Document:

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                                                                   EXHIBIT 10.15

                 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
                PORTIONS OF THIS DOCUMENT. DELETED PORTIONS ARE
                             MARKED WITH ASTERISKS.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

3.   KODAK OBLIGATIONS

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

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

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

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

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

     c.   WITH RESPECT TO JETSON SOFTWARE:

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

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

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                 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
                PORTIONS OF THIS DOCUMENT. DELETED PORTIONS ARE
                             MARKED WITH ASTERISKS.

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

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

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

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

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

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

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

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

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

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

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

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

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

4.   LIFE F/X OBLIGATIONS

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

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                 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
                PORTIONS OF THIS DOCUMENT. DELETED PORTIONS ARE
                             MARKED WITH ASTERISKS.

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

     b.   WITH RESPECT TO THE BABBLE SOFTWARE: Life F/X grants to Kodak a
          royalty free license to market, distribute and support (but not
          modify) the Babble Software, which shall be distributed to end users
          on the Kodak ************************************************, in
          the form provided by Life F/X to Kodak, which shall include the end
          user license provided to Kodak by Life F/X. Additionally, in
          ****************** Life F/X shall provide Kodak with a minimum of 5
          "demo" versions to allow Kodak to introduce the Babble Software to
          certain Kodak customers, gain feedback regarding the viability of the
          Babble Software, and to discuss market testing and launch plans within
          the ******************************** markets. This license shall
          terminate upon the termination of the Agreement, except that Kodak
          will have a right to continue to market, distribute, and support any
          products containing the Babble Software and in existence on the date
          on which this Agreement terminates, until the earlier of (i) when any
          and all such product is sold or distributed or (ii) 180 days after
          such termination.

     c.   WITH RESPECT TO JETSON SOFTWARE:

               (i) Life F/X will provide Kodak with and Alpha Version of the
               Jetson Software as soon as such version is available. Such Alpha
               Version will allow for the creation of Stand-Ins that, when used
               with the Babble Software or another Life F/X player, are ********
               enabled. Subject to meeting the conditions set forth in Section
               2.c of this Agreement, such Stand-Ins shall also be ********
               **************** enabled when used with the Babble Software or
               another Life F/X player. Life F/X will work in good faith with
               Kodak to evaluate and improve the Alpha Version until such time
               as Life F/X believes such version is a complete Beta Version. In
               order to allow Kodak to prepare to launch products generated by
               the use of the Jetson Software, Life F/X shall provide Kodak with
               an updated status report in ******** regarding the Jetson
               Software and confirming the date by which the Jetson Software
               will be made available to Kodak in Beta Version.

               (ii) In or before ********, Life F/X shall deliver the Beta
               Version of the Jetson Software to Kodak, which will have the
               functionality described above in Exhibit A. In the event that the
               Beta version is not acceptable to Kodak, Life F/X will have 30
               days from the date of written notice of non-acceptance by Kodak,
               or such longer

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               period as the Parties may mutually agree upon, to cure any
               problems identified by Kodak. If Life F/X fails to cure such
               problems within the specified time, and if in Kodak's opinion
               such problems are material to Kodak's ability to commercialize
               the Jetson Software then, at either party's option, they may
               terminate this Agreement by giving written notice to that effect.

               (iii) In or before **********, Life F/X shall deliver to Kodak
               a version of the Jetson Software acceptable to Kodak for
               commercialization by Kodak. This version of the Jetson Software
               shall be able to perform as detailed herein, and in Exhibit A,
               and shall produce photo-realistic Stand-Ins that are virtually
               indistinguishable from video quality, and which when used with
               the Babble Software or another Life F/X player will allow the
               consumer to easily transmit the Stand-In via an ********, or,
               subject again to Section 2.c hereof, will allow the consumer to
               use the Stand-In to participate in ******************************
               ****, and drive it from either their keyboard (text to speech) or
               voice input from a microphone on their computer. The user must be
               able to open the Stand-In and view it in an amount of time
               comparable to the time it takes to open a text email.

               (iv) Life F/X grants to Kodak a royalty bearing license to use
               the Jetson Software for the purpose of creating and marketing
               Stand-Ins. the royalty payments due under this license are
               described below in Section 6 of the Agreement. Such license shall
               terminate upon the termination of this Agreement, except that
               Kodak will have a right to continue to use the Jetson Software
               for a period of not more than one year to process any orders in
               hand or contemplated under any other existing contractual
               obligation pursuant to consumer offers as of the date of
               termination.

     d.   Life F/X will provide Kodak, at no cost to Kodak, to its best
          commercially reasonable ability, with technical training, information
          and support during normal business hours regarding the Genesis,
          Babble and Jetson Softwares to enable Kodak to perform to the
          satisfaction of its customers. In addition, Life F/X will provide
          Kodak, at no cost to Kodak, with reasonable technical assistance
          required to integrate the Jetson Software into a Kodak product or
          service as contemplated under this Agreement. Notwithstanding the
          foregoing, Kodak shall have no rights to the source code to any of the
          software nor shall it have any rights to the intellectual property
          (including all patent rights and trademark rights) of Life F/X except
          to the extent of the explicit license rights granted herein.

     e.   Life F/X will provide Kodak, at no additional cost, with any and all
          plug-ins which are necessary to enable the ************************
          created by the Genesis Software, Babble Software and/or Jetson
          Software to be transmitted, opened, assessed and used by a consumer
          ********, and subject to Section 2.c hereof, in an ****************
          ******** environment.

     f.   Life F/X will work in good faith with Kodak to address any Software
          production issues.

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     g.   Life F/X will work in good faith with Kodak, to the extent requested
          by Kodak, to prepare for any presentations to be made by Kodak to
          Kodak partners which involve the use of the Jetson Software.

5.   EXCLUSIVITY.

     a.   Kodak shall have an exclusive right to use the Jetson Software to
          create Stand-Ins in the ****************************************
          **********************************************************************
          Market) and to sell the Stand-Ins generated thereby for one year plus
          ninety (90) days from the date the Jetson Software is accepted by
          Kodak. Such rights shall continue during both the second and third
          year of the term of this Agreement unless at least ninety days prior
          to the end of any year of the Term, Kodak sends Life F/X notice that
          it will not commit to renew its marketing commitment (as set forth in
          Section 3(c)). If Kodak chooses no to renew its marketing support and
          exclusive rights to the Jetson Software: (1) Life F/X may pursue
          licensing opportunities with other companies and (2) 90 days after
          such failure to renew such exclusive rights, Life F/X may terminate
          this Agreement and Kodak's license rights hereunder, in accordance
          with the provisions of this Agreement.

     b.   During the term of this Agreement, Kodak's ************************
          shall not market or use any software other than the Jetson Software
          capable of transforming a digital image of a person's face (as
          provided by a ******************************** into a ************
          ******** image that can move, talk and express emotion. For a
          period of 3 months after termination of this Agreement, Kodak's
          ******************** shall not market or use any software capable of
          transforming a digital image of a person's face (as provided by a
          **********************************************************************
          image that can move, talk and express emotion.

6.   FEES. Commencing upon the commercialization of the Jetson Software, and
     throughout the entire term of this Agreement, Kodak shall pay to Life F/X a
     royalty fee equal to the greater of ************************ generated
     for each Stan-In sold by Kodak. The parties also agree that on or before
     the date of acceptance by Kodak of the Jetson Software the parties will
     negotiate in good faith a minimum royalty amount to be paid by Kodak during
     each year of the term of this Agreement commencing upon the
     commercialization of the Jetson Software by Kodak.

     Kodak and Life F/X shall mutually agree on a royalty payment for any
     Related Software Accessories at such time as they may be developed.

7.   INTELLECTUAL PROPERTY. The parties anticipate entering into various
     research and development arrangements (pursuant to separate agreements)
     that could generate inventions. Pursuant to the terms and conditions of any
     such separate agreements, Life F/X will license to Kodak a Software
     Development Kit or API which will allow for Kodak to use the Software in
     vertical applications developed or otherwise owned by Kodak. The parties
     agree to address the appropriate ownership of such inventions in the
     context of entering into any such SDK, API, or research and development
     agreements.

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8.   WARRANTY. (a) Each Party represents and warrants to the other that (i) this
     Agreement has been executed and delivered by its duly authorized
     representative and constitutes a valid and legally binding obligation of
     it, enforceable against it in accordance with its terms and (ii) the
     execution and performance of this Agreement does not require any consent,
     approval or notice under, and will not conflict with or result in a breach
     of ruling of any governmental authority or any other material restriction
     of any kind or character to which it is subject.

     EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
     WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT
     LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
     PURPOSE.

     (b)  BY LIFE F/X (i) Life F/X represents and warrants that it has the
          unimpaired right to license Kodak to distribute, promote, and use the
          Genesis Software and Babble Software and to use the Jetson Software as
          contemplated under this Agreement.

          (ii) Life F/X warrants that, to the best of its knowledge, neither the
          Genesis Software, Babble Software, Jetson Software, or any Related
          Software Accessories created by Life F/X (collectively referenced as
          the "Life F/X Products") developed and supplied to Kodak under this
          Agreement, will infringe any intellectual property rights of another.
          If either party discovers the existence of any such infringement, Life
          F/X shall attempt to procure a license from the person or entity
          claiming or likely to claim infringement, or to modify the Life F/X
          Product to avoid the infringement. Any costs of obtaining any such
          license or making any such modification shall be borne by Life F/X.

9.   USE OF TRADEMARKS.

     a.   BY LIFE F/X. Subject to the terms of this Agreement, Life F/X grants
          to Kodak a non-exclusive right and license to use the Life F/X
          trademark or ingredient mark as depicted on Exhibit B hereto in
          connection solely with its rights and obligations hereunder. Such
          marks shall be of a size and location reasonably agreed upon by Life
          F/X and Kodak. Kodak may not transfer or assign this license or any
          other right to use the Life F/X trademarks, ingredient marks or
          Software to any other party.

     b.   BY KODAK. Life F/X may not use or display any Kodak tradenames,
          trademarks or service marks ("Marks"), nor permit them to be displayed
          or used by third parties, without the prior written approval of Kodak.
          Kodak to provide Life F/X with language regarding permitted use of
          trademarks within 30 days of the execution of this Agreement.

     c.   Nothing in this Agreement creates in either Party any rights in the
          Marks of the other, and to the extent any right to use a Mark is
          granted under this Agreement, upon termination of the Agreement each
          party must discontinue use of the others Marks in any future products.

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10.  RIGHT OF FIRST REFUSAL.

     During any period when Kodak is maintaining its exclusive rights hereunder
     pursuant to Section 5, Kodak shall have a right of first refusal to sell,
     market distribute, integrate, or otherwise use any future Life F/X products
     aimed at ****************************************************************
     *********************************************. In the event that Life F/X
     develops any product aimed at such a market, or elects to promote,
     advertise or solicit, a product aimed at such market (an "Opportunity"),
     Life F/X shall inform Kodak in writing of such Opportunity (the
     "Opportunity Notice"). The Opportunity Notice shall describe the product
     with sufficient particularity (including any pricing or other similar
     requirements) to permit Kodak to reasonably evaluate the product. Life F/X
     shall deliver the Opportunity Notice to the person(s) designated by Kodak
     in writing for this purpose, or in the absence of any such designation to
     the Marketing contact identified above. Kodak shall have thirty (30) days
     from receipt of the Opportunity Notice to inform Life F/X as to whether or
     not it is interested in selling, marketing or otherwise using the
     Opportunity. If Kodak declines the Opportunity, the Life F/X may pursue the
     Opportunity with any other party. If Kodak accepts the Opportunity, the
     Life F/X and Kodak shall negotiate in good faith for sixty (60) days to
     determine the business terms of the arrangement for the Opportunity. If
     during such period the parties are unable to mutually agree on terms then
     Kodak's right of first refusal as to that Opportunity shall lapse and be of
     no further force and effect.

11.  TERMINATION.

     (a) This Agreement may be terminated by either party, or at its option, the
         party may suspend its performance of its obligations under the
         Agreement, if the other party has committed a material breach of the
         Agreement, and the material breach has not been cured within 30 days
         after written notice of the breach has been received by the breaching
         party.

     (b) This Agreement may be terminated by either party if Life F/X fails to
         provide Kodak, by **************** with a version of the Jetson
         Software which is suitable for commercialization by Kodak.

     (c) This Agreement may be terminated by Life F/X if Kodak fails to maintain
         its exclusivity rights pursuant to Section 5, except that the licenses
         granted to Kodak pursuant to Section 4, shall continue as provided
         therein to the extent necessary to run down inventory or process orders
         in hand, or as otherwise provided in Section 5.a.

12.  EFFECT OF TERMINATION OR EXPIRATION. Upon termination or expiration of this
     Agreement:

     (a) Kodak may continue to promote, market, sell or otherwise distribute any
         Kodak ******** or other products existing at the time of termination
         which contain either the Genesis or Babble Software to the extent
         contemplated by Section 4 of this Agreement.

                                                                              10
<PAGE>   11
                 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
                PORTIONS OF THIS DOCUMENT. DELETED PORTIONS ARE
                             MARKED WITH ASTERISKS.

     (b)  Kodak may continue to promote, market, sell or otherwise distribute
          any Kodak products or services containing or using the Life F/X
          Products and existing at the time of termination to the extent
          contemplated by Section 4 of this Agreement.

     (c)  Kodak must immediately stop manufacturing any additional products
          which contain or otherwise use the Life F/X products except Kodak
          shall continue to process Stand-Ins for orders in hand.

     (d)  Upon any termination or expiration of this Agreement, Kodak may offer
          to Life F/X the right to purchase from Kodak the Facility at a price
          equal to the Facility's then depreciated book value. For this purpose
          the Facility shall mean only the hardware, software and related
          personal property and equipment and not the real estate in which such
          Facility is located. In the event that Kodak offers and Life F/X
          exercises this purchase right, Life F/X shall move the Facility to its
          own location. In the event that Life F/X is not offered the
          opportunity to purchase the Facility as described above, then in such
          event, upon the termination of this Agreement Kodak shall continue to
          operate the Facility to the extent requested by Life F/X for a period
          of up to 90 days.

     (e)  Termination of this Agreement shall have no impact on any SDK or API
          Agreement entered into by the Parties, which shall be governed by
          terms thereof.

13.  PRESS RELEASES OR OTHER ANNOUNCEMENTS Any press releases regarding this
     Agreement issued by either party must first receive the prior written
     approval of the other party, such approval not to be unreasonably withheld,
     conditioned or delayed. Neither party shall make any announcement or other
     statement regarding this Agreement, or any relationship arising herefrom,
     for a period of forty five (45) days from the date of execution.
     Notwithstanding the foregoing, Life F/X may (a) make private disclosures
     regarding this Agreement to prospective investors that have executed an
     appropriate nondisclosure agreement, (b) in the event that Life F/X counsel
     deems it necessary to make a public announcement regarding this Agreement
     then Life F/X may do so after prior notice to Kodak and (c) after receiving
     the prior written approval of Kodak, issue a press release (similarly,
     after receiving the prior written approval of Life F/X, Kodak may issue a
     press release).

14.  INDEMNIFICATION.

     (a)  General Indemnification. Each Party agrees to defend, indemnify and
          hold the other Party harmless against all claims, demands, losses, and
          causes of action for personal injury or property damage arising from
          or based on the intentional acts, negligence, or willful misconduct of
          indemnitor's employees, agents, or contractors who undertake
          activities in connection with this Agreement, to the extent such
          personal injury or property damage is caused by such acts, negligence
          or willful misconduct. Indemnitor will pay any costs and damages,
          including reasonable attorneys fees, that a court finally awards
          against the indemnitee as a result of such claim or that are paid in
          settlement thereof, provided the indemnitee gives indemnitor prompt
          written notice of such claim and tenders to indemnitor the defense and
          all related settlement negotiations Notwithstanding the above, the
          indemnitee shall have the right, but not the obligation, at its sole
          discretion, to participate in any such defense at its own expense.

                                                                              11
<PAGE>   12
                 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
                PORTIONS OF THIS DOCUMENT. DELETED PORTIONS ARE
                             MARKED WITH ASTERISKS.

     (b)  Life F/X will indemnify, defend and hold Kodak harmless against any
          claim that the Genesis Software, Babble Software, Jetson Software or
          any Related Software Accessory provided by Life F/X to Kodak,
          excluding any modifications made by Life F/X at Kodak's request,
          infringes any intellectual property rights of any third party, or
          causes damage to any property, personal injury or death. Life F/X will
          pay any costs and damages, including reasonable attorneys fees, that a
          court finally awards against Kodak as a result of such claim or that
          are paid in settlement thereof, provided Kodak gives Life F/X prompt
          written notice of such claim and tenders to Life F/X the defense and
          all related settlement negotiations. Notwithstanding the above, Kodak
          shall have the right, but not the obligation, at its sole discretion,
          to participate in any such defense at its own expense.

15.  LIMITATION OF LIABILITY. In no event will either Party will be liable to
     the other Party for lost profits, or consequential, incidental, or punitive
     damages even if advised in advance of the possibility of such damages.

16.  NOTICE. All notices required or desired to be given must be given must be
     in writing and if not personally delivered, by sent by facsimile (with a
     copy by regular U.S. mail) or by registered or certified mail or by
     overnight delivery service. If sent by facsimile or personally delivered or
     by overnight delivery service, notices will be deemed to have been given on
     the day when delivered to the other party at the address shown on the first
     page of this Agreement. If mailed by registered or certified mail, notices
     will be deemed to have been given when received or when delivery is
     refused. Either party may from time to time change the address to which
     notices to it are to be sent by giving notice of such change to the other
     party in writing.

17.  ONGOING EFFORTS. Kodak and Life F/X will work in good faith to continue to
     explore promotions, marketing opportunities and digital imaging
     opportunities which use the unique strengths of each party. Kodak
     acknowledges and agrees that it shall never attempt to decompile,
     disassemble or reverse engineer any of the Software.

18.  WAIVE. Failure by either party to enforce any term or condition of this
     Agreement will not be deemed a waiver of future enforcement of that or any
     other term or condition.

19.  ASSIGNMENT. Neither party may assign its rights or obligations under this
     Agreement without the prior written consent of the other, which consent
     shall not be unreasonable withheld.

20.  INDEPENDENT CONTRACTOR. Kodak and Life F/X are independent contractors, and
     neither party may act as agent or otherwise bind the other party to any
     obligations.

21.  EXPORT CONTROL. Each party agrees to comply with all applicable
     governmental laws and regulations relating to export of technical data and
     products covered by this Agreement.

22.  FORCE MAJEURE. Except for payments of outstanding balances when due,
     neither party will be liable for any damages or penalties for delay in
     performance when such delay is due tot he elements, acts of God, acts of
     civil or military authority, fire or floods, epidemics, quarantine

                                                                              12
<PAGE>   13
                 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
                PORTIONS OF THIS DOCUMENT. DELETED PORTIONS ARE
                             MARKED WITH ASTERISKS.

     restrictions, war or riots or other circumstances outside the reasonable
     control of the affected party.

23.  GOVERNING LAW. This Agreement will be governed by and construed according
     to the substantive laws of the State of New York without regard to its
     conflict of laws principles. The parties submit to the nonexclusive
     personal jurisdiction of, and waive any objection against, the United
     States District Court for the Western District of New York and the United
     States District Court for Massachusetts.

24.  CONFIDENTIAL INFORMATION. During the term of this Agreement, certain
     information that is considered proprietary or confidential may be disclosed
     by or exchanged between the parties. The term "Confidential Information"
     means all information disclosed by one Party to the other in accordance
     with the following procedure: When disclosed in writing. Confidential
     Information must be labeled as being confidential and when disclosed
     orally, Confidential Information must be identified as Confidential at the
     time of disclosure, with subsequent confirmation to the other party in
     writing within 30 days after disclosure, identifying the date and type of
     information disclosed. During the Term and for a period of five years
     thereafter, each party will hold in confidence the other party's
     Confidential Information and must not, without the prior written consent of
     the other party, use such other party's Confidential Information other than
     to further the purposes of this Agreement or disclose the Confidential
     Information oh the other party to any person except its own employees or
     employees of its affiliates having a need to know and who shall likewise
     agree to be bound by the foregoing. Confidential Information shall not
     include any information that (i) is generally available to the public
     before its disclosure under this Agreement, (ii) becomes generally
     available to the public without default by either party under this
     Agreement, (iii) is lawfully in the possession of one party in written or
     other recorded from before the time of disclosure by the other party, (iv)
     is lawfully acquired by one party from a source that is not under
     obligation to the other party regarding disclosure of such information, (v)
     is disclosed by one party with permission of the other party to any third
     party on a non-confidential basis or (vi) is disclosed under operation of
     law (provided, the parties shall endeavor to give prior notice of such an
     event in order to allow a party to seek a protective order or the like.

     The parties agree that the terms of this Agreement are "Confidential
     Information" as defined above subject, however, to the proviso that Life
     F/X shall be permitted to disclose such terms as its counsel deems
     necessary to comply with applicable securities laws in connection with its
     filings with the Securities and Exchange Commission. Life F/X shall provide
     Kodak with notice of its intent to disclose such information as much in
     advance of such disclosure as is commercially reasonably possible.

25.  SEVERABILITY. If any term of this Agreement is held invalid or
     unenforceable for any reason, the remainder of the provisions will
     continue in effect as if this Agreement had been executed with the invalid
     portion eliminated.

26.  ENTIRE AGREEMENT. This Agreement, including and Supplements and Attachments
     is the entire agreement of the parties and supersedes all prior agreements
     and understandings, whether

                                                                              13
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                 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
                PORTIONS OF THIS DOCUMENT. DELETED PORTIONS ARE
                             MARKED WITH ASTERISKS.

     written or oral, with respect to the subject matter of this Agreement. This
     Agreement can be modified only by a written amendment executed by
     authorized representatives of Life F/X and Kodak.

27.  COUNTER PARTS. Facsimile signatures constitute original signatures for
     purposes of the execution of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day year stated above.

EASTMAN KODAK COMPANY                           LIFE F/X, Inc.

By: /s/ Kent D. McNeely                         By: /s/ Salhany & Rosenblatt
   --------------------------------                -----------------------------

Name: Kent D. McNeely                           Name: Salhany & Rosenblatt
     ------------------------------                  ---------------------------

Title: Chief Marketing Officer                  Title: Co-Presidents
      -----------------------------                   --------------------------
       Consumer Imaging

                                                                              14
<PAGE>   15
                 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
                PORTIONS OF THIS DOCUMENT. DELETED PORTIONS ARE
                             MARKED WITH ASTERISKS.

                                    EXHIBIT A

1.   INTRODUCTION

     The Jetson Software will be able to process digital images of a human face
that meet the criteria defined below. The Jetson Software will transform the
digital image to a ******** Stand-In using some human intervention,
****************. This Exhibit A details the processing steps and performance of
the Jetson Software and specifies items that Life F/X and Kodak will deliver
under this Agreement.

2.   PROCESSING STEPS

     The Jetson Software has five major processing steps:
     a)   The face is pre-screened by a human operator and either rejected
          because it does not meet minimum requirements or accepted for further
          processing.
     b)   Location of the face and face features, and typing the face based on
          age, sex, and skin color.
     c)   Fine feature detection, analysis and mapping of ****************
          ******** models.
     d)   Generation of ******** face image Stand-In from the mapped data.
     e)   Final quality control verification.

3.   LIFE F/X DELIVERABLES

     a)   Life F/X will deliver software for each of these five processing
          steps.
     b)   Life F/X will deliver software that links each processing step as well
          as accepting JPEG images and/or images of other formats if specified
          by Kodak, and saving a completed ******** Stand-In to disk.
     c)   Life F/X will deliver documentation of the major exported functions in
          the Jetson Software and an overview of the process flow.
     d)   Life F/X will deliver an overview design document that shows how Kodak
          will build a working, production system using the Jetson Software.
          This document will be based on a prototype system developed by Life
          F/X and used for testing and evaluating the Jetson Software.
     e)   LifeFX will work with Kodak to define access methods to integrate
          the Life F/X process with the Kodak photo-finishing and image
          processing process.

                Exhibit A - Confidential to Life FX and Kodak                  1

<PAGE>   16
                 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
                PORTIONS OF THIS DOCUMENT. DELETED PORTIONS ARE
                             MARKED WITH ASTERISKS.

     f)   Life F/X will deliver executable (compiled, linked) code for the
          Jetson Software's computer vision and graphics algorithms. When
          essential for proper integration of the Jetson Software with the Kodak
          process, LifeFX may provide Application Programming Interfaces for
          some selected modules.

4.   KODAK DELIVERABLES

     a)   As Kodak has developed expertise and know-how in digital imaging and
          that its expertise can potentially accelerate the development of the
          Jetson Software, it is expected that Kodak will provide technical
          assistance to Life F/X where possible, including consultation with
          digital imaging and system development experts at Kodak.
     b)   Kodak will work with LifeFX to integrate appropriate hooks with the
          Kodak Digital Imaging, Retouching and Finishing process, and define a
          common set of input and output methods for the integration of the
          Jetson Software within the Kodak network of photo-finishing processes.
     c)   Kodak will purchase, equip and maintain all items and personnel for
          the production systems (the "Facility").
     d)   Kodak will provide Life F/X with a large sample of input face images
          and Jetson results to be used by Life F/X to improve or adjust the
          Jetson Software. These images and data will be kept confidential and
          used only for research.
     e)   Kodak will provide Life F/X with enough information about the
          Facility, its operation and its network infrastructure to allow
          LifeFX to best design, modularize and optimize the Jetson Software.

5.   GENERAL IMAGE REQUIREMENTS

     These items are necessary for the Jetson Software to create a ********
Stand-In.

     a)   The input image must be a high-quality, color digital image. The input
          formats will include at a minimum JPEG. Kodak will cooperate with
          LifeFX on the selection and integration of other digital image
          formats. In particular Kodak will provide LifeFX with the appropriate
          software if image formats proprietary to Kodak must be integrated in
          the Jetson Software.
     b)   The Jetson Software will convert only one face to a ****************
          Stand-In per digital image. There should also be only one human face
          in an image, but the Jetson Software will also handle images including
          smaller faces (such as photographs on a wall) in the image background.
          If there is more than one face in the image, than Jetson needs to be
          informed of which face is to be converted.
     c)   The entire face, head, and neck must be in the image.
     d)   The face must be looking straight into the camera with no more than **
          ******** of roll, pitch or yaw of the face, with respect to the focal
          plane and principle axis of the camera.

                Exhibit A - Confidential to Life FX and Kodak                  2

<PAGE>   17
                 CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
                PORTIONS OF THIS DOCUMENT. DELETED PORTIONS ARE
                             MARKED WITH ASTERISKS.

     e)   For best results the camera must be essentially level with the eyes
          and the image focal plane must be essentially parallel to the face
          plane.
     f)   For best results the face must have an expression close to a neutral
          expression and the eyes must be open and looking almost directly at
          the camera.
     g)   For best results the face must be evenly illuminated, so Jetson can
          find the face features, and have no reflections from the eyeglasses
          that affect the view of the eyes.
     h)   For best results there must be at least **************** steps of
          contrast within the face.
     i)   For best results the face must be in sharp focus.
     j)   The size of the face image, from chin to natural hairline, must be ***
          **************** as otherwise the model or the animation may not meet
          required quality standards.
     k)   The face features must be visible. As examples, hats, dark glasses,
          hair, cellular telephones, hands, large beards or cigarettes must not
          obscure the face. There should be nothing under the chin that would
          restrict apparent motions of the jaw.
     l)   In the first version(s) of the Jetson Software it may be required that
          the eyeglasses be removed, as they can confuse the Software.

6.   SYSTEM CONFIGURATION

     The details of the production system (the "Facility") remain to be fully
delineated in collaboration between Kodak and Life F/X. Each computer would be
at a minimum a Pentium IV, 1.5 GHz class machine with at least 256 MB memory and
adequate disk storage. However LifeFX will use the fastest Pentium class
machine, or successor to the Pentium, available at the time of delivery of the
Jetson Software, with the architecture specified including graphics card,
memory, data storage specified by LifeFX and with possibly a graphics
co-processor and/or multi-processors. The Jetson will be developed in a modular
manner and consisting of sub-processes (or steps) that can be configured to run
on individual computers configured as workstations and servers and
interconnected to optimally maximize the production and best integrate with
Kodak's infrastructure.

                Exhibit A - Confidential to Life FX and Kodak                  3<PAGE>   1
                                                                   EXHIBIT 10.16

                              EMPLOYMENT AGREEMENT

            THIS EMPLOYMENT AGREEMENT ("Agreement"), is made and entered into to
be effective as of January 18, 2001, by and between Lifef/x Networks, Inc. (the
"Company"), a Delaware corporation doing business in Massachusetts, and Richard
A. Guttendorf ("Executive"), an individual residing in Maryland.

            The parties hereby agree as follows:

         1. Employment; Term.

             (a) The Company hereby employs Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions contained in
this Agreement. The term of Executive's employment hereunder (the "Employment
Period") shall commence on January 18, 2001 (the "Effective Date") and shall
continue for a period of two (2) years from and after the Effective Date, unless
sooner terminated as hereinafter provided.

             (b) The Employment Period may be extended for two (2) successive
one year periods by mutual written agreement of the parties hereto. If either
party intends not to renew this Agreement upon the expiration of the Employment
Period then in effect, such party shall give the other party notice of such
intention not less than thirty (30) days prior to the expiration of such
Employment Period. Failure to provide notice of such intention shall not
constitute either a renewal of this Agreement or an extension of the Employment
Period.

         2. Duties.

             (a) During the Employment Period, Executive shall serve as the
Chief financial Officer. Executive shall report directly to the Chief Executive
Officer. Executive shall faithfully perform for the Company the duties of
Executive's office which shall include such duties of an executive, technical,
managerial or administrative nature as may be specified and designated from time
to time by the Chief Executive Officer and the Chairman of the Board of the
Company. Executive shall devote substantially all of Executive's business time
and effort to the performance of Executive's duties for the Company hereunder.
<PAGE>   2
         3. Compensation. Commencing on January 18, 2001, the Company shall pay
to Executive a salary at an annual rate of $210,000. The salary payable pursuant
to this Section 3 (the "Base Salary") shall be payable in accordance with the
Company's payroll practices, as in effect from time to time. In addition to
Executive's Base Salary, Executive shall be entitled to annual consideration for
a bonus based on Executive's and the Company's performance of mutually
acceptable performance objectives, such bonus, if any, to be determined by the
Chief Executive Officer, in his/her sole discretion.

         4. Stock Option Grant. Following the execution of this Agreement and
subject to the approval of the Board of Directors of the Company's parent
company, Lifef/x, Inc. ("Parent"), the Company will cause Parent to grant
Executive a non-qualified option (the "Option") to purchase 225,000 shares of
Parent's Common Stock, subject to the terms and conditions of Parent's stock
option plan and agreements. Twenty percent (20%) of the Option will vest on the
Effective Date and the balance will vest in equal quarterly installments over a
period of two (2) years at each employment anniversary date until fully vested.
The Option exercise price shall be the average of the closing prices of the
stock for the ten business days preceding the start of employment. The unvested
balance of stock options shall vest immediately in the event of the Executive's
death or in the event of his Permanent Disability, as defined herein, or in the
event of a Change of Control as defined herein, or in the event his employment
hereunder is terminated with the effect of the Company being obligated to pay
the Severance Compensation described in Section 7(c) hereof.

The term "Change of Control" shall mean a sale of the Company to an unaffiliated
third party or a merger of the Company with another company, whereby the
stockholders of the Company immediately after the merger own less than a
majority of the outstanding shares.

         5. Expenses; Benefits.

             (a) During the Employment Period, the Company agrees to reimburse
Executive, in accordance with the Company's policies as in effect and as
modified from time to time, for all reasonable and ordinary and necessary
business expenses paid or incurred by Executive in connection with the
performance of Executive's duties for the Company hereunder; provided, however
that Executive must obtain the Company's approval prior to incurring individual
expenses exceeding $2,500 (or $5,000 in the aggregate) in any thirty (30) day
period.

             (b) During the Employment Period, Executive shall be entitled to
accrue vacation at a rate of 1.25 days per month for up to three weeks (i.e.,
fifteen days) of vacation annually, which vacation shall accrue at a rate of
1.25 days per month; provided that the maximum vacation accrual that Executive
may have at any time shall be fifteen (15) days. Once the Executive has accrued
the full fifteen (15) days vacation, all vacation accruals shall cease and shall
not resume unless and until Executive uses enough vacation time to fall below
the maximum accrual, at which point Executive shall start accruing vacation
again from that date forward until the maximum is reached again.

                                      -2-
<PAGE>   3
             (c) During the Employment Period, Executive shall be entitled to
participate in and enjoy the benefits of any health, life, or disability
insurance, and of any retirement, pension, or profit-sharing plans, or other
similar plan or plans which may be instituted by the Company for the benefit of
its senior executive staff employees generally, upon such terms as may be
therein provided from time to time, and as modified or terminated from time to
time. The failure of the Executive to satisfy any eligibility requirements of
such plans or policies, waiting periods, or other requirements shall not
increase the obligation of the Company hereunder.

         6. Termination. Executive's employment hereunder may be terminated
prior to the expiration of the Employment Period only as follows:

             (a) Automatically in the event of the death of Executive;

             (b) At the option of the Company, by written notice to Executive or
Executive's personal representative in the event of the Permanent Disability (as
defined below) of Executive. As used herein, and subject to applicable law, the
term "Permanent Disability" shall mean a physical or mental incapacity or
disability which renders Executive unable to perform the essential functions of
his position, as determined by the Company, for a period of not less than one
hundred twenty (120) days in any calendar year. In the event that the Executive
resumes the performance of substantially all of his duties hereunder before the
termination of his employment under this subparagraph becomes effective, the
notice of termination shall automatically be deemed to have been revoked. No
compensation or benefits will be paid or provided to the Executive under this
Agreement on account of termination for Permanent Disability for periods
following the date when such a termination of employment is effective. The
Executive's rights under the benefit plans of the Company shall be determined
under the provisions of those plans. At the request of the Company, Executive
will submit to a medical examination by a physician acceptable to both parties
for the purpose of permitting the Company to determine whether Executive is
unable to perform the essential functions of his position;

             (c) At the option of the Company, by written notice to Executive
upon the occurrence of any one or more of the following events:

                  (i) any action by Executive constituting breach of fiduciary
duty, fraud, embezzlement or theft in the course of Executive's employment
hereunder;

                  (ii) any conviction of or guilty plea or plea of nolo
contendere by Executive involving a felony or misdemeanor involving moral
turpitude, and which offense results in material harm to the Company, as
determined by the Board of Directors of the Company in its sole and reasonable
discretion;

                  (iii) gross neglect or willful refusal by Executive to perform
Executive's duties hereunder for a period of ten (10) days following notice
thereof by the Company;

                  (iv) material failure or refusal by Executive to comply with
any valid and legal directive of the Board of Directors of the Company; or

                                      -3-
<PAGE>   4
                  (v) a breach by Executive of any obligation under this
Agreement if the Company determines in its sole discretion that such breach is
not curable or, if curable, is not cured within thirty (30) days after written
notice thereof by the Company to Executive.

             (d) At the option of Executive, by written notice to the Company at
any time:

                  (i) within one hundred twenty (120) days after the occurrence
of a material breach of any material obligation under this Agreement by the
Company if such breach is not curable or, if curable, is not cured within
forty-five (45) days after written notice thereof by Executive to the Company;
or

                  (ii) within fifteen (15) days if the Company shall have failed
to pay Executive the Base Salary on its due date in accordance with Section 3
and such failure shall not have been cured within fifteen (15) days of such
failure; or

                  (iii) subject to the terms and conditions of Section 4 hereof,
as the result of the Company's material failure to issue its grant of the stock
options agreed to herein; or

                  (iv) in the event Good Reason exists, such Good Reason to
include only the following two listed circumstances, and in such event the
Executive's employment with the Company may be regarded as having been
constructively terminated by the Company, and the Executive may therefore
terminate his employment for Good Reason as a result thereof, and subject to the
terms and conditions of this Agreement, thereupon become entitled to only the
benefit of Subsection 9(e)(iv), if, before the end of his Employment Period, one
or more of the following events shall occur (unless such event(s) applies
generally to all senior management of the Company or unless the Executive shall
have become Permanently Disabled:

                      (1) without the Executive's written consent, the
assignment to the Executive of any duties or the reduction of the Executive's
duties, either of which results in a significant diminution in the Executive's
position or responsibilities with the Company in effect immediately prior to
such assignment, and which is reasonably expected to continue for a period of at
least one month, or the removal of the Executive from his position and his
active and ongoing responsibilities and duties pursuant to this Agreement; or

                      (2) a material reduction by the Company in the kind or
level of employee benefits to which the Executive is entitled immediately prior
to such reduction with the result that the Executive's overall employee benefits
package is significantly reduced.

             (e) The Company may terminate this Agreement at any time and for
any reason or for no reason, subject to the Company's obligations under Section
7(c).

         7. Effect of Termination.

             (a) In the event of the Company's termination of Executive's
employment hereunder prior to the expiration of the Employment Period for any
reason, the Company shall have no liability or obligation to Executive other
than as specifically set forth in this Section 7.

                                      -4-
<PAGE>   5
             (b) Upon the termination by the Company of Executive's employment
hereunder pursuant to the provisions of Section 6(a), 6(b), or 6(c) hereof, or
the termination by Executive of Executive's employment hereunder for any reason
other than as set forth in Section 6(d), Executive (or Executive's heirs or
legal representatives) shall be entitled to receive only such portion (if any)
of the Base Salary as may theretofore have accrued but be unpaid on the date of
such termination, plus any accrued and unpaid vacation pay which may be owing
through the date of termination, plus in the event of the Executive's Permanent
Disability hereunder, the Base Salary amount payable pursuant to Section 3
hereof for the period of time until the Company's disability insurance on the
Executive becomes payable, such maximum period of time in any event not to
exceed a maximum period of twelve months from the date of such disability.

             (c) Upon the termination of Executive's employment hereunder
either: (i) by the Company for any reason other than pursuant to Sections 6(a),
6(b) or 6(c), including, without limitation, pursuant to Section 6(e), or (ii)
by Executive pursuant to Section 6(d), then Executive shall be entitled to
receive such portion of the Base Salary as may theretofore have accrued but be
unpaid on the date of such termination and any accrued and unpaid vacation pay
which may be owing through the date of termination, and the Company shall
continue to pay to Executive, as severance compensation (the "Severance
Compensation"), the lesser of; the Executive's full Base Salary as provided in
Section 3 above for the unexpired period of the Employment Period set forth in
Section 1(a) hereof or the Executive's full Base Salary as provided in Section 3
above for nine months. At the option of the Company, the Severance Compensation
shall be payable (i) at the same time as such compensation would have been paid
to Executive had Executive not been so terminated, or (ii) in one lump sum
within thirty (30) days of the termination of Executive's employment.

             (d) Upon the termination of Executive's employment hereunder for
any reason, Executive shall immediately surrender to the Company all Company
property in the possession, custody or control of Executive, including but not
limited to any computer hardware, software, computer disks and/or data storage
devices, as well as all notes, data, sketches, drawings, manuals, documents,
records, data bases, programs, blueprints, memoranda, specifications, customer
lists, financial reports, equipment and all other physical forms of expression
incorporating or containing any Confidential Information (as defined in Section
8 hereof), it being distinctly understood that all such writings, physical forms
of expression and other things are exclusive property of the Company.

         8. Confidential Information and Inventions.

             (a) Executive recognizes and acknowledges that during the course of
Executive's employment with the Company, Executive shall have access to
Confidential Information. Subject to the terms and conditions of Section 2(b)
and Section 14 hereof, "Confidential Information" means all information or
material not publicly known about the Company, including, without limitation,
any such information which relates to any of its products, services or any phase
of its operations, business or financial affairs. Confidential Information
includes, but is not limited to, the following types of information and other
information of a similar nature (whether or not reduced to writing): trade
secrets, inventions,

                                      -5-
<PAGE>   6
drawings, file data, documentation, diagrams, specifications, know-how,
processes, formulas, models, flow charts, software in various stages of
development, source codes, object codes, research and development procedures,
test results, marketing techniques and materials, marketing and development
plans, price lists, pricing policies, business plans, information relating to
customers and/or suppliers' identities, characteristics and agreements,
financial information and projections and employee files. Confidential
Information also includes any information described above which the Company
obtains from another party and which the Company treats and/or has an obligation
to treat as confidential or designates as Confidential Information, whether or
not owned or developed by the Company. Confidential Information shall not
include any information which is or becomes (i) generally available to the
public other than as a result of disclosure in violation of any agreement with
the Company or (ii) generally known in the industry in which the Company is or
may become involved other than as a result of disclosure in violation of any
agreement with the Company. (The term "Company," as used in this Section 8,
means not only Lifef/x Networks, Inc., but also any company, partnership or
entity which, directly or indirectly, controls, is controlled by or is under
common control with Lifef/x Networks, Inc.)

             (b) Both during the Employment Period and at all times thereafter,
all Confidential Information which Executive may now possess, may obtain during
or after the Employment Period, or may create prior to the end of the Employment
Period will be held confidential by Executive, and Executive will not (nor will
Executive assist any other person to do so), directly or indirectly, (i) reveal,
report, publish or disclose such Confidential Information to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever
(other than in the course of carrying out Executive's duties hereunder or as
expressly authorized by the Company), (ii) render any services to any person,
firm, corporation, association or other entity to whom any such Confidential
Information, in whole or in part, has been disclosed or is threatened to be
disclosed by or at the instance of Executive, or (iii) use such Confidential
Information except for the benefit of the Company and in the course of
Executive's employment with the Company; provided, however that the foregoing
will not apply to the extent Executive is required to disclose any Confidential
Information by applicable law or legal process so long as Executive promptly
notifies the Company of such pending disclosure and consults with the Company
prior to such disclosure concerning the advisability of seeking a protective
order or other means of preserving the confidentiality of the Confidential
Information.

             (c) Subject to the terms and conditions of Section 2(b) and Section
14 hereof, all memoranda, notes, lists, records and other documents (and all
copies thereof) constituting Confidential Information (including information
relating to all Inventions which belong exclusively to the Company pursuant to
the provisions of Section 8(c) above) made or compiled by Executive or made
available to Executive during or after the Employment Period shall be the
Company's property, shall be kept confidential in accordance with the provisions
of this Section 8 and shall be delivered to the Company at any time on request
and in any event upon the termination of Executive's employment with the Company
for any reason.

                                      -6-
<PAGE>   7
         9. Covenant Against Competition. Executive covenants and agrees that:

             (a) During the Non-Compete Period (as hereinafter defined),
Executive shall not, directly or indirectly, in any Geographic Area (as
hereinafter defined): (i) engage for Executive's own account in any business
competitive with the Company Business (as hereinafter defined); (ii) render any
services in any capacity to any person or entity (other than the Company or its
Affiliates) engaged in any business competitive with the Company Business; or
(iii) acquire an interest in any person or entity engaged in any business
competitive with the Company Business (other than the Company) as a partner,
shareholder, director, officer, employee, principal, manager, member, agent,
trustee, consultant or in any other relationship or capacity; provided, however,
Executive may own, directly or indirectly, solely as a passive investment,
securities of any such entity which are traded on any national securities
exchange if Executive (A) is not a controlling person of, or a member of a group
which controls, such entity, and (B) does not, directly or indirectly, own 1% or
more of any class of securities of such entity.

             (b) During the Non-Compete Period, Executive shall not, without the
prior written consent of the Company, directly or indirectly, on behalf of
himself or any other person or entity solicit or encourage any employee of the
Company or any of its Affiliates to leave the employment of the Company or any
of its Affiliates, or hire any employee who has left the employment of the
Company or any of its Affiliates within one year of the termination of such
employee's employment with the Company or any of its Affiliates.

             (c) During any portion of the Non-Compete Period during which
Executive is not employed by the Company, Executive shall not, in any Geographic
Area, and in connection with any business competitive with the Company's
Business (as hereinafter defined), directly or indirectly, (i) solicit or
encourage any customer or client of the Company to engage the services of
Executive or any person or entity (other than the Company) in which Executive is
a partner, shareholder, director, officer, employee, principal, member, manager,
agent, trustee, consultant or engaged in any other relationship or capacity, or
(ii) accept orders or business from, or agree to provide services to, any
customer or client of the Company, on behalf of Executive or any person or
entity (other than the Company) in which Executive is a partner, shareholder,
director, officer, employee, principal, member, manager, agent, trustee,
consultant or engaged in any other relationship or capacity.

             (d) If any provision of Sections 8 or 9 is held to be unenforceable
because of the scope, duration, area of its applicability or otherwise, it is
the intention of the parties that the court making such determination shall
modify such scope, duration or area, or all of them so that the provision shall
be enforceable to the greatest extent permitted under the law, and that such
provision shall then be applicable in such modified form.

             (e) As used in this Agreement:

                  (i) "Affiliate" shall mean any entity directly or indirectly
controlling, controlled by, or under common control with the Company and any
entity in which the Company is a general partner, member, manager or holder of
greater than a 10% common equity, partnership or membership interest.

                                      -7-
<PAGE>   8
                  (ii) "Company Business" shall mean the business of the Company
as so defined at the time of the signing of this Agreement, or at the time of a
violation of this Section 9 is alleged to occur or, if such alleged occurrence
is after Executive's employment is terminated, the business of the Company at
the time such employment terminates.

                  (iii) "Geographic Area" shall mean the world.

                  (iv) "Non-Compete Period" shall mean the period during which
Executive is employed by the Company and for an additional period of two years
following the termination of Executive's employment with the Company. Such two
year period following Executive's termination of employment shall be reduced to
a one year period in the event the Executive's termination of employment by the
Company occurs for no specific reason or in the event Executive terminates his
employment with the Company for Good Reason, as defined in Section 6(d)(vi)
hereof.

                  (v) "Control," with respect to any person, shall mean
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of such person, whether through the ownership of
voting securities or a partnership interest, by contract or otherwise, and for
example, including election of a majority of a board of directors of persons who
simultaneously serve on another affiliated board of directors.

         10. Enforcement by Injunction. Executive acknowledges and agrees that
the Company will be irreparably damaged if Executive fails to comply with the
provisions of Sections 8 or 9 hereof, subject to the applicable terms and
conditions of this Agreement, including Section 2(b) and Section 14 hereof.
Accordingly, in the event of such a failure to comply with the terms and
conditions of Sections 8 or 9 hereof, the Company shall be entitled to (i) an
injunction or any other appropriate decree of specific performance (without the
necessity of posting any bond or other security in connection therewith) in case
of any breach or threatened breach of Executive's covenants under Sections 8 or
9, (ii) damages in an amount equal to all compensation, profits, monies,
accruals, increments or other benefits derived or received by Executive (or any
associated party deriving such benefits including but not limited to any future
employer of Executive) as a result of any such breach of Executive's covenants
under Sections 8 or 9, and (iii) indemnification against any other losses,
damages, costs and expenses, including actual attorneys' fees and court costs,
incurred by the Company in obtaining any damages and/or injunctive relief. Such
remedies shall not be exclusive and shall be in addition to any other remedy, at
law or in equity, which the Company may have for any breach or threatened breach
of Sections 8 or 9 by Executive.

         11. Notices. Any and all notices or other communications required or
permitted to be given under any of the provisions of this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered or
mailed by first class registered mail, return receipt requested, or by
commercial courier or delivery service, or by facsimile, addressed to the
parties at the addresses set forth below their signatures hereto (or at such
other address as any party may specify by notice to all other parties given as
aforesaid).

         12. Indemnification. The Company shall indemnify Executive and hold
Executive harmless from and against any and all losses, claims, damages or
liabilities (including reasonable

                                      -8-
<PAGE>   9
attorneys' fees), and all actions, claims or proceedings in respect thereof,
brought against Executive by any third party by reason of the fact that
Executive is or was a director, officer or employee of the Company or any other
business or entity for which Executive so serves at the written request of the
Company, if Executive acted, in good faith, for a purpose which Executive
reasonably believed to be in, or (in the case of service for such other business
or entity) not opposed to, the best interests of the Company and, in criminal
proceedings, in addition, had no reasonable cause to believe that Executive's
conduct was unlawful; provided that the Company shall not be liable under this
Section 12 to the extent that any loss, claim, damage, liability or expense: is
found by a court of competent jurisdiction to arise (i) from the gross
negligence or willful misconduct of Executive or (ii) out of or relate to
Executive's acts or omissions, negligent or otherwise, relating to any of the
outside business and investment activities of Executive described in Section
2(b) above. In connection with the indemnity granted by the Company, Executive
agrees (i) to notify the Company promptly of the assertion against Executive of
any claims or the commencement of any action or proceeding for which Executive
may seek indemnity under this Agreement (provided that the failure to so notify
the Company shall not affect the Company's obligations hereunder, except to the
extent the Company is materially prejudiced by such failure); and (ii)
reasonably to cooperate with the Company and counsel selected by the Company to
represent Executive (which counsel shall be reasonably acceptable to Executive).
Expenses (including reasonable attorneys' fees and disbursements) Executive
incurs in defending any action, suit or proceeding shall be paid by the Company
from time to time promptly upon Executive's written request in advance of the
final disposition of the action, suit or proceeding upon presentation of
vouchers or other evidence of the incurrence of the expense and upon receipt of
an undertaking in writing by Executive to repay such amount if it shall
ultimately be determined that Executive is not entitled to be indemnified
thereunder.

         13. Arbitration. Any dispute or controversy arising under this
Agreement or concerning Executive's employment with the Company (including,
without limitation, any controversy as to the arbitrability of any dispute)
including but not limited to any claims arising out of Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, and/or Massachusetts General Laws Chapter 151B, shall be
settled exclusively by arbitration to be held in Boston, Massachusetts, before a
single arbitrator in accordance with the rules of the American Arbitration
Association then in effect relating to the arbitration of employment disputes,
provided, however, that any claims arising out of Sections 8, 9 and/or 10 of
this Agreement shall be resolved through the courts. Judgment may be entered on
the arbitrator's award in any court having jurisdiction, and the parties consent
to the jurisdiction of the Massachusetts courts for that purpose.

         14. Miscellaneous.

             (a) This writing constitutes the entire agreement of the parties
with respect to the subject matter hereof and may not be modified, amended or
terminated except by a written agreement signed by all of the parties hereto.

                                      -9-
<PAGE>   10
             (b) This Agreement shall not be assignable by Executive, but it
shall be binding upon, and shall inure to the benefit of, Executive's heirs,
executors, administrators and legal representatives. This Agreement may be
assigned by the Company to any Affiliate of the Company or any successor to all
or substantially all of the Company's Lifef/x technology and shall be binding
upon and inure to the benefit of the Company and its successors and assigns.

             (c) No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.

             (d) If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein, unless the invalidity or unenforceability of such provision
substantially impairs the benefits of the remaining portions of this Agreement.

             (e) The section headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said
sections.

             (f) This Agreement may be executed in two or more counterparts, all
of which taken together shall be deemed one original.

             (g) This Agreement shall be deemed to be a contract under the laws
of the Commonwealth of Massachusetts and for all purposes shall be construed and
enforced in accordance with the internal laws of said Commonwealth.

             (h) This Agreement shall not confer any rights or remedies upon any
person or entity other than the parties hereto and their respective successors
and permitted assigns.

             (i) The Executive acknowledges that he has consulted with counsel
and is fully aware of his rights and obligations under this Agreement.

             (j) The Executive represents and warrants that his employment by
the Company as described herein shall not conflict with and will not be
constrained by any prior employment or consulting agreement or other business or
investment relationship, and that he has previously obtained all necessary work
permits, green cards, and has satisfied all other requirements of applicable law
for a Canadian citizen to be employed in the United States.

                                     -10-
<PAGE>   11
             (k) During his Employment Period, the Company agrees to use its
reasonable best efforts to obtain and to pay for Directors and Officers
Liability insurance from a solvent insurer in amounts and on terms which the
Company in its sole discretion may establish from time to time, and to provide
evidence of such insurance to the Executive once in each calendar year if
requested in writing by the Executive to do so.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                     Lifef/x Networks, Inc.

/s/ Richard Guttendorf               By: /s/ Lucille S. Salhany
----------------------------------      ---------------------------------

                                    Name: Lucille S. Salhany
----------------------------------        -------------------------------
                                     Title: CEO and Co-President
Address:                                   ------------------------------

                                     Name and Address:
----------------------------------   Lucille S. Salhany, CEO and Co-President
                                     Lifef/x, Inc.

                                      -11-

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