Exhibit 10


                        Silicon Valley Financial Services
                                3003 Tasman Drive
                             Santa Clara, Ca. 95054
                       (408) 654-1000 - Fax (408) 980-6410

                     ACCOUNTS RECEIVABLE PURCHASE AGREEMENT

         This Accounts  Receivable  Purchase Agreement (the "Agreement") is made
on this 22nd day of March,  1999 by and between  Silicon  Valley Bank  ("Buyer")
having  a  place  of  business  at  the  address   specified   above  and  Focus
Enhancements,  Inc., a Delaware  corporation,  ("Borrower") having its principal
place of business and chief executive office at 600 Research Drive,  Wilmington,
Massachusetts.

1.       Definitions.  When used  herein,  the  following  terms  shall have the
following meanings.

         1.1.  "Account  Balance" shall mean, on any given day, the gross amount
of all Purchased Receivables unpaid on that day.

         1.2.  "Account  Debtor"  shall  have  the  meaning  set  forth  in  the
Massachusetts Uniform Commercial Code and shall include any person liable on any
Purchased  Receivable,  including  without  limitation,  any  guarantor  of  the
Purchased  Receivable  and  any  issuer  of  a  letter  of  credit  or  banker's
acceptance.

         1.3.  "Adjustments"  shall  mean all  discounts,  allowances,  returns,
disputes,  counterclaims,  offsets,  defenses,  rights of recoupment,  rights of
return,  warranty  claims,  or short  payments,  asserted by or on behalf of any
Account Debtor with respect to any Purchased Receivable.

         1.4.  "Administrative  Fee"  shall  have the  meaning  as set  forth in
Section 3.3 hereof.

         1.5. "Advance" shall have the meaning set forth in Section 2.2 hereof.

         1.6. "Collateral" shall have the meaning set forth in Section 8 hereof.

         1.7.  "Collections" shall mean all good funds received by Buyer from or
on behalf of an Account Debtor with respect to Purchased Receivables.

         1.8.  "Compliance  Certificate"  shall  mean a  certificate,  in a form
provided  by Buyer to Seller,  which  contains  the  certification  of the chief
financial officer of Seller that, among other things,  the  representations  and
warranties  set forth in this Agreement are true and correct as of the date such
certificate is delivered.

         1.9.  "Event of Default"  shall have the meaning set forth in Section 9
hereof.

         1.10. "Finance Charges" shall have the meaning set forth in Section 3.2
hereof.

         1.11.  "Invoice   Transmittal"  shall  mean  a  writing  signed  by  an
authorized  representative of Seller which accurately identifies the receivables
which  Buyer,  at its  election,  may  purchase,  and  includes  for  each  such
receivable the correct amount owed by the Account  Debtor,  the name and address
of the Account  Debtor,  the invoice  number,  the invoice  date and the account
code.



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         1.12. "Obligations" shall mean all advances,  financial accommodations,
liabilities, obligations, covenants and duties owing, arising, due or payable by
Seller to Buyer of any kind or nature,  present or future,  arising  under or in
connection  with  this  Agreement  or under any other  document,  instrument  or
agreement,  whether or not evidenced by any note, guarantee or other instrument,
whether  arising  on  account  or  by  overdraft,  whether  direct  or  indirect
(including  those  acquired by assignment)  absolute or  contingent,  primary or
secondary,  due or to become due,  now owing or hereafter  arising,  and however
acquired;   including,   without  limitation,  all  Advances,  Finance  Charges,
Administrative Fees, interest, Repurchase Amounts, fees, expenses,  professional
fees and attorneys'  fees and any other sums  chargeable to Seller  hereunder or
otherwise.

         1.13.  "Prime Rate" shall mean the rate  announced from time to time by
Silicon Valley Bank as its Prime Rate.

         1.14.   "Purchased   Receivables"   shall  mean  all  those   accounts,
receivables,  chattel paper, instruments,  contract rights,  documents,  general
intangibles,  letters  of credit,  drafts,  bankers  acceptances,  and rights to
payment,  and all proceeds  thereof (all of the foregoing  being  referred to as
"receivables"),  arising out of the invoices and other agreements  identified on
or  delivered  with any Invoice  Transmittal  delivered by Seller to Buyer which
Buyer elects to purchase and for which Buyer makes an Advance.

         1.15.  "Reconciliation  Date" shall mean the last  calendar day of each
Reconciliation Period.

         1.16.  "Reconciliation  Period" shall mean each calendar month of every
year.

         1.17. "Refund" shall have the meaning set forth in Section 3.6 hereof.

         1.18. "Reserve" shall have the meaning set forth in Section 2.4 hereof.

         1.19.  "Repurchase  Amount" shall have the meaning set forth in Section
4.2 hereof.

2.       Purchase and Sale of Receivables.

         2.1. Offer to Sell  Receivables.  During the term hereof,  and provided
that  there  does not then  exist any Event of  Default  or any event  that with
notice, lapse of time or otherwise would constitute an Event of Default,  Seller
may  request  that  Buyer  purchase  receivables  and  Buyer  may,  in its  sole
discretion, elect to purchase receivables provided further that the Seller is in
compliance  with all of the  terms and  conditions  herein,  including,  without
limitation,  Section  2.2  below.  Seller  shall  deliver  to Buyer  an  Invoice
Transmittal  with respect to any  receivable for which a request for purchase is
made. An authorized representative of Seller shall sign each Invoice Transmittal
delivered  to Buyer.  Buyer  shall be  entitled  to rely on all the  information
provided  by Seller to Buyer on or with the Invoice  Transmittal  and to rely on
the signature on any Invoice Transmittal as an authorized signature of Seller.

         2.2.  Acceptance  of  Receivables.  Buyer shall have no  obligation  to
purchase any receivable listed on an Invoice Transmittal. Buyer may exercise its
sole discretion in approving the credit of each Account Debtor before buying any
receivable.  Upon acceptance by Buyer of all or any of the receivables described
on any  Invoice  Transmittal,  Buyer  shall  pay to Seller a  percentage,  to be
established  by Buyer in its sole and  absolute  discretion,  and  agreed  to by
Seller,  of the face amount of each  receivable  Buyer desires to purchase.  The
acceptance  by the  Seller of an  Advance  shall be deemed to be  acceptance  by
Seller of the terms and  conditions  established  by the Buyer  relating to such
Advance.  Such payment shall be the "Advance"  with respect to such  receivable.
Buyer may, from time to time, in its sole  discretion,  change the percentage of
the Advance.  Upon Buyer's acceptance of the receivable and payment to Seller of
the Advance, the receivable shall become a "Purchased Receivable." It shall be a
condition to each Advance that:  (i) all of the  representations  and warranties
set forth in Section 6 of this  Agreement  be true and  correct on and as of the
date  of the  related  Invoice  Transmittal  and on and as of the  date  of such
Advance as though made at and as of each such date, and (ii) no Event of Default
or any event or  condition  that with notice,  lapse of time or otherwise  would
constitute an Event of Default shall have occurred and be  continuing,  or would
result from such Advance. In no event shall the aggregate amount of all Advances
outstanding  at any time  exceed  Three  Million Six  Hundred  Thousand  Dollars
($3,600,000.00).  Notwithstanding the foregoing, until agreed to by the Buyer in
writing,  after the date hereof,  the maximum  aggregate  amount of all Advances
outstanding at any time shall not exceed Two Million Dollars ($2,000,000.00).


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         2.3.  Effectiveness of Sale to Buyer. Effective upon Buyer's payment of
an Advance,  and for and in  consideration  therefor and in consideration of the
covenants of this  Agreement,  Seller  hereby  absolutely  sells,  transfers and
assigns to Buyer,  all of  Seller's  right,  title and  interest  in and to each
Purchased  Receivable  and all  monies  due or which may  become  due on or with
respect to such Purchased Receivable.  Buyer shall be the absolute owner of each
Purchased Receivable. Buyer shall have, with respect to any goods related to the
Purchased Receivable,  all the rights and remedies of an unpaid seller under the
Massachusetts  Uniform  Commercial Code and other applicable law,  including the
rights of replevin, claim and delivery, reclamation and stoppage in transit.

         2.4.  Establishment  of a Reserve.  Upon the  purchase by Buyer of each
Purchased Receivable,  Buyer shall establish a reserve. The reserve shall be the
amount by which the face amount of the Purchased  Receivable exceeds the Advance
on that Purchased Receivable (the "Reserve"); provided, the Reserve with respect
to all Purchased Receivables  outstanding at any one time shall be an amount not
less than Twenty Percent  (20.0) of the Account  Balance at that time and may be
set at a higher  percentage at Buyer's sole  discretion.  The reserve shall be a
book  balance  maintained  on the records of Buyer and shall not be a segregated
fund.

3.       Collections, Charges and Remittances.

         3.1.  Collections.  Upon receipt by Buyer of  Collections,  Buyer shall
promptly credit such  Collections to Seller's  Account Balance on a daily basis;
provided,  that if Seller is in default under this Agreement and only until such
default is cured to the satisfaction of Buyer, Buyer shall apply all Collections
to  Seller's  Obligations  hereunder  in such  order  and  manner  as Buyer  may
determine.  If an item of  collection  is not  honored or Buyer does not receive
good funds for any reason,  the amount shall be included in the Account  Balance
as if the  Collections  had not been received and Finance  Charges under Section
3.2 shall accrue thereon.

         3.2. Finance Charges.  On each  Reconciliation Date Seller shall pay to
Buyer a  finance  charge in an amount  equal to a per  annum  rate  equal to the
aggregate of the Bank's Prime Rate, plus four percent (4.0%),  multiplied by the
average daily Account Balance  outstanding during the applicable  Reconciliation
Period (the "Finance  Charges").  Buyer shall deduct the accrued Finance Charges
from the Reserve as set forth in Section 3.6 below.

         3.3.  Administrative  Fee. On each Reconciliation Date Seller shall pay
to Buyer an  Administrative  Fee equal to 0.78125% of the amounts  Advanced with
respect to each Purchased  Receivable first purchased during that Reconciliation
Period (the  "Administrative  Fee").  Buyer shall deduct the  Administrative Fee
from the Reserve as set forth in Section 3.6 below.

         3.4.  Commitment  Fee.  The  Borrower  has  paid  a  commitment  fee of
$5,000.00  to the Bank.  In the event any  Obligations  are  outstanding  on the
ninetieth day following  the date of execution of this  Agreement,  the Borrower
shall pay to the Bank an additional commitment fee of $5,000.00.  All commitment
fees shall be deemed fully earned and non-refundable.

         3.5. Accounting. Buyer shall prepare and send to Seller after the close
of business for each  Reconciliation  Period,  an accounting of the transactions
for  that  Reconciliation   Period,   including  the  amount  of  all  Purchased
Receivables,   all   Collections,   Adjustments,   Finance   Charges,   and  the
Administrative Fee. The accounting shall be deemed correct and conclusive unless
Seller makes written  objection to Buyer within thirty (30) days after the Buyer
mails the  accounting  to Seller.  In  addition,  Buyer shall  provide to Seller
copies of all checks, drafts, wire transfers and other forms of payment received
by Buyer for account of Seller.

         3.6. Refund to Seller. Provided that there does not then exist an Event
of  Default  or any  event  or  condition  that  with  notice,  lapse of time or
otherwise would constitute an Event of Default,  Buyer shall refund to Seller by
check after the  Reconciliation  Date,  the amount,  if any, which Buyer owes to
Seller  at the end of the  Reconciliation  Period  according  to the  accounting
prepared  by Buyer for that  Reconciliation  Period (the  "Refund").  The Refund
shall be an amount equal to:

                  (A)      (1)      The  Reserve  as  of  the  beginning of that
                  Reconciliation Period, plus


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                           (2) the Reserve created for each Purchased Receivable
                  purchased during that Reconciliation Period, minus

                  (B) The total for that Reconciliation Period of:

                           (1) the Administrative Fee;

                           (2) Finance Charges;

                           (3) Adjustments;

                           (4)  Repurchase  Amounts,  to the  extent  Buyer  has
                  agreed to accept payment thereof by deduction from the Refund;

                           (5) the  Reserve  for the  Account  Balance as of the
                  first  day  of  the  following  Reconciliation  Period  in the
                  minimum percentage set forth in Section 2.4 hereof; and

                           (6) all amounts due, including  professional fees and
                  expenses, as set forth in Section 12 for which oral or written
                  demand  has  been  made  by  Buyer  to  Seller   during   that
                  Reconciliation Period to the extent Buyer has agreed to accept
                  payment thereof by deduction from the Refund.

In the event the formula set forth in this  Section 3.6 results in an amount due
to Buyer from  Seller,  Seller shall make such payment in the same manner as set
forth in Section  4.3 hereof for  repurchases.  If the formula set forth in this
Section 3.6 results in an amount due to Seller from Buyer, Buyer shall make such
payment by check, subject to Buyer's rights under Section 4.3 and Buyer's rights
of offset and recoupment.

4.       Recourse and Repurchase Obligations.

         4.1. Recourse. Buyer's acquisition of Purchased Receivables from Seller
shall be with full recourse against Seller. In the event the Obligations  exceed
the amount of Purchased  Receivables and Collateral,  Seller shall be liable for
any deficiency.

         4.2. Seller's Agreement to Repurchase. Seller agrees to pay to Buyer on
demand,  the  full  face  amount,  or  any  unpaid  portion,  of  any  Purchased
Receivable:

                  (A) which  remains  unpaid ninety (90) calendar days after the
         invoice date; or

                  (B) which is owed by any Account Debtor who has filed,  or has
         had filed against it, any bankruptcy  case,  assignment for the benefit
         of creditors,  receivership, or insolvency proceeding or who has become
         insolvent (as defined in the United States  Bankruptcy  Code) or who is
         generally not paying its debts as such debts become due; or

                  (C) with  respect  to which  there  has  been  any  breach  of
         warranty or representation  set forth in Section 6 hereof or any breach
         of any covenant contained in this Agreement; or

                  (D) with  respect  to which the  Account  Debtor  asserts  any
         discount,  allowance, return, dispute,  counterclaim,  offset, defense,
         right of recoupment, right of return, warranty claim, or short payment;

together with all reasonable  attorneys' and professional  fees and expenses and
all court costs incurred by Buyer in collecting such Purchased Receivable and/or
enforcing its rights under,  or collecting  amounts owed by Seller in connection
with, this Agreement (collectively, the "Repurchase Amount").


                                      -4-
<PAGE>



         4.3.  Seller's  Payment of the  Repurchase  Amount or Other Amounts Due
Buyer.  When any  Repurchase  Amount or other amount owing to Buyer becomes due,
Buyer shall inform  Seller of the manner of payment which may be any one or more
of the following in Buyer's sole discretion: (a) in cash immediately upon demand
therefor;  (b) by delivery of  substitute  invoices  and an Invoice  Transmittal
acceptable to Buyer which shall thereupon become Purchased  Receivables;  (c) by
adjustment to the Reserve pursuant to Section 3.6 hereof;  (d) by deduction from
or offset against the Refund that would  otherwise be due and payable to Seller;
(e) by  deduction  from or offset  against  the amount that  otherwise  would be
forwarded  to Seller in  respect  of any  further  Advances  that may be made by
Buyer; or (f) by any combination of the foregoing as Buyer may from time to time
choose.

         4.4. Seller's Agreement to Repurchase All Purchased  Receivables.  Upon
and after the  occurrence  of an Event of Default,  Seller  shall,  upon Buyer's
demand (or, in the case of an Event of Default under  Section 9(B),  immediately
without notice or demand from Buyer)  repurchase  all the Purchased  Receivables
then outstanding,  or such portion thereof as Buyer may demand. Such demand may,
at Buyer's  option,  include  and  Seller  shall pay to Buyer  immediately  upon
demand,  cash in an amount equal to the Advance  with respect to each  Purchased
Receivable  then   outstanding   together  with  all  accrued  Finance  Charges,
Adjustments,  Administrative Fees, attorney's and professional fees, court costs
and expenses as provided for herein, and any other Obligations.  Upon receipt of
payment in full of the  Obligations,  Buyer shall  immediately  instruct Account
Debtors to pay Seller  directly,  and return to Seller any Refund due to Seller.
For the  purpose of  calculating  any Refund due under this  Section  only,  the
Reconciliation  Date  shall be deemed to be the date Buyer  receives  payment in
good funds of all the Obligations as provided in this Section 4.4. The foregoing
notwithstanding,  Seller may at Seller's sole  discretion  repurchase any or all
Purchased  Receivables from Buyer.  Further, if Seller repurchases the Purchased
Receivables on or before April 15, 1999, the applicable Administrative Fee shall
be limited to one  quarter  of one  percent  (0.25%).  The Seller  shall  remain
responsible  for all other  amounts due  hereunder  upon the  repurchase  by the
Seller of any Purchased Receivable.

5. Power of  Attorney.  Seller does  hereby  irrevocably  appoint  Buyer and its
successors and assigns as Seller's true and lawful  attorney in fact, and hereby
authorizes Buyer,  regardless of whether there has been an Event of Default, (a)
to sell, assign,  transfer,  pledge,  compromise,  or discharge the whole or any
part of the Purchased  Receivables;  (b) to demand,  collect,  receive, sue, and
give  releases to any Account  Debtor for the monies due or which may become due
upon or with respect to the Purchased Receivables and to compromise,  prosecute,
or defend any  action,  claim,  case or  proceeding  relating  to the  Purchased
Receivables, including the filing of a claim or the voting of such claims in any
bankruptcy case, all in Buyer's name or Seller's name, as Buyer may choose;  (c)
to  prepare,  file and sign  Seller's  name on any  notice,  claim,  assignment,
demand,  draft,  or  notice of or  satisfaction  of lien or  mechanics'  lien or
similar  document  with  respect  to  Purchased  Receivables;  (d) to notify all
Account Debtors with respect to the Purchased Receivables to pay Buyer directly;
(e) to  receive,  open,  and  dispose  of all mail  addressed  to Seller for the
purpose of collecting the Purchased Receivables,  provided, however, that copies
of same shall be forwarded to Seller; (f) to endorse Seller's name on any checks
or other forms of payment on the Purchased Receivables; (g) to execute on behalf
of Seller any and all instruments,  documents, financing statements and the like
to perfect Buyer's  interests in the Purchased  Receivables and Collateral;  and
(h) to do all acts and things necessary or expedient, in furtherance of any such
purposes.  If  Buyer  receives  a check  or item  which  is  payment  for both a
Purchased Receivable and another receivable, the funds shall first be applied to
the  Purchased  Receivable  and,  so long as there  does  not  exist an Event of
Default  or an  event  that  with  notice,  lapse  of  time or  otherwise  would
constitute an Event of Default, the excess shall be remitted to Seller. Upon the
occurrence and continuation of an Event of Default, all of the power of attorney
rights granted by Seller to Buyer  hereunder shall be applicable with respect to
all Purchased Receivables and all Collateral.

6.       Representations, Warranties and Covenants.

         6.1. Receivables' Warranties,  Representations and Covenants. To induce
Buyer to buy  receivables  and to render its  services to Seller,  and with full
knowledge  that the truth and accuracy of the following are being relied upon by
the Buyer in determining whether to accept receivables as Purchased Receivables,
Seller represents,  warrants, covenants and agrees, with respect to each Invoice
Transmittal delivered to Buyer and each receivable described therein, that:


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                  (A) Seller is the absolute owner of each  receivable set forth
         in the Invoice  Transmittal and has full legal right to sell,  transfer
         and assign such receivables;

                  (B) The correct  amount of each  receivable is as set forth in
         the Invoice Transmittal and is not in dispute;

                  (C) The payment of each  receivable is not contingent upon the
         fulfillment of any  obligation or contract,  past or future and any and
         all  obligations  required of the Seller have been  fulfilled as of the
         date of the Invoice Transmittal;

                  (D) Each  receivable  set forth on the Invoice  Transmittal is
         based on an actual sale and delivery of goods and/or services  actually
         rendered,  is presently due and owing to Seller,  is not past due or in
         default,  has not  been  previously  sold,  assigned,  transferred,  or
         pledged,  and is  free of any and all  liens,  security  interests  and
         encumbrances  other than liens,  security  interests or encumbrances in
         favor of Buyer or any other  division or  affiliate  of Silicon  Valley
         Bank;

                  (E) There are no defenses,  offsets, or counterclaims  against
         any of the receivables,  and no agreement has been made under which the
         Account Debtor may claim any deduction or discount, except as otherwise
         stated in the Invoice Transmittal;

                  (F) Each  Purchased  Receivable  shall be the  property of the
         Buyer and shall be collected by Buyer,  but if for any reason it should
         be paid to Seller,  Seller shall promptly notify Buyer of such payment,
         shall hold any checks,  drafts,  or monies so received in trust for the
         benefit of Buyer,  and shall promptly  transfer and deliver the same to
         the Buyer;

                  (G) Buyer  shall have the right of  endorsement,  and also the
         right to require  endorsement  by Seller,  on all payments  received in
         connection   with  each  Purchased   Receivable  and  any  proceeds  of
         Collateral;

                  (H)  Seller,  and to Seller's  best  knowledge,  each  Account
         Debtor  set forth in the  Invoice  Transmittal,  are and  shall  remain
         solvent as that term is defined in the United  States  Bankruptcy  Code
         and the  Massachusetts  Uniform  Commercial  Code,  and no such Account
         Debtor has filed or had filed  against it a  voluntary  or  involuntary
         petition for relief under the United States Bankruptcy Code;

                  (I) Each Account Debtor named on the Invoice  Transmittal will
         not object to the payment  for,  or the quality or the  quantity of the
         subject  matter  of,  the  receivable  and is liable for the amount set
         forth on the Invoice Transmittal;

                  (J) Each  Account  Debtor shall  promptly be  notified,  after
         acceptance by Buyer, that the Purchased Receivable has been transferred
         to and is  payable to Buyer,  and  Seller  shall not take or permit any
         action to countermand such notification; and

                  (K) All  receivables  forwarded to and accepted by Buyer after
         the date hereof,  and thereby  becoming  Purchased  Receivables,  shall
         comply  with  each  and  every  one of the  foregoing  representations,
         warranties,  covenants and agreements referred to above in this Section
         6.1.

         6.2. Additional Warranties,  Representations and Covenants. In addition
to the foregoing warranties,  representations and covenants,  to induce Buyer to
buy receivables and to render its services to Seller,  Seller hereby represents,
warrants, covenants and agrees that:

                  (A) Seller  will not  assign,  transfer,  sell,  or grant , or
         permit any lien or security  interest in any Purchased  Receivables  or
         Collateral  to or in favor of any other party,  without  Buyer's  prior
         written consent;


                                      -6-
<PAGE>



                  (B) The Seller's name, form of  organization,  chief executive
         office,  and the  place  where the  records  concerning  all  Purchased
         Receivables  and  Collateral  are kept is set forth at the beginning of
         this Agreement, Collateral is located only at the location set forth in
         the  beginning  of this  Agreement,  or, if located  at any  additional
         location,  as set forth on a schedule  attached to this Agreement,  and
         Seller will give Buyer at least thirty (30) days prior  written  notice
         if such name,  organization,  chief executive office or other locations
         of Collateral or records concerning Purchased Receivables or Collateral
         is  changed  or added and shall  execute  any  documents  necessary  to
         perfect  Buyer's   interest  in  the  Purchased   Receivables  and  the
         Collateral;

                  (C) Seller shall (i) pay all of its normal  gross  payroll for
         employees,  and all federal and state taxes, as and when due, including
         without  limitation all payroll and  withholding  taxes and state sales
         taxes;  (ii)  deliver  at any  time and  from  time to time at  Buyer's
         request, evidence satisfactory to Buyer that all such amounts have been
         paid to the proper taxing authorities; and (iii) if requested by Buyer,
         pay its  payroll  and related  taxes  through a bank or an  independent
         payroll service acceptable to Buyer.

                  (D) Seller has not, as of the time Seller delivers to Buyer an
         Invoice Transmittal,  or as of the time Seller accepts any Advance from
         Buyer,  filed a voluntary  petition for relief under the United  States
         Bankruptcy  Code or had filed  against it an  involuntary  petition for
         relief;

                  (E)  If  Seller  owns,  holds  or has  any  interest  in,  any
         copyrights   (whether   registered,   or   unregistered),   patents  or
         trademarks,  and licenses of any of the  foregoing,  such  interest has
         been disclosed to Buyer and is specifically  listed and identified on a
         schedule to this Agreement,  and Seller shall immediately  notify Buyer
         if Seller hereafter obtains any interest in any additional  copyrights,
         patents,  trademarks or licenses that are  significant  in value or are
         material to the conduct of its business; and

                  (F) Seller shall provide  Buyer with a Compliance  Certificate
         (i) on a  quarterly  basis to be  received  by Buyer no later  than the
         fifth calendar day following each calendar quarter, and; (ii) on a more
         frequent or other basis if and as requested by Buyer.

7.  Adjustments.  In the  event  of a  breach  of  any  of the  representations,
warranties,  or  covenants  set  forth  in  Section  6.1,  or in the  event  any
Adjustment or dispute is asserted by any Account  Debtor,  Seller shall promptly
advise Buyer and shall,  subject to the Buyer's approval,  resolve such disputes
and advise Buyer of any adjustments. Unless the disputed Purchased Receivable is
repurchased by Seller and the full Repurchase Amount is paid, Buyer shall remain
the absolute owner of any Purchased Receivable which is subject to Adjustment or
repurchase under Section 4.2 hereof,  and any rejected,  returned,  or recovered
personal  property,  with the right to take  possession  thereof at any time. If
such  possession  is not  taken by Buyer,  Seller  is to  resell it for  Buyer's
account at Seller's  expense  with the  proceeds  made  payable to Buyer.  While
Seller retains  possession of said returned  goods,  Seller shall segregate said
goods and mark them "property of Silicon Valley Financial Services."

8. Security  Interest.  To secure the prompt payment and performance to Buyer of
all of the Obligations, Seller hereby grants to Buyer a continuing lien upon and
security  interest in all of Seller's now existing or hereafter  arising  rights
and  interest in the  following,  whether  now owned or  existing  or  hereafter
created,   acquired,  or  arising,  and  wherever  located  (collectively,   the
"Collateral"):

                  (A) All accounts, receivables, contract rights, chattel paper,
         instruments, documents, letters of credit, bankers acceptances, drafts,
         checks, cash, securities,  and general intangibles (including,  without
         limitation, all claims, causes of action, deposit accounts, guaranties,
         rights in and claims  under  insurance  policies  (including  rights to
         premium  refunds),   rights  to  tax  refunds,   copyrights,   patents,
         trademarks,  rights  in and  under  license  agreements,  and all other
         intellectual property);

                  (B) All inventory,  including  Seller's rights to any returned
         or  rejected  goods,  with  respect to which  Buyer  shall have all the
         rights of any unpaid  seller,  including the rights of replevin,  claim
         and delivery, reclamation, and stoppage in transit;

                                      -7-
<PAGE>



                  (C)  All  monies,   refunds  and  other  amounts  due  Seller,
         including, without limitation,  amounts due Seller under this Agreement
         (including Seller's right of offset and recoupment);

                  (D) Investment Property;

                  (E)  All   equipment,   machinery,   furniture,   furnishings,
         fixtures, tools, supplies and motor vehicles (the "Equipment");

                  (F) All farm products,  crops,  timber,  minerals and the like
         (including oil and gas);

                  (G) All accessions to, substitutions for, and replacements of,
         all of the foregoing;

                  (H) All books and records  pertaining to all of the foregoing;
         and

                  (I) All proceeds of the foregoing, whether due to voluntary or
         involuntary disposition, including insurance proceeds.

Seller is not  authorized  to sell,  assign,  transfer or  otherwise  convey any
Collateral  without  Buyer's  prior  written  consent,  except  for the  sale of
finished  inventory in the Seller's  usual course of business.  Seller agrees to
sign UCC financing  statements,  in a form  acceptable  to Buyer,  and any other
instruments and documents  requested by Buyer to evidence , perfect,  or protect
the interests of Buyer in the Collateral.  Seller agrees to deliver to Buyer the
originals of all instruments,  chattel paper and documents evidencing or related
to Purchased Receivables and Collateral.

9. Default.  The occurrence of any one or more of the following shall constitute
an Event of Default hereunder.

                  (A) Seller  fails to pay any amount  owed to Buyer as and when
         due;

                  (B)  There  shall  be  commenced  by  or  against  Seller  any
         voluntary or involuntary case under the United States  Bankruptcy Code,
         or any  assignment  for the benefit of creditors,  or  appointment of a
         receiver or custodian for any of its assets;

                  (C)  Seller  shall  become  insolvent  in that its  debts  are
         greater than the fair value of its assets,  or Seller is generally  not
         paying its debts as they become due;

                  (D) Any involuntary lien, garnishment, attachment or the like,
         in excess of $25,000.00 in the aggregate is issued  against or attaches
         to the Purchased  Receivables or any  Collateral,  which is not removed
         within thirty (30) days;

                  (E) Seller shall breach any covenant, agreement,  warranty, or
         representation  set forth herein,  and the same is not cured to Buyer's
         satisfaction  within ten (10) days after Buyer has given Seller oral or
         written notice thereof;  provided,  that if such breach is incapable of
         being cured it shall constitute an immediate default hereunder;

                  (F)  Seller is not in  compliance  with,  or  otherwise  is in
         default  under,  any  term of any  document,  instrument  or  agreement
         evidencing a debt,  obligation or liability of any kind or character of
         Seller, now or hereafter existing, in favor of Buyer or any division or
         affiliate  of Silicon  Valley  Bank,  regardless  of whether such debt,
         obligation  or liability is direct or indirect,  primary or  secondary,
         joint,  several or joint and several, or fixed or contingent,  together
         with any and all renewals and extensions of such debts, obligations and
         liabilities, or any part thereof;


                                      -8-
<PAGE>



                  (G) An  event  of  default  shall  occur  under  any  guaranty
         executed by any guarantor of the  Obligations  of Seller to Buyer under
         this  Agreement,  or any material  provision of any such guaranty shall
         for any reason cease to be valid or  enforceable  or any such  guaranty
         shall be repudiated or terminated, including by operation of law;

                  (H) A  default  or event of  default  shall  occur  under  any
         agreement  between  Seller and any  creditor of Seller that has entered
         into a subordination agreement with Buyer; or

                  (I)  Any  creditor  that  has  entered  into  a  subordination
         agreement  with  Buyer  shall  breach any of the terms of or not comply
         with such subordination agreement.

10.  Remedies Upon  Default.  Upon the  occurrence  of an Event of Default,  (1)
without  implying  any  obligation  to buy  receivables,  Buyer may cease buying
receivables or extending any financial  accommodations  to Seller;  (2) all or a
portion of the Obligations  shall be, at the option of and upon demand by Buyer,
or with respect to an Event of Default described in Section 9(B),  automatically
and without notice or demand,  due and payable in full; and (3) Buyer shall have
and may  exercise  all the rights and remedies  under this  Agreement  and under
applicable  law,  including the rights and remedies of a secured party under the
Massachusetts  Uniform  Commercial  Code,  all  the  power  of  attorney  rights
described in Section 5 with respect to all Collateral, and the right to collect,
dispose of, sell, lease, use, and realize upon all Purchased Receivables and all
Collateral in any commercial  reasonable manner. Seller and Buyer agree that any
notice of sale  required to be given to Seller shall be deemed to be  reasonable
if given five (5) days prior to the date on or after which the sale may be held.
In the event  that the  Obligations  are  accelerated  hereunder,  Seller  shall
repurchase all of the Purchased Receivables as set forth in Section 4.4.

11. Accrual of Interest. If any amount owed by Seller hereunder is not paid when
due, including,  without  limitation,  amounts due under Section 3.6, Repurchase
Amounts,  amounts due under Section 12, and any other Obligations,  such amounts
shall  bear  interest  at a per annum  rate  equal to the per annum  rate of the
Finance  Charges until the earlier of (i) payment in good funds or (ii) entry of
a final  judgment  thereof,  at which  time the  principal  amount  of any money
judgment remaining unsatisfied shall accrue interest at the highest rate allowed
by applicable law.

12.  Fees,  Costs and  Expenses;  Indemnification.  The Seller will pay to Buyer
immediately  upon  demand  all  fees,  costs  and  expenses  (including  fees of
attorneys and  professionals and their costs and expenses ) that Buyer incurs or
may from  time to time  impose  in  connection  with any of the  following:  (a)
preparing,  negotiating ,  administering,  and enforcing  this  Agreement or any
other  agreement  executed in connection  herewith,  including  any  amendments,
waivers or consents in connection with any of the foregoing,  (b) any litigation
or dispute (whether  instituted by Buyer, Seller or any other person) in any way
relating to the Purchased  Receivables,  the  Collateral,  this Agreement or any
other agreement executed in connection herewith or therewith,  (d) enforcing any
rights against Seller or any guarantor, or any Account Debtor, (e) protecting or
enforcing  its interest in the  Purchased  Receivables  or the  Collateral,  (f)
collecting  the  Purchased   Receivables  and  the  Obligations,   and  (g)  the
representation  of Buyer in connection  with any  bankruptcy  case or insolvency
proceeding  involving  Seller,  any Purchased  Receivable,  the Collateral,  any
Account Debtor, or any guarantor. Seller shall indemnify and hold Buyer harmless
from and against any and all claims,  actions,  damages,  costs,  expenses,  and
liabilities  of any  nature  whatsoever  arising in  connection  with any of the
foregoing.

13. Severability,  Waiver, and Choice of Law. In the event that any provision of
this  Agreement  is deemed  invalid  by reason of law,  this  Agreement  will be
construed as not  containing  such  provision and the remainder of the Agreement
shall remain in full force and effect.  Buyer retains all of its rights, even if
it makes an Advance after a default. If Buyer waives a default, it may enforce a
later default. Any consent or waiver under, or amendment of, this Agreement must
be in writing.  Nothing  contained  herein,  or any action taken or not taken by
Buyer at any  time,  shall be  construed  at any  time to be  indicative  of any
obligation  or  willingness  on the part of Buyer to amend this  Agreement or to
grant to Seller any waivers or consents.  This Agreement has been transmitted by
Seller to Buyer at Buyer's office in the Wellesley,  Massachusetts  and has been
executed and  accepted by Buyer in the State of  Massachusetts.  This  Agreement
shall be governed by and interpreted in accordance with the internal laws of the
Commonwealth of Massachusetts.


                                      -9-
<PAGE>



14. Account Collection  Services.  Certain Account Debtors may require or prefer
that all of Seller's  receivables be paid to the same address  and/or party,  or
Seller and Buyer may agree that all receivables  with respect to certain Account
Debtors  be paid to one  party.  In such  event  Buyer and Seller may agree that
Buyer  shall  collect  all  receivables  whether  owned by  Seller  or Buyer and
(provided  that there does not then exist an Event of Default or event that with
notice,  lapse or time or otherwise  would  constitute an Event of Default,  and
subject to Buyer's rights in the Collateral) Buyer agrees to remit to Seller the
amount of the  receivables  collections  it receives with respect to receivables
other than  Purchased  Receivables.  It is understood  and agreed by Seller that
this Section does not impose any  affirmative  duty on Buyer to do any act other
than to turn  over  such  amounts.  All such  receivables  and  collections  are
Collateral and in the event of Seller's default  hereunder,  Buyer shall have no
duty to remit  collections of Collateral  and may apply such  collections to the
obligations  hereunder  and Buyer shall have the rights of a secured party under
the Massachusetts Uniform Commercial Code.

15. Notices.  All notices shall be given to Buyer and Seller at the addresses or
faxes set forth on the first page of this  Agreement and shall be deemed to have
been  delivered  and  received:  (a) if mailed,  three (3)  calendar  days after
deposited in the United States mail, first class, postage pre-paid,  (b) one (1)
calendar day after deposit with an overnight mail or messenger  service;  or (c)
on the same date of confirmed  transmission if sent by hand delivery,  telecopy,
telefax or telex.

16. Jury Trial.  SELLER AND BUYER EACH HEREBY (a) WAIVE THEIR RESPECTIVE  RIGHTS
TO A JURY TRIAL ON ANY CLAIM OR ACTION ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT,  ANY  RELATED  AGREEMENTS,  OR ANY OF THE  TRANSACTIONS  CONTEMPLATED
HEREBY OR THEREBY; (b) RECOGNIZE AND AGREE THAT THE FOREGOING WAIVER CONSTITUTES
A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT; AND (c) REPRESENT AND
WARRANT  THAT IT HAS  REVIEWED  THIS  WAIVER,  HAS  DETERMINED  FOR  ITSELF  THE
NECESSITY  TO  REVIEW  THE SAME  WITH  ITS  LEGAL  COUNSEL,  AND  KNOWINGLY  AND
VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.

17. Term and  Termination.  The term of this Agreement shall be for one (1) year
from the date hereof,  and from year to year  thereafter  unless  terminated  in
writing  by Buyer or  Seller.  Seller  and  Buyer  shall  each have the right to
terminate  this  Agreement  at any  time.  Notwithstanding  the  foregoing,  any
termination of this Agreement shall not affect Buyer's security  interest in the
Collateral  and  Buyer's  ownership  of  the  Purchased  Receivables,  and  this
Agreement  shall  continue  to be  effective,  and Buyer's  rights and  remedies
hereunder shall survive such  termination,  until all transactions  entered into
and Obligations incurred hereunder or in connection herewith have been completed
and satisfied in full.

18. Titles and Section Headings. The titles and section headings used herein are
for convenience only and shall not be used in interpreting this Agreement.


                                      -10-
<PAGE>



19. Other  Agreements.  The terms and  provisions  of this  Agreement  shall not
adversely  affect  the rights of Buyer or any other  division  or  affiliate  of
Silicon Valley Bank under any other document, instrument or agreement. The terms
of such other  documents,  instruments and agreements shall remain in full force
and effect  notwithstanding  the execution of this Agreement.  In the event of a
conflict  between any provision of this Agreement and any provision of any other
document,  instrument or agreement  between Seller on the one hand, and Buyer or
any other division or affiliate of Silicon Valley Bank on the other hand,  Buyer
shall  determine in its sole  discretion  which  provision  shall apply.  Seller
acknowledges  specifically that any security  agreements,  liens and/or security
interests currently securing payment of any obligations of Seller owing to Buyer
or any other division or affiliate of Silicon  Valley Bank also secure  Seller's
obligations  under  this  Agreement,  and are valid and  subsisting  and are not
adversely affected by execution of this Agreement.  Seller further  acknowledges
that (a) any collateral  under other  outstanding  security  agreements or other
documents between Seller and Buyer or any other division or affiliate of Silicon
Valley Bank secures the  obligations  of Seller under this  Agreement  and (b) a
default  by Seller  under  this  Agreement  constitutes  a default  under  other
outstanding  agreements  between  Seller  and  Buyer or any  other  division  or
affiliate of Silicon Valley Bank.

         IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as an
instrument  under seal under the laws of the Commonwealth of Massachusetts as of
the day and year above written.

SELLER: FOCUS ENHANCEMENTS, INC.


By: /s/ Thomas L. Massie
Title: President & CEO


BUYER: SILICON VALLEY BANK


By: /s/ Lee Shodiss
Title: Vice President



                                      -11-
<PAGE>




                                   EXHIBIT "A"
                  TO FINANCING STATEMENT AND SECURITY AGREEMENT


This FINANCING  STATEMENT and SECURITY  AGREEMENT  covers the following types or
items of property (in  addition  to, and without  limiting the types of property
set forth on page 1 hereof):

A)       All accounts, receivables, contract rights, chattel paper, instruments,
         documents,  letters of credit,  bankers  acceptances,  drafts,  checks,
         cash, securities, deposit accounts, and general intangibles (including,
         without limitation, all claims, causes of action, guaranties, rights in
         and  claims  under  insurance  policies  (including  rights to  premium
         refunds),  rights  to tax  refunds,  copyrights,  patents,  trademarks,
         rights  in and under  license  agreements,  and all other  intellectual
         property);

B)       All inventory,  including  Seller's  rights to any returned or rejected
         goods,  with  respect to which  Buyer  shall have all the rights of any
         unpaid  seller,  including the rights of replevin,  claim and delivery,
         reclamation, and stoppage in transit;

C)       All monies,  refunds and other amounts due Seller,  including,  without
         limitation, amounts due Seller under this Agreement (including Seller's
         right of offset and recoupment);

D)       All equipment,  machinery,  furniture,  furnishings,  fixtures,  tools,
         supplies and motor vehicles;

E)       All farm products,  crops, timber, minerals and the like (including oil
         and gas);

F)       All accessions to,  substitutions  for, and replacements of, all of the
         foregoing;

G)       All books and records pertaining to all of the foregoing; and

H)       All proceeds of the foregoing,  whether due to voluntary or involuntary
         disposition, including insurance proceeds.






                                      -12-