Exhibit
        10.12

       

      ASSET
        PURCHASE AGREEMENT

      


      This
        asset purchase agreement (this “Agreement”) is dated March 14, 2005 and is
        between VIVID LEARNING SYSTEMS, Inc., a Delaware corporation (“Vivid”), and
        TRUEACTIVE SOFTWARE, Inc., a Washington corporation (“TrueActive”).

      


      WHEREAS,
        the respective Boards of Directors and/or Executive Management Committees
        of
        Vivid and TrueActive have determined that the purchase of the assets of
        TrueActive by Vivid pursuant to the terms and conditions of this Agreement
        is
        advisable, fair, and in the best interests of both Vivid and TrueActive and
        their respective shareholders;

      


      NOW,
        THEREFORE, in consideration of the representations, warranties, covenants,
        and
        agreements contained herein and other valuable consideration, the receipt
        and
        sufficiency of which are hereby acknowledged, the parties, intending to be
        legally bound, agree as follows:

      


      ARTICLE
        I

      THE
        PURCHASE

      


      Section
        1.1 The
        Purchase.
        This
        Agreement pertains to the purchase of specific assets of TrueActive; it does
        not
        constitute a purchase of the TrueActive corporate entity nor of the shares
        of
        TrueActive. Upon the terms and subject to the conditions of this Agreement,
        at
        the “Effective Time” as defined in Section 1.2, Vivid shall have lawful, valid,
        and indefeasible title to all of the assets of TrueActive delineated in
Exhibit
        A,
        as well
        as full rights to the names “WinWhatWhere”, “TrueActive”, and all derivatives
        thereof.

       

      Within
        forty-five (45) days from the date of Closing, the original owner/shareholders
        of TrueActive shall provide evidence to Vivid’s General Counsel that they are
        conducting business under a new name. The purpose of the new entity will
        be to
        receive any amortized purchase payments, such as royalty and note payments,
        owed
        by Vivid to TrueActive. In recognition of this, the parties agree that payables
        and receivables shall be posted through the closing date. Vivid shall be
        responsible for collecting the Interactive, Inc. receivable. All other
        receivables shall remain payable to TrueActive. Vivid shall not be responsible
        for satisfying any payables, except Vivid shall assume responsibility for
        future
        Internet services (hosting and access) required to support the sales of
        TrueActive/Vivid products. 

      


      Section
        1.2 Effective
        Time of the Purchase.
        The
        Purchase shall become effective upon the time of closing. 

      


      Section
        1.3 Closing.
        The
        closing of the transactions contemplated by this Agreement shall take place
        March 14, 2005 at 1:30 p.m. local time, at the corporate offices of Vivid
        located at 723 The Parkway, Richland, Washington. At that time, Vivid shall
        deliver all funds and documents required by this Agreement and TrueActive
        shall
        deliver a bill of sale for the assets.

      


      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      ARTICLE
        II

      CONSIDERATION

       

      Section
        2.1 Consideration.
        In
        exchange for the assets sold by True Active to Vivid and for certain promises
        as
        noted in Section 2.2, Vivid shall issue to TrueActive: 

       

      
        	a)  	
                A
                  check in the amount of One Hundred Twenty Thousand Dollars
                  ($120,000.00).

              


      

      
        	b)  	
                A
                  one (1) year promissory note with principal due and owing of One
                  Hundred
                  Twenty Thousand Dollars ($120,000.00), payable in monthly installments
                  on
                  the first day of each month, beginning May 1st, 2005. 

              


      

      
        	c)  	
                Vivid
                  warrants, carrying a four (4) year expiration date from date of
                  issue,
                  representing a total of Eighty Thousand (80,000) shares of Vivid
                  Common
                  Stock with an exercise price of One Dollar ($1.00) per share and
                  a two (2)
                  year vesting schedule, wherein one-eighth
                  (1/8) shall vest at the end of each quarter. Said warrants shall
                  be
                  distributed as follows: Thirty-nine Thousand One Hundred Eleven
                  (39,111)
                  to Richard E. Eaton;
                  Forty Thousand Seven Hundred Eight (40,708) to M. Susan Mikels;
                  and
                  One Hundred Eighty-one (181) to Theresa Sullivan-Seidl. Such shares
                  as may
                  be issued pursuant to such exercise will, upon issuance, be duly
                  and
                  validly issued, fully paid and nonassessable and free from all
                  taxes,
                  liens and charges with respect to the issuance thereof.
                  

              


      

      
        	d)  	
                An
                  employment agreement with Richard E. Eaton to include terms as
                  delineated
                  in the form of Exhibit
                  B.

              


      

      
        	e)  	
                A
                  royalty of eight percent (8%) - based on “net sale amount,” defined as
                  gross sale amount less credit card fees, shipping and handling,
                  applicable
                  taxes, returns, reseller commissions, and discounts - will be paid
                  by
                  Vivid to the corporate entity that is the successor to TrueActive
                  for all
                  sales of: i) the existing TrueActive Monitor product, as well as
                  any
                  developments thereto not yet released; ii) products (un-enhanced)
                  sold as
                  “computer monitoring” programs under the name “WinWhatWhere”; and, iii)
                  products under the name “TrueActive” for a period of three (3) years from
                  Closing. Royalties will be calculated according to calendar quarters
                  ending in March, June, September and December and, where applicable,
                  royalty checks will be mailed within the first ten working days
                  of the end
                  of each quarter.

              


      

      
        	f)  	
                A
                  royalty of four percent (4%) - based on “net sale amount,” defined as
                  gross sale amount less credit card fees, shipping and handling,
                  applicable
                  taxes, returns, reseller commissions and discounts - will be paid
                  by Vivid
                  to the corporate entity that is the successor to TrueActive for
                  all sales
                  of the Vivid branded or “sub-branded” product(s) based on the existing
                  TrueActive products that include a refined dashboard and additional
                  Vivid-funded enhancements to the program for three (3) years after
                  the
                  official launch of the program. Royalties will be managed as noted
                  in
                  Section 2.1(e).

              


      

      
        	g)  	
                Royalties
                  will not be due to TrueActive for sales of products other than
                  those
                  delineated above. It is acknowledged by the parties that a portion
                  of the
                  afore-noted consideration is designated specifically as the consideration
                  in exchange for the covenant not to compete and client lists.
                  

              


      

      
        	h)  	
                Any
                  and all taxes incurred as a result of this Agreement shall be the
                  responsibility of the party incurring said
                  taxes.

              


      

      


      Section
        2.2 Covenant
        Not To Compete.
        TrueActive agrees that from and after closing, a)
        the
        corporate officers of TrueActive will be reasonably available to assist with
        the
        transition; and, b) will not, without Vivid’s prior written consent, directly or
        indirectly invest or engage in any business that is competitive with the
        Vivid
        business lines, nor accept employment or render services to a competitor
        as a
        director, officer, agent, employee, or consultant for a period of two (2)
        years.
        This non-compete covenant shall be binding on the officers, directors, and
        shareholders of TrueActive. 

      


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      ARTICLE
        III

      REPRESENTATIONS
        AND WARRANTIES

      


      Section
        3.1 Representations
        and Warranties of Vivid.
        Vivid
        hereby represents and warrants to TrueActive that:

       

      3.1.1 Organization;
        Corporate Power and Authority.
        Vivid
        is
        a corporation duly and validly organized and existing under the laws of the
        State of Delaware. Vivid has full power, legal capacity, and authority to
        carry
        on its business as it is now conducted, to own, lease, and operate its assets
        and properties, and to enter into, perform, and comply with this
        Agreement.

       

      3.1.2  Authorization;
        Enforceability; No Conflict.
        The
        execution, delivery, and performance of this Agreement by Vivid have been
        duly
        authorized by all necessary corporate action. This Agreement constitutes
        the
        valid and binding obligation of Vivid, enforceable in accordance with its
        terms
        except as limited by bankruptcy, insolvency, reorganization, fraudulent
        transfer, moratorium, and similar laws affecting creditors generally and
        by the
        availability of equitable remedies. The execution, delivery, and performance
        of
        this Agreement will not, or at Closing shall not, conflict with, or result
        in
        the breach or termination of, or constitute a default under, the articles
        of
        incorporation or bylaws of Vivid or any agreement, commitment, or instrument,
        judgment, or decree to which Vivid is a party or by which Vivid or its
        properties are bound.

      


      3.1.3  Disclosure.
        To the
        best knowledge of Vivid, neither this Agreement nor any other
        instrument/document delivered to TrueActive pursuant to this Agreement contains
        any untrue statement of any material fact or omits to state any material
        fact
        required to be stated or necessary in order to make the statements contained
        herein or therein not misleading.

      


      3.1.4  Finances.
        Vivid
        represents that it is financially capable of completing the purchase of
        TrueActive’s business assets and fully understands its financial obligations
        under this Agreement.

      


      Section
        3.2 Representations
        and Warranties of TrueActive.
        TrueActive hereby represents and warrants to Vivid that:

      


      3.2.1 Organization;
        Corporate Power and Authority.
        TrueActive
        is a corporation duly and validly organized and existing under the laws of
        the
        State of Washington. TrueActive has full power, legal capacity, and authority
        to
        carry on its business as it is now conducted, to own, lease, and operate
        its
        assets and properties, and to enter into, perform, and comply with this
        Agreement.

      


      3.2.2 Authorization;
        Enforceability; No Conflict.
        The
        execution, delivery, and performance of this Agreement by TrueActive has
        been
        duly authorized by all necessary corporate action. This Agreement constitutes
        the valid and binding obligation of TrueActive, enforceable in accordance
        with
        its terms except as limited by bankruptcy, insolvency, reorganization,
        fraudulent transfer, moratorium, and similar laws affecting creditors generally
        and by the availability of equitable remedies. The execution, delivery, and
        performance of this Agreement will not, or at Closing shall not, conflict
        with,
        or result in the breach or termination of, or constitute a default under,
        the
        articles of incorporation or bylaws of TrueActive or any agreement, commitment,
        or instrument, judgment or decree to which TrueActive is a party or by which
        TrueActive or the properties of TrueActive are bound.

      


      3.2.3
        Liabilities.
        TrueActive has no liabilities or obligations of any nature or kind, whether
        absolute or contingent, known or unknown, accrued or unaccrued, due or to
        become
        due related to the assets being purchased by Vivid. 

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      


      3.2.4  Disclosure.
        To the
        best knowledge of TrueActive, neither this Agreement nor any other
        instrument/document delivered to Vivid pursuant to this Agreement contains
        any
        untrue statement of any material fact or omits to state any material fact
        required to be stated or necessary in order to make the statements contained
        herein or therein not misleading.

      


      3.2.5  Title
        to Assets.
        TrueActive is the record and beneficial owner of the assets to be purchased
        by
        Vivid from TrueActive, free and clear of any security interest, claim, lien,
        pledge, encumbrance, or restriction whatsoever in law or in equity, and
        TrueActive’s delivery and/or granting of access to Vivid on closing of this
        Agreement will convey to Vivid lawful, valid, and indefeasible title thereto,
        free and clear of any security interest, claim, lien, pledge, encumbrance,
        or
        restriction unless listed on Exhibit
        A.

      


      Section
        3.3 No
        Further Representations or Warranties.
        The
        parties hereto acknowledge that due diligence has occurred. As a result,
        each
        party is adequately informed about the other’s past, current, and planned
        business activities and strategies. Accordingly, the representations and
        warranties contained in Sections 3.1 and 3.2 of this Agreement are exclusive,
        and no further representations or warranties shall be deemed to have been
        made
        by either party pursuant to this Agreement.

      


      ARTICLE
        IV

      SECURITIES
        LAW MATTERS AND REGISTRATION RIGHTS

       

      Section
        4.1  Shares
        for Investment.
        TrueActive covenants and agrees that the Vivid warrants to be issued under
        this
        Agreement will be held for investment and not with a view to distribute all
        or
        any part thereof in any transaction which would constitute a “distribution”
        within the meaning of the Securities Act of 1933 (hereinafter “Securities Act”).
        TrueActive and/or its shareholders will not, directly or indirectly, offer,
        transfer, sell, assign, pledge, hypothecate, or otherwise dispose of any
        of the
        Vivid warrants except in compliance with the Securities Act. TrueActive and
        its
        shareholders agree that no transfer or assignment of any Vivid warrants shall
        be
        effective if the assignment would violate the provisions of the securities
        laws.
        If Vivid so requires, no assignment shall be effective unless TrueActive
        and/or
        its shareholders deliver an opinion of counsel to Vivid, which opinion must
        be
        satisfactory to Vivid in all respects, to the effect that such transfer will
        not
        violate the securities laws. 

      


      Section
        4.2 Registration
        Rights.
        In the
        event Vivid shall undertake to provide registration rights to its shareholders
        in general, TrueActive and its shareholders shall have the right to participate
        in such registration rights upon the terms and conditions applicable to all
        holders of warrants. The parties acknowledge that the recently completed
        registration does not invoke the application of this right nor does the
        registration of the Vivid Stock Option Plan.

      


      Section
        4.3 Shareholder
        Information.
        So long
        as TrueActive and its shareholders own the Vivid warrants, TrueActive and
        it
        shareholders will be provided with a copy of any information which Vivid
        sends
        to its shareholders in general.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      


      ARTICLE
        V

      TERMINATION
        OF AGREEMENT

      


      This
        Agreement may be terminated at any time before the Closing by mutual consent
        of
        the parties and in no other manner.

       

      ARTICLE
        VI

      INDEMNIFICATION

      


      Section
        6.1 Indemnification
        of TrueActive.
        Without
        in any way limiting or diminishing the warranties, representations, or
        agreements herein contained or the rights or remedies available to any party
        for
        a breach by one of the other parties, Vivid agrees to indemnify, defend,
        and
        hold harmless TrueActive and its designees, successors, and assigns from
        and
        against all losses, judgments, liabilities, claims, damages, or expenses
        (including reasonable attorney fees) of every kind, nature, and description
        in
        existence before or on the Closing, whether known or unknown, absolute or
        contingent, joint or several, either arising out of any failure of any
        representation or warranty of Vivid contained in this Agreement to have been
        correct and materially complete when made or arising out of or relating to
        the
        breach of any covenant or agreement of Vivid contained in this
        Agreement.

      


      Section
        6.2 Indemnification
        of Vivid.
        Without
        in any way limiting or diminishing the warranties, representations, or
        agreements herein contained or the rights or remedies available to any party
        for
        a breach by one of the other parties, TrueActive agrees to indemnify, defend,
        and hold harmless Vivid and its designees, successors, parent company, and
        assigns from and against all losses, judgments, liabilities, claims, damages,
        or
        expenses (including reasonable attorney fees) of every kind, nature, and
        description in existence before or on the closing, whether known or unknown,
        absolute or contingent, joint or several, either arising out of any failure
        of
        any representation or warranty of TrueActive contained in this Agreement
        to have
        been correct and materially complete when made or arising out of or relating
        to
        the breach of any covenant or agreement of TrueActive contained in this
        Agreement.

      


      ARTICLE
        VII

      MISCELLANEOUS
        PROVISIONS

      


      Section
        7.1 Confidentiality.
        Each of
        the parties will treat and hold all of the confidential information of the
        other
        exchanged as a result of the due diligence and the transactions contemplated
        by
        this Agreement to the highest level of care and confidence. No information
        of
        another party shall be released without the prior written approval of said
        party; provided, however, the parties may disclose such information as is
        necessary to comply with any information or disclosure requirements of any
        governmental agency. In such event, the party to whom the information belongs
        shall be immediately notified by the party from whom the information has
        been
        requested.

      


      Section
        7.2 Amendment.
        This
        Agreement constitutes the entire agreement of the parties and may not be
        modified or amended except by a writing signed by all the parties.

      


      Section
        7.3 Notices.
        All
        notices, requests, demands, or other communications which are required or
        may be
        given pursuant to the terms of this Agreement shall be in writing and shall
        be
        deemed to have been duly given: (I) on the date of delivery if personally
        delivered by hand, (ii) upon the third day after such notice is
        (a) deposited in the United States mail, if mailed by registered or
        certified mail, postage prepaid, return receipt requested, or (b) sent
        by a
        nationally recognized overnight express courier, or (iii) by facsimile
        upon
        written confirmation (other than the automatic confirmation that is received
        from the recipient's facsimile machine) of receipt by the recipient of such
        notice:

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                If
                  to Vivid:

              	 	Vivid Learning
                Systems,
                Inc.
	 	 	 
	 	 	723 The Parkway
	 	 	Richland, WA 99532
	 	 	Attention: Sandra
                Muller
	 	 	Telephone No.: 509/
                943-5319
	 	 	Facsimile No.: 509/
                943-5528
	 	 	 
	
                If
                  to TrueActive:

              	 	TrueActive
                Software,
                Inc.
	 	 	Post Office Box
                5548
	 	 	Kennewick, WA
                99336
	 	 	Attention: Susan
                Mikels
	 	 	Telephone No.: 509/
                585-8877
	 	 	Facsimile No.: 510/
                991-8955


      

       

            Section
        7.4 Survival
        of Representations.
        The
        representations and warranties given under this Agreement shall be continuing
        and survive the Closing of the transaction contemplated by this
        Agreement. 

      


      Section
        7.5 Interpretation.
        The
        headings contained in this Agreement are for reference purposes only and
        shall
        not in any way affect the meaning or interpretation of this Agreement. Whenever
        the words “include”, “includes”, or “including” are used in this Agreement, they
        shall be deemed to be followed by the words “without limitation”.

      


      Section
        7.6 Miscellaneous.
        This
        Agreement (including the documents and instruments referred to herein):
        (i) constitutes the entire agreement and supersedes all other prior
        agreements and understandings, both written and oral, among the parties,
        or any
        of them, with respect to the subject matter hereof; (ii) shall not
        be
        assigned by operation of law or otherwise without the prior written consent
        of
        the other parties hereto; and (iii) shall be governed in all respects,
        including validity, interpretation and effect, by the laws of the State of
        Washington, exclusive of the conflict of laws provisions thereof.

      


      Section
        7.7 Counterparts.
        This
        Agreement may be executed in two or more counterparts, each of which shall
        be
        deemed to be an original, but all of which shall constitute one and the same
        agreement.

      


      Section
        7.8 Parties
        in Interest. This
        Agreement shall be binding upon and inure to the benefit of and be enforceable
        by the parties hereto and their respective permitted successors and assigns,
        and
        nothing in this Agreement, express or implied, is intended to confer upon
        any
        other person any rights or remedies of any nature whatsoever under or by
        reason
        of this Agreement. Specifically, in the event Vivid assigns this Agreement
        and/or is not the surviving corporation in a merger, the new party in interest
        shall honor the royalty payments delineated in Section 2.1.

      


      Section
        7.9 Severability.
        Any
        term
        or provision of this Agreement which is invalid or unenforceable in any
        jurisdiction shall, as to that jurisdiction, be ineffective to the extent
        of
        such invalidity or unenforceability without rendering invalid or unenforceable
        the remaining terms and provisions of this Agreement or affecting the validity
        or enforceability of any of the terms or provisions of this Agreement in
        any
        other jurisdiction. If any provision of this Agreement is so broad as to
        be
        unenforceable, the provision shall be interpreted to be only so broad as
        is
        enforceable.

      


      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      Section
        7.10 Arbitration.
        In the
        event any dispute arises from this Agreement, and the parties are unable
        to
        resolve such controversy, dispute or disagreement within thirty (30) days
        after
        notice thereof is first delivered, the parties agree to submit such to
        arbitration in accordance with the rules of the American Arbitration Association
        (“AAA”). However, the parties also agree that they are not required to use the
        services of the AAA and may mutually agree to appoint an arbitrator to hear
        any
        dispute. 

      


      
        	(a)  	
                Any
                  arbitrator selected by mutual agreement of the parties shall be
                  experienced in the matter or action that is the subject of the
                  arbitration. The arbitrator so chosen shall be impartial and independent
                  of both parties. 

              


      

      


      
        	(b)  	
                If
                  the parties cannot agree to the mutual selection of an arbitrator
                  within
                  twenty (20) days after the end of such thirty-day period, then
                  any party
                  may in writing request the American Arbitration Association to
                  select an
                  appropriate arbitrator, and such arbitrator shall hear all arbitration
                  matters arising under this section.


              


      

      


      
        	(c)  	
                Any
                  arbitration shall take place in Benton County, Washington. The
                  decision of
                  the arbitrator is binding and no suit at law or equity shall be
                  instituted
                  by either party to this agreement except to enforce the decision
                  of the
                  arbitrator. Any award rendered by the arbitrator shall be final
                  and
                  judgment may be entered on it in any court having jurisdiction.
                  

              


      

      


      Section
        7.11 Attorney
        Fees.
        In the
        event either party is required to employ an attorney to enforce rights
        hereunder, including initiating arbitration to enforce the provisions of
        this
        Agreement, or for any cause arising out of this Agreement, the substantially
        prevailing party in such action shall be entitled to reimbursement from the
        other party for all of its court costs and reasonable attorneys’ fees.


      


      IN
        WITNESS WHEREOF, the parties are signing this Agreement on the date stated
        in
        the introductory clause.

      


      


      VIVID
        LEARNING SYSTEMS, INC.

      


      


      By: /s/Kevin
        A. Smith

      Kevin
        A.
        Smith

      Chief
        Executive Officer

      


      


      TRUEACTIVE
        SOFTWARE, INC. 

      


      


      By: /s/Richard
        E. Eaton

      Richard
        E. Eaton

      President

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        A

       

      TrueActive
        Software Inc. List of Assets included in Sale to Vivid Learning Systems,
        Inc.

      


      
        	1.    	
                 
                  Complete source code and supporting files for the latest version
                  of
                  TrueActive Monitor

              


      

      Note:
        TrueActive Monitor is currently sold in 3 license configurations: a 100-day
        license, a standard single-user, non-expiring license, and a network starter
        +
        clients, non-expiring license. The configurations are set using a license
        number. This source code is sold “as is.”

       

      
        	
                2.

              	
                 
                  Complete source code and supporting files for the last version
                  of
                  WinWhatWhere, a/k/a WinWhatWhere
                  Investigator

              


      

      Note:
        This
        source code is sold “as is.”

      


      
        	
                3.

              	
                 
                  Copyright for WinWhatWhere dated 3/8/1993 issued to Basic Systems
                  Inc
                  (original name of TrueActive Software
                  Inc.)

              


      

      


      
        	4.    	
                 
                  Registered Trademarks

              


      

      WinWhatWhere,
        registered 6/11/02

      WinWhatWhere
        Investigator, registered 2/26/02

      Note:
        Section
        8 of the Trademark Act requires the filing of an Affidavit of Continued Use
        prior to the end of the sixth year following the date of
        registration.

      


      
        	5.    	
                 
                  Unregistered Trademarks

              


      

      TrueActive

      TrueActive
        Software

      TrueActive
        Monitor

      


      
        	6.    	
                 
                  Web site addresses www.trueactive.com
                  and www.winwhatwhere.com

              


      

      


      
        	7.    	
                 
                  All web site content

              


      

      


      
        	8.    	
                 
                  Complete customer database

              


      

      


      
        	9.    
                	
                 
                  Complete evaluation license list (sales
                  leads)

              


      

      


      
        
          	10.    	
                  Current
                    qualified sales opportunities
                    list

                


        

      

      


      
        	11.    	
                One
                  current account receivable:

              


      

      Interactive,
        Inc., Huntington, NY - Contact: Dale Mann Balance Due: $10,825

      


      
        	12.    	
                All
                  inventory of software packaging

              


      

      TrueActive
        Software CD Jackets, approx. 320

      WinWhatWhere
        Investigator CD Case Inserts

      CDs,
        approx. 400

      


      
        	13.    	
                Marketing
                  materials for TrueActive and WinWhatWhere, including folders and
                  article
                  reprints

              


      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      EXHIBIT
        B

      March
        8,
        2005

      Richard
        E. Eaton

      925
        West
        Kennewick Avenue

      Kennewick,
        WA 99336

      


      Dear
        Rick,

      


      Based
        on
        recent discussions, I am very pleased to extend you an offer of employment
        as a
        Senior Software Developer of Vivid Learning Systems, Inc. located in Richland,
        WA, starting on March 16th,
        2005.
        Attached are the terms of your compensation.

      


      In
        addition to the monthly salary offer, I am sure you will find the fringe
        benefits package provided by Vivid to be competitive. As a Vivid employee,
        we
        will provide you a copy of our employee handbook that outlines our employment
        policies and benefits programs.

      


      You
        will
        need to provide documentation that establishes identity and employment
        eligibility. For example, if you are a U.S. citizen, a current drivers’ license
        and social security card will be sufficient. If you are not a U.S. citizen,
        we
        will require other documents. 

      


      As
        discussed in our employment policies, your employment and compensation with
        Vivid are consistent with Washington State “at will” law in that they can be
        terminated with or without cause, and with or without notice, at any time,
        at
        the option of either Vivid or yourself, except as otherwise provided by law.
        Therefore, there is no intent that the terms of this offer letter create
        either
        an expressed and/or implied contract of employment with Vivid.

      


      During
        your work for Vivid, you agree to perform your best efforts, full time for
        Vivid, and not to perform work for other businesses. The terms stated in
        this
        letter are in addition to terms of your Vivid “Non-Disclosure Agreement” wherein
        you agree not to disclose confidential information, not compete with Vivid,
        that
        your work (whether physical property or intellectual property) is the property
        of Vivid and that you will return all materials upon termination of your
        work
        with Vivid.

      


      Let
        me
        say again that I am very pleased to make this offer of employment with Vivid
        and
        we all look forward to working with you. You will be a great addition to
        our
        team.

      


      Very
        truly yours,

      /s/Kevin
        A. Smith

      Kevin
        A.
        Smith

      President
        & CEO

      


      Enclosure

      


      cc:      
        HRN

          Finance

          File

      


      ACCEPTED: 

      


      Name: /s/
        Richard E. Eaton

      


      Date: 3-14-05

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      TERMS
        OF EMPLOYMENT - RICHARD E. EATON (“Employee”)

      


      Employment
        of Employee. 

      


      Vivid
        will employ Employee in the capacity of Senior Software Developer.

      


      The
        term
        of Employee’s employment (“Employment Term”) under this Agreement shall be a
        period of two (2) years, commencing on March 16th, 2005 and expiring at 5:00
        p.m. (local time at Vivid’s headquarters) on March 15th, 2007, unless extended
        in writing by both Vivid and Employee, or unless earlier terminated pursuant
        to
        these Terms. 

      


      Notwithstanding
        anything in these Terms to the contrary, Employee acknowledges and agrees
        that
        Employee’s employment with Vivid is “at will” and that Employee’s employment may
        be terminated by Vivid at any time and for any reason, subject to applicable
        laws.

      


      Position
        and Duties. Employee
        accepts and agrees to such employment and agrees to be subject to the general
        supervision, advice, and direction of the Vivid Chief Technology Officer
        or any
        individual that the Vivid Chief Technology Officer may designate. Employee
        shall
        also perform such other duties as are customarily performed by an employee
        in a
        similar position and such other and unrelated services and duties as may
        be
        assigned from time to time. Employee shall devote his full business time
        and
        attention and best efforts to Vivid’s business and affairs, except with Vivid’s
        prior approval in case of leaves of absence, vacation, and service on corporate,
        civil, or charitable boards or committees involving no conflict of interest
        with
        Vivid’s interests and not significantly interfering with the regular performance
        of his Vivid duties. 

      


      Compensation

      


      Base
        Salary.
        Employee shall receive an annual base salary of $75,000. Employee's base
        salary
        may be reviewed in accordance with Vivid's regular compensation practices.
        Base
        salary shall be paid in substantially equal periodic installments, but not
        less
        frequently than monthly. The parties acknowledge that Employee’s base salary
        shall be processed and paid through Human Resource Novations, Inc. Employee’s
        base salary may be subject to periodic updates and adjustments, as set forth
        in
        the Vivid Employee Compensation Plan and incorporated herein by
        reference.

      


      Bonus.
        Employee may be entitled to performance bonuses and performance based stock
        option awards in accordance with the Vivid Employee Compensation
        Plan.

       

      Fringe
        Benefits.
        Employee may participate in all benefit programs that Vivid from time to
        time
        makes available to other employees holding positions similar to that of
        Employee, subject to applicable eligibility rules.

      


      Expenses.
        In
        accordance with Vivid policies, Employee shall be reimbursed in the amount
        of
        $300 per month for the home office in which Employee will primarily perform
        his
        duties, said reimbursement to continue as long as Employee is employed by
        Vivid.

      


      Termination.
        

      


      Due
        To Death or Permanent Disability.
        Employee's employment shall terminate upon his death or permanent disability.
        

      


      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      By
        Vivid.
        Vivid
        may terminate Employee's employment at any time, with or without Just Cause.
        Vivid shall have "Just Cause" if its Chief Executive Officer in the exercise
        of
        his reasonable judgment, determines that Employee has committed an act or
        acts
        constituting any of the following: (i) dishonesty or fraud in connection
        with
        his duties for Vivid; (ii) disclosure of confidential or private information
        regarding Vivid or its parent company; (iii) sexual harassment or other
        violation of laws prohibiting discrimination, in each case, committed in
        connection with his duties for Vivid; (iv) materially aiding a competitor
        of
        Vivid or its parent company; (v) misappropriation of a business opportunity
        of
        Vivid; (vi) repeated
        and/or gross misconduct or negligence, in each case in the performance of
        his
        duties for Vivid; or, (vii) a felony conviction. 

      


      By
        Employee.
        Employee may terminate his employment at any time, with or without Good Reason.
        Employee shall have “Good Reason” to terminate in the event of (i) a forced
        relocation of the place for Employee's performance of his duties reasonably
        requiring a move of more than fifty (50) miles in Employee's residence; or,
        (ii)
        a material breach of a material provision of these Terms, which breach remains
        uncured thirty (30) days after written notice of such breach is delivered
        to
        Vivid. Good Reason shall not exist if Vivid contemporaneously has Just Cause
        to
        terminate Employee's employment.

      


      Payments
        upon Termination.
        

      


      If
        Employee's employment is terminated (i) due to Employee's death or permanent
        disability; (ii) by Vivid for Just Cause; or, (iii) by Employee without Good
        Reason, Vivid shall pay Employee's Base Salary through the date of termination,
        and provide such other payments and benefits as applicable law or Vivid’s
        employee benefit policies may require. 

      


      If
        Employee's employment is terminated (i) by Vivid without Just Cause; or,
        (ii) by
        Employee for Good Reason, then Vivid shall pay Employee an amount equal to
        four
        (4) months salary.

       

      
        
          
          

        

        
          11