Indemnity Agreement

INDEMNITY AGREEMENT


This INDEMNITY AGREEMENT (the "Agreement"), dated as of _____, 1999, by and between 7TH LEVEL, INC., a Delaware corporation ("7th Level"), MICHAEL A. WEBSTER, ROBERT E. WEBSTER and ROBERT C. MOORE, JR., (a/k/a Robert Moore) (each an "Indemnitee" and collectively, the "Indemnitees"). Any capitalized term which is not defined in this Agreement shall have the meaning given such term in the Merger Agreement (as defined below).


WHEREAS, pursuant to an agreement and plan of merger, dated as of the date hereof (the "Merger Agreement"), by and among 7th Level, 7th Level Merger Corporation ("Merger Corporation") and ViaGrafix Corporation, an Oklahoma corporation ("ViaGrafix"), Merger Corporation shall be merged with and into ViaGrafix (the "Merger") and the stockholders of ViaGrafix prior to the Merger will receive 7th Level Common Stock;


WHEREAS, as an integral part of the Merger Agreement, 7th Level has agreed to indemnify and hold harmless the Indemnitees from and against all Losses (as defined herein), arising from the action entitled GORDON V. VIAGRAFIX, ET AL (the "Suit"); and


WHEREAS, it is a condition precedent to the Merger that the parties hereto enter into this Agreement.


NOW, THEREFORE, in consideration of the premises and representations, warranties, covenants and agreements set forth herein, as well as other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:


1. INDEMNITY. 7th Level agrees to indemnify and hold harmless each Indemnitee from and against any and all judgments, debts, losses, claims, liabilities, damages, penalties, interest, obligations, demands and expenses, including attorney's fees and expenses and amounts paid in settlement ("Losses") arising from the Suit.


2. CERTAIN REPRESENTATIONS OF THE INDEMNITEES. Each Indemnitee represents and warrants to 7th Level that the prospectus dated March 4, 1998 of ViaGrafix, at the time it became effective under the Securities Act of 1933, as amended, and each other document which the plaintiffs allege forms the factual basis for the Suit, did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.


3. COOPERATION. Each Indemnitee shall provide such assistance to 7th Level as 7th Level may reasonably request in connection with the defense of the Suit.


4. MISCELLANEOUS.


(a) ENTIRE AGREEMENT. This Agreement, together with Sections 6.11 and 6.15 of the Merger Agreement, constitutes the entire Agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.


(b) AMENDMENTS, WAIVERS ETC. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or termina ...