TERMINATION AGREEMENT
AGREEMENT (this "Agreement") dated January 4, 2002, between Euston
Investments Holdings Limited ("Euston") and FOCUS Enhancements, Inc. ("FOCUS").
In consideration of the mutual covenants and agreements of the parties hereto,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, do hereby agree as follows:
1. Termination.
(a) (i) that the exercise price of that certain warrant,
issued to Euston on June 9, 2000, representing the right to purchase up
to 250,000 shares of FOCUS's common stock (the "Warrant"), is hereby
reduced from $1.625 to $0.75 (subject to adjustment in the Warrant),
for the remainder of the term of the Warrant and Euston shall have
until June 12, 2003 to exercise the Warrant into such shares of common
stock, (ii) that, except as otherwise set forth herein, the Private
Equity Line of Credit Agreement, dated July 28, 2000 (as amended on
February 6, 2001) between Euston and FOCUS, the agreements entered into
in connection therewith (except the Warrant) and any amendments thereto
(collectively, the "Purchase Agreement") are hereby terminated,
whereupon the Purchase Agreement shall become null and void and of no
further force or effect whatsoever, (iii) that no party shall have any
further or continuing obligations under the Purchase Agreement, except
for any registration rights with respect to the Warrants thereunder,
and (iv) that, except as otherwise set forth herein, each party shall
be irrevocably, unconditionally and generally released and forever
discharged (each, a "Releasee") from any and all debts, obligations,
reckonings, promises, covenants, agreements, contracts, endorsements,
bonds, suits, actions, specialties, claims, controversies, causes of
action, defaults, demands or judgments, at law or in equity, which any
of such parties ever had, now has or hereafter can, shall or may have,
against such Releasee under or in connection with the transactions
contemplated by the Purchase Agreement; provided, however, that this
termination and release shall have no force or effect whatsoever with
respect to Euston's rights and FOCUS's obligations under the Warrants,
including any registration rights under the Purchase Agreement. Euston
shall not exercise the Warrant by means of a "cashless exercise" until
after March 31, 2002 and thereafter only if there is no effective
registration statement registering for resale by Euston the shares
underlying the Warrant. The Warrants are and remain duly authorized by
all necessary corporate action, including the reduction in the exercise
price of the Warrants hereunder, and, when paid for or issued in
accordance with the terms thereof, the shares of common stock
underlying the warrants shall be validly issued and outstanding, fully
paid and non-assessable, and Euston shall be entitled to all rights
accorded to a holder of such common stock.
(b) The parties mutually agree not to make any defamatory or
derogatory statements to any third party, whether written or oral,
concerning one another from the beginning of the world to the end of
time.
2. Miscellaneous.
(a) Entire Agreement. This Agreement embodies the
entire agreement and understanding among the parties hereto relating to
the subject matter hereof and supersedes any prior agreements and
undertakings among the parties which relate to such subject matter.
(b) Binding Agreement. This Agreement shall be
binding upon and inure to the benefit of the parties hereto, their
respective successors, representatives and permitted assigns.
(c) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
(d) Severability. If any provision of this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality
and enforceability of all other provisions hereof shall in no way be
affected thereby.
(e) Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original
but all of which taken together shall constitute one instrument.
Execution may be made by delivery by facsimile.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the day and year first above written.
FOCUS ENHANCEMENTS, INC.
By: /s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
V.P. of Finance & CFO
EUSTON INVESTMENTS HOLDINGS LIMITED
By: /s/ Xxxxx Xxxx
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Xxxxx Xxxx
Director
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