Document:

Exhibit 10.39

THIRD  ADDENDUM  TO LEASE  DATED JULY 6, 1994,  BY AND  BETWEEN  H-K  ASSOCIATES
(LESSOR) AND FOCUS ENHANCEMENTS, INC. (LESSEE) FOR PREMISES AT 1370 DELL AVENUE,
CAMPBELL, CALIFORNIA 95008.

Whereas Lessee desires to renew its above  referenced  Lease,  Lessor and Lessee
agree to the following changes and additions for a new Lease term.

1.   PREMISES:
     Premises consist of 27,500 square feet of space.

2.   TERM:
     The term of the Lease  shall be for three (3) years,  commencing  August 1,
     2002, and ending July 31, 2005.

3.   RENT:
     Rent shall be based on a NNN Lease as per the following:
     First year - $1.00 per square foot per month.
     Second year - $1.00 per square foot per month.
     Third year - $1.05 per square foot per month.

4.   SECURITY DEPOSIT:
     Lessee  currently  has a Security  Deposit on  account  with  Lessor in the
     amount of  $37,125.00.  $8,250.00  of  Lessee's  Security  Deposit  will be
     applied to the August 2002 rent.  This will bring  Lessee's  total Security
     Deposit to $28,875.00

5.   RIGHT TO RENEW LEASE:
     Lessee  shall  have the right to renew  this  Lease for one 3 year  period.
     Lessee  shall give  Lessor  written  notice of its intent to renew not Less
     than 180 days prior to the  expiration  of the Lease.  Rent for the renewal
     shall be as follows:
          First year - $1.10 NNN per square foot per month.
          Second year - $1.15 NNN per square foot per month.
          Third year - $1.20 NNN per square foot per month.

6.   TENANT IMPROVEMENTS:
     Lessor, at Lessors expense, shall provide the following:
     a) Supply new air-conditioning ducting to MIS room.
     b) Touch up paint  as  agreed  upon  between  Lessor  and  Lessee.  Repaint
     breakroom cabinets and install new gray counter top. Repaint coffee counter
     cabinet and install new gray counter top.
     c) Repair bubbled carpet areas.
     d) Repair tile area at side building entrance.
     e) Replace any stained or damaged ceiling tile.

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Addendum to Lease dated July 6, 1994

7.   NNN EXPENSES:
     Lessee's NNN expenses shall not exceed an average of $0.07 per square foot,
     per month,  annually,  for the first and second  years of said  Lease,  and
     $0.08 per  square  foot,  per month,  annually,  for the third year of said
     Lease.  Upon Lessee's  renewal option,  (see Paragraph 5), the NNN expenses
     shall not exceed an average of $0.09 per square foot,  per month,  annually
     for the first year,  $0.10 per square  foot,  per month,  annually  for the
     second year, and $0.11 per square foot,  per month,  annually for the third
     year of the renewal

8.   SUBLEASE:
     Lessor agrees to assist  Lessee in subleasing  any excess space that Lessee
     no longer  requires.  Any rent proceeds  shall be divided  equally  between
     Lessor and  Lessee.  Any  Sublease  shall not effect the base  rental  rate
     agreed upon between Lessor and Lessee.

ALL other  terms and  conditions  shall be as stated in the Lease  dated July 6,
1994

H-K ASSOCIATES                                   FOCUS ENHANCEMENTS, INC.

BY    /s/ Neil Hamm                              BY    /s/ Gary Williams
      ---------------------------------                -------------------------

Title General Partner                            Title VP of Finance & CFO
      ---------------------------------                -------------------------

Date  June 2, 2002                               Date  May 14, 2002
      ---------------------------------                -------------------------EXHIBIT 10.1

                   AMENDMENT TWENTY SIX TO MARKETING AGREEMENT

This  document is  Amendment  Twenty Six to the  Marketing  Agreement,  made and
entered into  effective  June 1, 1993, and amended by Amendment One to Marketing
Agreement dated September 16, 1993;  Amendment Two to Marketing  Agreement dated
June 4, 1998;  Amendment Three to Marketing  Agreement dated September 25, 1998;
Amendment Four to Marketing Agreement dated October 19, 1998; and Amendment Five
to Marketing  Agreement  dated  December 15,  1998;  Amendment  Six to Marketing
Agreement dated March 25, 1999, Amendment Seven to Marketing Agreement dated May
10, 1999;  Amendment Eight to Marketing Agreement dated June 24, 1999; Amendment
Nine to Marketing  Agreement  dated August 5, 1999,  Amendment  Ten to Marketing
Agreement dated October 1, 1999,  Amendment Eleven to Marketing  Agreement dated
January 31, 2000,  Amendment Twelve to Marketing  Agreement dated March 1, 2000,
Amendment  Thirteen  to  Marketing  Agreement  dated April 19,  2000,  Amendment
Fourteen  to  Marketing  Agreement  dated July 31,  2000,  Amendment  Fifteen to
Marketing  Agreement  dated September 25, 2000,  Amendment  Sixteen to Marketing
Agreement dated October 31, 2000,  Amendment  Seventeen dated November 29, 2000,
Amendment  Eighteen to Marketing  Agreement  dated  January 24, 2001,  Amendment
Nineteen to  Marketing  Agreement  dated  March 14,  2001,  Amendment  Twenty to
Marketing  Agreement  dated  May 4,  2001,  Amendment  Twenty-One  to  Marketing
Agreement dated June 28, 2001, Amendment Twenty-Two to Marketing Agreement dated
September 4, 2001,  Amendment  Twenty-Three to Marketing Agreement dated October
11, 2001, Amendment  Twenty-Four to Marketing Agreement dated November 30, 2001;
and  Amendment  Twenty-Five  to  Marketing  Agreement  dated  March 1, 2002 (the
"Agreement"),  by and between American  National  Insurance  Company  ("American
National"),  a  Texas  corporation,   and  Legacy  Marketing  Group  ("LMG"),  a
California corporation.

In  consideration  of mutual covenants  contained  herein,  the parties agree as
follows:

1.       Section 3.1 of the Agreement is hereby deleted in its entirety, and the
         following new Section 3.1 shall be substituted therefor:

         "3.1 Subject to  termination as  hereinafter  provided,  this Agreement
         shall  remain  in force and  effect  until  the  close of  business  on
         September 30, 2002, the term of this  Agreement.  This Agreement may be
         renewed by mutual agreement for successive terms of one (1) year unless
         terminated  by  either  party by prior  written  notice to the other at
         least one hundred eighty (180) days prior to termination."

Except as specifically amended hereby, all terms and provisions of the Marketing
Agreement shall remain in full force and effect.

IN WITNESS HEREOF, the parties hereto have executed this Agreement.

LEGACY MARKETING GROUP                      AMERICAN NATIONAL INSURANCE COMPANY

By: /s/ R. Preston Pitts                    By: /s/ Kelly M. Collier

Title: President                            Title: Vice President

Witness: /s/ Anne Sedleniek                 Witness: /s/ Renee Garland

Date: May 30, 2002                          Date: May 31, 2002EXHIBIT 10.2

             AMENDMENT TWENTY-FIVE TO INSURANCE PROCESSING AGREEMENT

This document is Amendment  Twenty-Four  to the Insurance  Processing  Agreement
made and entered into  effective  June 1, 1993,  and amended by Amendment One to
Insurance  Processing  Agreement dated June 4, 1998;  Amendment Two to Insurance
Processing  Agreement  dated  September 25, 1998;  Amendment  Three to Insurance
Processing  Agreement  dated  October  19,  1998;  Amendment  Four to  Insurance
Processing  Agreement  dated  December  15,  1998;  Amendment  Five to Insurance
Processing Agreement dated March 25, 1999; Amendment Six to Insurance Processing
Agreement dated May 10, 1999;  Amendment Seven to Insurance Processing Agreement
dated June 24, 1999;  Amendment  Eight to Insurance  Processing  Agreement dated
August 5, 1999;  Amendment Nine to Insurance  Processing Agreement dated October
1, 1999; Amendment Ten to Insurance Processing Agreement dated January 31, 2000;
Amendment  Eleven  to  Insurance  Processing  Agreement  dated  March  1,  2000;
Amendment  Twelve to  Insurance  Processing  Agreement  dated  April  19,  2000;
Amendment  Thirteen  to  Insurance  Processing  Agreement  dated July 31,  2000;
Amendment Fourteen to Insurance  Processing  Agreement dated September 25, 2000;
Amendment  Fifteen to Insurance  Processing  Agreement  dated  October 31, 2000;
Amendment  Sixteen to Insurance  Processing  Agreement  dated November 29, 2000;
Amendment  Seventeen to Insurance  Processing  Agreement dated January 24, 2001;
Amendment  Eighteen to  Insurance  Processing  Agreement  dated March 14,  2001;
Amendment  Nineteen  to  Insurance  Processing  Agreement  dated  May  4,  2001;
Amendment  Twenty  to  Insurance  Processing  Agreement  dated  June  28,  2001;
Amendment  Twenty-One to Insurance Processing Agreement dated September 4, 2001;
Amendment  Twenty-Two to Insurance  Processing Agreement dated October 11, 2001;
Amendment  Twenty-Three  to Insurance  Processing  Agreement  dated November 30,
2001; and Amendment Twenty-Four to Insurance Processing Agreement dated March 1,
2002 (the  "Agreement"),  by and between  American  National  Insurance  Company
("American  National"),  a Texas  corporation,  and Legacy Insurance  Processing
Group ("LMG"), a California corporation.

In  consideration  of mutual covenants  contained  herein,  the parties agree as
follows:

    1.   Section 6.1 of the Agreement is hereby deleted in its entirety, and the
         following new Section 6.1 shall be substituted therefor:

    "Subject to termination as hereinafter provided, this Agreement shall remain
    in force and effect until the close of business on September  30, 2002,  the
    term of this  Agreement.  This Agreement may be renewed by mutual  agreement
    for additional  successive terms of one (1) year unless terminated by either
    party by prior written notice to the other at least one hundred eighty (180)
    days prior to termination."

Except as specifically amended hereby, all terms and provisions of the Insurance
Processing Agreement shall remain in full force and effect.

IN WITNESS HEREOF, the parties hereto have executed this Agreement.

LEGACY MARKETING GROUP                      AMERICAN NATIONAL INSURANCE COMPANY

By: /s/ R. Preston Pitts                    By: /s/ Kelly M. Collier

Title: President                            Title: Vice President

Witness: /s/ Anne Sedleniek                 Witness: /s/ Renee Garland

Date: May 30, 2002                          Date: May 31, 2002

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