As filed with the Securities and Exchange Commission on June 26, 1998
Registration No. 333- _____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------
FOCUS ENHANCEMENTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11860 04-3186320
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
142 North Road
Sudbury, Massachusetts 01776
(978) 371-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Christopher P. Ricci
Senior Vice President and General Counsel
FOCUS Enhancements, Inc.
142 North Road
Sudbury, Massachusetts 01776
(978) 371-2000
(Name, address, including zip code, telephone number, including area
code, of agent for service)
Copy to:
John A. Piccione, Esq.
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
(617) 338-2800
---------------------
Approximate date of commencement of proposed sale to the public: From
time to time or at one time after the effective date of the Registration
Statement as determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. If delivery of the prospectus is expected to be
made pursuant to Rule 434, please check the following box.
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Amount of
Title of Each Class of Securities to Amount to Maximum Registration
be Registered be Registered Price to Public Offering Price Fee(2)
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share(1) 350,000 $2.47 $864,500 $255.03
<FN>
(1) The Common Stock being registered consists of 350,000 shares issued to
Digital Vision, Inc. (the "Selling Shareholder") in connection with the
sale of assets by Selling Shareholder in March 1998 (the "Sale of
Assets").
(2) The registration fee is calculated pursuant to Rule 457(c) of the
Securities Act of 1933 by taking the average of the bid and asked
prices of the registrant's Common Stock, $.01 par value per share, on
June 25, 1998 as reported on the NASDAQ SmallCap Market.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
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<PAGE>
Subject to Completion
Preliminary Prospectus Dated June 26, 1998
REOFFER
PROSPECTUS
FOCUS ENHANCEMENTS, INC.
350,000 Shares of Common Stock
This Prospectus relates to the offer and sale from time to time of up
to 350,000 shares (the "Shares") of common stock, $.01 par value per share (the
"Common Stock") of FOCUS Enhancements, Inc. (the "Company"), by Digital Vision,
Inc., (the "Selling Stockholder"), or by its pledgees, donees, transferees or
other successors in interest that receive such Shares as a gift, distribution or
other non-sale related transfer. The Shares were issued by the Company to the
Selling Stockholder on March 31, 1998 as partial payment for certain assets sold
by the Selling Stockholder to the Company (the "Sale of Assets"). The Company
will not receive any proceeds from the sale of the Shares by the Selling
Stockholder. The expenses of registration of the Shares which may be offered
hereby under the Securities Act of 1933, as amended (the "Securities Act") will
be paid by the Company.
The Shares covered under the Registration Statement of which this
Prospectus is a part may be offered for sale from time to time by or for the
account of the Selling Stockholder, or its pledgees, donees, transferees or
other successors in interest, in the open market, on the NASDAQ Small Cap Market
or on one or more exchanges on which the Shares are then listed, in privately
negotiated transactions, in an underwritten offering, in a combination of such
methods, or by any other legally available means, at market prices prevailing at
the time of such sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices. The Shares are intended to be sold through
one or more broker-dealers or directly to purchasers. Such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Stockholder, its successors in interest and/or the purchasers of the
Shares for whom such broker-dealers may act as agent or to whom they may sell as
principal, or both (which compensation as to a particular broker-dealer may be
in excess of customary commissions). The Selling Stockholder, its successors in
interest and/or any broker-dealers acting in connection with the sale of the
Shares hereunder may be deemed to be underwriters with the meaning of Section
2(11) of the Securities Act, and any commissions or other compensation received
by them and any profits realized by them on the resale of the Shares as
principals may be deemed underwriting compensation under the Securities Act. See
"SELLING STOCKHOLDER" and "PLAN OF DISTRIBUTION."
The Common Stock is traded on the Nasdaq SmallCap Market under the
symbol FCSE. On June 25, 1998, the last sale price of the Company's Common Stock
as reported on the Nasdaq SmallCap Market was $2.50.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------------------
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" AT PAGES 5 THROUGH 7.
----------------------
The date of this Prospectus is June __, 1998.
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus in connection with the offer contained in this Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company or the Selling Stockholder. This
Prospectus does not constitute an offer to sell or solicitation of an offer to
buy securities in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create an implication that there
has been no change in the affairs of the Company since the date hereof or the
information contained or incorporated by reference herein is correct at any time
subsequent to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copies obtained at the public reference facilities maintained by
the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the Commission:
Chicago Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511; and New York Regional Office, Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the Commission
at its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
materials may also be accessed electronically by means of the Commission's home
page at http://www.sec.gov.
The Company has filed with the Commission a Form S-3 Registration
Statement (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This prospectus, which constitutes part of the Registration
Statement filed by the Company with the Commission under the Securities Act
omits certain information contained in the Registration Statement in accordance
with the rules and regulations of the Commission. Reference is hereby made to
the Registration Statement and the exhibits relating thereto for further
information with respect to the Company and the securities offered hereby. Any
statements contained herein concerning provisions of any documents are not
necessarily complete, and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission
pursuant to the Exchange Act, are hereby incorporated in this Prospectus and
specifically made a part hereof by reference: (i) the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1997; (ii) the Company's Quarterly
Report on Form 10-QSB for the quarter ended March 31, 1998; (iii) the definitive
Proxy Statement filed with the Commission dated April 30, 1998 provided to
stockholders in connection with the Annual Meeting of Stockholders to be held on
July 31, 1998; and (iv) the description of the Company's Common Stock contained
in the Registration Statement on Form SB-2 File No. 33-60248-B filed with the
Commission on March 29, 1993, as amended. All documents filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the offering of the
securities offered hereby shall be deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the respective dates of filing of
such documents.
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<PAGE>
Any statement contained herein or in a document incorporated or deemed
to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein (or in the applicable Prospectus Supplement), or in any
subsequently filed document that also is or is deemed to be incorporated herein
by reference, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom this Prospectus is delivered, upon the written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference in this Prospectus (excluding exhibits unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be made to the Company at its
principal executive offices, 142 North Road, Sudbury, Massachusetts 01776,
Attention: Christopher P. Ricci, telephone (978) 371-2000.
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<PAGE>
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
more detailed information appearing elsewhere in this Prospectus or incorporated
herein by reference and the financial statements which are incorporated herein
by reference.
THE COMPANY....................... FOCUS Enhancements, Inc. (the "Company"
or "FOCUS") internally develops, markets
and sells worldwide a proprietary line
of PC-to-TV video conversion products
for Windows(TM) and Mac(TM)OS based
personal computers. The Company's
proprietary PC-to-TV video conversion
products include video output devices
marketed and sold under the Company's
registered brand name, TView. All of the
Company's PC-to-TV conversion products
enable users to transmit at low-cost,
high quality, computer generated images
from any DOS, Windows or Mac OS based
personal computer to any television of
any size with a standard RCA or S-Video
interface. FOCUS' PC-to-TV technology
provides sharp, flicker-free,
computer-generated images on televisions
for multimedia/business presentations,
classroom/training sessions, game
playing or even collective viewing of
spreadsheets or Internet browsing. The
Company markets and sells its FOCUS
branded consumer products globally
through a network of distributors,
volume resellers, mail order, value
added resellers ("VARs") and original
equipment manufacturers ("OEMs").
RISK FACTORS...................... The Offering involves substantial risk.
See "RISK FACTORS".
SECURITIES OFFERED................ 350,000 Shares. See "SELLING
STOCKHOLDER."
OFFERING PRICE.................... All or part of the Shares offered hereby
may be sold from time to time in amounts
and on terms to be determined by the
Selling Stockholder at the time of sale.
USE OF PROCEEDS................... The Company will receive no part of the
proceeds from the sale of the Shares
registered pursuant to this Registration
Statement.
NASDAQ TRADING SYMBOL............. FCSE
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<PAGE>
RISK FACTORS
An investment in the Securities offered hereby involves a high degree
of risk and should only be purchased by investors who can afford to lose their
entire investment. The following factors, in addition to those discussed
elsewhere in the Prospectus, should be considered carefully in evaluating the
Company and its business.
Future Capital Needs. At March 31, 1998, the Company had working
capital of $5,825,071, cash and cash equivalents of $1,164,624 and was fully
drawn on its line of credit (approximately $690,000 at March 31, 1998) with its
bank and its $1.5 million term note with an unaffiliated lender. Historically,
the Company has been required to meet its short- and long-term cash needs
through debt and the sale of Common Stock in private placements in that cash
flow from operations has been insufficient. During 1997, the Company received
$6,081,939 in net proceeds from the exercise of warrants, stock options and the
sale of Common Stock. In March 1998, the Company received approximately
$2,800,000 in net proceeds from the sale of Common Stock in a Private Placement,
and in May 1998, the Company received approximately $6,000,000 in proceeds from
the exercise of Common Stock Purchase Warrants issued in connection with the
Company's initial public offering.
The Company's future capital requirements will depend on many factors,
including cash flow from operations, continued progress in its research and
development programs, competing technological and market developments, and the
Company's ability to market its products successfully. During 1998, the Company
may be required to raise additional funds through equity or debt financing, of
which there can be no assurance. Any equity financing could result in dilution
to the Company's then-existing stockholders. Sources of debt financing may
result in higher interest expense. Any financing, if available, may be on terms
unfavorable to the Company. If adequate funds are not available, the Company may
be required to curtail its activities significantly.
Reliance on Major Customers. For the three months ended March 31, 1998,
approximately 16% of the Company's revenues were derived from sales to a major
distributor, approximately 27% of the Company's revenues were derived from sales
to a major manufacturer of personal computers and its contract manufacturer, and
approximately 11% of the Company's revenues were derived from sales to a major
television manufacturer. Management expects that sales to these customers will
continue to represent a significant percentage of the Company's future revenues.
The Company does not have long-term contracts pursuant to which any customer is
required to purchase any minimum amount of products. There can be no assurance
that the Company will continue to receive orders of the same magnitude as in the
past from existing customers or that it will be able to market its current or
proposed products to new customers. The loss of any major customer by the
Company would have a materially adverse effect on the business of the Company as
a whole.
History of Operating Losses. The Company has experienced limited
profitability since its inception and at March 31, 1998, had an accumulated
deficit of $22,046,863. The Company incurred net losses of $10,772,410 and
$1,986,079 for the years ended December 31, 1996 and 1997, respectively. The
Company had net income of $364,748 and $16,476 for the first three months of
1997 and 1998, respectively. There can be no assurance that the Company will be
profitable in 1998.
Limited Availability of Capital under Credit Arrangements with Lenders.
The Company maintains a line of credit with Silicon Valley Bank which is fully
drawn ($690,000 was owed to the bank at March 31, 1998). At December 31, 1997,
the Company was in violation of certain debt covenants relating to the line of
credit. In addition, the line of credit was scheduled to expire on March 8,
1998. In March 1998, the Company received a waiver of the covenants from the
bank, a revision of the loan covenants and an agreement to extend the line until
June 8, 1998. The Company is currently in discussions with Silicon Valley Bank
to extend the line for an additional term. The Company is currently in
discussions with another lender to refinance this line.
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<PAGE>
The Company also currently owes $1.5 million to an unaffiliated lender
pursuant to a term note that accrues interest at a revolving rate of prime plus
4%, is payable quarterly in arrears at the end of December, March, June, and
September, and the principal was due February 1, 1996. On June 28, 1996, the
Company negotiated an amendment to the term note with the lender to extend the
due date of the term note to March 31, 1997. Pursuant to the amendment, the
Company granted the lender a second security interest in all the assets of the
Company. The Company anticipates paying this lender with capital raised from
recent warrant exercises.
In the event that the Company is unsuccessful in refinancing its bank
line of credit or the Company is unable to pay the unaffiliated lender its term
note, the Company would be required to repay the amounts outstanding from
working capital or from equity or debt financing.
Market Acceptance. The Company's sales and marketing strategy is
targeted to sales of its PC-to-TV video-graphics products to the Windows, MAC OS
markets, including computer manufacturers, VGA graphic card developers and VGA
chip developers, as well as to television manufacturers. Although the Company
has to date experienced success in penetrating these markets, there can be no
assurance that the Company's marketing strategy will continue to be effective
and that current customers will continue to buy the Company's products. Market
acceptance of the Company's current and proposed products will depend upon the
ability of the Company to demonstrate the advantages of its products over other
PC-to-TV video-graphics products.
Reliance on Two Vendors. In the year ended December 31, 1997,
approximately 90% of the components for the Company's products were secured and
manufactured on a turnkey basis by two vendors. In the event that either vendor
were to cease supplying the Company, management believes there are alternative
vendors for the components for the Company's products. However, the Company
would experience short-term delays in the shipment of its products.
Dependence on Timely Delivery of the FOCUS Scan 300 Chip. In late 1997,
the Company completed development of an ASIC called the FOCUS Scan 300 Chip
which the Company is incorporating into all of its next generation PC-to-TV
video-graphics products. The Company is relying on an outside vendor to
manufacture the Chip. A significant portion of the Company's anticipated
revenues and gross margins for 1998 are dependent on timely delivery of
sufficient quantities of the FOCUS Scan 300 Chip in order to fill pending and
anticipated orders. In the event that the Company does not receive sufficient
quantities of the Chip to fill orders, the Company's revenues and profitability
for 1998 could be adversely effected.
Technological Obsolescence. The Windows and MAC OS markets are
characterized by extensive research and development and rapid technological
change resulting in product life cycles of nine to eighteen months. Development
by others of new or improved products, processes or technologies may make the
Company's products or proposed products obsolete or less competitive. The
Company will be required to devote substantial efforts and financial resources
to enhance its existing products and to develop new products. There can be no
assurance that the Company will succeed with these efforts.
Competition. The Windows and MAC OS markets are extremely competitive.
The Company currently competes with other developers of PC-to-TV conversion
products and with video-graphic integrated circuit developers. Many of the
Company's competitors have greater market recognition and greater financial,
technical, marketing and human resources than the Company. Although the Company
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<PAGE>
is not currently aware of any announcements by its competitors that would have a
material impact on the Company or its operations, there can be no assurance that
the Company will be able to compete successfully against existing companies or
new entrants to the marketplace.
Component Supply Problems. The Company purchases all of its parts from
outside suppliers and from time to time experiences delays in obtaining some
components or peripheral devices. The Company attempts to reduce the risk of
supply interruption by evaluating and obtaining alternative sources for various
components or peripheral devices. However, there can be no assurance that supply
shortages will not occur in the future which could significantly increase the
cost, or delay shipment of, the Company's products, which in turn could
adversely affect its results of operations.
Protection of Proprietary Information. Although the Company has filed
five patent applications and expects to file two additional patent applications
in 1998 with respect to its PC-to-TV video-graphics products, the Company does
not currently have any patents. The Company treats its technical data as
confidential and relies on internal nondisclosure safeguards, including
confidentiality agreements with employees, and on laws protecting trade secrets
to protect its proprietary information. There can be no assurance that these
measures will adequately protect the confidentiality of the Company's
proprietary information or that others will not independently develop products
or technology that are equivalent or superior to those of the Company. While it
may be necessary or desirable in the future to obtain licenses relating to one
or more of its products or relating to current or future technologies, there can
be no assurance that the Company will be able to do so on commercially
reasonable terms.
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<PAGE>
THE COMPANY
FOCUS Enhancements, Inc. (the "Company" or "FOCUS") internally
develops, markets and sells worldwide a line of proprietary PC-to-TV video
conversion products for PC's and Mac's(R). Based on an independent survey by
Frost & Sullivan, the Company is an industry leader in the development and
marketing of PC-to-TV video conversion products that make personal computers
"TV-ready" and televisions "PC-ready."
The Company's proprietary PC-to-TV video conversion products include
video output devices marketed and sold under the Company's registered trademark
"TView." All of the Company's PC-to-TV conversion products enable users to
transmit at low-cost, high-quality, computer generated images from any DOS,
Windows or Mac OS based personal computer to any television of any size with a
standard RCA or S-Video interface. FOCUS' PC-to-TV technology provides sharp,
flicker-free, computer-generated images on televisions for multimedia/business
presentations, classroom/training sessions, game playing, collective viewing of
computer applications, and Internet browsing.
The Company markets and sells its FOCUS branded consumer products
globally through a network of distributors, volume resellers, mail order,
value-added resellers ("VARs") and original equipment manufacturers ("OEMs"). In
North America, the Company markets and sells its products through national
distributors such as Ingram Micro D, D & H, Academic and Nuvo; national volume
resellers such as CompUSA, Computer City, Micro Center, Staples and through
third party mail order companies such as MicroWarehouse, Multiple Zones, Global
Direct, PC Connection and CDW.
In addition, the FOCUS branded PC-to-TV products have been selected by
leading personal computer manufacturers to be marketed with the use of their
select brand of personal computers. Compaq, and Toshiba have included the
Company's PC-to-TV products on their selected market price lists, and promote
the FOCUS PC-to-TV products in their box materials.
The Company also markets and sells its products internationally in over
30 countries by independent distributors in each country. These independent
distributors market and sell the FOCUS branded products to retailers, mail order
companies, and VARs in their respective countries.
In addition to the FOCUS branded products, the Company markets, sells
or licenses its proprietary PC-to-TV technology to television manufacturers such
as Philips Consumer Electronics, Zenith Electronics, Port, and to personal
computer manufacturers such as Apple Computer. The Company is currently in
discussions with several other PC manufacturers, television manufacturers, VGA
chip developers and VGA card developers globally.
The Company was founded in December 1991, as a Massachusetts
corporation and was reincorporated in Delaware in April 1993. In December 1993,
the Company acquired Lapis Technologies Inc. ("Lapis"), a developer of
high-quality, low-cost Macintosh PC to TV video graphics products. Effective
September 30, 1996, the Company consummated the acquisition of TView, Inc., a
developer of PC-to-TV video conversion ASIC technology. This acquisition has
played a major strategic role in allowing FOCUS to gain a major technological
lead over competitors in the video scan conversion category and has positioned
FOCUS as a leader in PC-to-TV video conversion technology. On September 30,
1997, the Company sold its line of computer connectivity products. In March
1998, the Company acquired Digital Vision, Inc., a developer of PC-to-TV video
scan converters and TV-to-PC video frame capture products for the personal
computer marketplace.
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<PAGE>
The Company's principal executive offices are located at 142 North
Road, Sudbury, Massachusetts 01776. Its research and development center is
located at 9275 SW Nimbus Drive, Beaverton, Oregon 97008. The Company's European
sales and marketing office, FOCUS Enhancements B.V., is located at Schipholweg
118, Kantorenhuis, 2316 XD Leiden, The Netherlands. The Company's general
telephone number is (978) 371-2000 and its worldwide web address is
http://www.focusinfo.com.
USE OF PROCEEDS
The Company will not receive any proceeds from the resale by the
Selling Stockholder of the Shares.
SELLING STOCKHOLDER
The Shares being offered for resale by the Selling Stockholder were
acquired in connection with the Sale of Assets. In connection with the Sale of
Assets, the Company granted the Selling Stockholder certain registration rights
pursuant to which the Company agreed to keep the Registration Statement, of
which this Prospectus is a part, effective until the date that all of such
Shares have been sold pursuant to the Registration Statement or the Shares are
otherwise eligible for resale pursuant to Rule 144(k) of the Securities Act,
whichever occurs first. The Company has agreed to indemnify the Selling
Stockholder and its officers, directors, members, employees, partners, agents
and each person who controls the Selling Stockholder against certain expenses,
claims, losses, damages and liabilities (or action, proceeding or inquiry by any
regulator or self-regulatory organization in respect thereof). The Company has
agreed to pay its expenses of registering the Shares under the Securities Act,
including registration and filing fees, blue sky expenses, printing expenses,
accounting fees, administrative expenses and its own counsel fees.
The following table sets forth the name of the Selling Stockholder, the
number of shares of Common Stock beneficially owned by the Selling Stockholder
as of June 26, 1998 and the number of Shares being offered by the Selling
Stockholder. The Shares being offered hereby are being registered to permit
public secondary trading, and the Selling Stockholder may offer all or part of
the Shares for resale from time to time. However, the Selling Stockholder is
under no obligation to sell all or any portion of the Shares nor is the Selling
Stockholder obligated to sell any Shares immediately under this Prospectus. All
information with respect to share ownership has been furnished by the Selling
Stockholder. Because the Selling Stockholder may sell all or part of its Shares,
no estimates can be given as to the number of Shares that will be held by the
Selling Stockholder upon termination of any offering made hereby. See "PLAN OF
DISTRIBUTION."
<TABLE>
<CAPTION>
Name of Selling Shares Beneficially Shares to be Sold in the Shares Owned After
Stockholder Owned Prior to the Offering the Offering (1)(2)
Offering (1)
<S> <C> <C> <C>
Digital Vision, Inc. 350,000 350,000 - 0 -
<FN>
(1) Beneficial ownership is determined in accordance with Rule 13d-3 of the Exchange Act. The entity named in
the table above has sole voting and investment power with respect to all shares of Common Stock shown as
beneficially owned by it.
(2) Assumes all Shares offered hereby are sold in the Offering.
</FN>
</TABLE>
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<PAGE>
PLAN OF DISTRIBUTION
The Shares may be sold or distributed from time to time by the Selling
Stockholder or by pledgees, donees or transferees of, or successors in interest
to, the Selling Stockholder, directly to one or more purchasers (including
pledgees) or through brokers, dealers or underwriters who may act solely as
agents or may acquire Shares as principals, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices, at negotiated
prices or at fixed prices, which may be changed. The distribution of the Shares
may be effected in one or more of the following methods: (i) ordinary brokers
transactions, which may include long or short sales, (ii) transactions involving
cross or block trades or otherwise on the NASDAQ SmallCap Market, (iii)
purchases by brokers, dealers or underwriters as principal and resale by such
purchasers for their own accounts pursuant to this Prospectus, (iv) "at the
market" to or through market makers or into an existing market for the Common
Stock, (v) in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected through agents,
(vi) through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise), or (vii) any combination of the foregoing, or by
any other legally available means. In addition, the Selling Stockholder or its
successors in interest may enter into hedging transactions with broker-dealers
who may engage in short sales of shares of Common Stock in the course of hedging
the positions they assume with the Selling Stockholder. The Selling Stockholder
or its successors in interest may also enter into option or other transactions
with broker-dealers that require the delivery by such broker-dealers of the
Shares, which Shares may be resold thereafter pursuant to this Prospectus.
Brokers, dealers, underwriters or agents participating in the
distribution of the Shares may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholder and/or the purchasers of
Shares for whom such broker-dealers may act as agent or to whom they may sell as
principal, or both (which compensation as to a particular broker-dealer may be
in excess of customary commissions). The Selling Stockholder and any
broker-dealers acting in connection with the sale of the Shares hereunder may be
deemed to be underwriters within the meaning of Section 2(11) of the Securities
Act, and any commissions received by them and any profit realized by them on the
resale of Shares as principals may be deemed underwiting compensation under the
Securities Act. Neither the Company nor the Selling Stockholder can presently
estimate the amount of such compensation. The Company knows of no existing
arrangements between the Selling Stockholder and any other stockholder, broker,
dealer, underwriter or agent relating to the sale of distribution of the Shares.
The Selling Stockholder and any other persons participating in a
distribution of securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M, which may restrict certain activities of, and limit
the timing of purchases and sales of securities by the Selling Stockholder and
other persons participating in a distribution of securities. Furthermore, under
Regulation M, persons engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and certain other activities with
respect to such securities for a specified period of time prior to the
commencement of such distributions subject to specified exceptions or
exemptions. All of the foregoing may affect the marketability of the securities
offered hereby.
Any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule rather
than pursuant to this Prospectus.
There can be no assurance that the Selling Stockholder will sell any or
all of the shares of Common Stock offered hereunder.
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<PAGE>
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby was passed
upon for the Company by Sullivan & Worcester LLP, Boston, Massachusetts 02109.
John A. Piccione, Esq., is a partner at Sullivan & Worcester LLP. Mr. Piccione
holds options to purchase 45,000 shares of Common Stock.
EXPERTS
The consolidated financial statements of the Company as of and for the
year ended December 31, 1997 appearing in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1997, have been audited by Wolf &
Company, P.C. independent accountants as set forth in their report thereon. Such
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the Shares being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in such Act and will
be governed by the final adjudication of such issue.
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<PAGE>
No dealer, salesman or other person has been authorized to give any
information or make any representation other than those contained in this
Prospectus. If given or made, such information or representations must not be
relied upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any of the
securities other than the specific securities to which it relates, or an offer
or solicitation to any person in any jurisdiction where such an offer or
solicitation would be unlawful.
TABLE OF CONTENTS
Page
Available Information 2
Incorporation of Certain
Documents by Reference 2
Prospectus Summary 4
Risk Factors 5
The Company 8
Use of Proceeds 9
Selling Stockholder 9
Plan of Distribution 9
Legal Matters 11
Experts 11
Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities 11
350,000 Shares of Common Stock
FOCUS ENHANCEMENTS, INC.
--------------
PROSPECTUS
--------------
June ___, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The expenses in connection with the issuance and distribution of the
Common Stock to be registered are estimated (except for the Securities and
Exchange Commission filing fee) below. All such expenses will be paid by the
Registrant.
Registration Fee Under Securities Act $ 255.03
Blue Sky Fees and Expenses 5,000.00
Legal Fees and Expenses 15,000.00
Accounting Fees and Expenses 8,000.00
Printing and Mailing Costs 1,000.00
Miscellaneous Fees and Expenses 2,000.00
------------
Total Expenses $ 31,255.03
============
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify, subject to the standards therein prescribed, any
person in connection with any action, suit or proceeding brought or threatened
by reason of the fact that such person is or was a director, officer, employee
or agent of the corporation or was serving as such with respect to another
corporation or other entity at the request of such corporation.
The Delaware General Corporation Law, the Company's charter and by-laws
provide for indemnification of the Company's directors and officer for
liabilities and expenses that they may incur in such capacities. In general,
directors and officers are indemnified with respect to actions taken in good
faith in a manner reasonably believed to be in, or not opposed to, the best
interests of the Company, and with respect to any criminal action or proceeding,
actions that the indemnitee had no reasonable cause to believe were unlawful.
Reference is made to the Company's Second Restated Certificate of Incorporation,
as amended and Restated By-laws incorporated herein by reference.
The Underwriting Agreement executed in connection with the Company's
initial public offering provides that the underwriters are obligated, under
certain circumstances, to indemnify directors, officers and controlling persons
of the Company against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Act"). Reference is made to the form of
Underwriting Agreement previously filed as Exhibit 1.1 to the Company's
Registration Statement on Form SB-2, No. 33-602-B.
The Company has obtained directors and officers liability insurance for
the benefit of its directors and certain of its officers.
Reference is made to the Underwriting Agreement described above,
pursuant to which the Registrant agreed to indemnify each underwriter and each
person, if any, who controls any underwriter within the meaning of the Act, or
the Securities Exchange Act of 1934, as amended, against certain types of civil
liabilities arising in connection with the aforementioned Registration Statement
or the prospectus contained therein.
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<PAGE>
Item 16. Exhibits
The following documents have been previously filed as Exhibits and are
incorporated herein by reference except those exhibits indicated with an
asterisk which are filed herewith:
Exhibit No. Description
3.1 Second Restated Certificate of Incorporation, as amended,
incorporated by reference to Exhibit No. 3.1 of the Company's
Registration Statement on Form SB-2 [Reg. No. 33-60248-B] and
as an exhibit to the Company's Form 10-QSB dated November 13,
1995.
3.2 Restated By-laws of the Company(1).
4.1 Specimen certificate for Common Stock of the Company(1).
4.2* Registration Rights Agreement dated March 31, 1998 between the
Company and Digital Vision, Inc.
5.1* Opinion of Sullivan & Worcester LLP
23.1* Consent of Wolf & Company, P.C., independent public
accountants
(1) Filed as an exhibit to the Company's Registration Statement on
Form SB-2, No. 33-60248-B, and incorporated herein by
reference.
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) (Section 230.424(b) of 17 C.F.R.) if, in the
aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
this registration statement or any material change to
such information in this registration statement;
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<PAGE>
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities and Exchange Act of 1934 that
are incorporated by reference in this registration statement.
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the Securities offered herein, and the offering of such
Securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the Shares being registered which remain
unsold at the termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in such Act and is, therefore,
unenforceable.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of
prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the Company pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared
effective; and
(2) For purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the Town of Sudbury, Commonwealth of Massachusetts, on June
25, 1998.
FOCUS ENHANCEMENTS, INC.
By: /s/ Thomas L. Massie
Thomas L. Massie
Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Form S-3 relating to Common Shares has been signed by the following persons
in the capacities and on the dates indicated. Each person whose signature
appears below hereby authorizes Thomas L. Massie and Christopher P. Ricci, and
each of them, to file one or more amendments (including additional
post-effective amendments) to this Registration Statement, which amendments may
make such changes as any of such persons deem appropriate, and each person,
individually and in each capacity stated below, hereby appoints each of such
persons as attorney-in-fact to execute in his name and on his behalf any of such
amendments to the Registration Statement.
Signature Title Date
/s/ Thomas L. Massie President, Chief Executive Officer June 25, 1998
Thomas L. Massie and Director (Principal Executive
Officer)
/s/ Gary Cebula Vice President of Finance and June 25, 1998
Gary Cebula Administration (Principal Financial
and Accounting Officer)
/s/ John C. Cavalier Director June 25, 1998
John C. Cavalier
/s/ William B. Coldrick Director June 25, 1998
William B. Coldrick
/s/ Timothy E. Mahoney Director June 25, 1998
Timothy E. Mahoney
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of March 31,
1998, by and among FOCUS ENHANCEMENTS, INC., a corporation organized under the
laws of the State of Delaware (the "Company"), and Digital Vision, Inc., a
corporation organized under Massachusetts ("DVI").
WHEREAS:
A. In connection with the Purchase Agreement of even date herewith by
and between the Company and DVI (the "Purchase Agreement"), the Company has
agreed, upon the terms and subject to the conditions contained therein, to issue
and sell to DVI three hundred fifty thousand (350,000) shares of the Company's
common stock, par value $.01 per share, unregistered with restrictive legends
(the "Common Stock"); and
B. To induce DVI to execute and deliver the Purchase Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the "Securities Act"), and applicable
state securities laws.
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 DVI
hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have
the following meanings:
(i) "Seller" means DVI.
(ii) "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 declaration or ordering
of effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the "SEC").
(iii) "Registrable Securities" means the Common Shares
issued or issuable pursuant to the Purchase and Sale Agreement.
(iv) "Registration Statement" means any registration
statement of the Company under the Securities Act required to be filed pursuant
hereto (including all amendments or supplements to any such Registration
Statement).
<PAGE>
b. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Securities Purchase
Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall use its diligent
business efforts to ensure the registration of the Registrable Securities by the
ninetieth (90th) day following the date hereof. In connection therewith, the
Company shall prepare, and, as soon as practicable, but in no event later than,
on or before the ninetieth (90th) day following the date hereof (the "Filing
Date"), file with the SEC a Registration Statement on Form S-3 or, if Form S-3
is not then available, on such form of Registration Statement as is then
available to effect a registration of all of the Registrable Securities,
covering the resale of all of the Registrable Securities.
b. Eligibility for Form S-3. The Company represents and
warrants that, as of the date of this agreement, it meets the requirements for
the use of Form S-3 for registration of the sale by Seller and any transferee or
assignee of the Registrable Securities and the Company shall file all reports
required to be filed by the Company with the SEC in a timely manner so as to
maintain such eligibility for the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare and file with the SEC the
Registration Statement required by Section 2(a) as soon as practicable after the
date hereof (but in no event later than the Filing Date), and cause such
Registration Statement relating to Registrable Securities to become effective as
soon as practicable after such filing, and keep the Registration Statement
effective pursuant to Rule 415 at all times until such date as is the earlier of
(i) the date on which all of the Registrable Securities have been sold and (ii)
the date on which all of the Registrable Securities (in the reasonable opinion
of counsel to Seller) may be immediately sold to the public without registration
or restriction pursuant to Rule 144(k) under the Securities Act or any successor
provision (the "Registration Period"), which Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein and all
documents incorporated by reference therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein not misleading.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company covered by the Registration
Statement until such time as all of such
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<PAGE>
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by Seller or sellers thereof as set forth in the
Registration Statement.
c. The Company shall furnish to Seller (i) promptly after the
same is prepared and publicly distributed, filed with the SEC, or received by
the Company, one copy of the Registration Statement and any amendment thereto,
each preliminary prospectus, final prospectus and each amendment or supplement
thereto, and each letter written by or on behalf of the Company to the SEC or
the staff of the SEC regarding the registrable securities (including, without
limitation, any request to accelerate the effectiveness of any Registration
Statement or amendment thereto), and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to such Registration Statement
(other than any portion, if any, thereof which contains information for which
the Company has sought confidential treatment), (ii) on the date of
effectiveness of the Registration Statement or any amendment thereto, a notice
stating that the Registration Statement or amendment has been declared
effective, and (iii) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as Seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by Seller.
d. The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement under
such other securities or "blue sky" laws of The Commonwealth of Massachusetts,
(ii) prepare and file such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in The Commonwealth of Massachusetts; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (a) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (b)
subject itself to general taxation in any such jurisdiction, (c) file a general
consent to service of process in any such jurisdiction, (d) provide any
undertakings that cause the Company undue expense or burden, or (e) make any
change in its charter or bylaws, which in each case the Board of Directors of
the Company determines to be contrary to the best interests of the Company and
its stockholders.
e. As promptly as practicable after becoming aware of such
event, the Company shall notify Seller of the happening of any event, of which
the Company has knowledge, as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and use its best
efforts promptly to prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission, and deliver one such
supplement or amendment to Seller.
f. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable moment (including in each
case by amending or supplementing such Registration Statement) and to notify
Seller of the issuance of such
3
<PAGE>
order and the resolution thereof (and if such Registration Statement is
supplemented or amended, deliver such number of copies of such supplement or
amendment to Seller as Seller may reasonably request).
g. The Company shall hold in confidence and not make any
disclosure of information concerning Seller provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement, or (v) Seller consents
to the form and content of any such disclosure. The Company agrees that it
shall, upon learning that disclosure of such information concerning Seller is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to Seller prior to making such
disclosure, and allow Seller, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such information.
h. The Company shall comply with all applicable laws related
to the Registration Statement and offering and sale of securities and all
applicable rules and regulations of governmental authorities in connection
therewith (including, without limitation, the Securities Act and the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated by
the SEC.)
All obligations of the Company under this Section 3 (except for those
obligations set forth in paragraph (l) of this Section 3) shall terminate as
soon as Seller no longer owns any Registrable Securities.
4. OBLIGATIONS OF THE SELLER.
In connection with the registration of the Registrable Securities, the
Seller shall have the following obligations:
a. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of Seller, that Seller shall furnish to the Company
such information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.
b. Seller, by Seller's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder.
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<PAGE>
c. Seller agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Sections 3(e) or
3(f), Seller will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until Seller's receipt of the copies of the supplemented or amended prospectus
contemplated by Sections 3(e) or 3(f) and, if so directed by the Company, Seller
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 Seller's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice.
5. EXPENSES OF REGISTRATION.
All reasonable expenses incurred in connection with registrations,
filings or qualifications pursuant to Section 2, including, without limitation,
all registration, listing and qualifications fees, printers and accounting fees,
the fees and disbursements of counsel for the Company shall be borne by the
Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify,
hold harmless and defend (i) Seller, and (ii) the directors, officers, partners,
members, employees, agents and each person who controls Seller within the
meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), if any, (each, an
"Indemnified Person"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "Claims") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any other applicable securities law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities (the matters in the
foregoing clauses (i) through (iii) being, collectively, "Violations"). Subject
to the restrictions set forth in Section 6(c) with respect to the number of
legal counsel, the Company shall reimburse the Seller and each other Indemnified
Person, promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained
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<PAGE>
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person expressly for use in the Registration
Statement or any such amendment thereof or supplement thereto; (ii) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld; and (iii) with respect to any preliminary prospectus,
shall not inure to the benefit of any Indemnified Person if the untrue statement
or omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or supplemented,
if such corrected prospectus was timely made available by the Company pursuant
to Section 3(c) hereof, and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise to a
Violation and such Indemnified Person, notwithstanding such advice, used it.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by Seller pursuant to Section 9
hereof.
b. In connection with any Registration Statement in which
Seller is participating, Seller agrees to indemnify, hold harmless and defend,
to the same extent and in the same manner set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the Registration
Statement, its employees, agents and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and any other stockholder selling securities pursuant to the
Registration Statement or any of its directors or officers or any person who
controls such stockholder within the meaning of the Securities Act or the
Exchange Act (collectively and together with an Indemnified Person, an
"Indemnified Party"), against any Claim to which any of them may become subject,
under the Securities Act, the Exchange Act or otherwise, insofar as such Claim
arises out of or is 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 to the Company by Seller expressly
for use in connection with such Registration Statement; and subject to Section
6(c) Seller will reimburse any legal or other expenses (promptly as such
expenses are incurred and are due and payable) reasonably incurred by them in
connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of Seller, which consent shall not be unreasonably
withheld; provided, further, however, that Seller shall be liable under this
Agreement (including this Section 6(b) and Section 7) for only that amount as
does not exceed the net proceeds actually received by Seller as a result of the
sale of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented, and the Indemnified Party
failed to utilize such corrected prospectus.
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<PAGE>
c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice 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
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that such indemnifying party shall not be
entitled to assume such defense and an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential conflicts of interest between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding or the actual or potential defendants in, or targets
of, any such action include both the Indemnified Person or the Indemnified Party
and the indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are different from or in addition
to those available to such indemnifying party. The indemnifying party shall pay
for only one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable, and such legal counsel shall be selected by
Seller, if the Seller is entitled to indemnification hereunder, or by the
Company, if the Company is entitled to indemnification hereunder, as applicable.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
actually prejudiced in its ability to defend such action. The indemnification
required by this Section 6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation, and (iii) contribution (together with any
indemnification or other obligations under this Agreement) by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
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8. AMENDMENT OF REGISTRATION RIGHTS.
Provisions 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 written consent of the Company and
Seller. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon Seller and the Company.
9. 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. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five (5) days after being placed in the mail,
if mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The addresses
for such communications shall be:
If to the Seller:
Digital Vision, Inc.
c/o Arthur Little
33 Broad Street
10th Floor
Boston, MA 02109
Tel: (617) 742-2790
Fax: (617) 723-7107
with a copy to:
John H. Morton
Hale & Dorr
60 State Street
Boston, MA 02109
Tel: (617) 526-6235
Fax: (617) 526-5000
and to Company if delivered personally, sent by facsimile or nationally
recognized overnight delivery service, or mailed by certified mail, postage
prepaid, addressed to:
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FOCUS Enhancements, Inc.
142 North Road
Sudbury, Massachusetts 01776
Attn: Thomas L. Massie
Tel: (978) 371-2000
Fax: (978) 371-8471
with a copy to:
FOCUS Enhancements, Inc.
142 North Road
Sudbury, Massachusetts 01776
Attn: Christopher P. Ricci, Esq.
Tel: (978) 371-8420
Fax: (978) 371-8471
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 governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts applicable to
contracts made and to be performed in The Commonwealth of Massachusetts. Seller
irrevocably consents to the jurisdiction of the United States federal courts and
the state courts located in The Commonwealth of Massachusetts in any suit or
proceeding based on or arising under this Agreement and irrevocably agrees that
all claims in respect of such suit or proceeding may be determined in such
courts. Seller irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. Seller further agrees that service of
process upon Seller, mailed by first class mail shall be deemed in every respect
effective service of process upon Seller in any such suit or proceeding. Nothing
herein shall affect the Company's right to serve process in any other manner
permitted by law. Seller agrees that a final non-appealable judgment in any such
suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
e. This Agreement and the Purchase Agreement (including all
schedules and exhibits thereto) constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. This
Agreement and the Purchase Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9
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h. This Agreement may be executed in two 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.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
j. For purposes of this Agreement, the term "business day"
means any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law,
regulation or executive order to close.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
FOCUS ENHANCEMENTS, INC.
By:
Name:
Its:
SELLER:
DIGITAL VISION, INC.
By:
Name:
Its:
EXHIBIT 5
SULLIVAN & WORCESTER LLP
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
(617) 338-2800
FAX NO. 617-338-2880
IN WASHINGTON, D.C. IN NEW YORK CITY
1025 CONNECTICUT AVENUE, N.W. 767 THIRD AVENUE
WASHINGTON, D.C. 20036 NEW YORK, NEW YORK 10017
(202) 775-8190 (212) 486-8200
FAX NO. 202-293-2275 FAX NO. 212-758-2151
June 26, 1998
FOCUS Enhancements, Inc.
142 North Road
Sudbury, Massachusetts 01776
Gentlemen:
We are familiar with the Registration Statement on Form S-3 (the "S-3
Registration Statement") to which this opinion is an exhibit, to be filed by
FOCUS Enhancements, Inc., a Delaware corporation (the "Company"), with the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
The S-3 Registration Statement relates to the proposed public offering by
Digital Vision, Inc. (the "Selling Stockholder") of a total of 350,000 shares
(the "Shares") of the Company's Common Stock, $.01 par value per share ("Common
Stock"), issued to the Selling Stockholder in connection with the purchase by
the Company of certain assets from the Selling Stockholder on March 31, 1998.
We have acted as counsel to the Company in connection with the
preparation of the S-3 Registration Statement, and we have examined and relied
on the originals or copies, certified or otherwise identified to our
satisfaction of all such corporate records of the Company and such other
instruments and other certificates of public officials, officers and
representatives of the Company and such other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis for the opinion
expressed below. In making such examination, we have assumed the genuineness of
all signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals and the conformity to the originals of
all documents submitted to us as copies, which facts we have not independently
verified. As to various facts material to the opinions set forth herein, we have
relied without independent verification upon certificates of public officials
and upon facts certified to us by officers of the Company. We express no opinion
herein as to any laws other than the General Corporation Law of the State of
Delaware.
<PAGE>
FOCUS Enhancements, Inc.
June 19, 1998
Page 2
Based upon the foregoing, we are of the opinion that the Company has
corporate power adequate for the issuance of the Shares issuable in the manner
set forth in the S-3 Registration Statement and offered pursuant to the S-3
Registration Statement.
We hereby consent to the filing of this opinion as an exhibit to the
S-3 Registration Statement.
Very truly yours,
/s/ SULLIVAN & WORCESTER LLP
SULLIVAN & WORCESTER LLP
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
FOCUS Enhancements, Inc. on Form S-3 of our report, dated February 27, 1998,
(except for Note 13 as to which the date is March 3, 1998), on the consolidated
financial statements of FOCUS Enhancements, Inc. as of and for the year ended
December 31, 1997, appearing in the Annual Report on Form 10-KSB of FOCUS
Enhancements, Inc. for the year ended December 31, 1997. We also consent to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ WOLF & COMPANY, P.C.
WOLF & COMPANY, P.C.
Boston, Massachusetts
June 26, 1998
