Document:

Exhibit 10.01

 

FORM OF CITIGROUP EQUITY OR DEFERRED CASH AWARD AGREEMENT (EFFECTIVE
01/01/09)

 

Citigroup Inc.

[Equity/Deferred Cash] Award Agreement

 

1. Award Agreement. 
Citigroup Inc. (“Citigroup”) hereby grants to {NAME}  (the
“Participant”), the award(s) summarized below, pursuant to the
terms of the [EQUITY/DEFERRED CASH
AWARD PROGRAM NAME] (the “Program”).  The terms, conditions and restrictions of
your award are contained in this Equity/Deferred Cash Award Agreement,
including the attached Appendix (together, the “Agreement”), and are
summarized, along with additional information, in the [EQUITY/Deferred Cash AWARD
PROGRAM NAME] [prospectus/brochure]
dated [MONTH] [DAY], [YEAR],  and
any applicable [prospectus] supplements (together, a “[Prospectus/Brochure]”).  Your award is also governed by the Citigroup [1999
Stock Incentive Plan, as amended and restated effective January 1, 2009,
and as it may be further amended from time to time][NAME OF SUCCESSOR EQUITY PLAN][DEFERRED
CASH PLAN] (the “Plan”) [IF APPLICABLE: , and the Letter Agreement (as
defined in the Appendix)].  For the award
to be effective, you must [accept][sign] below[ and return this page of
the Agreement], acknowledging that you have received and read the [Prospectus/Brochure]
and this Agreement, including the Appendix.

 

2. [EQUITY/DEFERRED CASH AWARD PROGRAM NAME] Award Summary*

 

{Restricted/Deferred}
Stock [Deferred Cash] Award Summary

 

	
  Award Date:

  	
   

  	
  {AWARD DATE}

  
	
  Number of Shares [Award
  Amount(1)]

  	
   

  	
  {# SHARES} [{US$or
  local currency value}]

  
	
  [Interest Rate or
  Notional Return

  	
   

  	
  {RATE, INVESTMENT
  VEHICLE OR MARKET INDEX}](2)

  
	
  Vesting Dates (  %
  each vesting date):(3)

  	
   

  	
  {VEST DATE 1}(4)

  
	
   

  	
   

  	
  {VEST DATE 2}

  
	
   

  	
   

  	
  {VEST DATE 3}

  
	
   

  	
   

  	
  {VEST DATE 4}

  
	
  Stock
  Option Grant Summary

  	
   

  	
   

  
	
  Grant Date:

  	
   

  	
  {GRANT DATE}

  
	
  Grant Price:

  	
   

  	
  {$ Grant Price   per share}(5)

  
	
  Number of Shares:

  	
   

  	
  {#OPTION SHARES}

  
	
  Vesting Dates (  %
  each vesting date):(6)

  	
   

  	
  {VEST DATE 1}(7)

  
	
   

  	
   

  	
  {VEST DATE 2}

  
	
   

  	
   

  	
  {VEST DATE 3}

  
	
   

  	
   

  	
  {VEST DATE 4}

  
	
  Option Expiration Date:

  	
   

  	
  {EXPIRATION DATE}(8)

  

 

3. Acceptance and Agreement by
Participant. I hereby accept the award described above, and
agree to be bound by the terms, conditions, and restrictions of such award as
set forth in this Agreement, including the Appendix, and in the [Prospectus/Brochure]
(acknowledging hereby that I have read and that I understand such documents),
the Plan and Citigroup’s policies, as in effect from time to time, relating to
the administration of the Program and the Plan. 
I understand that vesting is conditioned upon continuous employment with
the Company, and that an Award may be cancelled if there is a break in or
termination of my employment with the Company.

 

	
  CITIGROUP INC.

  	
  PARTICIPANT’S
  [SIGNATURE][ACCEPTANCE]:

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  [Name]

  	
   

  	
  Name:

  
	
   

  	
  [Title]

  	
   

  	
  GEID:

  

 

*The terms, conditions
and restrictions applicable to your award, including what happens in the event
of a termination or suspension of your employment, and including restrictions
or a potential waiver of your rights that may apply pursuant to provisions of
the Emergency Economic Stabilization Act of 2008, are contained in this
Agreement, which includes the Appendix hereto, and are also summarized in the [Prospectus/Brochure].

 

(1) Initial
deferral amount.

(2) Basis for
notional return (may be subject to election) to be added to (or subtracted
from) initial deferral amount.

(3) Generally,
no more rapidly than 25% each vesting date.

(4) Generally,
at least one year after award date.

(5) No less than
prior day NYSE closing price.

(6) Generally, no
more rapidly than 25% each vesting date.

(7) Generally, at
least one year after award date.

(8) Generally,
no later than sixth anniversary of grant date.

 

 

CITIGROUP INC.

[EQUITY/DEFERRED
CASH] AWARD AGREEMENT

APPENDIX

 

This Appendix constitutes part of the [Equity/Deferred
Cash] Award Agreement (the “Agreement”) and is applicable to the [EQUITY/DEFERRED
CASH AWARD PROGRAM NAME] award(s) summarized on the first page of
this Agreement. 
This Appendix is part of
the Agreement and sets forth the terms and conditions and other information
applicable to the [restricted or deferred stock award, and/or non-qualified
stock option grant (an “Option”)][deferred cash award (the “Award”)],
made to Participant under the Program,
as described in the Award Summary on page 1.  [FOR EQUITY AWARDS ONLY: Restricted or
deferred stock awards and Option grants are hereinafter referred to as “Awards”.  All Awards are denominated in shares of
Citigroup common stock, par value $.01 per share (referred to herein as “shares”
or “Citigroup stock”).]  The “Company”,
for purposes of this Agreement, shall mean Citigroup and its subsidiaries that
participate in the Program, except where provided otherwise herein.

 

1.
Terms and Conditions.  The terms, conditions, and restrictions of
the Award are set forth below [IF APPLICABLE: , subject to the letter agreement
between the Company and Participant dated [MONTH] [DAY], [YEAR] (the “Letter Agreement”)].  Certain of these provisions [IF APPLICABLE: ,
except as they are deemed modified by the terms of the Letter Agreement], along
with other important information, are summarized in the [EQUITY/DEFERRED CASH PROGRAM NAME] [prospectus/brochure] dated [MONTH] [DAY], [YEAR], and any
applicable [prospectus] supplement (together, the “[Prospectus/Brochure]”). 
The terms, conditions, and restrictions of the Award include, but are
not limited to, provisions relating to amendment, vesting, and cancellation of
Awards, restrictions on the transfer of Awards, [sale restrictions on shares
acquired upon the exercise of an Option], and additional restrictions or a
potential waiver of Participant’s rights to an Award, if required by the
applicable provisions of the Emergency Economic Stabilization Act of 2008,
which will regulate Citigroup’s policies and practices with respect to
corporate governance and executive compensation, as further described below.

 

By accepting an Award, Participant acknowledges that he or
she has read and understands the [Prospectus/Brochure] and the terms and
conditions set forth in this Appendix. 
Participant understands that this Award and all other incentive awards
are entirely discretionary and that no right to receive the Award, or any
incentive award, exists absent a prior written agreement to the contrary.

 

[Participant understands that the value that may be realized
from an Award, if any, is contingent and depends on the future market price of
Citigroup stock, among other factors, and that because equity awards are
discretionary, and intended to promote employee retention and stock ownership
and to align employees’ interests with those of stockholders, equity awards are
subject to vesting conditions and will be canceled if vesting conditions are
not satisfied.]

 

Any monetary value assigned to an Award in any communication
regarding the Award is contingent, hypothetical, and for illustrative purposes
only and does not express or imply any promise or intent by the Company to
deliver, directly or indirectly, any certain [or determinable] cash value to
Participant.  Receipt of an Award covered
by this Agreement, or any other incentive award, is neither an indication nor a
guarantee that an incentive award of any type or amount will be made in the
future, and absent a written agreement to the contrary, the Company is free to
change its practices and policies regarding incentive awards at any time in its
sole discretion.

 

Any actual, anticipated, or estimated financial benefit to
Participant from an Award is not and shall not be deemed to be a normal or an
integral part of Participant’s regular or expected salary or compensation from
employment for any purposes, including, but not limited to, calculating any
statutory, common law or other severance, resignation, termination, redundancy,
end of service payments, bonuses, long-service awards, pension or retirement or
welfare benefits or similar payments, and in no event should be considered as
compensation for, or relating in any way to, past services for the Company.

 

2.
Vesting.  If
conditions to vesting are satisfied,  [the initial
deferral amount, as adjusted to reflect interest accrued/notional gain (or
loss) to the vesting date][shares underlying an Award of restricted or deferred
stock] will be distributed to Participant on the vesting date(s) set forth
in the [Stock/Deferred Cash] Award Summary, [and Option shares shall vest and become
exercisable in the installment amounts (subject to 

 

2

 

rounding,
in Citigroup’s discretion) on the vesting dates set forth in the Stock Option
Grant Summary].  Vesting in each case is subject
to receipt of the information necessary to make required tax payments and
confirmation by Citigroup that all conditions to vesting and distribution have
been satisfied.

 

Vesting is conditioned on Participant’s continuous employment
with the Company up to and including the scheduled vesting date, unless
otherwise provided below.

 

[3.
Exercise of Option.  Vested Option shares may be exercised in
whole or in part by Participant upon notice to the Company, together with
provision for payment of the grant price (set forth in the Stock Option Grant
Summary) and applicable withholding taxes. 
Such notice shall be given in the manner prescribed by Citigroup and
shall specify the date and method of exercise and the number of Option shares
that are being exercised. The currently available option exercise methods,
which are subject to change at any time, are described in the Prospectus.  All stock option exercises will be processed
in accordance with the Citigroup Equity Compensation administrative procedures
and deadlines then in effect.  If
Participant uses a broker-assisted exercise method that may be available from
time to time, Participant acknowledges and agrees that option proceeds from any
broker-assisted exercises will be net of applicable commissions and fees associated
with these transactions.  The applicable
commissions and fees will be disclosed to Participant at or prior to the time
of exercise or will be available to Participant upon request.  The laws of the country in which Participant
is working at the time of grant, vesting, and/or exercise of the Option
(including any rules or regulations governing securities, foreign
exchange, tax or labor matters), and Citigroup accounting or other policies,
whether dictated by such country’s political or regulatory climate or
otherwise, may restrict or prohibit any one or more of the stock option
exercise methods described in the Prospectus; such restrictions may apply
differently if Participant is a resident or expatriate employee, and are
subject to change at any time.  If the
last day on which an Option may be exercised pursuant to any provision of this
Agreement is not a trading day on the New York Stock Exchange, then the
immediately preceding New York Stock Exchange trading day shall be the last day
on which an Option may be exercised.  An
Option may not be exercised after the Option Expiration Date set forth in the
Stock Option Grant Summary (the “Option expiration date”).  The Company
is not obligated to notify a Participant that an Option is nearing expiration.]

 

[4. Sale Restriction on Option Shares.  Except in the case of Participant’s
termination of employment pursuant to Section [6][(b) and (e)] [(b),
(e), (j), (k) or (l)], Participant acknowledges that shares acquired upon
an Option exercise during the term of Participant’s employment may not be sold
or otherwise transferred until two years from the date of exercise.]

 

5. Fractional
Shares.  Participant acknowledges that only whole
shares of Citigroup stock may be delivered [upon the exercise of an Option for
shares and] upon the vesting of a restricted or deferred stock award, and that
while Citigroup will endeavor to compensate Participant in cash for any
fractional shares Participant would otherwise be entitled to receive pursuant
to the terms of an Award, due to foreign exchange controls that may be in
effect from time to time in certain countries, there is no guarantee that such
payments can be made to Participants residing outside of the United States, and
the Company shall not be liable if for such reason payment is not made to a Participant.

 

6.
Termination and Interruption of Employment.  Participation in the Program, including but
not limited to Participant’s right to vest in an Award [or exercise an Option],
is conditioned upon Participant’s continuous employment with the Company,
except as otherwise provided below.

 

For all
purposes related to an Award, Participant’s employment shall be deemed
terminated on the date of Participant’s “separation from service” from
Citigroup, [except where specifically provided otherwise in this Agreement].  Whether a “separation from service” has
occurred will be determined in accordance with the definition of such term in
Treas. Reg. § 1.409A-1(h), which, unless provided otherwise by such definition [(or
elsewhere in this Agreement in a manner that does not conflict with such
definition)] shall be as of Participant’s last day of active service with the
Company, regardless of any entitlement to notice, payment in lieu of notice,
severance pay, termination pay, pension payment, or the equivalent that may be
provided by any other plan, contract, or law.

 

3

 

If Participant’s
continuous employment with the Company terminates or is interrupted for any
reason stated below, Participant’s rights with respect to the Award will be
affected as described below.  With
respect to any provision herein that provides for the distribution of a
deferred [stock][cash] award upon the termination of Participant’s employment,
such distribution may be delayed for a period of six months, if Citigroup
determines that Participant is a “specified employee” within the meaning of
Treas. Reg. § 1.409A-1(i)(1) (generally, one who is among the Company’s
top 50 most highly compensated employees). 
Interest will not accrue during the period of any such delay and there
will not be any compensation for loss in market value that occurs during such
time or otherwise. [INCLUDE SUB-SECTIONS (a) – (r) AS APPLICABLE]:

 

(a) Voluntary
Resignation.  If
Participant voluntarily terminates his or her employment with the Company,
vesting of [restricted stock awards, deferred stock awards and Option shares][deferred
cash awards] will cease[, as will the right to exercise any vested Option
shares,] on the date Participant’s employment is so terminated[; all unvested
shares and unexercised Option shares subject to the Award will be canceled] and
Participant shall have no further rights of any kind with respect to the Award.  [Different treatment may apply to Option
shares if Participant is subject to a garden leave or other notice policy.]

 

(b) Disability.

 

(i) A restricted stock
award will continue to vest during a Participant’s approved disability leave
pursuant to a Company disability policy. 
If Participant’s approved disability leave results in a “separation from
service,” any unvested portion of the Award will vest immediately and shares of
Citigroup stock will be delivered to Participant following such separation.

 

(ii) A deferred [stock][cash]
award will continue to vest during a Participant’s approved disability leave
pursuant to a Company disability policy. 
If Participant’s approved disability leave results in a “separation from
service,” any unvested portion of the Award will vest immediately and be
distributed to Participant on the 90th day following the “separation
from service” date.  [The provisions of
this Section 6(b)(ii) shall not apply if prior to the commencement or
during the period of any disability leave referred to above, Participant meets
the conditions of Section 6(j), (k) or (l) below, in which case
the Award will be administered in accordance with the applicable provisions of
those Sections of this Agreement.]

 

(iii) Notwithstanding
the foregoing, if a Participant with a deferred [stock][cash] award provides
proof satisfactory to the Company that Participant has been determined by the
United States Social Security Administration to be totally disabled, any
unvested portion of a deferred [stock][cash] award will vest and be distributed
to Participant immediately.

 

[(iv) An Option will
continue to vest on schedule and may be exercised during a Participant’s approved
disability leave (but not later than the Option expiration date).  If Participant’s approved disability leave
results in a “separation from service,” any unvested Option shares will vest
immediately, and the Option may be exercised for up to [XX DAYS/MONTHS/YEARS] thereafter
(but not later than the Option expiration date); the two year sale restriction
imposed on Option shares will cease to apply and will not be imposed on any
shares that may be acquired from a future exercise of the Option.]

 

[(v) Notwithstanding
the foregoing, if before the end of a period of approved disability leave (or
determination of total disability by the United States Social Security
Administration) Participant’s employment is terminated for any of the reasons
described in Sections 6(a), (e), (f), (h) or (i), such applicable
provisions shall apply instead of the provisions of this Section 6(b).]

 

(c) Approved
Personal Leave of Absence (Non-Statutory Leave).

 

(i) A restricted or
deferred stock award [deferred cash award] will continue to vest on schedule
during the first six months of Participant’s personal leave of absence,
provided that Participant’s leave of absence was approved by management of
Participant’s business unit in accordance with the leave of absence policies
applicable to Participant (an “approved personal leave of absence”).  Any unvested

 

4

 

restricted or deferred
stock [deferred cash award] will be canceled as soon as the approved personal
leave of absence has exceeded six months.

 

[(ii) An Option will continue to vest on schedule
during the first six months of an approved personal leave of absence.  Vested Option shares may be exercised during
the first six months of an approved personal leave of absence (but not later
than the Option expiration date).  All
unexercised Option shares will be canceled as soon as the approved personal
leave of absence has exceeded six months.]

 

(iii) If Participant terminates employment for
any reason during the first six months of an approved personal leave of
absence[, or if on or prior to such time Participant satisfies the conditions
of Section 6(j), (k) or (l)], then such applicable provisions of this
Section 6 will apply.  [For purposes
of Section 6(j), (k) and (l), Participant’s employment will be deemed
to have terminated as of the date that an approved personal leave of absence
exceeds six months.]

 

(d) Statutory
Leave of Absence.  The
Award will continue to vest [and Participant may continue to exercise vested
Option shares (but not later than the Option expiration date)] during a leave
of absence that is approved by management of Participant’s business unit, is
provided by applicable law and taken in accordance with such law and applicable
Company policy (a “statutory leave of absence”).  If a statutory leave of absence is followed
without interruption by an approved personal leave of absence, any unvested
restricted or deferred stock [and unexercised Option shares][deferred cash
award] will be canceled as of the date that the combined leaves, if continuous,
have exceeded six months.  If Participant
terminates employment for any reason during an approved statutory leave of
absence[, or if on or prior to such time Participant satisfies the conditions
of Section 6(j), (k), or (l)], then such applicable provisions of this Section 6
will apply.  [For purposes of Section 6(j),
(k) and (l), if a statutory leave of absence is followed without
interruption by an approved personal leave of absence, Participant’s employment
will be deemed to have terminated as of the date that the combined leaves
exceed six months.]

 

(e) Death.  If Participant’s employment terminates by
reason of Participant’s death, (i) any unvested restricted or deferred
stock [deferred cash award] will vest and be distributed to Participant’s
estate[; (ii) any unvested Option shares will vest and vested Option
shares may be exercised by Participant’s estate for up to [XX DAYS/MONTHS/YEARS]
from the date of Participant’s death (but not later than the Option expiration
date)] and (iii) the two-year sale restriction imposed on Option shares
will cease to apply and will not be imposed on any shares that may be acquired
by Participant’s estate in a future exercise of the Option].

 

(f) Involuntary
Termination for Gross Misconduct.  Notwithstanding any provisions of this
Agreement to the contrary, if the Company terminates Participant’s employment
because of Participant’s “gross misconduct” (as defined below), vesting of the
Award[, and the right to exercise vested Option shares,] will cease on the date
Participant’s employment is so terminated; all unvested restricted or deferred
stock [deferred cash awards][and all unexercised Option shares] will be
canceled as of the termination date of Participant’s employment and Participant
shall have no further rights of any kind with respect to the Award.  For purposes of this Agreement, “gross
misconduct” means any conduct that (i) is in competition with the
Company’s business operations, (ii) that breaches any obligation that
Participant owes to the Company or Participant’s duty of loyalty to the
Company, (iii) is materially injurious to the Company, monetarily or
otherwise, or (iv) is otherwise determined by the Personnel and
Compensation Committee of the Citigroup Board of Directors (the “Committee), in
its sole discretion, to constitute gross misconduct.  For purposes of this Section 6(f), “Company”
shall mean Citigroup and any of its subsidiaries.

 

(g) Transfer
to Non-Participating Subsidiary.

 

(i) If Participant transfers to a subsidiary that
is a member of the “controlled group” of Citigroup (as defined below), the
Award will continue to vest on schedule [and vested Option shares may continue
to be exercised (but not later than the Option expiration date)].

 

5

 

(ii) If Participant transfers to a subsidiary
that is not a member of the “controlled group” of Citigroup (as defined below),
the provisions of Section 6(h) will apply to the Award.

 

For purposes of this
Agreement, “controlled group” has the meaning set forth in Treas. Reg. §
1.409A-1(h)(3).

 

(h) Involuntary Termination
Other than for Gross Misconduct. Except as provided in Section 6(n) below,
if Participant’s employment is terminated by the Company for any reason other
than gross misconduct [and Participant has not met the conditions specified in Section 6(j),
(k) or (l)], (i) any unvested restricted or deferred stock [deferred
cash award] will vest and be distributed to Participant on the 90th
day following the “separation from service” date [;and (ii) vesting of an
Option will cease and any vested Option shares may continue to be exercised for
up to [XX DAYS/MONTHS/YEARS] after Participant’s “separation from service” date
(but not later than the Option expiration date)].

 

(i) Voluntary
Resignation to Pursue Alternative Career.  If [Participant has not met the conditions of
Section 6(j), (k) or (l), and], with the prior written approval of
the Senior Human Resources Officer for Participant’s business, in his or her
sole discretion, Participant voluntarily resigns from his or her employment
with the Company to work in a full-time career in either government service,
for a bona fide charitable institution, or as a teacher at a bona fide
educational institution, and/or otherwise satisfies the alternative or
additional requirements that may be imposed by then applicable guidelines
adopted for the purposes of administering this provision, (i) any unvested
restricted or deferred stock [deferred cash award] will vest and be distributed
to Participant on the 90th day following the “separation from
service” date[;and (ii) vesting of an Option will cease and [vested options may
continue to be exercised for up to [XX DAYS/MONTHS/YEARS] after Participant’s “separation
from service” date (but not later than the Option expiration date), provided
that Participant is not, at any time up to and including any exercise date,
employed by a “significant competitor” of the Company (as defined in Section 6(p) below)][all
unexercised Option shares will be canceled as of Participant’s “separation from
service” date and Participant shall have no further rights of any kind with
respect to the Option].

 

(j) Satisfying
the “Rule of 75.” 
If Participant has completed a number of full years of service with the
Company that, when added to his or her age, equals at least 75, (i) any
unvested restricted or deferred stock [deferred cash award] will continue to
vest on schedule, provided that Participant is not, at any time up to and
including any vesting date, employed by a “significant competitor” of the
Company (as defined in Section 6(p) below)[; and (ii) an Option
will continue to vest on schedule and may be exercised (but not later than the
Option expiration date) while Participant is employed by the Company; unvested
Option shares will vest on Participant’s “separation from service” date if employment
with the Company is terminated for any reason other than gross misconduct and
may be exercised for up to [XX DAYS/MONTHS/YEARS] after Participant’s “separation
from service” date (but not later than the Option expiration date), provided
that Participant is not, at any time up to and including any exercise date,
employed by a “significant competitor” of the Company (as defined in Section 6(p) below)].

 

(k) Satisfying
the “Rule of 60.” 
If Participant [does not satisfy the conditions of Section 6(j) above,
but] (i) is at least age 50 and has completed at least five full years of
service with the Company and Participant’s age plus the number of full years of
service with the Company equals at least 60, or (ii) Participant is under
age 50, but has completed at least 20 full years of service with the Company
and Participant’s age plus the number of full years of service with the Company
equals at least 60, then (1) any unvested restricted or deferred stock
[deferred cash award]  will continue to
vest on schedule, provided that Participant is not, at any time up to and
including any vesting date, employed by a “significant competitor” of the
Company (as defined in Section 6(p) below); [(2) an Option will
continue to vest on schedule and may be exercised (but not later than the
Option expiration date) while Participant is employed by the Company; if
Participant is no longer employed by the Company, vesting of the Option will
cease on the Participant’s “separation from service” date if employment with
the Company is terminated for any reason other than gross misconduct and any
vested Option shares may be exercised for up to [XX DAYS/MONTHS/YEARS] after
Participant’s “separation from service” date (but not later than the Option
expiration date), provided that Participant is not, at any time up to and
including any exercise date, employed by a “significant competitor” of the
Company (as defined in Section 6(p) below)].

 

6

 

(l) Reaching
Age 55 by Certain Legacy Citibank Employees. 
If Participant is at least age 55 and is a legacy
Citibank employee who participates in (i) the grandfathered Citibank
formula of the U.S. Citigroup Pension Plan or (ii) the grandfathered
Citibank formula of the Head Office Guarantee (HOG) Plan, then [(1)] any
unvested restricted or deferred stock [deferred cash award] will continue to
vest on schedule, provided that Participant is not, at any time up to and
including any vesting date, employed by a “significant competitor” of the
Company (as defined in Section 6(q) below); [(2) vested options
may continue to be exercised for up to [XX DAYS/MONTHS/YEARS] after Participant’s
“separation from service” date (but not later than the Option expiration date)
if employment with the Company is terminated for any reason other than gross
misconduct, provided that Participant is not, at any time up to and including
any exercise date, employed by a “significant competitor” of the Company (as
defined in Section 6(p) below)][all unexercised Option shares will be
canceled as of Participant’s “separation from service” date and Participant
shall have no further rights of any kind with respect to the Option]

 

(m) Termination
of Employment other than for Gross Misconduct or Transfer to Non-Participating
Subsidiary, when Also Eligible under Section 6(j), (k) or (l).  If Participant is
terminated other than for gross misconduct or is transferred to a subsidiary
described in Section 6(g)(ii) above and on the date Participant’s
employment is so terminated or transferred, Participant has satisfied the
conditions of Section 6(j), (k) or (l) above, then the
provisions of such sub-section will apply; provided, however, that continued
vesting of the Award [and the right to exercise vested Option shares] will not
be subject to the condition that Participant not be employed by a “significant
competitor” of the Company (as defined in Section 6(p) below).

 

(n) Employing
Company is Acquired by Another Entity (Change in Control).  If Participant is employed
by a company or other legal entity that is acquired by another entity in a
transaction that is described in Section 409A(a)(2)(A)(v) of the
United States Internal Revenue Code of 1986, as amended (the “Code”) and
the regulations thereunder (a “change in control”), the provisions of Section 6(h) shall
apply[; provided, however, that if on the effective date of the change in
control Participant has satisfied the conditions specified in Section 6(j),
(k) or (l), the number of shares of restricted or deferred stock and
Option shares that vest upon the change in control, and the period during which
any Option shares may be exercised following the change in control, shall be as
provided by Section 6(j), (k) or (l), and the distribution of shares that
vest as a result of such change in control will occur on the effective date of
the change in control.]  The Committee,
in its discretion, may accelerate the vesting of additional shares of
restricted or deferred stock or Option shares in the event of a change in
control.

 

(o) Additional
Conditions Applicable to Post-Employment Participation.  Except as otherwise
provided herein, [in any instance in which, if, in the determination of the
Committee, Participant engages in conduct that is in competition with the
Company’s business operations, breaches his or her duty of loyalty or any
obligation Participant owes to the Company, or is materially injurious to the
Company, monetarily or otherwise, while holding any shares of Citigroup common
stock subject to a sale restriction, such shares may be canceled, in the sole
discretion of the Committee.  If any such
shares are canceled pursuant to this Section 6(o), Participant will
receive a cash payment (without interest) equal to the grant price of the
Option under which the shares were issued (as adjusted, if applicable)
multiplied by the number of shares canceled. 
Additionally,] [t]he Committee may cancel any unvested restricted or
deferred stock [deferred cash award] if it determines that Participant has,
since the termination of Participant’s employment with the Company, engaged in
conduct that breaches any obligation or duty of loyalty to the Company or that
is materially injurious to the Company, monetarily or otherwise.  For purposes of this Section 6(o), “Company”
shall mean Citigroup and any of its subsidiaries.

 

(p) Definition
of “Significant Competitor.”  For purposes of this Agreement, a “significant
competitor” of the Company shall mean any company or other entity
designated by the Committee as such and included on a list of “significant
competitors” that will be made available to Participant and which may be
updated from time to time.  If
Participant has terminated employment with the Company, a “significant
competitor” shall mean a company or other entity included on the list in effect
at the time Participant’s employment with the Company was terminated.  For purposes of this Section 5(q), “Company”
shall mean Citigroup and any of its subsidiaries.

 

7

 

[(q) Non-Solicitation
Covenant.

 

(i)                                     Participant
agrees that during Participant’s employment with the Company (inclusive of any
notice period or garden leave policy to which Participant is otherwise subject)
and for twelve (12) months following any termination of Participant’s
employment, he or she will not, without the prior written consent of the
Company, directly or indirectly solicit or induce away from the Company or
cause to be solicited or induced away from the Company any of its employees.

 

(ii)                                  Notwithstanding
anything to the contrary in this Agreement, and without limiting any remedies
at law or in equity that may be available to the Company, Participant
acknowledges and agrees that a remedy at law for any breach or threatened
breach of the covenant contained in this Section 6(q) would be
inadequate and monetary damages would be difficult to calculate and that for
any such breach or threatened breach, a court of law may award an injunction,
restraining order or other equitable relief, restraining Participant from
committing or continuing to commit such breach.

 

(iii)                               It
is expressly understood and agreed that if a final determination is made by a
court of law that the time or any other restriction contained in this Section 6(q) is
an unenforceable restriction against Participant, the provisions of Section 6(q) shall
not be rendered void but shall be deemed amended to apply to such maximum time
and to such other maximum extent as such court may determine or indicate to be
enforceable.  Alternatively, if such
court finds that any restriction contained in this Section 6(q) is
unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any other
provision of this Agreement.

 

(iv)                              The
restrictive covenant set forth in this Section 6(q) shall continue
and survive any cancellation, forfeiture or payment of any amounts due under
the Award.

 

(v)                                 The
covenant contained in this Section 6(q) is not intended to shorten,
reduce or otherwise limit any non-solicitation obligation Participant may have
(including but not limited the non-solicitation obligation contained in the
Employment Termination Notice and Non-Solicitation Policy for the Citigroup
Management Committee or any successor policy) pursuant to contract, collective
agreement or applicable policy, local law, rule or regulation (“Independent
Obligation”), nor is it intended to limit or reduce any other obligation that
Participant may have to the Company pursuant to an Independent Obligation.  For purposes of this Section 6(q), “Company”
shall mean Citigroup and any of its subsidiaries.]

 

7. Non-Transferability. 
Neither the Award, nor
any component of the Award, may be sold, pledged, hypothecated, assigned,
margined or otherwise transferred, other than by will or the laws of descent
and distribution, and no Award or interest or right therein shall be subject to
the debts, contracts or engagements of Participant or his or her successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law, by judgment,
lien, levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy or divorce), and any attempted disposition thereof shall
be null and void, of no effect, and not binding on the Company in any way.  Participant agrees that any purported
transfer shall be null and void, and shall constitute a breach of this
Agreement causing damage to the Company for which the remedy shall be a
cancellation of the Award.  During
Participant’s lifetime, all rights with respect to the Award shall be
exercisable only by Participant, and any and all payments in respect of the
Award shall be to Participant only.  The
Company shall be under no obligation to entertain, investigate, respect,
preserve, protect or enforce any actual or purported rights or interests
asserted by any creditor of Participant or any other third party in the Award,
and Participant agrees to take all reasonable measures to protect the Company
against any such claims being asserted in respect of Participant’s Award and to
reimburse the Company for any and all reasonable expenses it incurs defending
against or complying with any such third-party claims if Participant could have
reasonably acted to prevent such claims from being asserted against the
Company.

 

8

 

8.
Stockholder Rights.  Participant shall have no rights as a
stockholder of Citigroup over any shares covered by an Award, except to the
limited extent provided in the Prospectus for an Award of restricted stock,
unless and until shares are distributed to Participant in connection with the
vesting of a restricted or deferred stock award or an Option exercise.  During the vesting period, Participant may
receive dividend or dividend equivalent payments in respect of shares subject
to a restricted or deferred stock award, to the extent provided in the
Prospectus.

 

9.
Right of Set Off.  Participant agrees that the Company may, to
the extent permitted by applicable law, retain for itself funds or securities
otherwise payable to Participant pursuant to this Award or any award under any
equity award program administered by Citigroup to offset any amounts paid by
the Company to a third party pursuant to any award, judgment, or settlement of a
complaint, arbitration, or lawsuit of which Participant was the subject; to
satisfy any obligation or debt that Participant owes the Company or its
affiliates; or in the event any equity award is canceled pursuant to its terms.  The Company may not retain such funds or
securities and set off such obligations or liabilities, as described above,
until such time as they would otherwise be distributable to Participant in
accordance with the applicable award terms.

 

10.
Consent to Electronic Delivery.  In lieu of receiving documents in paper
format, Participant hereby agrees, to the fullest extent permitted by law, to
accept electronic delivery of any documents that Citigroup may be required to
deliver (including, but not limited to, prospectuses, prospectus supplements,
grant or award notifications and agreements, account statements, annual and
quarterly reports, and all other forms or communications) in connection with
the Award(s) covered by this Agreement and any other prior or future
incentive award or program made or offered by Citigroup or its predecessors or
successors.  Electronic delivery of a
document to Participant may be via a Company e-mail system or by reference to a
location on a Company intranet site to which Participant has access.

 

11.
Plan Administration.  The
Award described in this Agreement has been granted subject to the terms of the
Plan, and the shares deliverable to Participant in connection with an Award,
whether upon the exercise of an Option or vesting of a restricted or deferred
stock award, will be from the shares available for grant pursuant to the terms
of the Plan.

 

12. Adjustments.  In the event of any change in Citigroup’s
capital structure on account of (i) any extraordinary dividend, stock
dividend, stock split, reverse stock split or any similar equity restructuring;
or (ii) any combination or exchange of equity securities, merger,
consolidation, recapitalization, reorganization, divestiture or other
distribution (other than ordinary cash dividends) of assets to stockholders, or
any other similar event affecting Citigroup’s capital structure, to the extent
necessary to prevent the enlargement or diminution of the rights of
Participants, the Committee shall make such appropriate equitable adjustments
as may be permitted by the terms of the Plan and applicable law, to the number
or kind of shares subject to an Award and/or the grant price applicable to an
Award.  All such adjustments shall
conform to the requirements of Section 409A of the Code, to the extent
applicable, and with respect to Awards intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, such adjustments or
substitutions shall be made only to the extent that the Committee determines
that such adjustments or substitutions may be made without causing the Company
to be denied a tax deduction on account of Section 162(m) of the
Code.  Citigroup shall give each
Participant notice of an adjustment hereunder and, upon notice, such adjustment
shall be conclusive and binding for all purposes.  Notwithstanding the foregoing, the Committee
may, in its discretion, decline to adjust any Award made to a Participant, if
it determines that such adjustment would violate applicable law or result in
adverse tax consequences to the Participant or the Company, and neither the
Committee nor Citigroup shall be bound to compensate any Participant for any
such adjustment not made, nor shall they be liable to Participant for any
additional personal tax or other consequences of any adjustments that are made
to an Award.

 

13.
Taxes and Tax Residency Status.  By accepting the Award, Participant agrees to
pay all applicable income and/or social taxes and file all required tax returns
in all jurisdictions where Participant is subject to tax and/or an income tax
filing requirement.  If Participant is an
employee in one of Citigroup’s expatriate programs, he or she agrees to pay all
applicable income and/or social taxes and file all tax returns in accordance
with the applicable expatriate policy. 
To assist Citigroup in achieving full compliance with its obligations
under the laws of all relevant taxing jurisdictions, Participant agrees to keep
complete and accurate records of his or her income tax residency status and the
number and location of workdays outside his or her country of income tax
residency from the date of an Award until the later of the vesting of an Award,
the exercise of an Option, or the subsequent sale of any shares 

 

9

 

received
in connection with an Award.  By signing
this Agreement, Participant also agrees to provide, upon request, information
about his or her tax residency status to Citigroup during such period.
Participant will be responsible for any income tax due, including penalties and
interest, arising from any misstatement by Participant regarding such
information.

 

14.
Entire Agreement; No Right to Employment.  [IF APPLICABLE: The Letter Agreement,] [T]he
Prospectus [Brochure] and the Agreement constitute the entire understanding
between the Company and Participant regarding the Award and supersede all
previous written, oral, or implied understandings between the parties hereto
about the subject matter hereof, including any written or electronic agreement,
election form or other communication to, from or between Participant and the
Company.  Nothing contained herein, in
the Plan, or in any Prospectus [Brochure] shall confer upon Participant any
rights to continued employment or employment in any particular position, at any
specific rate of compensation, or for any particular period of time.

 

15.
Amendment.  The
Committee may in, its sole discretion, modify, amend, terminate or suspend the
Award or the Program at any time, except that no termination, suspension,
modification or amendment of the Award or the Program shall (i) cause the
Award or the Program to become subject to, or violate, Section 409A of the
Code, or (ii) except as provided in Section 16(a), adversely affect
Participant’s rights with respect to the Award, as determined by the Committee,
without Participant’s written consent.

 

16. Section 409A [and Section 457A] Compliance.

 

(a) Participant
understands that as a result of Section 409A to the Code, if Participant
is a U.S. taxpayer he or she could be subject to adverse tax consequences if
the Award, the Program and/or the Plan are not administered in accordance with the
requirements of Section 409A.  [Participant
further understands that if a deferred cash award covered by this Agreement is
considered to be a “nonqualified deferred compensation plan” and Participant’s
employer is considered to be a “nonqualified entity” (as such terms are defined
in Section 457A of the Code), similarly adverse tax consequences could
apply if the Award or the Program are not administered in accordance with the
requirements of Section 457A.] Citigroup may modify the provisions of the
Award, the Program and/or the Plan, as necessary, to conform them to the
requirements of Section 409A[, Section 457A,] or other changes in
applicable law.  To the extent Citigroup
amends the Award, the Program or the Plan, Participant will receive a
supplement to the Prospectus describing any such changes.

 

(b) Notwithstanding
any provision of this Agreement to the contrary, (i) Citigroup may modify
the provisions of the Award, the Program and/or the Plan, as necessary, to
conform them to the requirements of Section 409A[, Section 457A,] or
other changes in applicable law and (ii) any distribution of [shares
subject to a deferred stock award][a deferred cash award] otherwise provided by
the terms of this Agreement to occur upon any event that would constitute a “separation
from service” (within the meaning of Section 409A of the Code) to a
Participant who is a “specified employee” (within the meaning of Treas. Reg. §
1.409A-1(i)(1)) at the time of such Participant’s “separation from service,”
shall not be made until the date which is six months from such “separation from
service,” or, if earlier, the date of Participant’s death and during such
six-month deferral period, Participant shall not be entitled to interest,
dividends, dividend equivalents, or any compensation for any loss in market
value or otherwise which occurs with respect to the Award during such deferral
period.

 

(c) BY
ACCEPTING THIS AWARD, PARTICIPANT HEREBY CONSENTS TO THE AMENDMENT OR
MODIFICATION OF ANY OUTSTANDING AWARD(S) HERETOFORE GRANTED TO OR ENTERED
INTO WITH PARTICIPANT, IN LIKE MANNER AND PURPOSE AS PROVIDED BY SECTION 16(b) OF
THIS AGREEMENT, TO THE EXTENT ANY SUCH AWARDS MAY VIOLATE SECTION 409A
[OR SECTION 457A] OF THE CODE; PROVIDED, HOWEVER, THAT (i) NO SUCH
AMENDMENT OR MODIFICATION SHALL BE MADE IF IT WOULD VIOLATE THE TERMS AND
CONDITIONS OF PARTICIPANT’S OFFER LETTER OR EMPLOYMENT AGREMENT, AND (ii) UNLESS
THE COMMITTEE DETERMINES OTHERWISE, ANY AMENDMENT OR MODIFICATION TO
OUTSTANDING AWARD(S) PURSUANT TO THIS SECTION 16(c) SHALL
MAINTAIN, TO THE MAXIMUM EXTENT PRACTICABLE, THE ORIGINAL INTENT OF THE
APPLICABLE PROVISION WITHOUT CONTRAVENING THE PROVISIONS OF SECTION 409A
[OR SECTION 457A] OF THE 

 

10

 

CODE.  THE AMENDMENT OR MODIFICATION OF ANY AWARD(S) PURSUANT
TO THIS PROVISION SHALL BE AT THE COMPANY’S SOLE DISCRETION AND THE COMPANY
SHALL NOT BE OBLIGATED TO AMEND OR MODIFY ANY SUCH AWARD(S) OR THIS AWARD,
THE PROGRAM OR THE PLAN, NOR SHALL THE COMPANY BE LIABLE FOR ANY ADVERSE TAX OR
OTHER CONSEQUENCES TO PARTICIPANT RESULTING FROM SUCH AMENDMENTS OR
MODIFICATIONS OR THE COMPANY’S FAILURE TO MAKE ANY SUCH AMENDMENTS OR
MODIFICATIONS FOR PURPOSES OF COMPLYING WITH SECTION 409A [OR SECTION 457A]
OF THE CODE OR FOR ANY OTHER PURPOSE.  TO
THE EXTENT CITIGROUP AMENDS OR MODIFIES ANY OUTSTANDING AWARD(S) OR THIS
AWARD PURUSANT TO SECTIONS 15 OR 16 OF THIS AGREMENT, PARTICIPANT SHALL RECEIVE
A SUPPLEMENT TO THE PROSPECTUS [BROCHURE] DESCRIBING ANY SUCH CHANGES AND,
UNLESS THE COMMITTEE DETERMINES OTHERWISE, THE CHANGES DESCRIBED IN THE
SUPPLEMENT SHALL BE DEEMED TO AMEND THE TERMS AND CONDITIONS OF THE APPLICABLE
AWARD AGREEMENTS.

 

17.
Compliance with Emergency Economic Stabilization Act of 2008.  Participant
acknowledges that if Participant and any Award governed by this Agreement are
subject to Section 111 of the Emergency Economic Stabilization Act of 2008
and any regulations or interpretations that may from time to time be
promulgated thereunder (“EESA”), then any payment of any kind provided for by
this Agreement must comply with EESA, and that this Agreement shall be
interpreted or reformed to so comply.  If
the making of any payment pursuant to this Agreement would violate EESA, or if
the making of such payment may in the judgment of the Company limit or
adversely impact the ability of the Company to participate in, or the terms of
the Company’s participation in, the sale of troubled assets to the U.S. Secretary
of the Treasury or to qualify for any other relief under EESA, Participant
shall be deemed to have waived his or her right to such payment.  If applicable, Participant also hereby grants
to the U. S. Treasury a waiver releasing the U. S. Treasury from any claims
that Participant may otherwise have as a result of the issuance of any
regulations which modify the terms of benefits plans, arrangements and
agreements to eliminate any provisions that would not be in compliance with the
executive compensation and corporate governance requirements of Section 111
of EESA and any guidance or regulations issued by the Secretary of the Treasury
on or prior to the date of any investment to carry out the provisions of EESA.

 

18.
Arbitration; Conflict; Governing Law.  Any disputes related to the Award shall be
resolved by arbitration in accordance with the Company’s arbitration
policies.  In the absence of an effective
arbitration policy, Participant understands and agrees that any dispute related
to an Award shall be submitted to arbitration in accordance with the rules of
the American Arbitration Association, if so elected by the Company in its sole
discretion.  In the event of a conflict
between the Prospectus and this Agreement [IF APPLICABLE: the Letter Agreement
and this Agreement], this Agreement [IF APPLICABLE: the Letter Agreement] shall
control.  In the event of a conflict
between this Agreement and the Plan, the Plan shall control.  This Agreement shall be governed by the laws
of the State of New York (regardless of conflict of laws principles) as to all
matters, including, but not limited to, the construction, application, validity
and administration of the Program.

 

19. Disclosure Regarding Use of Personal Information and
Participant’s Consent.

 

(a) Definition and Use of “Personal
Information.”  In connection with the grant of this Award,
and any other award under the Program or any other equity award program, and
the implementation and administration of any such program, including, without
limitation, Participant’s actual participation, or consideration by the Company
for potential future participation, in any program at any time, it is or may
become necessary for the Company to collect, transfer, use, and hold certain
personal information regarding Participant in and/or outside of Participant’s
home country.

 

The
“personal information” that Citigroup may collect, process, store and
transfer for the purposes outlined above may include Participant’s name,
nationality, citizenship, tax or other residency status, work authorization,
date of birth, age, government/tax identification number, passport number,
brokerage account information, GEID or other internal identifying information,
home address, work address, job and location history, compensation and equity award
information and history, business unit, employing entity, and Participant’s
beneficiaries and contact information. 
Participant may obtain more details regarding the access and use of
his/her personal information, and may correct or update such information, by
contacting his/her human resources representative or local equity coordinator.

 

11

 

Use,
transfer, storage and processing of personal information, electronically or
otherwise, may be in connection with the Company’s internal administration of
its equity award programs, or in connection with tax or other governmental and
regulatory compliance activities directly or indirectly related to an equity
award program.  For such purposes only,
personal information may be used by third parties retained by the Company to
assist with the administration and compliance activities of its equity award
programs, and may be transferred by the company that employs (or any company
that has employed) Participant from Participant’s home country to other
Citigroup entities and third parties located in the United States and in other
countries.  Specifically, those parties
that may have access to Participant’s information for the purposes described
herein include, but are not limited to, (i) human resources personnel
responsible for administering the equity award programs, including local and
regional equity award coordinators, and global coordinators located in the
United States; (ii) Participant’s U.S. broker and equity account
administrator and trade facilitator; (iii) Participant’s U.S., regional
and local employing entity and business unit management, including Participant’s
supervisor and his/her superiors; (iv) the Committee or its designee,
which is responsible for administering the Plan; (v) Citigroup’s
technology systems support team (but only to the extent necessary to maintain
the proper operation of electronic information systems that support the equity
award programs); and (vi) internal and external legal, tax and accounting
advisors (but only to the extent necessary for them to advise the Company on
compliance and other issues affecting the equity award programs in their
respective fields of expertise).  At all
times, Company personnel and third parties will be obligated to maintain the
confidentiality of Participant’s personal information except to the extent the
Company is required to provide such information to governmental agencies or
other parties.  Such action will always
be undertaken only in accordance with applicable law.

 

(b) Participant’s Consent.  BY
ACCEPTING THIS AWARD, PARTICIPANT EXPLICITLY CONSENTS (I) TO THE USE OF
PARTICIPANT’S PERSONAL INFORMATION FOR THE PURPOSE OF BEING CONSIDERED FOR
PARTICIPATION IN FUTURE EQUITY OR OTHER AWARD PROGRAMS (TO THE EXTENT HE/SHE IS
ELIGIBLE UNDER APPLICABLE PROGRAM GUIDELINES, AND WITHOUT ANY GUARANTEE THAT
ANY AWARD WILL BE MADE); AND (II) TO THE USE, TRANSFER, PROCESSING AND
STORAGE, ELECTRONICALLY OR OTHERWISE, OF HIS/HER PERSONAL INFORMATION, AS SUCH
USE HAS OCCURRED TO DATE, AND AS SUCH USE MAY OCCUR IN THE FUTURE, IN
CONNECTION WITH THIS OR ANY OTHER EQUITY OR OTHER AWARD, AS DESCRIBED ABOVE.

 

***

 

12LICENSE AGREEMENT

Exhibit 10.15

SUBLICENSE AGREEMENT

between

1451 INTERNATIONAL, LTD.,

a California corporation

and

SECOND RENAISSANCE, LLC,

a California limited liability company

(collectively, “Sublicensor”)

and

ETERNAL IMAGE,

a Michigan limited liability company

(“Sublicensee”)

Date: July 21, 2005

SUBLICENSE AGREEMENT

(“Caskets & Urns”)

THIS SUBLICENSE AGREEMENT (the "Agreement") is entered into effective as of the 21st day of July, 2005 by and among SECOND RENAISSANCE, LLC, a California limited liability company (“SRLLC”) and 1451 INTERNATIONAL LTD., a California corporation ("1451")  (collectively, “Sublicensor”), and ETERNAL IMAGE, a Michigan limited liability company ("Sublicensee").

RECITALS

A.

Sublicensor has an exclusive worldwide license (the “License Agreement”) to manufacture and sell products constituting reproductions and adaptations of works of art (the "Properties") which are the exclusive property of the Biblioteca Apostolica Vaticana ("BAV" or the "Vatican Library").  There are other licensees that hold exclusive worldwide licenses with the Ufficio Vendita Pubblicazioni e Riproduzioni dei Musei Vaticani ("UVPR") in relation to the Vatican Library in specified product categories. Sublicensor has made Sublicensee aware of these other licensees and the scope of their licenses.

B.

The foregoing third party direct licenses are issued and administered by the UVPR of the sovereign State of Vatican City. Under no condition or circumstance can the rights of such licensees be violated. SRLLC and 1451 (Sublicensor) and Sublicensee guarantee not to infringe on any and all of the rights that are owned by other companies or licensees. Ignorance of such rights does not lessen the culpability and severity of violation of said rights. Should any of these three companies (or parties and/or affiliates) infringe on such rights, they alone and exclusively are liable. It is further guaranteed that the UVPR and BAV, the Vatican City State and the Roman Catholic Church are completely and fully excluded from any legal action that might arise from such infringement.

C.

Sublicensor has the right to sublicense the rights granted by its License Agreement, subject to written approval of UVPR. The approval of this Agreement by UVPR is conditional to the prior consultation with BAV.  

D.

The UVPR, along with its prior consultation with the BAV, retains the exclusive and sole right to refuse the granting of its approval based on serious reasons, such as that which would present the Vatican City State or the Roman Catholic Church or the UVPR or the BAV in a negative light due to a negative historical/personal background of a Sublicensee and/or his or her company. It is the exclusive and sole duty of the Sublicensor to investigate the integrity and worthiness of its prospective Sublicensee. Hence, it is the sole and exclusive responsibility of Sublicensor to ascertain that the current and prospective Sublicensees abide by said clause. 

E.

Sublicensee desires to obtain from Sublicensor and Sublicensor desires to grant to Sublicensee a sublicense to use, manufacture and sell certain products (as herein defined) incorporating, based on or derived from certain of the Properties, and to use the Logo (see Schedule 2.2.1) in connection with the sale of such products, subject to the terms and conditions hereinafter set forth.

1

AGREEMENT

NOW, THEREFORE, the parties hereto agree as follows:

1.

Definitions.  The defined terms used in this Agreement shall have the meanings set forth below.

Advertising Material shall mean any and all packaging, advertising and promotional materials in any medium whatsoever used by Sublicensee in connection with the Sublicensed Products, including without limitation written advertisements, point-of-sale displays, tags, labels, and radio and television commercials.  (See  Approval Procedures-Section 15.) 

1.1.1  The use of Internet is strictly limited specifically to advertising pictures of the Sublicensed Products. It is strictly prohibited in every circumstance and under every condition to scan onto the Internet any and all digital images from the BAV. There is no exception to this.

Affiliate shall mean any entity which directly or indirectly controls, is controlled by or is under common control with Sublicensee.  The term “control” as used herein means possession of the power to direct or cause the direction of the management and the policies of an entity, whether through the ownership of a majority of the outstanding voting securities or by contract or otherwise.

1.2.1  Affiliates means every partner that has a provable valid contract with the Sublicensor. The affiliates do not have the rights or grants in the main License Agreement. They must strictly and always abide by the limitations and conditions which bind the Sublicensor in the main License Agreement with UVPR. It is the sole and exclusive responsibility of the Sublicensor to ensure that this clause in being implemented by their Sublicensees.

Commencement Date shall mean the date first set forth above.

1.3.1 The Commencement Date shall mean the date this Agreement is approved and signed by the UVPR. Only original copies are required, one for each signing party and one for UVPR. Each page of the sublicense shall be initialized by ALL parties, including UVPR. 

Exhibit(s) shall mean temporary exhibition(s) sponsored and staged independently or in conjunction with a museum or gallery, which (i) include the display of multiple (not less than an aggregate of fifty), different Sublicensed Products of any Sublicensee or  Affiliate of Sublicensor, (ii) are generally open to the public for an admission fee, and (iii) have been pre-approved by UVPR, following consultation with BAV, when other items appearing with Sublicensed Products form part of the total exhibit

1.4.1 The admission fee must be approved by UVPR to insure that it is reasonable; this requirement is to protect the image of the Vatican and the BAV to prospective viewers of any exhibit.

Sublicensed Products shall mean those Products described on Schedule 1.5 hereto. 

Sublicensee’s Work Product shall mean that Work Product which Sublicensee owns as set forth in Section 16.4.

Properties shall mean original artwork, manuscripts, books, sculptures, coins, images, and other three-dimensional objects that are located in and owned exclusively by the Vatican Library, 

2

including rights and property of the Vatican Library in the Salone Sistino and the Library Gallery prior to October 1, 1999.

1.7.1  Excluded are any items that are conserved in the BAV but under copyright and proprietary laws outside of BAV dominion and independent of the contracting parties hereunder, such as particular coins, books, manuscripts and other types of works of art and medals from the Medagliere that have been recently donated to the BAV and whose artists (authors, designers and sculptors) are still living.

1.7.2  The Sublicensee possesses no rights whatsoever to reproduce in any form, including adaptations, any work of art and/or manuscript and/or facsimile that does not form part of the stable patrimony of BAV and of which BAV has no exclusive copyright.

1.8  Receipts shall mean the gross amount actually billed by Sublicensee or its Affiliates on sales of Sublicensed Products, less any returns, taxes and/or freight, shipping and insurance charges, and other allowances approved by Sublicensor, but only to the extent that such returns, taxes and/or charges, and allowances are actually paid or credited by Sublicensee or its Affiliates with respect to any customer accounts. Sales of Sublicensed Products to any Affiliate which is a reseller thereof shall be excluded until the subsequent sale by such Affiliate.

1.9  Retail Store shall mean any and all retail outlets operated by the exclusive sublicensee(s) of Sublicensor for retail stores under the trade name “Vatican Library Collection” (or other name specifically approved in writing by Sublicensor and UVPR) for point of purchase sale by such sublicensee(s) of the Sublicensed Products authorized by their respective sublicense agreement(s), including without limitation physical fixed locations (whether owned or rented), kiosks (fixed or movable), catalogue sales of Sublicensed Products sold at fixed location Retail Stores, limited internet sites pre-approved by UVPR, following consultation with BAV, for sale of Sublicensed Products sold at fixed location Retail Stores (or other technological means of distribution and sale of Sublicensed Products sold at fixed location Retail Stores, whether now existing or created in the future), temporary sites for events, and space within stores, malls or the like.  

1.10  Royalties shall mean the percentage compensation on Receipts and Sublicense income, if any, to be paid by Sublicensee to Sublicensor pursuant to Section 6.2 hereof.

1.11  Specifications shall mean the technical, functional and design specifications for a Sublicensed Product agreed upon by Sublicensee and approved by both Sublicensor and UVPR pursuant to Section 15.2.

1.12  Territory shall mean the specified geographic area covered by the Sublicensee’s rights pre-approved by UVPR, as described on Schedule 1.12 hereto.

2.

Grant of Sublicense.

2.1  Sublicense.  Sublicensor hereby grants to Sublicensee, under the terms and conditions set forth in this Agreement, the exclusive and/or nonexclusive (as specified in Schedule 1.12) right and sublicense to manufacture, sell, distribute and advertise the sale of Sublicensed Products in the Territory.

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2.1.1 Notwithstanding the foregoing grant of rights, Sublicensor has informed Sublicensee and Sublicensee hereby acknowledges that the Sublicensor has certain obligations to third parties with respect to the sale and distribution of Sublicensed Products through the channels identified in this subsection 2.1.1. Accordingly, Sublicensee shall not be authorized to, and Sublicensee agrees that it shall not, (i)  sell Sublicensed Products through fundraising programs organized or operated by Sublicensee, (ii) stage, sponsor or hold “Exhibits” as defined in Section 1.4 to promote or market Sublicensed Products, (iii)  market and sell Sublicensed Products through Retail Stores operated under the name and logo of The Vatican Library Collection or otherwise promoted or advertised as “  officially licensed” Vatican Library stores, (iv)  market and sell Sublicensed Products through Internet sites or catalogue sales programs operated under the name and logo of The Vatican Library Collection or otherwise promoted or advertised as the “ officially licensed” Vatican Library Collection of products pre-approved by UVPR Internet site or catalogue sales program provided, however, that the display of Sublicensed Products on the Sublicensee’s website shall not be prohibited by, and shall not constitute any breach or violation of this clause (iv), (v) market and sell Sublicensed Products on television home shopping channels, except in conjunction with, and through sales at the Sublicensee’s  most favorable wholesale prices for similar quantities to Sublicensor’s exclusive “officially licensed” Vatican Library Collection home shopping channel sublicense, or (vi) market and sell to stores located in Vatican City and/or its extra-territorial domains.

Notwithstanding the foregoing grant of rights, Sublicensor reserves the right to manufacture and sell, or to sublicense third parties to manufacture and sell, products similar to the Sublicensed Products, but solely for sale as limited editions or collectibles contingent upon UVPR approval.

Sublicensee may not sell Sublicensed Products to any wholesaler or retailer or any other entity when Sublicensee knows or has reason to believe that the Sublicensed Products will be sold by street vendors and/or other non-conventional manners of distribution.

Sublicensee shall also not manufacture, sell or distribute the Sublicensed Products to any party or entity who changes, alters or adds to the Sublicensed Products in any manner whatsoever and then resells or distributes the Sublicensed Products to retailers, wholesalers, vendors or the general public, unless approved in advanced in writing by Sublicensor contingent upon UVPR approval.

2.2  Logo Sublicense.  Sublicensor hereby grants to Sublicensee a nonexclusive sublicense to use the Logo and logotype “The Vatican Library Collection” on or in association with the Sublicensed Products in the Territory and on all Advertising Material associated therewith.  Sublicensed Products shall be sold, distributed and advertised with appropriate labels, hang tags, trademark notices and other attributes and identification which identify them with Sublicensor.

2.2.1 The logo and logotype is the one specifically approved by UVPR and indicated on Schedule 2.2.1 

2.2.2 Sublicensee shall be authorized to utilize the name and approved logo “The Vatican Library Collection” in order to represent to the public that Products manufactured and sold by Sublicensee hereunder pursuant to the rights granted herein are officially sanctioned by The Vatican Library.  Hangtags/labels utilized for Sublicensed Products shall read “The Vatican Library Collection” and bear the Logo. Sublicensor shall provide specific graphic artwork for labels, 

4

hangtags or advertising materials in which “The Vatican Library Collection” name and/or logo is used.  All packaging, “text” labeling or advertising using the same requires the prior written approval of Sublicensor, who must already have prior written approval from UVPR.  A copy of the logo and graphic standard for The Vatican Library Collection is attached as Schedule 2.2.1.

2.3  No Combination.  No material from any Properties or the Logo shall be combined in any Sublicensed Product with any characters, images, products or trademarks of any other party without Sublicensor’s prior written approval contingent upon UVPR approval, except for Sublicensee’s trademark and design, and line and price listings.

2.4  No Sublicense.  Sublicensee shall not have any right to sublicense or transfer in any way the rights granted to it by Sublicensor under this Agreement.

2.5  Reservation of Rights. Sublicensee has no right in and to the Properties and Logo which fall outside the provisions specifically stated in this Agreement.

3.

Cooperation.  Each of the parties acknowledges that the development of the Sublicensed Products will be a cooperative process requiring the contributions and special expertise, documents and personnel of each party as provided in this Agreement. Each party will appoint a project coordinator to facilitate the tasks to be performed by such party under this Agreement.

4.

Representations and Warranties.

4.1  Sublicensor Representations and Warranties.  Sublicensor hereby represents and warrants, both as of the Commencement Date and continuing thereafter until the termination date of the Agreement, that it has the right and power to grant the sublicense granted herein, there are no other agreements with any other party in conflict therewith and Sublicensor has no actual knowledge that the Properties or the Logo infringe any copyright or trademark of any third party.

4.2  Sublicensee Representations, Warranties and Covenants.  Sublicensee hereby represents, warrants and covenants as follows, both as of the Commencement Date and continuing thereafter:

4.2.1 Sublicensee is experienced and knowledgeable in the manufacture, sale and distribution of products similar to the Sublicensed Products and has adequate resources and experience to fulfill its obligations set forth herein.

4.2.2 Sublicensee agrees not to directly or indirectly produce or manufacture or permit the production or manufacture of Sublicensed Products with the use of prison, child or forced labor.

4.2.3 Sublicensee has the right and power to perform the obligations set forth herein, and there are no other agreements with any other party in conflict herewith and for the duration of this Agreement.

4.2.4 No injurious, deleterious or toxic substances shall be used in any Sublicensed Products, and the Sublicensed Products will be manufactured, advertised and sold in compliance with all applicable laws and regulations. It is the exclusive and sole responsibility of the 

5

Sublicensor and the Sublicensee to ascertain the current laws regarding these issues in the country in which the Sublicensed Products are being produced

4.2.5 Sublicensee shall use all reasonable efforts to develop and manufacture the Sublicensed Products so that they will not cause harm when used as instructed and with ordinary care for their intended purpose. Consequently, the Sublicensor and the Sublicensee are the ones solely and exclusively liable to the possible harm that the manufacturing of products might produce.

4.2.6 All services provided by Sublicensee hereunder will be performed in a skillful, competent and workmanlike manner in accordance with first-class industry standards.  Sublicensee warrants that the Sublicensed Products will be of high quality in design, material and workmanship and suitable for their intended purpose.

 4.2.7 The Sublicensor and Sublicensee are the ones solely and exclusively liable for the violation of any such laws and regulations, and will guarantee that the Sublicensed Products will be manufactured, distributed and sold in strict compliance with all applicable laws and regulations.   

5.

Term. This Agreement and the sublicense granted herein shall commence on the Commencement Date and shall continue for a term of approximately three (3) years ending June 30, 2008, unless earlier terminated as provided herein. Sublicensee shall have the right and option to extend the term for an additional five (5) years by written notice delivered to Sublicensor no less than ninety (90) days prior to expiration of the original term, during the continuance of Sublicensor’s License Agreement, as the same may be extended or renewed. (See Schedule 5 hereto.)

6.

Compensation.

6.1  Advance Sublicense Fee.  Concurrent with the execution of this Agreement (or in installments as specified in Schedule 6 hereto), Sublicensee shall pay to Sublicensor an advance royalty of $150,000 (“Advance Sublicense Fee”) as a nonrefundable advance to be set off and credited against minimum annual Royalties due to Sublicensor under Section 7 for the initial year of the term hereof. (See Schedule 6 hereto.) 

If Sublicensor has not received the Advance Sublicense Fee due on the execution of this Agreement, Sublicensor shall have the right to terminate this Agreement, with immediate effect, by providing Sublicensee with written notice of termination. 

6.1.2 It is the exclusive responsibility of the Sublicensor to immediately inform UVPR of the termination of this Agreement.

6.2  Royalties.  Sublicensee agrees to pay to Sublicensor during the term of this Agreement the following Royalties: 

6.2.1  ten percent (10%) of Sublicensee’s Receipts for the Sublicensed Products sold (as the term “sold” is defined in subsection 6.2.2 below) by Sublicensee.

6.2.2  A “sale” shall be deemed to have occurred and a Sublicensed Product shall be considered “sold” by Sublicensee when such Sublicensed Product is paid for. Sublicensee 

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shall make commercially reasonable efforts to collect monies due on its sales of Sublicensed Products.

7.

Minimum Royalty.  Sublicensee agrees to pay to Sublicensor a minimum annual Royalty during each year of the term of this Agreement in accordance with Schedule 7 attached hereto and incorporated herein by reference.

7.1  Payment of Minimum Royalties.  In the event the actual Royalty amounts owed to Sublicensor by Sublicensee for any year or period pursuant to Section 6.2 are less than the minimum annual Royalty as specified in this section, Sublicensee shall pay the difference to Sublicensor within fifteen (15) days following the end of the applicable year or period. 

7.2  Termination Right.  In the event the actual Royalties payable by Sublicensee pursuant to Section 6.2 for any year are less than the minimum Royalty amounts set forth in Schedule 7, Sublicensor shall have the right, at its option and in its sole discretion, to terminate this Agreement within sixty (60) days following the end of such year, effective as of the date of such notice.  In the event of such termination, Sublicensee shall be released from its obligation for future minimum annual Royalties but shall remain responsible for the shortfall for the prior year.  If Sublicensee does not sell the minimum sales units for each Product category listed on Schedule 1.5 Sublicensor shall have the right, at its option and in its sole discretion, to terminate this Agreement or delete that Product from this Agreement upon sixty (60) days written notice by Sublicensor to Sublicensee but said deletion shall not serve to lower the total minimum Royalty payable by Sublicensee. However, should the terms of this Agreement be changed, such change must be approved by UVPR pursuant to Section 19.1.

7.1.1  If separate categories of Sublicensed Products with separate minimum annual royalty amounts and a separate Advance Sublicense Fee are covered by this Agreement, each such separate category of Sublicensed Products will be accounted for independently.  No royalties shall be paid to Sublicensor under Section 6.2 with respect to sales and licensing of a Sublicensed Product (or separate category thereof) during the initial year of the term hereof until the full amount of the Advance Sublicense Fee attributable to that Sublicensed Product (or separate category) has been fully recouped by Sublicensee.  

7.1.2  It is the exclusive and sole responsibility of the Sublicensor to immediately inform UVPR of the termination of this Agreement.

7.3  Payment.  Sublicensee shall pay to Sublicensor all Royalties owing under Section 6.2 for each calendar quarter no later than fifteen (15) days following the last day of such quarter.  All Royalties and other amounts payable to Sublicensor in accordance with the provisions of this Agreement are payable in United States dollars by check made payable to Sublicensor and delivered to the address set forth in Section 22.11 or at such other office or by such other method as Sublicensor may from time to time designate in writing.  A duplicate copy of the payments due to Sublicensor shall be sent by Sublicensor to UVPR. Each Royalty declaration must follow the requirements of Section 5.2 of the main License Agreement, a copy of which declaration and payment must also be sent to UVPR by Sublicensor.

7.3.1 Late Payments.  Late payments shall be subject to a late payment charge equal to 1% per month from the date such payments were originally due until paid in full. A copy of 

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documentation relative to such late payment received by Sublicensor shall be sent to UVPR by Sublicensor.

7.4  Taxes and Deductions.  If any country imposes a withholding tax against Sublicensor with respect to the Royalties payable to Sublicensor by Sublicensee on sales of the Sublicensed Products in such country, and Sublicensee pays such tax on behalf of Sublicensor, Sublicensee may deduct the amount of such withholding tax from the Royalties owing to Sublicensor hereunder on the condition that (i) such tax is an income tax as to which a foreign tax credit is allowable to Sublicensor under the current Internal Revenue Code, and (ii) Sublicensee furnishes to Sublicensor such information as Sublicensor requires to evidence Sublicensor’s right to credit such withholding tax against its United States federal income tax liability.

7.5  Royalty Statements.  Sublicensee shall furnish to Sublicensor, at the same time it makes payment of Royalties, a full and complete statement, duly certified by the Chief Financial Officer of Sublicensee to be true and accurate, showing in reasonable detail the basis upon which such Royalties were calculated, including without limitation (i) the number of each type of Sublicensed Product sold during the calendar quarter in question, (ii) the total gross sales revenues for each such type of Sublicensed Product, (iii) an itemization of all allowable deductions, if any, (iv) the sales price for each Sublicensed Product, (v) the amount of Royalties due with respect to such sales, and (vi) such other pertinent information as Sublicensor may reasonably request from time to time. 

7.5.1  Sublicensor has the exclusive and singular obligation to inform UVPR every calendar quarter of the income generated from such Royalties. A projected late report should be accompanied by a thorough explanation by Sublicensor as to the reason for its tardiness.

7.5.2  Sublicensor has the responsibility of informing UVPR of any material controversy between Sublicensor and Sublicensee in accordance with the provisions of Section 21.

8.

Retention of Records.  During the term of this Agreement and for a period of five (5) years thereafter, Sublicensee shall keep complete and accurate records of:

The number and type of Sublicensed Products produced pursuant to this Agreement;

The gross sales recorded;

The taxes, duties, shipping costs, insurance costs and approved allowances incurred in connection with said sales; and

The net returns.

9.

Audit Right.  Sublicensor, by its duly authorized agents and representatives, shall have the right to audit such books, documents and other material from time to time and shall have access thereto during ordinary business hours, and shall be at liberty to make copies of such books, documents and other material.  Sublicensor shall maintain the confidentiality of all information obtained by Sublicensor as a result of auditing Sublicensee and shall not reveal any such information to any third party except in connection with legal action or such other proceeding implemented by Sublicensor to enforce any of Sublicensor’s rights under this Agreement.  Sublicensor shall conduct no more than one audit in any calendar year.

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10.

Underpaid Royalties.  If any audit of Sublicensee’s books and records reveals that Sublicensee has failed to account for and pay Royalties owing to Sublicensor, and the amount of any Royalties which Sublicensee has failed properly to account for and pay for any annual accounting period exceeds, by three percent (3%) or more, the Royalties actually accounted for and paid to Sublicensor for such period, Sublicensee shall, in addition to paying Sublicensor such past due Royalties, reimburse Sublicensor for its direct out-of-pocket expenses incurred in conducting such audit, together with interest on the overdue Royalties, such interest to be at a monthly rate of 1.5 percent from the date past due royalties were due until the date royalties are paid in full in accordance with Section 7.3.1.

11.

Indemnification.

11.1  Right to Indemnification.  Sublicensee hereby agrees to indemnify and hold harmless Sublicensor, UVPR and BAV, the Vatican City State and the Roman Catholic Church and their respective subsidiaries, affiliates, successors and assigns, and the officers, directors, employees and agents of each of the foregoing (collectively, the “Indemnified Parties”) from and against any and all claims, demands, losses, costs, liabilities and expenses, including reasonable attorneys’ fees and costs, arising out of or related to the design, manufacture, distribution and sale of Sublicensed Products by Sublicensee pursuant to this Agreement.

11.2  Reimbursement Upon Demand. Sublicensee shall immediately reimburse an Indemnified Party upon demand for all damages, losses, liabilities, awards, costs and expenses, including reasonable attorneys’ fees and costs, incurred by the Indemnified Party to investigate, defend and/or settle any and all claims or suits or proceedings for which Sublicensee has an obligation to indemnify and hold harmless such Indemnified Party, provided such Indemnified Party gives prompt notice to Sublicensee of any such claim or suit or proceeding.

11.3  Claims Procedures.  With respect to any claims falling within the scope of the foregoing indemnifications:  (a) the indemnified party (the “Indemnitee”) agrees promptly to notify Sublicensee of and keep Sublicensee fully advised with respect to such claims and the progress of any suits in which Sublicensee is not participating; (b) Sublicensee shall have the right to assume, at its sole expense, the defense of a claim or suit made or filed against Indemnitee and for which it is claiming indemnification; (c) Sublicensee shall have the right to participate, at its expense, in any suit instituted against it; (d) Sublicensee shall have the right to approve any attorneys selected by Indemnitee to defend it; and (e) Indemnitee shall not settle any claim or suit without the prior written approval of Sublicensee.

12.

Commercialization Efforts.

12.1  Manufacture and Sale of Sublicensed Products.  Sublicensee agrees to make necessary arrangements so that the manufacture, packaging and introduction into distribution channels of each Sublicensed Product will occur promptly after Sublicensee and Sublicensor have approved the final production version of each Sublicensed Product contingent upon approval of each product by UVPR.  Sublicensee agrees to manufacture the Sublicensed Products in sufficient quantities to meet the reasonably anticipated demand for such Sublicensed Products.  Sublicensee also agrees to exercise reasonable efforts to advertise and promote the Sublicensed Products at its own expense and to use its best efforts to sell the Sublicensed Products in the Territory.  In order to assist Sublicensor in reviewing Sublicensee’s marketing activities, Sublicensee agrees to furnish 

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Sublicensor upon request complete information evidencing, on a country-by-country basis, Sublicensee’s efforts to market the Sublicensed Products in such countries.

12.2  Business Development Plans.  Sublicensee shall, at least annually, provide Sublicensor with a brief written tentative business plan indicating the countries in which Sublicensee proposes to manufacture and sell Sublicensed Products during the following twelve (12) month period. Sublicensee agrees that, upon request, it will meet with Sublicensor on a biannual or more frequent basis to review promotional activities, production and sales during the year.

12.3  Notification Requirements.  Notwithstanding anything to the contrary contained in this Agreement, Sublicensee acknowledges and agrees that (i) Sublicensee shall give Sublicensor reasonable written notice prior to Sublicensees’ initial sale or other exploitation of a Sublicensed Product in each country outside the United States, (ii) Sublicensee shall not, unless Sublicensor, who must already have prior written approval from UVPR, otherwise consents in writing, sell or otherwise exploit a Sublicensed Product in any such country until Sublicensor have had an opportunity, at its election, to file an application for registration of the Trademarks in any such countries, and (iii) Sublicensee shall not, unless Sublicensor otherwise consents in writing, sell or otherwise exploit a Sublicensed Product in any country outside the United States and the British Commonwealth (including Canada) in which Sublicensor has notified Sublicensee that there exists litigation, or an unresolved dispute, with respect to registration of the Trademarks. 

The Sublicensor has the exclusive and singular obligation to inform UVPR every six months of such the activities.  

It is hereby guaranteed that the UVPR, the BAV, the Vatican City State, and the Roman Catholic Church are completely and fully excluded from any legal action that arises from such infringements unless caused directly by the aforementioned parties.

12.4

  Restrictions on Sales of Sublicensed Products.

12.4.1 The Sublicensed Products shall be sold to the public through normal retail outlets only in the manner in which articles of the same general description are generally merchandised to the public.  Sublicensee shall not use or sell the Sublicensed Products as premiums, or distribute the Sublicensed Products to parties which the Sublicensee has reason to believe intend to use or sell the Sublicensed Products as premiums, except with Sublicensor’s prior written consent.  Use or sale of the Sublicensed Products as “premiums” for purposes of the foregoing provisions shall mean the use or sale of the Sublicensed Products in connection with promotional programs designed to promote the sale of the Sublicensed Products or other goods or services of the Sublicensee or a third party, including without limitation joint merchandising programs, give-aways, sales incentive programs and traffic builders.

12.4.2 Nothing herein shall prevent Sublicensee from doing any of the foregoing when done exclusively for the purpose of promoting the sale of the Sublicensed Products or from offering the Sublicensed Products bundled with third parties’ goods or services, subject to the prior written approval of Sublicensor (such approval not to be unreasonably withheld or delayed) and subject always to the payment of Royalties pursuant to the provisions of Section 6  as if the Sublicensed Products had been sold at Sublicensee’s normal wholesale prices.

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13.

Direct Purchase Right.  Sublicensor shall have the right to purchase Sublicensed Products from Sublicensee (for distribution and sale directly or indirectly by Sublicensor) at pricing equal to the best pricing and terms offered by Sublicensee to third parties, provided, however, that Sublicensor shall not distribute and sell such products, directly or indirectly, in a manner that could reasonably be expected to be disruptive to the marketing of the Sublicensed Products then being actively conducted by Sublicensee. Such purchases by Sublicensor shall be subject to payment of the Royalty provided for in Section 6 hereof. No more than 5% of each production run per product may be purchased by Sublicensor or Affiliates under this clause. 

  Sublicensor has the exclusive and singular obligation to inform the UVPR every six months of such activities.

14.

Free Copies.  In addition to the random production samples of the Sublicensed Product to be supplied by Sublicensee to Sublicensor free of charge under Section 15.5, Sublicensee shall, upon official publication of a Sublicensed Product hereunder, deliver ten (10) free copies of such Sublicensed Product to Sublicensor and two (2) free copies of such Sublicensed Product to UVPR. 

15.

Approval Procedures.

15.1  General.  Sublicensee shall comply with all reasonable procedures which Sublicensor may from time to time adopt regarding its approval of Advertising Material and of Sublicensed Products which Sublicensee proposes to manufacture and sell under this Agreement.  These approval procedures shall be implemented using prescribed forms to be supplied to Sublicensee by Sublicensor and shall incorporate the basic approval requirements and steps outlined in the following sections.  Sublicensee agrees to retain all materials relating to approvals in its files while this Agreement remains in effect and for one year thereafter.  Sublicensor’s approval rights shall be exercised in accordance with this Section 15.  Materials for review shall be sent to Sublicensor at the address set forth in Section 22.11 or such other address as Sublicensor may designate from time to time.

For the purposes of this approval clause, all final approvals for proposed Sublicensed Products are subject to prior approval by UVPR through Sublicensor. “Product” shall be deemed to include, but is not limited to the following: product, design, use of celebrities, promotions, and the format and content of press releases, press kits and advertising materials. Sublicensee further agrees that the content of any interviews or articles for publication in any media shall be limited to information relating to Sublicensee's products and marketing programs and the non-economic terms of this Agreement.  

15.2  Approval of Sublicensed Products.  Sublicensee shall comply with the following steps for each Sublicensed Product as requested by Sublicensor from time to time as may be necessary for a Sublicensed Product, obtaining Sublicensor’s written approval, for the step of the procedure requested. Sublicensor must already have prior written approval from UVPR.  Unless by prior written notice from Sublicensor, following written approval of UVPR, it is exempted from such step with respect to a specific Sublicensed Product, for each different Sublicensed Product, Sublicensee shall submit to Sublicensor for its prior review and approval the following materials as requested by Sublicensor:

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(i)

the Vatican Library’s shelf number identifying the name of the collection, the number of the manuscript or item and the exact folio or page number, and the Vatican Library copyright information;

(ii)

a concept for the proposed Sublicensed Product, demonstrating by rough artwork, written description and product design the appearance and operation, including sound and interactive capabilities, if any,  of the proposed Sublicensed Product;

(iii)

finished artwork, text and/or audio for the Sublicensed Product, including the exact use of the Trademarks on or in connection with the Sublicensed Product;

(iv)

a reproduction master of the Sublicensed Product showing the exact form, quality, number and operational capabilities the Sublicensed Product will have when manufactured in production quantities;

(v)

three (3) identical production samples of each Sublicensed Product, to be submitted immediately to Sublicensor upon commencement of production; and

(vi)

any other materials Sublicensor deems necessary to review and approve proposed Sublicensed Products.

15.2.1 Acknowledgement.  Sublicensor has advised Sublicensee and Sublicensee acknowledges that final product approval rests with Ufficio Vendita Pubblicazioni e Riproduzioni dei Musei Vaticani of the sovereign state of Vatican City (“UVPR”).  Sublicensee acknowledges the following approval clause contained in Sublicensor’s main License Agreement with UVPR:

Each Product must be approved in writing by [UVPR] before its sale, distribution or commercial presentation, which approval shall not be unreasonably withheld.  [UVPR] shall consult the Prefect of the Vatican Library before granting such approval.  All artistic and business decisions shall be made by Sublicensee, provided, however, that [UVPR] shall be accorded the right to review in advance of publication the content of each of the Products to insure its historical accuracy to determine whether in the exercise of its reasonable judgment the Project could subject the Vatican and/or the Catholic Church to criticism, embarrassment or obloquy.  Accordingly, each Product must be specifically approved by [UVPR].  [UVPR] shall have thirty (30) days from execution of this Agreement to review and approve any items scheduled for production in accordance with this Paragraph.  If [UVPR] disapproves of the content of a particular Product, it shall notify the Sublicensee of its reasons so that the Sublicensee may, if possible, make the necessary and appropriate changes.  If there has been no written notice of disapproval within thirty (30) calendar days of submission of such material by Sublicensee and unless there has been a written request for extensions for reasonable cause made within said thirty (30) calendar days, the submission shall be deemed approved.

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15.3  Approval of Advertising Material.  With respect to each different item of Advertising Material which Sublicensee (or any party acting on its behalf) proposes to produce and use under this Agreement, Sublicensee shall submit to Sublicensor such of the following materials as may be requested by Sublicensor from time to time and as necessary with respect to the particular Advertising Material, for the prior review and approval of Sublicensor and UVPR: 

(i)

proposed written copy and text for the item of Advertising Material, with attached rough art showing how the Logos will be used in connection with the copy;

(ii)

final copy for the item, with finished “lift” art, showing the use of the Logo;

(iii)

finished “mechanicals” for the item; and 

(iv)

a final printed sample of the item where feasible (as, for example, in the case of labels, hangtags, printed brochures, catalogs and the like).

Sublicensee shall comply with all of the foregoing approval steps for each item of Advertising Material, obtaining Sublicensor’s and UVPR's written approval at each step of the procedure, unless by prior written notice from Sublicensor and following written approval by UVPR, it is exempted from any such step with respect to a specific item of Advertising Material.  All Advertising Material shall include the copyright information (© Biblioteca Apostolica Vaticana).  Any Advertising Material that fails to include the copyright information shall not be approved.  Further, in connection with each submission under this Section 15.3, Sublicensee shall describe the proposed uses of the Advertising Material (including the media to be used) and the duration of such proposed uses.  In such cases, Sublicensor’s and UVPR's approval of the Advertising Material shall extend only to those proposed uses, duration of use, etc., described in Sublicensee’s submissions.

Sublicensee shall obtain Sublicensor’s written approval before using any celebrity or other spokesperson for the Sublicensed Product. Sublicensor must already have prior written approval from UVPR.

Sublicensee shall not (i) issue any press releases, without the express prior written authorization for the format and content from Sublicensor, who shall already have prior written approval from UVPR, or (ii) discuss matters other than the development of the Sublicensed Products and related marketing programs in any interviews with the press or other media concerning this Agreement or any related subject matter.

15.4  Time for Approval by Sublicensor. Sublicensor agrees to use reasonable efforts to notify Sublicensee in writing of the approval or disapproval by Sublicensor and UVPR of any materials submitted to Sublicensor under Section 15.2 and Section 15.3, within thirty (30) business days after Sublicensor's receipt of such materials. Sublicensor will endeavor to notify Sublicensee as soon as practicable of any changes to the content and context of the proposed materials.  Sublicensee will exercise its best efforts to provide materials to Sublicensor early in the production process so as to allow as much time as possible for approval by UVPR. Sublicensor may need an additional thirty (30) business days for approvals on new images in order to secure the required approval from UVPR. Sublicensor’s approval shall not be unreasonably withheld or delayed.

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15.5  Maintenance of Quality; Inspection of Production Facilities.  Sublicensee agrees to maintain the quality of each Sublicensed Product up to the specifications, quality and finish of the production sample of such Sublicensed Product approved by Sublicensor and UVPR under Section 15.2.  Sublicensee agrees not to change the Sublicensed Product in any respect that would materially alter either its looks or its quality, or to make any change in the artwork for the Sublicensed Product, without first submitting to Sublicensor samples showing such proposed changes and obtaining Sublicensor’s written approval of such samples in accordance with Section 15.2. Sublicensor must already have prior written approval from UVPR. From time to time after it has commenced manufacturing any Sublicensed Product, Sublicensee, upon Sublicensor’s request, shall furnish free of charge to Sublicensor a reasonable number of samples not to exceed four (4) from any production run of any Sublicensed Product specified by Sublicensor. Sublicensor shall have the right to withdraw its approval of any Sublicensed Product if the quality of such Sublicensed Product ceases to be acceptable to Sublicensor.

15.6  Unapproved Sublicensed Products or Advertising Materials.  Sublicensee shall not have the right to manufacture, offer for sale, distribute or sell any Sublicensed Product or use any item of Advertising Material unless Sublicensee has complied with all of the approval procedures and requirements set forth in this Section 15 and has obtained Sublicensor’s and UVPR's prior written approval of such Sublicensed Product or item of Advertising Material.  Failure by the Sublicensee to comply with the provisions of this Section 15 shall constitute a material breach of this Agreement and shall be grounds for termination of this Agreement by Sublicensor, as provided in Section 20.1 hereof.

15.7  Access to Vatican Library.  Pursuant to its main License and BAV terms and conditions, Sublicensor has the right of a limited access to the collection of the Vatican Library and of the Salone Sistino and the Library Gallery on a prescribed basis by each of these entities for purposes of obtaining/creating designs for Sublicensed Products.  The Sublicensee must contact directly and in writing the Prefect of the BAV and follow the prescribed procedure to have access to the BAV. This must be done on reasonable notice (two business weeks’ prior written notice shall constitute reasonable notice) and upon terms and conditions specified by the BAV.  Original artwork may not be used in molds or removed from the premises.  All work using the originals must be performed on the premises (e.g., copied by film, video, artist sketches) and under the supervision of the BAV.  All costs incurred in obtaining artwork, photographs, transparencies or otherwise in utilizing BAV staff shall be the responsibility of Sublicensee, and all time schedules and arrangements for access by Sublicensee to original art works shall be approved in writing by BAV. Furthermore, in accordance with the main License, transparencies must be returned to BAV within ninety (90) days as stated in the BAV protocol regarding this activity. 

Images granted for reproduction from BAV may not be reproduced in any way, shape, or form and for any means and/or purposes other than the ones declared and approved by the UVPR and the BAV. It is prohibited to concede such items to third parties. It is the sole and exclusive responsibility of the Sublicensor to ensure that this clause is being strictly implemented by their Sublicensees. 

Transparencies and any other images of the Properties are obtained only from BAV following its terms and conditions.

15.8  Translations. All translations of written material used on or in connection with the Sublicensed Products or Advertising Material shall be accurate, and Sublicensee, when 

14

submitting the Sublicensed Products and the Advertising Material for approval, shall provide Sublicensor with accurate English translations of all such written materials.

15.9  Use of Properties.  None of the Properties or Logo shall be shown on or in any product or item of advertising, promotional or other material used by, endorsing or identifying Sublicensee or the products (including the Sublicensed Products) or services of Sublicensee without Sublicensor’s prior written approval. Sublicensor must already have prior written approval from UVPR.  Neither the Properties nor the Logo shall be combined in any Sublicensed Products or Advertising Material with any other characters, images, products or logos of any other party without Sublicensor’s and UVPR’s prior written approval.

15.10  Transactions with Other Sublicensees.  Sublicensee shall not, without Sublicensor’s prior written consent contingent upon UVPR prior written approval, (i) sell or deliver to another Sublicensee the artwork, films, molds or other devices used by Sublicensee to produce the Sublicensed Products or to create Advertising Material or (ii) print or otherwise produce any items using the  Logo for another Sublicensee.

16.

Copyright Provisions.

16.1  Rights in Copyrights.  Sublicensee shall not at any time during the term hereof or thereafter dispute or contest, directly or indirectly, Sublicensor’s and UVPR’s right and title to the Properties.  Sublicensee shall not acquire any rights in any copyrights or other rights in the Properties, except for the Sublicense granted herein.

16.2  Copyright Notices.  Sublicensee agrees to place on all Sublicensed Products and on all Advertising Material the copyright notice or notices in the name of Sublicensor specified below or as otherwise specified in writing by Sublicensor from time to time.  All Sublicensed Products shall contain the following notice of copyright:  ãBiblioteca Apostolica Vaticana.  Nothing herein contained shall prohibit Sublicensee from using its own trademark(s) on the Sublicensed Products and its own copyright notice on the Sublicensed Products where said Sublicensed Products contain independent material which is the property of Sublicensee.

16.3 Affixation of Notices; Name of Copyright Proprietor. Sublicensee acknowledges that proper copyright notices must be permanently affixed to all Sublicensed Products and Advertising Material and to any separate portions of Sublicensed Products or Advertising Material which contain the Properties or any portion thereof and which are intended to be used separately by the purchaser or ultimate user.  Sublicensee agrees that it will not, without Sublicensor’s prior written consent, affix to the Sublicensed Products or the Advertising Material a copyright notice in its name or the name of any person, firm or corporation other than Sublicensor.

16.4  Ownership and Assignment.  In accordance with the main License Agreement between UVPR and Sublicensor and the rights granted therein, Sublicensor shall own all right, title and interest, including all copyrights and copyright renewals and extensions, with respect to any Sublicensed Product or any portion or component thereof using or incorporating the Properties, except as to such portion or component thereof as is a “derivative work” or “new work” (the “Sublicensee’s Work Product”). 

16.5  Cooperation.  Each party agrees to take such actions and to execute, acknowledge and deliver to the other party such assignments, documents, instruments and 

15

agreements as either party shall request to effect or evidence the parties’ respective ownership rights described herein.

17.

Insurance.  Sublicensee shall obtain and maintain, at its sole cost and expense, a comprehensive general liability insurance policy from a recognized insurance company with coverage limits of not less than $1,000,000 per occurrence for bodily injury and property damage and products liability.  Such insurance shall be in the form and with insurers acceptable to Sublicensor and UVPR and shall include coverage for all premises and operations, broad form property damage, product liability and contractual liability (including obligations assumed under this Agreement).  The policies shall name each of Sublicensor, UVPR, BAV, the Vatican City State and the Roman Catholic Church as additional insureds.  Sublicensee shall furnish Sublicensor with evidence of the required insurance coverage within ten (10) days following execution hereof and shall thereafter provide Sublicensor with written notice of any change, replacement or termination of such insurance. In its turn Sublicensor must provide this information to UVPR within 10 days of receipt of insurance certificate. 

Such insurance shall include coverage of Sublicensor, UVPR, BAV, the Holy See and their respective directors, officers, agents, employees, assignees and successors.  Within thirty (30) days after execution of this Agreement by Sublicensor, Sublicensee shall cause the insurance company or companies issuing such policies to issue certificates to Sublicensor confirming that such policies have been issued and are in full force and effect and provide coverage of Sublicensor as required by this Section 17, and also confirming that before any cancellation, modification or reduction in coverage of any such policy, the insurance company shall give Sublicensor thirty (30) days prior written notice of such proposed cancellation, modification or reduction.  Any insurance carried by Sublicensor or the other named insureds shall be deemed excess insurance not subject to contribution.

18.

Compliance with Laws.  Sublicensee shall, at Sublicensee’s expense, obtain all necessary governmental approvals, permits and sublicenses and comply with all laws, rules and regulations applicable to the manufacture, production, distribution, export, import, sale and use of all Sublicensed Products, including without limitation any safety studies.  Sublicensee shall have sole responsibility for any warning labels, packaging and instructions as to the use of the Sublicensed Products or any components or properties thereof.

19.

Sublicensor Approvals.  Except as otherwise expressly stated, any approval or consent of Sublicensor provided for herein may be given or withheld by Sublicensor in its sole discretion for any reason or no reason, subject to obtaining such consent or approval of UVPR/BAV as may be required hereunder. Except as otherwise expressly provided in the main License Agreement or in Section 19.1 below or elsewhere in this Sublicense, UVPR/BAV shall approve or disapprove requests for required approvals or consents within ten (10) business days following receipt of a written request, or the request shall be deemed approved.

UVPR Approvals.  Sublicensor shall provide UVPR with not less than thirty (30) days advance written notice of its intent to terminate or modify the material terms of this Sublicense.  Sublicensor agrees that subject to the following provision it shall obtain UVPR’s approval for any such modification prior to implementing such modification or termination, which approval shall not be unreasonably withheld.  Within ten (10) business days of its receipt of notice of Sublicensor’s intent to terminate or modify, UVPR shall either formally approve of the intended action or if it disapproves, it shall state the reasons for its disapproval in writing.  In the event that UVPR fails to respond in writing to the notice of intended action within said ten 

16

(10) business days, it shall be deemed to have approved of said action.  The parties understand and agree that the business terms of the Sublicense, including but not limited to the Territory, Minimum Royalties, Royalty percentage, and other substantive business terms fall within the discretion of Sublicensor.

20.

Breach and Termination.

20.1  Immediate Right of Termination.

20.1.1 In addition to any other right of termination contained elsewhere herein, Sublicensor shall have the right to terminate this Agreement immediately, by giving written notice to Sublicensee, in any of the following situations:

(a)

if Sublicensee becomes subject to any voluntary or involuntary order of any governmental agency involving the recall of any of the Sublicensed Products because of safety, health or other hazards or risks to the public;

(b)

if, other than under Title 11 of the United States Code or a similar law of any other country, Sublicensee becomes subject to any voluntary or involuntary insolvency, bankruptcy or similar proceedings, or an assignment for the benefit of creditors is made by Sublicensee, or an agreement between Sublicensee and its respective creditors generally is entered into providing for extension or composition of debt, or a receiver is appointed to administer the assets of Sublicensee, or the assets of Sublicensee are liquidated, or any distress, execution or attachment is levied on such of its manufacturing or other equipment as is used in the production and distribution of the Sublicensed Products and the same remains undischarged for a period of thirty (30) days;

(c)

if Sublicensee breaches the provisions of Section 2.4 prohibiting sublicensing;

(d)

if Sublicensee breaches the provisions of Section 22.1 prohibiting assignments;

(e)

if there is (i) a transfer of twenty-five percent (25%) or more of the capital stock of the Sublicensee in a single transaction or a series of transactions, (ii) if there is a transfer of the business and/or substantially all of the assets of the Sublicensee in a single transaction or a series of transactions, or (iii) if there is a merger or consolidation of Sublicensee with any other entity; 

(f)

if Sublicensee undergoes a significant change in management;

(g)

if any changes are made to the terms of the Sublicense without written approval of UVPR pursuant to Section 19.1;

(h)

if Sublicensee is found guilty of a felony and/or becomes involved in activities that publicly denigrate or go against the doctrine of the Catholic Church and as a consequence tarnish the good name and image of UVPR and/or BAV and/or the Vatican City State and/or the Roman Catholic Church; or

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(i)

if Sublicensee fails to perform or generate any income within two (2) years of signing this Agreement.

20.2  Curable Breaches.

If either party breaches any of the terms and provisions of this Agreement, other than those specified in Section 20.1, and the party involved fails to cure the breach within thirty (30) days after receiving written notice by certified or registered mail from the other party specifying the particulars of the breach, the non-defaulting party shall have the right to terminate this Agreement by giving written notice thereof to the defaulting party.

Not by way of limitation, Sublicensor shall have the right to terminate this Agreement (subject to Section 20.2.1), by giving written notice to Sublicensee, in any of the following events:

(a)

if Sublicensee makes, sells, offers for sale or distributes any Sublicensed Product or Advertising Material without having the prior written approval of Sublicensor and UVPR as required by Section 15 or makes any use of the Properties or Trademarks not authorized under this Agreement;

(b)

if Sublicensee fails to make any payment hereunder by the date such payment is due, or Sublicensee fails to submit complete and specific royalty statements to Sublicensor within the time periods specified in Section 7; 

(c)

if Sublicensee becomes involved in activities that will tarnish the good name and image of UVPR and/or BAV and/or Vatican City State and/or the Roman Catholic Church; or

(d)

if Sublicensee breaches any of the provisions or covenants of Sections 11, 12.4, or 16. 

Any Sublicensee breach as to a particular Sublicensed Product shall be considered a breach of the entire Agreement, and termination by Sublicensor shall be deemed to pertain to the entire Agreement and all Sublicensed Products unless Sublicensor specifies otherwise with prior written approval of UVPR. 

20.3  Effect of Termination.  Termination of this Agreement under the provisions of this Section 20 or provisions set forth elsewhere in this Agreement shall be without prejudice to any rights or claims which Sublicensor may otherwise have against Sublicensee.  Upon the termination of this Agreement, all Royalties on sales made prior to the date of termination shall become immediately due and payable to Sublicensor.  Upon the termination of this Agreement under the provisions of Section 20.1, neither Sublicensee nor its receivers, trustees, assignees or other representatives shall have the right to develop, sell, exploit or in any way deal with the Properties, Sublicensed Products, Advertising Material or Logo, except with the written approval and instructions of Sublicensor following pre-approval of UVPR. 

Sections 2.5 (“Reservation of Rights”), 4 (“Representations and Warranties”), 7.3.1 (“Late Payments”), 8 (“Retention of Records”), 11 (“Indemnification”), 16  (“Copyright Provisions”), 20.3 (“Effect of Termination”), 20.4 (“Discontinuance of Use of Logo, Etc.”), 

18

20.5 (“Disposition of Inventory Upon Expiration”), 22 (“Miscellaneous Provisions”) and any other provisions which by their nature are intended to survive shall survive any termination or expiration of this Agreement.

20.4  Discontinuance of Use of Logo, Etc.  Subject to the provisions of Section 20.5, upon the expiration or earlier termination of this Agreement, Sublicensee agrees to immediately and permanently discontinue manufacturing, selling, advertising, distributing and using the Sublicensed Products and Advertising Material, immediately and permanently discontinue using the Properties and Logo, immediately, either deliver to Sublicensor or destroy any copies, storyboards, molds, dies, patterns, devices or similar items from which the Sublicensed Products and Advertising Material were made or which contain any element of the Properties, and immediately terminate all agreements with manufacturers, distributors, affiliates and others which relate to the manufacture, sale, distribution and use of the Sublicensed Products.

20.5  Disposition of Inventory Upon Expiration.  Notwithstanding the provisions of Section 20.4, if this Agreement expires in accordance with its terms, and is not terminated for cause by Sublicensor, the provisions of this Section 20.5 shall apply.  If Sublicensee delivers to Sublicensor on or before the date thirty (30) days prior to the expiration of this Agreement a written inventory listing, on a product-by-product basis, of all Sublicensed Products in Sublicensee’s possession, custody or control as of the date of such inventory, Sublicensee shall have the right to sell any Sublicensed Products listed on such inventory for a period of six (6) months immediately following such expiration, subject to the payment of Royalties to Sublicensor on any such sales in accordance with the terms of this Agreement.  Sublicensor shall have the right (but not the obligation) to buy any or all of the Sublicensed Products listed on such inventory at Sublicensee’s cost of manufacture at the end of such six (6) month period.

21.

Communications.  Except as otherwise provided in Section 15.7, all contacts and communications of any type with UVPR or BAV in connection with or arising out of the provisions and requirements of this Agreement shall be handled exclusively by Sublicensor.  Sublicensee understands and acknowledges that it shall have no direct contact or written communication with UVPR or BAV without the prior written consent of Sublicensor.  Furthermore, Sublicensee shall promptly notify Sublicensor of the content and nature of any contact or communication that it may receive from UVPR or BAV.

22.

Miscellaneous Provisions.

22.1  No Assignments by Sublicensee.  Without the prior written consent of Sublicensor following pre-approval from UVPR, Sublicensee may not directly or indirectly assign, transfer, sublicense or encumber any of its rights under this Agreement, and any such assignment, transfer, sublicense or encumbrance shall be void. 

22.1.1 It is hereby guaranteed that the UVPR, the BAV, the Vatican City State, and the Roman Catholic Church are completely and fully excluded from any legal action that arises from such actions.

22.2 Assignment by Sublicensor.  Sublicensor (and its successors and assigns) shall have the right to assign, transfer or encumber any or all of its rights under this Agreement following pre-approval from UVPR.

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22.3  Successors and Assigns.  Subject to Section 22.1, this Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto.

22.4  Independent Contractors.  The relationship between Sublicensor and Sublicensee is that of independent contractors.  Sublicensor and Sublicensee are not joint venturers, partners, principal and agent, master and servant, or employer and employee and have no relationship other than independent contracting parties.  Sublicensee shall have no power to bind or obligate Sublicensor in any manner other than as is expressly set forth in this Agreement.

22.5  Governing Law; Dispute Resolution.

Any disagreements between Sublicensor and Sublicensee shall be resolved exclusively in the Sovereign State of Vatican City.  Sublicensor and Sublicensee each hereby consent to jurisdiction in the Sovereign State of Vatican City.  All disputes relating to this Agreement between Sublicensor and Sublicensee shall be governed by the laws of the Sovereign State of Vatican City, and Sublicensor and Sublicensee each hereby consents thereto.  All proceedings shall be conducted in the English language.

Any party to this Agreement may, upon written notice reasonably made, request that the dispute be decided by binding arbitration.  Whenever a controversy arises between Sublicensor and Sublicensee in regard to the formulation, interpretation or application of any part of this Agreement, or in regard to an alleged wrongful act by either party, and when the parties are unable to settle said controversy amicably and one party has demanded arbitration, the dispute shall be referred to a College of Arbiters in the Sovereign State of Vatican City.  The College of Arbiters shall be composed of the following three members:  one Arbiter designated by Sublicensor, one Arbiter designated by Sublicensee and the third Arbiter, who will be the President of the College, will be agreed upon by the two (2) designated Arbiters.  In the instance when a party fails to designate its Arbiter within twenty (20) days of the receipt of notification of the appointment of the first Arbiter, the President of the Tribunal of the Sovereign State of Vatican City shall appoint the second Arbiter.  If the designated Arbiters cannot agree to a third Arbiter, the President of the College of Arbiters (i.e., the third Arbiter) shall be appointed by the President of the Tribunal of the Sovereign State of Vatican City (“Tribunal”).  Every Arbiter shall be independent and impartial. 

The College of Arbiters shall have its seat in the Sovereign State of Vatican City.  There will be no appeal of its decision.  The expenses incurred by the arbitration will be assumed by the losing party.  

In any arbitration proceeding a party may be represented by legal counsel of its choice in accord with the laws of the Sovereign State of Vatican City.

Except as set forth below, the parties shall keep confidential the fact of the arbitration, the dispute being arbitrated and the decision of the Arbiters. Notwithstanding the foregoing, the parties may disclose information about the arbitration to persons who have a need to know, such as directors, trustees, management employees, witnesses, experts, investors, attorneys, lenders, insurers and others who may be directly affected.  Additionally, if a party has stock which is publicly traded, the party may make such disclosures as are required by applicable securities laws.  Further, if a party is expressly asked by a third party about the dispute or the arbitration, the party may disclose and acknowledge in general and limited terms that there is a dispute with the other party which is being (or has been) arbitrated.  Once the arbitration award has become final, if the 

20

arbitration award is not promptly satisfied, then these confidentiality provisions shall no longer be applicable.

22.6 Entire Agreement; Modification. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter set forth in this Agreement.  There shall be no amendments or modifications to this Agreement, except by a written document which is signed by all parties including UVPR.

22.7  Headings.  The headings for each article and section in this Agreement have been inserted for convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular article or section.

22.8  Severability.  Should any one or more of the provisions of this Agreement be held invalid or unenforceable by a court of competent jurisdiction, it shall be considered severed from this Agreement and shall not serve to invalidate the remaining provisions hereof.  The parties shall make a good faith effort to replace any invalid or unenforceable provision with a valid and enforceable provision such that the objectives contemplated by them when entering this Agreement may be realized.

22.9  No Waiver.  Any delay in enforcing a party’s rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of such party’s right to the future enforcement of its rights under this Agreement, excepting only an express written and signed waiver as to a particular matter for a particular period of time.

22.10  Attorneys’ Fees.  In the event of a dispute between the parties hereto or in the event of any default hereunder, the party prevailing in the resolution of any such dispute or default shall be entitled to recover its reasonable attorneys’ fees and other costs incurred in connection with resolving said dispute or default.

22.1  Notices.  Any notices required by this Agreement shall be in writing, shall specifically refer to this Agreement and shall be sent by registered or certified airmail, postage prepaid, or by prepaid nationally recognized overnight courier, or by telefax, telex or cable, charges prepaid, to the respective addresses set forth below unless subsequently changed by written notice to the other party given in accordance with this section.  Notice shall be deemed delivered upon the earlier of (i) when received, (ii) three (3) business days after post-mark of destination or (iii) the date notice is sent via telefax during normal business days.

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To 1451:

1451 International Ltd.

600 West Broadway, Suite 1520

San Diego, California 92101

Fax: (619) 515-1481

with a copy to:

Guillermo Marrero, Esq.

International Practice Group

600 West Broadway, Suite 1520

San Diego, California 92101

Fax: (619) 515-1481

To SRLLC:

Second Renaissance, LLC

870 Encanto Street

Corona, California 92881

Fax: (951) 280-0971

with a copy to:

James R. Pickett, Esq.

32847 Abana Court

Temecula, California 92592

Fax: (951) 302-7205

To Sublicensee:

Eternal Image

28175 Haggerty Road

Novi, MI 48377

Attn: Clint Mytych, President & CEO

Fax: (248) 671-5001

To UVPR:

Francesco Riccardi, Administrator

Ufficio Vendita Pubblicazioni e Riproduzioni

I-00120 Vatican City State, Europe

Fax: 011-39-06-6988-3478

22.12  Compliance with Laws.  Nothing contained in this Agreement shall require or permit Sublicensor or Sublicensee to perform any act inconsistent with the requirements of any Vatican City State law, regulation or executive order may be in effect from time to time.

22.13  Confidentiality.  Except as otherwise agreed by the parties in writing, the parties shall treat in confidence and not disclose to any third party the terms of this Agreement, except as required by law.

UVPR Approval. This Agreement and the obligations of the parties hereunder are conditioned upon obtaining the pre-approval hereof by UVPR in the form of Schedule 22.14 attached hereto and incorporated herein by reference.

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IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized representatives as of the date first set forth above.

23

 

SCHEDULE 1.5

SUBLICENSED PRODUCTS

Sublicensed products shall mean caskets and urns for funeral home use.

24

SCHEDULE 1.12

TERRITORY

Sublicensee shall have the exclusive right to manufacture and sell the Sublicensed Products in the following Territory:                                                worldwide.

25

SCHEDULE 2.2.1

The VATICAN LIBRARY COLLECTION LOGO/SEAL

26

SCHEDULE 5

TERM

This Agreement and the sublicense granted herein shall commence on the Commencement Date and shall continue for a term of approximately three (3) years ending June 30, 2008, unless earlier terminated as provided herein. Sublicensee shall have the right and option to extend the term for an additional five (5) years by written notice delivered to Sublicensor no less than ninety (90) days prior to expiration of the original term, during the continuance of Sublicensor’s License Agreement, as the same may be extended or renewed. 

27

SCHEDULE 6

ADVANCE SUBLICENSE FEE

Sublicensee shall pay to Sublicensor an advance royalty of $150,000 (“Advance Sublicense Fee”), payable in installments of $50,000 upon execution of this Sublicense, $50,000 on the date which is 30 days after execution hereof, and the balance of $50,000 on the date which is 60 days after execution hereof, as a nonrefundable advance to be set off and credited against minimum annual Royalties due to Sublicensor under Section 7 for the initial approximately twelve (12) months of the term hereof, ending June 30, 2006.

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SCHEDULE 7

MINIMUM ANNUAL ROYALTIES

Period                                                                           Minimum Royalties (U.S. Dollars)

                                                               

Initial Period Ending 06/30/06                                        $          150,000

    

12 Months Ending 06/30/07                                            $          165,000 

    

12 Months Ending 06/30/08                                            $          180,000

 

Each 12 months thereafter                                               $        Minimum Royalty equal to prior 

during renewal period, if exercised                                      year’s minimum amount increased by 

c                                                                                                  10%                                                       

                                                                                    

29

SCHEDULE 22.14

APPROVAL OF UVPR

A.

  This will certify that 1451 INTERNATIONAL LTD. and SECOND RENAISSANCE, LLC (combined as “Sublicensor”) have separate legal and binding main License Agreements with the UFFICIO VENDITA PUBBLICAZIONI E RIPRODUZIONI ("UVPR"), whose legal representative is the undersigned, granting certain rights (as defined therein) to the BIBLIOTECA APOSTOLICA VATICANA  ("BAV" or "THE VATICAN LIBRARY"). 

B.  This will further certify and acknowledge that pursuant to the main License Agreements, Sublicensor has the right, subject to review and approval of proposed Products, publicity and other matters by UVPR following consultation with BAV, to sell and distribute within the Territory consisting of the entire world, unless otherwise specified, Products covered by the main License Agreements, and to utilize the name and logo of the Vatican Library Collection in connection therewith.

C.

  This will further certify that Sublicensor has the right, subject to approval by UVPR following consultation with BAV, to sublicense its rights under the main License Agreements, through the approved form of Standard Agreement for Sublicensing incorporated herewith. On July _20_, 2005, the Standard Agreement for Sublicensing - Caskets & Urns and has been presented to the undersigned for pre-approval and UVPR hereby approves the same. 

Approved on

Date: 

UFFICIO VENDITA PUBBLICAZIONI 

E RIPRODUZIONI (UVPR)

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