Exhibit 10.2


FOCUS
ENHANCEMENTS, INC.


SELLING AGENT
AGREEMENT


Dated as of September 24, 2007


First Montauk Securities Corp.

Parkway 109 Office Center

328 Newman Springs Road

Red Bank, New Jersey 07701


Re: Proposed Placement of
Shelf Securities


Ladies and Gentlemen:


Focus Enhancements, Inc., a Delaware corporation (the “Company”)
proposes to offer for sale (the “Offering”) up to $3,400,000 in gross proceeds
of its securities (“Securities”) in a “shelf takedown” of securities registered
for sale under the Securities Act of 1933, as amended (the “Act”) on
Registration Statement on Form S-3 (SEC File No. 333-139224), including a
prospectus which was declared effective by the Securities and Exchange
Commission (“SEC”) on December 20, 2006 (including the base prospectus included
therein, the “Registration Statement”).   This letter agreement shall confirm our
agreement concerning First Montauk Securities Corp. acting as selling or
placement agent (the “Selling Agent” or “FMSC”) in connection with the sale of
the Securities.


1.                                       Appointment
of Selling Agent.


On the basis of the representations and warranties
contained herein, and subject to the terms and conditions set forth herein, the
Company hereby appoints First Montauk Securities Corp. as a selling
agent/placement agent for a period beginning on the date hereof and terminating
on September 30, 2007 (unless terminated sooner pursuant to the terms hereof)
and grants to FMSC the right to offer, as its agent, the Securities pursuant to
the terms of this Agreement.  On the
basis of such representations and warranties, and subject to such conditions,
FMSC hereby accepts such appointment and agree to use its reasonable best
efforts to secure subscribers to purchase subscriptions for the
Securities.  The Company understands that
the Selling Agent is being retained to obtain subscriptions on a “best efforts”
basis and has not guaranteed the sale of any Securities and is not purchasing
the Securities for its account.


2.                                       Terms
of the Offering.


(a)                                  The
Offering is being made on a “best efforts” basis with no minimum offering
amount of subscriptions for the Securities. 
In the event a subscription is not accepted by the Company or FMSC, such
rejected subscription funds will be returned to the subscriber without interest
or deduction.


(b)                                 The
Company has prepared a Securities Purchase Agreement and Form of Warrant to be
delivered to all prospective investors. 
The Securities Purchase Agreement and Form of Warrant, including all
supplements, exhibits and appendices thereto and other documents delivered
therewith, are referred to herein as the “Documents” and shall include any
supplements or amendments 













in accordance with this Agreement.  No later than two business days after sale of
the Securities, the company shall prepare and file with the SEC a prospectus
supplement (“Prospectus Supplement”) to the Registration Statement describing
the amount and term of the Securities, the retention of the Selling Agent and
such other matters as  the Company and
its counsel shall deem necessary or desirable in order to comply with this Agreement,
the Act and the regulations promulgated thereunder.  The Offering shall commence on the date
hereof, and shall expire at 3:00 p.m., New York time, on September 30, 2007.  Such period, as same may be so extended,
shall hereinafter be referred to as the “Offering Period.”


(c)                                  Each
prospective investor (“Subscribers”) who desires to purchase Securities shall
deliver to the Selling Agent the Securities Purchase Agreement and other
Documents required to be executed by the investor and immediately available
funds in the amount necessary to purchase the amount of Securities such
Prospective Investor desires to purchase. 
The Selling Agent shall not have any obligation to independently verify
the accuracy or completeness of any information contained in any Documents or
the authenticity, sufficiency, or validity of any check delivered by any
Prospective Investor in payment for Securities. Purchasers in the Offering
shall be “accredited investors” as determined in accordance with SEC Regulation
Section D 501.


3.                                       Closing/Release
of Funds.


The closing (“Closing”) shall be held at such time as
the conditions as provided in the Securities Purchase Agreement have been
satisfied.  References herein to the actual
closing date thereof shall be referred to as a “Closing Date.” In addition, the
following conditions shall have been satisfied:


(a)                                  the
Registration Statement shall be effective and not subject to any stop order
preventing or suspending the use of the Registration Statement, of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such purpose,
or of any request by the SEC for the amending or supplementing of the
Registration Statement; and


(b)                                 the
Securities shall have been registered for sale or exempt from registration,
under applicable state securities laws and regulations.


4.                                       Representations
and Warranties of the Selling Agent.


The Selling Agent represents and warrants to the
Company as follows:


(a)                                  The
Selling Agent is duly incorporated and validly existing and in good standing
under the laws of its state of incorporation.


(b)                                 The
Selling Agent is, and at the time of each Closing will be, a member in good
standing of the NASD.


(c)                                  Offers
and sales of Securities by the Selling Agent will be made only in accordance
with this Placement Agreement and in compliance with the provisions of the Act.


(d)                                 The
Selling Agent will furnish to each investor a copy of the Documents prior to
accepting any subscription for the Securities.


5.                                       Compensation
and Expenses.


(a)                                  The
Selling Agent shall be entitled, on the Closing Date, as compensation for its
services as Selling Agent under this Agreement, to selling Commissions payable
in cash equal to 8% of the aggregate gross principal amount of the Securities sold
in the Offering. Payment shall be made to FMSC simultaneously with the Closing
under the Securities Purchase Agreement.



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(b)                                 The
Company shall pay all filing fees payable to FINRA (formerly the NASD) in
connection with any filings which may be required by FINRA for the
participation by the Selling Agent in the Offering under FINRA Rule 2710.


(c)                                  In
addition, the Company shall also pay the legal expenses of counsel to FMSC not
to exceed $15,000, payable on the Closing Date.


6.                                       Representations
and Warranties of the Company.


(a)                                  The
Company represents and warrants to, and agrees with, the Selling Agent that as
of the Closing Date:


(i)                                     No
Documents or information provided by the Company to the Subscribers, including,
without limitation the SEC Reports (as defined in the Purchase Agreement),
shall 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 circumstances made therein not misleading.


(ii)                                  The
Company is, and at all times during the period from the date hereof to and
including the Closing Date will be, a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware, with
full corporate power and authority, and has obtained all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits and
declarations of and from, and has made filings with, all federal, state and
local authorities, to own, lease, license, and use its properties and assets
and to conduct its business as presently conducted and/or in any such case
where the failure to have any of the foregoing would not have a material
adverse effect on the Company’s presently conducted business.  As of the date hereof, the Company is, and at
all times during the period from the date hereof to and including the Closing
Date, duly qualified to do business and is in good standing in every
jurisdiction in which its ownership, leasing, licensing, or use of property and
assets or the conduct of its business makes such qualification necessary except
where the failure to be so qualified would not have a material adverse effect
on the Company’s business.


(iii)                               As
of the date hereof, except as disclosed in the Documents or the  or the SEC Reports, there is no, and as of
the Closing Date there shall not be any, litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation pending
or to the Company’s knowledge threatened, with respect to the Company, or its
respective operations, businesses, properties, or assets, except as described
in the Securities Purchase Agreement, the SEC Reports or which individually or
in the aggregate do not now have and will not in the future have a material
adverse effect upon the operations, business, properties, or assets of the
Company.


(iv)                              The
Company is not in violation or breach of, or in default with respect to, any
material term of its Certificate of Incorporation or By-Laws, as in effect as
the date hereof and as of the Closing Date.


(v)                                 The
Company has all requisite corporate power and authority to execute, deliver,
and perform this Agreement and to consummate the transactions contemplated
hereby.  All necessary corporate
proceedings of the Company have been duly taken to authorize the execution, 



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delivery, and performance by the Company of
this Agreement and (subject to the Required Approvals (as defined in the Securities
Purchase Agreement), the Securities Purchase Agreement and the consummation of
the transactions contemplated hereby and thereby.


(vi)                              The
Registration Statement was declared effective by the SEC on December 20,
2006.  The Prospectus Supplement shall
have been filed with the Commission pursuant to Rule 424(b) under the
Securities Act within the applicable time period prescribed for such filing. The
Company meets the requirements for the use of Form S-3 under the Securities Act
for the primary issuance of securities.  The
Registration Statement conforms, and the Prospectus Supplement and any further
amendments or supplements to the Registration Statement will, when they become
effective or are filed with the Commission, as the case may be, conform in all
respects to the requirements of the  Act
and the rules and regulations thereunder and do not and will not, as of the
applicable effective date (as to the Registration Statement and any amendment
thereto) and as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) 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 not misleading. 
There is no stop order or other or of any order preventing or suspending
the use of the Registration Statement, of the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, of the initiation
or threatening of any proceeding for any such purpose, or of any request by the
SEC for the amending or supplementing of the Registration Statement.


(vii)                           The
Company’s Common Stock (including any shares underlying convertible Securities)
shall be eligible for inclusion on the Nasdaq Capital Market and listed and
admitted and authorized for trading on the Nasdaq Capital Market.


(viii)                        Notwithstanding
Section 5.7 of the Securities Purchase Agreement, the Selling Agent shall be
entitled to rely upon, and receive the full benefit of, as if a party thereto,
the representations and warranties made by the Company to the Prospective
Investors in the Securities Purchase Agreement.


7.                                       Covenants
of the Company.


The Company covenants that it will:


(a)                                  Deliver
without charge to the Selling Agent such number of copies of the Documents and
any supplement or amendment thereto as may reasonably be requested by the
Selling Agent.


(b)                                 Notify
you promptly of rejection of any subscription. 
The Company shall not (i) accept subscriptions from, or make sales
of Securities to, any Subscribers who are not, to the Company’s knowledge,
accredited investors, or (ii) unreasonably reject any subscription for
Securities.


(c)                                  The
Company shall cause, at its cost and expense, all “blue sky” filings related to
the Offering and required by applicable law to be made in due and proper form and
substance and in a timely manner as required under the laws of the states in
which Securities are sold (“Blue Sky Filings”). 
The Company shall deliver true and correct copies of all Blue Sky Filings
to the Selling Agent within 15 days of the final closing date.



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(d)                                 File
the Prospectus Supplement with the SEC pursuant to Rule 424(b) under the
Securities Act within the applicable time period prescribed for such filing.


(e)                                  Assist
the Selling Agent with providing any information to, or documents required by,
FINRA pursuant to FINRA Rule 2710 and make any changes or modifications or file
with the SEC a new prospectus supplement if so requested by FINRA.


(f)                                    The Company will comply with all the undertakings
contained in the Registration Statement.


(g)                                 The
Company will not makes any offer relating to the offered Securities that would
constitute an “Issuer Free Writing Prospectus” (within the meaning of the rules
and regulations of the SEC) without the prior written consent of the Selling
Agent.


(h)                                 The
Company will not at any time, directly or indirectly, take any action intended,
or which might reasonably be expected, to cause or result in, or which will
constitute, stabilization of the price of securities to facilitate the sale or
resale of any of the Offered Shares.


8.                                       Conditions
of Closing.


The obligations of the Selling Agent pursuant to this
Agreement shall be subject, in its discretion, to the continuing accuracy of
the representations and warranties of the Company contained herein and in each
certificate and document contemplated under this Agreement to be delivered to
the Selling Agent, as of the date hereof and as of the Closing Date, with
respect to the performance by the Company of its obligations hereunder, and to
the following conditions:


(a)                                  At
the Closing, the Selling Agent, the investors and the Company shall have
executed documents in form and substance reasonably acceptable to them.


(b)                                 All
proceedings taken in connection with the issuance, sale, and delivery of the
Securities shall be satisfactory in form and substance to FMSC, the Prospective
Investors and the Company.


(c)                                  At
the Closing Date, there shall be furnished to the Selling Agent a certificate,
dated the date of its delivery, signed by either of the Chief Executive Officer
or the Chief Financial Officer of the Company, in form and substance
satisfactory to the Selling Agent to the effect that each signer has carefully
examined the Registration Statement and 
the Prospectus Supplement, and that to each of such person’s knowledge:


(A)          As
of the date of such certificate, (x) the Registration Statement does not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading and (y) the Prospectus Supplement does not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading and (B)
no event has occurred as a result of which it is necessary to amend or
supplement the Prospectus Supplement in order to make the statements therein
not untrue or misleading in any material respect.


(B)           Each
of the representations and warranties of the Company contained in this
Agreement were, when originally made, and are, at the time such certificate is
delivered, true and correct in all material respects.


(C)           Each
of the covenants required herein to be performed by the Company on or prior to
the date of such certificate has been duly, timely and fully performed and each
condition herein required to be complied with by the Company on or prior to the
delivery of such certificate has been duly, timely and fully complied with.


(D)          No
stop order or other order suspending the effectiveness of the Registration
Statement, or any part thereof, or the qualification or registration of the
Offered Securities under the securities or blue sky laws of any jurisdiction,
has been issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission.



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(E)           Any
request for additional information on the part of the staff of any securities
or other governmental authority (including, without limitation, the SEC) shall
have been complied with to the satisfaction of the staff of the SEC or such
authorities.


(d)           FMSC
shall have received from legal counsel to the Company an opinion addressed to
it, dated as of the Closing Date and in form and substance reasonably
satisfactory to FMSC, to the effect that:


1.             The
Company has been duly incorporated, and is validly existing as a corporation in
good standing under the laws of the State of Delaware;


2.             The
Company has the corporate power and authority to enter into and perform its
obligations under the Selling Agent Agreement, Securities Purchase Agreement
and Warrant;


3.             Each
of the Securities have been duly authorized and, when issued and delivered by
the Company pursuant to the Securities Purchase Agreement against due payment
of the consideration set forth therein, will be validly issued, fully paid and
nonassessable, and that the shares issuable upon exercise of the Warrants (the
“Warrant Shares”) have been duly authorized and reserved for issuance pursuant
to the terms of the Warrants, and the Warrant Shares, when issued and delivered
upon valid exercise of the Warrants in accordance with the terms thereof,
including payment of the exercise price thereto, will be validly issued, fully
paid and nonassessable;


4.             To
the knowledge of such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued under the Act and no proceedings for
that purpose have been instituted, are pending or are threatened by the SEC;
and


5.             The
Registration Statement and Prospectus, and each amendment or supplement to the
Registration Statement and Prospectus, as the case may be, as of their
respective effective or issue dates, or as of the dates they were filed with
the SEC, or for any as have been amended then as of the dates of such
amendments, as the case may be (other than the financial statements, other
financial information and supporting schedules included therein or omitted
therefrom, as to which we express no opinion), complied as to form in all
material respects with the applicable requirements of the Act and the rules and
regulations promulgated by the SEC thereunder.


9.                                       Termination.


This Agreement may be terminated by the Selling Agent
(i) at anytime in the event the Selling Agent has determined, in good
faith, that the Documents fail to contain a material fact required to be stated
therein or necessary to make the statements therein not misleading or
(ii) upon three days written notice. 
The Company may not terminate this Agreement in the absence of a
material breach of any covenant, representation or warranty contained in this
Agreement made by the Selling Agent.


 



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10.                                 Indemnification
and Contribution.


(a)                                  The
Company agrees to indemnify and hold harmless the Selling Agent, its officers,
directors, partners, employees, agents, and counsel, and each person, if any,
who controls the Selling Agent within the meaning of Section 15 of the Act
or Section 20(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), against any and all loss, liability, claim, damage, and
expense whatsoever (which shall include, for all purposes of this
Section 10, but not be limited to, attorneys’ fees and any and all expense
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when incurred
arising out of, based upon, or in connection with (i) any untrue statement
or alleged untrue statement of a material fact contained in the Documents, or
any omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company as stated in Section 10(b) with
respect to the Selling Agent expressly for inclusion in the Documents or
(ii) any breach of any representation, warranty, covenant, or agreement of
the Company contained in this Agreement. 
The foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including liabilities arising under
this Agreement.


If any action is brought against the Selling Agent or
any of its officers, directors, partners, employees, agent, or counsel, or any
controlling persons of the Selling Agent (an “indemnified party”), in respect
of which indemnify may be sought against the Company pursuant to the foregoing
paragraph, such indemnified party or parties shall promptly notify the Company
(the “indemnifying party”) in writing of the institution of such action (but
the failure so to notify shall not relieve the indemnifying party from any
liability it may have other than pursuant to this Section 10(a)) and the
indemnifying party shall promptly assume the defense of such action, including
the employment of counsel (reasonably satisfactory to such indemnified party or
parties) and payment of expenses.  Such
indemnified party shall have the right to employ its own counsel in any such
case, but the fees and expense of such counsel shall be at the expense of such
indemnified party unless the employment of such counsel shall have been authorized
in writing by the indemnifying party in connection with the defense of such
action or the indemnifying party shall not have promptly employed counsel
satisfactory to such indemnified party or parties to have charge of the defense
of such action or such indemnified party or parties shall have reasonably
concluded that there may be one or more legal defenses available to it or them
or to other indemnified parties which are different from or additional to those
available to one or more of the indemnifying parties, in any of which events
such reasonable fees and expenses of one such counsel shall be borne by the
indemnifying party and the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified party or parties.  Anything in this paragraph to the contrary
notwithstanding, the indemnifying party shall not be liable for any settlement
of any such claim or action effected without its written consent.  The Company agrees to promptly notify the
Selling Agent of the commencement of any litigation or proceedings against the
Company or any of its officers or directors in connection with the sale of the
Securities or the Documents.


(b)                                 The
Selling Agent agrees to indemnify and hold harmless the Company, its officers,
directors, employees, agents, and counsel, and each other person, if any, who
controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Selling Agent in Section 10(a), with
respect to any and all loss, liability, claim, damage, and expense whatsoever
(which shall include, for all purposes of this Section 10, but not be
limited to, attorneys’ fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation) as and when incurred arising out of, based upon, or
in connection with (i) statements or omissions, if any, made in the Documents
in reliance upon and in conformity with written information furnished to the
Company with respect to the Selling Agent expressly for inclusion in the
Documents, and (ii) or any breach of any representation, warranty, covenant or
agreement of the Selling Agent contained in this Agreement; provided, however,
except in the event of fraud ( as determined by a court of appropriate
jurisdiction) the Selling agent shall have no liability in excess of two times
the commissions received by it under Section 5(a) hereunder).  If any action shall be brought against the
Company or any other person so indemnified based on the Documents and in
respect of which indemnity may be sought against the Selling Agent pursuant to
this Section, the Selling Agent shall have the rights and duties given to the
indemnifying party, and the Company and each other person so indemnified shall
have the rights and duties given to the indemnified parties, by the provisions
of Section 10(a) hereof.



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(c)                                  To
provide for just and equitable contribution, if 
(i) an indemnified party makes a claim for indemnification pursuant
to Section 10(a) or 10(b) hereof but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying
party seeks contribution under the Act, the Exchange Act, or otherwise, then
the Company (including for this purpose any contribution made by or on behalf
of any officer, director, employee, agent, or counsel of the Company, or any
controlling person of the Company), on the one hand, and the Selling Agent
(including for this purpose any contribution by or on behalf of an indemnified
party), on the other hand, shall contribute to the losses, liabilities, claims,
damages, and expenses whatsoever to which any of them may be subject, in such
proportions as are appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Selling Agent, on the other hand; provided,
however, that if applicable law does not permit such allocation, then other
relevant equitable considerations such as the relative fault of the Company and
the Selling Agent in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses shall also be considered.  The relative benefits received by the
Company, on the one hand, and the Selling Agent, on the other hand, shall be
deemed to be in the same proportion as (x) the total proceeds from the Offering
(net of compensation payable to the Placement Agent pursuant to
Section 5(a) hereof but before deducting expenses) received by the
Company, and (y) the compensation received by the Selling Agent pursuant to
Section 5(a) hereof.


The relative fault, in the case of an untrue
statement, alleged untrue statement, omission, or alleged omission, shall be
determined by, among other things, whether such statement, alleged statement,
omission, or alleged omission relates to information supplied by the Company or
by the Selling Agent, and the parties’ relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged omission. 
The Company and the Selling Agent agree that it would be unjust and
inequitable if the respective obligations of the Company and the Selling Agent
for contribution were determined by pro rata or per capita allocation of the aggregate
losses, liabilities, claims, damages, and expenses or by any other method of
allocation that does not reflect the equitable considerations referred to in
this Section 10(c).  In no case
shall the Selling Agent by responsible for a portion of the contribution
obligation in excess of the compensation received by it pursuant to
Section 5(a) hereof.  No person
guilty of a fraudulent misrepresentation shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation.  For purposes of this Section 10(c), each
person, if any, who controls the Selling Agent within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and each
officer, director, partners, employee, agent, and counsel of the Selling Agent,
shall have the same rights to contribution as the Selling Agent, and each
person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act and each officer,
director, employee, agent, and counsel of the Company, shall have the same
rights to contribution as the Company, subject in each case to the provisions
of this Section 10(c).  Anything in
this Section 10(c) to the contrary notwithstanding, no party shall be
liable for contribution with respect to the settlement of any claim or action
effected without its written consent.



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11.                                 Non-Solicitation.


The Company shall not solicit any additional financing
(whether debt or equity or any combination thereof) from (i) any Source (as
defined below) that purchased Securities in connection with this Offering for a
period of 12 months from the termination of this Agreement and (ii) from any
Source that did not purchase Securities in connection with this Offering for a
period of six months from the termination of this Agreement (collectively, the “Non-Solicitation
Period”). If the Company were to receive any additional capital or other funds
either (i) within 12 months from the termination of this Agreement from any
Source that purchased Securities or (ii) within six months from the termination
of this Agreement from any Source that did not purchase Securities, the Company
will be deemed to have automatically retained the Selling Agent as selling
agent for such new financing and shall pay to FMSC a cash fee of 8% of the
amount raised from such Sources at the closing of any such financing. During
the Non-Solicitation Period, the Company will not circumvent FMSC and will not
attempt to deal directly with such Source(s) without prior written consent of
an officer of FMSC.  As used in this
Agreement, the term “Source(s)” shall be broadly interpreted to include,
without limitation, any corporation, company, institution, partnership,
individual and all of the Source(s)’ affiliates that are directly contacted by FMSC
for the purpose of investing in this Offering.  A list of all Source(s) introduced by FMSC is
attached hereto as Schedule 1, and a list of Sources that purchased Securities
persuant to this Offering is attached hereto as Schedule 2.


12.                                 Representations
and Agreements to Survive Delivery.


All representations, warranties, covenants, and
agreements contained in this Agreement shall be deemed to be representations,
warranties, covenants, and agreements at the Closing Date and, such
representations and warranties shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Selling
Agent or any indemnified person, or by or on behalf of the Company or any
person or entity which is entitled to be indemnified under Section 10(b),
and shall survive for a period of five (5) years from the date hereof.  In addition, notwithstanding the foregoing
and any election hereunder or any termination of this Agreement, and whether or
not the terms of this Agreement are otherwise carried out, the provisions of
Section 10 shall survive for a period of seven (7) years from the date hereof.


13.                                 Prior
Agreement and FMSC Warrants.


The Company and FMSC confirm and agree that the
Agreement dated as of September 13, 2007 shall be of no further force and
effect and is terminated in full and that all other prior agreements between
FMSC and the Company, shall be of no further force or effect and are terminated
in full except (i) all rights to indemnification shall continue in full force in
accordance with their respective terms and effect and (ii) all warrants
previously issued to FMSC (or its employees and affiliated persons) in
connection with prior transactions shall remain in full force and effect in
accordance with their respective terms.


14.                                 Notices.


All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and shall be either
(i) mailed by first class mail in which case delivery shall be deemed to
be made three days following deposit in the United States mail; or
(ii) sent by overnight courier service 



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in which case delivery
shall be deemed to be made upon delivery, to: 
First Montauk Securities Corp., Parkway 109 Office Center, 328 Newman
Springs Road, Red Bank, New Jersey 07701, Attention:  Ernest Pellegrino, with a copy to Ellenoff,
Grossman & Schole LLP, 370 Lexington Avenue, New York, New York 10017,
Attention:  Brian C. Daughney, Esq.;  Focus Enhancements, Inc., 1370 Dell Avenue, Campbell,
California 95008 Attn:  Gary Williams
with a copy to Manatt, Phelps & Phillips, LLP, 1001 Page Mill Road, Bldg.
2, Palo Alto, California  94304-1006
Attn:  Jerrold F. Petruzzelli, Esq.


15.                                 Parties.


This Agreement shall inure solely to the benefit of,
and shall be binding upon, the Selling Agent and the Company and the persons
and entities referred to in Section 10 who are entitled to indemnification
or contribution, and their respective successors, legal representatives, and
assigns (which shall not include any purchaser, as such, of Securities), and no
other person shall have or be construed to have any legal or equitable right
remedy, or claim under or in respect of or by virtue of this Agreement or any
provision herein contained.


16.                                 Construction;
Governing Law; Submission to Jurisdiction.


This Agreement shall be
construed in accordance with the laws of the State of New York, without giving
effect to conflict of laws. Any legal suit, action or proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby shall be
instituted exclusively in New York Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York.  The parties hereto hereby: (i) waives any
objection which they may now have or hereafter have to the venue of any such
suit, action or proceeding, and (ii) irrevocably consents to the jurisdiction
of the New York Supreme Court, County of New York, and the United States
District Court for the Southern District of New York in any such suit, action
or proceeding.  The parties further agree
to accept and acknowledge service of any and all process which may be served in
any such suit, action or proceeding in the New York Supreme Court, County of
New York, or in the United States District Court for the Southern District of
New York and agree that service of process upon a party mailed by certified
mail to such party’s address shall be deemed in every respect effective service
of process upon such party in any such suit, action or proceeding.


17.                                 
No Fiduciary Relationship.


The Company acknowledges
and agrees that: (i) the offering and sale of the Securities pursuant to this
Agreement is an arm’s-length commercial transaction between the Company and the
Selling Agent; (ii) in connection therewith and with the process leading to the
Offering, the Selling Agent is acting solely as a principal and not the agent
or fiduciary of the Company; (iii) the Selling Agent has not assumed an
advisory or fiduciary responsibility in favor of the Company with respect to
the Offering contemplated hereby or the process leading thereto, including any
negotiation related to the pricing of the Securities; and (iv) the Company has
consulted its own legal and financial advisors to the extent it has deemed
appropriate in connection with this Agreement and the Offering.


[signature page
appears next]



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18.                                 Counterparts.


This Agreement may be executed in counterparts, each
of which shall constitute an original and all of which, when taken together,
shall constitute one agreement.  This
Agreement may be executed by facsimile signature and delivered by facsimile
transmission.


If the foregoing correctly sets forth the
understanding between us, please so indicate in the space provided below for
that purpose, whereupon this Agreement shall constitute a binding agreement
between us.


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  FOCUS
  ENHANCEMENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/: Gary Williams

  	
   

  
	
   

  	
  Name: Gary Williams

  
	
   

  	
  Title: CFO

  
	
   

  	
   

  
	
  Accepted as of
  the date

  	
   

  
	
  first above
  written:

  	
   

  
	
   

  	
   

  
	
  FIRST MONTAUK
  SECURITIES CORP.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/: Victor K.
  Kurylak

  	
   

  	
   

  
	
  Name:

  	
  Victor K.
  Kurylak

  	
   

  	
   

  
	
  Title:

  	
  President &
  CEO

  	
   

  	
   

  
								



 



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