Exhibit 10.3


 


AMENDMENT NO. 1 TO INTERCREDITOR AGREEMENT


 


This Amendment No.
1 to Intercreditor Agreement (this “Amendment”), is entered into as of
January 24, 2006, by and among Carl E. Berg (“Creditor”),
Venture Banking Group, a division of Greater Bay Bank N.A. (“Bank”), the
purchasers of Senior Secured Convertible Notes Due January 1, 2011 issued by
Focus Enhancements, Inc. who are identified on Exhibit A attached hereto (the “Purchasers”)
and Ingalls & Snyder LLC, a New York limited liability company, as agent
for the Purchasers (“Purchasers’ Agent”).  Capitalized terms used in this Amendment
without definition have the meanings ascribed to them in the Intercreditor
Agreement dated as of November 15, 2004, between Creditor and Bank (the “Agreement”).


 


WHEREAS, the
Purchasers intend to lend funds to Focus Enhancements, Inc. (“Borrower”)
pursuant to a Senior Secured Convertible Note Purchase Agreement;


 


WHEREAS, Bank has
previously loaned funds to Borrower, which loan is secured by the Bank
Collateral and is guarantied by Creditor; and


 


WHEREAS, Bank and
Creditor wish to amend the Agreement to add the Purchasers and Purchasers’
Agent as parties to the Agreement.


 


The parties hereto agree as follows:


 


1.                                       The
Agreement is hereby amended to add the Purchasers as parties to the Agreement
and, for all purposes of the Agreement, to provide that the capitalized term
“Creditor” shall include the Purchasers such that the Purchasers have the same
rights and obligations of Creditor under the Agreement, so long as the total
indebtedness of Borrower to Bank does not exceed $6,500,000 in principal amount
plus accrued interest, and fees and expenses collectible under the applicable
loan documents (the “Maximum Priority Debt Amount”).  Bank and Creditor agree that the Purchasers
will not be bound by the Agreement to the extent the Borrower’s total debt to
Bank exceeds the Maximum Priority Debt Amount. 
Purchasers, Creditor and Bank agree that Purchasers’ Agent shall be the
representative and agent of the Purchasers for all purposes under this
Amendment and the Agreement, which Purchasers’ Agent acknowledges by his
signature below.


 


2.                                       Except
to the extent amended hereby, all of the definitions, terms, provisions and
conditions set forth in the Agreement are hereby ratified and confirmed and
shall remain in full force and effect. 
The Agreement and this Amendment shall be read and construed together as
a single agreement.  This Amendment may
be signed in any number of counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one and the same
instrument.


 


3.                                       Creditor
agrees that the Unconditional Guaranty dated as of November 15, 2004 executed
by Creditor for the benefit of Bank with respect to the obligations of Borrower
to Bank shall remain in full force and effect.


 

















 


IN WITNESS WHEREOF, the parties to this Amendment have
caused this Amendment to be executed and delivered as of the date first written
above.


 


 


	
   

  	
  CREDITOR

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Carl Berg

  	
   

  
	
   

  	
  CARL
  E. BERG

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VENTURE
  BANKING GROUP, A DIVISION

  OF GREATER BAY BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tod Racine

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Tod Racine

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASERS’
  AGENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Ingalls
  & Snyder LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas
  Boucher Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Thomas Boucher
  Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
  Title (if
  applicable):

  	
  Manager

  	
   

  
	
   

  	
   

  
												



 


SIGNATURE PAGE TO AMENDMENT NO. 1
TO INTERCREDITOR AGREEMENT


 

















 


IN WITNESS WHEREOF, the parties to this Amendment have caused this
Amendment to be executed and delivered as of the date first written above.


 


 


	
   

  	
  THE PURCHASERS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							



 

















 


EXHIBIT A


 


SCHEDULE OF PURCHASES