Document:

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                                                                   Exhibit 10.25

                         RENTAL CONTRACT No. 11/V225162

May 18, 2000                                                     St. Petersburg

     The Committee for Managing City Property of St. Petersburg. acting in
accordance with the regulation concerning the Committee and hereinafter referred
to as "Landlord," in the person of the Director of the Admiralteyskoye District
Agency of the Committee for Managing Urban Property. Natalya Gennalyevna, acting
on the basis of a power of attorney from the Chairman of the KUCI [Committee for
Managing City Property] No. 27-42 dated January 5, 2000 on the one hand and the
limited liability company Artifishel Layf Rus [Artificial Life Rus], registered
by Decision No, 123879 of the Registration Chamber of St. Petersburg,
Certificate No. 77164, November 24, 1998 hereinafter referred to as "Tenant" in
the person of Yevgeniy Anatolyevich Malakhovskiy, acting on the basis of power
of attorney 78 AE 433317 dated May 9, 2000, have executed the following contract
(hereinafter referred to as "the Contract") concerning the following.

                              1. GENERAL PROVISIONS

     1.1. The Landlord undertakes to provide the tenant against payment the
temporary possession and use of the nonresidential property -- nonresidential
premises (building and equipment) hereinafter referred to as "The Property"
located at the address pr. Rimskogo-Korsakova, 22, liter B, Room 25n, cadastral
number 78:1244:0:8:1 on the second story on the basis of Order No. 878-r from
the Chairman of the KUGI dated May 16, 2000 for nonresidential use (office).

     The total area of the rented premises is 1996.6 (one thousand nine hundred
ninety-six and six hundredths) square meters.

     1.2. The information concerning the property contained in the Contract and
its annexes is sufficient for the proper use of the Property in accordance with
the purposes specified in Item 1.1. of the Contract. No documents aside from
those specified in Section 8 of the Contract shall be handed over.

     1.3. This contract shall be in effect for 5 years and shall enter into
force at the time it is officially registered. The terms of this contract shall
cover the relations between the parties from the date the Certificate of
Acceptance of the property is signed in accordance with Item 1.1 of the
Contract.

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                    2. RIGHTS AND OBLIGATIONS OF THE PARTIES

     2.1. The Landlord undertakes;

     2.1.1. To hand over the Property in accordance with the Certificate of
Acceptance to the Tenant no later than 10 days after the Contract is signed. The
Certificate of Acceptance for the Property shall be signed by the Landlord, the
organization acting as Facility Administrator 2000 OMIS [Department of Maritime
Engineering Service] (hereinafter referred to as the "Facility Administrator"],
and the Tenant. The Certificate in question shall be attached to the Contract
(Annex 1) and shall be an integral part of the latter.

     2.1.2. To consider within a month the requests by the Tenant with regard to
changing the use of the Property and also repairing and reequipping it.

     2.1.3 To give written notice to the Tenant not less than two months in
advance of the need to vacate the Property in connection with a decision made in
the established manner concerning the performance of major repairs on the
building in accordance with the approved plan for major repairs or concerning
its razing (or reasons of urban renewal).

     2.2. The Tenant undertakes:

     2.2.1. To use the Property in accordance with Item 1.1 of the Contract and
the standards and regulations for the use of buildings (premises) established by
legislation, including sanitary standards and regulations, fire safety
regulations, and statutory standards for the use of historical and cultural
monuments (where necessary).

     2.2.2. To pay promptly and completely to the Landlord the rent established
by the Contract and subsequent amendments to it for the use of the Property and
also the value added tax and other taxes.

     2.2.3. To pay the insurance premiums for the Property promptly during the
whole period that the Contract is in effect.

     2.2.4. Current and major repairs shall be carried out be the Tenant at its
cost within a reasonable period with prior written notification to the Landlord.
A different procedure and conditions for carrying out major repairs may be
established in a supplementary agreement to this Contract.

     If the major repairs on the Property are carried out in connection with
general major repairs on the building (equipment), financed in the established
manner out of funds from the city budget, the relations between the Parties with
regard to an allowance for the Tenant's expenditures, if the latter participates
in carrying out the major repairs and other matters connected with carrying out
the major repairs, shall be specified in a supplementary agreement to this
Contract.

     2.2.5. To ensure the preservation of the utility lines and equipment at the
Property.

     2.2.6 Not to lay covered or open electric or utility lines or to catty out
redesigning or equipment changes without the written permission of the Landlord.

     In the event that the Landlord discovers unsanctioned structural changes,
violations of the integrity of the walls, partitions, or ceilings, remodeling.
or laying networks that distort the original appearance of the Property, these
must be eliminated by the Tenant and the premises returned to the original state
at the Tenant's cost within a period set unilaterally by the Landlord.

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     2.2.7. Within the rented premises to comply with the requirements of the
State Public Health Inspectorate, the State Fire Inspectorate and also
industrial relations and standards in effect with regard to the kinds of
activity of the Tenant and the property it rents.

     2.2.8. To vacate the premises in connection with a state of emergency in
the building structure (or in part of it), performance of major repairs on the
building, or its razing for reasons of urban renewal within the periods
specified by the Landlord.

     2.2.9. To maintain the Property and the territory appertaining to it in a
proper state with regard to sanitation and fire protection.

     2.2.10. To Inform the Facility Administrator and the Landlord immediately
about any damage, accident, or other event causing (or threatening to cause)
harm to the Property and promptly to take all possible measures to prevent
threats of further destruction or damage to the Property.

     2.2.11 Within twenty days from the date this Contract enters into force:

     - to execute contracts for the supply of water, heat, electric power, and
other resources to the rented premises directly with the organizations providing
these services;

     - to execute a contract for technical services for the rented premises with
the Facility Administrator or, if it is actually possible, with other
organizations.

     - to execute a contract for the collection and the disposal of trash with
the district housing agency or with an organization performing such services. To
make payments promptly for services under the contracts in question.

     2.2.12. When subletting the Property in the established manner:

     - to ensure the compliance of the sublessee with the standards and
regulations for the use of a nonresidential property, including sanitary
standards and regulations, fire safety regulations, statutory standards for the
use of monuments of history and culture (where necessary), and also other
statutory standards and regulations.

     - to Inform the Landlord about the execution of a subletting contract
within fifteen days from the date of official registration of the subletting
contract and also to inform the Landlord about all amendments to the subletting
contract.

     2.2.13. To ensure that the Landlord and Facility Administrator have
unhindered access to the Property for inspecting it and verifying compliance
with the terms of the Contract.

     2.2.14. If an insured event covered in the insurance policy occurs, to
notify the Landlord, Facility Administrators and also the appropriate
responsible officials (police, State Fire Inspectorate, the organization
operating the utilities, etc.), and ASO RUS about the event without delay and
also afford representatives of the insurance organization the opportunity to
inspect the premises.

     2.2.15. To give written notice to the insurance organization mentioned
above about all changes in the degree of risk within no more than three days
from the onset of these changes.

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     2.2.16. To carry out within the specified period the orders of the
Landlord, Facility Administrator, the State Fire Inspectorate, and other
supervisory bodies concerning measures to be taken to remedy situations arising
as a result of the activity of the Tenant that threaten the safety of the
Property and the ecological and sanitary situation outside the rented premises,
and also with regard to compliance with the Tenant's obligations specified in
Items 2.2.6 and 2.2.9 of the Contract.

     2.2.17. To maintain the facade of the Property in a proper state. If part
of the building is rented, the Tenant shall accept a fractional participation in
the repair of the building facade. The share of the Tenant in expenditures for
repair shall be determined based on the ratio between the area rented and the
total area of the building.

     2.2.18. In the event that the Property is a building or structure and at
the time it is rented there are not confirmed boundaries for the plot of land
attached to the Property before ____________________, 19__, to arrange at its
own cost for the development of a plan of the boundaries of the plot of land
attached to the Property and execute a rental contract for the plot of land in
question (excluding the area on which the Property is built) within a period of
15 days from the time the boundaries are confirmed in the established manner.

     2.2.19. To return to the Landlord the Property in accordance with the
Certificate of Acceptance signed by the persons indicated in Item 2.1.1 no later
than ten days after the expiration of the period of validity of this Contract or
the date established for its cancellation in the condition in which the Tenant
received it, taking into account normal wear with all nonremovable improvements.

     2.4. The Landlord shall have the right to place advertising on the outside
of the building or structure, part of which is the Property.

     2.5. The Tenant shall have a preferential right over other persons to
execute a rental contract for a new period in the event that it has committed no
violations of the Contract during the period that it has been in effect on the
condition that the tenant inform the Landlord in writing of its desire to
execute a Contract for a new period no later than 2 months before the expiration
of the period that the Contract is in force.

     3. PAYMENTS AND ACCOUNTS REGARDING THE CONTRACT

     3.1. The rent paid for using the Property shall be set in conventional
units ((UYe) and at the time the Contract is executed it shall amount to 47.405
(forty-seven and four hundred and five thousandths) UYe per square meter per
year without taking into account the value-added tax: the rental payment for the
Property amounts to 23662.174 UYe per quarter.

     3.2. The conventional unit is equal to the value in rubles of one US dollar
at the exchange rate of the Central Rank of the Russian Federation on the first
working day of the quarter for which the payment is made. The Tenant shall be
required to calculate the amount of the rental payment to be remitted to the
Landlord In accordance with Item 3.1.

3.3 In the event of a change in the regulations of the Russian Federation and/or
St. Petersburg governing the calculation of the amount of rent and also [in the
event of a change] in the kind of activity of the Tenant (in the framework

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of the purposes for using the Property in accordance with Item 1.1. of the
Contract) the Landlord shall have the right to change the amount of the rental
payment in a noncontestable unilateral manner. The new amount of the rental
payment shall be set from the time the Tenant receives notification of the
corresponding

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amendment of the Contract. The time of receipt by the Tenant of notification is
specified in any event as no later than three days from the date a registered
letter is sent to the address indicated in the contract.

     3.4. The Tenant shall remit the rental payment and also the value-added tax
and other taxes indicated by a separate line in the payment order for each
quarter in advance, no later than the tenth day of the first month in the
current quarter.

     3.5. If the Tenant does not make the rental payment within twenty days from
the due date for payment, the Landlord shall have the right to collect the
indebtedness from the Tenant in the established manner.

     3.6. Each quarter the Tenant shall pay the insurance premium that is
specified in insurance contract No. 545422 dated May 18, 2000 between the Tenant
and the insurance organization designated in Item 2.2.14 in accordance with the
method in effect for assessing the value of real property for calculating the
amount of insurance and the insurance premium. Payment of the first insurance
premium with subsequent submission to the Landlord of a copy of the payment
order shall be accomplished within ten days from the day the Property is
transferred to the Tenant under the Certificate of Acceptance or the Contract is
signed, if the Property is already in the possession of the Tenant. Subsequently
the insurance premium for each quarter shall be paid no later than the
twenty-fifth day of the last month of the preceding quarter and a copy of the
payment order shall be provided to the Landlord within ten days.

     3.7. The amount of the insurance premium may be recalculated in accordance
with the method in effect for assessing the value of real estate for calculating
the amount of insurance and the Insurance premium. The recalculation of the
amount of the insurance premium shall be carried out by the insurance
organization designated in Item 2.2.14. and the Landlord and Tenant must be
informed about the recalculation performed. The notification in question must be
carried out in such a way that the Contracting Parties acquaint themselves or
have the opportunity to acquaint themselves with it no later than one month
before the start of the period of the payment in question.

                           4. LIABILITY OF THE PARTIES

     4.1. in the event of the failure to comply or failure to comply properly
with the provisions of the Contract the guilty party shall be required to make
compensation for losses that are caused.

     4.2. In the event that the Landlord violates Item 2.1.1 of the Contract, it
shall pay the Tenant a penalty in the amount of 0.5 MROT [daily minimum wage
rate] for each day of delay.

     4.3. In the event that the Tenant violates Item 2.2.2 of the Contract,
penalties in the amount of 0.15% of the amount in arrears shall be assessed for
each day of delay.

     4.4. In the event that the Tenant does not hand over the Property on time
in accordance with Item 2.2.19 of the Contract, penalties shall be assessed in
the amount of 0.5 MROT for each day of delay.

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     4.5. In the event of failure to fulfill on time the requirements in
accordance with Item 2.2.16 of the Contract, penalties shall be assessed in the
amount of 0.5 MROT for each day of delay.

     4.6. In the event of a violation of other terms of the Contract the guilty
party shall pay a penalty in the amount of thirty percent of the amount of a
quarterly rental payment.

     4.7. Payment of a penalty shall not release the Party from carrying out
obligations imposed on them under the Contract.

                     5. AMENDING AND CANCELING THE CONTRACT

     5.1. Amendments proposed to the Contract shall be considered by the Parties
within a month and be formalized by supplementary agreements except in the cases
provided in Item 3.3 of the Contract.

     5.2. If the Tenant continues to use the Property after the expiration of
the period of the Contract in the absence of objections from the Landlord, the
Contract shall be considered renewed on the same terms for an indefinite period.
In this regard each of the Parties shall have the right at any time to denounce
the Contract, informing the other Parry about this no later than one month
before the termination of the period the Contract is in effect that is indicated
in the notification.

     5.3. The rental Contract may be canceled prematurely at the request of the
Landlord under a judicial decision in the event of the following substantial
violations of the Contract acknowledged by the Parties:

     5.3.1. If the Tenant uses the Property for a purpose not designated in Item
1.1 of the Contract

     5.3.2. If there is indebtedness with regard to the performance of the
rental payment provided by the Contract, taking into account subsequent
amendments to it, over the course of three months regardless of whether it is
paid later. Cancellation of the Contract shall not release from the need to
discharge the indebtedness with regard to the rental payment and the payment of
a penalty.

     5.3.3. If the Tenant does not ensure the Landlord or the Facility
Administrator unhindered access to the Property for inspecting it and verifying
compliance with the terms of the Contract during two working days in accordance
with Item 2.2.13 of the Contract.

     5.3.4. If the rental right is mortgaged or contributed to the authorized
capital of a business company or partnership or if the Property is encumbered by
other means without the written permission of the Landlord with the exception of
cases of subletting provided in Section 6 of the Contract.

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     5.3.5. If the Tenant intentionally or negligently worsens the state of the
Property or the engineering equipment substantially or does not fulfill the
requirements specified in Items 2.2.6, 2.2.7, 2.2.16. 2.2.17, or 2.2.l8 of the
Contract.

     5.3.6. If the Tenant did not put the Property into operation within the
specified periods or does not implement the planned schedule for repair and
restoration work (Annex 2 to the Contract).

     5.3.7. In the event of the absence of the contracts specified in Item 2.2.1
of this Contract in the course of more than one month.

     5.3.8. In the event that the Tenant does not pay the insurance premium in
accordance with Item 3.6. of the Contract or does not pay it on time.

     5.4. The Landlord shall have the right to go to court with a request for
premature cancellation of the Contract if the Tenant does not remedy substantial
deficiencies within the period specified in the relevant written warning.

     5.5. The Contract shall be subject to premature cancellation in the event
that a decision is made in the established manner concerning the razing of the
building in connection with a state of emergency of its structural elements or
for reasons of urban renewal.

                              6. SPECIAL CONDITIONS

     6.1. Rights of third parties to the Property being rented: NONE.

     6.2. The Tenant shall perform major repairs of the rented premises at its
cost in the periods foreseen in the planned schedule agreed on with the Landlord
(Annex 2), which is an integral part of the Contract. After each stage of the
designated work is completed the Tenant shall submit to the Landlord: written
report within ten days, (in the event that the rental right is granted with a
condition that the Tenant carry out the major repairs).

     6.3. In the event that the Property is sublet in accordance with the terms
of the Contract when there is a premature cancellation of the rental contract,
the sublessee shall not have the right to execute a contract with it.

     6.4. A Tenant that does not have indebtedness with regard to the rental
payment at the time the subletting contract is signed shall have the right to
execute a subletting contract if in compliance with Item 2.2.12 of the Contract.

     6.5. The Tenant shall be required not to execute contracts and not to enter
into transactions that have or may have as a consequence any encumbrance of the
property rights granted to the Tenant under the Contract in particular their
transfer to another person (mortgage contracts, subletting contracts,
contribution of the right to rent the Property, or part of it to authorized
(inventory) capital, each without the written permission of the Landlord with
the exception of subletting in compliance with the terms specified by Items
2.2.1. and 2.6.4 of the Contract.

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     6.6. In the event that the Tenant does not comply with the conditions for
subletting the Property that are specified in Item 2.2.12 of the Contract, the
Landlord shall have the right to refuse to carry out its obligations under the
rental Contract and cancel the rental contract in a unilateral manner without
recourse to a court.

     In the cases indicated the Contract shall be considered to have been
canceled from the time that the Tenant receives notification of the refusal to
carry out the obligations. In any event the time of receipt by the Tenant of
notification shall be set not later than 5 days from the date it is sent by
registered letter to the address Indicated in the rental Contract.

     6.7. The Tenant shall be required to formalize a preservation obligation in
the KGIOP (Committee of the State Inspectorate for the Preservation of
Architectural Monuments.]

     6.8. Carrying out repair and restoration work in accordance with the
schedule agreed with the KGIOP in the period before September 1 2000.

                               7. OTHER CONDITIONS

     7.1. Nonremovable improvements, including major repairs of the Property,
shall be carried out by the Tenant only with the permission of the Landlord. The
cost of such improvements may be wholly or partially reimbursed to the Tenant
through the rental payment up to the termination of the period of rental on the
condition of prior written agreement with the Landlord on the amount subject to
reimbursement. On termination of the Contract the cost of nonremovable
improvements shall not be reimbursed.

     7.2. If the Property becomes unsuitable for its intended use through fault
of the Tenant earlier than the full period for depreciating the service, then
the Tenant shall reimburse the Landlord for the rental payment that was not made
and also other losses in accordance with legislation of the Russian Federal that
is in force for the period from the time the unsuitability of the Property is
discovered and until the expiration of the period of validity of the Contract
indicated in Item 1.2.

     7.3. If the state of the Property being returned on the termination of the
Contract is worse than is provided by the Contract, then the Tenant shall
reimburse the Landlord for the damage caused in accordance with legislation of
the Russian Federation that is in force.

     7.4. Matters not covered by the Contract shall be governed by civil
legislation of the Russian Federation that is in force.

     7.5. Disputes that arise during the performance of the Contract shall be
considered by a court or an arbitration tribunal in accordance with their
Jurisdiction.

     7.6. The property rights of the Tenant shall be protected in accordance
with legislation of the Russian Federation that is in force.

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     7.7. If there is a change in name, location, requisite bank data, or a
reorganization, the Parties shall be required to inform one another in writing
within two weeks about the changes that have occurred.

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     7.8. The Contract is prepared in 4 copies, each of which has identical
legal force.

                           8. ANNEXES TO THE CONTRACT

     The following annexes are integral parts of the Contract:

     1.   Certificate of Acceptance dated May 16, 2000
     2.   Calculation of rental payment               [stamp: State Institution
     3.   PIB (design and inventory documents         "City Administration for
     4.   Planned schedule                            Inventorying and Assessing
     5.   Planned schedule                            Real Property
                                                      Record No. 11-4348

                           9. KEY DATA ON THE PARTIES
June 30, 2000                                             Signature: [Illegible]
     Landlord: Admiralteyskoye District Agency of KUGI
     Address: 2190000, St. Petersburg, ul. Bolshaya Morakaya 41/11
     INN [Taxpayer identifying number] 7832000076
     Settlement account No. 40603810125000000094, MFO 044030791
     Correspondent Account 30101810200000000791
     in the Leninsk Branch of AO Promstroybank
     Manager's telephone: 314-20-87
     Bookkeeper's telephone: 311-79-78 [illegib1e stamp with scrawled signature
     and date: Mar 4, 2000]
     Tenant: Limited liability company Artifishel Layf Rus [Artificial Life Rus]
     Address: 190000 Sr.. Petersburg, ul, Mokhovaya, d. 15

     INN 7825121030
     Settlement account No, 40702810000000002380
     in the branch of the Foreign Trade Bank in St. Petersburg

     Manager's telephone 969-83-33
     Bookkeeper's telephone:

     For the Landlord                         For the Tenant
     Agency Director
     N.G. Cordeyeva                           B.A. Malakhovskiy
     [signature]                              [signature]
     [signature]                              [signature]
Place for seal                                [stamp: Artificial Life Rus, Ltd.]
     [stamp: Admiralteyskoye District Agency,
     Committee for Managing City Property]

                                   CERTIFICATE
                    OF ACCEPTANCE OF NONRESIDENTIAL PREMISES
May 16, 2000                                                     St. Petersburg

     This certificate is drawn up on the basis of an inspection of the premises
by a representative of the Admiralteyskoye District Agency of KUGI

                                       11
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and the limited liability company Artifishel Layf Rus [Artificial Life Rus] in
the person of B.A. Malakhovskiy
A commission composed of:
Representative of LANDLORD G.A. Solovyev
Representative of the TENANT Ye.A. Malakhovskiy
Representative of  FACILITY ADMINISTRATOR S.A. Demidov inspected the premises at
     the address:
Rimskogo-Korsakova 22 lit. B, having a total area  of 1996.6 square meters.

     As a result of the inspection it was found that:

     The rented property is located on the 4th story of a building constructed
in 1870.

     1.   The foundations are in satisfactory condition.
     2.   The walls and their exterior finish are in satisfactory condition.
     3.   The ceilings are in satisfactory condition.
     4.   The floors are in satisfactory condition.
     5.   The door and window openings are in satisfactory condition.
     6.   The interior finish is in satisfactory condition.
     7.   Heating - None.
     8.   Running water - Yes.
     9.   Sewage connection - Yes
     10.  Hot water - None
     11.  Ventilation - None

     After inspection the property was banded over in accordance with this
certificate to the Tenant, which did nor raise any objection to the Condition of
the property or to the periods for which it is being transferred.

     Signatures of the commission members:

     The property was handed over by:              The property was accepted by:

     LANDLORD                                      TENANT
     [signature]                                   [signature]

     [stamp: Administrative District Agency        [stamp: Artificial Life Rus,
     Committee for Administrative City Property]   Ltd., St. Petersburg]

pursuant to a power of attorney from
         No.
Facility Administrator                             Acting Director of 2000 OMIS
                                                   [Department of Maritime
                                                   Engineering Service]
[stamp: 2000 Department of Maritime [signature]
Engineering Service]

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                     PLAN OF SECONDARY REAL ESTATE PROPERTY

                                   (premises)

                         Cadastral number 78: 1244:0:8:1
                                         ---------------
                          Previous cadastral number 78:
                      Type of record: primary, confirmation
                                     -------
             Method of formation: primary, merger. division, change
                                  -------

Address of property: 198068 St. Petersburg, prospekt Rimskogo-Korsakova, dom 22.

                  liter 13

Descriptive address:  prospekt Rimskogo-Korsakova dom 22

                  Naberezhnaya kanala Griboyedova, dom 133.

Designation of property: office             Use of property: nonresidential

Number of property: 25-N
(residential/nonresidential)
Story:   2nd
Area of property: 1996.6 square meters

         boundaries of the secondary real estate property

Additional information:

                                              Director of the Branch of GU GUION
                                              [State Institution, City

State Land Register                           for Inventory an Assessing Real
[Property]
[signature]                                   [illegible stamp]
[illegible stamp]                             A.V. Kostrominskaya
Place for seal _________, 2000                [stamped date: Apr 19, 2000]
                                                                    , 2000
                                              ----------------------

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                              SITE PLAN OF THE LOT

Address of property: 198068 St. Petersburg, prospekt Rimskogo-Korsakova, dom 22.
                  liter B

Descriptive address: prospekt Rimskogo-Korsakova, dom 22.
                    naberezhnaya kanala Griboyedova, dom 1333

                           prospekt Rimskogo-Korsakova

                         naberezhnaya kanala Griboyedava

                                  Scale 1:2000

                         ____ boundaries of the property

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                             Information on Premises

               for calculating [recalculating] the rental payment

1. Address of structure (indicating letter]: prospekt Rimskogo-Korsakova dom 22,
liter B

Descriptive address (of corner structures and those extending through the
block);

                                       prospekt Rimskogo-Korsakova, dom 22
                                       naberezhnaya kanala Griboyedova, dom 133.

Characterization of type and quality of construction

2.1  Durability                2.2    Area of nonresidential premises in the
                               structure not counting basement and technical
                               premises (which include attics and garrets)
X    Durable                       Less than 600 square meters
     Pavilion                  X   More than 600 square meters
     Hangar
     Wooden

3.   Characterization of premises*

31.  Premises (part) number: 25-N

3.2  Story occupied    3.3   Type of entrance 3.4      Amenities
     1st story                    Separate from street       X   Electric
power
X    2nd story                    Separate from courtyard    X   Running water
     higher than 2nd (with        Common from street                           X
     Heating
         elevator)**     X        Common from courtyard      X   Sewage
connection
     higher than 2nd              2 entrances, incl. separate
     (without elevator)                    from street
     Basement                     Through entrance gate
     Story below Street level
     Garret (with elevator)
     Garret (without elevator)
     Technical story
     Technical basement
     (Underground technical area)
     Stairwell
     Attic

3.5  Area of premises (square meters); 1996.6 square meters

3.6  Area of parts of premises that are being rented***

3.7  Area of general use rooms in the premises***

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3.8  Total area being rented (square meters); 1996.6 square meters

Remarks (information about redesigning, etc.);

Executor T.I. Belonozhko

Director of the branch GU CUION

PIB Admiralteyskiy District                 [signature]      A.V. Kostrominskaya
                           ---------------------------------

Date          2000

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                                   CALCULATION

of the level of rental payments for the nonresidential premises for a rental
contract for nonresidential property

No. 11-42                  dated                          regarding the address
PR. RIMSKOGO-KORSAKOVA, dom 22. liter B. premises 25N
(St. Petersburg, naberezhnaya Kryukova kanala)

                             1. ITEMS OF INFORMATION
1.1. Name of enterprise renting the premises in question

     Tel.
1.2. Existing restriction on the use of the property
     Office             Commercial            Industrial
1.3. Area rented (square meters) 1996.6
1.4. Stories occupied  2nd FLOOR
1.5. Condition of premises              UNSATISFACTORY
1.8. Entrance to premises               COMMON ENTRANCE FROM
     COURTYARD
1.7. Type of building  STONE BUILDING, HIGHLY DURABLE BRICK
                                WALLS > 2.5K.
1.8. Amenities:                 Running water: Yes; Electric power: Yes
                                Heating: Yes; Sewer connection: Yes
1.9. Coefficient of social significance:
              1.00

1.10. Rate for 1 U.Ye. [conventional unit] at the beginning of the quarter
     (rubles) 14.800

2.   Calculation of rental payment

                                       17
<PAGE>

2.1. Calculation coefficients

------------------------------------------------------------ -------------------
Best rate                                                           186.600
------------------------------------------------------------ -------------------
Rental                                                               0.700
------------------------------------------------------------ -------------------
Premises                                                             0.862
------------------------------------------------------------ -------------------
Area                                                                 0.901
------------------------------------------------------------ -------------------
Stories occupied                                                     0.910
------------------------------------------------------------ -------------------
Condition of premises                                                0.790
------------------------------------------------------------ -------------------
Entrance to premises                                                 0.650
------------------------------------------------------------ -------------------
Type of building                                                     1.000
------------------------------------------------------------ -------------------
Amenities
- running water                                                      1.000
- sewage connection                                                  1.000
- heating                                                            1.000
- electric power                                                     1.000
------------------------------------------------------------ -------------------
Rental payment rate in UYe per square meter (without                47.405
preferences)
------------------------------------------------------------ -------------------
Rental payment rate in UYe per square meter per year                47.409
------------------------------------------------------------ -------------------

Best use: OFFICE
Rental payment in case of best use:
Without preferences:
Per year 94648.698 UYe., per quarter: 23662.174 U.Ye., per month:
7887.391 UYe.
Taking into account the coefficient of social significance.
Per year: 94648.698 U.Ye.. per quarter: 23662.174 U.Ye., per month:
7887.391 U.Ye.
Average COST of one square meter per year: 47.405 U.Ye.

Executor [signature]
Date of calculation

                                       18
<PAGE>

                                                             Artifishel Layf Rus
                                                   191028 Russia, St. Petersburg
                                                                Makhovaya ul. 15
                                                                   tel. 327-3760
                                                                    fax 272-6667
                                            mailing address: Artificial Life Rus
                                                             po box 109 (WP) 675
                                                   Lappeenranta SF-53101 Finland

artificial life, Inc.

                                                        Annex to Rental Contract
                                                for pr. Rimskogo-Korsakova, d.22

                                Planned Schedule
                         of Repair and Restoration Work
                        on the Building Complex/Monument
                          pr. Rimskoga-Korsakova, d.22

<TABLE>
<CAPTION>
----------------- ------------------------------------------ ---------------------------- ---------------------
No.               Designation of Work                        Time for                     Comment
                                                             Completion
----------------- ------------------------------------------ ---------------------------- ---------------------
<S>               <C>                                        <C>                          <C>
1                                     2                                   3                            4
----------------- ------------------------------------------ ---------------------------- ---------------------
1                 Surveying the bearing construction         May to November 2000
                  elements of the building (Wing No. 1),
                  obtaining the specifications for heat,
                  electrical power supply, working out and
                  harmonizing the plan for repair and
                  restoration work and adaptation to
                  current purposes

2                 Repairing the roof, restoring electric     July to October 2000
                  power supply to Wing No. 1.  Repair of
                  the engineering system of Wing No. 1

3                 Preparing the PIB documentation,           June to September 2000
                  preparing, harmonizing, and formalizing
                  the rental contract for the whole
                  complex of buildings

4                 The rental contract for the whole          April to October 2001
                  complex of buildings

----------------- ------------------------------------------ ---------------------------- ---------------------
5                 Repairing the facade of Wing No. 1         2002-2003

6                 Repairing the roof of Wings No. 2, 3, 4,   April to November 2001
                  and 6

----------------- ------------------------------------------ ---------------------------- ---------------------
</TABLE>

                                       19
<PAGE>

<TABLE>
----------------- ------------------------------------------ ---------------------------- ----------------------
<S>               <C>                                        <C>
7                 Repairing the engineering system of        August to November 2001
                  Wings No. 2, 3, 4 and 6
8                 Surveying the bearing structural           September 2000 to April
                  elements of the buildings (Wings Nos. 2,   2001
                  3, 4, and 6), obtaining specifications
                  for heat and electric power supply,
                  developing and harmonizing the plan for
                  repair and restoration work on adaption
                  for current purposes

9                 Major repairs and restoration of Wings     April 2001 to September
                  Nos. 2, 3 and 4                            2002

10                Major repairs of Wing No. 6                May 2002 to May 2003

----------------- ------------------------------------------ ---------------------------- ----------------------
</TABLE>

The schedule was worked out by:
General Manager of
Artifishel Layl Rus                                            Bruno Gabriel
                    ------------------------------------------
                  [stamp: Artificial Life Rus, Ltd.)

                                 Agreed:
Director of 2000th OMIS                       KGIOP

            V.V. Vasilenko            [words obscured by stamp]
                                       [signature] [hand-printed illegible name]
                                       [illegible stamp]
                                       [illegible hand-printed name and
                                       date]

                                       20
<PAGE>

[stamp: State Institution of Justice,
City Office for Registering Rights to Real Property,
Registration District No. 78

Government registration has been carried out of
Rental number 25N with the cadastral No. 78:1244;0:8:1
October 21, 2000
Registration No. 1209576.2
Registrar         [signature] D.A. Pechnikov
         -----------------------------------
         Signature Name
          [illegible stamp]              [illegible stamp]

                                        [words obscured by stamp]
                                        [stamp: Admiralteyskoye District Agency,
                                        Committee for Managing
                                        Nonresidential Property]
                                                 [signature]

                                       21<PAGE>
                                                                   Exhibit 10.26

                              EMPLOYMENT AGREEMENT
                              --------------------

     EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November 1, 2000,
between Artificial Life, Inc., a Delaware corporation, with its principal office
at Four Copley Place, Suite 102, Boston, Massachusetts, 02116 (the "Company"),
and Rolf Levenhagen, an individual residing at 65812 Bad Soden, Germany (the
"Employee").

     WHEREAS, the Company desires to employ the Employee and the Employee
desires to be employed upon the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the Company and the Employee hereby agree as follows:

     SECTION 1. Employment.
                -----------

     (a) The Company hereby agrees to employ the Employee, and the Employee
hereby accepts such employment by the Company as the Company's President, Sales
and Marketing. The activities of the Employee shall be allocated 70% to the
German market and 30% to the international market. Employee shall coordinate his
activities in the German market with those of Artificial Life Deutschland AG
through consultation with the President of Artificial Life Deutschland AG.

     (b) The Employee shall report directly to the Chief Executive Officer of
the Company and shall have the responsibilities, duties and authority
commensurate with the position of President, Sales and Marketing of the Company,
and shall engage in such other services and responsibilities as may be
prescribed by the Chief Executive Officer of the Company or his designees from
time to time.

     (d) The principal location at which the Employee will perform his duties
will be at the offices of Artificial Life Deutschland AG.

     SECTION 2. Salary; Bonus; Expenses.
                -----------------------

     (a) The Company will pay a salary to the Employee (the "Base Salary"),
payable in substantially equal installments in accordance with the Company's
payroll practices for its employees as in effect from time to time. The Base
Salary shall initially be at the annual rate of Two Hundred Fifty Thousand
Dollars ($250,000.00) per annum.

     (b) The Employee shall be reimbursed by the Company for reasonable travel,
entertainment, lodging, meal and other business expenses incurred by the
Employee in connection with performing his services hereunder in accordance with
the Company's policies as in effect from time to time. The Employee shall
receive sales commissions equal to 3% of revenues received from sales
transactions initiated and completed with companies in the German market through
the Employee's activities and 0.5% of revenues received from sales transactions
initiated and completed with companies outside of the German market through the
Employee's activities.

                                       1
<PAGE>

     (c) Commencing on March 1, 2001 the Company shall provide Employee, for
business use, a recent Audi automobile, model S6.

     SECTION 3. Equity Participation. The Employee shall be entitled to
                --------------------
participate in all stock option plans and equity participation plans as the
Company may make available to its employees from time to time. It is agreed that
the Employee shall receive stock options to purchase 50,000 shares of the
Company's common stock within fifteen (15) days after the Commencement Date
pursuant to the Company's Equity Incentive Plan and pursuant to a separate Stock
Option Agreement. Such Agreement shall provide that the options vest one-third
after one year, one-third after two years and one-third after three years of
employment.

     SECTION 4. Benefits; Vacations. In connection with the Employee's
                -------------------
employment hereunder, the Employee will be entitled to the following additional
benefits:

     (a) At the Company's expense such fringe benefits as the Company may
provide from time to time for its employees, including, without limitation,
family health insurance coverage and life insurance coverage (the "Fringe
Benefits"); and

     (b) Vacation time in each calendar year determined in accordance with the
Company's vacation policies for its employees as in effect from time to time,
prorated in any calendar year during which the Employee is employed hereunder
for less than the entire such year in accordance with the number of days in such
calendar year for which he is so employed. The Employee shall also be entitled
to all paid holidays and personal days given by the Company to its employees.

     SECTION 5. Termination.
                -----------

     (a) Termination by the Company. The Employee's employment may be terminated
         --------------------------
at any time (i) by the Company for Cause (as hereinafter defined) by a notice to
the Employee, specifying the Cause therefor, such notice to be effective
immediately unless otherwise stated in such notice, which date of effectiveness
shall be the Termination Date therefor, (ii) by the Company without Cause with
at least thirty (30) days notice at any time, (iii) upon the death of the
Employee, or (iv) for the Disability (as hereinafter defined) of the Employee in
accordance with Paragraph 5(c).

     (b) Definition of Cause. For purposes of this Agreement, the term "Cause"
         -------------------
shall mean (i) the engaging by the Employee in intentional misconduct which is
injurious to the Company monetarily or otherwise, (ii) the material violation by
the Employee of any provision of this Agreement, (iii) the conviction of the
Employee of a felony by a court of competent jurisdiction or (iv) the commission
by the Employee of any act of fraud or embezzlement relating to the property of
the Company and/or the services provided hereunder. In making any determination
that Cause exists under this Paragraph 5(b), the Board of Directors shall act
fairly and in utmost good faith.

     (c) Termination by the Employee. The Employee's employment may be
         ---------------------------
terminated by him at any time by written notice to the Company, which notice
shall be effective sixty (60) days

                                       2
<PAGE>

after the giving of such notice, or earlier if the Company so elects, which date
shall be the Termination Date therefor.

     (d)  Severance Compensation.
          ----------------------

          (i) In the event the Employee's employment hereunder is terminated by
     a notice given by the Company without Cause, the Employee shall be entitled
     to payment of severance pay by means of the continuation of the payment by
     the Company of the Employee's Base Salary and Fringe Benefits at the rate
     in effect on the applicable Termination Date for a period of two (2) months
     after the applicable Termination Date.

          (ii) If the Employee voluntarily terminates his employment hereunder
     or if the employment of the Employee hereunder is terminated by the death
     of the Employee, the Employee (or his estate) shall continue to be entitled
     to payment compensation through the Termination Date.

          (iii) In the event the Company terminates the Employee's employment
     hereunder for Cause, the Employee shall be entitled to no further
     compensation, bonus or Fringe Benefits under this Agreement after the
     applicable Termination Date.

     SECTION 6. Effect of Change of Control. In the event of a Change of Control
                ---------------------------
(as hereinafter defined (i) this Agreement shall survive the Change of Control,
and (ii) any options held by the Employee to purchase securities of the Company
shall become fully vested and exercisable. As used herein, a "Change of Control"
means that any of the following events has occurred:

     (a) The stockholders or the Board of Directors shall have approved any
consolidation or merger of the Company pursuant to which the holders of the
Company's shares of Common Stock immediately prior to such merger or
consolidation would not be the holders immediately after such merger or
consolidation of at least 51% of the voting power entitled to be cast at
elections for Directors of the Company;

     (b) The stockholders or the Board of Directors shall have approved any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of the Company;
or

     (c) The liquidation or dissolution of the Company or the Company ceasing to
do business.

FOR PURPOSES OF SECTIONS 7 AND 8 HEREIN, THE TERM "COMPANY" SHALL INCLUDE ALL OF
THE COMPANY'S DIRECT OR INDIRECT SUBSIDIARIES, IF ANY.

     SECTION 7. Confidentiality and Proprietary Information.
                -------------------------------------------

                                       3
<PAGE>

     (a) Acknowledgment of the Employee. The Employee acknowledges that (i) the
         ------------------------------
Company has developed and will develop its Proprietary Information (defined
below) and Intellectual Property (defined below) over a substantial period of
time and at a substantial expense, and its Proprietary Information and
Intellectual Property are integral to the goodwill of the Company, (i) during
the Employment Period, the Employee may develop or become aware of Proprietary
Information and/or Intellectual Property, and (iii) protection of the
Proprietary Information and Intellectual Property is necessary to conduct the
Company's business, and the Company is and shall at all times remain the sole
owner of the Company's Proprietary Information and Intellectual Property.

     (b) Confidentiality. The Employee shall at all times, both during and after
         ---------------
any termination of the Employment Period, maintain in confidence and not utilize
the Proprietary Information or the Intellectual Property of the Company, and/or
technology or proprietary information of others under confidential evaluation by
the Company, except in performing services for the Company pursuant to the
Employee's employment. Maintaining such Proprietary Information and Intellectual
Property in confidence shall include refraining from disclosing such Proprietary
Information or Intellectual Property to any third party (except when appropriate
for the furtherance of the business of the Company or when duly and specifically
authorized to do so), and refraining from using such Proprietary Information or
Intellectual Property for the account of the Employee or for any other person or
business entity. The Employee will not file patents based on the Company's
technology or confidential information, nor seek to make improvements thereon,
without the Company's written approval. The Employee agrees not to make any
copies of the Proprietary Information or Intellectual Property of the Company
(except when appropriate for the furtherance of the business of the Company or
when duly and specifically authorized to do so) and promptly upon request,
whether during or after the period of employment by the Company, to return to
the Company any and all originals and copies of documentary, machine-readable or
other elements or evidence of any such Proprietary Information, Intellectual
Property and other information of any kind relating to the present or potential
business of the Company that may be in the Employee's possession or under the
Employee's control.

     (c) Rights to Inventions and Intellectual Property. In connection with the
         ----------------------------------------------
Employee's employment by the Company, whether or not the Employee is then
retained by the Company, the Employee may, alone or with others, during working
hours and otherwise and by use of the Company's facilities or otherwise,
produce, develop, create, invent, conceive or reduce to practice Inventions
(defined below) and Intellectual Property related to the business of the
Company. The Employee shall maintain and furnish to the Company complete and
current records of all such Inventions and Intellectual Property and disclose to
the Company in writing any such Inventions and Intellectual Property. The
Employee agrees that all such Inventions and Intellectual Property conceived
and/or reduced to writing, drawings or practice during the Employment Period or
within six (6) months of the termination of the Employment Period are and shall
be the exclusive property of the Company, and that the Company may use or pursue
them without restriction or additional compensation. The Employee (i) hereby
assigns, sets over and transfers to the Company all of the Employee's right,
title and interest in and to such Inventions and Intellectual Property, (ii)
agrees that Employee and the Employee's agents shall, during and after the
period the Employee is retained by the Company, cooperate fully in obtaining
patent, trademark, service mark, copyright or

                                       4
<PAGE>

other proprietary protection for such Inventions and Intellectual Property, all
in the name of the Company (but at Company expense), and, without limitation,
shall execute all requested applications, assignments and other documents in
furtherance of obtaining such protection or registration and confirming full
ownership by the Company of such Inventions and Intellectual Property, and (iii)
shall, upon leaving the Company, provide to the Company in writing a full,
signed statement of all Inventions and Intellectual Property in which Employee
participated prior to termination of the Employee's employment by the Company.
The Employee hereby designates the Company as the Employee's agent, and grants
to the Company a power of attorney with full substitution, which power of
attorney shall be deemed coupled with an interest, for the purposes of effecting
the foregoing assignments from the Employee to the Company.

     (d) Definitions. For purposes of this Agreement, the following terms shall
         -----------
have the following respective meanings:

     "Intellectual Property" means any Invention, writing, trade name,
      ---------------------
trademark, service mark or any other material registered or otherwise protected
or able to be protected under state, federal, or foreign patent, trademark,
copyright, or similar laws.

     "Inventions" means ideas, discoveries, inventions, developments and
      ----------
improvements, whether or not reduced to practice and whether or not patentable
or otherwise within the definition of Intellectual Property.

     "Proprietary Information" means any scientific, technical, trade or
      -----------------------
business secrets of the Company and any scientific, technical, trade or business
materials that are treated by the Company as confidential or proprietary,
including, but not limited to, Inventions belonging to the Company and
confidential information obtained by or given to the Company about or belonging
to its suppliers, licensors, licensees, partners, affiliates, customers,
potential customers or others. The definition of "Proprietary Information"
herein shall not include any information (i) which is in the public domain,
provided such information is not in the public domain as a consequence of
disclosure by the Employee in violation of this Agreement, (ii) which becomes
available to the Employee on a non-confidential basis from a source that is
entitled to disclose it on a non-confidential basis or (c) which was on or
before that date of employment in any capacity or before the date of this
Agreement in the Employee's possession as evidenced by the Employee's written
records or independently developed by the Employee after termination of the
Employee's employment without utilization of confidential information gained
from the Company.

                                       5
<PAGE>

     SECTION 8. Non-Competition and Non-Solicitation.
                ------------------------------------

     (a) Non-Competition Covenant. The Employee covenants and agrees that during
         ------------------------
the Restricted Covenant Period (as defined below), the Employee shall not,
whether for the Employee's own account or for any other person or organization
other than the Company, (i) manage, operate, control, assist (directly or
indirectly), or participate in the management, operation or control of, or (ii)
serve as a Director, officer, partner, employee or consultant of, or own more
than five percent of the outstanding voting securities of any enterprise which,
within the Restricted Area (as that term is defined below), is engaged in any
business competitive with the business engaged in by the Company prior to the
time that the Employee's employment is terminated or set forth in a written
strategic plan adopted by the Board of Directors or the Board's Employee
Committee in good faith of which the Employee has knowledge prior to such
termination.

     (b) Non-Solicitation of Employees. The Employee further agrees that during
         -----------------------------
the Restricted Covenant Period the Employee will not knowingly, directly or
indirectly, (a) solicit the employment of any employee of the Company who was
such at any time during the last twelve (12) months of the Employee's employment
with the Company, or (b) induce any employee of the Company to leave the employ
of the Company, unless in each case the Employee obtains the prior written
consent of the Company.

     (c) Definitions. For the purposes of this Section 8, the term "Restricted
         -----------
Covenant Period" shall mean the period commencing on the date hereof and
terminating one (1) year after the Termination Date. For the further purposes of
this Section 5, the term "Restricted Area" shall mean Germany and any other
Territories in which Employee has earned commissions for sales.

     SECTION 9. Remedies. Without intending to limit the remedies which may be
                --------
available to the Company, the Employee acknowledges that any breach by the
Employee of any of the provisions of this Agreement may result in material
irreparable injury to the Company for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injury precisely, and
that, in the event of such a breach or a threat thereof, the Company shall be
entitled, in addition to monetary damages and to any other remedies available to
the Company, to equitable relief, including injunctive relief, and to payment by
the Employee of all costs incurred by the Company in enforcement against the
Employee of the provisions of this Agreement, including reasonable attorneys'
fees. The Employee further acknowledges and agrees that, in addition to the
remedies that the Company may seek and obtain pursuant to this Section 9, the
period during which the covenants contained in this Agreement apply shall be
extended by any periods during which the Employee is in violation of any of such
covenants.

     SECTION 10. Additional Representations of the Employee. The Employee
                 ------------------------------------------
represents and warrants to the Company that the Employee is not bound by the
provisions of any agreement with a current or former employer which would
prohibit or limit the Employee's ability to render services to the Company as
herein provided. The Employee also represents to the Company that he will not
disclose to the Company, or use for the benefit of the Company, any trade
secrets or confidential information now or hereafter in the possession of the
Employee which is the property of any other party, provided, however, that the
Employee will make every diligent effort to use all

                                       6
<PAGE>

information which is at his disposal and which is not subject to enforceable
confidentiality agreements to aid the Company in achieving its goals.

     SECTION 11. Disclosures Regarding Employment. The Employee acknowledges
                 --------------------------------
that the Company may, during the course of his employment hereunder or
thereafter, receive inquiries concerning the Employee's character, fitness or
performance as an employee. The Employee authorizes the Company to release to
any person or organization making such inquiry such information concerning the
Employee's character, fitness or performance as an employee and agrees to
indemnify and to hold the Company harmless from any liability whatsoever arising
from the Company's disclosure of such information.

     SECTION 12. Notices. All notices and other communications hereunder shall
                 -------
be in writing, and shall be either (i) delivered by hand, (ii) sent by overnight
courier, or (iii) sent by registered or certified mail, return receipt
requested, postage prepaid (a) if to the Employee, at his residence address
first set forth above, and (b) if to the Company, at its principal office as
first set forth above, or to such other persons or addresses as the parties
hereto may specify by a written notice in accordance with this Section 12 from
time to time. All notices and other communications hereunder shall be deemed to
have been given either (i) if by hand, at the time of the delivery thereof to
the receiving party at the address of such party as set forth above, (ii) if
sent by overnight courier, on the next business day following the day such
notice is delivered to the courier service, or (iii) if sent by registered or
certified mail, on the fifth (5th) business day following the day such mailing
is made, except in any case for a notice of a change of address, which will not
be effective until receipt.

     Section 13. Waivers and Consents. The terms and provisions of this
                 --------------------
Agreement may be waived, or consent for the departure therefrom granted, only by
a written document executed by the party entitled to the benefits of such terms
or provisions. No waiver or consent shall be deemed to be or shall constitute a
waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.

     SECTION 14. Headings. The headings contained in this Agreement are for
                 --------
reference purposes only and shall in no way affect the meaning or interpretation
of this Agreement.

     SECTION 15. Agreement Complete; Amendments. This Agreement, together with
                 ------------------------------
the Confidentiality Agreement, represents the entire agreement of the parties
with respect to the subject matter hereof and thereof and supersedes all prior
agreements, written or oral, with respect thereto. This Agreement may not be
amended, supplemented, canceled or discharged except by a written instrument
executed by both of the parties hereto, provided, however, that the immediately
foregoing provision shall not prohibit the termination of rights and obligations
under this Agreement which termination is made in accordance with the terms of
this Agreement.

     SECTION 16. Severability. If any provision of this Agreement shall be
                 ------------
deemed invalid or unenforceable as written, this Agreement shall be construed,
to the greatest extent possible, or

                                       7
<PAGE>

modified, to the extent allowable by law, in a manner which shall render it
valid and enforceable and any limitation on the scope or duration of any such
provision necessary to make it valid and enforceable shall be deemed to be a
part thereof. No invalidity or unenforceability of any provision contained
herein shall affect any other portion of this Agreement.

     SECTION 17. Benefit and Binding Nature; Assignment. This Agreement shall be
                 --------------------------------------
binding upon and inure to the benefit of the successors and permitted assigns of
the respective parties hereto. The Employee may not assign or transfer any or
all of his rights or obligations under this Agreement. The Company may assign
its rights and obligations hereunder to any person or entity who succeeds to all
or substantially all of the Company's business by means of a Change of Control
or otherwise or to any affiliate of the Company, defined as a person which,
directly or indirectly, controls or is controlled by or is under common control
with the Company.

     SECTION 18. Governing Law. This Agreement will be governed and construed in
                 -------------
accordance with the law of the Commonwealth of Massachusetts without giving
effect to the conflicts of law principles thereof.

     SECTION 19. Jurisdiction. The parties agree that in the event of any
                 ------------
dispute or claim arising out of or in connection with this Agreement, they will
submit to the exclusive jurisdiction and venue of any court of competent
jurisdiction in the Commonwealth of Massachusetts, and will comply with all
requirements necessary to give such court jurisdiction over the parties and the
controversy.

     SECTION 20. Survival. The provisions of Sections 6 through 22 shall survive
                 --------
the termination of the Employee's employment as continuing and separate
agreements between the parties.

     SECTION 21. Interpretation. The Company and the Employee each acknowledge
                 --------------
and agree that this Agreement has been reviewed and negotiated by such party and
its or his counsel, who have contributed to its revision, and the normal rule of
construction, to the effect that any ambiguities are resolved against the
drafting party, shall not be employed in the interpretation of it.

     SECTION 22. Counterparts. This Agreement may be executed in two or more
                 ------------
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one agreement.

                                       8
<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                                              ARTIFICIAL LIFE, INC.

                                              By: /s/ Eberhard Schoneburg
                                                  -----------------------
                                                  Eberhard Schoneburg
                                                  Chief Executive Officer

                                              EMPLOYEE

                                              /s/ Rolf Levenhagen
                                              -------------------
                                              Rolf Levenhagen

                                       9

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