FOCUS ENHANCEMENTS, INC. AMENDED AND RESTATED SENIOR SECURED NOTE DUE JANUARY 1, 2011
Exhibit 4.1
|
$20,800,000 |
|
Date: February 11, 2008 |
FOCUS ENHANCEMENTS, INC.
AMENDED AND RESTATED SENIOR SECURED NOTE DUE JANUARY 1, 2011
This Amended and Restated Senior Secured Note Due January 1, 2011 hereby amends and restates in its entirety the Senior Secured Convertible Note Due January 1, 2011 that was executed on January 24, 2006 by FOCUS ENHANCEMENTS, INC. This Note is one of those issued pursuant to an Amended and Restated Senior Secured Note Purchase Agreement of even date herewith (the “Purchase Agreement”) among the Company (as identified below) and the “Purchasers” named therein, which Purchasers include the holder of this Note and other like Notes (collectively the “Notes”). Unless otherwise specified in this Note, the Holder of this Note shall be ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLC as nominee for the actual Holder.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
1. INTEREST
Focus Enhancements, Inc., a Delaware corporation (the “Company”, which term shall include any successor corporation under the Purchase Agreement hereinafter referred to), promises to pay interest on the principal amount of this Note at the rate of twelve percent (12%) per annum beginning January 1, 2008 and continuing until September 30, 2008. Thereafter, interest under this Note shall accrue at the rate of fifteen percent (15%) per annum beginning October 1, 2008 and continuing until the Final Maturity Date or the date of any earlier retirement or redemption under the terms of this Note. The Company shall pay interest semiannually on June 30 and December 30 of each year, commencing on June 30, 2008. Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Purchase Agreement Closing Date; provided, however, that if there is not an existing default in the payment of interest and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding interest payment date, interest shall accrue from such interest payment date. Interest will be computed on the basis of a 360-day year and 30-day months.
2 METHOD OF PAYMENT
The Company shall pay interest on this Note (except defaulted interest) to the person who is the Holder of this Note at the close of business on the related interest payment date. The Holder must surrender this Note to the Company to collect payment of principal. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. If there is no pending Event of Default under the Loan Documents as of the interest payment date for which interest will be paid, the Company may pay interest due on June 30, 2008 and December 30, 2008 by issuing a new Note in the principal amount which includes all cumulative interest then due, and in all other respects having terms identical to this Note (each, a “Payment-in-Kind”). Upon any Payment-In-Kind, the Holder shall be entitled to receive, on the same terms as set forth in the Warrants issued under the Purchase Agreement of even date
1
herewith, additional Warrants for a number of Common Stock Shares of the Company equal to the additional new Note amount divided by $0.80, subject to further adjustment as set forth in the Warrants issued under such Purchase Agreement. The Company will pay principal due upon surrender of this Note by check sent to the Holder’s address on the books and records of the Company, or, if the Holder has provided wire transfer instructions to the Company at least five Business Days prior to the payment date, in immediately available funds by wire transfer.
3. PURCHASE AGREEMENT
This Note is one of a duly authorized issue of Notes of the Company designated as its Amended and Restated Senior Secured Notes Due January 1, 2011 (the “Notes”) issued under the Purchase Agreement. The terms of this Note include those stated in the Purchase Agreement. The Notes are secured obligations of the Company.
4. SECURITY INTEREST; ADDITIONAL SECURED CREDITORS
This Note is secured by all of the assets of the Company in accordance with the terms and subject to the conditions of the Amended and Restated Security Agreement of even date herewith (the “Security Agreement”) among the Company, Purchasers’ Agent, and the Purchasers. In case of an Event of Default, the Holders shall have the rights set forth in the Security Agreement; provided that such rights shall be subject to the senior or contemporaneous rights of the Bank and ▇▇▇▇ as set forth in the Amended Intercreditor Agreement and the Amended and Restated Intercreditor Agreement both dated as of December 31, 2007.
5. [INTENTIONALLY OMITTED]
6. DEFAULT
In the case an Event of Default shall occur, the aggregate unpaid principal balance plus accrued and unpaid interest on this Note shall become or may be declared to be due and payable in the manner and with the effect provided in the Loan Documents.
7. OPTIONAL REDEMPTION
This Note is subject to redemption, at the option of the Company, in whole or in part, at any time upon at least 30 days’ notice at a Redemption Price in cash equal to 100% of the principal amount of the Note to be redeemed together with accrued and unpaid interest, if any, on the principal amount of the Note redeemed to the date of redemption. Accrued interest also shall be paid in cash at the Redemption Date. No sinking fund is provided for the Notes.
8. NOTICE OF REDEMPTION
Notice of redemption as stated in Paragraph 7 will be delivered at least 30 days before the Redemption Date to the Holder of this Note at the Holder’s address on the books and records of the Company. Notes in denominations larger than $1,000,000 may be redeemed in part, but only in whole multiples of $1,000,000. Notes of lesser amounts may be redeemed in full so long as all such Notes redeemed shall total at
2
least $1,000,000, unless the Notes outstanding shall total less than $1,000,000. On and after the Redemption Date interest shall cease to accrue on Notes or portions of them called for redemption.
9. REPURCHASE OF NOTES AT OPTION OF HOLDER UPON A FUNDAMENTAL CHANGE
A. Subject to the terms and conditions of the Purchase Agreement, if a Fundamental Change occurs at any time prior to the Final Maturity Date, the Holder will, upon receipt of the notice of the occurrence of a Fundamental Change, have the right to require the Company to repurchase any or all of such Holder’s Notes for cash in an amount equal to 101% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest, if any, to (but not including) the Fundamental Change Repurchase Date. Subject to Section 3.1 of the Purchase Agreement, on or before the 15 th Business Day after the effective date of a Fundamental Change, the Company will provide to the Holder and Purchasers’ Agent a notice of the occurrence of the Fundamental Change and of the resulting repurchase right. To exercise the repurchase right, the Holder must deliver a Repurchase Exercise Notice duly completed to the Company as described in the Purchase Agreement.
▇. ▇▇▇▇▇▇ has the right to withdraw any Fundamental Change repurchase notice, in whole or in part, by delivering to the Company a written notice of withdrawal in accordance with the provisions of the Purchase Agreement.
C. All interest shall cease to accrue on this Note (or portions thereof) immediately after such Fundamental Change Repurchase Date, and the Holder shall have no other rights as such other than the right to receive the Fundamental Change Repurchase Price upon surrender of the Note plus any accrued but unpaid interest.
10. [INTENTIONALLY OMITTED]
11. [INTENTIONALLY OMITTED]
12. DENOMINATIONS, TRANSFER, EXCHANGE
The Notes are issued without coupons in the name of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLC, as nominee for each individual Holder unless otherwise requested by each individual Holder and are recorded in the name of the Holder on the books and records of the Company. The Holder may register the transfer of or exchange of this Note in accordance with the Purchase Agreement. The Company may require the Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or other governmental charges that may be imposed in relation thereto by law or permitted by the Purchase Agreement.
13. PERSONS DEEMED OWNERS
The Holder of this Note may be treated as the owner of it for all purposes.
14. AMENDMENT, SUPPLEMENT AND WAIVER
3
Subject to certain exceptions, the Purchase Agreement or the Notes may be amended or supplemented with the consent of the Holders of at least a Majority-in-Interest of the Notes, and an existing default or Event of Default and its consequence or compliance with any provision of the Purchase Agreement or the Notes may be waived in a particular instance with the consent of the Holders of a Majority-in-Interest of the Notes. The Majority-in-Interest may act through the Purchasers’ Agent. Without the consent of or notice to any Holder, the Company and the Purchasers’ Agent may amend or supplement the Purchase Agreement or the Notes to, among other things, cure any ambiguity, defect or inconsistency or make any other change that does not adversely affect the rights of any Holder.
15. [INTENTIONALLY OMITTED]
16. NO RECOURSE AGAINST OTHERS
No past, present or future director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes, the Purchase Agreement or for any claim based on, in respect of, or by reason of, such obligations or their creation. The Holder of this Note by accepting this Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of this Note.
17. ABBREVIATIONS AND DEFINITIONS
Customary abbreviations may be used in the name of the Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act).
All terms used in this Note but not specifically defined herein are defined in the Purchase Agreement and are used herein as so defined.
18. PURCHASE AGREEMENT TO CONTROL; GOVERNING LAW
In the case of any conflict between the provisions of this Note and the Purchase Agreement, the provisions of the Purchase Agreement shall control.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Holder, upon written request and without charge, a copy of the Purchase Agreement. Requests may be made to: Focus Enhancements, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Executed by the undersigned duly authorized officer of the Company at the Company’s principal office in Campbell, California on February 11, 2008.
4
|
|
FOCUS ENHANCEMENTS, INC. |
|
|
|
|
|
|
|
|
|
|
|
By: |
/s/ ▇▇▇▇▇ ▇▇▇▇▇ |
|
|
|
|
|
|
Its: |
President & CEO |
The consents of the Company and Purchasers’ Agent are required to amend this Note. Therefore, the Company and Purchasers’ Agent hereby consent to the amendment and restatement of this Note as set forth herein by setting forth their signatures below.
Consented to this day of February 11, 2008
COMPANY
|
FOCUS ENHANCEMENTS, INC. |
|
|
|
|
|
|
|
By: |
/s/ ▇▇▇▇▇ ▇▇▇▇▇ |
|
|
|
|
|
|
Its: |
Title: President & CEO |
|
PURCHASERS’ AGENT
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. |
|
|
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. |
|
SIGNATURE PAGE TO AMENDED AND RESTATED SENIOR SECURED
NOTE DUE JANUARY 1, 2011
5
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to:
|
(Insert assignee’s social security or tax I.D. number) |
|
|
|
|
|
(Print or type assignee’s name, address and zip code) |
|
|
|
and irrevocably appoint |
|
|
|
agent to transfer this Note on the books of the Company. The agent may substitute another to act for him or her. |
|
Date: |
|
Your Signature: |
|
|
|
|
|
|
|
(Sign
exactly as your name appears on the |
* Signature guaranteed by:
|
By: |
|
|
|
|
|
|
|
|
* Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934.
6
REPURCHASE EXERCISE NOTICE
UPON A FUNDAMENTAL CHANGE
To: Focus Enhancements, Inc.
The undersigned registered owner of this Note hereby irrevocably acknowledges receipt of a notice from Focus Enhancements, Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and requests and instructs the Company to redeem the entire principal amount of this Note, or the portion thereof (which is $100,000 or an integral multiple thereof) below designated, in accordance with the terms of the Purchase Agreement referred to in this Note at the Fundamental Change Repurchase Price, together with accrued interest to, but excluding, the Repurchase Date, to the registered Holder hereof.
|
Dated: |
|
|
|
|
|
|
|
|
||
|
|
|
Signature(s) |
||
|
|
|
|
||
|
|
|
Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. |
||
|
|
|
|
||
|
|
|
Signature Guaranty |
||
|
|
|
|
||
|
Principal amount to be redeemed |
|
|
||
|
(in an
integral multiple of $100,000, if less than |
|
|
||
NOTICE: The signature to the foregoing Election must correspond to the name as written upon the face of the Note in every particular, without alteration or any change whatsoever.
7