Exhibit 10.3


 


WARRANT
ACQUISITION AGREEMENT


 


This WARRANT
ACQUISITION AGREEMENT (“Agreement”) is made and entered into this     day of November, 2005, by and between
Focus Enhancements, Inc., a Delaware Company with offices located at 1370
Dell Avenue, Campbell, California 95008 (the “Company”), and                    
(herein “Investor”).


 


WHEREAS, the Company wishes to issue to the
respective Investor, and such Investor is willing to acquire from the Company,
subject to the terms and conditions set forth herein, a warrant (the “Warrant”)
for the purchase of         (                   )
shares of Company’s Common Stock, par value $.01 per share (the “Common Stock”);
and


 


WHEREAS, the Investor is acquiring the
Warrant in connection with services provided to the Company pursuant to that
certain letter agreement dated as of November    , 2005 by
and between the Investor and the Company


 


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


 


Definitions.  As used herein, each of the following terms
has the meaning set forth below, unless the context otherwise requires:


 


“Shares” means the shares of Common Stock
issuable upon exercise of the Warrant.


 


 “1933
Act” or “Securities Act” means the Securities Act of 1933, as amended.


 


 “1934
Act” or “Exchange Act” means the Securities Exchange Act of 1934, as amended.


 


1.             ACQUISITION
OF WARRANT


 


(a)           On
the date hereof, the Company shall issue to the Investor and the Investor shall
acquire from the Company the Warrant in the form attached hereto as Exhibit A,
bearing substantially the following legend:


 


THE SECURITIES REPRESENTED HEREBY (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.


 


(b)           (i)            The
Investor acknowledges that (1) the Warrant and the Shares have not been
and are not being registered under the provisions of the 1933 Act and, except
as provided in the Warrant or otherwise included in an effective registration
statement, the Shares have not been 


 


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and are not being registered
under the 1933 Act, and may not be transferred unless (A) subsequently
registered thereunder or (B) the Investor shall have delivered to the
Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Warrant and/or Shares to be
sold or transferred may be sold or transferred pursuant to an exemption from
such registration; (2) any sale of the Warrant and/or Shares made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is
not applicable, any resale of such Warrant or Shares under circumstances in
which the seller, or the Person through whom the sale is made, may be deemed to
be an underwriter, as that term is used in the 1933 Act, may require compliance
with some other exemption under the 1933 Act or the rules and regulations
of the Securities and Exchange Commission (“Commission” or the “SEC”)
thereunder; and (3) neither the Company nor any other Person is under any
obligation to register the Warrant and/or Shares (other than pursuant to the
Warrant) under the 1933 Act or to comply with the terms and conditions of any
exemption thereunder.


 


(ii)           Within
five (5) business days (such fifth business day, the “Delivery Date”)
after the business day on which the Company has received both the notice of
sale (by facsimile or other delivery) and the original Warrant and/or Share
certificate (and if the same are not delivered to the Company on the same date,
the date of delivery of the second of such items) from Investor, the Company at
its expense shall: (i) deliver, and shall cause legal counsel selected by
the Company to deliver, to its transfer agent (with copies to Investor) an
appropriate instruction and opinion of such counsel, for the delivery of
unlegended securities issuable pursuant to any registration statement for the
Warrant or Shares; provided that such registration statement at the time
of sale has been declared effective by the Commission and is current (the “Unlegended
Shares”); and (ii) transmit the certificates representing the Unlegended
Shares (together, unless otherwise instructed by the Investor, with Common
Stock not sold), to the Investor at the address specified.


 


(iii)          In
lieu of delivering physical certificates representing the Unlegended securities,
if the Company’s transfer agent is participating in the Depository Trust
Company (“DTC”) Fast Automated Securities Transfer program, upon request of
Investor and its compliance with the provisions contained in this paragraph, so
long as the certificates therefor do not bear a legend and the Investor thereof
is not obligated to return such certificate for the placement of a legend
thereon, the Company shall use its reasonable efforts to cause its transfer
agent electronically to transmit the Unlegended securities by crediting the
account of such Investor’s Prime Broker with DTC through its Deposit Withdrawal
Agent Commission system.


 


(c)           The
Company shall also deliver, or cause to be delivered, the original or execution
copies of this Agreement.


 


2.             REPRESENTATIONS
AND WARRANTIES OF THE COMPANY


 


The Company represents and warrants to each
respective Investor that:


 


(a)           The
Company has the corporate power and authority to enter into this Agreement, and
to perform its obligations hereunder. 
The execution and delivery by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby have 


 


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been duly authorized by all
necessary corporate action on the part of the Company.  This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligation of
the Company enforceable against it in accordance with its respective terms,
subject to the effects of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights
generally and to general equitable principles.


 


(b)           Except
as set forth in the SEC Documents (as hereinafter defined), there is no
pending, or to the knowledge of the Company, threatened, judicial,
administrative or arbitral action, claim, suit, proceeding or investigation
which might affect the validity or enforceability of this Agreement or which
involves the Company and which, if adversely determined, could reasonably be
expected to have a material adverse effect on the Company and its subsidiaries
taken as a whole.


 


(c)           No
consent or approval of, or exemption by, or filing with, any party or
governmental or public body or authority is required in connection with the
execution, delivery and performance under this Agreement or the taking of any
action contemplated hereunder or thereunder.


 


(d)           The
Company has been duly organized and is validly existing as a Company in good
standing under the laws of Delaware, the jurisdiction of its incorporation.


 


(e)           The
execution, delivery and performance of this Agreement by the Company, and the
consummation of the transactions contemplated hereby, will not (i) violate
any provision of the Company’s certificate of incorporation or bylaws or (ii) violate
any order, judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body by which the Company, or the assets or
properties of the Company are bound or (iii) to the Company’s knowledge,
violate any statute, law or regulation.


 


(f)            Current
Public Information.  The Company has
furnished or made available to each Investor true and correct copies of all
registration statements, reports and documents, including proxy statements
(other than preliminary proxy statements), filed with the Commission by or with
respect to the Company since December 31, 2004 and prior to the date of
this Agreement, pursuant to the Securities Act or the Exchange Act
(collectively, the “SEC Documents”).  The
SEC Documents are the only filings made by or with respect to the Company since
December 31, 2004 pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Exchange Act or pursuant to the Securities Act.  The Company has filed all reports, schedules,
forms, statements and other documents required to be filed under Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act since December 31,
2004 and prior to the date of this Agreement.


 


3.             REPRESENTATIONS
AND WARRANTIES OF THE INVESTOR


 


Investor hereby represents and warrants to
the Company that:


 


(a)           It
has the corporate power and authority to enter into this Agreement and to
perform its obligations hereunder.  The
execution and delivery by the Investor of this Agreement, and the consummation
by the Investor of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of the Investor.  This Agreement has been duly executed and
delivered by the Investor and constitutes the valid and binding obligation 


 


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of the Investor, enforceable
against it in accordance with its respective terms, subject to the effects of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors’ rights generally and to general equitable principles.


 


(b)           The
execution, delivery and performance by the Investor of this Agreement, and the
consummation of the transactions contemplated hereby, do not and will not
breach or constitute a default under any applicable law or regulation or of any
agreement, judgment, order, decree or other instrument binding on the Investor.


 


(c)           The
Investor has such knowledge and prior substantial investment experience in
financial and business matters, including investment in non-listed and
non-registered securities, and has had the opportunity to engage the services
of an investment advisor, attorney or accountant to read the SEC Documents and
to evaluate the merits and risks of investment in the Company and the Shares.


 


(d)           The
Investor is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D promulgated under the 1933 Act.


 


(e)           Investor
is acquiring the Warrant and, upon exercise thereof, will be acquiring the
Shares, solely for the Investor’s own account for investment and not with a
view to or for sale in connection with a distribution of any of the Shares or
the Warrant.


 


(f)            The
Investor does not have a present intention to sell the Warrant or the Shares,
nor a present arrangement or intention to effect any distribution of any of the
Warrant or Shares to or through any person or entity for purposes of selling,
offering, distributing or otherwise disposing of any of the Warrant or Shares.


 


(g)           The
Investor may be required to bear the economic risk of the investment
indefinitely because none of the Warrant and/or Shares may be sold,
hypothecated or otherwise disposed of unless subsequently registered under the
Securities Act and applicable state securities laws or an exemption from
registration is available. Any resale of any of the Warrant and/or Shares can
be made only pursuant to (i) a registration statement under the Securities
Act which is effective and current at the time of sale or (ii) a specific
exemption from the registration requirements of the Securities Act.  In claiming any such exemption, the Investor
will, prior to any offer or sale or distribution of any of the Warrant and/or
Shares, advise the Company and, if requested, provide the Company with a
favorable written opinion of counsel, in form and substance satisfactory to
counsel to the Company, as to the applicability of such exemption to the
proposed sale or distribution.


 


(h)           The
Investor understands that the exemption afforded by Rule 144 promulgated
by the Commission under the Securities Act (“Rule 144”) will not become
available for at least one year from the date of payment and any sales in
reliance on Rule 144, if then available, can be made only in accordance
with the terms and conditions of that rule, including, among other things, a
requirement that the Company then be subject to, and current, in its periodic
filing requirements under the Exchange Act, and, among other things, a
limitation on the amount of shares of Common Stock that may be sold in
specified time periods and the manner in which the sale can be made; that,
while the Company’s Common Stock is registered under the Exchange 


 


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Act and the Company is
presently subject to the periodic reporting requirements of the Exchange Act,
there can be no assurance that the Company will remain subject to such
reporting obligations or current in its filing obligations; and that, in case Rule 144
is not applicable to a disposition of the Shares, compliance with the
registration provisions of the Securities Act or some other exemption from such
registration provisions will be required.


 


(i)            The
Investor understands that legends shall be placed on the certificates
evidencing the Warrant and/or Shares to the effect that they have not been
registered under the Securities Act or applicable state securities laws and
appropriate notations thereof will be made in the Company’s stock books.  Stop transfer instructions will be placed
with the transfer agent.


 


(j)            Investor
has taken no action which would give rise to any claim by any person for
brokerage commission, finder’s fees or similar payments by Investor relating to
this Agreement or the transactions contemplated hereby.  The Company shall have no obligation with
respect to such fees or with respect to any claims made by or on behalf of
other persons for fees of a type contemplated in this clause (j) that may be
due in connection with the transactions contemplated hereby.  The Investor shall indemnify and hold
harmless the Company, its employees, officers, directors, agents, and partners,
and their respective affiliates, from and against all claims, losses, damages,
costs (including the costs of preparation and attorney’s fees) and expenses
suffered in respect of any such claimed or existing fees, as and when incurred.


 


4.             GENERAL


 


(a)           Notices.  Any notice required or permitted hereunder
shall be given in writing (unless otherwise specified herein) and shall be
deemed effectively given upon personal delivery or seven (7) business days
after deposit in the United States Postal Service, by (a) advance copy by
fax, and/or (b) mailing or delivery by express courier or registered or
certified mail with postage and fees prepaid, addressed to each of the other
parties thereunto entitled at the following addresses, or at such other
addresses as a party may designate by ten (10) days advance written notice
to each of the other parties hereto.


 


	
  COMPANY:

  	
  FOCUS ENHANCEMENTS, INC.

  
	
   

  	
  1370 Dell Avenue

  
	
   

  	
  Campbell, California 95008

  
	
   

  	
  ATTN: Gary Williams, Chief Financial
  Officer

  
	
   

  	
  Telephone No.: (408) 866-8300

  
	
   

  	
  Facsimile No.: (408) 866-4795

  



 


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  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Manatt, Phelps & Phillips, LLP

  
	
   

  	
  1001 Page Mill Road, Bldg. 2

  
	
   

  	
  Palo Alto, California 94304

  
	
   

  	
  Attn: Jerrold F. Petruzzelli, Esq.

  
	
   

  	
  Telephone No.: (650) 812-1335

  
	
   

  	
  Telecopier No.: (650) 213-0260

  
	
   

  	
   

  
	
  INVESTOR:

  	
  As set forth on the execution page hereto.

  



 


(b)           Severability.  If a court of competent jurisdiction
determines that any provision of this Agreement is invalid, unenforceable or illegal
for any reason, such determination shall not affect or impair the validity,
legality and enforceability of the other provisions of this Agreement in any
other jurisdiction. If any such invalidity, unenforceability or illegality of a
provision of this Agreement becomes known to any of the parties hereto, the
parties shall negotiate promptly and in good faith in an attempt to make
appropriate changes and adjustments to such provision specifically and this
Agreement generally to achieve as closely as possible, consistent with
applicable law, the intent and spirit of such provision specifically and this
Agreement generally.


 


(c)           Execution
in Counterparts.  This Agreement may
be executed in facsimile copies and counterparts, each of which shall be deemed
an original, but all of which together shall constitute the same Agreement.


 


(d)           Jury
Trial Waiver.  The Company and the
Investor hereby waive a trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto against any of the others in respect of
any matter arising out of or in connection with the Transaction Agreements.


 


(e)           Governing
Law: Miscellaneous.  This Agreement
shall be deemed to be made and performed in the State of California but the
laws of the State of Delaware shall apply to the interpretation of its
provisions without giving effect to the principles thereof regarding the
conflict of laws.  The parties consent to
the exclusive jurisdiction of the federal courts whose district encompass any
part of the State of California, Santa Clara County in connection with any
dispute arising under this Agreement and waive, to the maximum extent permitted
by law, any objection, including any objection based on forum non conveniens, to the bringing of
any such proceeding in such jurisdiction.


 


(f)            Failure
To Exercise Remedy. Failure or delay of any party to exercise any right or
remedy under this Agreement or otherwise shall not operate as a waiver thereof.


 


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


 


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


 


(i)            Headings.
The headings of this Agreement are for convenience of reference and shall not
form part of, or affect the interpretation of, this Agreement.


 


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(j)            Amendments
and Waivers. This Agreement may be amended only by an instrument in writing
signed by both parties; no waiver shall be effective unless signed by the
person charged with making such waiver.


 


(k)           Merger.
This Agreement supersedes all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof.


 


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IN WITNESS WHEREOF,
this Agreement has been duly executed by the parties (through one of its
officers thereunto duly authorized) as of the date set forth below.


 


	
  INVESTOR: 

  	
   

  
	
   

  	
   

  
	
  Signatory:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
					



 


 


FOCUS ENHANCEMENTS, INC.


 


 


	
  By:

  	
  /s/ Gary Williams

  	
   

  
	
   

  	
   

  
	
  Name:  Gary Williams

  	
   

  
	
   

  	
   

  
	
  Title:  EVP of Finance &
  CFO

  	
   

  
	
   

  	
   

  
	
  Date: November    ,
  2005

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  List of Exhibits

  	
   

  
				



 


Exhibit A
Warrant


 


8