Document:

ex4_7.htm

    
      

    

    Exhibit
4.7

     

    
      PIGGYBACK
REGISTRATION RIGHTS AGREEMENT

      

      THIS PIGGYBACK REGISTRATION RIGHTS
AGREEMENT (this "Agreement"), dated as of the same date as
the Warrant to which it is attached as Exhibit 1, is made by
and between FOCUS ENHANCEMENTS,
INC., a Delaware corporation, with headquarters located at 1370 Dell
Avenue, Campbell, California 95008 (the “Company”), and FutureWorks
(“Consultant”).

      

      W
I T N E S S E T H:

      

      WHEREAS, the Company has
agreed to issue the Warrant to the Consultant in connection with the performance
of certain services, and the Warrant may be exercised for the purchase of shares
of Common Stock (the “Warrant Shares”) upon certain  terms and
conditions; and

      

      WHEREAS, the Company has
agreed to provide certain registration rights under the Securities Act of 1933,
as amended, (the “1933 Act”) with respect to the Warrant.

      

      NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Holder hereby agree as
follows:

      

      1.       
   Definitions.   As used in this
Agreement, the following terms shall have the following meanings:

      

      (a)         “Effective
Date” means any  date after the date hereof that  the
Securities and Exchange Commission (“SEC”) declares effective a Registration
Statement covering Registrable Securities and otherwise meeting the conditions
contemplated hereby to be effective.

      

      (b)         “Holder”
means Consultant and any permitted transferee or assignee who agrees to become
bound by the provisions of this Agreement in accordance with Section 3 hereof
and who holds Registrable Securities, as the context may require.

      

      (c)         “Register,”
“Registered,” and “Registration” refer to a registration effected by preparing
and filing a Registration Statement or Statements in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous basis (“Rule
415"), and the SEC’s declaration or ordering of effectiveness of such
Registration Statement.

      

      (d)         "Registrable
Securities" means the Warrant and the Warrant Shares purchased upon exercise of
the Warrant as set forth in the document to which this Agreement is Exhibit
1.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (e)         “Registration
Statement” means a registration statement of the Company under the 1933 Act
covering Registrable Securities on Form S-3, if the Company is then eligible to
file using such form, and if not eligible, then on Form SB-2 or other
appropriate form.

      

      2.    
     Piggy-back
Registration Rights.  If, after the date hereof (but without
any obligation to do so), the Company proposes to register (including for this
purpose a registration effected by the Company for persons other than the
Holders) any of its securities under the 1933 Act in connection with the public
offering of such securities (other than a registration (i) with respect to an
employee benefit plan, or (ii)  in connection with a Rule 145
transaction under the 1933 Act), the Company shall, each such time, promptly
give each Holder written notice of such registration together with a list of the
jurisdictions in which the Company intends to attempt to qualify such securities
under applicable state securities laws.  Upon the written request of
each Holder given within twenty (20) business days after delivery of such
written notice by the Company to Holder, the Company shall, subject to the
provisions hereof, use its reasonable efforts to cause to be registered under
the 1933 Act all of the Registrable Securities that each such Holder has
requested to be registered.  If a Holder decides not to include all of
its Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth
herein.

       

      2.1         
 Obligations
of the Company.  Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:

       

      (a)         Prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its reasonable efforts to cause such registration statement
to become effective, and, upon the request of the holders of a majority of the
securities registered thereunder, keep such registration statement effective for
up to one hundred twenty (120) days.

       

      (b)         Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the 1933 Act with respect
to the disposition of all securities covered by such registration statement for
a period set forth in Section 2.1 (a) above.

       

      (c)         Furnish
to the Holders such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the 1933 Act, and such other
documents as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them.

       

      (d)         In
the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement with terms generally satisfactory to
the managing underwriter of such offering.  Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      (e)         Notify
each Holder of Registrable Securities covered by such registration statement, at
any time when a prospectus relating thereto is required to be delivered under
the 1933 Act, of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing. In such instance, Company shall use
its best efforts to amend or supplement such prospectus to cure any such
statement or omission so as to render such statement or omission not
misleading.

       

      (f)     
    Use its best efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and
(ii) a letter, dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering addressed to the underwriters.

       

      2.2    Furnish
Information.  In connection with any action pursuant to
this Section 2, the selling Holders shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them, and
the intended method of disposition of such securities as shall be required to
effect the registration of their Registrable Securities.  In that
connection, each selling Holder shall be required to represent to the Company
that all such information which is given is both complete and accurate in all
material respects when made.

       

      2.3         
 Definition
of Expenses.

       

      (a)         “Registration
Expenses” shall mean all expenses incurred by the Company, except for
“Selling Expenses,” in complying herewith  including, without
limitation, all registration, filing and qualification fees, underwriters’
expense allowances, printing expenses, fees and disbursements of counsel for the
Company,  blue sky fees and disbursements, and the expense of any
special audits incident to or required by any registration.

       

      (b)         “Selling Expenses”
shall mean all underwriting discounts and selling commissions applicable to the
sale of the Registrable Securities in the registration, all stock transfer taxes
and all fees and disbursements of any additional special counsel in connection
with each such registration attributable to the Registrable Securities being
registered.

       

      2.4          
Expenses
of Registration.  The
Company shall bear all Registration Expenses incurred in connection with any
registration, qualification or compliance,  All Selling Expenses shall
be borne by the Holders of the securities so registered, pro rata on the basis
of the number of Registrable Securities so registered.

       

      2.5    Underwriting
Requirements in Piggy-back Registration.  The right of any
Holder to registration pursuant to an underwriting shall be conditioned upon
such Holder’s participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting to the extent provided
herein.  All Holders proposing to distribute their securities through
such underwriting shall (together with the Company and any other persons
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected by the Company.  Notwithstanding any other provision of this
Agreement, if the underwriter determines that market factors require a
limitation of the number of shares to be underwritten, the underwriter
may  exclude some or all Registrable Securities from such registration
and underwriting.  Notwithstanding anything to the contrary herein, no
reduction shall be made with respect to securities offered by the Company for
its own account in connection with any Company offering. If any Holder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter.  Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration.

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      2.6    
      Delay
of Registration.  No
Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as a result of any controversy that
might arise with respect to the interpretation or implementation of this Section
2.

       

      2.7   
       Indemnification.  In the event any
Registrable Securities are included in a registration statement under this
Section 2:

       

      (a)         To
the extent permitted by law, the Company will indemnify and hold harmless each
Holder, the officers, directors and partners of each Holder, any underwriter (as
defined in the 1933 Act) for such Holder and each person, if any, who controls
such Holder or underwriter within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the “1934 Act”) against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a “Violation”): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading; or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any state securities law
or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any
state securities law; and the Company will reimburse each such Holder, officer,
director or partner, underwriter or controlling person for any reasonable legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the Company’s indemnity contained in this Section 2.7(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with  information furnished in writing
and expressly stated for use in connection with such registration by any such
Holder, or such Holder’s officers, directors or partners, underwriter, or
controlling person.  The Company shall not be required to indemnify
any person against any liability arising out of the failure of any Holder or
person acting on behalf of a Holder to deliver a prospectus as required by the
1993 Act. The
indemnity provided for in this Section 2.7(a) shall remain in full force and
effect regardless of any investigation made by or on behalf of such seller,
underwriter, participating person or controlling person and shall survive
transfer of such securities by such seller.

      
        
           

        

        
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      (b)         To
the extent permitted by law, each selling Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the Company
within the meaning of the 1933 Act, any underwriter (within the meaning of the
1933 Act) for the Company, any person who controls such underwriter, and any
other Holder selling securities in such registration statement or any of its
partners, directors or officers or any person who controls such Holder, against
any losses, claims, damages or liabilities (joint or several) to which any of
the foregoing persons may become subject, under the 1933 Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly stated in a writing for use in connection
with such registration; and each such Holder will reimburse any legal or other
expenses, as incurred, where same are reasonably incurred by any person intended
to be indemnified pursuant to this Section 2.7(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 2.7(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably
withheld.  Notwithstanding the foregoing, the liability of each Holder
under this Section 2.7(b) shall be limited to an amount equal to the net
proceeds from the offering price of the shares sold by such Holder.

       

      (c)         Promptly
after receipt by an indemnified party under this Section 2.7 of notice of the
commencement of any action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 2.7, notify the indemnifying party in writing of the
commencement thereof, and the indemnifying party shall have the right to
participate in and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the reasonable fees and expenses to be paid by the indemnifying party if the
indemnified party reasonably determines that representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such
proceeding.  The failure to notify an indemnifying party within a
reasonable time of the commencement of any such action, to the extent
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.7, but the omission so to notify the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 2.7.

      
        
           

        

        
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      (d)         In
order to provide for just and equitable contribution to joint liability under
the 1933 Act in any case in which either (i) any indemnified party makes a claim
under this Section 2.7 or any controlling person of such indemnified party makes
such a claim but is judicially determined (by entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.7 provides
for indemnification in such case, or (ii) contribution under the 1933 Act may be
required on the part of any such person seeking indemnity under the terms of
this Section 2.7; then, and in each such case, the Company and such person will
contribute to the aggregate losses, claims, damages, or liabilities to which
they may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations.  The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties’ relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission; provided, however,
that, in any such case, (A) no such person shall be required to contribute any
amount in excess of the net proceeds from the offering price of all such
Registrable Securities sold by it pursuant to such registration statement and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person or entity who was not guilty of such fraudulent
misrepresentation.

       

      2.8  
       Reports
Under Securities Exchange Act of 1934.  With
a view to making available to the Holders the benefits of Rule 144 promulgated
under the 1933 Act and any other rule or regulation of the SEC that may at any
time permit a Holder to sell securities of the Company to the public without
registration, the Company agrees to:

       

      (a)         use
its reasonable  efforts to make and keep public information available,
as those terms are understood and defined in Rule 144, at all times after ninety
(90) days after the closing date of the first registration statement filed by
the Company;

       

      (b)         use
its reasonable efforts to file with the SEC in a timely manner all reports and
other documents required of the Company under the 1933 Act and the 1934 Act;
and

       

      (c)         furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request: (i) a written statement by the Company that it has complied with
the reporting requirements of Rule 144 (at any time after ninety (90) days after
the closing date of the first registration statement filed by the Company), the
1933 Act and the 1934 Act (at any time after it has become subject to such
reporting requirements); (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company; and (iii) such other information as may be reasonably requested in
order to permit any Holder to avail itself of any rule or regulation of the SEC
or any state securities authority which permits the selling of any such
securities without registration or pursuant to such form.

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      3.
         Assignment
of Registration Rights.

       

      The
piggyback registration rights hereunder may be assigned by a Holder to a
transferee or assignee of such securities: (i) if such transfer is made in
connection with the transfer of all Registrable Securities held by the
transferor;  (ii) if such transferee or assignee acquires at least
thirty thousand (30,000) shares of the then outstanding Registrable Securities
held by such Holder, (iii) to any Affiliate (as defined in Regulation D of the
1933 Act) of such Holder; (iv) to any family member or trust established for the
benefit of an individual Holder; or (v) in connection with a distribution by
such Holder to any partner, member, former partner, or member or the estate of
such partner or member; provided in each case that the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; provided, however, that such
assignment shall be effective only if the transferee agrees in writing at the
time of transfer to be  bound by the terms and conditions of this
Agreement and such transfer of any Registrable Securities is lawful under all
applicable securities laws.

       

      4.    
     Termination of the Company’s
Obligations.

       

      The
Company shall have no obligations hereunder with respect to any registration
request or requests made by any Holder (a) more than three years following the
date of the Warrants are issued or (b) all Registrable Securities held by and
issuable to such Holder (and its affiliates) may be sold under Rule 144 during
any ninety (90) day period.

      

      5.    
     Obligations
of the Investors.  In connection
with the registration of the Registrable Securities, any Holder  shall
have the following obligations:

       

      (a)         Such
Holder shall cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of any
respective  Registration Statement hereunder, unless such Holder has
notified the Company in writing of such Holder's election to exclude all of such
Holder's Registrable Securities from the Registration Statement;
and

      

      (b)         Each
Holder agrees that, upon receipt of any notice from the Company of the happening
of any material event which, in the Company’s opinion justifies the cessation of
the distribution of the Registrable Securities, such Holder will immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Holder's receipt of
the copies of any supplemented or amended prospectus which addresses such
material event, and, if so directed by the Company, such Holder shall deliver to
the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in such Holder's possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice.

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      6.     
     Amendment
of Registration Rights.

      

      Any
provision of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Holders who
hold a fifty (50%) percent interest of the Warrant Shares as of such
date.  Any amendment or waiver effected in accordance with this
Section 6 shall be binding upon each Holder and the Company.

      

      7.     
     Miscellaneous.

      

      (a)         A
person or entity is deemed to be a holder of Registrable Securities whenever
such person or entity owns of record such Registrable Securities.  If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.

      

      (b)         Notices
required or permitted to be given hereunder shall be given in the manner
contemplated by the Warrant:  if to the Company or to the Holder, to
their respective address contemplated by the Warrant or at such other address as
each such party furnishes by notice given in accordance with this clause
(b).

      

      (c)         Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

      

      (d)         This
Agreement 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 exclusive 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 Agreement 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
jurisdiction.

      

      (e)         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 of or in connection with this
Agreement.

      

      (f)     
    If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other
jurisdiction.

      

      (g)    
    This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties
hereto.

      
        
           

        

        
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      (h)         All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require.

      

      (i)         The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning thereof.

      

      (j)         This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement.  This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

      

      (k)         This
Agreement constitutes the entire agreement among the parties hereto with respect
to the Holder’s registration rights with respect to the Warrant and Warrant
Shares  There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein.  This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to its subject matter.

      

      

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      IN WITNESS WHEREOF, the
parties have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized as of the day and year first above
written.

      

      
        	 
      	
                COMPANY:

              	 
	 
      	 
      	 
      	 
	 
      	
                FOCUS
      ENHANCEMENTS, INC.

              	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	
                By:

              	
                /s/ Gary Williams

              	 
	 
      	
                Name:

              	
                Gary Williams

              	 
	 
      	
                Title:

              	
                EVP of Finance & CFO

              	 
	 
      	 
      	 
      	 
	 
      	
                FUTUREWORKS

              	 
	 
      	 
      	 
      	 
	 
      	
                By:

              	
                /s/ Brian Solis

              	 
	 
      	
                Name:

              	
                Brian Solis

              	 
	 
      	
                Title:

              	
                Presidentex4_8.htm

    
      

    

    Exhibit
4.8

     

    
      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”), Keith L. Lippert, 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 1, 2011 (the “Expiration
Date”), 37,500 (thirty-seven
thousand five hundred) 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 $0.50 (fifty cents) per share, subject to
further adjustment as set forth herein.  Such Warrant shall vest in
accordance with Appendix A.

       

      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
      (1,000) Warrant Shares unless the Holder has a Warrant for less than ten
      thousand (1,000) 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.

              

      

       

      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 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.

              

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      
        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 mailed, four (4)
days after the date of prepaid deposit in the United States mail, certified,
registered or overnight delivery as follows:

       

      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

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      
         

        
          	 
      	
                  (ii)
      if to the Holder, to:

                	 
      
	 
      	
                   

                	 
      
	 
      	
                   

                	 
      
	 
      	
                   

                	 
      
	 
      	
                   

                	 
      
	 
      	 
      	 
      
	 
      	
                  Fax
      No.:

                	 
      
	 
      	
                   

                	 
      

        

         

      

      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.

       

      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.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the parties hereto have executed this Warrant as of the 1st day
of March, 2008.

       

      
        	 
      	
                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

                  
	 
	 	
                    Please
      deliver the stock certificate to:

                  

          

           

        

        Dated:

        
 

        [Name of
Holder]

        

        By:

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Appendix
A

      

      3,750
warrant shares shall vest monthly beginning on March 30, 2008 and continue until
all shares are vested on December 30, 2008.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit
1

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