Document:

Exhibit 10.5

 

AMENDED AND RESTATED REGISTRATION RIGHTS
AGREEMENT

 

This Amended
and Restated Registration Rights Agreement (this “ Agreement ”) is made
and entered into as of February 7, 2008, by and among Focus Enhancements, Inc.,
a Delaware corporation (the “ Company ”), the purchasers signatory
hereto (each such purchaser, a “ Purchaser ” and collectively, the “Purchasers
”), and Ingalls & Snyder LLC, a New York limited liability company
(the “Purchasers’ Agent”).  This
Agreement is made pursuant to the Amended and Restated Senior Secured  Note Purchase Agreement, dated as of the date
hereof, among the Company and the Purchasers (the “ Purchase Agreement ”).

 

The Company,
Purchasers’ Agent, and the Purchasers (who include all previous Purchasers”
under that certain  Registration Rights
Agreement dated January 24, 2006 by and among the Company, the “Purchasers”
named therein, and Purchasers Agent) as subsequently  amended by that Amendment to Registration
Rights Agreement dated June 26, 2006, 
(the “Prior Agreement”) hereby amend and restate such Prior
Agreement  by and among them and further
agree by entering into this Agreement as follows:

 

1.                                          Definitions
..  Capitalized terms used and not otherwise defined herein that are
defined in the Purchase Agreement shall have the meanings given such terms in
the Purchase Agreement.  As used in this Agreement, the following terms
shall have the following meanings:

 

“ Advice ” shall have the meaning set forth in Section 6(d).

 

“ Effectiveness Date ” means, with respect to the Registration
Statement required to be filed hereunder, the earlier of (a) the day the
Commission declares same effective  and (b) the
fifth (5th) Trading Day following the date on which the Company is notified by
the Commission that the Registration Statement will not be reviewed or is no
longer subject to further review and comments.

 

“ Effectiveness Period ” shall have the meaning set forth in Section 2(a).

 

“ Event ” shall have the meaning set forth in Section 2(b).

 

“ Event Date ” shall have the meaning set forth in Section 2(b).

 

“ Filing Date ” means, with respect to the Registration
Statement filed hereunder, the date on which the Company registers the
Registrable Securities hereunder 
following the Closing Date.

 

“ Holder ” or “ Holders ” means the holder or holders, as
the case may be, from time to time of Registrable Securities.

 

“ Indemnified Party ” shall have the meaning set forth in Section 5(c).

 

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“ Indemnifying Party ” shall have the meaning set forth in Section 5(c).

 

“ Losses ” shall have the meaning set forth in Section 5(a).

 

“ Notes ” means the Senior Secured Notes Due January 1,
2011 for total principal of $20,800,000 issued to the Purchasers by the Company
as of the date hereof and all Notes issuable by the Company in lieu of interest
pursuant to  the Purchase Agreement.

 

“ Proceeding ” means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“ Prospectus ” means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A or 430B promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

 

“ Registrable Securities ” means 
the Warrants and  Common Stock
issuable upon exercise thereof , $0.01 par value per share, issued  pursuant to the Purchase Agreement to  the individual Purchasers thereof, together
with any shares of Common Stock issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event with respect
to the foregoing (“Warrant Shares”).

 

“ Registration Statement ” means the registration statements
required to be filed hereunder, including (in each case) the Prospectus, amendments
and supplements to the registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in the registration
statement.

 

“ Rule 415 ” means Rule 415 promulgated by the
Commission pursuant to the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same purpose and effect as such Rule.

 

“ Rule 424 ” means Rule 424 promulgated by the
Commission pursuant to the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same purpose and effect as such Rule.

 

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2.                                          Registration
..  (a)  S-3 Registration Within ninety (90) days after the
Closing Date,  the Company shall use its
best commercial efforts to prepare and file with the Commission the
Registration Statement covering the resale of all of the Registrable Securities
for an offering to be made on a continuous basis pursuant to Rule 415. 
The Registration Statement required hereunder shall be on Form S-3 (except
if the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case the Registration shall be on another
appropriate form in accordance herewith).  The Registration Statement
required hereunder shall contain (except if otherwise directed by the Holders)
substantially the “ Plan of Distribution ” attached hereto as Annex A
..  Subject to the terms of this Agreement, the Company shall use its best
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof, but in any
event not later than the Effectiveness Date, and shall use its best efforts to
keep the Registration Statement continuously effective under the Securities Act
until the date when all Registrable Securities covered by the Registration
Statement have been sold or may be sold without volume restrictions pursuant to
Rule 144(k) as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the Company’s
transfer agent and the affected Holders (the “ Effectiveness Period ”).

 

(b)  “Piggy-Back” Registration. If (but without any
obligation to do so) Focus proposes to register 
any of its stock or other securities under the Securities Act in
connection with the public offering of such securities solely for cash for the
account of any selling securityholder (other than a registration relating
solely to the sale of securities to participants in a Focus stock plan, a
registration with respect solely to a corporate reorganization or other
transaction under Rule 145 of the Securities Act, a registration on any
form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities),  Focus shall, at
such time, promptly give each Holder written notice of such registration. Upon
the written request of each Holder given within twenty (20) days after mailing
of such notice by Focus, Focus shall, subject to the provisions of Section 3,
cause to be registered under the Securities Act all of the Registrable
Securities that each such Holder has requested to be registered. The
registration rights granted to a Holder pursuant to this paragraph (b) shall
terminate with respect to such Holder on the date when all of the Registrable
Securities of such Holder covered by the Effective Registration Statement or an
effective registration statement under this paragraph have been sold pursuant
to the Effective Registration Statement or such other registration statement or
an exemption from the registration requirements of the Securities Act or (b) may
be sold without any volume or other restrictions pursuant to Rule 144(k).

 

3.                                          Registration
Procedures

 

In connection
with the Company’s registration obligations hereunder, the Company shall:

 

(a)                                     Not
less than five Trading Days prior to the filing of the Registration Statement
or any related Prospectus or any amendment or supplement thereto, (i) furnish
to the Holders copies of all such documents proposed to be filed (including 

 

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documents
incorporated or deemed incorporated by reference to the extent requested by
such Person) which documents will be subject to the review of such Holders, and
(ii) cause its officers and counsel to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to conduct a
reasonable investigation within the meaning of the Securities Act.  The
Company shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities shall reasonably object in good faith, provided that the
Company is notified of such objection in writing by the Purchasers’ Agent no
later than four Trading Days after the Holders have been so furnished copies of
such documents.

 

(b)                                     (i) Prepare
and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as promptly
as reasonably possible to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and, as promptly
as reasonably possible, upon request, provide the Holders true and complete
copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the Holders thereof set forth in the Registration Statement as
so amended or in such Prospectus as so supplemented.

 

(c)               Notify
the Purchasers’ Agent on behalf of the Holders of Registrable Security to be
sold as promptly as reasonably possible and (if requested by any such Person)
confirm such notice in writing promptly following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed; (B) when the Commission
notifies the Company whether there will be a “review” of the Registration
Statement and whenever the Commission comments in writing on the Registration
Statement (the Company shall upon request provide true and complete copies
thereof and all written responses thereto to each of the Holders); and (C) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any
other Federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of
the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation
of any Proceedings for that purpose; (iv) of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that
makes the financial statements included in the Registration 

 

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Statement
ineligible for inclusion therein or any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that requires
any revisions to the Registration Statement, Prospectus or other documents so
that, in the case of the Registration Statement or the Prospectus, as the case
may be, it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

 

(d)                                     Use
commercially reasonable efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of the
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

 

(e)                                     Furnish
to each Holder, without charge, at least one conformed copy of the Registration
Statement and each amendment thereto promptly after the filing of such
documents with the Commission.

 

(f)                                      Except
during periods in which the delivery of the Prospectus is not required by
reason of Rule 174 (or any similar or successor SEC rule).  Promptly
deliver to each Holder, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or supplement
thereto as such Persons may reasonably request in connection with resales by
the Holder of Registrable 
Securities.  Subject to the terms of this Agreement, the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders in connection with the offering and sale
of the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto, except after the giving on any notice pursuant to Section 3(c).

 

(g)                                     Prior
to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
such Registration or qualification (or exemption therefrom) effective during
the Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided , that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.

 

(h)                                     If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable 

 

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such
Registrable Securities to be in such denominations and registered in such names
as any such Holders may request.

 

(i)                                      Upon
the occurrence of any event contemplated by Section 3(c)(v), as promptly
as reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus will
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. If the
Company notifies the Holders in accordance with clauses (ii) through (v) of
Section 3(c) above to suspend the use of any Prospectus until the
requisite changes to such Prospectus have been made, then the Holders shall
suspend use of such Prospectus.  The Company will use its best commercial
efforts to ensure that the use of the Prospectus may be resumed as promptly as
is practicable.  The Company shall be entitled to exercise its right under
this Section 3(i) to suspend the availability of a Registration
Statement and Prospectus, for a period not to exceed 60 days (which need not be
consecutive days) in any 12 month period .

 

(j)                                      Comply
with all applicable rules and regulations of the Commission.

 

(k)                                     The
Company may require each Holder to furnish to the Company a certified statement
as to the number of shares of Common Stock beneficially owned by such Holder
and the person thereof that has voting and dispositive control over the Shares.

 

4.                                          Registration
Expenses .  All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to the Registration
Statement.  The fees and expenses referred to in the foregoing sentence
shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to
filings required to be made with the Trading Market on which the Common Stock
is then listed for trading, and (B) in compliance with applicable state
securities or Blue Sky laws), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is reasonably requested
by the holders of a majority of the Registrable Securities included in the
Registration Statement), (iii) messenger, telephone and delivery expenses,
(iv) reasonable fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees
and expenses of all other Persons retained by the Company in connection with
the consummation of the transactions contemplated by this Agreement.  In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated
by this Agreement (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit and the fees 

 

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and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any taxes, broker or similar commissions or, except to the
extent provided for in this Agreement or the other Transaction Documents, any
legal fees or other costs of the Holders.

 

5.                                          Indemnification

 

(a)                                     Indemnification
by the Company .  The Company shall, notwithstanding any termination
of this Agreement, indemnify and hold harmless each Holder, the officers,
directors, agents and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and the officers, directors, agents and employees of each
such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorneys’ fees) and expenses
(collectively, “ Losses ”), as incurred, arising out of or relating to
any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading, except
to the extent, but only to the extent, that (i) such untrue statements or
omissions are based solely upon information regarding such Holder furnished in
writing  to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form
of Prospectus or in any amendment or supplement thereto (it being understood
that the Holder has approved Annex A hereto for this purpose) or (ii) in
the case of an occurrence of an event of the type specified in Sections
3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d).

 

(b)                                     Indemnification
by Holders . Each Holder shall, severally and not jointly, indemnify and
hold harmless the Company, its directors, officers, agents and employees, each
Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses, as incurred,
to the extent arising out of or based solely upon: (x) such Holder’s
failure to comply with the prospectus delivery requirements of the Securities
Act or (y) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading (i) to the extent, but only to the
extent, such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the 

 

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Company by
such Holder expressly for use therein or to the extent that such information
relates to such Holder or such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in the Registration Statement, such Prospectus or
such form of Prospectus or in any amendment or supplement thereto (it being
understood that the Holder has approved Annex A hereto for this purpose) or (ii) in
the case of an occurrence of an event of the type specified in Sections
3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d).  In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the net
proceeds  received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.

 

(c)                                     Conduct
of Indemnification Proceedings . If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “ Indemnified
Party ”), such Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the “ Indemnifying Party ”) in writing, and the
Indemnifying Party shall have the right to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally  determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any
such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly
to assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall reasonably believe that a material conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of one
separate counsel for all Indemnified Parties shall be at the expense of the
Indemnifying Party).  The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld.  No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding. Subject to the terms of this Agreement, all reasonable fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to the extent incurred in connection with investigating or preparing to defend
such Proceeding in a manner not inconsistent with this Section) shall be paid
to the Indemnified 

 

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Party, as
incurred, within 45 days of written notice thereof to the Indemnifying Party; provided
, that the Indemnified Party shall promptly reimburse the Indemnifying Party
for that portion of such fees and expenses applicable to such actions for which
such Indemnified Party is not entitled to indemnification hereunder, determined
based upon the relative faults of the parties.

 

(d)                                     Contribution
..  If a claim for indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations.  The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission.  The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the
limitations set forth in this Agreement, any reasonable attorneys’ or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees
or expenses if the indemnification provided for in this Section was
available to such party in accordance with its terms.

 

The parties
hereto agree that it would not be just and equitable if contribution pursuant
to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. 
Notwithstanding the provisions of this Section 5(d), no Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds   actually received by such Holder from the
sale of the Registrable Securities exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud
by such Holder.

 

The indemnity
and contribution agreements contained in this Section are in addition to
any liability that the Indemnifying Parties may have to the Indemnified
Parties.

 

6.                                          Miscellaneous

 

(a)                                     Remedies
..  In the event of a breach by the Company or by a Holder, of any of their
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.  The Company and
each Holder agree that monetary damages would not provide adequate compensation
for any losses incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any action for 

 

9

 

specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.

 

(b)                                     Authority
of Purchasers’ Agent .  The Purchasers and the Company agree that
Purchasers’ Agent is authorized to receive all documents and notices to Holders
under this Agreement and that the Company may rely upon statements and writings
by the Purchasers’ Agent made on behalf of any Holder with respect to the
exercise, or non-exercise of any right of a Holder and the performance of any
obligation of a Holder other than the execution of any contract or any document
to be submitted for filing with the SEC.

 

(c)                                     Compliance
..  Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement.

 

(d)                                     Discontinued
Disposition .  Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of written notice from the Company of
the occurrence of any event of the kind described in Section 3(c), such
Holder will forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until such Holder’s receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement or until it
is advised in writing (the “Advice”) by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.  The
Company will use its best efforts to ensure that the use of the Prospectus may
be resumed as promptly as it practicable.

 

(e)                                     Amendments
and Waivers; Termination of Prior Agreement.  The provisions of this
Agreement, including the provisions of this sentence, may be amended, modified
or supplemented, and waivers or consents to departures from the provisions
hereof may be given, if same shall be in writing and signed by the Company and
the Purchasers’ Agent (so long as such Purchasers’ Agent has been authorized to
do so by a majority in interest of the Holders of the then outstanding
Registrable Securities).  Purchasers
under the Prior Agreement and Company agree that upon execution of this
Agreement by Purchasers, Purchasers’ Agent, 
and Company, the Prior Agreement is terminated.

 

(f)                                      Notices
..  Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be made in accordance with the
provisions of the Purchase Agreement.

 

(g)                                     Successors
and Assigns .  This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder.  Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.

 

(h)                                     Execution
and Counterparts .  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be

 

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an original and, all of which
taken together shall constitute one and the same Agreement.  In the event
that any signature is delivered by facsimile transmission, such signature shall
create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.

 

(i)                                     
Governing Law .  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be determined
with the provisions of the Purchase Agreement.

 

  (j)                                     
Cumulative Remedies .  The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.

 

(k)                                  
Severability . If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall
use their commercially reasonable efforts to find and employ an alternative means
to achieve the same or substantially the same result as that contemplated by
such term, provision, covenant or restriction.  It is hereby stipulated
and declared to be the intention of the parties that they would have executed
the remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

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

 

(m)                                    Not a
Breach of Amended and Restated Senior Secured 
Note Purchase Agreement.  In
no event will the Company’s failure to register the Registrable Securities or
to maintain the effectiveness of the Registration Statement relating to the
Registrable Securities constitute an Event of Default under the Amended and
Restated Senior Secured  Note Purchase
Agreement.

 

(n)                               
Independent Nature of Purchasers’ Obligations and Rights .  The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible
in any way for the performance of the obligations of any other Holder
hereunder.  Nothing contained herein or in any other agreement or document
delivered at any closing, and no action taken by any Holder pursuant hereto or
thereto, shall be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Holders are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement.  Each
Holder shall be entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose.

 

IN WITNESS
WHEREOF, the parties have executed this Amended and Restated Registration
Rights Agreement as of the date first written above.

 

11

 

	
   

  	
  FOCUS ENHANCEMENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Brett
  Moyer

  
	
   

  	
  Name: 

  	
  Brett Moyer

  
	
   

  	
  Title:

  	
  CEO &
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASERS’ AGENT

  
	
   

  	
   

  
	
   

  	
  Ingalls & Snyder LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas
  O. Boucher, Jr.

  
	
   

  	
  Name:

  	
  Thomas O.
  Boucher, Jr.

  
	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASERS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name of
  Investing Entity

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature of Authorized Signatory of

  Investing entity

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name of
  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title of
  Authorized Signatory

  
						

 

SIGNATURE PAGE FOR AMENDED AND RESTATED REGISTRATION RIGHTS

AGREEMENT

 

 

ANNEX A

 

Plan of Distribution

 

We are registering the Warrants and Warrant Shares  being offered by this prospectus for resale
in accordance with certain registration rights granted the selling
stockholders, including their pledgees, donees, transferees or other
successors-in-interest, who may sell such securities  from time to time, or who may also decide not
to sell any or all of the securities 
that may be sold under this prospectus.  We will pay all
registration expenses including, without limitation, all the SEC and blue sky
registration and filing fees, printing expenses, transfer agents’ and
registrars’ fees, and the fees and disbursements of our outside counsel in
connection with this offering, but the selling stockholders will pay all
selling expenses including, without limitation, any underwriters’ or brokers’
fees or discounts relating to the securities 
registered hereby, or the fees or expenses of separate counsel to the
selling stockholders.

 

The selling
stockholders and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their securities  on any stock exchange, market or trading
facility on which the securities are traded or in private transactions. 
These sales may be at fixed or negotiated prices.  The selling holders may
use any one or more of the following methods when selling securities:

 

·
                 
ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 

·
                 
block trades in which the broker-dealer will attempt to sell the securities as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;

 

·
                 
purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

 

·
                 
an exchange distribution in accordance with the rules of the applicable
exchange;

 

·
                 
privately negotiated transactions;

 

·
                 
settlement of short sales;

 

·
                 
broker-dealers may agree with the selling stockholders to sell a specified
number of such securities  at a stipulated
price per security;

 

·
                 
a combination of any such methods of sale;

 

 

·
                 
through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise; or

 

·
                 
any other method permitted pursuant to applicable law.

 

The selling
stockholders may also sell securities 
under Rule 144 under the Securities Act of 1933, as amended, if
available, rather than under this prospectus.

 

 

Broker-dealers
engaged by the selling holders may arrange for other brokers-dealers to
participate in sales.  Broker-dealers may receive commissions or discounts
from the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of securities, from the purchaser) in amounts to be negotiated. 
Each selling holder does not expect these commissions and discounts relating to
its sales of securities  to exceed what
is customary in the types of transactions involved.

 

In connection
with the sale of our securities or interests therein, the selling stockholders
may enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the common stock in
the course of hedging the positions they assume.  The selling holders may
also sell our securities  short and
deliver these securities to close out their short positions, or loan or pledge
the underlying common stock to broker-dealers that in turn may sell these
securities.  The selling holders may also enter into option or other transactions
with broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-dealer or
other financial institution of the securities 
offered by this prospectus, which securities  such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).

 

The selling
holders and any broker-dealers or agents that are involved in selling the
securities  may be deemed to be “underwriters”
within the meaning of the Securities Act in connection with such sales. 
Selling holders that are either broker-dealers or affiliated with
broker-dealers will be deemed to be underwriters within the meaning of the
Securities Act in connection with resale of their securities.  Any
commissions received by such broker-dealers, affiliates, or agents and any
profit on the resale of the securities 
purchased by them will be deemed to be underwriting commissions or
discounts under the Securities Act.  The selling holders have informed us
that at the time they purchased our common stock they did not, and currently do
not have, any agreement or understanding, directly or indirectly, with any
person to distribute the securities 
being sold pursuant to this prospectus.

 

We are
required to pay certain fees and expenses incurred by us incident to the
registration of the securities .  We have agreed to indemnify the selling
holders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.

 

Because
selling holders may be deemed to be “underwriters” within the meaning of the
Securities Act, they will be subject to the prospectus delivery requirements of
the Securities Act, unless such requirement is inapplicable by reason of rule of
the SEC promulgated thereunder.  In addition, any securities covered by
this prospectus that qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this
prospectus.  Each selling holder has advised us that they have not entered
into any agreements, understandings or arrangements with any underwriter or
broker-dealer regarding the sale of the resale securities.  There is no
underwriter or coordinating broker acting in connection with the proposed sale
of the resale securities by the selling holders.

 

 

We agreed to
keep this prospectus effective until the earlier of (i) the date on which
the securities may be resold by the selling holders without registration and
without volume restrictions pursuant to Rule 144(k) as determined by
our counsel pursuant to a written opinion letter to such effect, addressed and
acceptable to our transfer agent and the selling stockholders or (ii) all
of the securities have been sold pursuant to the prospectus or Rule 144
under the Securities Act or any other rule of similar effect.

 

The resale
securities will be sold only through registered or licensed brokers or dealers
if required under applicable state securities laws.  In addition, in certain
states, the resale securities may not be sold unless they have been registered
or qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and is complied with.

 

Under
applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to our common stock for a
period of two business days prior to the commencement of the
distribution.  In addition, the selling stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of securities of our common stock by the selling stockholders or any
other person.  We will make copies of this prospectus available to the
selling stockholders and have informed them of the need to deliver a copy of
this prospectus to each purchaser at or prior to the time of the sale.

 

We will not
receive any of the proceeds from the selling stockholders’ sale of our common
stock.EXHIBIT 4.1

 

FORM OF NOTE

 

THIS
NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS.  THIS NOTE AND THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

CONVERTIBLE PROMISSORY
NOTE

 

	
  $                

  	
  Promissory Note No.     

  [                          ,
  2008]

  

 

FOR VALUE RECEIVED, ProUroCare Medical Inc., a Nevada corporation (the “Company”),
hereby promises to pay to
                                  
(“Holder”), the principal sum of
           DOLLARS
($          ), together with
interest as provided for herein, in lawful currency of the United States of
America.  This Convertible Promissory
Note (this “Note”) shall bear interest at a rate of 10% per annum.

 

This Note is issued pursuant to, and is entitled to the benefits of the
provisions of that certain Unit Purchase Agreement, dated as of
                        ,
2008, (the “Unit Purchase Agreement”), between the Company, the Holder
and the other parties thereto.  Capitalized
terms used herein and not otherwise defined herein shall have the meaning
ascribed to them in the Unit Purchase Agreement.

 

SECTION 1

Terms

 

Section 1.1     Interest
Rate.  The Company agrees that
interest shall accrue on the outstanding principal amount of this Note from the
date of this Note until the principal and interest have been converted in
accordance with the provisions hereof or paid in full, with interest accruing
at a fixed rate per annum equal to ten percent (10.0%).  Such interest shall be computed on the basis
of actual days elapsed and a year of 360 days.

 

Section 1.2     Annual
Interest Payment.  Subject to the
earlier conversion of this Note, the interest accrued on this Note from the
date of this Note through the [one-year anniversary of
the date of the Unit Purchase Agreement] shall be payable to the
Holder in cash on [such one-year
anniversary].  At the option
of the Holder, such accrued interest, in whole or in part, may be converted
into that number of fully paid and nonassessable shares of the Company’s common
stock, $0.00001 par value (the “Common Stock”) as is obtained by
dividing (A) the amount of such accrued interest by (B) the closing
price of the Common Stock on [the one-year anniversary
of the date of the Unit Purchase Agreement].

 

 

Section 1.3     Conversion
Date.  On [the
eighteen-month anniversary of the date of the Unit Purchase Agreement]
(the “Maturity Date”), the entire outstanding principal amount of this
Note shall automatically convert into that number of fully paid and
nonassessable shares of Common Stock as is obtained by dividing (A) the
entire outstanding principal amount of this Note by (B) $0.005 (the “Conversion
Price”).  All or any portion of the
accrued but unpaid interest on the Note shall, at the option of the Holder, be (i) converted
into that number of fully paid and nonassessable shares of Common Stock as is
obtained by dividing (A) such accrued but unpaid interest by (B) the
Conversion Price or (ii) paid to the Holder in cash.

 

Section 1.4     Conversion
Upon a Public Offering.  In the event
that a Public Offering is completed before the Maturity Date, without any act
by the Company or the Holder hereof, at the effective date of such Public
Offering, the entire outstanding principal amount of this Note, together with
all interest accrued thereon (such principal and accrued interest, the “Outstanding
Balance”) shall be automatically converted into that number and type of
equity securities issued by the Company in a Public Offering as is obtained by
dividing (A) the Outstanding Balance by (B) the product of (i) the
Offering Price and (ii) 0.70.  For
purposes of this Note, (i) “Public Offering” shall mean an
underwritten public offering of equity securities of the Company and (ii) “Offering
Price” shall mean the per share or other unit price at which equity
securities of the Company are offered in the Public Offering.

 

Section 1.5     Optional
Prepayment.  Subject to the Holder’s
right to have all interest accrued from the date of this Note through the [the one-year anniversary of the date of the Unit Purchase Agreement]
converted into Common Stock in accordance with Section 1.2 hereof,
beginning on [the one-year anniversary of the date of the
Unit Purchase Agreement], the Company may, at its option, without
premium or penalty, upon five (5) days prior written notice to the Holder,
repay the unpaid principal amount of this Note, at any time in whole or from
time to time in part, together with interest accrued thereon to the date of
prepayment.  The Company shall prepay such
principal and interest to the Holders of all outstanding Notes on a pro rata
basis.  Any such prepayment shall be
applied first to the payment of accrued interest and then to repayment of
principal.  Upon any partial prepayment
of the unpaid principal amount of this Note, the Holder shall make notation on
this Note of the portion of the principal so prepaid.

 

Section 1.6     Subordination.  This Note shall be subordinated in all
respects (including right of payment) to all other indebtedness of the Company,
now existing or hereafter owing, to banks and other such financial
institutions.

 

Section 1.6 
No Fractional Shares or Scrips. 
No fractional shares or scrip representing fractional shares shall be
issued upon the conversion of this Note. 
In lieu of issuing such fractional shares, the Company shall pay all of
the cash value of any fractional interest to Holder.

 

                Section 1.7  No Impairment.  Without limiting or altering the provisions
or obligations of the Company under this Note or the Unit Purchase Agreement,
the Company shall not avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed by it pursuant to this Note and
the Unit Purchase Agreement and shall at all times in good faith assist in the
observance or performance of any of the terms to be observed or performed by it
pursuant to this Note and the Unit Purchase Agreement.

 

2

 

                Section 1.8  Issuance of Shares.  Holder acknowledges that the
Company currently has insufficient authorized shares of Common Stock to permit
the conversion of this Note and all of the other similar notes sold pursuant to
the Unit Purchase Agreement in accordance with Section 1.3 hereof.

 

                Section 1.9  Release of Obligations.  Upon conversion or prepayment of this Note,
the Company shall be forever released from all its obligations and liabilities
under this Note.

 

                Section 1.10  Adjustment.

 

(a)                                  Adjustments for Dividends and
Distributions.  In the event the Company at any time or from time
to time after the date hereof shall make, issue, or fix a record date for the
determination of holders of capital stock entitled to receive a dividend or
other distribution (including a stock split or subdivision) payable in
securities of the Company, then and in such event provisions shall be made so
that the Holder shall receive, upon conversion of this Note, in addition to the
number of shares of Common Stock receivable thereupon, the amount of securities
of the Company that the Holder would have received had this Note been converted
into Common Stock on the date of such event and had the Holder thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by the Holder as aforesaid during
such period, giving application to all adjustments called for during such
period under this Note with respect to the rights of the Holder under the Note.

 

(b)                                 Adjustment for Reclassifications,
Exchanges, or Substitutions.  If the Common
Stock issuable upon the conversion of this Note shall be changed into the same
or different number of shares of any class or classes of capital stock, whether
by capital reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a reorganization,
merger, consolidation, or sale of assets provided for elsewhere), then and in
each such event the Holder shall have the right thereafter to convert this Note
into the kind and amount of shares of capital stock and other securities and
property receivable upon such reorganization, reclassification, or other
change, by holders of the number of shares of Common Stock into which this Note
might have been converted immediately prior to such reorganization,
reclassification or change, all subject to further adjustment as provided
herein.

 

(c)                                  Reorganization; Mergers; Consolidations;
Sales of Assets.  If at any time or from time to time there
shall be a capital reorganization of the Common Stock issuable on conversion of
this Note (other than a subdivision, combination, reclassification, or exchange
of shares provided for elsewhere) or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all of
the Company’s properties and assets to any other entity, then, as a part of
such reorganization, merger, consolidation, or sale, provision shall be made so
that the Holder shall thereafter be entitled to receive upon conversion of this
Note, the number of shares of capital stock or other securities or property of
the Company, or of the successor corporation resulting from such 

 

3

 

merger or consolidation
or sale, to which a holder of Common Stock deliverable upon conversion would have
been entitled on such capital reorganization, merger, consolidation, or sale.
In any such case, appropriate adjustment shall be made in the application of
the provisions of this Note with respect to the rights of the Holder after the
reorganization, merger, consolidation, or sale to the end that the provisions
of this Note shall be applicable after the event as nearly equivalent as may be
practicable.

 

(d)                                 Adjustment for Stock Splits and
Combinations.  If the Company at any time or from time to
time effects a subdivision of the outstanding capital stock, the Conversion
Price then in effect immediately before that subdivision shall be
proportionately decreased, and conversely, if the Company at any time or from
time to time combines the outstanding shares of capital stock, the Conversion
Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this subsection (d) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.

 

(e)                                  Effects of Reverse Stock Split.  Notwithstanding any of the foregoing, the
price at which this Note converts under Section 1.4 hereof in the event of
a Public Offering shall not be adjusted under this Section 1.10 for the
Company’s Reverse Stock Split.  For
purposes of this Note, “Reverse Stock Split” shall mean the ten-for-one reverse split of the
Company’s Common Stock effective prior to the effectiveness of a Public Offering.  For example, after the Reverse
Stock Split, the Outstanding Balance shall still be automatically converted into that number and
type of equity securities issued by the Company in a Public Offering as is
obtained by dividing (A) the Outstanding Balance by (B) the product
of (i) the Offering Price and (ii) 0.70.

 

SECTION 2

Events of Default

 

Section 2.1  Events of
Default.   The Outstanding Balance of
this Note shall become due and payable without any action on the part of the
Holder thereof upon the happening of any of the following events (each, an “Event
of Default”):

 

(a)                                  the Company shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Company
seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, custodianship, protection, or
relief of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, custodian trustee, or other similar
official for it or for any substantial part of its property; or

 

(b)                                 the Company shall default in the due
performance or observance of any expressed or implied covenant, agreement or
provision of this Note or the Unit Purchase 

 

4

 

Agreement and such
default shall have continued uncured for a period of thirty (30) days after
written notice thereof to the Company from the Holder of any outstanding Note.

 

                Section 2.2  Suits for Enforcement.  In case any one or more Events of Default
shall have occurred and be continuing, unless such Events of Default shall have
been waived in the manner provided in Section 3.5, the Majority Purchasers
may proceed to protect and enforce their rights under this Section 2.2 by
suit in equity or action at law.  It is agreed that in the event the Holders
prevail in such action, such Holders shall be entitled to receive all
reasonable fees, costs and expenses incurred, including without limitation such
reasonable fees and expenses of attorneys (whether or not litigation is
commenced) and reasonable fees, costs and expenses of appeals.

 

SECTION 3

Miscellaneous

 

Section 3.1     Lost,
Stolen or Mutilated Notes.  Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note, and in case of any such loss, theft or destruction,
upon delivery of any customary indemnity agreement reasonably satisfactory to
the Company, or in any case of any such mutilation, upon surrender and
cancellation of this Note, the Company at its expense will issue and deliver a
new Note of like tenor in an amount equal to the amount of such lost, stolen or
mutilated Note and any such lost, stolen or destroyed Note shall thereupon
become void.

 

Section 3.2     Benefit
of Note.  This Note shall be binding
upon, and shall inure to the benefit of and be enforceable by, Holder and its
successors and assigns.  All of the
covenants and the agreements contained in this Note by or on behalf of the
Company are binding on the Company’s successors and assigns, whether by
consolidation, merger, transfer or license of all or substantially all of the
property of the Company.

 

Section 3.3     Costs
of Collection.  The Company hereby
waives presentment for payment, notice of dishonor, protest and notice of
protest and, following an Event of Default, the Company shall pay all of Holder’s
costs of collecting or attempting to collect any amount due hereunder,
including but not limited to, all reasonable attorneys’ fees and legal
expenses.

 

                Section 3.4  Notices.  All notices required under this Note shall be
deemed to have been given or made for all purposes (i) upon personal
delivery, (ii) upon confirmation receipt that the communication was
successfully sent to the applicable number if sent by facsimile; (iii) one
day after being sent, when sent by professional overnight courier service, or (iv) five
days after posting when sent by registered or certified mail.  Notices to the Company shall be sent to the
principal office of the Company (or at such other place as the Company shall
notify the Holder hereof in writing). 
Notices to the Holder shall be sent to the address of the Holder set
forth in Schedule A to the Unit Purchase Agreement (or at such other
place as the Holder shall notify the Company hereof in writing).

 

                Section 3.5  Amendment; Waiver.  Any term of this Note may be amended, changed
or modified, and the observance of any term of this Note may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the 

 

5

 

Company
and the Purchasers holding a majority of the outstanding aggregate principal
amount of the Notes issued pursuant to the Unit Purchase Agreement (the “Majority
Purchasers”); provided, however, that no amendment, change,
modification or waiver respecting this Note may be made by the Majority
Purchasers without the consent of the Holder unless a comparable amendment,
change, modification or waiver is made respecting all of the Notes issued
pursuant to the Unit Purchase Agreement. 
Any amendment, change, modification or waiver to this Note shall apply
equally and be binding upon all of the Notes issued pursuant to the Unit
Purchase Agreement.  Except as otherwise
provided in this Note, this Note may not be discharged, nor shall the principal
amount or interest be amended, changed or modified, without the written consent
of the Company and the Holder of this Note. This Section 3.5 may not be
amended, changed or modified, except by a writing signed by the Company and all
of the Purchasers that are a party to the Unit Purchase Agreement.

 

                Section 3.6  Governing Law and Construction.  This Note shall be construed in accordance
with and governed by the laws of the State of Minnesota, without regard to the
principles of conflicts of law.  Whenever
possible, each provision of this Note and any other statement, instrument or
transaction contemplated hereby and valid under such applicable law, but, if
any provision of this Note or any other statement, instrument or transaction
contemplated hereby or relating hereto shall be held to be prohibited or
invalid under such applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Note or any
other statement, instrument or transaction contemplated hereby or relating
hereto.  In the event of any conflict
with, between or among the provisions of this Note or the Unit Purchase
Agreement, the Unit Purchase Agreement shall govern.

 

IN WITNESS WHEREOF, the Company has executed this Note as
of the date first above written.

 

	
   

  	
   

  	
  PROUROCARE MEDICAL INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
							

 

 

6

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