securities Exchange Act of 1934, as amended.
Seller has such knowledge and experience in business or financial matters that
it is capable of evaluating the merits and risks of an investment in the
Purchaser Shares.
14.2 LEGEND. The certificates representing the Purchaser
Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IN
COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE WITH
RESPECT THERETO, OR IN ACCORDANCE WITH AN OPINION OF COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
Purchaser may, unless a Registration Statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
15. MISCELLANEOUS.
15.1 NOTICES. All notices, requests, demands, claims, and
other communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage pre-paid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall designate
in writing to the other party)
IF TO PURCHASER: WITH A COPY TO:
Advanced Electronic Support Products, Inc. Akerman, Senterfitt & Eidson, P.A.
1810 N.E. 144th Street One S.E. 3rd Avenue
North Miami, Florida 33181 27th Floor
Attn: Slav Stein Miami, Florida 33131
Telecopy: (305) 652-8489 Attn: Philip B. Schwartz, Esq.
Telecopy: (305) 374-5095
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IF TO SELLER: WITH A COPY TO:
Focus Enhancements, Inc. Sullivan & Worcester
142 North Road One Post Office Square
Sudbury , Massachusetts 01776 Boston, Massachusetts 02109
Attn: Thomas Massie Attn: John Piccione, Esq.
Telecopy: (508)371-8471 Telecopy: (617) 338-2883
15.2 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
15.3 ENTIRE AGREEMENT. This Agreement (including the Schedules
and Exhibits attached hereto) and other documents delivered at the Closing
pursuant hereto, contains the entire understanding of the parties in respect of
its subject matter and supersedes all prior agreements and understandings (oral
or written) between or among the parties with respect to such subject matter.
The Schedules and Exhibits constitute a part hereof as though set forth in full
above.
15.4 EXPENSES. Except as otherwise provided herein, the
parties shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby.
15.5 AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising, any
right, power or privilege under this Agreement shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the exercise of any other right, power or privilege. No waiver of any
breach of any provision shall be deemed to be a waiver of any preceding or
succeeding breach of the same or any other provision, nor shall any waiver be
implied from any course of dealing between the parties. No extension of time for
performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts. The rights and remedies of the parties
under this Agreement are in addition to all other rights and remedies, at law or
equity, that they may have against each other.
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15.6 REMEDIES CUMULATIVE. The remedies provided in this
Agreement shall be cumulative and shall not preclude Purchaser or any of its
shareholders from asserting any other right, or seeking any other remedies or
against Seller.
15.7 BINDING EFFECT; ASSIGNMENT. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder. The
rights and obligations of this Agreement may not be assigned by any of the
parties without the prior written consent of the other party. Purchaser may
assign all or any portion of its rights hereunder to one or more of its wholly
owned subsidiaries.
15.8 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one and the same instrument.
15.9 INTERPRETATION. When a reference is made in this
Agreement to an article, section, paragraph, clause, schedule or exhibit, such
reference shall be deemed to be to this Agreement unless otherwise indicated.
The headings contained herein and on the schedules are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement or the schedules. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." Time shall be of the essence in this Agreement.
15.10 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State, without application of the principles of conflict of laws.
15.11 JURISDICTION. Any suit, action or proceeding against
either party arising out of, or with respect to, this Agreement or any judgment
entered by any court in respect thereof may be brought in the courts of Dade
County, Florida or in the U.S. District Court for the Southern District of
Florida hereby accept the nonexclusive jurisdiction of those courts for the
purpose of any suit, action or proceeding. In addition, each of the parties
hereby irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any judgment entered
by any court in respect thereof brought in Dade County, Florida or the U.S.
District Court for the Southern District of Florida, and hereby further
irrevocably waives any claim that any suit, action or proceedings brought in
such jurisdiction has been brought in an inconvenient forum.
15.12 SEVERABILITY. The invalidity of any one or more of the
words, phrases, sentences, clauses, sections or subsections contained in this
Agreement shall not affect the enforceability of the remaining portions of this
Agreement or any part hereof, all of which are inserted
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conditionally on their being valid in law, and, in the event that any one or
more of the words, phrases, sentences, clauses, sections or subsections
contained in this Agreement shall be declared invalid by a court of competent
jurisdiction, this Agreement shall be construed as if such invalid word or
words, phrase or phrases, sentence or sentences, clause or clauses, section or
sections, or subsection or subsections had not been inserted.
[Signatures to follow this page]
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IN TESTIMONY WHEREOF, the parties have executed this Agreement in
duplicate originals, one of which is retained by each of the parties, as of the
day and year first above written.
ADVANCED ELECTRONIC SUPPORT
PRODUCTS, INC., a Florida corporation
By:_____________________________________________
Slav Stein
President and Chief Executive Officer
FOCUS ENHANCEMENTS, INC., a Delaware
corporation
By:_____________________________________________
Harry G. Mitchell
Senior Vice President and
Chief Financial Officer
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Bill of Sale Assignment
Exhibit B Form of Covenant Not-to-Compete
Exhibit 12.3 Escrow Agreement
Schedule 1.1 Supplier Lists and Accounts
Schedule 1.2 Customer Lists and Accounts
Schedule 1.3 Marketing and Advertising
Schedule 1.4 Intellectual Property
Schedule 2.1(a) Inventory
Schedule 2.1(b) Retained Inventory
Schedule 6.6 Purchaser Conflicts and Consents
Schedule 7.4 Seller Conflicts and Consents
Schedule 7.6 Warranties
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