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-1- 2.13 Form: Art Work License Agreement AGREEMENT made by and between Educational Multimedia Corp., a corporation organized and existing under the laws of the State of New York, with a principal place of business at Fort George Hill, New York, N.Y. (the "Producer") and ABC University, an institution with principle executive offices at University Avenue, Albany, N.Y. (the "Licensor"). WHEREAS, Producer is in the business of publishing and distributing various multimedia titles; WHEREAS, Licensor has exclusive possession of, and controls all access to certain paintings, sculpture and other art work described fully in Schedule A attached hereto (the "Art Work"); and WHEREAS, Producer wishes to incorporate digitized images of the Art Work (the "Images"), in whole or in part, in combination with or as a composite of other matter, including, but not limited to, text, data, images, photographs, illustrations, animation and graphics, video or audio segments of any nature, and embody such combination or composites in computer readable media and embodiments, now known or hereafter to become known, including, but not limited to, all formats of computer readable electronic, magnetic, digital, laser or optical- based media (the "Product"). NOW, THEREFORE, in consideration of the promises and covenants recited below, it is hereby agreed by and between Producer and Licensor as follows: 1. Grant Subject to the terms and conditions set forth herein, Licensor hereby grants to Producer a nonexclusive license for the term of this Agreement to: (i) photograph the Art Work; (ii) create Images of such photographs; (iii) incorporate the Images only as described in Schedule A hereto; -2- and (iv) distribute the Product, embodying the Images. 1.1. Right to Photograph Producer shall have the right to photograph the Art Work, provided, however that Producer complies with Licensor's standard terms and conditions for the access to Licensor's Art Work, which are attached hereto as Exhibit A. Within one (1) week of the execution of this Agreement, Licensor shall make the Art Work available to be photographed for five (5) hours at a time mutually convenient to the parties. All photographs, including any negatives, film imprints, prints, or any reproductions thereof (the "Photographs") shall be the sole property of Licensor, and Licensor shall own all right, title and interest thereto, including any and all copyrights, trade secrets and other intellectual property rights. Within ten (10) days after the photograph of the Art Work, Licensee shall deliver to Licensor two (2) sets of all Photographs for Licensor's written approval. Licensor's right of approval shall be in its sole discretion. Licensor shall respond in writing within ten (10) business days of receipt thereof, and if Licensor disapproves any or all of the Photographs, Licensor shall provide written notice specifying the reasons for such disapproval. If, as a result of Licensor's comments, additional Photographs are necessary, Licensor shall make the Art Work available to Producer to take additional Photographs, provided that Producer shall reimburse Licensor for any direct costs incurred therein. Producer shall resubmit any revised Photographs for Licensor's approval pursuant to the procedure set forth herein. 1.2. Right to Digitize and Incorporate Upon receiving Licensor's written approval of the negatives and prints thereof, Producer shall have the right to create the Images and incorporate such Images in the Product. Upon completion of the design of the Product, including without limitation the incorporation of the Images in the Product, and prior to the commercial distribution of the Product, Producer shall submit two (2) copies of the Product, a videotape of the Product in its operational -3- mode, as well as all accompanying packaging and documentation for the Product to Licensor for approval. Producer shall include a list of all Images included in the Product, and instruction on all methods by which such Images can be accessed by the user of the Product. Licensor shall not disapprove any aspect of the Images which was explicit and approved in Licensor's prior approval of the Photographs. Notwithstanding the foregoing, however, nothing shall prevent Licensor from disapproving the Products based on the color, tone or general aesthetic and artistic impression of the Images as embodied in the Product as determined in the sole discretion of Licensor, the placement or method of access of the Images in the Product, or the content of the Product, documentation or accompanying material. Licensor shall respond in writing within ten (10) business days of receipt thereof, and if Licensor disapproves any aspect of the Products, Licensor shall provide written notice specifying the reasons for such disapproval. Producer shall resubmit the revised version of the Products for Licensor's approval pursuant to the procedure set forth herein. 1.3. Distribution Producer shall submit a detailed written description of distribution plans for the Product to Licensor for Licensor's written approval, such approval not to be unreasonably withheld. Licensor shall respond in writing within ten (10) business days of receipt thereof, and if Licensor disapproves any aspect of the distribution plans, Licensor shall provide written notice specifying the reasons for such disapproval. Subject to Licensor's final written approval of the Products and the distribution plans, Producer shall have the right to distribute the Products through standard distribution channels for such of Products, such approval not to be unreasonably withheld. 2. Use of Name Nothing herein shall be construed as granting any permission for Producer to use Licensor's name, logos, trademarks or other identification in connection with any Product. -4- 3. Licensor's Warranties Licensor hereby represents and warrants to Producer that it is the lawful possessor of the Art Work. LICENSOR MAKES NO OTHER WARRANTY REGARDING THE ART WORK, EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS ANY WARRANTY OF NON-INFRINGEMENT, OR ANY REPRESENTATION THAT THE ART WORK DOES NOT VIOLATE A THIRD PARTY'S PRIVACY OR PUBLICITY RIGHTS, OR THAT THE USE OF THE ART WORK AS CONTEMPLATED HEREIN, WITHOUT ANY CREDIT OR ATTRIBUTION, DOES NOT VIOLATE A THIRD PARTY'S RIGHTS OF ATTRIBUTION OR INTEGRITY. 4. Proprietary Rights The parties hereby acknowledge and agree that the Licensor shall retain all right, tile and interest to the Art Work, Photographs and Images, including without limitation any copyright or other proprietary rights in and to the same. Producer shall make no use of the Art Work, Photographs or Images, other than as expressly provided herein, and acknowledges that to do so would constitute an infringement of Licensor's proprietary rights therein. Notwithstanding the foregoing, the parties hereby acknowledge and agree that, with the exception of the Images, the Producer shall retain all proprietary rights in the Product, including all applicable rights to patents, copyrights, trademarks, and trade secrets inherent therein, and appurtenant thereto. 5. Indemnification Producer shall indemnify, defend and hold Licensor harmless from any claims, demands, liabilities, losses, damages, judgments or settlements, including all reasonable costs and expenses related thereto including attorneys' fees, directly or indirectly resulting from any claim asserted by a third party with respect to the Products, or the -5- Photographs or the Images as incorporated into the Products, including without limitation a claimed infringement or violation of any intellectual property right or right of publicity or privacy or a claim of libel or defamation. 6. Term The term of this Agreement shall be three (3) years from the date that this Agreement is executed by both parties. This Agreement may be terminated by either party in the event that the other party commits a material breach of this Agreement and fails to cure such breach within ten (10) days of notification thereof by the non-breaching party. Producer shall have no right of sell-off upon the termination or expiration of this Agreement, unless otherwise agreed to by the parties in writing. Producer agrees that within five (5) business days of the termination or expiration of this Agreement, Producer shall: (1) return to Licensor all Photographs in its possession or control, and shall destroy any and all Images, including those embodied in unsold Products, within its possession and control; and (2) certify to Licensor in writing of such return or destruction. Upon the termination or expiration of this Agreement, all rights licensed hereunder shall terminate but all provisions except for those of Section 1 shall survive such termination or expiration. 7. Compensation Upon the execution of this Agreement, Producer shall pay to Licensor a one-time, non-refundable license fee of ______ dollars ($__). This fee is not an advance against royalties, and is non-refundable under any circumstance, including but not limited to a termination of this Agreement due to Licensor's material breach. Producer agrees to pay Licensor a royalty (a "Royalty") which shall be equal to the greater of: (1) $_____ for each copy of each Product commercially distributed (excluding up to ___ copies of Products distributed at no charge for promotional purposes); (2) ______ percent (___%) of Sales Income (as defined herein) multiplied by the percent of data of the Product comprised by the Images; or (3) _____ percent -6- (__%) of Sales Income. As used herein, "Sales Income" shall mean gross revenues to be received by Producer in connection with any sale, license, lease or other exploitation of the Product; provided, however, Sales Income shall exclude import/export or other taxes imposed on foreign sales; duties, sales or use taxes actually invoiced; transportation and insurance charges billed separately to customers; and actual credits, discounts, allowances and returns granted to customers. Except as herein provided, Sales Income shall be determined by using generally accepted accounting principles consistently applied. 8. Royalty Accounting Producer will compute Licensor's Royalties, if any, four (4) times per year, at the end of each calendar quarter. Within thirty (30) days after the last day of a calendar quarter, Producer will send Licensor a statement (a "Royalty Statement") covering such Royalties indicating the Royalties due Licensor, if any. 9. Inspection Licensor, at its sole cost and expense, shall have the right, upon reasonable written notice to Producer, to inspect those of Publisher's books and records which pertain to revenues received from sales of Products, at Producer's premises and during Producer's normal business hours. Licensor may exercise this right two (2) times each calendar year and only during the Term of this Agreement. All information to which Licensor is provided access during such examination is confidential information of Producer, and Licensor shall not use or disclose such information, except for the purposes of verifying its royalty payments. In connection with any claim by Licensor that additional monies are payable by Producer under this Agreement based upon an examination of Producers books and records as set forth in this Section, Producer will not be deemed in breach of this Agreement unless within thirty (30) days of Producer's receipt of such claim in writing, together with sufficient documentation to support such claim, Producer does not pay such additional monies so claimed by Licensor. -7- 10. Binding Agreement This Agreement executed by the Parties sets forth the entire agreement between the Parties in connection with the subject matter hereof and it incorporates, replaces, and supersedes all prior agreements, promises, proposals, representations, understandings and negotiations, written or not, between the Parties. The making, execution, and delivery of this Agreement have been induced by no representations, statements, warranties or agreements other than those expressed herein. This Agreement shall be binding upon the heirs, legal representatives, successors and assigns of Licensor. 11. Notice All notices will be in writing and will be delivered personally or sent by confirmed facsimile transmission, overnight letter or United States certified mail, proper postage prepaid at the addresses specified above. 12. Choice of Law This Agreement has been entered into in the State of New York and will be governed by those laws of the State of New York which are applicable to contracts entered into and performed entirely within the State of New York without regard to conflict of laws principles. Any disputes which arise under this Agreement, even after the termination of this Agreement, that cannot be resolved through good faith discussions, will be heard only in the State or Federal courts located in the City of New York, State of New York. Developer expressly agrees to submit itself to the jurisdiction of the foregoing courts in the City of New York, State of New York. Developer expressly waives any rights it may have to contest the jurisdiction, venue or authority of any court sitting in the State of New York. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date hereof. -8- ABC UNIVERSITY EDUCATIONAL MULTIMEDIA CORP. By:___________________ By:_________________________ Name:_________________ Name:_______________________