Exhibit 10.4
AMENDED AND RESTATED
INTERCREDITOR AGREEMENT
This AMENDED AND RESTATED INTERCREDITOR
AGREEMENT (“Agreement”), dated as of February 7,
2008, is made by and between Carl E. Berg (“Berg”), on
one hand, and the purchasers of the Amended and Restated Senior
Secured Notes due January 1, 2011 issued by Focus
Enhancements, Inc., a Delaware corporation (the
“Company”) who are identified on Exhibit A
attached hereto, (the “Purchasers”) and Thomas O.
Boucher, Jr., as agent for the Purchasers
(“Purchasers’ Agent”), on the other
hand.
RECITALS
A.
The Company, Purchasers’ Agent, Berg, and the purchasers
identified on Exhibit A (the “Original
Purchasers”) previously entered into an Intercreditor
Agreement dated as of January 24, 2006 (the “Original
Intercreditor Agreement”). The Company, the
Purchasers’ Agent, and the Original Purchasers desire to
amend and restate the Original Intercreditor Agreement on the terms
stated herein. This Agreement is intended to and does
completely amend and restate, without novation, the Original
Intercreditor Agreement. All security interests referred to
in the Original Intercreditor Agreement are hereby confirmed and
ratified and shall continue to secure all obligations under their
respective agreements.
B.
In addition to the Original Purchasers, other purchasers identified
on Exhibit A (the “New Purchasers”) wish to become
a party to this intercreditor agreement under terms pari passu with
the Original Purchasers. The Original Purchasers and the New
Purchasers are referred to herein collectively as the
“Purchasers”.
C.
Collectively, the Purchasers have purchased $20,800,000 of Amended
and Restated Senior Secured Notes Due January 1, 2011 (the
“Notes”) from the Company pursuant to an Amended and
Restated Senior Secured Note Purchase Agreement dated as of the
same date as this Agreement, which Notes are secured by all of the
assets of the Company pursuant to an Amended and Restated Security
Agreement dated as of the same date as this Agreement (the
“Purchasers’ Security Interest”).
D.
Berg has previously guaranteed a Loan and Security Agreement, dated
as of November 15, 2004, as amended subsequently through
December 1, 2005 (“Bank Loan Agreement”) between
Wells Fargo Bank, as successor-in-interest to Venture Banking
Group, a division of Greater Bay Bank N.A. (“Bank”) and
the Company pursuant to an Unconditional Guaranty dated as of
November 15, 2004, which guaranty is secured by all of the
assets of the Company under a Security Agreement between Berg and
the Company dated as of October 26, 2000, as amended
subsequently through December 1, 2005 (the “Berg
Security Interest”).
E.
The Bank and Berg are parties to an Intercreditor Agreement (the
“Bank Intercreditor Agreement”) dated as of
November 15, 2004, amended by that certain Amendment
No. 1 to Intercreditor Agreement dated January 24, 2006
to add the Original Purchasers, which has been further amended by
that certain Amendment No. 2 to Intercreditor Agreement of
even date herewith to add the New Purchasers as additional
parties.
F.
This Agreement provides for certain matters of repayment and
sharing of Collateral between Berg and the Purchasers.
NOW
THEREFORE, the parties agree as follows:
1.
Bank Collateral . The recitals set forth above
are hereby incorporated by this reference as if they were part of
the body of this Agreement. As used in this Agreement,
“Bank Collateral” means all of the Company’s
present and future “Accounts” (such term as most
broadly defined in the Bank Loan Agreement and the California
Uniform Commercial Code in effect on the date hereof), and all
proceeds of these Accounts.
2.
Collateral . As used in this Agreement,
“Collateral” means all of the property of the Company
now owned and hereafter acquired.
1
3.
Pro Rata Security Interest and Subordination .
(a)
To the extent that the total amount of debt secured by the Berg
Security Interest does not exceed $6,500,000 plus all accrued and
unpaid interest and fees and expenses collectible under the applicable loan documents
(the “Maximum Priority Debt Amount”), the Purchasers
agree that all security interests in Bank Collateral and Creditor
Collateral shall be shared pro rata by Berg and the Purchasers
based on the outstanding payment obligations of the Company to
Berg, if any under the Unconditional Guaranty and the Purchasers
under the Notes, subject to the first priority security interest of
Bank in Bank Collateral pursuant to the Bank Intercreditor
Agreement to the extent, and only to the extent, debt remains owed
to the Bank by the Company under the Bank Loan Agreement.
Berg agrees that the Purchasers shall have priority over Berg with
respect to all Collateral to the extent the total debt to Berg and
Bank exceeds the Maximum Priority Debt Amount and that the
Purchasers shall be entitled to the value or proceeds of all such
Collateral to the extent of such excess amount of debt. In
the event any Collateral is being sold or otherwise disposed of by
Berg pursuant to rights under the Berg Security Interest or by or
for the Purchasers pursuant to the Purchasers’ Security
Interest in connection with the liquidation of Company assets after
an event of default, the party selling or otherwise disposing of
such Collateral shall (i) apply the proceeds thereof pro rata
in respect of its share of the total debt then owed by the Company
to Berg and the Purchasers, (ii) deduct the other
party’s pro rata share of the collectible enforcement fees
and expenses, and (iii) shall pay over the remaining share to
the other party (so long as the debt to Berg does not exceed the
Maximum Priority Debt Amount). Thus, by way of example, but
not of limitation, if the total debt owed by the Company to Berg is
$6,500,000 and the total debt owed by the Company to the Purchasers
is $20,000,000, upon a sale of Collateral by Berg that realizes
gross proceeds of $5,000,000, Berg can retain 24.5283% of the
proceeds plus 75.4717% of the expenses of sale, and must pay over
to the Purchasers or to the Purchasers’ Agent for their
respective accounts, all remaining proceeds.
(b)
The priorities specified in this Agreement shall be applicable
irrespective of the time or order of attachment or perfection of
any security interest or the time or order of filing of any
financing statements or other documents, or the giving of any
notices of purchase money security interests or other notices, or
possession of any Collateral, or any statutes, rules or law,
or court decisions to the contrary.
(c)
The subordinations and priorities specified in this Agreement are
expressly conditioned upon the nonavoidability and perfection of
the security interest to which another security interest is
subordinated, and if the security interest to which another
security interest is subordinated is not perfected or is avoidable,
for any reason, then the subordinations and relative priority
provided for in this Agreement shall not be effective as to the
particular Collateral which is the subject of the unperfected or
avoidable security interest.
(d)
Berg agrees that if there is an event of default by the Company
under the
