Document:

ex4_4.htm

    Exhibit 4.4

     

    
 

    PIGGYBACK
REGISTRATION RIGHTS AGREEMENT

    

    THIS PIGGYBACK REGISTRATION RIGHTS
AGREEMENT (this "Agreement"), dated as of the same date as
the Warrant to which it is attached as Exhibit 1, is made by
and between FOCUS ENHANCEMENTS,
INC., a Delaware corporation, with headquarters located at 1370 Dell
Avenue, Campbell, California 95008 (the “Company”), and R. Keith Fetter of
Piedmont Consulting, Inc. (“Consultant”).

    

    W
I T N E S S E T H:

    

    WHEREAS, the Company has
agreed to issue the Warrant to the Consultant in connection with the performance
of certain services, and the Warrant may be exercised for the purchase of shares
of Common Stock (the “Warrant Shares”) upon certain  terms and
conditions; and

    

    WHEREAS, the Company has
agreed to provide certain registration rights under the Securities Act of 1933,
as amended, (the “1933 Act”) with respect to the Warrant.

    

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Holder hereby agree as
follows:

    

    1.           Definitions.                                As
used in this Agreement, the following terms shall have the following
meanings:

    

    (a)           “Effective
Date” means any  date after the date hereof that  the
Securities and Exchange Commission (“SEC”) declares effective a Registration
Statement covering Registrable Securities and otherwise meeting the conditions
contemplated hereby to be effective.

    

    (b)           “Holder”
means Consultant and any permitted transferee or assignee who agrees to become
bound by the provisions of this Agreement in accordance with Section 3 hereof
and who holds Registrable Securities, as the context may require.

    

    (c)           “Register,”
“Registered,” and “Registration” refer to a registration effected by preparing
and filing a Registration Statement or Statements in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous basis (“Rule
415"), and the SEC’s declaration or ordering of effectiveness of such
Registration Statement.

    

    (d)           "Registrable
Securities" means the Warrant and the Warrant Shares purchased upon exercise of
the Warrant as set forth in the document to which this Agreement is Exhibit
1.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (e)           “Registration
Statement” means a registration statement of the Company under the 1933 Act
covering Registrable Securities on Form S-3, if the Company is then eligible to
file using such form, and if not eligible, then on Form SB-2 or other
appropriate form.

    

    2.           Piggy-back
Registration Rights.  If, after the date hereof (but without
any obligation to do so), the Company proposes to register (including for this
purpose a registration effected by the Company for persons other than the
Holders) any of its securities under the 1933 Act in connection with the public
offering of such securities (other than a registration (i) with respect to an
employee benefit plan, or (ii)  in connection with a Rule 145
transaction under the 1933 Act), the Company shall, each such time, promptly
give each Holder written notice of such registration together with a list of the
jurisdictions in which the Company intends to attempt to qualify such securities
under applicable state securities laws.  Upon the written request of
each Holder given within twenty (20) business days after delivery of such
written notice by the Company to Holder, the Company shall, subject to the
provisions hereof, use its reasonable efforts to cause to be registered under
the 1933 Act all of the Registrable Securities that each such Holder has
requested to be registered.  If a Holder decides not to include all of
its Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth
herein.

     

    2.1           Obligations of the
Company.  Whenever required to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible:

     

    (a)           Prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its reasonable efforts to cause such registration statement
to become effective, and, upon the request of the holders of a majority of the
securities registered thereunder, keep such registration statement effective for
up to one hundred twenty (120) days.

     

    (b)           Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the 1933 Act with respect
to the disposition of all securities covered by such registration statement for
a period set forth in Section 2.1 (a) above.

     

    (c)           Furnish
to the Holders such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the 1933 Act, and such other
documents as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them.

     

    (d)           In
the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement with terms generally satisfactory to
the managing underwriter of such offering.  Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (e)           Notify
each Holder of Registrable Securities covered by such registration statement, at
any time when a prospectus relating thereto is required to be delivered under
the 1933 Act, of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing. In such instance, Company shall use
its best efforts to amend or supplement such prospectus to cure any such
statement or omission so as to render such statement or omission not
misleading.

     

    (f)           Use
its best efforts to furnish, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, (i) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and (ii) a letter, dated
as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering addressed
to the underwriters.

     

    2.2           Furnish
Information.  In connection with any action pursuant to this
Section 2, the selling Holders shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them, and the intended
method of disposition of such securities as shall be required to effect the
registration of their Registrable Securities.  In that connection,
each selling Holder shall be required to represent to the Company that all such
information which is given is both complete and accurate in all material
respects when made.

     

    2.3           Definition of
Expenses.

     

    (a)           “Registration
Expenses” shall mean all expenses incurred by the Company, except for
“Selling Expenses,” in complying herewith  including, without
limitation, all registration, filing and qualification fees, underwriters’
expense allowances, printing expenses, fees and disbursements of counsel for the
Company,  blue sky fees and disbursements, and the expense of any
special audits incident to or required by any registration.

     

    (b)           “Selling Expenses”
shall mean all underwriting discounts and selling commissions applicable to the
sale of the Registrable Securities in the registration, all stock transfer taxes
and all fees and disbursements of any additional special counsel in connection
with each such registration attributable to the Registrable Securities being
registered.

     

    2.4           Expenses of
Registration.  The Company shall bear all Registration Expenses
incurred in connection with any registration, qualification or
compliance,  All Selling Expenses shall be borne by the Holders of the
securities so registered, pro rata on the basis of the number of Registrable
Securities so registered.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.5           Underwriting Requirements in
Piggy-back Registration.  The right of any Holder to
registration pursuant to an underwriting shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting to the extent provided
herein.  All Holders proposing to distribute their securities through
such underwriting shall (together with the Company and any other persons
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected by the Company.  Notwithstanding any other provision of this
Agreement, if the underwriter determines that market factors require a
limitation of the number of shares to be underwritten, the underwriter
may  exclude some or all Registrable Securities from such registration
and underwriting.  Notwithstanding anything to the contrary herein, no
reduction shall be made with respect to securities offered by the Company for
its own account in connection with any Company offering. If any Holder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter.  Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration.

     

    2.6           Delay of
Registration.  No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as a
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 2.

     

    2.7           Indemnification.  In
the event any Registrable Securities are included in a registration statement
under this Section 2:

     

    (a)           To
the extent permitted by law, the Company will indemnify and hold harmless each
Holder, the officers, directors and partners of each Holder, any underwriter (as
defined in the 1933 Act) for such Holder and each person, if any, who controls
such Holder or underwriter within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the “1934 Act”) against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a “Violation”): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading; or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any state securities law
or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any
state securities law; and the Company will reimburse each such Holder, officer,
director or partner, underwriter or controlling person for any reasonable legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the Company’s indemnity contained in this

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
2.7(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with  information furnished
in writing and expressly stated for use in connection with such registration by
any such Holder, or such Holder’s officers, directors or partners, underwriter,
or controlling person.  The Company shall not be required to indemnify
any person against any liability arising out of the failure of any Holder or
person acting on behalf of a Holder to deliver a prospectus as required by the
1993 Act. The
indemnity provided for in this Section 2.7(a) shall remain in full force and
effect regardless of any investigation made by or on behalf of such seller,
underwriter, participating person or controlling person and shall survive
transfer of such securities by such seller.

     

    (b)           To
the extent permitted by law, each selling Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the Company
within the meaning of the 1933 Act, any underwriter (within the meaning of the
1933 Act) for the Company, any person who controls such underwriter, and any
other Holder selling securities in such registration statement or any of its
partners, directors or officers or any person who controls such Holder, against
any losses, claims, damages or liabilities (joint or several) to which any of
the foregoing persons may become subject, under the 1933 Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly stated in a writing for use in connection
with such registration; and each such Holder will reimburse any legal or other
expenses, as incurred, where same are reasonably incurred by any person intended
to be indemnified pursuant to this Section 2.7(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 2.7(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably
withheld.  Notwithstanding the foregoing, the liability of each Holder
under this Section 2.7(b) shall be limited to an amount equal to the net
proceeds from the offering price of the shares sold by such Holder.

     

    (c)           Promptly
after receipt by an indemnified party under this Section 2.7 of notice of the
commencement of any action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 2.7, notify the indemnifying party in writing of the
commencement thereof, and the indemnifying party shall have the right to
participate in and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the reasonable fees and expenses to be paid by the indemnifying party if the
indemnified party reasonably

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    determines
that representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding.  The failure to notify an indemnifying
party within a reasonable time of the commencement of any such action, to the
extent prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.7, but the omission so to notify the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 2.7.

     

    (d)           In
order to provide for just and equitable contribution to joint liability under
the 1933 Act in any case in which either (i) any indemnified party makes a claim
under this Section 2.7 or any controlling person of such indemnified party makes
such a claim but is judicially determined (by entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.7 provides
for indemnification in such case, or (ii) contribution under the 1933 Act may be
required on the part of any such person seeking indemnity under the terms of
this Section 2.7; then, and in each such case, the Company and such person will
contribute to the aggregate losses, claims, damages, or liabilities to which
they may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations.  The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties’ relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission; provided, however,
that, in any such case, (A) no such person shall be required to contribute any
amount in excess of the net proceeds from the offering price of all such
Registrable Securities sold by it pursuant to such registration statement and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person or entity who was not guilty of such fraudulent
misrepresentation.

     

    2.8  Reports Under Securities
Exchange Act of 1934.  With a view to making available to the
Holders the benefits of Rule 144 promulgated under the 1933 Act and any other
rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration, the Company agrees
to:

     

    (a)           use
its reasonable  efforts to make and keep public information available,
as those terms are understood and defined in Rule 144, at all times after ninety
(90) days after the closing date of the first registration statement filed by
the Company;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)           
use its reasonable efforts to file with the SEC in a timely manner all reports
and other documents required of the Company under the 1933 Act and the 1934 Act;
and

     

    (c)           furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request: (i) a written statement by the Company that it has complied with
the reporting requirements of Rule 144 (at any time after ninety (90) days after
the closing date of the first registration statement filed by the Company), the
1933 Act and the 1934 Act (at any time after it has become subject to such
reporting requirements); (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company; and (iii) such other information as may be reasonably requested in
order to permit any Holder to avail itself of any rule or regulation of the SEC
or any state securities authority which permits the selling of any such
securities without registration or pursuant to such form.

     

    3.           Assignment
of Registration Rights.

     

    The
piggyback registration rights hereunder may be assigned by a Holder to a
transferee or assignee of such securities: (i) if such transfer is made in
connection with the transfer of all Registrable Securities held by the
transferor;  (ii) if such transferee or assignee acquires at least
thirty thousand (30,000) shares of the then outstanding Registrable Securities
held by such Holder, (iii) to any Affiliate (as defined in Regulation D of the
1933 Act) of such Holder; (iv) to any family member or trust established for the
benefit of an individual Holder; or (v) in connection with a distribution by
such Holder to any partner, member, former partner, or member or the estate of
such partner or member; provided in each case that the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; provided, however, that such
assignment shall be effective only if the transferee agrees in writing at the
time of transfer to be  bound by the terms and conditions of this
Agreement and such transfer of any Registrable Securities is lawful under all
applicable securities laws.

     

    4.           Termination of the Company’s
Obligations.

     

    The Company shall have no obligations
hereunder with respect to any registration request or requests made by any
Holder (a) more than three years following the date of the Warrants are issued
or (b) all Registrable Securities held by and issuable to such Holder (and its
affiliates) may be sold under Rule 144 during any ninety (90) day
period.

    

    5.           Obligations
of the Investors.  In connection
with the registration of the Registrable Securities, any Holder  shall
have the following obligations:

    

    (a)           Such
Holder shall cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of any
respective  Registration Statement hereunder, unless such Holder has
notified the Company in writing of such Holder's election to exclude all of such
Holder's Registrable Securities from the Registration Statement;
and

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)           Each
Holder agrees that, upon receipt of any notice from the Company of the happening
of any material event which, in the Company’s opinion justifies the cessation of
the distribution of the Registrable Securities, such Holder will immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Holder's receipt of
the copies of any supplemented or amended prospectus which addresses such
material event, and, if so directed by the Company, such Holder shall deliver to
the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in such Holder's possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice.

    

    6.           Amendment
of Registration Rights.

    

    Any
provision of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Holders who
hold a fifty (50%) percent interest of the Warrant Shares as of such
date.  Any amendment or waiver effected in accordance with this
Section 6 shall be binding upon each Holder and the Company.

    

    7.           Miscellaneous.

    

    (a)           A
person or entity is deemed to be a holder of Registrable Securities whenever
such person or entity owns of record such Registrable Securities.  If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.

    

    (b)           Notices
required or permitted to be given hereunder shall be given in the manner
contemplated by the Warrant:  if to the Company or to the Holder, to
their respective address contemplated by the Warrant or at such other address as
each such party furnishes by notice given in accordance with this clause
(b).

    

    (c)           Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

    

    (d)           This
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 exclusive jurisdiction of the federal courts
whose districts encompass any part of the State of California, Santa Clara
County in connection with any dispute arising under this 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
jurisdiction.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (e)           The
Company and the Holder hereby waive a trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other in
respect of any matter arising out of or in connection with this
Agreement.

    

    (f)           If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.

    

    (g)           
This Agreement shall inure to the benefit of and be binding upon the successors
and assigns of each of the parties hereto.

    

    (h)           All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require.

    

    (i)           The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning thereof.

    

    (j)           This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement.  This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

    

    (k)           This
Agreement constitutes the entire agreement among the parties hereto with respect
to the Holder’s registration rights with respect to the Warrant and Warrant
Shares  There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein.  This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to its subject matter.

    

    

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    IN WITNESS WHEREOF, the
parties have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized as of the day and year first above
written.

    

    COMPANY:

    

    FOCUS ENHANCEMENTS, INC.

    

    

    By: /s/ Gary
Williams                                                                                     

    Name: Gary
Williams

    Title: EVP of Finance &
CFO

    

    
 

    By: R. Keith
Fetter

    Name:   R.
Keith
Fetter                                                                        

    Title:                                                                           

    

    

    

    

    

     

    20197708.1ex10_1.htm

    
      
         

        Exhibit
10.1

         

        ASSET
PURCHASE AGREEMENT

        

        This Asset Purchase Agreement (“Agreement”)
is made as of the last date signed by both parties hereunder (the “Effective
Date”), by and between Hallo Development Co., LLC, a Michigan limited
liability company (the “Seller”),
with its principal place of business at the address set forth below and Focus
Enhancements, Inc. a Delaware corporation (the “Purchaser”),
whose principal place of business is at the address set forth below. Together,
Seller and Purchaser are the “Parties,”
each a “Party.”

        

        RECITALS

        

        .

         

        WHEREAS, Silicon Valley Bank
(“SVB”) made
a loan to AudioMojo, Inc., a Delaware corporation (“AudioMojo”), in
the original principal amount of $500,000 pursuant to that certain Loan and
Security Agreement effective January 8, 2007,
as amended (collectively, the “Loan and Security
Agreement”).

         

        WHEREAS, Seller acquired all
rights of SVB as lender and secured party under the Loan and
Security Agreement pursuant to that certain Non Recourse Loan Document Sale
and Assignment Agreement effective April 23, 2008.  

         

        WHEREAS, AudioMojo is in
default of its obligations set forth in the Loan and
Security Agreement.

        

        WHEREAS, Seller wishes to sell
to Purchaser certain of AudioMojo’s assets set forth in Exhibit A hereto
(collectively, the “Assets”)
pursuant to a nonjudicial foreclosure under Article 9 of the Uniform Commercial
Code as in effect in the State of Oregon (the “Foreclosure”).

        

        WHEREAS, Purchaser wishes to
purchase the Assets.

        

        NOW, THEREFORE, in
consideration of the foregoing premises, the mutual covenants and agreements
contained herein, and other good and valuable consideration, receipt of which is
hereby acknowledged, Purchaser and Seller agree as follows:

         

        Definitions

        

        “Assets”
means those items set forth in Exhibit
A, including the Intellectual Property embodied therein.

        

        “Intellectual
Property” means the patents and trademarks, patent rights, trademark
rights, and applications for patents and trademarks, know how, confidential or
proprietary information, technical information, software, data, plans, drawings,
trade secrets, inventions, discoveries, processes, copyrights and applications
for any of the foregoing that relate in any way to the wireless digital audio
distribution technology developed by AudioMojo as further described in Exhibit
A.

        

        “Products”
means those portions of the Assets embodied in the chipset technology developed
by AudioMojo, including computer software, and subsequent versions thereof,
source code, object, executable and binary code, objects, covenants, screens,
user interfaces, report formats, menus, data bases, compilations, manuals,
design notes, flow charts, and other items and documentation related thereto or
associated therewith.

        

        1.           Sale of
Assets.

        

        (a)           In
consideration of the Purchase Price set forth in Section 6 below, the Seller
shall sell, assign, transfer and convey to Purchaser, and Purchaser shall
purchase, acquire, accept and take possession of, all of the Seller’s right,
title and interest in and to the Assets.

         

        (b)           Title
to the Assets will transfer to Purchaser upon payment of that portion of the
Purchase Price identified as “Stock” as
set forth in Exhibit
C (the “Closing”
or “Closing
Date”).

        

        (c)            No
liabilities of Seller or AudioMojo incurred with respect to the Assets prior to
the Closing are assumed by Purchaser. Purchaser is not assuming any liabilities,
obligations or indebtedness of the Seller or AudioMojo (the “Excluded
Liabilities”).

         

        (d)           Simultaneous
with the Closing, Seller will do all things that are reasonably necessary to
effect the transfer of the Assets to Purchaser, including, without limitation,
executing Exhibits B
and B-1 (the “Ancillary
Documents”).  If Seller does not so execute same promptly upon
Purchaser’s written demand therefor, Purchaser is hereby appointed as Seller’s
attorney in fact for the limited purpose of executing all such documents and
taking all such actions as are reasonably appropriate to effect transfer of
title to the Assets, the same as if Seller itself had  signed
same.

         

        2.           Proprietary Rights of
Purchaser.

        

        Nothing
in this Agreement shall cause Seller to acquire any right, title, or interest in
or to any copyrights, trademarks, service marks, trade secrets, patents or other
intellectual property rights of Purchaser, or to retain any rights to the
Assets.

        

        3.           Confidentiality.

         

        Without
the other Party’s prior written consent or except as required by law, the terms
of this Agreement shall be confidential and not be disclosed by either
Party.  For avoidance of doubt, Seller may provide a copy of this
Agreement or disclose its terms to VenCore Solutions, LLC and its
attorneys.  Either Party may provide a copy of this Agreement or
disclose its terms to such Party’s employees, investors, stockholders,
attorneys, accountants and other professionals.  Additionally, either
Party may provide a copy of this Agreement or disclose its terms to third
parties in connection with any due diligence review of such Party. The Seller
shall not issue a press release or make any other public statements related to
this Agreement or the Assets without the express written consent of Purchaser,
provided that Seller may inform its

        Board of
Directors and stockholders of the transaction. Notwithstanding the above, Seller
shall be entitled to issue press releases regarding the transaction and the
Assets acquired hereby.

        

        4.           Representations,
Warranties and Covenants of Seller.  Seller represents
and  warrants:

        

        4.1           Organization of the
Seller. The Seller is a limited liability company duly organized, validly
existing, and in good standing under the laws of Michigan.

        

        4.2           Authorization of
Transaction. As of the Closing,  the Seller will have full
power and authority  to enter into and perform its obligations under
(i) this Agreement and (ii) all documents and instruments to be executed by it
pursuant to this Agreement, including, without limitation, the Ancillary
Documents. Without limiting the generality of the foregoing, as of the Closing,
the members of  Seller  shall have duly authorized the
transactions contemplated by the Agreement and the Ancillary Documents and
Seller’s  execution, delivery, and performance thereof, and when so
executed and delivered, such documents will be legal, valid and binding
obligations of the Seller, enforceable against it in accordance with their
respective terms.

        

        4.3           Non-contravention. As
of the Closing, the execution and the delivery of this Agreement shall
not  (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Seller or any of the
Assets is  subject or any provision of the operating agreement of the
Seller or (ii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any person  the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Seller is a party or by which it is bound or to which any of the Assets is
subject which would have a material effect on such Assets, or result in the
imposition of any security interest or other encumbrance of any kind upon any of
the  Assets. Other than the notice required by Oregon Revised Statutes
(“ORS”) 79.0611, the Seller does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any third party or
government or governmental agency  to consummate the transactions
contemplated by this Agreement.

        

        4.4           Brokers’ Fees. As of
now and the Closing, the Seller has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.

        

        4.5           Title to Assets. As
of the Closing, Purchaser shall receive good and marketable title to the Assets
and such Assets shall be free and clear of any mortgage, pledge, lien,
encumbrance, charge security interest, license (unless expressly assumed
hereunder) or other restriction (“Liens”);
provided, however, that Seller is not required to provide the Assets identified
as “Equipment” under Exhibit A hereto free of Liens held by VenCore Solutions,
LLC.

        

        4.6           Undisclosed
Liabilities. As of now and the Closing:

        

        (1)  The Seller has no
knowledge of:

        

        (a)  Any liability or any
basis to believe that any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand will be brought against
Seller or AudioMojo giving rise to any liability that may affect title or
marketability to the Assets;

        

        (b)  Any claim that the
Assets interfere with, infringe upon, misappropriate, or otherwise conflict with
third party intellectual property rights;

        

        (c) Any charge, complaint, claim,
demand, or notice alleging any claim of such interference, infringement,
misappropriation, or violation (including any claim that the Seller or AudioMojo
must license or refrain from using any Intellectual Property rights of any third
party); or

        

        (d)  Any third party
interference with, infringement upon, misappropriation of, or other conflict
with the Intellectual Property rights of the Seller or AudioMojo.

        

        (2)           With
respect to the Intellectual Property embodied in the Assets:

        

         

        (i)  all right, title, and
interest shall transfer to Purchaser free and clear of any lien, license, or
other restriction;

         

        (ii) same is not subject to any
outstanding injunction, judgment, order, decree, or ruling; and

        

        (iii) no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand is pending or
threatened which challenges the legality, validity, enforceability, use,
ownership of AudioMojo or foreclosure rights of Seller therein or
thereof.

        

        4.7           Legal Compliance;
Litigation. As of Closing, the Seller has complied with all applicable
laws regarding the conduct of its business and its ownership, including all
applicable rules, regulations, laws, statutes, treaties, ordinances, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder
of federal, state, local, and foreign governments (and all agencies thereof)
(collectively, “Legal
Requirements”), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
Seller alleging any failure so to comply.  As of now and the Closing,
neither Seller nor AudioMojo are, with regard to the Assets,  (i)
subject to any outstanding injunction, judgment, order, decree, or ruling or
(ii) a party or is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator.

         

               
4.8           Foreclosure
Issues.  As of the Closing: (a) since the assignment to it of
the rights of SVB under the Loan and Security Agreement, Seller has had a valid
and perfected first position security interest in the Assets; (b) Seller's
disposition of the Assets will comply with ORS 79.0610 through
79.0613; and (c) upon consummation of the private sale referenced
in the Recitals above, Purchaser will have the title concerning
the Assets set forth in ORS 79.0617(1).  Promptly after the
Closing, Seller shall provide Purchaser a transfer statement pursuant to ORS
79.0619.

        

        5.           Representations, Warranties
and Covenants of Purchaser.

        

        Purchaser
represents and warrants to the Seller that: (i) Purchaser has full legal
capacity to enter into this Agreement and is duly incorporated and in good
standing in the jurisdiction of its incorporation; (ii) as of the Closing Date
the transaction shall have been approved by Purchaser’s Board of Directors;
(iii) no other approval of any stockholders, third party, or any governmental
authority is necessary for Purchaser’s purchase of the Assets, and no filing
with any governmental agency is so required; and (iv) the execution and
performance of this Agreement by Purchaser will not violate any rights of any
third party or person or result in a breach of any other agreement or contract
to which Purchaser is a party.

        

        6.           Purchase
Price.
   In exchange for the sale, assignment, transfer,
conveyance and delivery to Purchaser of the Assets in accordance with this
Agreement, Purchaser shall pay to Seller at the Closing the Purchase Price,
comprised of the transfer to Seller of certain stock of Purchaser (the “Stock”),
and a limited, ongoing portion of the revenue stream arising from Purchaser’s
subsequent commercialization of the Assets (the “Revenue
Stream”), all as set forth in Exhibit
C.

        

        7.           Closing
Conditions.

        

                                  7.1           Conditions to Sellers’
Obligation to Close.  The obligations of the Seller to
consummate the transactions under this Agreement are subject to the
satisfaction, before or on the Closing Date, of each of the conditions set forth
below in this Section 7.1, any of which may be waived by the
Seller:

        

        7.1.1                      Accuracy of
Representations.  All representations and warranties of
Purchaser contained in this Agreement and in the Ancillary Documents at or prior
to Closing shall be true in all material respects, in each case on and as of the
Closing Date with the same effect as if made on and as of the Closing
Date.

        

        7.1.2                      Covenants.  Purchaser
shall, in all material respects, have performed and complied with each of the
covenants, obligations and agreements contained in this Agreement and the
Ancillary Documents that are to be performed or complied with by it at or prior
to Closing.

                                                

                        7.1.3                      Consents and
Approvals.  All consents, approvals, permits, authorizations
and orders required to be obtained from, and all registrations, filings and
notices required to be made with or given to any regulatory authority or person
as provided herein, if any, shall have been so obtained or filed with such
regulatory authority or person.

        

        7.1.4                      No Legal
Proceedings.  No injunction, action, suit or proceeding shall
be pending or threatened by or before any regulatory authority and no law shall
have been enacted, promulgated or issued or deemed applicable to any of the
transactions contemplated by this Agreement and the Ancillary Documents, which
would: (i) prevent consummation of any of the transactions contemplated by this
Agreement or any of the Ancillary Documents; (ii) cause any of the transactions
contemplated by this Agreement or any of the Ancillary Documents to be rescinded
following consummation; or (iii) have a material adverse effect on a Party, the
Assets, this Agreement or the transactions contemplated hereby.

        

        7.1.5                      Bill of Sale and Assumption
Agreement.  The Parties shall have executed and delivered the
Bill of Sale, and any other instruments necessary for the sale, transfer and
conveyance to Purchaser of the Assets.

        

        7.2           Conditions to Purchaser’s
Obligation to Close.  The obligations of Purchaser to
consummate the transactions under this Agreement are subject to the
satisfaction, before or on the Closing Date, of each of the conditions set forth
below in this Section 7.2, any of which may be waived by Purchaser:

        

        7.2.1                      Accuracy of
Representations.  All representations and warranties of Seller
contained in this Agreement and the Ancillary Documents at or prior to Closing
shall be true in all material respects, in each case on and as of the Closing
Date with the same effect as if made on and as of the Closing Date.

         

                        7.2.2                      Covenants.  Seller
shall, in all material respects, have performed and complied with each of the
covenants, obligations and agreements contained in this Agreement and the
Ancillary Documents that are to be performed or complied with by it at or prior
to Closing.

        

                        7.2.3                      Key
Employees.  Purchaser shall have interviewed and, at
Purchaser’s option, hired certain of the personnel involved in the development
of the Assets, including Myron White, Dylan Vance, Scott Leibelt, and Kevin
Hammack (collectively, the “Personnel”)
upon terms and conditions satisfactory to Purchaser, and Purchaser shall be
satisfied, in its sole and absolute discretion, with the ability of the
Personnel to continue the development of the Assets.

         

                        7.2.4                      No Legal
Proceedings.  No injunction, action, suit or proceeding shall
be pending or threatened by or before any regulatory authority and no law shall
have been enacted, promulgated or issued or deemed applicable to any of the
transactions contemplated by this Agreement or any of the Ancillary Documents,
which would: (i) prevent consummation of any of the transactions contemplated by
this Agreement or any of the Ancillary Documents; (ii) cause any of the
transactions contemplated by this Agreement or any of the Ancillary Documents to
be rescinded following consummation; or (iii) have a material adverse effect on
a Party, the Assets, this Agreement or the transactions contemplated
hereby.

        

        7.2.5                      Bill of
Sale.  The Parties shall have executed and delivered the Bill
of Sale in substantially the form provided in Exhibit B-2 of this Agreement, and
any other instruments necessary for the sale, transfer and conveyance to
Purchaser of the Assets.

        

        7.2.6                      Due
Diligence.  The Purchaser shall be satisfied, in its sole and
absolute discretion, with the results of its due diligence with respect to the
Assets.

        

        7.2.7                      Foreclosure.  Seller
shall provide evidence satisfactory to Purchaser that Seller has completed the
Foreclosure in accordance with the requirements of ORS 79.0610 through
79.0613.

        

        8.           Term
and Termination, Survival and Indemnification.

        

        8.1           Early Termination and
Survival.

        

        8.1.1                      Termination Prior to
Close.  This Agreement may be terminated at any time prior to
the Closing Date: (a) by mutual written consent of the Seller and the Purchaser;
or (b) by the Seller if the transactions contemplated hereby shall not have been
consummated on or before June 30, 2008.

        

        8.1.2                      Survival. The
respective representations, warranties and covenants of the Seller and the
Purchaser contained in this Agreement shall survive until December 31, 2009 (the
“Survival
Period”).  Notwithstanding the foregoing,  in the
event a claim for breach of any representation, warranty or covenant is made
prior to the expiration of the Survival Period, such representation, warranty or
covenant shall survive until such claim is resolved.  Purchaser’s
obligation to pay to Seller a portion of the Revenue Stream as part of the
Purchase Price shall expire in accordance with the terms of Exhibit
C.

        

        8.2           Indemnification.

        

        8.2.1                      Seller
hereby agrees to indemnify, protect, defend (at Purchaser’s request), release
and hold Purchaser and its directors, officers, managers, members, employees,
agents, successors, affiliates and assigns (collectively, the “Purchaser
Indemnified Parties”) harmless from and against any and all Losses
incurred in connection with, arising out of, resulting from or incident to any
breach or inaccuracy of any representation or warranty of Seller as set forth in
this Agreement or the Ancillary Documents.

        8.2.2                      The
term “Losses” as
used in this Agreement is not limited to matters asserted by third parties
against any indemnified party, but includes losses incurred or sustained by an
indemnified party in the absence of third party claims.  Payments by
an indemnified party of amounts for which such indemnified party is indemnified
under this Section 8 shall not be a condition precedent to
recovery.

        

        8.3           Indemnification
Proceedings.

        

        8.3.1                      In
the event that any legal proceeding shall be instituted or any claim or demand
shall be asserted (individually and collectively, a “Claim”) by
any person or entity in respect of which payment may be sought under this
Section 8, the Purchaser Indemnified Party shall reasonably and promptly cause
written notice (a “Claim
Notice”) of the assertion of any Claim of which it has knowledge which is
covered by this indemnity to be delivered to Seller; provided, however, that the
failure of the Purchaser Indemnified Party to give the Claim Notice shall not
release, waive or otherwise affect Seller’s obligations with respect thereto,
except to the extent that Seller can demonstrate actual loss and material
prejudice as a result of such failure.  If Seller shall notify the
Purchaser Indemnified Party in writing within ten (10) business days (or sooner,
if the nature of the Claim so requires) of delivery of such Claim Notice that
Seller shall be obligated under the terms of its indemnity hereunder in
connection with such lawsuit or action, then Seller shall be entitled, if it so
elects at its own cost, risk and expense, (i) to take control of the defense and
investigation of such lawsuit or action, (ii) to employ and engage attorneys of
its own choice, but, in any event, reasonably acceptable to the Purchaser
Indemnified Party, to handle and defend the same unless the named parties to
such action or proceeding (including any impleaded parties) include both Seller
and the Purchaser Indemnified Party and the Purchaser Indemnified Party has been
advised in writing by counsel that there may be one or more material legal
defenses available to such indemnified party that are different from or
additional to those available to Seller, in which event the Purchaser
Indemnified Party shall be entitled, at Seller’s cost, risk and expense, to
select a single firm of separate counsel (plus any necessary local counsel), all
at reasonable cost, of its own choosing, reasonably acceptable to Seller and
(iii) to compromise or settle such lawsuit or action, which compromise or
settlement shall be made only with the prior written consent of the Purchaser
Indemnified Party, such consent not to be unreasonably withheld or
delayed.

        

        8.3.2                      If
Seller elects not to defend against, negotiate, settle or otherwise deal with
any Claim which relates to any Losses indemnified against hereunder, fails to
notify the Purchaser Indemnified Party of its election as provided in this
Section 8.3 or contests its obligation to indemnify the Purchaser Indemnified
Party for such Losses under this Agreement, the Purchaser Indemnified Party may
defend against, negotiate, settle or otherwise deal with such
Claim.  If the Purchaser Indemnified Party defends any Claim, then
Seller shall reimburse the Purchaser Indemnified Party for the Losses incurred
in defending such Claim upon submission of periodic bills.  If Seller
shall assume the defense of any Claim, the Purchaser Indemnified Party may
participate, at its own expense, in the defense of such Claim; provided, however, that such
indemnified party shall be entitled to participate in any such defense with
separate counsel at the expense of Seller if (i) so requested by Seller to
participate or (ii) in the reasonable opinion of counsel to the Purchaser
Indemnified Party, a material conflict or potential material
conflict

        exists
between the Purchaser Indemnified Party and Seller that would make such separate
representation required; and provided, further, that Seller
shall not be required to pay for more than one such counsel for all indemnified
parties in connection with any Claim.  If Seller shall assume the
defense of any Claim, Seller shall obtain the prior written consent of the
Purchaser Indemnified Party before entering into any settlement of such Claim or
ceasing to defend such Claim if, pursuant to or as a result of such settlement
or cessation, injunctive or other equitable relief shall be imposed against the
Purchaser Indemnified Party or if such settlement or cessation does not
expressly and unconditionally release the Purchaser Indemnified Party from all
liabilities or obligations with respect to such Claim, with
prejudice.  The Parties hereto agree to cooperate fully with each
other in connection with the defense, negotiation or settlement of any
Claim.

        

        8.4           Limitations on
Indemnification Obligations.  Anything in this Agreement to the
contrary notwithstanding, (i) the aggregate liability of the Seller under this
Agreement and the Ancillary Documents shall not exceed the value of 300,000
shares of the Stock, and (ii) Purchaser’s sole recourse against Seller hereunder
and under the Ancillary Documents shall be such 300,000 shares of Stock and the
proceeds thereof.

        

        9.           Default by Seller;
Remedies.

        

        The
Seller will be in default under this Agreement if the Seller is in breach of (i)
its covenants under this Agreement and such breach is not cured to the
reasonable satisfaction of Purchaser within thirty (30) days after Seller has
received notice of such breach (if such breach is capable of being cured within
such time) or (ii) any of the representations or warranties of the Seller
contained in this Agreement, and in such event Purchaser may pursue any remedies
available to Purchaser under this Agreement or allowable under law or
equity.

        

        10.           Default by Purchaser;
Remedies.

        

        If
Purchaser (a) fails to observe or perform, other than due to a default or breach
by the Seller, any of its covenants or obligations contained in this Agreement
and such failure or breach is not cured or commenced to be cured within ten (10)
days after Purchaser has received notice from the Seller of such default or
breach or (b) breaches any of its representations or warranties contained
herein, then, Seller may seek specific enforcement of this Agreement, and any
remedies available to Seller under this Agreement or allowable under law or
equity.

        

        11.           Jurisdiction.

        

        The
execution, performance and interpretation of this Agreement shall be governed
by, construed and enforced in accordance with the substantive laws of the State
of California, without regard to California’s choice of law rules. The Parties
irrevocably consent to the in-personam jurisdiction of and exclusive venue in
the United States Federal Courts for the Northern District of California or the
California Superior Court for Santa Clara County.

        

        12.             Binding Effect;
Assignment.

        

        Neither
Seller nor Purchaser shall assign any of its right or delegate any of its
obligations under this Agreement to any third party without prior written
consent of the other Party except that Seller may assign to a disbursing agent,
an assignee for the benefit of AudioMojo’s creditors or similar person or entity
its payment rights only with respect to the Revenue Stream portion of the
Purchase Price.  This Agreement is binding upon, and shall inure
solely to the benefit of, the Parties, their respective successors, and
permitted assigns. Except as set forth in the immediately preceding sentence, no
third party shall have standing to enforce any provision of this
Agreement.

         

        13.           Entire
Agreement.

        

        This
Agreement (including its Exhibits) constitute(s) the Parties’ entire agreement
with respect to its subject matter, and it supersedes, merges and voids any and
all prior and contemporaneous understandings or agreements, whether oral or
written, concerning such subject matter. Each Party acknowledges that it enters
into this Agreement without relying on any statement by the other Party which is
not specifically set forth in this Agreement.

        

        14.           Miscellaneous.

         

        14.1           No Other
Terms.  Nothing in this Agreement, express or implied, is
intended to confer upon any third party, other than the Parties and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.

         

        14.2           Counterparts.  This
Agreement may be executed in two or more counterparts, including by facsimile or
PDF, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

         

        14.3           Titles and
Subtitles.  The titles, subtitles and headings used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.  Unless the context
otherwise requires (a) the singular shall include the plural and the plural
shall include the singular, and (b) a reference to one gender shall include
the other gender and the neuter, and the neuter shall include each
gender.

         

        14.4           Notices.  Any
notice required or permitted under this Agreement shall be given in writing and
shall be deemed effectively given upon the earlier of personal delivery or
confirmed facsimile to the Party to be notified or actual delivery after deposit
with a recognized courier or delivery service or four (4) business days after
deposit with the United States post office, by registered or certified mail,
postage prepaid and addressed to the Party to be notified (attention: President)
at the address or confirmed facsimile number indicated for such Party herein, or
at such other address or addressee as such Party may designate by ten (10) days’
advance written notice to the other Party.

         

        14.5           Finder’s and Broker’s
Fees.  Each Party shall indemnify and hold harmless the other
Party from and against any liability for any fee, commission or compensation in
the nature of a broker, agent, finder, adviser or other intermediary in
connection with this Agreement (and the other Party’s costs and expenses of
defending against such liability or asserted liability) for which the
indemnifying Party or any of its officers, partners, employees, or
representatives is responsible.

         

        14.6           Amendments and
Waivers. No purported modification or amendment of any term of this
Agreement shall be effective unless it is in writing, subsequent to this
Agreement and signed by both Parties hereto. Unless a particular provision or
section of this Agreement requires otherwise explicitly in a particular
instance, any provision of this Agreement may be waived (either generally or in
a particular instance and either retroactively or prospectively) with the signed
written consent of the Party to whom the obligation or performance is
due.  Any waiver or amendment so effected shall bind all successors in
interest.

         

        14.7           Severability.  If
one or more provisions of this Agreement is or are held to be invalid, illegal
or unenforceable under applicable law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transaction contemplated
hereby is not affected in any manner adverse to any Party. Upon determination
that any term or other provision is invalid, illegal or unenforceable under
applicable law or public policy, the Parties shall negotiate in good faith to
modify this Agreement to effect the original intent of the Parties as closely as
possible in an acceptable manner to the end that transactions originally
contemplated hereby are fulfilled to the extent possible.

         

        14.8           Expenses.  Regardless
of whether the Closing occurs, Purchaser and Seller respectively shall each bear
its own legal and other expenses incurred with respect to the negotiation,
execution and delivery  of this Agreement.

         

         

        14.9           Arbitration; Attorneys’
Fees.  Except for breach of Section 3, on written request of either
Party, any controversy or claim arising out of this Agreement shall be submitted
to binding arbitration before a single arbitrator under the Commercial Rules and
Regulations of the American Arbitration Association.  If the Parties are
unable to agree on an arbitrator within thirty (30) days after a Party has
served notice of a request to arbitrate, then an arbitrator experienced in
commercial disputes of like nature shall be selected by the American Arbitration
Association pursuant to its then current rules, within thirty (30) days after
one Party has advised the other Party it is unable to agree on the
arbitrator.  Arbitration shall take place in the County of Santa Clara,
California.  No discovery shall be allowed in such arbitration except for
an exchange of documents. The arbitration shall be concluded within ninety
(90) days after the arbitrator has been appointed.  The maximum number
of hearing days for such arbitration shall be five (5), all of which shall occur
within a consecutive two week period.  The arbitrator shall issue a written
decision within thirty (30) days after the last hearing day giving findings of
facts and reasons for any award.  The award shall be specifically
enforceable in a court of law with jurisdiction over the Parties and subject
matter. For any breach of Section 3, notwithstanding the foregoing, a Party may
seek injunctive relief from a court to enjoin violations.  In any
litigation or arbitration between the Parties, the prevailing Party therein
shall be entitled to obtain its reasonable attorney fees and costs of the
proceedings from the other Party as an element of its damages in enforcing this
Agreement. 

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

       

      

       

      IN WITNESS WHEREOF, the
Parties have executed this Agreement effective as of the date first written
above.

      

      
        	
                Focus
      Enhancements, Inc. (“Purchaser”)

              	
                Hallo
      Development Co., LLC (“Seller”)

              

      

      
        	
                By:/s/ Brett A.
      Moyer       

                    Brett A.
      Moyer

              	
                By:
      /s/ Dennis
      Howitt
    Dennis
      Howitt

              

        	
                Title:President
      and CEO

              	
                Title:
      General Partner

              

        	
                 

              	
                 

              

        	
                Date:
      June 25, 2008  

              	
                Date:
      June 24, 2008

              

        	
                 

              	
                 

              

        	
                Address:

              	
                Address:

              

      
      

      
        	
                      
                  1370
      Dell Avenue

                  Campbell, CA 95008

                  Fax: 408.866.4795

                

              	
                      
                  1221
      Pinecrest SE

                  E. Grand Rapids, MI 49506

                  Fax
    503.223.9073

                

              

                                                                                

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Exhibit
A

      

      Assets

      

      

      Assets:

      

      Intellectual
Property/Technology:

      Patents

      
        	
                ·  

              	
                Patent
      Application Titled “HIGH QUALITY, CONTROLLED LATENCY MULTI-CHANNEL
      WIRELESS DIGITAL AUDIO DISTRIBUTION SYSTEM AND METHODS”, No. 20070058762,
      filed August 4, 2006

              

      

      
        	
                ·  

              	
                Patent
      Application Titled “SYSTEM AND METHODS FOR ALIGNING CAPTURE AND PLAYBACK
      CLOCKS IN A WIRELESS DIGITAL AUDIO DISTRIBUTION SYSTEM”, No 20070030986,
      filed August 4, 2006

              

      

      
        	
                ·  

              	
                IP
      and Patent Rights Pertaining to Room
Mapping

              

      

      
        	
                ·  

              	
                IP
      and Patent Rights Pertaining to My
Zone

              

      

      

      All
software files (in source and object form), notes, designs, documentation and
other materials proprietary to AudioMojo comprising the Product as of the
Closing Date, including without limitation:

      
        	
                ·  

              	
                Specifications
      for System, MAC, ASIC Design, and Command
  Interface

              

      

      
        	
                ·  

              	
                Verilog,
      VHDL, and RTL Source for ASIC

              

      

      
        	
                ·  

              	
                Firmware
      source for Master and Slaves in Demo
Condition

              

      

      
        	
                ·  

              	
                FPGA
      Board Designs, Schematic, BOM, and
Layout

              

      

      
        	
                ·  

              	
                FPGA
      Programming File

              

      

      
        	
                ·  

              	
                Ultrasonic
      Pinger Board Design, Schematic, BOM, and
Layout

              

      

      
        	
                ·  

              	
                Class
      D Amplifier Board Design, Schematic, BOM, and
  Layout

              

      

      
        	
                ·  

              	
                Power
      Interface Board Design, Schematic, BOM, and
  Layout

              

      

      
        	
                ·  

              	
                ASIC
      Design Support Files

              

      

      
        	
                ·  

              	
                Methods
      and Processes for Converting and Loading Filter
  Parameters

              

      

      
        	
                ·  

              	
                Audio
      Performance Reports

              

      

      

      Equipment:

      

      
        	
                ·  

              	
                Demo
      Setup Consisting of Radio Modules, Speakers, Master Interface, and
      Cases

              

      

      
        	
                ·  

              	
                FPGA
      Boards for Lab use, not all board
functional

              

      

      

      

      Products:

      AudioMojo’s
audio solution that incorporates the patents set forth in the first 4 bullets
above.

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Exhibit
B

      

      Patent
Assignment

      

      ASSIGNMENT
OF PATENTS

      

      This
ASSIGNMENT OF PATENTS is effective as of July 8, 2008, between Hallo Development
Co., LLC, a Michigan limited liability company, (“ASSIGNOR”), and Focus
Enhancements, Inc., a Delaware corporation (“ASSIGNEE”).

       

      WHEREAS,
ASSIGNEE has entered into that certain Asset Purchase Agreement dated June 25,
2008 with ASSIGNOR (the “Agreement”) wherein ASSIGNEE is purchasing certain
property and assets described therein, including certain intellectual
property;

       

      WHEREAS,
ASSIGNOR holds all right, title and interest in and to the patent applications
(and the inventions disclosed therein) identified in the attached Schedule A (“Patent
Properties”); and

       

      WHEREAS,
ASSIGNEE is desirous of acquiring the aforesaid Patent Properties and the right
to recover damages for any past and future acts of infringement associated with
the Patent Properties.

       

      NOW,
THEREFORE, in consideration of the premises and the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by ASSIGNOR, ASSIGNOR does hereby assign unto
ASSIGNEE all rights, title and interest in and to the aforesaid Patent
Properties identified hereinabove, any legal equivalent thereof in all foreign
countries (subject, however, to applicable patents laws in such countries), the
right to claim priority therefrom, and in and to all additional patents and
patent applications to be obtained from such Patent Properties from any future
applications, continuations, divisions, renewals, extensions, substitutes,
reissues or re-examinations thereof, each and all to be held and enjoyed by
ASSIGNEE, its successors and assigns, to the full end of the terms for which any
of such Patent Properties are granted, plus any extensions, as fully and
entirely as the same would have been held and enjoyed by ASSIGNOR had this
assignment not been made, together with all claims for damages by reason of past
and future infringement of said Patent Properties, with the right to sue for and
collect the same for its own use and enjoyment, and for the use and enjoyment of
its successors, assigns or other legal representatives.

       

      ASSIGNOR
authorizes and requests the United States Patent and Trademark Office to issue
any and all United States Letters Patent resulting from the Patent Properties
listed herein or any divisions, reissues, continuations (in whole or in part),
renewals, extensions, substitutes or re-examinations thereof to ASSIGNEE as
assignee of ASSIGNOR’s interest therein.

       

      ASSIGNOR:                                HALLO
DEVELOPMENT CO., LLC

       

      By:           /s/ Dennis
Howitt                                                                

       

      Name:      Dennis
Howitt                                                                

       

      Title:        Managing
Member      

       

                                                                

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
A

       

      

       

      

      
        
          	
                   

                  TYPE
      OF APPLICATION/

                  COUNTRY

                   

                	
                  APPLICATION
      NO.

                	
                  FILING
      DATE

                	
                  STATUS
      AS OF _______

                
	
                  Utility/USA

                	
                  20,070,058,762

                	
                  August
      4, 2006

                	
                  Pending

                
	
                  Utility/USA

                	
                  20,070,030,986

                	
                  August
      4, 2006

                	
                  Pending

                

        

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Exhibit
B-1

      

      Bill of
Sale

      

      BILL
OF SALE

      

      

      THIS BILL OF SALE (“Bill of
Sale”) is made, executed and delivered as of July 8, 2008, by Hallo
Development Co., LLC, a Michigan limited liability company (“Grantor”),
to Focus Enhancements, Inc., a Delaware corporation (“Grantee”).

      

      RECITALS

       

      A.           Grantor
and Grantee are parties to a certain Asset Purchase Agreement (“Asset Purchase
Agreement”), dated as of June 25, 2008, providing for, among other
things, the transfer and sale to Grantee of certain assets (“Assets”),
all as more fully described in Exhibit A of the Asset Purchase Agreement, for
consideration in the amount and on the terms and conditions provided in the
Asset Purchase Agreement.  All capitalized terms used and not
otherwise defined herein shall have the meanings assigned to them in the Asset
Purchase Agreement.

       

      

      B.           All
of the terms and conditions precedent provided in the Asset Purchase Agreement
have been met and performed or waived by the respective parties, and the parties
now desire to carry out the intent and purpose of the Asset Purchase Agreement
by Grantor’s execution and delivery to Grantee of this instrument evidencing the
vesting in Grantee of all of Grantor's right, title and interest in and to the
Assets, in addition to such other instruments as Grantee shall have otherwise
received or may hereafter request.

      

      NOW, THEREFORE, for the consideration
set forth in the Asset Purchase Agreement, the receipt and sufficiency of which
are hereby acknowledged:

      

      Grantor hereby conveys, sells,
transfers, assigns, and delivers unto Grantee, its successors and permitted
assigns forever, and Grantee hereby accepts from Grantor, all right, title and
interest in and to the Assets free and clear of any Liens.

      

      Grantor hereby authorizes Grantee, its
successors and permitted assigns, to institute and prosecute in the name of
Grantor, or otherwise, for the benefit of Grantee, its successors and permitted
assigns, any and all proceedings at law, in equity or otherwise, which Grantee,
its successors or permitted assigns, may deem proper for the collection or
reduction to possession of any of the Assets or for the collection and
enforcement of any claim or right of any kind hereby sold, conveyed, transferred
and assigned, or intended so to be, and to do all acts and things relating to
the Assets which Grantee, its successors or permitted assigns, shall deem
desirable.

      

      Grantor hereby covenants that, from
time to time after the delivery of this instrument, at Grantee’s reasonable
request and without further consideration, Grantor will do, execute, acknowledge
and deliver, or will cause to be done, executed, acknowledged and delivered, all
and every such further acts, deeds, conveyances, transfers, assignments, powers
of attorney and assurances as may be reasonably required more effectively to
convey, transfer to and vest in Grantee, and to put Grantee in possession of,
any of the Assets.

      

      Notwithstanding any other provisions of
this Bill of Sale to the contrary, nothing contained in this Bill of Sale shall
in any way supersede, modify, replace, amend, change, rescind, expand, exceed or
enlarge or in any way affect the provisions of, or any rights and remedies of
Grantor or Grantee under, the

      Asset
Purchase Agreement.  This Bill of Sale is being delivered pursuant to
the Asset Purchase Agreement to memorialize the transfer of the Assets pursuant
to the Asset Purchase Agreement.

      

      This instrument is executed by Grantor
and shall be binding upon Grantor and Grantee, their successors and permitted
assigns, for the uses and purposes above set forth and referred to, effective
immediately upon its delivery to Grantee.  This Bill of Sale may be
executed in one or more counterparts, and by facsimile or PDF, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

      

      IN WITNESS WHEREOF, Grantor and Grantee
caused this Bill of Sale to be signed on the date first above
written.

      

      Hallo
Development Co., LLC

      

      

                

         

        
          	 By:	 /s/
      Dennis
      Howitt                        	 	 
	 Name: 	 Dennis
      Howitt	 	 
	 Title: 	 Managing
      Member	 	 

        

         

      

                                      

                                      

      

      

      ACCEPTED:

       

      

      Focus
Enhancements, Inc.

      

      By:           /s/ Brett
Moyer

      

      Its:           President
and CEO

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Exhibit
C

      Purchase
Price

       

      

      (a)           Stock.  In
consideration of the purchase of the Assets and of the Seller’s covenants and
agreements set forth in this Agreement, Purchaser shall issue to Seller
1,800,000 shares of the authorized common stock in Focus Enhancements, Inc. (the
“Stock”) as
of the Closing Date, subject to the following conditions.

      

      (1)           Notwithstanding
Rule 144, the Stock shall be subject to restrictions against sale by Seller to
any third party until the earlier of (a) the date at which Purchaser has sold
and received $1,000,000 in Net Revenues from the Covered Product, or (b)
December 31, 2009.

      

      (2)           Subject
to the above, the Stock shall be saleable pursuant to Rule 144.

      

      (3)           If,
following the expiration of the restrictions on sale as set forth in subitem (1)
above, the Stock must be registered to enable subsequent sale by Seller, then
Purchaser will supplement one of Purchaser’s existing S-3 forms to do so, if
such form is then available.

      

      (4)           The
Parties shall, on the Closing Date, set into an escrow account 300,000 shares of
the Stock in connection with Section 8.4 of the Agreement (the “Escrowed
Shares”).  The terms of the escrow account shall provide for
the release of the Escrowed Shares.

      

      The
number of shares of Stock shall be subject to adjustment from time to
time as  follows upon the happening of any of the following between
the Effective Date and the Closing Date: the Company shall (i) pay a dividend in
shares of common stock or make a distribution in shares of common stock to all
of the holders of its outstanding common stock, (ii) subdivide its outstanding
shares of common stock into a greater number of shares, or (iii) combine
its outstanding shares of common stock into a smaller number of shares of common
stock, then the number of shares of Stock shall  be proportionately
increased or decreased, as the case may be.

      

      (b)           Revenue
Stream.  In consideration of the Seller’s covenants and
agreements set forth in this Agreement, Purchaser agrees to pay Seller amounts
based on the revenues obtained by Purchaser from the subsequent sale or
licensing of the Covered Products (the “Revenue
Share”), as set forth below:

      

      (1)           For
purposes of this Agreement, “Covered
Product” means any product sold or licensed by Purchaser that includes
the Products, which shall be either (a) the Product sold on a standalone basis
(the “Standalone
Product”), or (b) the Product combined with the Purchaser’s TV-Out, Ultra
WideBand (UWB) or any other intellectual property the Purchaser shall purchase
or develop not related to the Product, and packaged into a single chip, a
multichip (system in a package), or a systems product or other combination (a
“Combined
Product.”)  “Net
Revenues” for any particular period of time means all sales revenue based
on the gross dollar

      amount
invoiced by Purchaser for the sale of Covered Product, less returns, rebates,
and allowances with respect to such Covered Product, and all licensing revenues
earned by Purchaser from its licenses of Covered Product.  “FCS” means
the date of first commercial shipment by Purchaser or a licensee of Purchaser of
a Covered Product and shall include the sale of a hardware developer’s kit (HDK)
for revenue so long as the Products included on such HDK are included on working
silicon (chip) and not on an FPGA.

      

      (2)           The
Revenue Share shall be equal to (a) ten percent (10%) of Net Revenues received
for Covered Products during the first year after FCS, (b) seven and one half
percent (7.5%) of Net Revenues received for Covered Products between the first
and second year after FCS, and (c) five percent (5%) of Net Revenues received
for Covered Products received between the second and third year after FCS. The
three (3) year period commencing on FCS shall be the “Revenue Share
Term.”  No Revenue Share shall be owed for any revenues
received for the Covered Products after the Revenue Share Term. Notwithstanding
the above, in the event that Purchaser creates and sells or licenses Combined
Products during the Revenue Share Term, the Revenue Share owed with respect to
the Combined Product shall be measured against the most recent average selling
price of the Standalone Product (e.g., if in the first year after FCS the
average selling price for the Standalone Product is $100, and the average
selling price for a Combined Product is $150, then the Revenue Share for the
sale of that given Combined Product shall be equal to ten percent (10%) of
$100).

      

      (3)           Within
forty five (45) days after the end of each calendar quarter during the Revenue
Share Term, Purchaser will provide Seller with payment of the Revenue Share for
the preceding calendar quarter, together with a written report that includes
information on Purchaser’s sales and shipments of Covered Products by Purchaser
and/or its licensees for that calendar quarter, by dollar volume and number of
units reasonably sufficient for Seller to confirm the amounts of the Revenue
Share.

      

      (4)           No
more than once per year during the Revenue Share Term, upon at least thirty (30)
days prior written notice, Seller may, at its expense, hire an independent
auditor to review Purchaser’s relevant books and records to confirm the amount
of Revenue Share owed under this Agreement.  Any such audit will be
conducted during regular business hours at Purchaser’s facilities and will not
unreasonably interfere with Purchaser’s business activities, and the auditor
shall sign a reasonable confidentiality agreement provided by
Purchaser.  Purchaser will provide the auditor with access to the
relevant Purchaser records and facilities.  If an audit reveals that
Purchaser has underpaid the Revenue Share during the period audited, then
Purchaser will promptly pay Seller for such underpaid amounts, and in the event
that the underpaid amounts exceed the greater of Five Thousand Dollars ($5,000)
or five percent (5%) of the amount owed during the period audited, then
Purchaser will reimburse Seller for  Seller’s fees to the auditor in
connection with such audit.

      

      (5)           Seller
agrees that the Revenue Share set forth in this Agreement is an unsecured
obligation for Purchaser to pay such amounts.

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