Document:

Exhibit 10.1

 

ACQUISITION AGREEMENT

 

ACQUISITION
AGREEMENT made this 9th day of April 2004, by and between
Immediatek, Inc., a Nevada corporation (“Buyer”), and DiscLive Inc., a Delaware
corporation (the “Corporation”).

 

RECITALS

 

WHEREAS, the
Corporation has an authorized capitalization of 20,000 shares, divided into
12,000 shares of common stock, par value $.001 per share, and 8,000 shares of
preferred stock, par value $.001 per share, of which 2,607 shares of common
stock are issued and outstanding; 223 shares of preferred stock have been
designated as Series A Convertible Preferred Stock, of which all such shares
are issued and outstanding; and 1,125 shares of preferred stock have been
designated as Series B Convertible Preferred Stock, of which 801 such shares
are issued and outstanding; and

 

WHEREAS, the
stockholders of the Corporation listed in Exhibit A hereto (the
“Stockholders”) have agreed to accept the common stock of Buyer in exchange for
their shares of the Corporation so that the business of the Corporation can be
continued as a wholly-owned subsidiary of Buyer.

 

In
consideration of the mutual covenants set forth here, Buyer and the Corporation
agree as follows:

 

 

Section 1.

Effect of Agreement

 

In accordance with the terms and conditions set forth
in this Agreement, it is contemplated that the Corporation shall use
commercially reasonable efforts to cause the Stockholders to exchange all their
shares of the Corporation, representing all the issued and outstanding capital
stock of the Corporation, for a total of 1,666,667 shares of common stock of
Buyer, par value $.001 per share.  Each
Stockholder is to receive the pro rata number of shares of such stock listed
opposite his or her name in Exhibit A attached to this Agreement.

 

 

Section 2.

Delivery of Shares

 

(a)           On
the date of this Agreement, the Corporation shall use commercially reasonable
efforts to cause the Stockholders to deposit certificates, properly indorsed,
representing the shares to be transferred by them in escrow with Vial, Hamilton,
Koch & Knox, L.L.P, located at 1700 Pacific Avenue, Suite 2800, Dallas,
Texas (“Vial”).

 

(b)           On the date of this Agreement, Buyer
shall deposit in escrow with the same holder, certificates representing the
shares of Buyer’s common stock to be transferred by it to the Stockholders.

 

(c)           All fees and expenses of the escrow
agent shall be borne equally by the parties.

 

(d)           The parties hereto have agreed that
their respective shares will be held in escrow for a period of six (6) months
from the date of this Agreement. In the event an adjustment to the escrowed
shares in accordance with Section 7 of this Agreement occurs, the appropriate
shares will be adjusted by the party making such adjustment and delivered to
the escrow agent.  Vial is hereby
authorized to issue or return the appropriate shares to the party making any
adjustments as described herein.  On
October 8, 2004, assuming there are no adjustments, all shares of the
Stockholders representing 100% of the issued and outstanding capital stock of
the Corporation shall be delivered to Buyer, and the 1,666,667 shares of common
stock of Buyer shall be delivered pro rata to the Stockholders, each
Stockholder to receive delivery of certificates representing the number of
shares of such common stock listed opposite his or its name in Exhibit A.
The parties hereby agree to (i) waive any conflict of interest regarding Vial
serving as the escrow agent on behalf of both the parties to facilitate the
transaction herein and (ii) to indemnify and hold harmless Vial from any and
all liability, causes of action, damages, expenses (including attorneys’ fees)
and costs arising out of its service as an escrow agent to the parties hereto.

 

(e)           The stock certificates of Buyer held
in the above described escrow will be held in blank until such time as the
Stockholder submits to escrow agent a power of attorney or consent in a form
agreeable to the parties hereto (the “Consent”), whereby the Stockholder gives
the escrow agent authority to adjust the Stockholder’s shares in accordance
with Section 7 of this Agreement. Upon receipt of the Stockholder’s Consent,
the escrow agent will have the certificate for Stockholder’s shares reflect the
Stockholder’s record ownership (including additional shares by virtue of any
stock splits and dividends).  The
Stockholders will not transfer their shares until released from escrow.  While the escrowed shares are held in
escrow, the Stockholders shall be entitled to vote the number of shares of
Buyer’s common stock held for his or its account in escrow and shall otherwise
have all the rights of a shareholder of Buyer in respect thereof.

 

(f)            In the event of termination of this
Agreement as set forth in Section 7, all stock certificates shall be returned
to the parties who deposited the certificates.

 

 

Section 3.

Covenants and
Representations of the Corporation

 

The Corporation covenants and represents as follows:

 

(a)           Corporate Status.  The Corporation is a duly organized
corporation and in good standing under the laws of the State of Delaware and
has qualified to transact business in all other states requiring qualification
therein.  The Corporation has corporate
power to own all of its properties and assets and to carry on its business as
it is now being conducted.  The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated herein will not, violate any provision of any
charter, by-law, mortgage, lien, lease, agreement, instrument, order, judgment
or decree to which the Corporation is a party or by which the Corporation is
bound, and will not violate any other restriction of any kind or character to
which the Corporation is subject.  The
corporate minute book of the Corporation is complete, including therein the
Articles of Incorporation and By-Laws with any amendment thereto, and the
meetings of directors referred to therein were duly called and held, and the
minutes thereof represent all minutes of directors’ meetings heretofore held,
and the signatures appearing on all documents contained therein are the true
signatures of the persons purporting to have signed the same.  The Corporation has no subsidiaries nor any
interest in any other business enterprise.

 

(b)           Financial Statements.  The Corporation has heretofore delivered to
Buyer the balance sheet and related statement of income covering the business
and the operations for the Corporation dated December 31, 2003, and said
balance sheet and related statement of income fairly represent the financial
position of the Corporation as of the date thereof and the results of
operations for the period covered by said statements.  The accounts receivable reflected therein represent bona fide
claims against debtors for charges arising on or before the date of said balance
sheet and are fully collectible, except to the extent of the bad debt reserves
reflected in said balance sheet.  Since
that date there has not been any material adverse change in the financial
condition of the Corporation and there have been no material transactions other
than in the normal course of business. 
The Corporation shall deliver to Buyer as soon as possible after the
execution of this Agreement, a balance sheet of the Corporation as of March 31,
2004, and income and surplus accounts of the Corporation for the three months
ending on that date, all of which shall be certified by the Corporation to
present fairly the financial condition of the Corporation on that date and the
results of the operations for the above-mentioned period.

 

(c)           Title to Properties.  The Corporation has good and marketable
title to its properties and assets (including, without limitation, the assets
reflected in the above described balance sheet, except as subsequently sold or
otherwise disposed of in the ordinary course of business), free and clear of
all claims, rights, restrictions, conditions, covenants, easements, liens and
encumbrances except the lien of property taxes not yet due.  The Corporation makes the following
representations and warranties with regard to the following properties and
assets:

 

(i)            The Corporation has
good and marketable title to those certain trade practices approved by
applicable regulatory state and/or federal agencies, trademarks and trade names
as described in Exhibit B attached hereto.  The Corporation knows of no infirmities which would offset the
validity of same; nor does the Corporation know of any claim by any other
person, firm or corporation, which impairs, or tends to impair the value or
effectiveness of said trademarks or trade names; nor does the Corporation know 

 

 

of any action,
or threatened action by any other person, firm or corporation which infringes
or tends to prohibit the trade practices approved by any applicable regulatory
state and/or federal agency or to infringe said trademark or trade names, or
any rights appurtenant thereto.

 

(ii)           The Corporation has
good and marketable title to the licensing agreements described in Exhibit C
attached hereto.  The Corporation knows
of no infirmities which would offset the validity of same, nor does the
Corporation know of any claim by any other person, firm or corporation which
impairs, or tends to impair the value or effectiveness of said licensing or
other agreements pertaining thereto; nor does the Corporation know of any
action, or threatened action by any other person, firm or corporation which
infringes or tends to infringe said licensing or other agreements, by any
rights appurtenant thereto.

 

(iii)          The licensing
agreements described in Exhibit C attached hereto are valid and
subsisting agreements.  The Corporation
knows of no claim, or threatened claim by any person, firm or corporation which
impairs, or tends to impair the Corporation’s rights under such
agreements.  The Corporation knows of no
action, or threatened action which diminishes, or threatens to diminish the
value of the Corporation’s rights under said agreements.

 

(d)           Intellectual Property.  The Corporation owns, or is licensed or
otherwise possesses legally sufficient rights to use, all patents, trademarks,
trade names, service marks, copyrights, and any applications there for,
technology, know-how, computer software programs or applications (in both
source code and object code form) and tangible or intangible proprietary
information or material that are used or proposed to be used in the business of
the Corporation, as currently conducted in any respect (the “Company
Intellectual Property”).  Except as
disclosed in Exhibit D, the Corporation has no knowledge of any
infringement by any other person of any of the Company Intellectual Property
owned by or exclusively licensed to the Corporation (any such licensed Company
Intellectual Property being referred to herein as “Third Party Intellectual
Property”), and the Corporation has not entered into any agreement to indemnify
any other person against any charge or infringement of any of the Company
Intellectual Property except as disclosed in Exhibit D.  To the knowledge of the Corporation, it has
not violated or infringed any intellectual property right of any other person,
and the Corporation has not received any written communication (including,
without limitation, claims or demands) alleging that it violates or infringes
the intellectual property rights of any other person.  Except as disclosed in Exhibit D and with respect to
                              
, as to which Buyer has been informed, the Corporation has not received any
written claim or demand of any person or entity pertaining to, or any
proceeding which is pending or, to the knowledge of the Corporation,
threatened, that challenges the rights of the Corporation in respect to any
Company Intellectual Property or operation of the business of the Corporation,
or that claims that any default exists under the Company Intellectual
Property.  None of the Company
Intellectual Property is subject to any outstanding order, ruling, decree,
judgment or stipulation by or with any court, tribunal, arbitrator, or other
governmental entity.  The Corporation
will not be as a result of the execution and delivery of this Agreement or the
performance of its obligations hereunder, in violation of any license,
sublicense or agreement concerning Company Intellectual

 

 

Property.  Except as set forth in Exhibit D, no
claims with respect to the Company Intellectual Property, any trade secret
material to the Corporation or Third Party Intellectual Property to the extent
arising out of any use, reproduction or distribution of such Third Party
Intellectual Property by or through the Corporation are currently pending or,
to the knowledge of the Corporation, are threatened by any person, (i) to the
effect that the manufacture, sale, licensing or use of any product as now used,
sold or licensed or proposed to use, sale or license by the Corporation
infringes on any patent, trademark, trade name, service mark, copyright, or trade
secret; (ii) against the use by the Corporation of any patent, trademarks,
trade names, copyrights, trade secrets, technology, know-how or computer
software programs and applications used in the business of the Corporation as
currently conducted or as proposed to be conducted; (iii) challenging the
ownership, validity or effectiveness of any of the Company Intellectual
Property or other trade secret material the Corporation; or (iv) challenging
the Corporation’s license or legally enforceable right to use of the Third
Party Intellectual Property.

 

Neither the
execution and delivery of this Agreement by the Corporation nor the
consummation by the Corporation of the transactions contemplated by this
Agreement will result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default), or impair
the Corporation’s rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or cancellation
of, any license agreement, contract or other arrangement of any nature relating
to Company Intellectual Property Rights or Third Party Intellectual Property
Rights.

 

(e)           Tax Returns.  The Corporation has timely filed or caused
to be timely filed all federal, state and local tax returns for income taxes,
sales taxes, withholding and all payroll taxes, property taxes, and all other
taxes of every kind whatsoever required by law to have been filed, and all such
tax returns are complete and accurate. 
For the purpose of the preceding sentence, a return shall be deemed to
be timely filed if it is filed after the date due but within any period allowed
in an extension granted by the taxing authority.

 

The
Corporation has paid or caused to be paid all taxes which have become due,
whether pursuant to said returns or pursuant to any assessments or otherwise,
and there is no further liability (whether or not disclosed on such returns or
assessments) for any such taxes, and no interest or penalties accrued or accruing
with respect thereto, except as may be set forth in the balance sheet and
statements of operations referred to in Section 3(b) above.

 

The amounts
set up as provisions for taxes on the Corporation’s balance sheet as of March
31, 2004, are sufficient for the payment of all unpaid federal, state, county
and local taxes of the Corporation accrued for or applicable to the period
ended on such date and all years and periods prior thereto and for which the
Corporation may be liable in its own right or as transferee of the assets of,
or as successor to any other corporation, association, partnership, joint
venture or other entity.

 

(f)            Litigation.  There are no actions, suits or proceedings
pending against the Corporation either in court or before any administrative
board, agency or commissions and the Corporation has no notice or knowledge
that any such action, suit or proceeding is threatened.

 

 

(g)           Absence of Adverse Changes.  Since the date of the balance sheet and
profit and loss statement referred to in Section 3(b) hereof, the Corporation
warrants and represents that the Corporation:

 

(i)                                     has
not suffered any material adverse change in its business or financial affairs;

 

(ii)                                  has
conducted its business in the ordinary course and has not made any unusual
commitments, acquisitions, purchases or sales;

 

(iii)                               has
not suffered any damage, destruction, or loss, whether or not covered by
insurance, materially and adversely affecting their properties or business;

 

(iv)                              has
not made any declaration or setting aside or payment of any dividend or other
distribution in respect of their outstanding capital stock, or any direct or
indirect redemption, purchase or other acquisition of any such stock;

 

(v)                                 has
not made any reduction or increase in compensation payable to or to become
payable to any of its officers or agents or any changes in employee benefit
plans.

 

There are no
facts (either known to the Corporation or which due diligence would have
disclosed) which are not set forth in this Agreement, its exhibits and other
documents referred to herein and heretofore delivered to Buyer and which would
have a material adverse effect on the operations of the Corporation.

 

(h)           Equipment.  All equipment used by the Corporation is in
good repair and operating condition and conforms to all applicable ordinances
and regulations.  A list of all tangible
personal property owned by the Corporation is attached hereto as Exhibit E.

 

(i)            Material Contracts.  The full, true and complete schedule of all
leases and material contracts is attached hereto marked Exhibit F and by
this reference made a part hereof.  For
the purpose of this section, a material contract is defined to be any contract
involving a commitment in excess of $10,000 but excluding, however, insurance
policies and group insurance policies of which the Corporation is a party.  With respect to insurance policies and group
insurance policies to which the Corporation is a party, as well as all material
contracts together with all amendments and statements thereto, upon the request
of Buyer, the Corporation has made such policies and contracts available to
Buyer or its duly authorized representative. 
There are no material defaults nor are there any obligations of the
Corporation to be performed under said material contracts.

 

(j)            Indebtedness and Contingent
Liabilities.  The Corporation does
not have any liabilities except as reflected on its balance sheet heretofore
delivered to Buyer and except as incurred in the ordinary course of business
since the date of said balance sheet or disclosed

 

 

otherwise herein.  All liabilities of the Corporation as of the
date hereof or incurred hereafter can be prepaid in full, without penalty, by
the Corporation at any time.  The Corporation
is not directly or indirectly liable upon or with respect to (by discount,
repurchase agreement, or otherwise), or obligated in any other way to provide
funds in respect of or to guarantee or assume any debtor obligation or any
corporation, association, partnership, joint venture or other entity except
endorsements made in the ordinary course of business in connection with the
deposit of items for collection.

 

(k)           Indebtedness of the Corporation to
Certain Persons.  The Corporation is
not indebted to any of its shareholders, or to any officers or directors of the
Corporation or to their respective spouses and/or children in any amount
whatsoever other than for payment of salaries, compensation for services
rendered and outstanding business expense reports, except as is more
particularly set forth in Exhibit G attached hereto and by this
reference made a part hereof.

 

(l)            Ownership of Stock.  Each of the Stockholders is the lawful owner
and holder of the number of shares of the capital stock of the Corporation set
forth opposite its name in Exhibit A and has valid and marketable
title thereto, free and clear of any claims, liens, restrictions or
encumbrances of or by others, and each of the Stockholders has the absolute and
unrestricted right, power, authority and capacity to sell, assign and transfer his
shares as herein provided, without prior consent of any other party.

 

(m)          Pension and Profit-Sharing Plan.  There is not presently in existence to which
the Corporation is a party any profit sharing, pension or bonus plans for any
of the Corporation’s officers, directors or employees.

 

Section 4.

Covenants and Representations of Buyer

 

Buyer covenants and represents as follows:

 

(a)           Buyer has the power and authority to
enter into this Agreement.

 

(b)           Buyer has and will have good
marketable title to the shares of its common stock that are to be delivered to
the Stockholders on the closing date to the extent that the shares are already
issued, and it has the power and authority under its articles of incorporation
to issue common stock as are required to equal the total of 1,666,667 shares to
be delivered under the terms of this Agreement.

 

(c)           Buyer has full right and authority
and transfer and deliver the shares as provided herein; and on delivery, the
Stockholders will receive good and marketable title to them, free and clear of
all liens, encumbrances and claims whatsoever; and the shares are and will be
validly issued, outstanding, fully paid and non-assessable.

 

(d)           Buyer has good and marketable title
to its properties and assets (including, without limitation, the assets
reflected in the above described balance sheet, except as subsequently sold or
otherwise disposed of in the ordinary course of business), free and clear of

 

 

all claims, rights,
restrictions, conditions, covenants, easements, liens and encumbrances, except
the lien of property taxes not yet due.

 

(e)           Tax Returns.

 

(i)                                     Buyer
has timely filed or caused to be timely filed all federal, state and local tax
returns for income taxes, sales taxes, withholding and all payroll taxes,
property taxes, and all other taxes of every kind whatsoever required by law to
have been filed, and all such tax returns are complete and accurate.  For the purpose of the preceding sentence, a
return shall be deemed to be timely filed if it is filed after the date due but
within any period allowed in an extension granted by any taxing authority.

 

(ii)                                  Buyer
has paid or caused to be paid all taxes which have become due, whether pursuant
to said returns or pursuant to any assessments or otherwise, an there is no
further liability (whether or not disclosed on such returns or assessments) for
any such taxes, and no interest or penalties accrued or accruing with respect
thereto, except as may be set forth in the balance sheet and statements of
operations referred to in this Section 4.

 

(iii)                               The
amounts set up as provisions for taxes on the balance sheet as of December 31,
2003 are sufficient for the payment of all unpaid federal, state, county and
local taxes of Buyer accrued for or applicable to the period ended on such date
and all years and period prior thereto and for which Buyer may be liable in its
own right or as transferee of the assets of, or as successor to any other
corporation, association, partnership, joint venture or other entity.

 

(f)            Buyer shall use its best efforts to
satisfy all conditions precedent of this Agreement.

 

(g)           Between the date of this Agreement
and the closing date, Buyer will not, without the prior written consent of the
shareholders, recapitalize, reclassify or increase to presently authorized
common stock or issue additional shares of its common stock.

 

(h)           Commission Filings.  (i)  Buyer filed a
registration statement on Form 10-SB under the Exchange Act of 1934, as amended
(the “Exchange Act”), which became effective on May 14, 1999.  Since May 14, 1999 and except as set forth
on Exhibit H, Buyer has timely filed with the Securities and Exchange
Commission (the “Commission”) all registration statements, proxy statements,
information statements and reports required to be filed pursuant to the
Exchange Act.  Buyer has not filed with
the Commission a certificate on Form 15 pursuant to Rule 12h-3 of the Exchange
Act.

 

(ii)  Buyer has delivered to the Corporation true
and complete copies of the registration statements, information statements and
other reports (collectively, the “Buyer SEC Documents”) filed by Buyer
with the Commission.  None of the Buyer
SEC Documents, as of

 

 

their
respective dates, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements contained
therein not misleading.

 

(iii)    Except as set forth in Exhibit
I, Buyer has not filed, and nothing has occurred with respect to which
Buyer would be required to file, any report on Form 8-K since January 1, 2004.  Buyer has provided to the Corporation copies
of any and all amendments or supplements to the Buyer SEC Documents filed with
the Commission since January 1, 2004 and all subsequent registration statements
and reports filed by Buyer subsequent to the filing of the Buyer SEC Documents
with the Commission and any and all subsequent information statements, proxy
statements, reports or notices filed by the Buyer with the Commission or
delivered to the stockholders of Buyer.

 

(iv)  Buyer is not an investment company within
the meaning of Section 3 of the Investment Company Act.

 

(v)  The shares of Buyer’s common stock are
quoted on the Over-the-Counter (OTC) Bulletin Board under the symbol “ITEK.OB,”
and Buyer is in compliance in all material respects with all rules and
regulations of the OTC Bulletin Board applicable to it and the Buyer’s common
stock.

 

(vi)  The Buyer has complied in all material
respects with the Securities Act of 1933, as amended, the Exchange Act and all
other applicable federal and state securities laws.

 

(i)            Financial Statements.  The balance sheets, and statements of income, changes in
financial position and stockholders’ equity contained in the Buyer SEC
Documents (i) have been prepared in accordance with GAAP applied on a basis
consistent with prior periods (and, in the case of unaudited financial
information, on a basis consistent with year-end audits), (ii) are in
accordance with the books and records of the Buyer, and (iii) present fairly in
all material respects the financial condition of the Buyer at the dates therein
specified and the results of its operations and changes in financial position
for the periods therein specified.  The
financial statements included in the Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2003 are audited by, and include the related
opinions of Buyer’s independent certified public accountants.  The financial information included in the
Quarterly Reports on Form 10-QSB for the quarters ended March 31, 2003, June
30, 2003 and September 30, 2003 are unaudited, but reflect all adjustments
(including normally recurring accounts) that Buyer considers necessary for a
fair presentation of such information in accordance with GAAP.

 

(j)            Bank Account. 
Buyer has in excess of $500,000 on deposit in an interest bearing
account at Silicon Valley Bank and has only used and will only use such funds
in accordance with the provisions of the business plan of the Buyer previously
delivered to the Corporation.

 

(k)           Capitalization. 
As of December 31, 2003, Buyer had 22,958,218 shares of common stock
issued and outstanding.  From January 1,
2004 to the date hereof, Buyer has issued an additional 3,052,867 shares of
Buyer’s common stock and warrants to purchase 2,958,999 shares of Buyer’s
common stock in consideration for investments received.  Buyer has no outstanding preferred
stock.  Except for employee stock
options, Buyer has no other outstanding securities.

 

 

Section 5.

Conditions Precedent
to Closing by Buyer

 

Buyer’s duty to close under the terms of this
Agreement is subject to the following conditions precedent:

 

(a)           The representations of the
Corporation, as set forth in this Agreement, must be true as of the closing
date, and the Corporation shall have performed all acts in accordance with its
covenants as set forth in this Agreement.

 

(b)           As of the closing date, the
Corporation shall have disclosed all material facts and transactions relating
to the condition and future prospects of the Corporation, and shall have
responded truthfully and completely to questions posed by the Buyer which
concern such facts and transactions that the Corporation knows, or reasonably
should know.

 

(c)           The Stockholders shall have deposited
their stock of the Corporation in escrow in accordance with Section 2 of this
Agreement.

 

(d)           During the period subsequent to
December 31, 2003, the date of the balance sheet referenced in Section 3(b), to
the closing date, Corporation shall not have:

 

(i)            Departed from
customary business practices or entered into any transactions other than in the
ordinary course of business;

 

(ii)           Made any contract
not in the ordinary course of business;

 

(iii)          Incurred any
indebtedness or liability except in the ordinary course of business;

 

(iv)          Sold or transferred
assets, tangible or intangible, or compromised or settled any debt or claim,
except in the ordinary course of business;

 

(v)           Mortgaged or
encumbered any assets, tangible or intangible;

 

(vi)          Increased any
salaries or compensation or any directors, officers, or agents;

 

(vii)         Made any substantial
capital expenditures without the express written approval of Buyer;

 

(viii)        Forfeited or waived
any rights of substantial value;

 

(ix)           Incurred any loss
substantially greater than those customarily incurred in the ordinary course of
business; or

 

 

(x)            Declared or paid
any dividend or made any other distribution on or in respect of its outstanding
shares of capital stock, or purchased or redeemed any of its outstanding shares
of capital stock.

 

(e)           From the date of execution of this
Agreement, Buyer, its directors, officers, agents, attorneys and auditors,
shall have had the right of inspecting at reasonable times the Corporation’s
properties, books, accounts, commitments and records of every kind; and, to
effect this provision, the Corporation shall have cooperated fully with Buyer
and its representatives, and shall have kept Buyer fully informed of the
affairs of the Corporation.

 

(f)            All papers and proceedings under the
terms of this Agreement must be acceptable to counsel for Buyer.

 

(g)           The resignations of those officers
and directors of the Corporation whose resignations have been requested by
Buyer, the names of which persons are listed in Exhibit J attached to
this Agreement, shall have been furnished to Buyer.

 

(h)           The
Stockholders shall have elected as new directors of the Corporation those
persons designated by Buyer whose names are listed in Exhibit K attached
to this Agreement.

 

(i)            This Agreement shall have been
executed and delivered on behalf of the Corporation and shall constitute a
legal, value and binding obligation, enforceable in accordance with its terms.

 

(j)            The Corporation shall have executed
and delivered to Buyer the Registration Rights Agreement in the form attached
hereto as Exhibit L.

 

Section 6.

Conditions Precedent to Closing by the
Corporation

 

The Corporation’s duty to close under the terms of
this Agreement is subject to the following conditions precedent:

 

(a)           The representations of Buyer, as set
forth in this Agreement, must be true as of the closing date, and Buyer shall
have performed all acts in accordance with its covenants as set forth in this
Agreement.

 

(b)           Buyer shall have deposited 1,666,667
shares of its common voting stock, par value $.001 per share, in accordance
with Section 2 of this Agreement.

 

(c)           All papers and proceedings under the
terms of this Agreement must be acceptable to counsel for the Corporation.

 

(d)           This Agreement shall have been
executed and delivered on behalf of Buyer and shall constitute a legal, valid
and binding obligation, enforceable in accordance with its terms.

 

 

(e)           Buyer shall have executed and
delivered to the Corporation the Registration Rights Agreement in the form
attached hereto as Exhibit L, which shall provide for the registration
by Buyer of the shares of Buyer’s common stock being issued to the Stockholders
under this Agreement on or before the indemnity expiration period set forth in
Section 7(c).

 

Section 7.

Indemnification;
Survival

 

(a)           Indemnification.  Each party hereto (the “Indemnifying Party”)
hereby agrees to indemnify, defend, and hold harmless the other party hereto
(the “Indemnified Party”) from and against any and all losses, liabilities,
obligations, damages, costs and expenses actually incurred (collectively,
“Losses”) based upon, attributable to or resulting from the breach of any
representation, warranty or covenant of the Indemnifying Party set forth
herein, and any and all notices, actions, suits, proceedings, claims, demands,
assessments, judgments, costs, penalties and expenses, including reasonable attorneys’
and other professionals’ fees and disbursements actually disbursed
(collectively, “Expenses”) as a consequence of and incident to any and all
Losses with respect to which indemnification is provided hereunder.

 

(b)           Limitation on Indemnification Obligations.  The Indemnified Party shall not be entitled
to recover Losses and Expenses from the Indemnifying Party until the aggregate
amount which the Indemnified Party would seek a recovery exceeds the sum of
$10,000 (the “Threshold Amount”), and then the Indemnified Party may recover
the Threshold Amount and any sums which are in excess of the Threshold Amount,
but in no event may the Indemnified Party be entitled to recover an amount in
excess of $500,000, provided, however, that the Indemnified Party
may only seek recovery from the Indemnifying Party by receiving duly issued and
outstanding shares of the Common Stock of the Buyer (“Indemnification Shares”)
then owned or held by the Indemnifying Party, and provided, further,
that for purposes of determining the amount of Indemnification Shares to be
recovered by the Indemnified Party, such shares shall be valued for all claims
of indemnification at $0.30 per share (subject to any subsequent stock split,
stock dividend, recapitalization or similar event).

 

(c)           Survival of Representations and
Warranties.  The parties hereto
hereby agree that the representations, warranties and covenants contained in
this Agreement and the obligation of the Indemnifying Party to indemnify the
Indemnified Party for Losses and Expenses pursuant to this Section shall
survive the execution and delivery of this Agreement and the closing date until
the date that is six months after the date hereof (the “Indemnification
Period”), on which date, such representations, warranties and covenants and
such obligations to indemnify shall terminate.

 

(d)           Patent Indemnification.  Notwithstanding the foregoing provisions of
this Section 7, in the event Buyer or the Corporation receives within the
Indemnification Period a “cease and desist” letter or similar notice or
correspondence directly from
                                             
or an affiliate or representative or any successors or assigns thereof
(“                       “),
asserting a claim against Buyer or the Corporation on the grounds that the
Corporation’s technology or

 

 

processes constitute patent
infringement of any proprietary rights of such claimant, the Indemnification
Period with respect to such matter (and only such matter) shall be extended for
an additional six-month period. 
Further, in the event
                                  
commences a legal action against the Corporation or the Buyer seeking either
injunctive relief or money damages in excess of $500,000 in a federal or state
court of competent jurisdiction against the Corporation or the Buyer on the
grounds of any such patent infringement, which would reasonably have the
effect, on the advice of counsel, of preventing the Corporation from carrying
on its business in its usual and ordinary course, the Buyer shall have the
right, exercisable within 10 business days after notice of any such legal
action, by written notice to the Corporation, to recover all the
Indemnification Shares from the Corporation (an “Unwinding”).  In the event of an Unwinding, the Buyer shall
promptly assign, at no cost, all shares of the Corporation to the Stockholders
in the proportions set forth on Exhibit A hereto.

 

Buyer agrees
that, upon acquiring constructive knowledge of the commencement of any legal
action by
                    
against the Corporation or the Buyer, it shall use commercially reasonable
efforts, including, without limitation, engaging appropriate counsel, to defend
the Corporation and/or the Buyer, as applicable, in such legal action, so as to
allow the Corporation to carry on its business in the usual and ordinary
course.  Buyer further agrees that,
during the period that this provision shall be in effect, it shall not cause
the Corporation to declare or pay any dividends or other distributions to Buyer
or impose any management fees payable to Buyer or its affiliates upon the
Corporation.

 

Section 8.

Termination of
Agreement

 

If any duties or obligations of the parties to this
Agreement, contemplated by this Agreement to occur or be performed before the
closing date, shall have not taken place before that date, or if the conditions
precedent, contemplated by this Agreement to be satisfied before the closing
date, shall not have been satisfied or waived by the proper party before that
date, this Agreement shall be terminated and of no further force or effect, and
the parties shall be relieved of all obligations under the terms of this
Agreement.  In the event of termination,
the parties shall bear their own expenses incurred pursuant to this Agreement,
and each of the parties shall return all documents, instrument and commercial
paper transferred pursuant to the terms of this Agreement, unless otherwise
provided in this Agreement, to the owner of, or the party who originally
submitted, such documents, instruments or commercial paper.

 

Section 9.

Notices

 

(a)           Any
notification to be given pursuant to this Agreement shall be deemed to have
been given when the notification is deposited in the mails or with a telegraph
company, with all charges of transmittal prepaid, and properly addressed to:

 

 

	
  Buyer:

  	
  The
  Corporation:

  
	
   

  	
   

  
	
  Immediatek,
  Inc.

  	
  DiscLive
  Inc.

  
	
  2435 N.
  Central Expressway

  	
  73 Spring
  Street

  
	
  Suite 1610

  	
  Suite 302

  
	
  Richardson,
  TX  75080

  	
  New York, NY
  10012

  
	
  Attn:  Zach Bair, President

  	
  Attn:  Sami Valkonen, President

  

 

(b)           Liability for any taxes mentioned in
this Agreement attributable to the operations of the Corporation before the
closing date, and subsequently assessed against Buyer pursuant to the transfer
of the Corporation’s stock under the terms of this Agreement, shall be made
known to the Corporation so that it may contest the assessment.  This notice shall be given by Buyer so as to
afford the Corporation a reasonable amount of time to prepare a defense, and
Buyer shall be bound by the reasonable determinations and decisions of the
Corporation and its counsel, in the course of contesting any such tax
liability.

 

Section 10.

Successors and
Assigns

 

This Agreement and all its terms shall be binding on
an inure to the benefit of the parties to this Agreement, and to their
respective legal representatives, successors or assigns, as the case may be,
with the same force and effect as if specifically mentioned in each instance
where a party to this Agreement is named.

 

Section 11.

Interpretation of Agreement

 

(a)           This
Agreement and the exhibits attached to this Agreement constitute the entire
agreement between the parties concerning the transaction contemplated by this
Agreement.

 

(b)           The
transaction contemplated under the terms of this Agreement is intended to
qualify as a tax-free exchange under Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended.

 

(c)           Issues
of formation, interpretation and performance of this Agreement are to be
resolved in accordance with the laws of Texas.

 

(d)           Any controversy or claim arising out
of or relating to this Agreement or the breach thereof, including disputes with
respect to any adjustment to the escrowed shares in accordance with Section 7
of this Agreement, shall be finally settled by arbitration in either New York,
New York, or Dallas, Texas in accordance with the rules, regulations and
procedures of the American Arbitration Association or JAMS before one
arbitrator appointed pursuant thereto. 
The claimant shall elect the location of the arbitration and any
counterclaim shall take place in

 

 

the same venue as the original
claim.  The arbitration award shall be
final, shall be binding upon the parties hereto, and may be entered in any
court having jurisdiction thereof.

 

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first written above.

 

	
   

  	
   

  	
  BUYER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  IMMEDIATEK, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Zach Bair, President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE CORPORATION:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DISCLIVE INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Rich Isaacson, Chief Executive OfficerExhibit
10.1

 

PATENT AND TECHNOLOGY LICENSE
AGREEMENT

 

This AGREEMENT (“AGREEMENT”)
is made on this 15th day of April, 2004 (“EFFECTIVE
DATE”), by and between Vista Medical Technologies, Inc., a Delaware
corporation, having a principal place of business located at 2101 Faraday
Avenue, Carlsbad, CA 92008 (“LICENSOR”),
and Viking Systems, Inc., a Nevada corporation, having a principal place of
business located at 7514 Girard Ave., Suite 1509, La Jolla, CA  92037 (“LICENSEE”).

 

RECITALS

 

A.                                   WHEREAS,
pursuant to that certain Asset Purchase Agreement by and between LICENSOR and
LICENSEE dated December 22 (the “Asset Purchase Agreement”), LICENSEE is
acquiring from the LICENSOR, and LICENSOR is selling to LICENSEE, certain
assets (“ASSETS”) of the LICENSOR’s medical
device and technology business (“BUSINESS”); and

 

B.                                     WHEREAS, LICENSOR owns certain
intellectual property rights necessary to make use of such ASSETS,
commercialize LICENSED PRODUCTS and operate the BUSINESS; and

 

C.                                     WHEREAS, LICENSEE desires to license
certain intellectual property rights necessary to make use of such ASSETS,
commercialize LICENSED PRODUCTS and operate the BUSINESS and LICENSOR is willing to grant such an exclusive license to
LICENSEE.

 

NOW, THEREFORE, in consideration of the mutual covenants
and promises herein contained, the parties agree as follows:

 

I.

 

DEFINITIONS

 

All definitions below or elsewhere in this AGREEMENT
apply to both their singular and plural forms, as the context may require.  “Herein,”  “hereunder,” and “hereof”
and other similar expressions refer to this AGREEMENT.  “Section”
refers to sections in this AGREEMENT.  “Including” means “including without
limitation.”  “Days” means “calendar days,” unless otherwise stated.

 

1.1 “AFFILIATE”
means any business entity more than fifty percent (50%) owned by LICENSEE, any
business entity which owns more than fifty percent (50%) of LICENSEE, or any
business entity that is more than fifty percent (50%) owned by a business
entity that owns more than fifty percent (50%) of LICENSEE.

 

1.2 “CONFIDENTIAL
INFORMATION” means the proprietary or confidential information of a
party (each, a “DISCLOSER”) which
is disclosed to the other party (each, a “RECIPIENT”)
before or after the EFFECTIVE DATE and (i) is identified as “confidential” by
DISCLOSER in writing prior to disclosure and (ii) relates to products,
plans, designs, costs, prices, finances, marketing plans, business
opportunities, personnel, research, development, know-how, trade secrets,
inventions, blueprints, techniques, chemical or biological materials, drugs,
devices, specimens, apparatus, processes, algorithms, software programs,
schematics,

 

 

designs,
contracts, customer lists, procedures, formulae, patent applications and other
information relating to DISCLOSER’s business, services, processes or
technology.  CONFIDENTIAL INFORMATION
shall not include information that RECIPIENT proves:  (i) was known by RECIPIENT, or was publicly available, prior
to disclosure by DISCLOSER to RECIPIENT; (ii) became publicly available after
disclosure by DISCLOSER to RECIPIENT through no act of RECIPIENT; (iii) is
hereafter rightfully furnished to RECIPIENT by a third party without
confidentiality restriction; or (iv) is disclosed with the prior written
consent of DISCLOSER or as expressly authorized under this AGREEMENT.

 

1.3 “GROSS REVENUES” means royalties, up-front
payments, marketing, distribution, franchise, option, license, or documentation
fees, bonus and milestone payments, equity securities or any other payment or
value received by License from the sale, licensing, sublicensing, renting,
leasing or other commercialization of Licensed Products, less sales/and/or use
taxes actually paid, import and/or export duties actually paid, outbound
transportation prepaid or allowed, and amounts allowed or credited due to
returns.

 

1.4 “IMPROVEMENTS”
means any and all derivative works, modifications, improvements, enhancements,
translations, abridgements, additional developments or the like to the existing
LICENSED TECHNOLOGY made by LICENSEE, LICENSEE’s AFFILIATES and/or LICENSEE’s
sublicensees after the EFFECTIVE DATE.

 

1.5 “INTELLECTUAL
PROPERTY” or “INTELLECTUAL
PROPERTY RIGHTS” collectively means any and all patents (including
reissues, divisions, continuations and extensions thereof), patent registrations,
patent applications, data rights, utility models, business processes,
trademarks, trade secrets, know how, trade names, registered or unregistered
designs, mask works, copyrights, moral rights and any other form of proprietary
protection afforded by law to intellectual property, or any applications
therefor, which arises or is enforceable under the laws of the United States,
any other jurisdiction or any bi-lateral or multi-lateral treaty regime.

 

1.6 “KNOW-HOW”
means any and all information, processes, procedures, documents and materials
relating to the design, development and manufacture of LICENSED PRODUCTS known
to LICENSOR as of the EFFECTIVE DATE.

 

1.7 “LICENSED
PRODUCTS” means any product incorporating or arising out of LICENSED
TECHNOLOGY, including the OEM PRODUCTS and the VISTA PRODUCTS.

 

1.8 “LICENSED
PATENTS” means all of the patent applications and patents listed on Schedule
3.10(a) of the Company Disclosure Schedule (as defined in the Asset
Purchase Agreement), and any patents issued therefrom, together with all
pending and issued foreign counterparts of such applications, and all pending
and issued renewals, continuations, continuations-in-part, divisions, patents
of addition, reexaminations and/or reissues of such applications or foreign
counterparts.

 

1.9 “LICENSED
TECHNICAL INFORMATION” means LICENSOR’s rights in any technical
information, KNOW-HOW, processes, procedures, compositions, devices, methods,
formulae, protocols, techniques, software, designs, drawings or data which are
not claimed in

 

 

LICENSED PATENTS
but that are necessary or useful for practicing LICENSED PATENTS.

 

1.10   “LICENSED TECHNOLOGY” means inventions or discoveries covered
by LICENSED PATENTS and/or LICENSED TECHNICAL INFORMATION as more fully defined
in Exhibit A.  LICENSED
TECHNOLOGY includes any IMPROVEMENTS developed by LICENSEE or its AFFILIATES
subsequent to the EFFECTIVE DATE as set forth in Section 4.2.

 

1.11   “LIMITED
ROYALTY PERIOD” has the meaning set forth in Section 3.1(b).

 

1.12   “LIMITED ROYALTY PERIOD GROSS REVENUES” means Gross Revenues from Licensee’s
Sale of Vista Products less the gross revenues earned by LICENSOR from its Sale
of Vista Products during 2003.

 

1.13   “OEM PRODUCTS” meansthe Aesculap product line, the Wolf product line and the OEM Camera
product line as further defined in Exhibit B, and any improvements,
derivatives, modifications or enhancements thereto.

 

1.14   “SALE” OR “SOLD” means the transfer, licensing, renting, leasing,
disposition or other commercialization of Licensed Products for value.

 

1.15   “TERM”
has the meaning set forth in Section 10.1.

 

1.16   “VISTA
PRODUCTS” means  the
Endosite System product line and the Three Chip Endosite System product line as
further defined in Exhibit B, and any improvements, derivatives, modifications
or enhancements thereto.

 

II.

 

LICENSE; TECHNOLOGY TRANSFER

 

2.1 Subject to the terms and conditions of this
Agreement, LICENSOR hereby grants to LICENSEE, a worldwide, exclusive (even as
to LICENSOR) license, with the right to sublicense, under LICENSED TECHNOLOGY,
and all INTELLECTUAL PROPERTY RIGHTS therein (i) to make, have made, use,
import, reproduce, offer to sell and/or sell LICENSED PRODUCTS; and (ii) to
modify and create IMPROVEMENTS.

 

2.2 Sublicenses.  LICENSEE may grant sublicenses
under LICENSED TECHNOLOGY consistent with the terms of Section 2.1 and this
AGREEMENT.  Notwithstanding anything
else herein and for avoidance of doubt, LICENSEE shall have no right to
commercialize the LICENSED TECHNOLOGY except as incorporated into LICENSED PRODUCTS.

 

2.3 Technology
Transfer.  No later than
thirty (30) days following the EFFECTIVE DATE, LICENSOR shall deliver to
LICENSEE all LICENSED TECHNOLOGY.

 

 

III.

 

CONSIDERATION, PAYMENTS AND REPORTS

 

3.1 Royalties.  In consideration of rights granted by
LICENSOR to LICENSEE under this AGREEMENT, LICENSEE agrees to pay LICENSOR the
following:

 

(a) A five percent
(5%) royalty on Gross Revenues for all OEM PRODUCTS Sold by LICENSEE, its
AFFILIATES or its sublicensees;

 

(b) For the first
(1st) two (2) twelve (12) month periods after the EFFECTIVE DATE (“LIMITED ROYALTY PERIOD”), a ten percent
(10%) royalty on the Limited Royalty Period Gross Revenues for all VISTA
PRODUCTS Sold by LICENSEE, its AFFILIATES or its sublicensees; and

 

(c) After the
LIMITED ROYALTY PERIOD, a ten percent (10%) royalty on Gross Revenues for all
VISTA PRODUCTS Sold licensed, leased, rented or otherwise commercialized by
LICENSEE, its AFFILIATES or its sublicensees.

 

3.2 Minimum
Royalties.  Notwithstanding
Section 3.1, the minimum royalty payment by LICENSEE to LICENSOR for the
Licensed Products shall be as follows:

 

(a) One Hundred
and Fifty Thousand U.S. Dollars ($150,000) for the first (1st) twelve (12)
month period after the EFFECTIVE DATE to be paid no later than thirty (30) days
after the first (1st) anniversary of the EFFECTIVE DATE;

 

(b) Three Hundred
Thousand U.S. Dollars ($300,000) for the second twelve (12) month period
starting on the first (1st) anniversary of the EFFECTIVE DATE to be paid no
later than thirty (30) days after the second (2nd) anniversary of the EFFECTIVE
DATE;

 

(c) Three Hundred
Thousand U.S. Dollars ($300,000) for the third twelve (12) month period
starting on second (2nd) anniversary of the EFFECTIVE DATE to be paid no later
than thirty (30) days after the third (3rd) anniversary of the EFFECTIVE DATE;

 

(d) Three Hundred
Thousand U.S. Dollars ($300,000) for the fourth twelve (12) month period
starting on the third (3rd) anniversary of the EFFECTIVE DATE to be paid no
later than thirty (30) days after the fourth (4th) anniversary of the EFFECTIVE
DATE; and

 

(e) Three Hundred
and Seventy-Five Thousand U.S. Dollars ($375,000) for the fifth twelve (12)
month period starting on the fourth (4th) anniversary of the EFFECTIVE DATE to
be paid no later than thirty (30) days after the fifth (5th) anniversary of the
EFFECTIVE DATE.

 

3.3 Termination of
License.  If LICENSEE does
not pay LICENSOR the minimum royalty for each twelve month period as set forth
in Section 3.2, and such failure continues for thirty (30) days after LICENSOR
notifies LICENSEE thereof in writing, 
the licenses granted

 

 

under Section 2
shall terminate immediately and all rights and interests granted therein shall
revert back to LICENSOR.  The parties
shall take any and all necessary actions and execute all documents necessary to
ensure that the intent of this Section is enforced.

 

3.4 Royalty
Obligation and Conditional Transfer of LICENSED TECHNOLOGY.   The royalties agreed to hereunder shall be
paid until the earlier of the date on which LICENSEE has paid LICENSOR an
aggregate of Four Million Five Hundred Thousand U.S. Dollars ($4,500,000) or
the fifth anniversary of Effective Date. (“TOTAL
ROYALTY”).  If LICENSEE pays
LICENSOR the TOTAL ROYALTY, LICENSOR shall assign and transfer to LICENSEE all
of LICENSOR’s rights, title and interests in and to the LICENSED
TECHNOLOGY.  The parties shall take any
and all necessary actions and execute all documents necessary to ensure the
intent of this Section is enforced.

 

3.5 Payment Terms.  The royalties due hereunder shall be paid on
a semi annual basis (“Payment Period”) commencing six (6) months from the
Effective Date. Within thirty (30) days after the end of each Payment Period,
LICENSEE:

 

(i) shall pay all royalties set forth in this Section
3 accrued and payable for such period, and

 

(ii) furnish LICENSOR
with a royalty report along with a written statement certified by an officer of
LICENSEE (a) stating that the royalty report is true and accurate, and
(b) specifying the total royalties payable to LICENSOR for such period and
providing the basis for the calculation of such royalties.

 

All payments due
to LICENSOR shall be made solely in U.S. Dollars in immediately available
funds, via wire transfer to such account as is designated by LICENSOR in writing
to LICENSEE.  Late payments shall accrue
interest from the date due until the date paid at a rate of one percent (1%)
per month, or the maximum rate allowed under applicable law, whichever is less.  LICENSEE shall make no offset for any
amounts due to LICENSOR regardless of the justification for such intended
offset.

 

3.6 Right of Audit.  During the TERM and for three (3) years after
the expiration and termination of this AGREEMENT for any reason (the “AUDIT PERIOD”), LICENSEE shall keep
complete, true and accurate records containing all invoices and other data
related to the computation and verification of the royalties to be paid under
Section 3 and any other amounts to be paid to LICENSOR, and (b) the basis of
information provided in the royalty report or any statements provided by
LICENSEE to LICENSOR pursuant to this AGREEMENT.  During the AUDIT PERIOD LICENSEE shall permit LICENSOR or its
designees or agents, at LICENSOR’s expense and upon ten (10) days prior
written notice, to inspect and make copies of such records for the sole
purpose of verifying the accuracy of the royalties and other payments made by
LICENSEE under this AGREEMENT.  LICENSEE
shall itself, and shall cause its accountants to, diligently cooperate with the
audit.  If any audit reveals any
underpayment by LICENSEE, LICENSEE shall within ten (10) days after such audit
remit to LICENSOR all amounts due, with interest thereon at the rate of one
percent (1%) per month compounded (or the highest rate permitted by applicable
law, whichever is lower), calculated from the date such amounts were due.  If any underpayment is more than five
percent (5%) of the total payments

 

 

due for the period
audited, LICENSEE shall remit to LICENSOR in full all costs for such audits and
the subsequent audit, including any fees of a certified public accountant.

 

3.7 Taxes.  In addition to any other amounts due under
this AGREEMENT, LICENSEE agrees to pay, indemnify and hold LICENSOR harmless
from any TAXES imposed by any governmental authority with respect to LICENSEE’s
use of the LICENSED TECHNOLOGY.  “TAXES” herein means any tax, fee or
cost not based on LICENSOR’s net income, including any sales, use, excise,
import or export, value added, withholding or similar tax, or any duty or fee
and any penalties or interest associated with any of the foregoing.  LICENSEE’s obligation to pay TAXES shall
survive any expiration or termination of this AGREEMENT.  Notwithstanding the foregoing, if LICENSEE
is required by U.S. or other law to withhold any amount from sums payable to
LICENSOR hereunder, LICENSEE shall deduct and pay any withholding taxes to the
appropriate U.S. or other tax authorities, respectively, and shall provide
LICENSOR with a tax receipt evidencing such payment.

 

IV.

 

PATENTS AND INVENTIONS

 

4.1 Ownership.  Except for the licenses granted
herein and as set forth in Section 3, LICENSOR shall retain all of its rights,
title and interests, which it may have, in the underlying INTELLECTUAL PROPERTY
RIGHTS of the LICENSED TECHNOLOGY and any IMPROVEMENTS.

 

4.2 LICENSEE IMPROVEMENTS.  In the event that LICENSEE develops IMPROVEMENTS subsequent to the
EFFECTIVE DATE, LICENSEE shall have all rights to such IMPROVEMENTS under the
terms of the exclusive license granted to LICENSEE in Section 2.1.

 

4.3 Patent Prosecution.  LICENSEE shall have the
responsibility for preparing, filing, prosecuting and maintaining the LICENSED
PATENTS and conducting any interferences, reexaminations or requesting reissues
or patent term extensions with respect to the LICENSED PATENTS in the United
States, and the right to prepare, file, prosecute and maintain the LICENSED
PATENTS and conduct any interferences, reexaminations or request reissues or
patent term extensions with respect to the LICENSED PATENTS, or to take such
similar actions to protect the LICENSED PATENTS in any other country.  During the TERM LICENSEE shall prosecute
and/or maintain, as appropriate, the LICENSED PATENTS in at least the countries
in which LICENSOR has already begun prosecution and/or maintenance (“PROSECUTION COUNTRIES”), a list of which
shall be provided by LICENSOR upon request. 
LICENSEE shall keep LICENSOR fully informed as to the status of such
patent matters, including without limitation by providing LICENSOR with the
opportunity to review and comment on any documents which will be filed in any
patent office and by providing LICENSOR copies of any documents received by
LICENSEE from such patent offices including notices of all interferences,
reexaminations, oppositions or requests for patent term extensions.  In the event that LICENSEE declines or fails
to prepare, file, prosecute or maintain any LICENSED PATENTS in any PROSECUTION
COUNTRY, LICENSEE shall promptly, and in no event later than ninety (90) days
prior to any filing deadline, provide written notice to LICENSOR and

 

 

LICENSOR shall
then have the right to assume such responsibilities at its own expense using
counsel of its choice.  In addition,
LICENSEE shall promptly notify LICENSOR of any decision to abandon a patent or
application covered by the LICENSED PATENTS in any country, in which case,
LICENSOR shall have the option, at its expense and with counsel of its choice,
of continuing to prosecute any such pending patent application or of keeping
the issued patent in force.  If LICENSEE
abandons, declines or fails to prepare, file, prosecute or maintain any
LICENSED PATENTS as set forth in this Section, the licenses granted by LICENSOR
to LICENSEE pursuant to Section II shall immediately become non-exclusive.

 

4.4 Additional
Filings.  LICENSEE shall have
the right to file for the protection of the LICENSED TECHNICAL INFORMATION, or
any rights therein in any country. 
LICENSEE shall keep LICENSOR fully informed as to the status of such
matters, including without limitation by providing LICENSOR with the
opportunity to review and comment on any documents to protect the LICENSED
TECHNICAL INFORMATION which will be filed in any governmental office or agency
and by providing LICENSOR copies of any documents received by LICENSEE from
such governmental offices or agencies.

 

V.

 

INFRINGEMENT BY THIRD PARTIES

 

5.1 Notice.  Each party shall promptly notify
the other in writing of any alleged or threatened INTELLECTUAL PROPERTY
infringement of the LICENSED TECHNOLOGY which may adversely impact the rights
of the parties hereunder, of which it becomes aware.

 

5.2 Enforcement.  In the event that either party
becomes aware of any alleged or threatened INTELLECTUAL PROPERTY infringement
of the LICENSED TECHNOLOGY, as between the parties, LICENSEE shall have the
first right, but not the obligation, to take appropriate action against any
person or entity directly or contributorily infringing such LICENSED
TECHNOLOGY, and to retain any recovery from such action.  In furtherance of such right, LICENSOR
hereby agrees that LICENSEE may join LICENSOR as a party in any such action
(with LICENSOR having the right to participate in such action and to be
represented, if it so desires and at its own expense, by counsel of its own
selection) and to give LICENSEE reasonable assistance and any needed authority
to control, file and prosecute such action, without expense to LICENSOR.  If LICENSEE does not file suit against a
substantial infringer within six (6) months of knowledge thereof, then LICENSOR
may, at its sole discretion, enforce any INTELLECTUAL PROPERTY RIGHTS in any
LICENSED TECHNOLOGY licensed hereunder, provided LICENSOR does so both on
behalf of itself and LICENSEE, with LICENSOR retaining all recoveries from such
enforcement.  In furtherance of such
right, LICENSEE hereby agrees that LICENSOR may join LICENSEE as a party in any
such action (with LICENSEE having the right to participate in such action and
to be represented, if it so desires and at its own expense, by counsel of its
own selection) and to give LICENSOR reasonable assistance and any needed
authority to control, file and prosecute such action, without expense to
LICENSEE.

 

5.3 Cooperation.  In any suit or dispute involving
an infringer, the parties agree to cooperate fully with each other at the
expense of the party bringing the suit. 
Cooperation shall

 

 

include permitting
access during regular business hours upon reasonable notice, to all relevant
personnel, records, papers, information, samples, specimens, and the like in
its possession.

 

5.4 Licenses to
Abate Third Party Infringement. 
LICENSEE shall have the sole right in accordance with the terms and
conditions herein to sublicense the rights granted to LICENSEE under Section
2.1 to any alleged infringer.

 

VI.

 

INDEMNIFICATION

 

6.1 Indemnification
By LICENSOR.  Subject to
Section 6.2, LICENSOR, at its own expense, shall: (i) defend, or at its
option settle, any claim, suit or proceeding brought by a third party against
LICENSEE: (a) that the LICENSED TECHNOLOGY (except for IMPROVEMENTS) as used in
accordance with this Agreement infringes any United States patent issued as of
the Effective Date, or any United States copyright or trademark right(s)
of a third-party, or misappropriates any United States trade secret of a
third party, (b) that LICENSOR breached any of its warranties, representations
or obligations in Section 8.1, or (c) arising out of LICENSOR’s negligence,
tortious conduct or willful misconduct hereunder; and (ii) pay any final
and non-appealable judgment entered or settlement against LICENSEE thereon; provided,
however, that LICENSOR shall not be responsible for any compromise or
settlement made without its consent. 
LICENSOR shall have no obligation to LICENSEE unless:  (1) LICENSEE gives LICENSOR prompt
written notice of the claim; (2) LICENSOR is given the right to control
and direct the investigation, preparation, defense and settlement of the claim;
and (3) LICENSEE fully cooperates with LICENSOR, at LICENSOR’s
expense, in such defense and settlement.

 

(a) Exclusions.  LICENSOR’s indemnification obligations shall not apply to any
claim relating to:  (a) the IMPROVEMENTS
or any element of the LICENSED TECHNOLOGY that has been changed, abused or not
used as authorized hereunder; (b) the bundling of LICENSED TECHNOLOGY with
software, hardware or other materials of LICENSEE and third parties; (c) use of
the LICENSED TECHNOLOGY that exceeds the scope of the licenses expressly
granted in this Agreement; and/or (d) LICENSEE’s failure to use the LICENSED
TECHNOLOGY or any portion thereof in accordance with the provisions of this
Agreement.

 

(b) Additional Rights.  If the use, sale or distribution of the OEM
PRODUCTS or the VISTA PRODUCTS by LICENSEE, or its AFFILIATES or sublicensees
is enjoined due to infringement of the LICENSED TECHNOLOGY in the Unites
States, or if LICENSOR wishes to minimize its potential liability in connection
therewith, LICENSOR may, at its option and expense, either:  (a) substitute functionally equivalent
non-infringing LICENSED TECHNOLOGY; (b) modify the infringing LICENSED
TECHNOLOGY so that the OEM PRODUCTS or VISTA PRODUCTS no longer infringe, but
remain functionally equivalent; (c) obtain for LICENSEE the right to
continue to use such LICENSED TECHNOLOGY; or (d) if none of the
foregoing is feasible, refund to LICENSEE a pro rata portion of the royalties
paid hereunder (as depreciated on a straight line basis over five (5) years
from the EFFECTIVE DATE).

 

 

6.2 Indemnification By LICENSEE.  LICENSEE, at its own expense, shall:  (i) defend, or at its option settle, any claim, suit or
proceeding against LICENSOR arising from or in connection with (x) LICENSEE’s
breach of any of its warranties, representations or obligations in Section 8.2,
12.10, 12.11 and 12.12, (y) any LICENSEE modification, combination, adaptation,
integration, incorporation, reproduction, sale, lease, rental or other
commercialization, distribution or performance of the LICENSED PRODUCTS, or (z)
LICENSEE’s negligence, tortious conduct or willful misconduct; and (ii) pay any
final judgment entered or settlement against LICENSOR thereon, provided,
however, that LICENSEE shall not be responsible for any compromise or
settlement made without its consent. 
LICENSEE shall have no obligation to LICENSOR pursuant to this Section
6.2 unless:  (a) LICENSOR gives
LICENSEE prompt written notice of the claim; (b) LICENSEE is given the
right to control and direct the investigation, preparation, defense
and settlement of the claim; and (c) LICENSOR fully cooperates with
LICENSEE, at LICENSEE’s expense, in such defense and settlement.

 

6.3 In the event the provisions of this
Article VI conflict with similar provisions contained in the Asset Purchase
Agreement, the provisions of the Asset Purchase Agreement shall control.

 

VII.

 

CONFIDENTIAL INFORMATION

 

7.1 Nondisclosure.  RECIPIENT shall not, except as otherwise
expressly provided herein, disclose, disseminate or otherwise allow access to
the CONFIDENTIAL INFORMATION of DISCLOSER to anyone other than RECIPIENT’s
employees that have a need to know such CONFIDENTIAL INFORMATION to implement
this AGREEMENT and who are bound by written confidentiality obligations with
provisions no less stringent than those contained in this Section VII.  RECIPIENT shall prevent unauthorized disclosure
or use of the CONFIDENTIAL INFORMATION of DISCLOSER.  DISCLOSER and RECIPIENT shall execute any documents and otherwise
shall take all necessary steps to ensure that DISCLOSER and RECIPIENT shall
each be able to enforce DISCLOSER’s rights hereunder against RECIPIENT, its
employees and all other third parties to whom RECIPIENT discloses DISCLOSER’s
CONFIDENTIAL INFORMATION, under the laws of each jurisdiction in which
DISCLOSER’s CONFIDENTIAL INFORMATION is disclosed by RECIPIENT.  RECIPIENT shall be responsible for any
breach of this Section VII by RECIPIENT’s employees, contractors or agents.

 

7.2 Ownership.  Except as set forth herein, RECIPIENT
acknowledges and agrees that DISCLOSER (or its licensors) owns all rights,
title and interests, including INTELLECTUAL PROPERTY RIGHTS, in and to DISCLOSER’s
CONFIDENTIAL INFORMATION.

 

7.3 Notification.  If RECIPIENT learns or believes that any
person who has had access to the CONFIDENTIAL INFORMATION of DISCLOSER has
violated or intends to violate this AGREEMENT, RECIPIENT shall immediately
notify DISCLOSER and shall cooperate with DISCLOSER in seeking injunctive or
other equitable relief against any such person.

 

7.4 Exceptions.  RECIPIENT may disclose the CONFIDENTIAL
INFORMATION of

 

 

DISCLOSER, if such
disclosure is required by law, provided that RECIPIENT promptly notifies
DISCLOSER to allow intervention by DISCLOSER (prior to the disclosure),
cooperates with DISCLOSER to contest or minimize the disclosure (including
application for a protective order) at RECIPIENT’s expense and limits such
disclosure to the party entitled to receive the CONFIDENTIAL INFORMATION and to
the scope of the legal requirement. 
Notwithstanding the foregoing, any CONFIDENTIAL INFORMATION disclosed
pursuant to this Section 7.4 shall otherwise continue to be treated as CONFIDENTIAL
INFORMATION hereunder.

 

7.5 Confidentiality
of AGREEMENT.  Neither party
will publicly disclose any term of this AGREEMENT or announce the existence of
this AGREEMENT without the prior written consent of the other party, except
that each party may reveal the terms of this AGREEMENT (a) to its
accountants, banks, financing sources, lawyers and other professional advisors,
provided that such parties undertake in writing to keep such information
confidential, or (b) as required by applicable laws and regulations including
those of the U.S. Securities and Exchange Commission on the notification.  Each party may also disclose the tax
treatment and tax structure of the transactions contemplated by this AGREEMENT
and all materials of any kind (including opinions or other tax analyses) that
are provided to it relating to such tax treatment and tax structure.

 

7.6 Reproduction of
CONFIDENTIAL INFORMATION. 
CONFIDENTIAL INFORMATION shall not be reproduced except as required to
implement this AGREEMENT.  Any reproduction
or derivative of any CONFIDENTIAL INFORMATION of DISCLOSER by RECIPIENT shall
remain the property of DISCLOSER and shall contain all confidential or
proprietary notices or legends which appear on the original.

 

VIII.

 

REPRESENTATIONS AND WARRANTIES

 

8.1 Representations and Warranties by LICENSOR: 
LICENSOR represents, warrants and covenants to LICENSEE:

 

(a) Corporate Power.  LICENSOR is duly organized and validly existing under the laws of
Delaware and has full corporate power and authority to enter into this
AGREEMENT and to carry out the provisions hereof.

 

(b) Due Authorization.  LICENSOR is duly authorized to execute and
deliver this AGREEMENT and to perform its obligations hereunder.  The person executing this AGREEMENT on
LICENSOR’s behalf has been duly authorized to do so by all requisite corporate
action.

 

(c) Binding Agreement.  This AGREEMENT is a legal and valid
obligation binding upon LICENSOR and enforceable in accordance with its
terms.  The execution, delivery and
performance of this AGREEMENT by LICENSOR does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a party or by
which it may be bound, nor violate any material law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over
it.

 

 

(d) Grant of Rights.  LICENSOR has not, and will not during the term of this AGREEMENT,
grant any right to any third party that would conflict with the rights granted
to LICENSEE hereunder.

 

(e) Validity.  LICENSOR is aware of no action, suit or inquiry or investigation
instituted by any governmental agency that questions or threatens the validity
of this AGREEMENT.

 

(f)            Ownership. 
To LICENSOR’s knowledge, it owns or holds valid and enforceable licenses
to the LICENSED PATENTS and LICENSED TECHNICAL INFORMATION and has sufficient
rights and power to grant the licenses to LICENSEE that it purports to grant
herein.

 

(g) Third Party Rights.  LICENSOR has no knowledge of any third party
INTELLECTUAL PROPERTY RIGHT that is infringed by the use or commercialization
of the LICENSED PRODUCTS as contemplated hereby.

 

8.2 Representations and Warranties by LICENSEE:  LICENSEE represents, warrants and covenants to
LICENSOR:

 

(a) Corporate Power.  LICENSEE is duly organized and validly existing under the laws of
the State of Nevada and has full corporate power and authority to enter into
this AGREEMENT and to carry out the provisions hereof.

 

(b) Due Authorization.  LICENSEE is duly authorized to execute and
deliver this AGREEMENT and to perform its obligations hereunder.  The person executing this AGREEMENT on
LICENSEE’s behalf has been duly authorized to do so by all requisite
corporation action.

 

(c) Binding Agreement.  This AGREEMENT is a legal and valid
obligation binding upon LICENSEE and enforceable in accordance with its
terms.  The execution, delivery and
performance of this AGREEMENT by LICENSEE does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a party or by
which it may be bound, nor violate any material law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over
it.

 

8.3 EXCEPT FOR ANY EXPRESS WARRANTY GIVEN IN SECTION
8.1 OR 8.2, NEITHER PARTY MAKES ANY WARRANTY, AND EACH PARTY EXPRESSLY
DISCLAIMS ALL OTHER WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED OR ARISING OUT OF
A COURSE OF CONDUCT OR COURSE OF DEALING, INCLUDING ALL WARRANTIES OF TITLE,
PERFORMANCE, USE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.

 

IX.

 

ASSIGNMENT

 

9.1 Neither this AGREEMENT nor any right or obligation
hereunder is assignable in

 

 

whole or in part
by any party without the prior written consent of the other party.  Notwithstanding the foregoing, either party
may assign this AGREEMENT, without such consent to a third party in connection
with any merger, acquisition, consolidation, reorganization (in which a change
of control occurs), CHANGE OF CONTROL of or by the assigning party, or the sale
of all, substantially all or a majority of such parties’ assets or voting
securities.  A “CHANGE OF CONTROL” occurs when over fifty
percent (50%) of a party’s then outstanding securities are acquired by a third
party.  This AGREEMENT shall inure to
the benefit of each of the party’s successors and assignees provided that such
successors or assignees assume the party’s obligations under this AGREEMENT.

 

X.

 

TERM AND TERMINATION

 

10.1                           Term. Subject to Sections 10.2 and 10.3
hereinbelow, the term of this AGREEMENT is from the EFFECTIVE DATE until the
five (5) year anniversary of the EFFECTIVE DATE (the “TERM”).

 

10.2                           Termination for
Breach.  Each party shall have the right to terminate this
AGREEMENT if the other party  breaches
this AGREEMENT and fails to cure such breach within thirty (30) days following
the date the breaching party receives a written breach notice from the
non-breaching party describing the breach; provided, however,
that the foregoing cure right shall not apply for a breach of Sections II, IV
and VII, whereupon the non-breaching party may terminate this AGREEMENT
immediately upon written notice to the breaching party without granting the
breaching party the right to cure such breach.

 

10.3                           Termination for
Bankruptcy.  Each party shall have the right to terminate
this AGREEMENT immediately upon written notice if the other party files a
petition, action or other proceeding seeking relief or protection under any
bankruptcy laws, whether voluntary or involuntary; or the other party becomes
insolvent, or is unable to pay its debts as due or ceases to conduct business
in the normal course (however, if such petition, action or proceeding is
involuntary, then only if such petition, action or proceeding is not dismissed
within sixty (60) days of filing);

 

10.4                           Post-Termination Obligations.  Upon termination or expiration of this AGREEMENT:

 

(a) nothing herein
will be construed to release either party of any obligation or liability
maturing prior to the effective date of the termination or expiration of this
AGREEMENT;

 

(b) Any outstanding
payments and the provisions of Sections I, V, VI, VII, VIII, IX, XI, XII and
Sections 3.4, 3.5, 3.6, 3.7, 4.1, 4.2 and 10.4 shall survive any termination or
expiration of this AGREEMENT by their terms for any reason.

 

(c) Each party
shall cease to use or exploit in any manner the CONFIDENTIAL INFORMATION of the
other party or any elements thereof in accordance with Section VII and shall
return to the other party all CONFIDENTIAL INFORMATION (including

 

 

all copies and
derivatives, in any form, thereof) disclosed by the other party, and LICENSEE
shall cease to use the CONFIDENTIAL INFORMATION of LICENSOR, provided that
LICENSEE shall not be prohibited from using such CONFIDENTIAL INFORMATION in
providing support services for the LICENSED PRODUCTS and selling all LICENSED
PRODUCTS and parts therefor that it has on hand at the date of termination; and

 

(d) Except as set
forth in Section 3.4, LICENSEE shall immediately cease the manufacture of
LICENSED PRODUCTS.

 

XI.

 

LIMITATION OF LIABILITY

 

11.1                           TO THE MAXIMUM ALLOWED BY APPLICABLE LAW,
IN NO EVENT SHALL LICENSOR BE LIABLE FOR ANY LOSS, INABILITY TO USE,
INTERRUPTION OF BUSINESS, OR ANY INDIRECT, SPECIAL, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING LOST PROFITS) ARISING OUT OF THE
LICENSED TECHNOLOGY, THE LICENSED PRODUCTS, OR OTHERWISE UNDER THIS AGREEMENT,
REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT (INCLUDING
NEGLIGENCE), STRICT PRODUCT LIABILITY, OR OTHERWISE, EVEN IF LICENSEE HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

11.2                           TO THE MAXIMUM EXTENT ALLOWED UNDER
APPLICABLE LAW, IN NO EVENT SHALL LICENSOR’S AGGREGATE LIABILITY TO LICENSOR, OR ANY THIRD PARTY
FOR ANY AND ALL CLAIMS ARISING FROM OR RELATING TO THIS AGREEMENT, WHETHER IN
CONTRACT, TORT OR ANY OTHER THEORY OF LIABILITY, EXCEED THE AMOUNTS PAID
BY LICENSEE TO LICENSOR HEREUNDER
PRIOR TO THE DATE OF THE EVENT GIVING RISE TO SUCH LIABILITY.  THIS LIMITATION SHALL APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED
HEREIN.

 

XII.

 

GENERAL

 

12.1                           Integration,
Amendments.  This AGREEMENT and Exhibits A and B
attached hereto, represent and constitute the sole, final and entire agreement
between the parties with respect to the subject matter hereof, may only be
amended in writing signed by the duly authorized officers of both parties, and
supersedes all prior agreements and understandings with respect to the matters
covered by this AGREEMENT.

 

12.2                           Notices.  Any notice, waivers or consents required by this
AGREEMENT must be given by prepaid, first class, certified mail, return receipt
requested, and addressed in the case of LICENSOR to:

 

 

Vista Medical
Technologies, Inc.

2101 Faraday
Avenue

Carlsbad, CA 92008

Facsimile: (760)
603-9170

Attention: John R.
Lyon

 

or in the case of
LICENSEE to:

Viking
Systems, Inc. 

7514
Girard Ave., Suite 1509

La
Jolla, CA  92037

Facsimile
No.:  (619) 839-3793

Attention:  Thomas B. Marsh

 

or other addresses
as may be given from time to time under the terms of this notice provision.

 

12.3                           Governing Law.  This AGREEMENT is entered into in and shall be
governed, construed and enforced in all respects solely and exclusively under
the laws of the State of California, USA without giving effect to any law which
would result in the application of a different body of law.  Any and all suits hereunder shall be brought
and resolved solely and exclusively in, and the parties hereby irrevocably
consent to the exclusive jurisdiction and proper venue of, the state and federal
courts located in the County of San Diego, State of California, USA, and waive
any objections thereto based on any ground including improper venue or Forum
Non-Conveniens.  The parties agree that
any process directed to any of them in any such litigation may be served
outside the State of California, USA, with the same force and effect as if the
service had been made within the State of California, USA, and that service of
process may be effected in accordance with Section 12.2 hereof.  Any decision rendered by such court shall be
binding, final and conclusive upon the parties, and a judgment thereon may
be entered in, and enforced by, any court having jurisdiction over the
party against which an award is entered or the location of such party’s assets.

 

12.4                           Injunctive Relief. 
Notwithstanding anything to the contrary herein, each party shall be
entitled to seek injunctive or other equitable relief, wherever such party
deems appropriate in any jurisdiction, in order to preserve or enforce such
party’s rights for any breach or threatened breach of the other party of
Sections II, IV or VII.  
Each party agrees that:  (i)
Section II, IV and VII are necessary and reasonable to protect the other party
and its business, (ii) any violation of these provisions could cause
irreparable injury to the other party for which money damages would be
inadequate, and (iii) as a result, the other party will be entitled to seek and
obtain injunctive relief against the breach or threatened breach of the
provisions of Section II, IV or VII without the necessity of posting bond or
proving actual damages.  The parties
agree that the remedies set forth in this Section 12.4 are in addition to and
in no way preclude any other remedies or actions that may be available at law
or under this AGREEMENT.

 

12.5                           Attorneys’ Fees. 
The prevailing party in any action or suit shall be entitled to
recover all costs it incurred in connection therewith, including, without
limitation, reasonable attorneys’ fees.

 

 

12.6                           No Waiver.  The failure of either party to require performance by
the other party of any provision hereof shall not affect its right to require
such performance at any time thereafter; nor shall the waiver by either party
of a breach of any provision hereof be taken or held to be a waiver of the
provision itself.  Any such waiver or
any amendment of this AGREEMENT must be in writing and signed by both parties
to be effective.

 

12.7                           Headings.  Headings included herein are for convenience only and
will not be used to construe this AGREEMENT.

 

12.8                           Severability.  If one or more provisions in this AGREEMENT are ruled
entirely or partly invalid or unenforceable by any court or governmental
authority of competent jurisdiction, then: (i) the validity and enforceability
of all provisions not ruled to be invalid or unenforceable shall remain
unaffected; (ii) the effect of such ruling shall be limited to the
body making the ruling; (iii) the provision(s) held wholly or partly
invalid or unenforceable shall be deemed amended, and the parties shall reform
the provision(s) to the minimum extent necessary to render them valid and
enforceable in conformity with the parties’ intent as manifested herein; and
(iv) if the ruling, or the controlling principle of law or equity leading to
the ruling, is subsequently overruled, modified, or amended, then the
provision(s) in question, as originally set forth in this AGREEMENT, shall be
deemed valid and enforceable to the maximum extent permitted by the new
controlling principle of law or equity.

 

12.9                           Independent Contractors. 
The relationship between LICENSEE and LICENSOR is solely that of
independent contractors.  Neither party
nor its employees, agents or representatives shall be considered employees,
agents, partners, franchisees, joint venturers or representatives of the other
party.  Neither party shall act or
represent itself, directly or by implication, as agent, party to a joint
venture with the other party, partner or representative of the other, or in any
manner assume or attempt to assume or create any obligation or liability of any
kind, express or implied, on behalf of, or in the name of, the other.

 

12.10                     Export Controls. 
LICENSEE understands that the LICENSED TECHNOLOGY is subject to the
export control laws and regulations of the U.S. or other applicable
jurisdictions.  LICENSEE agrees that it
will not export or re-export the LICENSED TECHNOLOGY in violation of such laws
or regulations.

 

12.11                     Corrupt Practices. 
LICENSEE shall not, directly or indirectly, make, offer or agree to make
or offer on behalf of LICENSOR, any loan, gift, donation or other payment,
directly or indirectly, whether in cash or in kind, for the benefit of or at
the direction of any candidate, committee, political party, political function
or government or government subdivision, or any individual elected, appointed
or otherwise designated as an employee or officer thereof, for the purposes of
influencing any act or decision of such entity or individual or inducing such
entity or individual to do or omit to do anything in order to obtain or retain
business or other benefits in violation of the United States Foreign Corrupt
Practices Act.

 

12.12                     Boycott. 
LICENSEE shall not, directly or indirectly, take any action that would
cause LICENSOR to be in violation of United States anti-boycott laws under the
United States Export Administration Act or the United States Internal Revenue
Code, or any regulation thereunder.

 

 

12.13                     Counterparts.  This AGREEMENT may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.

 

12.14                     Interpretation. 
This AGREEMENT has been negotiated by the parties and their respective
counsel.  This AGREEMENT will be fairly
interpreted in accordance with its terms and without any strict construction in
favor of or against any party.  Any
ambiguity will not be interpreted against the drafting party.

 

IN
WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this AGREEMENT.

 

	
  VIKING
  SYSTEMS, INC.

  	
  VISTA
  MEDICAL TECHNOLOGIES, INC.

  
	
  By:

  	
     /s/
  Thomas B. Marsh

  	
   

  	
  By:

  	
     /s/
  John R. Lyon

  	
   

  
	
   

  	
  Thomas
  B. Marsh, President

  	
   

  	
   

  	
  John
  R. Lyon, President

  	
   

  
	
   

  	
   

  
	
  Date:

  	
    4/15/04

  	
   

  	
  Date:

  	
    4/15/04

  	
   

  
								

 

 

EXHIBIT A

 

LICENSED TECHNOLOGY

 

All “Company
Intellectual Property,” as defined in the Asset Purchase Agreement.

 

 

EXHIBIT B

 

LICENSED PRODUCTS

 

VISTA
PRODUCTS

 

 

OEM
PRODUCTS

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