Marketing And Distribution Agreement

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MARKETING AND DISTRIBUTION AGREEMENT
BETWEEN EASTMAN KODAK COMPANY AND LIFE F/X, INC.


This worldwide marketing and Distribution Agreement is entered into as of this ___ day of January, 2001, by and between Eastman Kodak Company, a New Jersey corporation with its principal office at 343 State Street, Rochester, New York 14650 ("Kodak") and Lifef/x, Inc., a Nevada corporation with its principal office at 153 Needham Street, Newton, MA ("Life F/X"), hereinafter referred to collectively as the Parties.


WHEREAS, Life F/X has developed software (the "Software") which is capable of transforming a digital image of a face ************************************ ***************** that can move, talk, and express emotion when played on a Life F/X player such as Genesis or Babble, as more fully described below, and


WHEREAS, Kodak has a various channels of distribution through which it can distribute the Genesis and Babble Software and Stand-Ins generated by the Jetson Software (as all such terms are defined below).


Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties mutually agree as follows:


1. TERM. This Agreement is binding as of the date on which it is fully executed by the Parties ("Effective Date") and will continue from the date of such execution until the date that is three (3) years plus ninety (90) days from the date on which the Jetson Software (as defined below) is accepted by Kodak for commercialization purposes pursuant to Section 3(c)ii.


2. DEFINITIONS. "Software" as used in this Agreement shall mean the following items of software:


a. GENESIS SOFTWARE: as used in this Agreement shall mean the software
program developed by Life F/X (or its licensors) with which digital
humans using text-to-speech (TTS) synthesis can be used on Windows based
personal computers (W98/ME/NT/2K), and can be transmitted and played on
the internet at 28.8kbps or greater modem speeds.


b. BABBLE SOFTWARE: as used in this Agreement shall mean the software program
developed by Life F/X (or its licensors) that can perform all of the
functions of the Genesis Software and is also able to lip-sync a digital
human to an actual human voice.


c. JETSON SOFTWARE: as used in this Agreement shall mean the software
program developed by Life F/X (or its licensors) that will allow for the
creation of Stand-Ins that when used with the Babble Software or another
Life F/X player, are email enabled and will have any other functionality
described in Exhibit A. Such software shall be capable of transforming
(with human intervention for the purposes described in Exhibit A) a
digital image of a face (provided by a consumer or professional
photographer) that meets Life F/X's minimum criteria into *******
***************** that can move, talk and express emotion when used with
the Babble Software or another Life F/X player. The minimum criteria for
use of the


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digital image is set forth in Exhibit A hereto. Additionally, the
*********************** created by the Jetson Software shall be able
to lip-sync either synthesized or actual voice messages provided by
the consumer and generate facial movements and expressions in a
photo-realistic manner when used with the Babble Software or another
Life F/X player. The Jetson Software shall enable the creation of
digital Stand-Ins in less than one minute on PC servers when used and
configured in an "appropriate system." When used with Babble or
another Life F/X player, the Stand-Ins can be transmitted and played
on the internet at modem speeds of 28.8kbps or greater. An
"appropriate system" consists of networked Wintel systems with the
most up-to-date CPU and hardware architecture available at the time
the Jetson Software is configured as specified by Life F/X as single
or multi processors. The Jetson Software shall substantially conform
to specification requirements listed in Exhibit A hereto. The Jetson
Software includes the ability to create a Stand-In that when used with
the Babble Software or another Life F/X player can be used for ******
purposes but does not include creating Stand-Ins that are enabled for
******** use. If Life F/X obtains appropriate access to the relevant
hardware and software architecture, the Stand-In created by the Jetson
Software will also include the ability, when used with the Babble
Software or another Life F/X player, to be used for ****************
**********


d. STAND-IN: as used in this Agreement shall mean the *****************
digital reproduction of a photographic image of a face that can move,
talk and express emotion in a photo-realistic manner when used with
Babble or another Life F/X player.


e. RELATED SOFTWARE ACCESSORIES: as used in this Agreement shall mean
accessories and additional. Jetson Software functionality and/or
capabilities as the parties may mutually agree to develop during the
term of this Agreement.


f. **************************** as used in this Agreement shall mean the
process by which Life F/X can cause a Stand-In developed with the
Jetson Software to be ***************************** when used with the
Babble Software or another Life F/X player.


g. ***************** IMAGE: as used in this Agreement shall mean a
Stand-In ***********************************************************
********************************************************************
has limited head motion and accuracy.


h. ALPHA VERSION: as used in this Agreement shall mean a version
comprising a prototype or proof of concept that includes major
functions, but which is not fully operational.


i. BETA VERSION: as used in this Agreement shall mean a version that
includes all agreed functionality, but perhaps requiring additional
testing in a controlled customer environment, with subsequent
modifications to the product, documentation or packaging prior to full
release of the product.


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j. FACILITY: as used in this Agreement shall mean a production site which
receives digital images from consumers or professional photographers
and converts these images to Stand-ins using the Jetson Software.


k. WEB ENABLED MARKETS OR ACCOUNTS: as used in this Agreement shall mean
the sale of Web Enabled Stand-Ins.


l. KODAK'S *********************** as used in this Agreement means that
division of Kodak focused on the **************** market, as such
division has been previously identified by Kodak in its annual reports
to shareholders.


3. KODAK OBLIGATIONS


a. WITH RESPECT TO GENESIS SOFTWARE: Upon the execution of this
Agreement, Kodak will use commercially reasonable efforts to:


(i) distribute the Genesis Software on the ************************
***********************************************************
******* and, until the Babble Software is available, on
subsequent versions of the Kodak ***********


(ii) distribute the Genesis Software on ********* and other Kodak
***********************************************************
************************************************** until the
Babble Software is available; and


(iii) include a "Powered by Life F/X" ingredient brand in proximity or
conjunction with the Genesis Software on the Kodak ********
********* promotional material and content that includes or
otherwise uses the Genesis Software.


b. WITH RESPECT TO BABBLE SOFTWARE: Upon release of the Babble Software
Kodak will use commercially reasonable efforts to distribute the
Babble Software on the next available release version of the Kodak
********** and, for so long as this Agreement is in effect on
subsequent versions of the Kodak *********************** and on other
current and future Kodak ***************** retail outlets, marketing
partnerships and distribution channels. To the extent that Kodak
distributes the Babble Software, it will include a "Powered by Life
F/X" ingredient brand in proximity or conjunction with the Babble
Software on the Kodak ******************** promotional material and
content that includes or otherwise uses the Babble Software.


c. WITH RESPECT TO JETSON SOFTWARE:


(i) Within 30 days of its receipt of an Alpha Version of the Jetson
Software, Kodak will provide Life F/X with comments regarding
(1) ease of use, (2) success of use, and (3) general quality of
the ***************** Stand-In.


(ii) Within 30 days of its receipt of a Beta Version of the Jetson
Software, Kodak will provide Life F/X with any comments
regarding (1) ease of use, (2) success of use, (3) general
quality of the Stand-In, and (4) whether the Beta version is
acceptable to Kodak for commercialization purposes. Kodak will
inform Life


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F/X promptly, in writing, once it has accepted the Jetson
Software for commercialization purposes. In the event that the
Beta version is not acceptable to Kodak, Kodak will give Life F/X
written notice within such 30 day period specifying the problems
Kodak has identified. Life F/X shall thereupon have 30 additional
days, or such longer period as the parties may mutually agree
upon, to cure such problems. If Life F/X cannot cure such
problems within such period of time, and if in Kodak's opinion
such problems are material to Kodak's ability to commercialize
the Jetson Software then, at either party's option, they may
terminate this Agreement by giving written notice to that effect.
Once Kodak has accepted a Beta Version for commercialization (A)
the three-year plus ninety (90) day period referenced in Section
1 shall commence as of the date of Kodak's letter stating its
acceptance of the Beta version for commercialization purposes;
(B) Kodak will immediately commence the planning and design of
the marketing effort contemplated by Section 3(c)(iv)(D) below,
(C) Kodak shall commence building the Facility, (within 90 days
after ***************, Kodak and Life F/X will mutually agree to
the minimum number of Stand-Ins which the Facility will be
capable of processing a day), and (D) within ninety (90) days of
such acceptance Kodak shall commence "commercialization." The
term "commercialization" means the sale of Stand-Ins to consumers
as contemplated by this Agreement. Life F/X shall have the right
of reasonable approval of Kodak's marketing plans and efforts.


(iii) Within 90 days from Kodak's acceptance of the Jetson Software for
commercialization purposes, or in ************, whichever is
later, Kodak shall commercialize products and services that use
the Jetson Software. Such commercialization shall include
commencing the marketing and promotional activities described
below and commencing the processing of Stand-Ins for consumers.


(iv) During the first year of commercialization by Kodak of the Jetson
Software, Kodak will:


A. operate a ********************, and on other appropriate
************* managed by Kodak, (as reasonable determined by
Kodak), that will allow for the purchase of Stand-Ins,
created with the use of Jetson Software, by consumers.


B. Allocate and spend at least *******************************
for Stand-Ins through Kodak ********************
**********.


C. Assign the following Kodak employees or their replacements
to assist in the integration and marketing of the Jetson
Software with related Kodak products: For Integration
Issues: *********; For Marketing Issues: ****************.


D. Expend at least ***********************************
**************** to promote and advertise the products and
services that use the Jetson Software. These Marketing
efforts shall commence upon Kodak's launch of products which
use the Jetson Software unless otherwise mutually agreed.
Such "in-kind" marketing efforts shall include, where
reasonably


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applicable, marketing the Stand-ins and services, on all
current and future Kodak ********************************
************************ marketing on the Kodak *********
marketing in Kodak's current and future retail outlets and
partnership arrangements (to the extent agreed to by
retailers and partners), and marketing to ****************
**********************************************************
**********************************************************
and other Kodak products. Subject to Section 5 hereof, the
level of marketing efforts referenced in this subparagraph D
shall also apply to the second and third years of the Term
of this Agreement.


d. Once Kodak has accepted the Jetson Software for commercialization, and
has enabled the Facility, Kodak shall process any Stand-Ins generated
by Life F/X for *********** Markets or Accounts which are not
considered obscene, pornographic or otherwise similarly objectionable.
In addition, Kodak shall have the right at all times to review the
digital images submitted, to disclose the images as necessary to
satisfy any laws, regulations or government requests, and to refuse to
process, in Kodak's reasonable discretion, any images deemed
objectionable for the reasons described above or in violation of this
Agreement. Life F/X shall receive ******************************. As
such, the prices charged to Life F/X for the processing of a Stand In
shall be **********************************************************
*******************************************************************
*****************


e. During the Term of this Agreement, Kodak shall give all purchasers of
Stand-Ins notice that such Stand-Ins can be ***********. Such notice
shall be of a form and substance mutually agreed to by the Parties.


f. Kodak shall include a "Powered by Life F/X" ingredient brand in
proximity to or conjunction with all Stand-Ins it sells.


g. Where appropriate, Kodak will work in good faith with Life F/X, to
prepare any presentations to be made by Life F/X concerning the
Software and resulting products to Kodak's partners and OEM
relationships (and Kodak will assist Life F/X with introductions to
such parties) as well as presentations to other third parties
reasonable identified by Life F/X.


h. Kodak acknowledges and agrees that licenses granted in this Agreement
may not be sublicensed or assigned except to the extent of the
end-user licenses contemplated by Sections 4.a and 4.b., below.


4. LIFE F/X OBLIGATIONS


a. WITH RESPECT TO GENESIS SOFTWARE: Life F/x grants Kodak a royalty free
license to use, market, distribute and support (but not modify) the
Genesis Software on the Kodak *************************************
************** in the form provided to Kodak by


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Life F/X, which shall include the end user license provided to Kodak
by Life F/X. Additionally, in ***********, Life F/X shall provided
Kodak with a minimum of 5 "demo" versions of the Genesis Software to
allow Kodak to: introduce the Genesis Software to certain Kodak
customers, gain feedback regarding the viability of the Genesis
Software, and to discuss market testing and launch plans with the
**************************************** This license shall
terminate upon the earlier of the termination of this Agreement or
upon delivery of the Babble Software to Kodak, except that Kodak will
have a right to continue to market, distribute, and support any
products containing the Genesis Software and in existence on the date
on which the Babble Software is delivered to Kodak, until the earlier
of (i) when any and all such product is sold or distributed or (ii)
180 days afte ...