Document:

Exhibit 4.1

 

THIS WARRANT AND THE
SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE
144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

WARRANT TO PURCHASE STOCK

	
  Corporation:

  	
   

  	
  FOCUS Enhancements, Inc., a Delaware corporation

  
	
  Number of Shares:

  	
   

  	
  48,148 [Quotient obtained by dividing $65,000 by the
  Initial Exercise Price]

  
	
  Class of Stock:

  	
   

  	
  Common

  
	
  Initial Exercise Price:

  	
   

  	
  $1.35 per share [Average closing price of Borrower’s
  common stock for the 5

  
	
   

  	
   

  	
  days prior to execution date]

  
	
  Issue Date:

  	
   

  	
  March 19, 2007

  
	
  Expiration Date:

  	
   

  	
  March 19, 2012

  

 

THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, GREATER BAY BANCORP (“Holder”) is
entitled to purchase the number of fully paid and nonassessable shares of
Common Stock (the “Shares”) of the corporation (the “Company”) at the price per
Share (the “Warrant Price”) all as set forth herein and as adjusted pursuant to
Article 2 of this Warrant, subject to the provisions and upon the terms
and conditions set forth of this Warrant.

ARTICLE 1.           EXERCISE.

1.1           Method
of Exercise.  Holder may exercise
this Warrant by delivering a duly executed Notice of Exercise in substantially
the form attached as Appendix 1 to the principal office of the
Company.  Unless Holder is exercising the
conversion right set forth in Section 1.2, Holder shall also deliver to
the Company a check for the aggregate Warrant Price for the Shares being
purchased.

1.2           Conversion
Right.  In lieu of exercising this
Warrant as specified in Section 1.1, Holder may from time to time convert
this Warrant, in whole or in part, into a number of Shares determined by
dividing (a) the aggregate fair market value of the Shares or other
securities otherwise issuable upon exercise of this Warrant minus the aggregate
Warrant Price of such Shares by (b) the fair market value of one
Share.  The fair market value of the
Shares shall be determined pursuant Section 1.4.

1.3           No
Rights of Shareholder.  This Warrant
does not entitle Holder to any voting rights as a shareholder of the Company
prior to the exercise hereof.

1.4           Fair
Market Value.  If the Shares are
traded in a public market, the fair market value of the Shares shall be the
closing price of the Shares (or the closing price of the Company’s stock into
which the Shares are convertible) reported for the business day immediately
before Holder delivers its Notice of Exercise to the Company.  If the Shares are not traded in a public
market, the Board of Directors of the Company shall determine fair market value
in its reasonable good faith judgment. 
The foregoing notwithstanding, if Holder advises the Board of Directors
in writing that Holder disagrees with such determination, then the Company and
Holder shall promptly agree upon a reputable investment banking or public
accounting firm to undertake such valuation. 
If the valuation of such investment banking firm is greater than that
determined by the Board of Directors, then all fees and expenses of such
investment banking firm shall be paid by the Company.  In all other circumstances, such fees and
expenses shall be paid by Holder.

1.5           Delivery
of Certificate and New Warrant. 
Promptly after Holder exercises or converts this Warrant, the Company
shall deliver to Holder certificates for the Shares acquired and, if this
Warrant has not been fully exercised or converted and has not expired, a new
Warrant representing the Shares not so acquired.

 

1.6           Replacement of Warrants.  On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, or surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant,
a new warrant of like tenor.

 

1.7           Repurchase
on Sale, Merger, or Consolidation of the Company.

1.7.1        “Acquisition”.  For the purpose of this Warrant, “Acquisition”
means any sale, license, or other disposition of all or substantially all of
the assets of the Company, or any reorganization, consolidation, or merger of
the Company where the holders of the Company’s securities before the transaction
beneficially own less than 50% of the outstanding voting securities of the
surviving entity after the transaction.

1.7.2        Assumption
of Warrant.  Upon the closing of any
Acquisition the successor entity shall assume the obligations of this Warrant,
and this Warrant shall be exercisable for the same securities, cash, and
property as would be payable for the Shares issuable upon exercise of the
unexercised portion of this Warrant as if such Shares were outstanding on the
record date for the Acquisition and subsequent closing.  The Warrant Price and consideration issuable
upon exercise of the Warrant shall be adjusted accordingly for such
Acquisition.

ARTICLE 2.           ADJUSTMENTS TO THE SHARES.

2.1           Stock
Dividends, Splits, Etc.   If the
Company declares or pays a dividend on its common stock payable in common
stock, or other securities, subdivides the outstanding common stock into a
greater amount of common stock, then upon exercise of this Warrant, for each
Share acquired, Holder shall receive, without cost to Holder, the total number
and kind of securities to which Holder would have been entitled had Holder
owned the Shares of record as of the date the dividend or subdivision occurred.

2.2           Reclassification,
Exchange or Substitution.  Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or
other event.  The Company or its
successor shall promptly issue to Holder a new Warrant for such new securities
or other property.  The new Warrant shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 2 including,
without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise of the new Warrant.  The provisions of this Section 2.2 shall
similarly apply to successive reclassifications, exchanges, substitutions, or
other events.

2.3           Adjustments
for Combinations, Etc.  If the
outstanding Shares are combined or consolidated, by reclassification or
otherwise, into a lesser number of shares, the Warrant Price shall be
proportionately increased.

2.4           No
Impairment.  The Company shall not,
by amendment of its Certificate of Incorporation or through a reorganization,
transfer of assets, consolidation, merger, dissolution, issue, or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this
Warrant by the Company, but shall at all times in good faith assist in carrying
out of all the provisions of this Article 2 and in taking all such action
as may be necessary or appropriate to protect Holder’s rights under this
Article against impairment.  If the
Company takes any action affecting the Shares or its common stock other than as
described above that adversely affects Holder’s rights under this Warrant, the
Warrant Price shall be adjusted downward and the number of Shares issuable upon
exercise of this Warrant shall be adjusted upward in such a manner that the
aggregate Warrant Price of this Warrant is unchanged.

2.5           Fractional
Shares.  No fractional Shares shall
be issuable upon exercise or conversion of the Warrant and the number of Shares
to be issued shall be rounded down to the nearest whole Share.  If a fractional share interest arises upon
any exercise or conversion of the Warrant, the Company shall eliminate such
fractional

 

share interest by paying Holder amount
computed by multiplying the fractional interest by the fair market value of a
full Share.

 

2.6           Certificate
as to Adjustments.  Upon each
adjustment of the Warrant Price, the Company at its expense shall promptly
compute such adjustment, and furnish Holder with a certificate of its Chief
Financial Officer setting forth such adjustment and the facts upon which such
adjustment is based.  The Company shall,
upon written request, furnish Holder a certificate setting forth the Warrant
Price in effect upon the date thereof and the series of adjustments leading to
such Warrant Price.

ARTICLE 3.           REPRESENTATIONS AND COVENANTS OF
THE COMPANY.

3.1           Representations
and Warranties.  The Company hereby
represents and warrants to the Holder that all Shares which may be issued upon
the exercise of the purchase right represented by this Warrant, and all
securities, if any, issuable upon conversion of the Shares, shall, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable, and
free of any liens and encumbrances except for restrictions on transfer provided
for herein or under applicable federal and state securities laws.  The Company shall at all times reserve a
sufficient number of shares of common stock for issuance upon Holder’s exercise
of its rights hereunder.

3.2           Notice
of Certain Events.  If the Company
proposes at any time (a) to declare any dividend or distribution upon its
common stock, whether in cash, property, stock, or other securities and whether
or not a regular cash dividend; (b) to offer for subscription pro rata to
the holders of any class or series of its stock any additional shares of stock
of any class or series or other rights; (c) to effect any reclassification
or recapitalization of common stock; (d) to merge or consolidate with or
into any other corporation, or sell, lease, license, or convey all or
substantially all of its assets, or to liquidate, dissolve or wind up; or
(e) offer holders of registration rights the opportunity to participate in
an underwritten public offering of the company’s securities for cash, then, in
connection with each such event, the Company shall give Holder (1) at
least 20 days prior written notice of the date on which a record will be
taken for such dividend, distribution, or subscription rights (and specifying
the date on which the holders of common stock will be entitled thereto) or for
determining rights to vote, if any, in respect of the matters referred to in
(c) and (d) above; (2) in the case of the matters referred to in (c) and
(d) above at least 20 days prior written notice of the date when the same
will take place (and specifying the date on which the holders of common stock
will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the
case of the matter referred to in (e) above, the same notice as is given to the
holders of such registration rights.

3.3           Information
Rights.  So long as the Holder holds
this Warrant and/or any of the Shares, the Company shall deliver to the Holder
(a) promptly after mailing, copies of all notices or other written
communications to the shareholders of the Company, (b) within ninety (90)
days after the end of each fiscal year of the Company, the annual financial
statements of the Company.

3.4           Registration
Under Securities Act of 1933, as amended. 
The Company hereby grants to Holder the registration rights described in
the Registration Rights Agreement by and between the Company and the Holder
dated as of March 19, 2007.

ARTICLE 4.           MISCELLANEOUS.

4.1           Term.  This Warrant is exercisable, in whole or in
part, at any time and from time to time on or before the Expiration Date set
forth above.

4.2           Legends.  This Warrant and the Shares (and the
securities issuable, directly or indirectly, upon conversion of the Shares, if
any) shall be imprinted with a legend in substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
PURSUANT TO RULE 144 OR

 

AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.

 

4.3           Compliance
with Securities Laws on Transfer.  This Warrant and the Shares issuable upon
exercise this Warrant (and the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) may not be transferred or assigned in
whole or in part without compliance with applicable federal and state
securities laws by the transferor and the transferee (including, without
limitation, the delivery of investment representation letters and legal
opinions reasonably satisfactory to the Company, as reasonably requested by the
Company).  The Company shall not require
Holder to provide an opinion of counsel if the transfer is to an affiliate of
Holder or if there is no material question as to the availability of current
information as referenced in Rule 144(c), Holder represents that it has complied
with Rule 144(d) and (e) in reasonable detail, the selling broker
represents that it has complied with Rule 144(f), and the Company is
provided with a copy of Holder’s notice of proposed sale.

4.4           Transfer
Procedure.  Subject to the provisions
of Section 4.3, Holder may transfer all or part of this Warrant or the
Shares issuable upon exercise of this Warrant (or the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) by giving the
Company notice of the portion of the Warrant being transferred setting forth
the name, address and taxpayer identification number of the transferee and
surrendering this Warrant to the Company for reissuance to the transferee(s)
(and Holder if applicable).  Unless the
Company is filing financial information with the SEC pursuant to the Securities
Exchange Act of 1934, the Company shall have the right to refuse to transfer
any portion of this Warrant to any person who directly competes with the
Company.

4.5           Notices.  All notices and other communications from the
Company to the Holder, or vice versa, shall be deemed delivered and effective
when given personally or mailed by first-class registered or certified
mail, postage prepaid, at such address as may have been furnished to the
Company or the Holder, as the case may be, in writing by the Company or such
holder from time to time.

4.6           Waiver.  This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.

4.7           Attorneys
Fees.  In the event of any dispute
between the parties concerning the terms and provisions of this Warrant, the
party prevailing in such dispute shall be entitled to collect from the other
party all costs incurred in such dispute, including reasonable attorneys’ fees.

4.8           Governing
Law.  This Warrant shall be governed
by and construed in accordance with the laws of the State of California,
without giving effect to its principles regarding conflicts of law.

 

	
  

  	
   

  	
  FOCUS ENHANCEMENTS, INC. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gary Williams

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  EVP of Finance & CFO

  	
   

  
							

 

 

APPENDIX
1

NOTICE OF EXERCISE

1.             The
undersigned hereby elects to purchase __________ shares of the Common Stock of
__________________________ pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.

1.             The
undersigned hereby elects to convert the attached Warrant into Shares/cash
[strike one] in the manner specified in the Warrant.  This conversion is exercised with respect to
_____________________ of the Shares covered by the Warrant.

[Strike paragraph that does not apply.]

2.             Please issue a certificate or
certificates representing said shares in the name of the undersigned or in such
other name as is specified below:

 

	
  

  
	
  (Name)

  
	
   

  
	
   

  
	
   

  
	
  (Address)

  

 

3.             The undersigned represents it is
acquiring the shares solely for its own account and not as a nominee for any
other party and not with a view toward the resale or distribution thereof
except in compliance with applicable securities laws.

 

	
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
  (Date)Exhibit 4.2

 

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

 

FOCUS ENHANCEMENTS, INC.

COMMON STOCK PURCHASE WARRANT

1.             Issuance; Certain Definitions. For good and
valuable consideration, the receipt of which is hereby acknowledged by FOCUS ENHANCEMENTS, INC., a Delaware corporation (the “Company”),
Carl E. Berg, or
registered assigns (the “Holder”) is hereby granted the right to purchase at
any time until 5:00 P.M., New York City time, on March 19,
2012 (the “Expiration Date”), 48,148 (forty-eight
thousand one hundred forty eight) fully paid and non-assessable
shares of the Company’s Common Stock, $0.01 par value per share (the “Common
Stock”), at an initial exercise price 
(the “Exercise Price”) of $1.35 (one dollar and
thirty-five cents) per  share, subject
to further adjustment as set forth herein. 
These shares are exercisable immediately 

 

2.             Exercise of Warrants.

 

(a)                                  This
Warrant is exercisable in whole or in part at any time and from time to
time.  Such exercise shall be effectuated
by submitting to the Company (either by delivery to the Company or by facsimile
transmission as provided in Section 8 hereof) a completed and duly executed
Notice of Exercise (substantially in the form attached to this Warrant) as provided
in this paragraph.  The date such Notice
of Exercise is faxed to the Company shall be the “Exercise Date,” provided that
the Holder of this Warrant tenders this Warrant Certificate to the Company
within five (5) business days thereafter and at the time of such Notice of
Exercise the Company has received payment for the shares being purchased.  The Notice of Exercise shall be executed by
the Holder of this Warrant and shall indicate the number of shares then being
purchased pursuant to such exercise. 
Upon surrender of this Warrant Certificate, together with appropriate
payment of the Exercise Price for the shares of Common Stock purchased, the
Holder shall be entitled to receive a certificate or certificates for the
shares of Common Stock so purchased.

(b)                                 The
Exercise Price per share of Common Stock for the shares then being exercised
shall be payable in cash by wire, certified or official bank check.

  
  
 

 

(c)                                  In
no event shall Holder exercise this Warrant for less than ten thousand (10,000)
Warrant Shares, as defined below, unless the Holder has a Warrant for less than
ten thousand (10,000) Warrant Shares, in which case Holder shall be required to
exercise the Warrant for all remaining Warrant Shares on the Exercise Date.

 

(d)                                 The
Holder shall be deemed to be the holder of the shares issuable to it in
accordance with the provisions of this Section 2 only on and after the Exercise
Date.

 

(e)                                  If at any time after one year from the date
of issuance of this Warrant there is no effective Registration Statement
registering the resale of the Warrant Shares by the Holder, this Warrant may
also be exercised at such time by means of a “cashless exercise” in which the
Holder shall be entitled to receive a certificate for the number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) =   the Closing Price on the trading day immediately
preceding the date of such election;

(B) = the Exercise Price of this Warrant, as adjusted;
and

(X)= the number of Warrant Shares issuable upon exercise
of this Warrant in accordance with the terms of this Warrant by means of                                    a cash exercise rather
than a cashless exercise.

3.             Reservation of Shares. At
all times during the term of this Warrant the Company  shall 
reserve for issuance upon exercise of this Warrant such number of shares
of its Common Stock as shall be required for issuance upon exercise of this
Warrant (the “Warrant Shares”).

 

4.             Mutilation or Loss of Warrant.  Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) receipt of reasonably
satisfactory indemnification, and (in the case of mutilation) upon surrender
and cancellation of this Warrant, the Company will execute and deliver a new
Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.

 

5.             Rights of the Holder.  Until the Warrant is exercised in whole or in
part, the Holder shall not, by virtue hereof, be entitled to any rights of a
stockholder in the Company, either at law or equity, and the rights of the
Holder shall be limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent set forth herein.

 

6.             Adjustments.

 

6.1                                 Adjustment
Mechanism.  If an adjustment of the
Exercise Price is required pursuant to this Section 6, the Holder shall be
entitled to purchase such number of shares of Common Stock as will cause (i)
the total number of shares of Common Stock Holder is entitled to purchase
pursuant to this Warrant, multiplied by (ii) the adjusted Exercise Price per
share, to equal (iii) the dollar amount of the total

 

 2
 

 

 number of shares of
Common Stock Holder is entitled to purchase before adjustment multiplied by the
total Exercise Price immediately before adjustment.

6.2                                 Capital
Adjustments.  In case of any stock
split or reverse stock split, stock dividend, reclassification of the Common
Stock, recapitalization, merger or consolidation, or like capital adjustment
affecting the Common Stock of the Company prior to the exercise of this Warrant
or its applicable portion, the provisions of this Section 6 shall be applied as
if such capital adjustment event had occurred immediately prior to the exercise
date of this Warrant and the original Exercise Price had been fairly allocated
to the stock resulting from such capital adjustment; and in other respects the
provisions of this Section shall be applied in a fair, equitable and reasonable
manner, as determined by the Company’s Board of Directors in its absolute
discretion,  so as to give effect, as
nearly as may be practicable, to the purposes hereof.

 

6.3                                 Spin
Off.  If, for any reason, prior to
the exercise of this Warrant in full, the Company spins off or otherwise
divests itself of a part of its business or operations or disposes all or of a
part of its assets in a transaction (the “Spin Off”) in which the Company does
not receive compensation for such business, operations or assets, but causes
securities of another entity to be issued to Common Stock security holders of
the Company, then the Company shall 
notify the Holder at least twenty 
(20) days prior to the record date with respect to such Spin-Off.

 

7.                                       Transfer
to Comply with the Securities Act; Restriction on Sales; Registration Rights.

 

7.1                                 Transfer.  This Warrant has not been registered under
the Securities Act of 1933, as amended, (the “Act”) and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares.  Neither
this Warrant nor any of the Warrant Shares or any other security issued or
issuable upon exercise of this Warrant may be sold, transferred, pledged or
hypothecated in the absence of an effective registration statement under the
Act relating to such security or an opinion of counsel satisfactory to the
Company that registration is not required under the Act.  Each certificate for the Warrant, the Warrant
Shares and any other security issued or issuable upon exercise of this Warrant
shall contain a legend on the face thereof, in form and substance satisfactory
to counsel for the Company, setting forth the restrictions on transfer
contained in this Section.  

 

7.2                                 Registration
Rights. As set forth in Exhibit 1, Holder shall have piggy-back
registration rights with respect to the Warrant Shares then held by the Holder
or then subject to issuance upon exercise of this Warrant (collectively, the “Remaining
Warrant Shares”).   

 

8.                                       Notices.  Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally
(including by recognized courier), sent by facsimile transmission, or sent by
certified, registered or express mail, postage pre-paid.  Any such notice shall be deemed given when so
delivered personally, or sent by facsimile transmission, or, if

 3
 

 

mailed, four days after the date of prepaid deposit in
the United States mail, certified, registered or overnight delivery as follows:

 

(i)                                     if
to the Company, to:

FOCUS
ENHANCEMENTS, INC.

1370
Dell Avenue

Campbell,
California 95008

ATTN:
Gary Williams, Chief Financial Officer

Telephone
No.: (408) 866-8300

Facsimile
No.:  (408) 866-4795

 

with a copy to:

Manatt,
Phelps & Phillips, LLP

1001
Page Mill Road, Bldg. 2

Palo
Alto, California 94304

Attn:
Jerrold F. Petruzzelli, Esq.

Telephone
No.: (650) 812-1335

Telecopier
No.: (650) 213-0260

 

(ii) if to the Holder,
to:

Carl
E. Berg

10050
Bandley Dr

Cupertino,
CA 95014

 

Telecopier
No.:

408-725-1626

 

Any
party may give notice to the other parties designated in accordance with this
Section to change its respective address or addressee for notices.

9.   Supplements and Amendments; Whole
Agreement.  This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto.  This Warrant contains the full
understanding of the parties with respect to its subject matter,  and there are no representations, warranties,
agreements or understandings other than expressly contained herein and therein.

 

10.           Governing Law.  This Warrant shall be deemed to be a contract
made under the laws of the State of Delaware for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws.  Each of
the parties consents to the jurisdiction of the federal courts whose districts
encompass any part of the State of California, Santa Clara County in connection
with any dispute arising under this Warrant and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions.

 4
 

 

11.  Jury Trial Waiver.  The Company and the Holder hereby waive a
trial by jury in any action, proceeding or counterclaim brought by either of
the parties hereto against the other in respect of any matter arising out or in
connection with this Warrant.

 

12.  Counterparts.  This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.

 

13.  Descriptive Headings.  Descriptive headings of the several Sections
of this Warrant are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.

 

IN WITNESS WHEREOF, the
parties hereto have executed this Warrant as of the 19 day of March, 2007.

 

	
  FOCUS ENHANCEMENTS, INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Gary Williams

  	
   

  
	
   

  
	
  Name: Gary
  Williams

  
	
  Title: EVP of
  Finance & CFO

  

 

 

 5
 

 

NOTICE OF EXERCISE OF WARRANT

 

The undersigned hereby
irrevocably elects to exercise the right, represented by the Warrant
Certificate dated as of                              ,        , to purchase                          shares of the Common Stock, $0.01 par value,
of FOCUS ENHANCEMENTS, INC.,  and tenders herewith payment in accordance
with Section 1 of said Common Stock Purchase Warrant.

CASH:$                                                     =  
(Exercise Price x Exercise Shares)

Payment is being made by:

_______                enclosed check

_______                wire transfer

_______                other

________        the cancellation of such number of
Warrant Shares as is necessary, in accordance with the formula set forth in
subsection 2(e), to exercise this Warrant with respect to the maximum number of
Warrant Shares purchasable pursuant to the cashless exercise procedure set
forth in subsection 2(e).

Please deliver the stock
certificate to:

Dated:

 

[Name of Holder]

By:

 6

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