RESEARCH AGREEMENT

Exhibit 10.4

Research Agreement





[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT CONFIDENTIALITY HAS BEEN REQUESTED FOR THIS CONFIDENTIAL INFORMATION. THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]





RESEARCH AGREEMENT



This Research Agreement (the "Agreement"), entered into this 1st day of November 1990 by and between David Sarnoff Research Center, Inc. ("Sarnoff") and Princeton Electronic Billboard, Inc. ("PEB"), describes the terms and conditions for Sarnoff's work in providing research and development services to PEB for the application of Sarnoff's Pyramid Image Processing Technology in PEB's Exclusive Field (the "Project"). The Project is entitled "PEB System for Video Insertion Via Pattern Key" and is described in Sarnoff's Proposal dated August 1, 1990 (No. 90-3214-291) (the "Proposal") and subsequent work statements (Phase II and III Proposals) to be agreed upon in writing at a later date. In the event of a conflict between the terms and conditions of this Agreement and the Proposal, the terms and conditions of this Agreement shall govern.



In consideration of the mutual promises contained herein, the Parties agree that:



ARTICLE I DEFINITIONS



1. The "Exclusive Field" is defined as electronically merging images into video for advertising purposes.



2. The words "Intellectual Property" shall mean, collectively, Inventions, ideas, procedures, principles, discoveries, computer software, mask works, and other forms of intellectual property. An "Invention" is any novel and useful machine, device, system or process first conceived and reduced to practice during the time period and under the Project.



3. The term "PEB Funded Property" is defined as that portion of the Sarnoff Property, defined below, which was developed on the Project and paid for by PEB.



ARTICLE II PERIOD OF PERFORMANCE AND THE TASKS



1. The Project comprises three Phases. Phase I has been entered into as of August 31, 1990 and will proceed according to the Statement of Work, as described in our Proposal 90-3214-291 dated August 1, 1990 and incorporated herein by reference. Phases II and III will be implemented according to the description contained in the Phase II and III Proposals, and will be incorporated herein by reference. Sarnoff and PEB agree that they will negotiate in good faith toward mutually acceptable statements of work and costs for the performance by Sarnoff of Phases II and III.



2. Any modification to the Statement of Work shall be on mutually acceptable terms and conditions. No modification to the Statement of Work will be made unless requested by PEB and accepted by Sarnoff in writing.



3. Sarnoff will perform such work in a manner consistent with the highest standards of scientific and technical excellence.



4. Sarnoff shall permit PEB personnel to visit Sarnoff's facilities to review the Project upon reasonable notice and during normal working hours.



ARTICLE III DELIVERABLES



1. As described in Sarnoff's Phase I, II and III Proposals.



ARTICLE IV PRICE AND PAYMENT TERMS



1. Sarnoff has undertaken Phase I on a fixed price basis. The cost for Phase I is Sixty-Five Thousand Dollars ($65,000.00). All terms of our Proposal 90-3214-291 shall govern Phase I.

2. Terms for Phase II and III shall be on a best effort, cost-reimbursable basis. The cost for each Phase shall be negotiated as indicated in Article II, Paragraph 1, and will not be exceeded without prior written approval of PEB.



3. Payment terms shall be an initial payment of (20% of Phase II and III estimated cost) upon acceptance of each Phase with the initial payment applied against the final Phase invoice. As to subsequent payments, Sarnoff shall submit monthly invoices for all costs incurred during a month. PEB shall pay each invoice within thirty (30) days of receipt.



4. Sarnoff will assist PEB to the extent it has the legal right to do so in acquiring third party rights in Pyramid Processing Technology.



ARTICLE V PROPRIETARY INFORMATION



1. The Confidential Disclosure Agreement between the Parties, dated June 12, 1990, is incorporated herein by reference and its obligations are extended to two (2) years after completion of all Phases of the Project.



ARTICLE VI INTELLECTUAL PROPERTY RIGHTS



1. Sarnoff shall retain ownership of all inventions, computer software and trade secrets in the field of Pyramid Image Processing Technology developed by Sarnoff's employees and consultants prior to the Project, during the Project or concurrently with the Project and of any and all resulting patent applications, issued patents, copyrights and mask work registrations (collectively the "Sarnoff Property"). Sarnoff agrees to pay all costs associated with obtaining and maintaining Sarnoff Property. PEB shall have no rights in Sarnoff Property except as provided in ARTICLE VII. Sarnoff has represented to PEB and does hereby represent that the ownership of rights, described in this paragraph 1, is the standard Sarnoff policy with respect to Pyramid Imaging Processing Technology and that all research done by Sarnoff in this field is done on this basis for all clients.



2. Any inventions, computer software and trade secrets jointly developed by one or more PEB employees or consultants with one or more Sarnoff employees or consultants together with any patent application, issued patent, copyright or mask work registration resulting therefrom (collectively the "Joint Property") shall be jointly owned by PEB and Sarnoff. Each Party shall own an undivided one-half interest in the whole of any such Joint Property with neither Party having to account to the other Party for any income or other consideration received from its exploitation or other use of the Joint Property, except that Sarnoff agrees that it will not grant any Licenses under its rights in the Joint Property in the Exclusive Field. The Parties will share equally in all costs related to obtaining and maintaining any such Joint Property, including any costs relating to the litigation of the patentability, validity or enforceability of any such patent application, issued patent, copyright or mask work registration. If, at any time, a Party declines to share in the costs described in this Paragraph 2 for a particular item of Joint Property, the Party so declining shall assign its ownership rights in the particular item of Joint Property to the other Party.



3. Each Party agrees, upon request, to inform the other Party of the status of any patent application or issued patent filed on Joint Property and of all prior art referred to or cited against a pending patent application or issued patent that the Party is prosecuting or maintaining in any country if the other Party has a corresponding patent application or issued patent for the same Invention in another country.







ARTICLE VII LICENSES



1. During the term of the Project, Sarnoff grants to PEB an exclusive, royalty-free, worldwide license, without right to sub-license, to use Sarnoff Property for research and development in PEB's Exclusive Field. Sarnoff agrees that it will not grant any other licenses in PEB's exclusive field during the term of the Project. The license granted in this Paragraph does not include PEB access to any Sarnoff computer software source code.



2. Sarnoff grants to PEB a worldwide, exclusive license, subject to the payment of the royalties provided herein to Sarnoff, with right to sublicense, to use, modify, make, have made and sell Sarnoff Property, in PEB's Exclusive Field, such exclusive license to be maintained as long as the royalties are paid, as described in paragraph 3 of this Article.



3. Sarnoff grants to PEB an exclusive, royalty-free, worldwide license with right to sublicense, to use, modify, make, have made and sell PEB Funded Property in PEB's Exclusive Field.



4. Royalties



4(a). In consideration for Sarnoff entering into this Agreement and staying out of the Exclusive Field, as described in Articles VII and VIII, and for the licenses granted to PEB, PEB shall pay to Sarnoff royalties based on PEB's audited gross revenue. Such royalties survive this Agreement and continue in effect as long as PEB, its successors or assigns remain in this field, and Sarnoff shall remain out of the Exclusive Field as long as royalties are paid. The amount of royalties due Sarnoff shall be calculated based on the following schedule.



[CONFIDENTIAL TREATMENT REQUESTED]



4(b). Deferral of Royalties - Royalties shall accrue until such time that PEB's cumulative gross revenue reaches $20,000,000 or four (4) years after the completion of Phase III, which ever occurs first. Payments for all accrued royalties shall commence after PEB's cumulative gross revenue exceeds $20,000,000 or four (4) years from the date of conclusion of Phase III, whichever occurs first in four equal quarterly installments beginning three (3) months after PEB's cumulative gross revenue exceeds $20,000,000 or four (4) years after the completion of Phase III.



4(c). Once the gross revenue of 20,000,000 or four (4) years after the completion of Phase III has occurred, PEB shall commence paying royalties quarterly based on the audited financial records of PEB for the preceding quarter in accordance with the schedule of Royalties as defined in Article VII, Paragraph 4.



4(d). An annual statement of PEB's cumulative revenue and the royalties due to Sarnoff shall be provided by PEB at PEB's expense by an independent, certified public accountant of PEB's choice. Sarnoff shall have the right to have such statement created an audited by an independent Certified Public Accountant of Sarnoff's choice and at Sarnoff's expense on a quarterly basis.



4(e). PEB may terminate its payments and licenses under Subparagraphs 4(b) or 4(c) of this ARTICLE VII, at PEB's election, at any time subsequent to Subparagraph 4(c) taking effect except that PEB shall remain liable for any deferred royalties accrued up to the date of termination. If PEB so terminates its payments, then all licenses and the non-compete clause shall also terminate as of the date of PEB's termination of its payments.







4(f). Each fee payment due to Sarnoff under this Paragraph 3 of this ARTICLE VII shall be paid during the month following the calendar quarter covered thereby.



5. Sarnoff agrees to forbare in this field for a period of one (1) year or until Phase II begins, whichever occurs first, without further consideration. In the event that Phase II does not commence within one (1) year, PEB will have the first right of refusal in this field subject to further negotiations. The same provision applies for a period of one (1) year following the completion of Phase II or until Phase III begins.



6. In the event that this Agreement is terminated prior to the completion of the Project for any reason other than the filing of a voluntary bankruptcy petition, or adjudication of bankruptcy, under Federal U.S. law, PEB agrees to pay the fees described in Paragraph 4(b) or 4(c) beginning on the termination date of the Project to maintain the licenses and non-compete clause in force. In the event that this Agreement is terminated due to the filing of a voluntary bankruptcy petition, or adjudication of bankruptcy, under Federal U.S. law, the licenses and non-compete Agreement shall be terminated under the provisions of ARTICLE XV, paragraph 1.



7. No licenses are implied or granted by either Party to the other Party hereto, or its Licensees, except as specifically provided in this Agreement.



ARTICLE VIII PERSONNEL/COMPETITORS



1. Sarnoff agrees that none of its employees, consultants or agents assigned to work on this Project either full-time or part-time will perform services in the Exclusive Field for other than PEB, during the time they are employed or retained as employees, agents or consultants by Sarnoff, for the duration of PEB's Exclusive License.



2. Each party agrees that it will not offer to employ or employ any employee of the other party assigned to the Project without the other party's written consent for the duration of the Project and for a period of three years after the termination of the Project for any reason whatsoever.



3. PEB agrees that it will not compete in any applications of Pyramid Processing outside of the video insertion field.



ARTICLE IX PUBLICITY



1. The Parties agree that neither will use the name of the other Party, either express or implied, in any of its advertising, public announcements or promotional material without the prior written consent of the other Party. Each Party agrees that it will not disclose the terms of the Agreement to any third Party without the other Party's prior written consent, except as required by law and in litigation between the Parties.



ARTICLE X FORCE MAJEURE



1. Sarnoff shall not be liable or deemed to be in default for any delay, failure in performance, non-performance, or any interruption of service resulting directly or indirectly from acts of God, acts of the public enemy, war, accidents, fires, electrical failures, machine failures or unavailability, postal delays, explosions, earthquakes, floods, the elements, strikes, lockouts, labor disputes, governmental orders or regulations, shortages of suitable parts, materials, labor or transportation, or any other cause beyond the reasonable control of Sarnoff. Increases in the cost of doing business, and circumstances giving rise to breach of Sarnoff's warranties under this Agreement, shall not be deemed causes beyond the reasonable control of Sarnoff, and shall not excuse any failure to perform, default, or liability.







ARTICLE XI TERMINATION



1. This Agreement may be terminated by either Party upon: (i) the default of the other Party or failure to conform to any term or condition of this Agreement, where the default or failure is not cured within thirty (30) days after written notice of such default or failure by the non-defaulting Party; or the filing of a voluntary bankruptcy petition, or adjudication of bankruptcy, under Federal U.S. law. Notice of default or failure to comply shall be as provided in ARTICLE XVIII, Paragraph 7.



2. PEB may terminate the Project and any liability for further payments at any time except as provided in this ARTICLE XI, with or without cause and in PEB's sole discretion, by written notice to Sarnoff as provided in ARTICLE XIV, Paragraph 7.



3. Upon termination of this agreement under paragraph 1 or 2 of this ARTICLE XIV, Sarnoff will use its best efforts to terminate the work being performed within fourteen (14) days from the date of termination and will be paid the costs thereof. PEB will not be responsible to pay Sarnoff for work performed beyond such fourteen (14) day period. In addition, PEB will pay to Sarnoff the lesser of the cost to Sarnoff of all parts, supplies and equipment, specific to the performance of the Project and ordered prior to PEB's default or receipt of PEB's notice of termination, or the cost to Sarnoff of the the cancellation of such orders, whichever is less. Sarnoff will use its best efforts to minimize such costs to PEB. Sarnoff will promptly deliver to PEB any and all parts, supplies and equipment paid for by PEB and work in progress developed to the effective date of termination to which PEB would otherwise be entitled.



ARTICLE XII EXPORT OF INFORMATION, DATA DESIGNS AND/OR PRODUCTS



1. PEB acknowledges that the information, data, designs and/or products disclosed or delivered by Sarnoff to PEB may be subject to U.S. Government regulations which prohibit export or diversion of certain products and/or technical data to certain countries. Any and all obligations of Sarnoff to provide information, data, designs and/or products, shall be subject in all respect to such U.S. laws and regulations that shall from time to time govern the export of technology and products abroad by persons subject to the jurisdiction of the U.S., including the Export Administration Act of 1979, as amended, any successor legislation, and the Export Administration Regulations issued by The Department of Commerce. PEB and Sarnoff warranty that they will comply in all respects with the export restrictions set forth in these laws and regulations as applied to the information, data, designs and/or products disclosed or delivered by Sarnoff to PEB.



ARTICLE XIII LIMITATION OF LIABILITY



1. SARNOFF ASSUMES NO LIABILITY EXCEPT AS EXPRESSLY PROVIDED IN THESE TERMS AND CONDITIONS AND IN NO EVENT SHALL SARNOFF BE LIABLE, WHETHER IN CONTRACT, TORT, OR NEGLIGENCE, FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.



ARTICLE XIV MISCELLANEOUS PROVISIONS



1. The captions appearing are inserted only as a matter of convenience and in no way define, limit or describe the scope or intent of this Agreement or any provision hereof.



2. Nothing in this Agreement shall create any association, partnership or joint venture between the Parties hereto, it being understood and agreed that the Parties are independent contractors and neither shall have any authority to bind the other in any way. Sarnoff shall provide, compensation, tax withholding, and other duties of an employer to the extent applicable to Sarnoff's employees, agents or consultants doing work on the Project.







3. This Agreement shall be binding upon the Parties, their successors, assigns, heirs and legal representatives, as the case may be when accepted in writing by PEB.



4. The Parties agree that any waiver of any term or condition of this Agreement by a Party shall not construed or deemed to be a waiver of any other term or condition of this Agreement, nor a waiver of a subsequent breach of the same or another term or condition.



5. If any term or condition of this Agreement is found invalid or unenforceable, that term or condition will be enforced to the maximum extent permitted by law, and the remainder of this Agreement will remain fully in force.



6. All notices, reports, requests, approvals and other communications required or permitted under this Agreement must be in writing. They will be deemed given when sent by registered or certified mail, postage prepaid. All communications must be sent to the receiving Party's address as provided herein or to any other address that the receiving Party may provide for purposes of notice by notice as provided herein. All notices to Sarnoff shall be addressed to David Sarnoff Research Center, Inc. 201 Washington Road, Princeton, NJ 08543-5300 Attention: Vice President, Corporate Affairs. All notices to PEB shall be addressed to Princeton Electronic Billboard, Inc., 27 Honey Brook Drive, Princeton, NJ 08540



7. This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey in the same manner as contracts entered into and fully performed therein.



ARTICLE XV ENTIRE AGREEMENT



1. This Agreement and all of the documents incorporated herein constitute the entire agreement between the Parties and supersedes all previous negotiations, comments and writing by the Parties. This Agreement shall be changed only by a writing signed by the Parties. No oral contract or conversation with any officer, agent or employee of Sarnoff or PEB, either before or after the execution of this Agreement, shall affect, alter or modify the obligations of the Parties.



ACCEPTED AND AGREED TO:



DAVID SARNOFF RESEARCH PRINCETON ELECTRONIC CENTER, INC. BILLBOARD





By: /s/ V. J. Boccanfuso, Jr. By: /s/ R. J. Rosser

------------------------------ -------------------------- Name: V. J. Boccanfuso, Jr. Name: R. J. Rosser Title: Director, Contracts Title: Chief Operating Officer Date: October 3, 1990 Date: November 1, 1990







COPY



AMENDMENT #1

August 9, 1991



The Agreement dated 1 November 1990 by and between David Sarnoff Research Center, Inc. ("Sarnoff") and Princeton Electronic Billboard ("PEB") (the "Agreement") is amended as follows:



Delete Article 1, paragraph 1, and insert:

1. The Exclusive Field is defined as electronically recognizing selected

landmarks and/or altering images in real time in any broadly disseminated

television program for advertising purposes or for any purpose in real

time television programs whose principal focus is sports. Broadly

disseminated programs are those which are broadcast over the air, via

cable or via satellite with a distribution to more than 5,000 customers.

Programs disseminated over point to point, or point to multipoint, private

networks are not included in the Exclusive Field.





Add new Article IV, paragraph 5:

5. In exchange for the expansion of the Exclusive Field to include all

applications in television programs whose principle focus is on sports,

PEB agrees to issue to Sarnoff 103,000 shares of common stock of PEB (8%

of the authorized and outstanding stock of PBE as of the date of this

amendment). PEB has represented and does hereby represent that there is

now only only class of authorized stock in PEB, PEB Common Stock, and that

the Stock given to Sarnoff will be of this class, the same class as every

other existing owner of PEB stock. The issuance of stock to Sarnoff will

take place pursuant to definitive documentation which PEB has instructed

its attorneys to prepare.



Add new Article VI, paragraph 4:

4. PEB shall retain ownership of all inventions, computer software and

trade secrets developed by PEB's employees and paid for by PEB that are

based on Sarnoff Technology. PEB shall assign Sarnoff a non-exclusive

license, with right to sublicense, to make, have made, use and sell in all

fields except the Exclusive Field. If in the future there are rights to

PEB developed ...