Document:

EX - 10.4

THIS LEASE, made this 24th day of April, 2001, between

Parties         VANCE MINNESOTA STREET, L.P.

(hereinafter called "Lessor"), first party, and

                OTHNET

(hereinafter called "Tenant"), second party,

WITNESSETH, That:

Description
of Premises

1.      Lessor, in  consideration of the rents to be paid
        and the terms, covenants and conditions hereof to
        be
        performed and observed by Tenant, leases to Tenant
        the premises known and described as Suite North
        100 consisting of approximately 3,128 rentable
        square feet as outlined on the attached Exhibit
        "A" on the first   floor in the FIRST NATIONAL
        BANK BUILDING, (hereinafter referred to as "the
        building"), in Saint Paul, Minnesota, (the
        premises aforedescribed being hereinafter referred
        to as "the premises"), to be used by Tenant for
        the purpose of general office and for no other
        purpose.

Term

2.      Tenant takes from Lessor the premises upon the
        rents, terms, covenants and conditions herein
        contained, TO HAVE AND TO HOLD the same for the
        term of five (5) years and zero (0) months,
        commencing on the first day of August, 2001, and
        ending on the last day of July, 2006 unless sooner
        terminated as herein provided.

Rent

3.      Tenant covenants and agrees to pay Lessor the
        yearly rental during said term according to the
        schedule set forth in paragraph 26 of this Lease
        document in equal monthly installments, in
        advance, on the first day of each calendar month.
        Tenant agrees to pay a prorated monthly
        installment at the current rental rate for any
        fraction of a month if the term shall begin on any
        day except the first day or shall be terminated on
        any day except the last day of any month.  All
        payments shall be made at the office of the Lessor
        in Saint Paul, Minnesota, or at such other place
        as may from time to time be designated by Lessor.

Heat and Air
Conditioning

4.      LESSOR AGREES THAT IT SHALL:
           (a)  Furnish through the equipment presently
           installed within the premises heat and air
           conditioning to provide a temperature and
           humidity condition required in the Lessor's
           judgment for comfortable occupancy of the
           premises under normal business operations,
           daily from 8:00 a.m. to 6:00 p.m., and from
           8:00 a.m. to 1:00 p.m. on Saturdays, Sundays
           and Holidays excepted, based on occupancy by
           not more than one person for any one hundred
           square feet of space.  Whenever heat-
           generating machines or equipment are used in
           the premises by the Tenant, which affect the
           temperature or humidity otherwise maintained
           by the air conditioning system, Lessor
           reserves the right to install supplementary
           air conditioning equipment in the premises,
           and the cost, operation and maintenance
           thereof shall be paid by Tenant to Lessor on
           the monthly rent payment dates at  such rates
           as may be determined by Lessor.

Elevator
Service

          (b) Provide passenger elevator service daily for use
          in common with others as in the Lessor's judgment is
          reasonably necessary for the use and occupancy of the
          premises. Provide  freight elevator service for use
          in common with others, daily from 8:00 a.m. to 4:00
          p.m., Saturdays, Sundays and Holidays excepted.

Janitor
Service

          (c)  Provide janitor service in and about the
          premises reasonably required in Lessor's judgment,
          Saturdays,
          Sundays and Holidays excepted.  Cleaning
          services are as outlined on the attached Exhibit "B."

Normal
Repairs

          (d)     Make all normal repairs to the premises
          arising by reason of wear and tear of normal use and
          occupancy,
          excluding repairs necessitated by the
          negligent or willful act or omission of Tenant, its
          agents, employees
          or visitors, or arising by reason of any breach
          of the terms and conditions of this lease and the
          rules and
          regulations pertaining to the building, and
          excluding,
          also, repairs to any special treatment of walls,
          floors or ceilings
          or to any other special improvements,
          alterations, additions, and fixtures made or
          installed by Tenant or
          at the request of Tenant.

Water
           (e)  Provide water for drinking, lavatory and
           toilet purposes when drawn through fixtures
           installed by Lessor.

Electricity

           (f)  Provide electricity so long as Lessor shall
           distribute electric current in the building,
           in which event Tenant shall obtain all
           electric current for the premises from Lessor
           and shall pay Lessor for such service as
           metered by Lessor at rates not in excess of
           prevailing local public utility rates for
           comparable load, quantity and service.  Upon
           thirty (30) days' notice, Lessor may cease to
           furnish current without responsibility to
           Tenant, except to connect within the thirty
           (30) day period the electrical wiring system
           of the premises with another source of
           current, and Tenant shall pay supplier
           thereafter for such service.  Tenant shall pay
           on the first day of the month for all
           electricity consumed by Tenant the previous
           month, including current consumed during
           janitor service, alterations or repairs in the
           premises.

Venetian
Blinds

           (g)     Provide Venetian or similar type blinds for
           exterior windows.  Tenant, at its own expense, may
           install drapes
           and window covering (and if installed, shall
           maintain them in attractive and safe condition);
           provided, however,
           they are determined by Lessor to be in harmony
           with the exterior and interior appearance of the
           building and
           to create no safety or fire hazard.

Interruption
of Service

5.      Tenant agrees that Lessor does not warrant that
        any of the services referred to in paragraph 4
        hereof will be free from interruption for causes
        beyond the reasonable control of Lessor; and that
        interruption of or failure in such services shall
        not be deemed an eviction or disturbance of
        Tenant's use and possession of the premises, nor
        shall such interruption or failure render the
        Lessor liable for damages to person, property or
        business suffered by Tenant or any other person,
        nor work an abatement of rent or otherwise relieve
        Tenant from performance of the obligations of this
        lease.  If Tenant is unable to carry out its
        normal business for any period of over 24 hours in
        any area greater that 10% of the lease premises,
        Lessor agrees to refund to Tenant a pro rata
        portion of its rent for the period and portion of
        the leased premises rendered unusable by such
        unexcused interruption of service.  Tenant shall
        pay all other rent and do all other things
        required of it under this Lease and shall have no
        claim for consequential damages against Lessor.

Building
Rules and
Regulations

6.       TENANT AGREES THAT IT SHALL:
         (a)  Observe and comply with, in all respects, the
           rules and regulations of the building printed
           hereon, which said rules and regulations are
           hereby made a part of this lease, and to
           observe and comply with such reasonable rules
           and regulations as may be established from
           time to time by Lessor.

Lessor's
Access

         (b) Lessor and its agents shall have the right to
           enter the premises, to examine the same and, at its
           election, to make
           such repairs and alterations as it shall deem
           necessary for the safety, preservation and
           improvement thereof or of any other portion of
           the building, but nothing herein shall be
           construed to require Lessor to make such
           repairs or alterations, and Lessor shall not
           be liable to Tenant or any other person for
           failure or delay in making repairs or for
           damage or injury to person or property or
           Tenant's business caused in or by the making
           thereof or the doing of such work.  Unless
           there is an emergency, Lessor will make an
           effort to provide advance notice.

Maintenance
and Waste

        (c) Keep the premises and all fixtures and
            appliances therein in good order and condition and
            replace all glass
            broken by Tenant with glass of the same
            quality as that broken, and commit no waste on the
            premises.

Electric
Lamps

       (d)     Pay for all electricity, electric lamps,
               starters and ballasts used in the premises.

Surrender Upon
Termination

       (e)  Upon the termination of this lease in any
            manner or for any reason whatsoever, to quit and
            deliver up the
            premises and all keys thereto to Lessor
            peaceably and quietly in as good order and
            condition as the same are
            now in or hereafter may be put in by Lessor or
            Tenant, reasonable use and wear thereof excepted
            and to furnish
            Lessor with the combination to any vault on the
            premises.   Goods and effects not removed by Tenant
            at expiration of occupancy shall be considered
            abandoned and Lessor may dispose of the same as it
            deems
            expedient.

Assignment and
Subletting

        (f)  Not assign this lease or any interest therein,
           nor sublet any part of the premises, or permit
           any person, whether jointly with Tenant or
           otherwise to occupy any part thereof without
           first obtaining, on each occasion, the written
           consent of Lessor, which shall not be
           unreasonably withheld, which consent, however,
           if given, will not release Tenant from
           Tenant's obligations hereunder.  Should Tenant
           make such an assignment or subletting or
           permit any such occupancy without such
           written consent, neither acceptance of rent by
           Lessor thereafter from Tenant or any other
           person, nor failure on the part of Lessor for
           any particular period to take action on
           account of such breach or enforce its rights,
           shall be deemed a waiver of the breach, but
           the same shall be a continuing breach as long
           as such assignment, subtenancy or occupancy
           exists.

Alterations and
Improvements

       (g)  Not make any alterations, additions or
          improvements in or to the premises without the
          written approval of
          Lessor; and all alterations, additions or
          improvements made in or to the premises by or at the
          request of
          Tenant, except removable trade fixtures installed at
          the expense of Tenant, shall be paid for by Tenant
          and be and remain
          the property of Lessor.  Any damage to the
          premises resulting from removal of Tenant's trade
          fixtures shall
          be repaired at the expense of Tenant.

Waste of
Utilities

        (h)  Not allow any waste of water, heat, air-
         conditioning, or other agencies serving the
         premises, nor misuse or
         neglect the fixtures, appliances and
         apparatus pertaining thereto, or the vault doors, and
         promptly notify
         Lessor, in writing, of any accidents to or defects in
         any of the foregoing agencies and the fixtures,
         appliances and
         apparatus pertaining thereto.

Increase
of Hazard

           (I)  Not do or permit to be done upon the premises
           anything which will increase the fire hazard
           or cause the insurance rates on the premises
           and the building to be increased or invalidate
           the insurance policies thereon, nor anything
           that may be dangerous to life, limb or
           property.

Damage and
Nuisance

           (j)     Not overload, damage or deface the premises
           nor permit any objectionable noise or odors to
           escape or be
           emitted therefrom, nor do or permit anything
           to be done upon the premises in any way tending to
           create a
           nuisance or disturb any other tenant, or to
           injure the reputation of the building.

Compliance, cooking or
with Law

          (k)     Comply with all laws, ordinances and
          regulations respecting the use and occupancy of the
          premises and the
          business to be conducted thereon, and not use
          the premises for lodging, sleeping immoral purposes.

           Tenant agrees that Tenant's obligations under
           this paragraph 6 to do or not do a specified
           act shall extend to and include Tenant's
           obligation to see to it that Tenant's agents,
           employees and visitors shall do or not do such
           acts, as the case may be.

Damage or
Destruction
of Premises

7.      In case the premises or any part thereof, or the
        whole or any part of the building of which they
        are a part, shall be destroyed or rendered
        untenantable by fire or other casualty after the
        execution hereof and before expiration of the
        term, then this lease and the said term shall
        terminate at the election of Lessor and upon
        written notice to Tenant from Lessor.  In case of
        such destruction or damage, if the premises shall
        become and remain untenantable for a period of
        ninety-one (91) days, and if Lessor shall not have
        entered into a contract for the substantial
        restoration of the premises, which contract may
        contain the usual allowance of time in case of
        strikes or delays for which allowance is usually
        made in building contracts, then Tenant may, by
        written notice served upon Lessor, terminate this
        lease.  If this lease is not so terminated in case
        of any such destruction or damage to the premises,
        a just proportion of the rent reserved, according
        to the nature and extent of the injuries sustained
        by the premises, shall be abated until the
        premises shall have been put in proper condition
        for use and occupation, except in the event such
        damage resulted from or was contributed to by the
        act, fault or neglect of Tenant, Tenant's
        employees or agents, in which event there shall be
        no abatement of rent.

Taking for
Public Use

8.      Tenant agrees in case the premises or any part
        thereof, or the whole or any part of the building
        of which they are a part, shall be taken by right
        of eminent domain or by other authority of law,
        after the execution hereof and before expiration
        of said term, this lease may, at the election of
        Lessor, be thereby terminated.  All damages
        allowed or awarded for any such taking, either to
        Lessor or to Tenant, shall be and remain the
        property of Lessor, whether the lease be
        terminated or remain in force, and Tenant hereby
        assigns to Lessor all right or claim which Tenant
        may at any time have to any such damages.

Injury to Property
of Tenant or
to Persons

9.      Tenant agrees that all property of any kind that
        may be on the premises or in the building shall be
        at the sole risk of Tenant or those claiming
        through or under Tenant.  Lessor, its officers and
        employees, shall not be liable for any loss of
        property by theft or burglary, nor for any damage
        to person or property in or about the premises or
        the building or to Tenant's business resulting
        from any accident, or from the operation or
        failure of any service, facility or equipment, or
        from water, rain, snow, steam or any other agency
        which come into, leak, issue or flow from any part
        of the premises or the building, or which may be
        caused by Lessor's employees or any tenant or any
        other person, or any other cause whatever, and
        Tenant hereby covenants and agrees to make no
        claim for any such loss or damage at any time, and
        to hold Lessor harmless from and indemnified
        against any such claim.

Lien on Fixtures
and Personal
Property

10.    OMIT

Lease Subordinate
to Mortgages

11.     The rights of Tenant shall be and are subject and
        subordinate at all times to the lien of any
        mortgage or mortgages now or hereafter in force
        against the real estate of which the premises are
        a part, and Tenant shall execute such further
        instruments subordinating this lease to the lien
        of liens of any such mortgage or mortgages as
        shall be requested by Lessor.  Tenant shall
        deliver to Lessor, within ten (10) days after
        written request, any estoppel letter which Lessor
        may reasonably request.

Rights Upon
Tenant's
Default

12.    It is further agreed by Lessor and Tenant that
        this lease is made upon the condition that if
        Tenant shall neglect or fail to pay the rent
        within five (5) days of the due date and to keep,
        observe and perform any of the covenants and
        agreements contained in this lease, which are to
        be kept, observed or performed by Tenant, or if
        the leasehold interest of Tenant shall be taken on
        execution or by other process of law, or if Tenant
        shall petition to be or be declared bankrupt or
        insolvent    according to law, or if any receiver of
        the property of Tenant is appointed, or if any
        assignment shall be made of Tenant's property for
        the benefit of creditors, or if Tenant shall
        vacate the premises or abandon the same during the
        term of this lease, then and in any of said cases
        Lessor, in addition to all other rights and
        remedies available to Lessor by law or by other
        provisions hereof, may immediately or at any time
        thereafter, and without further notice or demand,
        enter into and upon the premises, or any part
        thereof, in the name of the whole, remove all
        persons and property therefrom and take absolute
        possession of the same, without such reentry
        working a forfeiture of the rents to be paid and
        the covenants to be performed by Tenant for the
        full term of this lease, and may, at Lessor's
        election, lease or sublet the premises, or any
        part thereof, on such terms and conditions and for
        such rents and for such time as Lessor may elect,
        and after crediting the rent actually collected by
        Lessor from such reletting on the rentals
        stipulated to be paid under this lease by Tenant,
        from time to time collect from Tenant any balance
        remaining due from time to time on the rent
        reserved under this lease, charging to Tenant such
        costs and expenses as Lessor may sustain in
        restoring and repairing the premises and putting
        the same in rentable condition, the costs of
        renting to another tenant and all reasonable
        attorneys' fees and expenses incurred in enforcing
        any of the terms of this lease.

        Or the Lessor may, at its election and upon
        written notice to Tenant, declare this lease
        forfeited and void, and may thereupon reenter and
        take full and absolute possession of the premises
        as the owner thereof, and free from any right or
        claim of Tenant or any person or persons claiming
        through or under Tenant; and such election, notice
        and reentry, last mentioned, shall be and
        constitute an absolute bar to any right to enter
        by Tenant upon the payment of all arrearages of
        rent and costs after a dispossession.  Tenant
        further agrees that in the case of any such
        forfeiture and cancellation of said lease, Tenant
        will indemnify Lessor against all loss of rents
        and other damage which Lessor may incur by reason
        of such termination, including, but not being
        limited to, costs of restoring and repairing the
        premises and putting the same in rentable
        condition, costs of renting the premises to
        another tenant, loss or diminution of rents and
        other damage which Lessor may incur by reason of
        such termination, and all reasonable attorneys'
        fees and expenses incurred in enforcing any the
        terms of this lease.

No Light or
Air Rights

13.     This lease does not grant any rights to light and
        air over property except public streets and alleys
        adjoining the land on which the building is
        situated.

Premises
Not Ready

14.     If the premises shall not be vacant or ready for
        occupancy on the first day of the term, Lessor
        shall not be liable for damages, but a
        proportionate part of the rent shall be abated
        until the premises are ready for occupancy.

Indemnity Against
Expenses and
Attorneys' Fees

15.   a.   Tenant agrees to pay, and save Lessor harmless
from, any and all costs, damages, expenses and
attorneys' fees resulting
from Tenants failure to perform any of the terms, covenants and
agreements of this lease.

      b.   Except as provided under paragraph 5 hereof,
           Lessor agrees to pay, and save Tenant harmless
           from any and all costs, damages, expenses and
           attorney's fees resulting from Lessor's
           failure to perform any
           of the terms, covenants and agreements of
           this Lease.

Giving of Notice

16.     All bills, statements, notices or communications
        which Lessor may desire or be required to give to
        Tenant shall be deemed sufficiently given or
        rendered if in writing and either delivered to
        Tenant personally or sent by certified mail,
        addressed to Tenant at the building, and the time
        of rendition thereof or the giving of such notice
        or communication shall be deemed to be the time
        when the same is delivered to Tenant as herein
        provided.  Any notice by Tenant to Lessor must be
served by
        registered or certified mail, addressed to Lessor
        at the address where the last previous rental
        hereunder was payable, or in case of subsequent
        change upon notice given, to the latest address
        furnished.

Non-Waiver

17.     Neither acceptance of rent by Lessor, with or
        without knowledge of breach, nor failure of Lessor
        to take action on account of any breach hereof or
        to enforce its rights hereunder, shall be deemed a
        waiver of any breach, and absent written notice or
        consent, said breach shall be a continuing one.

Construction
of Lease
Provisions

18.     The word "Tenant", wherever used in this lease,
        shall be construed to mean "Tenants".  In all
        cases where there is more than one Tenant and more
        than one person, partnership, association or
        corporation signs as a party hereto, then the
        necessary grammatical changes required to make the
        provisions hereof apply to corporations,
        partnerships, associates or individuals, men or
        women, shall in all cases be assumed as though in
        each case fully expressed.  Each provision hereof
        shall extend to and shall, as the case may
        require, bind and inure to the benefit of Lessor
        and Tenant, and their respective heirs, legal
        representatives, successors and assigns, provided
        that this lease shall not inure to the benefit of
        any assignee, heir, legal representative,
        transferee or successor of Tenant, except upon the
        expressed written consent or election of Lessor.
        There are no understandings or agreements other
        than those stated in this lease, and if any
        covenant, agreement or condition in this lease
        shall be adjudged void, such adjudication shall
        not affect the validity, obligation or performance
        of any other covenant, agreement or provision
        which is valid, and no controversy concerning the
        same shall delay performance of any other
        covenant, agreement or provision.

Rental
Adjustment

19.  The yearly rental as set forth under paragraph 3
     is subject to adjustment in accordance with the following:
             (a)     Definitions:  As used in paragraph (B) of
             this paragraph 19 and elsewhere in this
             Lease:
              (1)    The "rentable square feet of the building"
              shall mean and be deemed to be 662,845
              square feet.
              (2)    The "square feet of the premises" shall
              mean and be deemed to be 3,128 rentable
              square feet.
              (3)    "Operating Expenses" shall mean and
              include (exclusive of "Taxes" as
              hereinafter defined) all expenditures,
              costs, disbursements and reimbursements of
              every kind and nature whatsoever, foreseen
              or unforeseen, and incurred or accrued or
              for which Lessor shall pay or become
              obligated to pay, and relating to the
              Lease term, because of or in connection
              with the ownership, maintenance, repair or
              operation of the premises or the building
              as a whole or the rights, privileges,
              franchises or permits appurtenant thereto,
              including without limitation,
              expenditures, costs, disbursements and
              reimbursements for or with respect to
              wages, salaries, labor, fringe benefits,
              employee taxes,  insurance, management
              fees (not to exceed five percent of gross
              receipts), professional fees, materials,
              supplies, fees for license permits and
              inspection, maintenance and service
              contracts, security, utilities, heat,
              water, air conditioning, window washing,
              cleaning, maintenance, repair and cleaning
              of skyways and common areas and rubbish
              removal and other contract services.
              Excluded from Operating expenses shall be
              (a) debt service on loans (but not hereby
              excluding costs associated with normal
              maintenance, repair and replacement that
              may be deemed interest, such as finance
              charges), (b) any expenses to the extent
              Lessor is reimbursed by insurance or
              otherwise (other than reimbursement by
              Tenant or other tenants for their
              proportionate share thereof) and (c) the
              cost of any items which, under generally
              accepted accounting principals
              consistently applied as pertaining to
              buildings such as the building in which
              the premises are situated, are properly
              classified as capital items (except to the
              extent such items have been historically
              treated otherwise with respect to the
              building in which the premises are
              situated), but not treating as capital
              items replacements or renovations
              necessary for ordinary operation of the
              building and requiring such replacement or
              renovation in the normal course, such as,
              for example, refurnishing, recarpeting or
              repairing in common areas; provided,
              however, that in the event Lessor makes
              any capital improvements to the building
              which are intended to or have the effect
              of reducing Operating Expenses, the
              Operating Expenses may be adjusted upward
              only by an amount equal to Lessor's
              reasonable estimate of annual savings
              attributable to the capital improvements
              (not to exceed the cost of such capital
              improvements).

              (4)     "Taxes" shall mean real estate taxes,
              assessments (whether general or special),
              sewer rents, rates and charges, taxes
              based upon the receipt of rent, and any
              other federal, state or local governmental
              charge, general, special, ordinary or
              extraordinary (but not including income or
              franchise taxes, or any other taxes
              imposed upon or  measured by the Lessor's
              income or profits, unless the same shall
              be imposed in lieu of real estate taxes or
              other ad valorem taxes), which may now or
              hereafter be levied, assessed or imposed
              against the building or the land on which
              the building is located, or both, and are
              due and payable during the Lease term.
              "Taxes" shall also include the amount of
              any gross receipts tax, sales tax or
              similar tax (but excluding therefrom any
              income tax) payable, or which will be
              payable, by Lessor by reason of the
              receipt of Rent.  Notwithstanding the
              foregoing, if at any time during the Lease
              term the method of taxation then
              prevailing shall be altered so that any
              new tax, assessment, levy, imposition or
              charge or any part thereof shall be
              imposed upon Lessor in place or partly in
              place of any such Taxes, or contemplated
              increase therein, and shall be measured by
              or be based in whole or in part upon the
              building, the land on which the building
              is located or the rents or other income
              therefrom, then all such new taxes,
              assessments, levies, impositions or
              charges or part thereof, to the extent
              that they are so measured or based, shall
              be included in Taxes.

                 (b)  Additional Rent.  In addition to
                 Yearly Rent, Tenant covenants and
                 agrees to pay to Lessor for that
                 portion of calendar year 2001,
                 commencing on January l, 2002, and
                 for each calendar year thereafter
                 during the Lease term, a sum equal to
                 the amount by which Taxes and
                 Operating Expenses per rentable
                 square foot of the building (Taxes
                 and Operating Expenses divided by
                 662,845) for such calendar year
                 exceed the actual Taxes and Operating
                 Expenses per square foot for calendar
                 year 2001 (Base Cost) multiplied by
                 the rentable square feet of the
                 premises ("Additional Rent").  Prior
                 to January l, 2002, and prior to each
                 January l thereafter during the Lease
                 term, Lessor shall notify Tenant in
                 writing of the estimated Additional
                 Rent to be paid by Tenant during the
                 forthcoming calendar year.
                 Notwithstanding the foregoing, Lessor
                 shall use its best efforts to inform
                 Tenant of the estimated Additional
                 Rent for the subsequent calendar year
                 before December l5, of each year
                 during the lease term.  Unless the
                 area of the premises changes during
                 such calendar year or this Lease
                 expires or is terminated before the
                 end of such calendar year, Tenant
                 shall pay the estimated Additional
                 Rent for such calendar year in twelve
                 (l2) equal monthly installments on
                 the first day of January and the
                 first day of each month thereafter
                 during the calendar year.  Additional
                 Rent for any fraction of a calendar
                 year falling within the Lease term
                 shall be prorated on the basis of the
                 number of days of the Lease term
                 within the calendar year compared to
                 365.  Monthly installments of
                 Additional Rent for any such fraction
                 of a calendar year shall be
                 determined as if the entire calendar
                 year were included in the Lease Term,
                 but shall be paid only on the first
                 day of the months within the Lease
                 term, subject to proration for
                 fractional months.  After the end of
                 each calendar year, any part of which
                 is included in the Lease term,
                 beginning with calendar year 2001,
                 Lessor shall notify Tenant in writing
                 of Lessor's determination of the
                 actual Additional Rent payable by
                 Tenant during such completed calendar
                 year.  Within sixty (60) days after
                 Lessor's notice to Tenant, if the
                 estimated Additional Rent paid by
                 Tenant is less than the actual
                 Additional Rent, Tenant shall pay the
                 deficiency to Lessor.  If the
                 estimated Additional Rent is in
                 excess of the actual Additional Rent,
                 the excess shall be applied to any
                 rent due or next coming due under
                 this Lease.  Tenant shall not be
                 entitled to any credit or payment
                 from Lessor if Taxes and Operating
                 Expenses are less than the Base Cost
                 for any calendar year.

Holding Over

20.        If Tenant shall remain in possession of the
           premises after termination of this lease or
           expiration of the Lease term without Lessor's
           written agreement as to such possession, then
           Tenant shall be deemed a tenant-at sufferance
           and shall pay rent, prorated on a daily basis,
           equal to two times the highest yearly rental
           and Additional Rent provided for under
           paragraphs 3 and 19 for each day Tenant
           remains in the premises, and Tenant shall also
           pay to Lessor or demand all damages,
           consequential as well as direct, incurred by
           Lessor as a result of such holding over. Such
           holding over shall not constitute an extension
           or renewal of this
           Lease and shall not create a tenancy at will
           or any other lawful tenancy.  Nothing in this
           paragraph
           contained shall be construed or operate as a
           waiver of Lessor's right of re-entry or any other
           right or
           remedy of Lessor under this Lease or at law or
           in equity.

Tenant's
Insurance

21.    During the Lease term, Tenant shall maintain
       at its own expense:
             (a)  Fire insurance with extended coverage and
             water damage insurance in amounts
             sufficient to fully
             cover Tenant's furniture, fixtures,
             equipment, records and personal property and all
             other property in
             the premises which is not owned by

            (b)  For the mutual benefit of Lessor and
             Tenant, comprehensive general public
             liability insurance,
             including Contractual Liability coverage
             insuring the indemnity obligations of Tenant
             contained in
             this lease.  Such insurance policy or policies
             shall
             cover claims for personal injury, wrongful death
             and
             property damage occurring in or on the premises or
             arising out of the use or
             occupancy of the premises or any part
             thereof.  Such insurance shall afford protection
             in amounts which are
             reasonably acceptable
             to Lessor from time to
             time, but shall never be less than a combined
             single limit of $l,000,000.00
             for personal injury or death and property damage
             in
             any one occurrence.  Lessor shall be named as an
             insured, and each such policy shall contain a
             cross-liability endorsement.

             A certificate of insurance as to each policy of
             insurance required to be procured by Tenant shall
             be
             delivered to the Lessor before Tenant's occupancy
             of
             the premises.  A certificate of insurance as to
             each renewal policy to be procured by Tenant shall
             be
             delivered to Lessor at least twenty (20) days
             the expiration date of the policy then in
             force.  Each policy of insurance required to be
             maintained by Tenant hereunder shall contain an
             endorsement requiring thirty (30) days' written
             notice
             from the insurance company to Lessor before
             cancellation or change in the
             coverage, scope or amount
             of any such policy.

Indemnity

22.  Tenant will (to the full extent permitted by
     applicable law) protect, indemnify and save harmless
     Lessor,   any
     agent or beneficiary of Lessor, and any partner,
     officer, director or share holder of any of the foregoing
     (each an
     "Indemnified Party") from and against all claims,
     judgements causes of action, liabilities, costs,
     expenses
     and damages (including, without limitation,
     attorneys'
     fees and expenses) imposed upon or
     or asserted against any Indemnified Party or
     against any Indemnified Party's interest in the
     building by reason of any accident, injury to or death of
     any person or
     persons or loss of or damage to
     property occurring
     on or in, or arising out of the use or occupancy of, the
     premises or any part
     hereof by Tenant, unless caused solely by the willful
     misconduct
     or gross negligence of such Indemnified Party.

       Lessor  will (to the full extent permitted by applicable
       law) protect, indemnify and save harmless Tenant,
       any agent or beneficiary of Tenant, and any partner,
       officer, director or share holder of any of the
       foregoing
       (each an "Indemnified Party") from and against all
       claims,
       judgements causes of action, liabilities, costs,
       expenses and damages (including, without limitation,
       attorneys' fees and
       expenses) imposed upon or
       incurred by or asserted against any Indemnified Party or
       against any Indemnified Party's interest in the
       building by reason of any accident, injury to or death
       of any person or
       persons or loss of or damage to
       property occurring
       on or in, or arising out of the use or occupancy of, the
       premises or any part
       hereof by Lessor, unless caused solely by the willful
       misconduct or
       gross negligence of Tenant.

Waiver of Claims
and Subrogation

23.      Each party hereto hereby waives all claims, causes of
         action, and rights of recovery against the other and
         the
         other's officers, agents, employees and partners for
         loss
         occurring to the building, the premises and
         the improvements, betterments, equipment, trade
         fixtures,
         merchandise, records, inventory and other
         personal property owned by Lessor or Tenant therein or
         thereon if and to the extent the owner of such
         property is reimbursed for such loss by insurance
         proceeds, except Lessor does
         not waive against Tenant
         the right to claim and receive insurance proceeds from
         policies of insurance carried by Tenant on behalf
         of Lessor.  Each party agrees to use its best efforts
         to have its property insurance policies endorsed to
         provide for waiver of subrogation by the insurance
         carriers.

Late Payments

24.      Tenant covenants and agrees to pay to Lessor,
         immediately
         on demand, a late payment charge equal to one percent
         (1%) of the amount of any installment of yearly rental
         or
         estimated Additional Rent which is made five days
         after
         the due date for such installment, as set forth in
         paragraphs 3 and 19 of this lease. Tenant agrees that
         such a charge is reasonable to compensate Lessor for
         its
         additional administrative costs and expenses
         associated
         with late payments. Nothing contained in this
         paragraph
         24 shall affect the remedies provided
         for in paragraph 12 or elsewhere in this lease or at
         law
         or in equity for defaults by Tenant.

Early
Occupancy

25.      Tenant may occupy the premises starting May 1, 2001
         and
         rent shall be abated for May, June and
         July, 2001.  Tenant would pay for electricity that is
         metered and billed
         monthly, starting April 15, 2001.

Rent

Schedule

26.      The following monthly rent schedule shall apply to
Suite  N100:

          MONTHLY

  Year 1       $2,500.00 Effective August 1, 2001

  Year 2       $2,500.00 Effective August 1, 2002

  Year 3       $3,910.00 Effective August 1, 2003

  Year 4       $3,910.00 Effective August 1, 2004

  Year 5       $3,910.00 Effective August 1, 2005

Early
Termination

27.      Tenant may end the Lease after the second year on July
         31st
         by providing ninety (90) day prior written
         notice of intent and a payment of $33,840.00 or
         $16,920.00
         at the third year or $8,460.00 after the
         fourth year.

Leasehold
Improvements

28.      The Lessor will provide the following leasehold
         improvements at no cost to Tenant:

         a. Paint walls a color similar to the existing.
         b. Clean carpeting.
         c. Remove test cubicles in the entry area and patch
            floor
            covering.
         d. Repair window blinds.

The marginal headings are for purposes of identification only
and do not limit
or enlarge the provisions of this lease.

IN WITNESS WHEREOF, the respective parties hereto have executed
this lease, or caused this lease to be executed by their duly
authorized representatives, the day and year first above
written, the Tenant hereby acknowledging that at the
time of making and delivery of this instrument the Lessor
delivered to Tenant a full true and complete copy of same.

OTHNET, TENANT, PARTY OF THE    VANCE MINNESOTA STREET, L.P.
SECOND PART                     LESSOR, PARTY OF THE FIRST PART

                                MINNESOTA STREET ASSOCIATES,
                                INC.
                                ITS MANAGING AGENTEXHIBIT 10.60

                            FOCUS ENHANCEMENTS, INC.
                          REGISTRATION RIGHTS AGREEMENT

         THIS  REGISTRATION  RIGHTS  AGREEMENT (the  "AGREEMENT")  is made as of
April 24, 2001 by and among Focus  Enhancements,  Inc.,  a Delaware  corporation
(the "COMPANY"), and the holders of the Company's Series B Convertible Preferred
Stock signatory hereto.

                                R E C I T A L S:

         A. Pursuant to a Stock Purchase  Agreement  dated as of the date hereof
by and  between the Company  and the Holder  (the  "PURCHASE  AGREEMENT"),  such
Holder has acquired,  or will acquire in the future,  certain shares of Series B
Convertible  Preferred Stock,  $.01 par value per share (the "SERIES B PREFERRED
STOCK"),  which Series B Preferred  Stock is  convertible  into shares of Common
Stock, $.01 par value per share, of the Company (the "COMMON STOCK").

         B. The parties desire to set forth herein their  agreement on the terms
and  subject to the  conditions  set forth  herein  related to the  granting  of
certain registration rights to the Holders relating to the Common Stock issuable
upon conversion of shares of Series B Preferred Stock.

                               A G R E E M E N T:

         The parties hereto agree as follows:

         1. CERTAIN DEFINITIONS.  As used in this Agreement, the following terms
shall have the following respective meanings:

         "COMMISSION" shall mean the U.S. Securities and Exchange Commission.

         "DEMAND  REGISTRATION" means a registration by the Company for a public
offering  of  Registrable  Securities  on Form  S-3 (or  any  successor  form to
FormS-3) or any similar short-form registration statement, or a Form S-1 (or any
successor or equivalent  registration  form) only if the Company is not eligible
to use Form S-3 for that transaction, the reasonably anticipated aggregate price
to the public of which, net of underwriting  discounts and commissions,  if any,
would be at least $2,000,000.

         "ELIGIBLE  HOLDER"  means a Holder that  beneficially  owns $250,000 or
more of Series B Stock (based on the purchase price of Series B Preferred  Stock
in the Purchase Agreement) or Common Stock issued upon conversion of such amount
of Series B Preferred Stock.

         "EXCHANGE  ACT"  shall mean the  Securities  Exchange  Act of 1934,  as
amended, and the rules and regulations of the Commission thereunder,  all as the
same shall be in effect from time to time.

         "HOLDERS"  or  "HOLDERS  OF  REGISTRABLE  SECURITIES"  shall  mean each
purchaser of Series B Preferred  Stock who is a party to this  Agreement and any
Person who shall have acquired  Registrable  Securities  from such  purchaser as
permitted  herein in a  transaction  pursuant to which  registration  rights are
transferred pursuant to Section 9 hereof.

         "INITIATING  HOLDERS" means Holders that collectively  beneficially own
$1,000,000 or more of Series B Preferred  Stock (based on the purchase  price of
Series B Preferred Stock in the Purchase  Agreement) or Common Stock issued upon
conversion of such amount of Series B Preferred Stock.

         "PERSON"  shall  mean an  individual,  a  partnership,  a  company,  an
association,  a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental or quasi-governmental entity, or any department,
agency or political subdivision thereof.

         "REGISTRABLE SECURITIES" means (i) any shares of Common Stock issued or
issuable  upon  conversion of shares of Series B Preferred  Stock,  and (ii) any
shares of Common Stock issued or issuable in respect of the securities  referred
to in clause (i) above upon any stock split, stock dividend, recapitalization or
similar event. The term "REGISTRABLE SECURITIES" EXCLUDES in all cases, however,
(a) Common Stock issued or issuable upon  conversion of Series B Preferred Stock
that may be sold under  Rule  144(k)  promulgated  under the  Securities  Act or
shares held by a Person to whom registration rights are not transferred pursuant
to Section 10 hereof,  and (b) shares of Common Stock issued upon  conversion of
Series B Preferred Stock that have been sold either in a transaction pursuant to
an effective  registration statement under the Securities Act or pursuant to any
provision of Rule 144 promulgated under the Securities Act.
<PAGE>

         The  terms  "REGISTER,"  "REGISTERED"  and  "REGISTRATION"  refer  to a
registration  effected  by  preparing  and filing a  registration  statement  in
compliance with the Securities Act.

         "REGISTRATION  EXPENSES"  shall mean all  expenses,  other than Selling
Expenses,  incurred by the  Company in  complying  with  Sections 2 or 3 hereof,
including without limitation,  all registration,  qualification and filing fees,
exchange listing fees, printing expenses, escrow fees, fees and disbursements of
counsel  for the  Company,  blue sky fees and  expenses,  and the expense of any
special audits incident to or required by any such registration.

         "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

         "SELLING  EXPENSES"  shall  mean all  underwriting  discounts,  selling
commissions and stock transfer taxes applicable to the securities  registered by
the  Holders  and the  costs  and fees of any  accountants,  attorneys  or other
experts retained by the Holders or Holder.

         2. DEMAND REGISTRATION.

                  (a)  REQUESTS  FOR  REGISTRATION.  At any time after April 24,
2003, the  Initiating  Holders may request in writing that the Company engage in
one Demand Registrations.  Within 10 days after receipt of any such request, the
Company will give written  notice of such  requested  registration  to all other
Eligible  Holders.  The Company shall  include in such offering the  Registrable
Securities  of the  Initiating  Holders  and  those  Eligible  Holders  who have
responded  affirmatively  within 10 days  after  the  receipt  of the  Company's
notice. If the Demand Registration is not an underwritten  offering, the Company
shall file for a so-called traditional "shelf registration" on Form S-3 (or Form
S-1) pursuant to which the Initiating Holders and Eligible Holders participating
in such registration may sell their Registrable  Securities from time to time at
prevailing  market prices  directly,  through agents they designate,  or through
dealers.

                  (b) PRIORITY ON DEMAND REGISTRATION.  If a Demand Registration
is an underwritten  offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable  Securities requested to
be included in such offering exceeds the number of Registrable  Securities which
can be sold in such offering without  adversely  affecting the  marketability of
the  offering,  the Company  will include in such  registration  (subject to the
rights of the  holder(s)  of the  Company's  Series A  Convertible  Exchangeable
Preferred  Stock (the  "SERIES A  PREFERRED  STOCK")  and to the rights of other
Persons  under  agreements  existing  as of  the  date  hereof  such  number  of
Registrable  Securities  allocated pro rata among the Holders thereof based upon
the number) of Registrable  Securities owned by each such Holder and the Company
will  provide  an  additional   registration  within  6  months  thereafter  for
Registrable  Securities  excluded from that offering.  No securities  other than
Registrable  Securities  hereunder shall be included in such Demand Registration
without  the prior  written  consent of  Initiating  and  Eligible  Holders  who
collectively  hold  Registrable  Securities  representing  at  least  50% of the
Registrable Securities subject to the Demand Registration, except for securities
relating  to the  Company's  existing  obligations  to  third  party  demand  or
piggyback rights on a pro rata basis with the Registrable Securities.

                  (c)  RESTRICTIONS  ON  DEMAND  REGISTRATION.   The  Initiating
Holders in the  aggregate  will be entitled to request two Demand  Registrations
hereunder on or after the dates  specified in  paragraph  (a) above  (subject to
paragraph  (b)  above).  A  registration  will not count as a  permitted  Demand
Registration until it has become effective (unless such Demand  Registration has
not become  effective  due  solely to the fault of the  Initiating  or  Eligible
Holders participating in such registration,  including a request by such Holders
that such registration be withdrawn). The Company may postpone the filing or the
effectiveness of a registration statement for a Demand Registration for up to 90
days for any Demand  Registration  if the Company  determines in good faith that
such Demand Registration would reasonably be expected to have a material adverse
effect on any  proposal  or plan by the  Company  to  engage  in any  financing,
acquisition  or  disposition  of assets  (other than in the  ordinary  course of
business) or any merger,  consolidation,  tender offer or similar transaction or
would require  disclosure of any information  that the board of directors of the
Company determines in good faith the disclosure of which would be detrimental to
the  Company;  provided,  however,  that in such event,  the  Holders  initially
requesting  such Demand  Registration  will be entitled to withdraw such request
and, if such request is withdrawn,  such Demand Registration will not count as a
permitted   Demand   Registration   hereunder  and  the  Company  will  pay  any
Registration Expenses in connection with such registration.

                  (d) SELECTION OF UNDERWRITERS.  If the Demand  Registration is
underwritten,  the  Initiating  Holders  will  have  the  right  to  select  the
investment  banker(s) and  manager(s) to administer an offering  pursuant to the
Demand Registration, subject to the prior written approval of the Company, which
will not be unreasonably withheld or delayed.

                  (e) OTHER  REGISTRATION  RIGHTS.  Except as  provided  in this
Agreement,  so long as any Holder owns any Registrable  Securities,  the Company
will not grant to any Persons  the right to request the Company to register  any
equity securities of the Company, or any securities  convertible or exchangeable
into or exercisable for such securities,  which conflicts with or is superior to
the rights granted to the Holders  hereunder,  without the prior written

                                      -2-

<PAGE>

consent of the Holders of at least 50% of the Registrable Securities, except (i)
for  securities  relating to the Company's  existing  obligations to third party
demand or piggyback rights on a pro rata basis with the Registrable  Securities,
and (ii) for  securities  issued (or  issuable  upon  conversion  or exercise of
options,  warrants,  convertible  instruments  and similar  securities  that are
currently outstanding) to vendors, licensors, lenders, Persons involved in joint
ventures  with the Company or its  affiliates,  and similar  Persons  engaged in
commercial relationships with the Company.

         3. PIGGYBACK REGISTRATIONS.

                  (a) RIGHT TO PIGGYBACK.  At any time the Company shall propose
to register  Common Stock under the Securities Act (other than in a registration
on Form S-3  relating  to sales  of  securities  to  participants  in a  Company
dividend  reinvestment  plan,  Forms S-4 or S-8 or any  successor  forms,  or in
connection  with an  acquisition  or exchange offer or an offering of securities
solely to the existing  shareholders  or employees of the Company),  the Company
shall give prompt written notice to all Holders of Registrable Securities of its
intention  to effect such a  registration  and,  subject to Section 3(b) and the
other  terms  of  this  Agreement,   shall  include  in  such  registration  all
Registrable Securities that are permitted under applicable securities laws to be
included in the form of registration  statement selected by the Company and with
respect to which the Company has received written requests for inclusion therein
by the Holders within 10 days after the receipt of the Company's notice (each, a
"PIGGYBACK REGISTRATION").

                  (b)  PRIORITY  ON  PIGGYBACK  REGISTRATIONS.  If  a  Piggyback
Registration is an underwritten  registration on behalf of the Company,  and the
managing  underwriters  advise the Company in writing that in their  opinion the
number of securities  requested to be included in such registration  exceeds the
number  which  can be sold in such  offering  without  adversely  affecting  the
marketability of the offering,  the Company shall include in such  registration,
only as may be permitted  in the  reasonable  business  judgment of the managing
underwriters for such registration:

                           (i)  first,  up to  that  number  of  securities  the
Company proposes to sell;

                           (ii)  second,   up  to  that  number  of  registrable
securities  requested to be included in such  registration by the holders of the
Series A Preferred Stock;

                           (iii)  third,   up  to  that  number  of  Registrable
Securities  requested to be included in such  registration  by the Holders,  pro
rata  among the  Holders  of such  Registrable  Securities,  on the basis of the
number of shares owned by each of such  Holders,  subject to the rights of other
Persons under agreements existing as of the date hereof; and

                           (iv)  fourth,  up to that number of other  securities
requested to be included in such registration.

         The  Holders  of  any  Registrable   Securities   included  in  such  a
registration  shall  execute an  underwriting  agreement  in form and  substance
satisfactory to the managing underwriters.

                  (c) RIGHT TO  TERMINATE  REGISTRATION.  If, at any time  after
giving  written notice of its intention to register any of its securities as set
forth in  Section  3(a)  and  prior to the  effective  date of the  registration
statement  filed  in  connection  with  such  registration,  the  Company  shall
determine  for any reason not to register such  securities,  the Company may, at
its  election,  give  written  notice of such  determination  to each  Holder of
Registrable  Securities  and thereupon be relieved of its obligation to register
any Registrable  Securities in connection with such  registration  (but not from
its  obligation  to pay the  Registration  Expenses in  connection  therewith as
provided herein).

                  (d)  SELECTION  OF  UNDERWRITERS.  The Company  shall have the
right to select  the  investment  banker(s)  and  manager(s)  to  administer  an
offering pursuant to a Piggyback Registration.

         4. EXPENSES OF REGISTRATION.  Except as otherwise  provided herein, all
Registration  Expenses  incurred in connection  with  registrations  pursuant to
Section 2 shall be borne by the  Company and all  Selling  Expenses  relating to
securities  registered on behalf of the Holders of Registrable  Securities shall
be borne by such Holders. All Registration  Expenses incurred in connection with
registrations  pursuant  to Section 3 shall be borne by the  Company  except for
Selling Expenses which shall be borne by such Holders.

         5. HOLDBACK AGREEMENTS.

                  (a) The  Company  agrees (i) not to effect any public  sale or
distribution of its equity  securities,  or any securities  convertible  into or
exchangeable or exercisable for such securities,  for its own account during the
seven days prior to and during the 90-day period beginning on the effective date
of any underwritten Demand Registration (except (A) as part of such underwritten
registration, (B) pursuant to registration statements on Form S-4 or Form S-8 or
any successor  form, (C) pursuant to a registration  statement then in effect or
(D) as required  under any  existing  contractual  obligation  of the  Company),
unless the underwriters managing the registered public offering otherwise agree,
and (ii) to use  reasonable  efforts to cause  each  holder of at least 5% (on a
fully-diluted  basis)  of  its  outstanding  Common  Stock,  or  any  securities
convertible into or exchangeable or exercisable for Common Stock, purchased from
the  Company  at any time  after  the date

                                      -3-

<PAGE>

of this Agreement  (other than in a registered  public offering) to agree not to
effect any public sale or distribution (including sales pursuant to Rule 144) of
any such  securities  during such periods  (except as part of such  underwritten
registration,  if otherwise  permitted),  unless the  underwriters  managing the
registered public offering otherwise agree.

                  (b) Each Holder agrees, in the event of an underwritten public
offering of Common Stock under a registration statement on Form S-1, S-3 or S-4,
not to effect  any offer,  sale,  distribution  or  transfer,  including  a sale
pursuant to Rule 144 (or any similar provision then effect) under the Securities
Act (except as part of such registration), beginning on the date of receipt of a
written  notice  from the Company  setting  forth its  intention  to effect such
registration  and ending on the earlier of (i) 180 days from the date of receipt
of  such  written  notice  or  (ii)  90 days  from  the  effective  date of such
Registration Statement.

         6.  REGISTRATION   PROCEDURES.   Whenever  the  Company  is  under  the
obligation to register Registrable  Securities  hereunder,  the Company will use
all  reasonable  efforts  to  effect  the  registration  and  the  sale  of such
Registrable  Securities,  and pursuant thereto the Company will as expeditiously
as possible:

                  (a) subject to Section 2(c) and 3(a) hereof,  prepare and file
with the  Commission a registration  statement  within 45 days of the receipt of
notice from the Holder on any form for which the Company  qualifies with respect
to such  Registrable  Securities  and use all  reasonable  efforts to cause such
registration  statement  to become  effective  (provided  that  before  filing a
registration  statement or prospectus or any amendments or supplements  thereto,
the Company will (i) furnish to the one counsel  selected by the Holders  copies
of all such documents  proposed to be filed,  which documents will be subject to
the  review  of such  counsel,  and  (ii)  notify  each  Holder  of  Registrable
Securities  covered by such  registration of any stop order issued or threatened
by the Commission);

                  (b) subject to Section 2(c), 3(b) and 6(e) hereof, prepare and
file with the Commission such  amendments and  supplements to such  registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration  statement effective for a period equal to the shorter of
(i) the time at which the  registered  shares  are  freely  saleable  under Rule
144(k),  or (ii) the time by which all securities  covered by such  registration
statement have been sold, and all Holders shall comply with Company's reasonable
requests in connection with such termination,  and comply with the provisions of
the Securities Act with respect to the disposition of all securities  covered by
such  registration  statement during such period in accordance with the intended
methods of  disposition  by the sellers  thereof set forth in such  registration
statement;

                  (c)  furnish to each  seller of  Registrable  Securities  such
number of copies of such registration  statement,  each amendment and supplement
thereto, the prospectus included in such registration  statement (including each
preliminary  prospectus)  and such other documents as such seller may reasonably
request in order to facilitate  the  disposition of the  Registrable  Securities
owned by such seller;

                  (d) use all  reasonable  efforts to register  or qualify  such
Registrable   Securities   under  the  securities  or  blue  sky  laws  of  such
jurisdictions  as any seller  reasonably  requests and do any and all other acts
and things which may be reasonably  necessary or advisable to enable such seller
to  consummate  the  disposition  in  such   jurisdictions  of  the  Registrable
Securities  owned by such seller (provided that the Company will not be required
to (i) qualify  generally to do business in any jurisdiction  where it would not
otherwise be required to qualify but for this Section 6(d),  (ii) subject itself
to taxation in any jurisdiction,  or (iii) consent to general service of process
in any such jurisdiction);

                  (e) notify each seller of such Registrable Securities,  at any
time when a prospectus  relating  thereto is required to be delivered  under the
Securities  Act,  of the  happening  of any  event  as a  result  of  which  the
prospectus included in such registration  statement contains an untrue statement
of a material fact or omits any fact  necessary to make the  statements  therein
not misleading, and, at the request of any such seller, the Company will prepare
a supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities,  such prospectus will not contain
an untrue  statement of a material  fact or omit to state any fact  necessary to
make the statements therein not misleading;  provided, however, that the Company
shall not be required to amend the  registration  statement  or  supplement  the
Prospectus for a period of up to 90 days if the board of directors determines in
good faith that to do so would reasonably be expected to have a material adverse
effect on any  proposal  or plan by the  Company  to  engage  in any  financing,
acquisition  or  disposition  of assets  (other than in the  ordinary  course of
business) or any merger,  consolidation,  tender offer or similar transaction or
would  require the  disclosure  of any  information  that the board of directors
determines  in good faith the  disclosure of which would be  detrimental  to the
Company,  it being understood that the period for which the Company is obligated
to keep the Registration  Statement  effective shall be extended for a number of
days equal to the number of days the Company  delays  amendments or  supplements
pursuant to this provision.  Upon receipt of any notice pursuant to this Section
6(e),  the  Holders  shall  suspend  all offers and sales of  securities  of the
Company and all use of any  prospectus  until advised by the Company that offers
and sales may resume,  and shall keep  confidential  the fact and content of any
notice given by the Company pursuant to this Section 6(e);

                                      -4-

<PAGE>

                  (f) cause all such Registrable Securities to be listed on each
securities  exchange on which similar  securities issued by the Company are then
listed;

                  (g)  provide  a  transfer  agent  and  registrar  for all such
Registrable  Securities not later than the effective  date of such  registration
statement;

                  (h)  enter   into   such   customary   agreements   (including
underwriting  agreements  in customary  form) and take all such other actions as
the  Holders  of a  majority  of the  Registrable  Securities  being sold or the
underwriters,  if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;

                  (i) make available for inspection by a  representative  of the
Holders of Registrable  Securities included in the registration  statement,  any
underwriter  participating  in any  disposition  pursuant  to such  registration
statement  and any  attorney,  accountant  or other  agent  retained by any such
seller or  underwriter,  all pertinent  financial and other  records,  pertinent
corporate  documents  and  properties  of the Company,  and cause the  Company's
officers,  directors,  employees  and  independent  accountants  to  supply  all
information  reasonably  requested  by any such seller,  underwriter,  attorney,
accountant or agent in connection with such registration statement;

                  (j)  otherwise use its  reasonable  efforts to comply with all
applicable  rules and regulations of the  Commission,  and make available to its
security  holders,  as soon as  reasonably  practicable,  an earnings  statement
covering  the period of at least 12 months  beginning  with the first day of the
Company's  first  full  calendar   quarter  after  the  effective  date  of  the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;

                  (k) in the event of the issuance of any stop order  suspending
the  effectiveness  of a registration  statement,  or of any order suspending or
preventing the use of any related  prospectus or suspending the qualification of
any  Common  Stock  included  in such  registration  statement  for  sale in any
jurisdiction,  use all reasonable  efforts  promptly to obtain the withdrawal of
such order; and

                  (l) if the registration is an underwritten  offering,  use all
reasonable  efforts  to  obtain  a  so-called  "cold  comfort"  letter  from the
Company's  independent  public  accountants  in customary form and covering such
matters of the type customarily covered by cold comfort letters.

         7.  OBLIGATIONS  OF  HOLDERS.   Whenever  the  Holders  of  Registrable
Securities sell any Registrable  Securities  pursuant to a Demand  Registration,
such Holders shall be obligated to comply with the applicable  provisions of the
Securities Act, including the prospectus delivery requirements  thereunder,  and
any applicable state securities or blue sky laws.

                  (a) In connection with any registration statement for a Demand
Registration in which a Holder of Registrable  Securities is participating,  the
Company agrees to indemnify,  to the fullest extent permitted by applicable law,
each such Holder of Registrable Securities,  its officers and directors and each
Person who  controls  such Holder  (within the  meaning of the  Securities  Act)
against all losses, claims, damages,  liabilities,  expenses or any amounts paid
in  settlement  of any  litigation,  investigation  or  proceeding  commenced or
threatened  to which each such  indemnified  party may become  subject under the
Securities Act  (collectively,  "CLAIMS") insofar as such Claim arose out of (i)
any untrue or alleged  untrue  statement  of  material  fact  contained,  on the
effective  date  thereof,  in any such  registration  statement,  prospectus  or
preliminary  prospectus or any amendment  thereof or supplement  thereto or (ii)
any omission or alleged omission to state therein a material fact required to be
stated  therein or  necessary  to make the  statements  therein not  misleading,
except  insofar  as the same  are  caused  by or  contained  in any  information
furnished in writing to the Company by such Holder expressly for use therein, by
such  Holder's  failure  to  deliver  a copy of the  registration  statement  or
prospectus  or any  amendments  or  supplements  thereto  after the  Company has
furnished such Holder with a sufficient  number of copies of the same or by such
Holder's  failure to comply with applicable  securities laws. In connection with
an underwritten  offering,  the Company will indemnify the  underwriters,  their
officers and directors and each Person who controls the underwriters (within the
meaning of the Securities Act) to the same extent as provided above with respect
to the indemnification of the Holders of Registrable Securities.

                  (b) In  connection  with  any  registration  statements  for a
Demand   Registration   in  which  a  Holder  of   Registrable   Securities   is
participating,  each such  Holder will  furnish to the  Company in writing  such
customary  information as the Company reasonably  requests for use in connection
with any such registration statement or prospectus (the "SELLER'S  INFORMATION")
and, to the fullest  extent  permitted by  applicable  law,  will  indemnify the
Company,  its  directors  and  officers and each Person who controls the Company
(within the meaning of the  Securities  Act) against any and all Claims to which
each such indemnified  party may become subject under the Securities Act insofar
as such  Claim  arose  out of (i) any  untrue or  alleged  untrue  statement  of
material fact contained, on the effective date thereof, in any such registration
statement,  prospectus or  preliminary  prospectus  or any amendment  thereof or
supplement  thereto,  (ii) any omission or alleged  omission to state  therein a
material fact required to be stated  therein or necessary to make the

                                      -5-

<PAGE>

statements  regarding Seller's  Information  therein not misleading or (iii) any
failure on the part of the Holder to comply  with  applicable  securities  laws;
provided  that with  respect to a Claim  arising  pursuant to clause (i) or (ii)
above,  the material  misstatement  or omission is  contained  in such  Seller's
Information;  provided,  further,  that  the  obligation  to  indemnify  will be
individual to each Holder and will be limited to the amount of proceeds received
by  such  Holder  from  the  sale of  Registrable  Securities  pursuant  to such
registration statement.

                  (c) Any Person entitled to indemnification  hereunder will (i)
give prompt written notice to the  indemnifying  party of any claim with respect
to which it seeks  indemnification (but the failure to provide such notice shall
not release the  indemnifying  party of its obligation  under paragraphs (a) and
(b),  unless and then only to the extent that, the  indemnifying  party has been
prejudiced  by such  failure to provide  such  notice)  and (ii)  unless in such
indemnified party's reasonable  judgment,  based on written advice of counsel, a
conflict of interest between such indemnified and indemnifying parties may exist
with respect to such claim, permit such indemnifying party to assume the defense
of such claim with counsel reasonably  satisfactory to the indemnified party. An
indemnifying  party who is not entitled to, or elects not to, assume the defense
of a claim will not be  obligated  to pay the fees and expenses of more than one
counsel for all parties  indemnified by such indemnifying  party with respect to
such claim, unless in the reasonable judgment of any indemnified party, based on
written  advice of  counsel,  a conflict  of  interest  may exist  between  such
indemnified party and any other of such indemnified parties with respect to such
claim.

                  (d) The indemnifying party shall not be liable to indemnify an
indemnified party for any settlement,  or consent to judgment of any such action
effected without the indemnifying party's written consent (but such consent will
not be unreasonably  withheld).  Furthermore,  the indemnifying party shall not,
except with the prior written  approval of each  indemnified  party,  consent to
entry of any judgment or enter into any settlement  which does not include as an
unconditional  term  thereof  the giving by the  claimant or  plaintiff  to each
indemnified  party of a release  from all  liability in respect of such claim or
litigation   without  any  payment  or  consideration   provided  by  each  such
indemnified party.

                  (e) If the  indemnification  provided for in this Section 8 is
unavailable to an  indemnified  party under clauses (a) and (b) above in respect
of any losses,  claims,  damages or liabilities  referred to therein,  then each
indemnifying  party,  in lieu of  indemnifying  such  indemnified  party,  shall
contribute to the amount paid or payable by such  indemnified  party as a result
of  such  losses,  claims,  damages  or  liabilities  in such  proportion  as is
appropriate  to reflect not only the relative  benefits  received by the Company
(if any), the underwriters,  the sellers of Registrable Securities and any other
sellers  participating  in the  registration  statement  from the sale of shares
pursuant to the registered  offering of securities for which indemnity is sought
but also the relative  fault of the Company,  the  underwriters,  the sellers of
Registrable  Securities and any other sellers  participating in the registration
statement in connection  with the statement or omission  which  resulted in such
losses, claims, damages or liabilities,  as well as any other relevant equitable
considerations.  The  relative  benefits  received by the Company (if any),  the
underwriters,  the  sellers  of  Registrable  Securities  and any other  sellers
participating in the  registration  statement shall be deemed to be based on the
relative  relationship  of the  total net  proceeds  from the  offering  (before
deducting expenses) to the Company (if any), the total underwriting  commissions
and fees from the offering (before  deducting  expenses) to the underwriters and
the total net proceeds  from the  offering  (before  deducting  expenses) to the
sellers of  Registrable  Securities and any other sellers  participating  in the
registration statement. The relative fault of the Company, the underwriters, the
sellers of  Registrable  Securities and any other sellers  participating  in the
registration  statement shall be determined by reference to, among other things,
whether  the  untrue or  alleged  untrue  statement  of a  material  fact or the
omission or alleged  omission to state a material  fact  relates to  information
supplied  by the  Company or by the sellers of  Registrable  Securities  and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent such statement or omission.

                  (f) The indemnification provided for under this Agreement will
remain in full force and effect  regardless of any  investigation  made by or on
behalf of the indemnified party or any officer,  director or controlling  person
of such  indemnified  party and will  survive the  transfer  of the  Registrable
Securities.

         8.   PARTICIPATION  IN  UNDERWRITTEN   REGISTRATIONS.   No  Holder  may
participate in any  registration  hereunder  which is  underwritten  unless such
Holder (a) agrees to sell such Holder's  securities on the basis provided in any
underwriting  arrangements  approved by the Holder or Holders entitled hereunder
to approve such  arrangements,  (b) as  expeditiously  as possible  notifies the
Company  of the  occurrence  of any event as a result  of which  any  prospectus
contains an untrue  statement of material fact or omits to state a material fact
required to be stated  therein or necessary to make the  statements  therein not
misleading  and  (c)  completes  and  executes  all  questionnaires,  powers  of
attorney,  indemnities,  underwriting  agreements and other documents reasonably
required under the terms of such underwriting arrangements.

         9. TRANSFER OF  REGISTRATION  RIGHTS.  The rights granted to any Holder
under this Agreement may be assigned to any permitted  transferee of Registrable
Securities,  in  connection  with any  transfer  or  assignment  of  Registrable
Securities by a Holder; provided,  however, that: (a) such transfer is otherwise
effected in accordance  with

                                      -6-

<PAGE>

applicable  securities laws, (b) if not already a party hereto,  the assignee or
transferee  agrees  in  writing  prior  to  such  transfer  to be  bound  by the
provisions  of  this  Agreement  applicable  to the  transferor,  and  (c)  such
transferee shall own Registrable Securities  representing at least 25,000 shares
of  Common  Stock  (as  adjusted  for any  combinations,  consolidations,  stock
distributions,  stock dividends or other  recapitalizations with respect to such
shares).

         10.  INFORMATION  BY HOLDER.  Each Holder shall  furnish to the Company
such written information  regarding such Holder and any distribution proposed by
such  Holder as the Company  may  reasonably  request in writing and as shall be
reasonably  required  in  connection  with any  registration,  qualification  or
compliance  referred to in this Agreement and shall promptly  notify the Company
of any changes in such information.

         11. EXCHANGE ACT  COMPLIANCE.  The Company shall comply with all of the
reporting  requirements  of the  Exchange  Act then  applicable  to it and shall
comply  with  all  other  public  information  reporting   requirements  of  the
Commission  which are conditions to the availability of Rule 144 for the sale of
the  Registrable  Securities.  The Company shall  cooperate  with each Holder in
supplying  such  information as may be necessary for such Holder to complete and
file any  information  reporting  forms  presently or hereafter  required by the
Commission as a condition to the availability of Rule 144.

         12. TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Agreement shall  terminate and be of no further force and effect,  as
to any  particular  Holder,  at such time as all shares of Common Stock issuable
upon  conversion  of Series B Preferred  Stock held by such Holder are  saleable
under Rule 144(k).

         13. MISCELLANEOUS.

                  (a) NO INCONSISTENT AGREEMENTS. The Company will not hereafter
enter into any agreement  with respect to its securities  which is  inconsistent
with or violates the rights granted to the Holders of Registrable  Securities in
this Agreement  without the prior written consent of the Initiating  Holders who
hold  at  least  50% of the  Registrable  Securities  collectively  held  by the
Initiating Holders.

                  (b) REMEDIES.  Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights  specifically  to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise  all other  rights  granted  by law.  The  remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of  competent  jurisdiction  (without  posting any
bond or other security) for specific performance and for other injunctive relief
in order to enforce or prevent  violation of the  provisions of this  Agreement;
provided,  however,  that in no event shall any Holder have the right to enjoin,
delay or interfere with any offering of securities by the Company.

                  (c)  AMENDMENTS  AND  WAIVERS.  Except as  otherwise  provided
herein,  the provisions of this Agreement may be amended or waived only with the
prior written  consent of the Company and  Initiating  Holders who hold at least
50% of the Registrable  Securities  collectively held by the Initiating  Holders
(in which case,  such  amendment  shall be binding upon all  Holders,  including
Holders that did not specifically consent to the amendment);  provided, however,
that without the prior written consent of all the Holders,  no such amendment or
waiver  shall  reduce the  foregoing  percentage  required to amend or waive any
provision of this Agreement.

                  (d)  SUCCESSORS  AND ASSIGNS.  All covenants and agreements in
this  Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective  successors and assigns of the parties  hereto,
and shall inure to the benefit and be  enforceable by each Holder of Registrable
Securities from time to time. In addition, whether or not any express assignment
has been made,  the  provisions of this  Agreement  which are for the benefit of
Holders of Registrable  Securities are also for the benefit of, and  enforceable
by, any permitted  transferee  of  Registrable  Securities  in  accordance  with
Section 9 hereof.

                  (e) SEVERABILITY.  Whenever  possible,  each provision of this
Agreement  will be interpreted in such manner as to be effective and valid under
applicable  law, but if any provision of this Agreement is held to be prohibited
by or invalid under  applicable law, such provision will be ineffective  only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

                  (f)  COUNTERPARTS;  FAX  SIGNATURES.  This  Agreement  may  be
executed  in two or more  counterparts,  any one of which need not  contain  the
signatures of more than one party, but all such counterparts taken together will
constitute  one and the same  Agreement.  This  Agreement  may be  executed by a
signature page delivered by fax  transmission,  which shall have the same effect
as if the signature page was an original.

                  (g) DESCRIPTIVE  HEADINGS.  The  descriptive  headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

                                      -7-

<PAGE>

                  (h) GOVERNING LAW. All questions  concerning the construction,
validity and  interpretation  of this  Agreement will be governed by the laws of
the State of  California  without  regard to  principles  of  conflicts of laws,
except that all issues  concerning  the  relative  rights of the Company and its
shareholders  shall be governed by Delaware State Law,  without giving effect to
the principles thereof relating to conflicts of laws.

                  (i) NOTICES. All notices,  demands and requests of any kind to
be delivered to any party in connection  with this Agreement shall be in writing
and shall be deemed to have been duly given if  personally  delivered or if sent
by  nationally-recognized  overnight  courier  or  by  registered  or  certified
airmail,   return  receipt   requested  and  postage  prepaid  or  by  facsimile
transmission, addressed as follows:

                  (j) if to the Company, to:

                      Focus Enhancements, Inc.
                      1370 Dell Avenue
                      Campbell, California  95008
                      Attention: Mr. Gary Williams
                      Facsimile:  (408) 8661748
                      with a copy to:

                      Manatt Phelps &Phillips, LLP
                      Suite 700
                      1501 M Street
                      Washington, DC 20005
                      Attn:  Gregory A. Gehlmann, Esq.
                      Facsimile:  (202) 463-4394

                      (ii) if to  a Holder, to such Holder's most recent address
                      in the stock records of the Company.

                  (k) ENTIRE AGREEMENT.  This Agreement constitutes the full and
entire  understanding  and  agreement  between  the  parties  with regard to the
subject matter hereof.

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

                                                 FOCUS ENHANCEMENTS, INC.

                                                 By:     /s/ Michael D'Addio
                                                      ----------------------
                                                     Name:  Michael D'Addio
                                                     Title:  President

                                                 HOLDER

                                                 By:   /s/ Carl Berg
                                                     ------------------------
                                                     Name:  Carl Berg
                                                     Title:

                                      -8-

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