<PAGE>
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
For Quarterly Period Ended: December 31, 1999
Commission File Number: 1-15043
CHEQUEMATE INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Utah 76-0279816
---------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
330 Washington Boulevard, Suite 507; Marina Del Rey, California 90292
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(Address of principal executive offices)
(305) 310-3659
---------------------------
(Issuer's Telephone Number)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirement for the past 90 days.
YES X NO
--- ---
State the number of shares outstanding of each of the issuer's common
equity, as of the latest practicable date: February 6, 2000: 6,135,491
(reflecting the 2/2/00 reverse split of stock)
Transitional Small Business Format: YES NO X
--- ---
<PAGE>
TABLE OF CONTENTS
PART I-FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ITEM 1. Financial Statements PAGE
<S> <C>
UNAUDITED CONSOLIDATED BALANCE SHEETS................................................3
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS......................................5
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS.......................................6
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.................................8
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation.
GENERAL INFORMATION.................................................................14
RESULTS OF OPERATIONS...............................................................18
LIQUIDITY AND CAPITAL RESOURCES.....................................................22
PART II-OTHER INFORMATION
Item 1. Legal Proceedings...........................................................24
Item 5. Other Information...........................................................25
Item 6. Exhibits and Reports on Form 8-K............................................25
</TABLE>
<PAGE>
CHEQUEMATE INTERNATIONAL, INC.
(dba C3-D Digital)
Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
----------------- -----------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 327,418 $ 1,732,199
Accounts receivable - net of allowances
of $100,000 and $53,820 915,269 197,922
Prepaid expenses 265,434 198,349
Inventory (Note 3) 2,116,531 3,115,763
----------------- -----------------
Total Current Assets 3,624,652 5,244,233
----------------- -----------------
PROPERTY AND EQUIPMENT (Note 4) 1,000,719 622,717
----------------- -----------------
OTHER ASSETS
Advances 5,354 -
Note receivable 73,588 65,000
Product rights (Note 2) 3,727,128 2,534,532
Secured interest - 1,198,530
Refundable deposits - 15,704
Investments 153,000 3,000
----------------- -----------------
Total Other Assets 3,959,070 3,816,766
----------------- -----------------
TOTAL ASSETS $ 8,584,441 $ 9,683,716
================= =================
</TABLE>
3
<PAGE>
CHEQUEMATE INTERNATIONAL, INC.
(dba C3-D Digital)
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
------------------ -----------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 985,340 $ 896,408
Accrued expenses 268,057 38,672
Income tax payable - 500
Accrued interest - related party - 79,943
Accrued interest payable 233,735 39,791
Current portion related party - 140,000
Current portion long-term debt (Note 5) 1,967,835 227,610
Current portion capital lease - 13,602
------------------ -----------------
Total Current Liabilities 3,454,967 1,436,526
----------------- -----------------
LONG-TERM LIABILITIES
Long-term debt (Note 5) 3,250,000 3,190,000
----------------- -----------------
Total Long-Term Liabilities 3,250,000 3,190,000
----------------- -----------------
Total Liabilities 6,704,967 4,626,526
----------------- -----------------
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value 500,000,000 shares
authorized, 24,541,964 and 22,358,646 shares
outstanding, respectively 2,456 2,236
Capital in excess of par 28,274,191 24,461,440
Accumulated deficit (26,397,173) (19,406,486)
----------------- -----------------
Total Stockholders' Equity 1,879,474 5,057,190
----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,584,441 $ 9,683,716
================= =================
</TABLE>
4
<PAGE>
CHEQUEMATE INTERNATIONAL, INC.
(dba C3-D Digital)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Nine Months Ended
December 31, December 31,
-------------------------------------- ------------------------------------
1999 1998 1999 1998
------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
REVENUES $ 1,035,292 $ 275,937 $ 2,644,478 $ 443,313
COST OF SALES 2,071,819 144,330 2,653,873 250,575
------------------- ----------------- ----------------- -----------------
GROSS PROFIT (LOSS) (1,036,527) 131,607 (9,395) 192,738
------------------- ----------------- ----------------- -----------------
EXPENSES
Selling expenses 1,235,549 84,448 2,576,079 299,957
Research and development cost 339,158 - 339,158 -
General and administrative 393,233 606,811 3,794,521 1,599,581
------------------- ----------------- ----------------- -----------------
Total Expenses 1,967,940 691,259 6,709,758 1,899,538
------------------- ----------------- ----------------- -----------------
OTHER INCOME (EXPENSE)
Loss on sale of assets - - - (165,167)
Interest income 3,149 782 11,735 782
Interest expense (177,778) (9,258) (283,269) (9,383)
------------------- ----------------- ----------------- -----------------
Net Other Expense (174,629) (8,476) (271,534) (174,550)
------------------- ----------------- ----------------- -----------------
NET (LOSS) BEFORE INCOME TAXES (3,179,096) (568,128) (6,990,687) (1,881,350)
INCOME TAX PROVISION - - - -
------------------- ----------------- ----------------- -----------------
NET (LOSS) $ (3,179,096) $ (568,128) $ (6,990,687) $ (1,881,350)
=================== ================= ================= =================
BASIC (LOSS) PER SHARE $ (0.14) $ (0.03) $ (0.30) $ (0.12)
=================== ================= ================= =================
AVERAGE NUMBER OF SHARES
OUTSTANDING 23,276,928 16,333,630 23,167,071 16,333,630
=================== ================= ================== =================
</TABLE>
5
<PAGE>
CHEQUEMATE INTERNATIONAL, INC.
(dba C3-D Digital)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Nine Months Ended
December 31, December 31,
-------------------------------------- ------------------------------------
1999 1998 1999 1998
------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) $ (3,179,096) $ (568,128) $ (6,990,687) $ (1,887,826)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 128,135 54,732 390,469 209,296
Bad debts 50,146 - 50,146 -
(Increase) decrease in accounts
receivable and other assets (596,003) (159,132) (776,081) (258,774)
(Increase) decrease in inventory 1,152,362 608,928 999,232 372,252
(Increase) decrease in prepaid expense 840 (41,753) (72,439) (41,302)
(Increase) decrease in deposits 15,704 (282,651) 15,704 (282,651)
Increase (decrease) in accounts payable (336,103) (405,902) 88,932 (260,930)
Increase (decrease) short-term debt - (57,724) - -
Increase (decrease) in accrued expenses 118,554 879 228,886 43,100
Increase (decrease) in customer deposits - (54,724) - (54,724)
Increase (decrease) in accrued interest 153,792 - 114,001 -
------------------- ----------------- ----------------- -----------------
Net Cash (Used) by Operating
Activities (2,491,669) (2,007,883) (5,951,837) (2,906,063)
------------------- ----------------- ----------------- -----------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Investment in Hotel Express (150,000) - (150,000) -
Purchase of movie rights (624,100) - (624,100) -
Equipment purchase - (315,898) (138,437) (315,898)
------------------- ----------------- ----------------- -----------------
Net Cash (Used) by Investing
Activities (774,100) (315,898) (912,537) (315,898)
------------------- ----------------- ----------------- -----------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from common stock 2,175,253 1,818,104 3,674,657 2,578,926
Proceeds from debt 1,359,970 1,190,000 1,859,970 1,190,000
Payments of capital leases - (5,604) (15,289) (7,054)
Payments of long-term debt - (19,778) (59,745) (20,850)
------------------- ----------------- ----------------- -----------------
Net Cash Provided by Financing
Activities $ 3,535,223 $ 2,982,722 $ 5,459,593 $ 3,741,022
------------------- ----------------- ----------------- -----------------
</TABLE>
6
<PAGE>
CHEQUEMATE INTERNATIONAL, INC.
(dba C3-D Digital)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Nine Months Ended
December 31, December 31,
-------------------------------------- ------------------------------------
1999 1998 1999 1998
------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
NET INCREASE (DECREASE) IN CASH $ 269,454 $ 658,941 $ (1,404,781) $ (519,061)
CASH AT BEGINNING PERIOD 57,964 80,960 1,732,199 220,840
------------------- ----------------- ----------------- -----------------
CASH AT END OF PERIOD $ 327,418 $ 739,901 $ 327,418 $ 739,901
=================== ================= ================= =================
</TABLE>
7
<PAGE>
CHEQUEMATE INTERNATIONAL, INC.
(dba C3-D Digital)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
prepared by the Company without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operations and cash flows at December 31, 1999 and 1998 and for all
periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements and
notes thereto included in the Company's March 31, 1999 audited
consolidated financial statements. The results of operations for the
periods ended December 31, 1999 and 1998 are not necessarily
indicative of the operating results for the full years.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's accounting policies reflect practices of the software
sales, 3-D electronic devices and services industries and conform to
generally accepted accounting principles. Certain prior year amounts
have been reclassified to be consistent with the March 31, 1999
presentation. The following policies are considered to be
significant:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its subsidiaries, Chequemate Electronic, Inc., Families
in Focus, Inc., AC&T Direct, AC&T and Chequemate Tele-Services, Inc.
All significant intercompany accounts and transactions have been
eliminated.
REVENUE RECOGNITION
Revenue is recognized on an accrual basis upon deliver of the
software or product. Revenue consists of software sales, product
sales, license fees, and monthly service fees.
PRODUCT RIGHTS
<TABLE>
<CAPTION>
Net Book Value
---------------------------------------------
December March
Term Cost Amortization 1999 1999
------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Product rights 4-15 years $ 3,825,810 $ 850,131 $ 2,975,679 $ 2,423,399
Contract/movie rights 2 years 818,491 67,042 751,449 111,133
------------- ------------- -------------- --------------
$ 4,644,301 $ 917,173 $ 3,727,128 $ 2,534,532
============= ============= ============== ==============
</TABLE>
Product and movie costs have been capitalized and amortized over
their life using a straight line method. The total amortization of
product and movie right costs for the nine month period ending
December 31, 1999 and for the year ended March 31, 1999 amounted to
$336,834 and $314,873, respectively.
8
<PAGE>
CHEQUEMATE INTERNATIONAL, INC.
(dba C3-D Digital)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost with depreciation and
amortization computed on the straight line method. Property and
equipment are depreciated over the following estimated useful lives:
<TABLE>
<CAPTION>
Years
--------------
<S> <C>
Office equipment 5
Office furniture 5-7
Machinery and equipment 5
Leasehold improvements 3-5
Capital leases 3-5
</TABLE>
BASIC LOSS PER SHARE
Basic loss per share is calculated using a weighted average for
common stock.
CASH FLOWS
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand and cash on deposit with banks.
INCOME TAXES
The Company's tax basis is the same as the Company's financial
statement basis. The Company has net operating loss carryforwards of
approximately $26,400,000 available to offset future federal and
state income tax through 2014. The Company has not recorded a tax
benefit attributable to the carryforwards because realization of
such has been offset by a valuation allowance for the same amount.
9
<PAGE>
CHEQUEMATE INTERNATIONAL, INC.
(dba C3-D Digital)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
ADVERTISING
The Company follows the policy of charging the costs of advertising
to expense as incurred.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
NOTE 3 - INVENTORY
<TABLE>
<CAPTION>
December 31, March 31,
1999 1998
------------------- -----------------
<S> <C> <C>
Finished goods $ 66,077 $ 1,035,682
WIP 1,200,583 1,076,880
Raw goods 849,871 1,003,201
------------------- -----------------
$ 2,116,531 $ 3,115,763
=================== =================
</TABLE>
The Company inventories are stated at the lower of cost or market,
using the first-in, first-out (FIFO) method. Inventories consist
mainly of components related to the 3-D electronic devices product
and pay-per-view operations
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 1999 and March 31, 1999
are detailed in the following summary:
<TABLE>
<CAPTION>
Net Book Value
----------------------------------
Accumulated December 31, March 31,
Cost Depreciation 1999 1999
--------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Office furniture and fixtures $ 159,249 $ 38,883 $ 120,366 $ 24,320
Machinery and equipment 945,478 230,117 715,361 569,488
Capital leases 183,093 18,101 164,992 26,905
Leasehold improvements - - - 2,004
--------------- ---------------- ----------------- ----------------
Total $ 1,287,820 $ 287,101 $ 1,000,719 $ 622,717
=============== ================ ================= ================
</TABLE>
10
<PAGE>
CHEQUEMATE INTERNATIONAL, INC.
(dba C3-D Digital)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 4 - PROPERTY AND EQUIPMENT (Continued)
Depreciation expense is computed principally on the straight-line
method in amounts sufficient to write off the cost of depreciable
assets over their estimated useful lives. Depreciation expense for
nine months ended December 31, 1999 and the year ended March 31,
1999 amounted to $73,374 and $79,599.
NOTE 5 - LONG-TERM DEBT
Notes payable as of December 31, 1999 and March 31, 1999 are
detailed in the following summary:
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
---------------- ------------------
<S> <C> <C>
Note payable to a company; due in monthly
installments of $3,244 which includes
interest at 8%; due on demand, unsecured. $ 50,990 $ 53,907
Convertible debentures to a company; due
December 22, 2001, which includes interest
at 8%. 750,000 750,000
Convertible debentures to a company; due
February 22, 2002, which includes interest at
8%. 2,000,000 2,000,000
Convertible debenture to a company, due
April 2002, with interest at 8%. 500,000 -
Note payable to a company; due June 8, 2000,
interest at 10% due monthly, secured by
equipment and inventory. - 440,000
Convertible debenture to a company, unsecured,
due on demand. 1,799,970 -
Note payable to a company; unsecured, due in
monthly installments of $19,654, which includes
interest at 6%; due October 1999. 116,875 173,703
---------------- ------------------
Total long-term debt 5,217,835 3,417,610
Less: current portion (1,967,835) (227,610)
---------------- ------------------
Long-term portion $ 3,250,000 $ 3,190,000
================ ==================
</TABLE>
11
<PAGE>
CHEQUEMATE INTERNATIONAL, INC.
(dba C3-D Digital)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 5 - LONG-TERM DEBT (Continued)
Maturities of long-term debt are summarized below:
<TABLE>
<S> <C>
Period ending December 31, 2000 $ 1,967,835
2001 -
2002 3,250,000
2003 -
2004 -
----------------
Total $ 5,217,835
================
</TABLE>
NOTE 6 - CASH FLOW AND NON-CASH INVESTING AND FINANCING ACTIVITIES
CASH FLOW INFORMATION
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
------------ ------------
<S> <C> <C>
Interest paid $ 99,277 $ 34,535
Income taxes paid $ 500 $ 500
</TABLE>
NON-CASH INVESTING AND FINANCING ACTIVITIES
For the nine months ended December 31, 1999 and the year ended
March 31, 1999 the Company incurred the following non-cash
investing and financing activities:
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
------------ ------------
<S> <C> <C>
Capital lease obligations incurred $ - $ 29,895
Issuance of stock and options for
services rendered $ 1,006,349 $ 448,547
Issuance of stock for assets $ 150,000 $ 1,533,000
Increase in debt for assets $ - $ 440,000
</TABLE>
NOTE 7 - FINANCIAL INSTRUMENTS
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade
receivables. The Company provides credit to its customers in the
normal course of business. However, the Company performs ongoing
credit evaluations of its customers and maintains allowances for
potential credit losses. The Company places its temporary cash with
high quality financial institutions. At times such cash accounts may
be in excess of the FDIC insurance limit.
12
<PAGE>
CHEQUEMATE INTERNATIONAL, INC.
(dba C3-D Digital)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Company has entered into an agreement to maintain a satellite
transponder and uplink for broadcasting its three dimensional cable
channel. The agreement requires the Company to make monthly payments
of $100,000 to retain these services.
The Company is the defendant in a pending lawsuit. The ultimate
outcome of this litigation is unknown at the present time.
Accordingly, no provision for any liability that might result has
been made in the accompanying financial statements. In the opinion
of management, the existing litigation is not considered to be
material in relation to the Company's financial position.
13
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
For more detailed information regarding the financial position of the
Company, please refer to the Unaudited Financial Statements for the third
quarter (three months) of the year 2000 ended December 31, 1999 and the nine
months of the year 2000 ended December 31, 1999.
C-3D DIGITAL, INC.
During the December, 1999 Western Cable Show in Los Angeles, C-3D
demonstrated several major advancements developed in its C-3D television and
3D.COM divisions. C-3D's television production teams have accomplished some
amazing feats in the stereoscopic arena.
Among the advancements displayed by C-3D was the debut of a new stereoscopic
3D show, Apartment 51. This 3D comedy/science-fiction series utilizes newly
developed proprietary inter-media composing techniques resulting in
breakthrough 3D stereoscopic imaging. The show is filmed using new
second-generation 3D stereoscopic cameras created by C-3D's award-winning
camera designer Ken Robings.
C-3D Digital has also retained the consulting services of world-renowned 3D
Stereoscopic consultant, John Rupkalvis. Rupkalvis is known for his work, as
a 3D stereoscopic consultant, on numerous projects including Terminator II 3D
and Universal Pictures' Metalstorm 3D. Rupkalvis' experience covers the
acquisition and display of stereoscopic images in virtually every process, as
applied to still and motion picture photography, and television and computer
graphics imaging. Recently, Rupkalvis authored the Official Imax 3D Manual
for producers of stereoscopic motion pictures in the large Imax format for
the Imax Corporation.
C-3D has signed an agreement with Academy Entertainment, Inc. to acquire over
1000 film titles and television programs. These 2D films will be converted
and enhanced to 3D using C-3D's patented 3D stereoscopic conversion
technology. These films will air on the C-3D Television Network and be
marketed through local video retailers in the 3D format as video and DVD
products.
In addition to the cult horror classics, the Academy Entertainment Inc. film
library consists of an array of other exciting movies, and a significant
number of action television programs, such as the popular western series
"Bonanza" and children's cartoon favorites, including "Popeye" and "Casper".
C-3D will own the exclusive rights to license these 3D titles to both
domestic and international distribution venues. The 3D videos will be
marketed to the large worldwide base of VCR-owners. This represents a
substantial potential video sell-through revenue stream. The 3D video
products will be available for purchase through C-3D's online store at 3D.Com
and through major retail distribution channels.
14
<PAGE>
The digital satellite GE-3 cable system, representing over 70 million homes,
is the method used to broadcast C-3D's signal to its viewers. This new
satellite enables C-3D to offer a clear, clean digital signal that provides
the ultimate 3D home theater viewing experience. The GE-3 satellite
significantly expands C-3D's broadcast footprint to include Latin America,
Alaska, and Hawaii, and greatly enhances C-3D's ability to deliver the C-3D
Television Network to our Asian broadcast partners. Broadcasting on GE-3
marks an important step in C-3D's goal to make the C-3DTelevision Network
available worldwide.
On February 4, 2000, i-O Display System, LLC agreed to make an initial
contribution of C-3D proprietary products worth $500,000 as a contract
manufacturer in exchange for common stock of C-3D. This equity investment in
C- 3D by its manufacturing partner strengthens the relationship between the
two companies, and demonstrates the confidence of i-O Display Systems in
C-3D's potential.
i-O Display System manufactures personal display devices and stereoscopic 3D
products used in a broad array of applications from entertainment to medical
and commercial uses. The company was formed in 1997 as a new venture between
Ilixco, Inc., a display technology company and Liberty Media Group, an AT&T
company that holds interests in a broad range of video programming,
communications, technology and internet businesses in the Unites States,
Europe, South America and Asia.
C-3D has also entered into an agreement with Telepro Communications, Inc of
Bellevue, Washington to provide the C-3D Television Network to its subscriber
base. Telepro, a national DIRECTV key account, owns and operates cable
systems in California, Washington, Georgia, Indiana, Michigan and Ohio.
Telepro has committed to an initial rollout in California in March 2000.
Telepro plans to bring additional locations on-line in the following months.
3D.COM
In the first quarter of fiscal year 2001, 3D.COM will be launching
C-3DTV.com, a "sub-portal" of 3D.COM, and will be displaying a sneak preview
of the overall Virtual Reality Portal. The preview will include a
demonstration of streaming 3D stereoscopic video over the Web, real-time
online games in stereoscopic 3D and live 3D e-commerce solutions.
3D.COM expects significant revenues in its centric graphical software
stemming from its computer software bundling deals. C-3D is already reaping
the rewards of marketing agreements with several makers of popular video
editing equipment, including Interex, Eskape Labs, Belkin Components and
Apple Computer Inc. Inexpensive, easy-to-operate DV capture devices are now
available. This has stimulated an interest in video editing and creation.
Getting video content created in both 2D and 3D is crucial to C-3D's overall
plan. Good content is an absolute necessity for a successful channel. These
tools will enable talented people to contribute to this media content. In
addition to the obvious synergy with the C-3D Television Network, 3D.COM
expects revenues will increase due to the existing software bundling
agreements.
15
<PAGE>
The bundling agreement with Interex is drawing attention to both companies'
products. The Interex InterView USB video capture device comes with a full
copy of Strata VideoShop and works with any USB-equipped Macintosh computer,
without a special video card installed. The InterView package sells for
$99.00 and is receiving positive reviews.
These key bundling agreements allow our customers to dive into the DV world.
Strata software features naturally draw them into 3D. Using VideoShop along
with Strata StudioPro, for example, home users are able to create their own
video footage in true, stereoscopic 3D.
The 3D.COM group has taken major steps toward the premiere of full blown 3D
on the Web. 3D.COM and Cycore, Inc., a leader in real-time 3D technologies,
create a revolutionary e-commerce solution for the Web. Cycore's agreement
with 3D.COM combines the Strata 3D technology, which has an installed base of
over 100,000, with Cult3D. This combination creates a revolutionary 3D
e-commerce development solution. The agreement also designates 3D.COM as a
primary portal for access to the Cult3D plug-in.
The Cycore technology Cult3D is already in use at the websites of Nokia, CNN,
Lego, Mercedes and many others and allows the viewer to experience 3D objects
interactively. The customers are able to rotate, move and zoom-in on products
in real-time. In addition, customers can actually push buttons, turn dials,
and literally interact with products, as if they were holding them in their
hands. The importance of the Cycore agreement is two-fold. First, the
software technology combination will create licensing revenues for both
companies. Second, Web traffic will be generated by the plug-in downloads.
Customers at sites, such as Nokia.com, will need to come to the download
center and register before getting the plug-in.
C-3D has launched the World Virtual Reality League (WVRL), an online game
network and TV series developed by two of C-3D's business divisions, 3D.COM
and C-3D Television. The initial trial of the system debuted on Wednesday,
December 15th at the Western Cable Show in Los Angeles. Future plans for the
system call for fully interactive, real-time 3D games to be played over the
Internet in stereoscopic 3D. In conjunction with the Web-based gamers
network, 3D.COM's sister division C-3D Television Network is previewing a
weekly stereoscopic television show "WVRL Arena".
VA Linux Systems equipment has been selected as the backbone of the WVRL
online network. The use of Linux for the game server systems creates a highly
reliable, fault tolerant platform for controlling multiple players on the
World Wide Web. Users can participate in the game or watch as an observer.
When coupled with C-3D's stereovision glasses, users can play in full
stereoscopic 3D.
The WVRL online game and television show will follow a professional wrestling
style format with ongoing story lines and well-established characters. Game
participants can play online against their favorite characters or versus
individual players on the Web.
16
<PAGE>
Circuit Technology, Inc. has acquired the licensing rights to C-3D's
proprietary, leading-edge 2D to 3D conversion technology. C-3D is committed
to expanding licensing alliances with several manufacturers such as Circuit
Technology. C-3D expects to significantly broaden visibility to world-
renowned consumer electronics manufacturers in this fashion.
The January 6, 2000 3D.COM and Fastware.net agreement combines Fastware.net's
VCC with 3D.COM's Strata VideoShop. The agreement is similar to previous
marketing deals 3D.COM has signed with Apple, Interex, Belkin Components, and
Eskape Labs. The VideoShop and Fastware.net bundle enables Apple Macintosh
users to digitize and edit any analog video into true DV format. With Strata
VideoShop, the video can then be edited using professional quality non-linear
techniques.
The Fastware.net VCC Video Converter is both powerful and easy to use. With
its multiple input ports (composite, S-video and FireWire DV) the VCC auto
detects what the user has plugged in, simplifying the DV conversion process.
The VCC is also hot pluggable, which allows the user to switch inputs during
the work process. With these features, the VCC is perfect for video
teleconferencing, live video capture and converting tapes from analog to
digital. Strata VideoShop 4.5 features support for FireWire, QuickTime and 3D
special effects. VideoShop is a popular tool with professional and home users
alike, and has amassed an installed base of over one million customers.
In early October 1999, C-3D announced that it has signed a distribution
agreement with Gomark Limited, to sell the 3D.COM Strata product line of 3-D
and digital video software tools in Europe.
Gomark is a leading European distributor of graphic software, which has
established itself as a specialist marketing and distribution company with
over 450 resellers in the United Kingdom and Europe. C-3D expects to see
sales increase in this region as a result of its agreement with Gomark. The
Strata technology owned by C-3D is a key component of Gomark's Internet
strategy.
HOTEL MOVIE NETWORK
Hotel Movie Network , C-3D's private television network dedicated to offering
new video experiences in the pay-per-view hotel market, has made arrangements
with Twentieth Century Fox and Time-Warner's New Line Cinema to include these
companies' first run movies on Hotel Movie Network. A separate agreement with
these entities is entered into on each movie selected by Hotel Movie Network.
These arrangements will significantly increase the available offerings to
hotel guests. Hits such as "Entrapment", "Lake Placid" and "A Mid Summers
Night Dream" are among the movies to be added to the Hotel Movie Network
line-up. Partnering with these two media giants, is another important step in
C-3D's long term marketing strategy. The objective of Hotel Movie Network is
to create the prototypical high-tech entertainment and information network
for the hotel market.
17
<PAGE>
Hotel Movie Network has also signed an agreement with Warner Brothers, a
subsidiary of Time Warner, Inc., the leading media and entertainment company.
According to the agreement, Hotel Movie Network will gain access to movies
still in their theatrical release from Warner Brothers. The agreement with
Warner Brothers significantly expands C-3D's existing movie line-up with
high-quality, in-demand first run movies. The recently released hit movie
"Three Kings" is an example of the type of movies to which C-3D has gained
access.
The Capital Associates hotel television properties acquisition positions
Hotel Movie Network for future growth in both the home and hotel rooms
industry. The assets comprising the Hotel Movie Network were originally
purchased by C-3D in December of 1998. Growth in the division has exceeded
management's expectations in both revenues and rooms served. Hotel Movie
Network's objective is to offer cutting-edge entertainment and information
services through selected private network systems. With final details
currently being worked out, Hotel Movie Network will become the world's first
in-room network to offer 3D stereoscopic movies.
REVERSE STOCK SPLIT
C-3D Digital Inc., announced that its Board of Directors approved a 1-for-4
reverse stock split of the Company's common stock. The date on which the
reverse stock split shares were reflected on the American Stock Exchange was
February 2, 2000. C-3D's business has now matured to a point where C-3D has
received considerable interest from institutional investors inquiring about
the possibility of adding the Company's shares to their portfolios. Through
this reverse split, the stock of C-3D will be priced in a range that allows
the Company to begin to attract quality institutions. Because certain
institutional investors have internal policies preventing the purchase of
low-priced stocks and many brokerage houses do not permit low-priced stocks
to be used as collateral for margin accounts, the split should generate
additional liquidity for C-3D's loyal shareholders.
RESULTS OF OPERATIONS
Comparison of Quarter Ended December 31, 1999
<TABLE>
<CAPTION>
For the
Three Months Ended
December 31, 1999
1999 1998
<S> <C> <C>
REVENUES $ 1,035,292 $ 275,937
COST OF SALES 2,071,819 144,330
GROSS PROFIT (1,036,527) 131,607
Revenues percentage increase over 1998 275%
</TABLE>
18
<PAGE>
Revenues for the third quarter of 1999 once again show an improvement over
1998. For the three months ended December 31, 1999 revenues increased over
275% over the same period in 1998. Gross Margin was in a negative position
for the three months ended December 31, 1999 due to management's reduction of
inventory levels of product that has become obsolete due to improvements on
technology of our suppliers parts over previously available parts. Any
inventories that could be affected will be written off over this period and
the fourth quarter. This write off will be less than one million dollars. The
C-3D Television Network delivery cost that is just more than $900,000
year-to-date is considered a cost of sales expense. C-3D Television Network
revenues have not yet become strong enough to cover this expense.
The increase in sales for the quarter is due primarily to the acquisition of
the new centric graphical software and the resulting revenue stream generated
by these product lines. This acquisition occurred in calendar year 1999, and
prior quarters reflect no sales of these products.
<TABLE>
<CAPTION>
For the
Three Months Ended
December 31, 1999
1999 1998
<S> <C> <C>
Selling Expenses $ 1,235,549 $ 84,448
Research and Development Cost 339,158
General and Administrative 393,233 606,811
Total Expenses 1,967,940 691,259
Total Expenses increase over 1998 185%
</TABLE>
C-3D is involved in research and development of new devices which use its
existing technology and, that will aid in creating better 3D content as well
as the ultimate display to its users of such content in a user friendly way.
Research and development expenses must be expensed at the time they are
incurred. C-3D is also involved in the creation of 3D media content. The
development of this content/media is capitalized and amortized over the sales
life of the content/media. With the maturing of the company, C-3D's
management is looking at each cost center within the Company to insure
long-term profitability.
Total operating expenses have increased over 185% in the three months ended
December 31, 1999 over the same period in 1998. These increase are due
largely to the increase of employees into the new 3D.COM enterprise and
building a team of professionals to maintain a quality-programming plan for
the C-3D Television Network.
19
<PAGE>
<TABLE>
<CAPTION>
For the
Three Months Ended
December 31, 1999
1999 1998
<S> <C> <C>
Net Loss $ 3,179,096 $ 568,128
Net Loss increase over 1998 460%
</TABLE>
Net Losses have increased over 460% in the three months ended December 31, 1999
over the same period in 1998. This increase is due to increased marketing
activities, increased costs to produce the centric graphical products of 3D.COM
and inventory write downs.
Comparison of Nine Months Ended December 31, 1999
<TABLE>
<CAPTION>
For the
Nine Months Ended
December 31, 1999
1999 1998
<S> <C> <C>
REVENUES $ 2,644,478 $ 443,313
COST OF SALES 2,653,873 250,575
GROSS PROFIT (9,395) 192,738
Revenues percentage increase over 1998 497%
</TABLE>
Revenues for the first nine months of 1999 show an improvement of 497% over
1998. The company expects to continue to show sales gains over last year due
to the purchase of the centric graphical revenue flow. In fiscal year 2001,
C-3D expects to show gains not only on the centric graphical line of products
on its C-3D Television Network, but also 3D sales though retail outlets and
e-commerce on 3D.COM.
Management expects that gross Margins for 3D.COM for the next quarter will be
low due to inventory write downs, but will become positive in the year 2001.
When C-3D Digital begins to gain momentum in the channel subscription market,
revenue is expected to increase quickly while corresponding expenses will
remain relatively the same. C-3D Digital has the capability of taking of
media titles that have generated billions of dollars and have brought
comfort, satisfaction and excitement to viewers world wide, and reintroducing
them to those same viewers and to new markets of viewers in the 3D format.
For those companies who own the rights to these titles that are now dormant
in their archives, a whole new royalty revenue is possible that has not been
available in the past. As these new titles become 3D compatible, more
subscribers will be attracted to the C-3D Television Network to view their
old favorites in 3D. Management anticipates that the old emotions
20
<PAGE>
that these favorite movies kindled will once again stir souls when viewed in
3D. Such emotions will encourage the sale of videos and DVD's, once again
increasing the revenue stream to C-3D Digital and those who have licensed
these titles to C-3D Digital.
<TABLE>
<CAPTION>
For the
Nine Months Ended
December 31, 1999
1999 1998
<S> <C> <C>
Selling Expenses $ 2,576,079 $ 299,957
Research and Development 339,158
General and Administrative 3,794,521 1,599,581
Total Expenses 6,709,758 1,899,538
Total Expenses increase over 1998 253%
</TABLE>
Total operating expenses have increased 253% in the nine months ended
December 31, 1999 over the same period in 1998. These increases are due
largely to the increase in cost of employees for the new 3D.COM enterprise
and building a team of professionals to maintain a quality-programming plan
for the C-3D Television Network.
<TABLE>
<CAPTION>
For the
Nine Months Ended
December 31, 1999
1999 1998
<S> <C> <C>
Net Loss $ 6,990,687 $ 1,881,350
Net Loss increase over 1998 272%
</TABLE>
Net losses have increased 272% in the nine months ended December 31,1999 over
the same period in 1998. The accumulation of these losses over the past few
years has given the Company over a 26 million dollar tax carry forward loss
which may be utilized until the year 2014. C-3D Digital is in the position of
not having to pay taxes on the first 26 million dollars of income that it
generates, allowing the company to use the money that would normally be paid
in taxes to finance its growth.
<TABLE>
<S> <C> <C>
Current Assets
Cash $ 327,418 9.04%
Accounts receivable net $ 915,269 25.25%
Prepaid expenses $ 265,434 7.32%
Inventory $ 2,116,531 58.39%
---------------------------
Total Current Assets $ 3,624,652 100.00%
</TABLE>
21
<PAGE>
Accounts receivable is made up of 3D.COM's product sales, the Home Movie
Network's billing to their hotel customers and channel revenue. Prepaid
expenses are deposits to landlords, utilities and our satellite suppliers.
Over $800,000 of the inventory is made up of products used by the Home Movie
Network. C-3D's proprietary 3D converters make up another $1,000,000 with the
remainder being product of 3D.COM.
Property and equipment of just over $1,000,000 is used on a daily bases by
the employees to perform their duties. Property rights of $3,727,128 includes
intellectual property acquired in the centric graphical software, rights to
movies to be shown on the C-3D Television Network and sold as videos and DVD
in 3D, and production of 3D content/media by the Company.
<TABLE>
<S> <C> <C>
Current Liabilities
Accounts payable $ 985,340 28.51%
Accrued expenses $ 268,057 7.76%
Accrued interest payable $ 233,735 6.77%
Current portion of notes $ 1,967,835 56.96%
----------------------------
Total Current Liabilities $ 3,454,967 100.00%
</TABLE>
Accounts payable represent bills from our vendors. Accrued expenses are
payroll related expenses. In excess of $1,750,000 of the notes payable of the
company will be converted to capital stock in the fourth fiscal quarter along
with over $200,000 of the accrued interest.
Long term liabilities of $2,750,000 have been converted to capital stock in
the fourth quarter of the year 2000 ending March 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
C-3D Digital continues to be dependent on investment capital to fund its
operations. The company has made arrangements with some of its consultants to
receive stock in place of cash for the services they render to the company.
These consultants are very important to the overall success of C-3D Digital
in the market place. The consultants have given us no assurance that they
will continue to take stock in place of cash.
Non-U.S. investors have committed verbally to provide an additional
$3,000,000 over the next four months of operations. C-3D Digital does not
know if this commitment will continue, even though our investors have honored
this commitment in the past. Management continues to work with the financial
industry to arrange proper capitalization of C-3D Digital. In the past,
management has been successful at making these arrangements. The company
cannot rely entirely on the past performance of management to succeed in the
future in securing necessary financing.
22
<PAGE>
IMPACT OF YEAR 2000
C-3D Digital experienced no adverse problem with regard to the Y2K or year
2000 issue.
FORWARD-LOOKING STATEMENTS
This filing includes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. This Act provides a "safe
harbor" for such statements to encourage companies to provide prospective
information about themselves so long as such information is identified as
forward-looking and is accompanied by meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those projected in the information. All statements other than
statements of historical fact made in this filing or incorporated by
reference are forward-looking and are beliefs, estimates, intentions and
strategies about the future. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," "projects", "predicts"
or variations of such words and similar expressions are intended to identify
such forward-looking statements, but their absence does not mean the
statement is not forward-looking. In particular, the statements herein
regarding the availability of adequate funding and progress in the
development of the Company's various business segments are forward-looking
statements. Forward-looking statements represent management's current
expectations and are inherently uncertain. The failure of any forward-looking
event to occur can cause all forward-looking predictions to fail. Investors
are warned that the Company's actual results may differ significantly from
management's expectations and, therefore, from the results discussed in such
forward-looking statements.
23
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
On July 29, 1999, a subsidiary of C-3D was served with a complaint filed in
the Third Judicial District Court of the State of Utah under Civil No.
990907583. The litigation is brought by MultiDimensional Studios, L.L.C.
("MDS"), Jonathan Neville and Loran Swensen. The actions described in the
complaint of the plaintiffs seek to recovery damages for the alleged breach
of three separate contracts: (i) a June 23, 1997 Consulting Agreement between
Neville and a subsidiary of C-3D; (ii) a June 1997 Consulting Agreement
between Swensen and the subsidiary; and (iii) a Restated Video Purchase
Agreement between MDS and the subsidiary. Total claims by the plaintiffs
exceeded $3,000,000. On January 24, 2000 the parties entered into a
settlement agreement dismissing all of the claims of the plaintiffs without
admission of liability and obligating C-3D to pay the sum of $25,000.
C-3D has also entered into a settlement agreement with Central Meadow Park,
L.L.P on litigation filed against a subsidiary of C-3D in the District Court
in Dallas, Texas. This litigation related to commercial lease obligations of
the subsidiary. The balance owing pursuant to the settlement agreement is
less than $50,000.
24
<PAGE>
ITEM 5. OTHER INFORMATION
February 2, 2000 Reverse Split of Common Stock
By action of the Board of Directors on January 13, 2000, the reverse split of
the common stock of C-3D Digital was approved. The reverse split is on a 4 to
1 basis, and became effective as of the close of business on February 1,
2000. In the week following the reverse split, the market has responded
positively to the reverse split.
Employment of In-House Counsel
D. Alan Hunter, General Counsel, joins C-3D Digital with 19 years of
experience in corporate law, civil litigation, appeals, and other
transactional work. Mr. Hunter's previous experience as in-house counsel for
a direct-to-home satellite programmer and Internet services company enables
him to bring valuable experience to C-3D Digital. His expertise will aid C-3D
in contract negotiations, acquisitions and new business development.
25
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
10.1 i-O Display Systems, LLC equipment purchase agreement
dated February 4, 2000.............................................................29
10.2 Affiliation Agreement for cable retransmission with CableAmerica ..................38
10.3 Affiliation Agreement with Telepro Communications, Inc.
dated December 31, 1999, for cable retransmission..................................53
10.4 Technology Licensing Agreement with Iehab Hawatmeh
(Circuit Technology)...............................................................68
10.5 License Agreement with Academy Entertainment, Inc.
dated November 3, 1999.............................................................72
10.6 Exclusive Distribution Agreement with 3D Television Co., Ltd.
of Japan dated April 25, 1999......................................................75
10.7 Affiliation Agreement with 3D Television Co., Ltd
of Japan dated April 25, 1999 for cable retransmission.............................87
10.8 Computer Software Bundle Agreement with Eskape Labs...............................102
10.9 Computer Software Bundle Agreement with Interex incorporated
dated April 29, 1999..............................................................113
10.10 Computer Software Bundle Agreement with Belkins Components
dated August 31, 1999.............................................................126
10.11 Computer Software Bundle Agreement with Aurora Design
dated June 1, 1999................................................................138
10.12 Amendment to Subscription Agreements and Warrants for the Augustine Fund
transaction (Incorporated by reference from Form S-3/A (Film No. 507009) filed
by C-3D with the Commission on January 13, 2000).
10.13 Form of Stock Option Agreement for Blaine Harris dated January 31, 2000...........151
10.14 Tippetts Advisory Agreement dated November 12, 1999...............................156
10.15 Warner Bros. Agreement dated January 20, 2000.....................................165
10.16 Trimark Pictures, Inc. License Agreement dated February 8, 2000...................170
26
<PAGE>
10.17 Software Too Corporation Agreement dated June 17, 1999............................175
10.18 Be, Incorporated On-Line Order and Distribution Agreement.........................190
10.19 Be, Incorporation Development and Distribution Agreement..........................202
10.20 i-O Display Systems Agreement dated September 17, 1999............................214
27 Financial Data Schedule (for SEC use only)........................................
</TABLE>
(b) Reports on Form 8-K
None
27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHEQUEMATE INTERNATIONAL, INC.
/s/ J. MICHAEL HEIL DATE: 2/11/2000
- --------------------------------------
J. MICHAEL HEIL
CHIEF EXECUTIVE OFFICER
/s/ GUY DEHART DATE: 2/11/2000
- --------------------------------------
GUY DEHART
CHIEF FINANCIAL OFFICER
28
<PAGE>
EXHIBIT 10.1
C-3D DIGITAL
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") dated this ______ day of
February, 2000 between CHEQUEMATE INTERNATIONAL, INC., a Utah corporation
("Buyer" or "Chequemate") doing business as C-3D Digital, with its principal
offices located at 330 Washington Blvd., Suite 507, Marina del Rey, CA
90292-5146 ("Buyer"), and i-O Display Systems, LLC, a California limited
liability company, with its principal offices located at 1370 Willow Road,
Menlo Park, California 94025-1516 ("Seller");
WITNESSETH:
WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell to
Buyer, on the terms and subject to the conditions of this Agreement, certain
goods;
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties agree
as follows:
ARTICLE 1. SALE OF GOODS
Subject to the terms and conditions set forth in this Agreement, Seller
agrees to sell to Buyer, and Buyer agrees to purchase from Seller, Five
Hundred Thousand Dollars ($500,000.00) (less any balance presently owed to
Seller by Buyer) worth of Seller's goods, in particular, 3D video viewing, 3D
internet viewing and/or 3D gaming systems or other 3D products. The unit
price shall be the lowest distributor price offered by the Seller for the
Seller's goods for a given configuration and purchase volume. Exhibit "A" is
the Seller's price list effective February 1st, 2000.
ARTICLE 2. PURCHASE PRICE
2.1 PAYMENT OF PURCHASE PRICE: In consideration for the transfer and
assignment by Seller of the Assets, and in consideration of the
representations, warranties and covenants of the Seller set forth
herein, Buyer on the conditions set forth herein states that:
(a) Buyer shall pay to Seller the sum of Five Hundred Thousand
Dollars ($500,000.00).
(b) Payment will be made in full on or before February 18, 2000.
Payment will be in cash or, at Buyer's option, in the form of
Chequemate International, Inc. restricted common stock, or
both. Any such shares of stock shall be valued at the average
of the end of day closing price for free-trading common stock
in Chequemate International, Inc., over the previous five (5)
days of trading. The number of shares to be issued shall be
sufficient in value to equal the balance due on the date of
payment.
29
<PAGE>
ARTICLE 3. DOCUMENTATION
DELIVERIES: In the event that stock in Buyer is used as all or a portion of
the purchase price, Buyer shall deliver to Seller the following
instruments and documents against delivery of the goods:
(a) Stock Certificates issued in the name of Seller, for the
balance due, of Buyers common stock. (See Section 2.1); and
(b) The certificate of the President or Secretary of the Buyer
confirming that proper minutes and resolutions of the Buyer's
Board of Directors have been secured approving the purchase of
the goods.
(c) Purchase may be made in whole or in part in the form of cash
or certified funds.
(d) Seller shall have demand registration rights on any and all
stock accepted hereunder toward the purchase price.
ARTICLE 4. SALES TAXES
Buyer shall pay all sales, use and transfer taxes arising out of the transfer
of the Assets.
ARTICLE 5. DELIVERY
All goods purchased hereunder are F.O.B. Seller's warehouse, Menlo Park,
California.
Buyer may take delivery of the goods in whole or in part, from time to time,
during the one hundred twenty (120) days following the payment of the
purchase price hereunder. Buyer shall give Seller reasonable notice of the
number of consumer kits of which it anticipates taking delivery.
ARTICLE 6. OTHER TERMS
All provisions of the Strategic Procurement Agreement entered into by the
parties on or about September 16, 1999, shall apply to this transaction to
the extent that this agreement does not expressly contradict them.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES AND BUYER.
Buyer represents and warrants to the Seller as follows:
7.1 ORGANIZATION AND QUALIFICATION. Chequemate is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Utah. Chequemate has all requisite power and authority to own
or operate its properties and conduct its business as it is now being
conducted.
30
<PAGE>
7.2 CAPITALIZATION; SUBSIDIARIES. The authorized capital stock of
Chequemate consists of 500,000,000 shares of Common Stock. As of
October 25, 1999, 23,866,834 shares of Chequemate's Common Stock were
issued and outstanding. As of February 2, 2000, there was a 1 to 4
reverse split, resulting in fewer than 6 million shares being
outstanding. All issued and outstanding shares of capital stock of
Chequemate are validly issued, fully paid, non-assessable and free of
preemptive rights.
7.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Chequemate has all requisite
corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of Chequemate, and no other corporate
proceedings on the part of Chequemate are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by
Chequemate and, assuming this Agreement constitutes a valid and
binding obligation of the Seller, this Agreement constitutes a valid
and binding agreement of Chequemate, enforceable against Chequemate in
accordance with its terms.
7.4 SEC REPORTS. Since January 1, 1998, to the best of its knowledge
Chequemate has filed all required forms, reports and documents
("Chequemate SEC Reports") with the Securities and Exchange Commission
(the "SEC") required to be filed by it pursuant to the federal
securities laws and the SEC rules and regulations thereunder, all of
which have complied in all material respects with all applicable
requirements of the Securities Act of 1933 (the "Securities Act") and
the Securities Exchange Act of 1934 (the "Exchange Act"), and the
rules and interpretive releases promulgated thereunder. None of such
Chequemate SEC Reports, including without limitation any financial
statements, notes, or schedules included therein, at the time filed,
contained any untrue statement of a material fact, or omitted to state
a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
Each of the consolidated balance sheets in or incorporated by
reference into the Chequemate SEC Reports fairly presents or will
fairly present the financial position of the entity or entities to
which it relates as of its date, and each of the related consolidated
statements of operations and retained earnings and cash flows or
equivalent statements in the Chequemate SEC Reports (including any
related notes and schedules) fairly presents or will fairly present
the results of operations, retained earnings and cash flows, as the
case may be, of the entity or entities to which it relates for the
period set forth therein (subject in the case of unaudited interim
statements, to normal yearend audit adjustments) in each case in
accordance with generally-accepted accounting principles applicable to
the particular entity consistently applied throughout the periods
involved, except as may be noted therein; and independent certified
public accountants for Chequemate have rendered or will render an
unqualified opinion with respect to each audited financial statement
included in the Chequemate SEC Reports. The consolidated financial
statements included in the Chequemate
31
<PAGE>
SEC Reports are hereinafter sometimes collectively referred to as the
"Chequemate Financial Statements."
7.5 CONSENTS AND APPROVALS: NO VIOLATION. Neither the execution and
delivery of this Agreement by Chequemate nor the consummation of the
transactions contemplated hereby nor compliance by Chequemate with any
of the provisions hereof will conflict with or result in any breach of
any provision of the Articles of Incorporation or by-laws of
Chequemate or any Subsidiary, require any consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Authority, except pursuant to the Securities Act and the
Exchange Act, such filings and approvals as may be required under the
"blue sky", takeover or securities laws of various states, or result
in a default (with or without due notice or lapse of time or both) (or
give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, contract, license, agreement or other instrument
or obligation to which Chequemate is a party or by which Chequemate,
any of its Subsidiaries or any of their respective assets may be
bound, result in the creation or imposition of any lien, charge or
other encumbrance on the assets of Chequemate or violate any order,
writ, injunction, decree, statute, rule or regulation applicable to
Chequemate or any of its respective assets.
7.6 LITIGATION, ETC. Except as disclosed in the Chequemate SEC Reports or
in Exhibit "B" attached hereto, there is no action, claim, or
proceeding pending or, to the knowledge of Chequemate, threatened, to
which Chequemate is or would be a party before any court or
Governmental Authority acting in an adjudicative capacity or any
arbitrator or arbitration tribunal with respect to which there is a
reasonable likelihood of a determination having, or which, insofar as
reasonably can be foreseen in the future would have, a material
adverse effect on Chequemate and since December 31, 1997, there have
been no claims made or actions or proceedings brought against any
officer or director of Chequemate arising out of or pertaining to any
action or omission within the scope of his employment or position with
Chequemate, which claim, action or proceeding would involve a material
adverse effect on Chequemate taken as a whole. All material litigation
and other material administrative, judicial or quasi-judicial
proceedings to which Chequemate is a party or to which it has been
threatened to be made a party, are described in the Chequemate SEC
Reports, or Exhibit "B" attached hereto.
7.7 COMPLIANCE WITH LAW AND PERMITS. Chequemate has owned and operated
its properties and assets in substantial compliance with the
provisions and requirements of all laws, orders, regulations, rules
and ordinances issued or promulgated by all Governmental Authorities
having jurisdiction with respect thereto. All necessary governmental
certificates, consents, permits, licenses or other authorizations with
regard to the ownership or operation by Chequemate of their respective
properties and assets have been obtained and no violation exists in
respect of such licenses, permits or authorizations. None of the
documents and materials filed with or furnished to any Governmental
Authority with respect to the properties, assets or businesses of
Chequemate
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contains any untrue statement of a material fact or fails to state a
material fact necessary to make the statements therein not misleading.
7.8 CHEQUEMATE COMMON STOCK. The shares to be issued by Chequemate
pursuant to this Agreement have been duly authorized and, when issued
in accordance with the terms of the this Agreement, will be validly
authorized and issued and fully paid and nonassessable, and no
shareholder of Chequemate will have any preemptive rights or
dissenter's right with respect thereto.
ARTICLE 8. SECURITIES ASPECTS OF AGREEMENT
8.1 All parties to this Agreement mutually understand, agree and covenant
that any referenced sale or other disposition of any security under
this Agreement shall be controlled and governed by this section.
Specifically should there arise any conflict of application or
interpretation under this section and any other provision or section
of this Agreement, this section shall be given primary definition and
control. The term "securities" for the purposes of this Agreement
shall mean and include all shares of Chequemate, and any warrants to
acquire those shares as well as any other instrument or obligation
customary or commonly described as a security. Each of the following
terms and conditions of the issuance and distribution of the
securities shall be fully applicable unless otherwise specifically
waived or treated in the following paragraphs.
8.2 Each security issued pursuant to the terms of this Agreement shall be
a "restricted" security unless otherwise specifically referenced as
being issued pursuant to a registration or offering.
8.3 Seller understands and agrees that a restricted security, for the
purposes of this Agreement, is one which is issued without meeting
registration requirements under both federal and state law within the
United States. Each party to this Agreement further agrees and
acknowledges that the nature of a restricted security is that it is
not freely tradable. That is, the holder of such security cannot
immediately market or further distribute such security in the open
market, or through private transactions without the express written
consent of the issuer, primarily Chequemate under the terms of this
Agreement.
8.4 Seller fully acknowledges and understands that the resale of a
restricted security will normally require substantial holding periods
unless subsequently subject to an intervening registration under
applicable federal and state securities laws. Seller acquiring
restricted stock under this Agreement further acknowledges and agrees
that the principal, though not exclusive, means by which restricted
securities are resold under United States law and conforming state
laws and regulations is Securities and Exchange Commission ("SEC")
Rule 144, which essentially requires a holding period of one year
before the stock can be resold or any interest therein further sold or
assigned. In general terms, Rule 144 would require that there be
current public information about the Company before the provisions of
the Rule could be relied upon for subsequent resale, that the
aforementioned holding period had been met, that the sales occurred
through independent arms-length and unsolicited brokerage
transactions, that certain volume limitations on the number of
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shares sold in each three month period be observed, and that a report
of sales will be filed with the SEC. Seller understands that the
foregoing constitutes only a general description of Rule 144 and that
such person is or has the means to become familiar with all of the
specific provisions and terms of Rule 144 through his independent
legal advisors. Seller further acknowledges and agrees that while Rule
144 is not exclusive, that it is anticipated and intended that it
would be the primary means by which securities acquired under this
Agreement could be resold absent the specific registration provisions
of this Agreement.
8.5 Seller further acknowledges and agrees that, except as specifically
provided by the terms of this Agreement, none of the corporate parties
will have any obligation to register securities issued, and have no
present intention to register such securities other than is
specifically provided for by this Agreement. Each person under this
Agreement acquiring securities further understands and agrees that
individual registration of securities, absent registration by the
issuer, is usually not practical and should not be relied upon as a
means for resale or other distributions of securities acquired under
this Agreement.
8.6 Any entity acquiring securities pursuant to this Agreement with the
intent to divide such securities among its principal shareholders or
members as part of the acquisition process, will be responsible for
obtaining the knowledgeable consent and agreement of such actual
shareholder to the terms of this Agreement, specifically referencing
this paragraph.
8.7 Seller fully understands and agrees that should such person be deemed
to be in a "control" position as to Chequemate incident to the
completion of this Agreement, that such person must comply with the
volume limitations of Rule 144 to complete sales of his or her
securities acquired, except for securities which have been otherwise
registered pursuant to this Agreement. A control person has been
defined by the SEC, and by most state securities regulatory agencies,
as a person who has the capacity to exercise control over the issuing
company. While no precise mathematical formulation of a control person
is applicable to all situations, the following are generally presumed
to be control people:
(i) a person holding 10% or more of the shares of the issuing company;
(ii) any principal officer or any director of the issuing company.
8.8 Seller represents that it is acquiring the Shares for its own account,
for investment and not with a view to the distribution or resale
thereof. The Seller further represents that its financial and other
circumstances are such that it has adequate means of providing for its
current and anticipated future needs without having to sell or
otherwise dispose of the Shares, and that the Seller is able to bear
the economic risks of this investment and consequently is able to hold
the Shares for an indefinite period of time and to sustain the loss of
its entire investment in the Shares, in the event such a loss should
occur.
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8.9 Seller acknowledges and represents that, due to its knowledge and
experience in financial and business matters, its investment
experience generally and its experience with investments similar to
the Shares in particular, Seller, either alone or together with its
advisors, if any, is able to understand and merits of, and the risks
involved in, its proposed investment in the Shares. Seller, either
alone or together with its advisors, if any, has the capacity to
protect its own interests in connection with this transaction.
8.10 Seller acknowledges that Chequemate has furnished or made available to
Seller all financial and other data relating to Chequemate, required
by Seller to enable it to make an informed decision concerning its
approval of this transaction and its resulting acquisition of the
Shares. In particular, Seller acknowledges that it has received and
reviewed the financial statements of Chequemate for the past two years
and complete copies of all of the Chequemate SEC Reports for such
period. Seller acknowledges that it has been informed that Chequemate
has not previously conducted business except as disclosed in the
Chequemate SEC Reports. Seller represents and acknowledges that it and
its principals have been engaged in the business of providing cable
television services and pay-per-view services in the hotel/lodging
industry, which is intended area of business for which the goods are
being acquired by the Buyer. In this regard, Seller has been
acquainted with the Chief Executive Officer of Chequemate. Seller
further represents and acknowledges that it has had full opportunity
to obtain additional information from Chequemate to verify the
accuracy of the information supplied by it and to evaluate the merits
of its investment decision, including, without limitation, full
opportunity to ask questions of and receive satisfactory answers and
other information from Chequemate, its officers, directors and other
persons acting on its behalf, and all such questions have been
answered, and such other information supplied, to Seller's full
satisfaction. Seller is aware of, and has thoroughly evaluated, to its
own satisfaction, the high degree of risk associated with investing in
Chequemate, including but not limited to, the specific risks
associated with Chequemate's business and the risks associated with
the ownership of common stock.
8.11 Seller hereby represents and warrants to Chequemate that Seller is an
"accredited investor" as that term is defined in Rule 501(a) of
Regulation D. Seller further represents and warrants that it is a
limited liability company, and that each of the equity owners of
Seller is an "accredited investor" by reason of the fact that each of
the equity owners meets one or both of the following criteria:
(i) The owner is a natural person whose individual net worth, or
joint net worth with owner's spouse, at the time of this
agreement, exceeds $1,000,000; or
(ii) The owner is a natural person who had an individual income in
excess of $200,000 in each of the two most recent years, or
joint income with owner's spouse in excess of $300,000 in each of
those years, and has a reasonable expectation of reaching the
same income level in the current year.
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ARTICLE 9. FURTHER ASSURANCES
The parties agree to execute such additional or modified agreements as are
reasonably necessary to give full effect to the intentions of the parties as
shown in this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
it as of the day and year first above written.
BUYER
CHEQUEMATE INTERNATIONAL, INC.
a Utah corporation
By
-------------------------------------
Its:
SELLER
i-O Display Systems, LLC
a California limited liability company
By
-------------------------------------
Its:
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EXHIBIT "B"
Litigation, arbitration, etc.
Management believes that these lawsuits and threats of lawsuits are not
material, but lists them here for the sake of completeness and will furnish
detailed information upon request.
Magnum Financial v. Chequemate (settled)
Central Meadow Park v. Harris et al. (settled)
Multi-Dimensional Studios v. Chequemate (settled)
B & H d/b/a Ignite Advertising v. Chequemate (settled)
Orix Credit Alliance v. Strata (pending)
First Security Leasing Company v. Strata (settled)
Rocky Mountain Employee Benefits, Inc. v. Chequemate (pending)
Transwestern American Plaza II v. Chequemate (pending)
All American Semiconductor v. Chequemate (pending)
Eagle Plaza (threat of lawsuit)
3DTV Corporation (threat of lawsuit)
Universal Electronics (threat of lawsuit)
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EXHIBIT 10.2
C-3D DIGITAL
AFFILIATION AGREEMENT
AGREEMENT made this _______ day of January, 2000, by and between
Chequemate International, Inc., a Utah corporation, d/b/a C3D Television,
with its principal place of business located at 330 Washington Blvd., Suite
507, Marina del Rey, CA 90292, ("C3D") and CableAmerica Corporation, an
Arizona corporation, with its principal place of business located at 2720 E.
Camelback Road, Suite 200, Phoenix, AZ 85016 ("Affiliate").
WHEREAS, Affiliate distributes television networks; and
WHEREAS, C3D desires to make available to Affiliate the programming
known as the "C-3D Service" for retransmission to Affiliate's subscribers,
and to provide certain other related services upon the terms and conditions
set forth herein; and
WHEREAS, Affiliate desires to make available to its subscribers the
C-3D Service;
NOW THEREFORE, it is mutually agreed as follows:
1. Definitions. The following terms shall have the meanings set
forth below when used in this Agreement:
1.1 "Programming" shall mean a motion picture,
pre-recorded program, live production, or other event transmitted on the C-3D
Service;
1.2 "C-3D Service" shall mean the single channel satellite
delivered stereoscopic video entertainment programming service, presently
transmitted on GE 3, transponder 8;
1.3 "Subscriber" shall mean a private residential dwelling
unit (whether an apartment, house, mobile home, condominium unit, or rentable
guest room in a hotel, motel, inn, or lodge), the resident(s) of which have
agreed to purchase access to programming from Affiliate;
1.4 "Subscription Basis" shall mean the access to
Programming chosen by a Subscriber over the facilities of a System for
television viewing, for which access Subscriber is obligated to pay a monthly
fee to Affiliate;
1.5 "System" shall mean each cable television system
described in Schedule "A" hereto; and
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1.6 "Viewing Device" shall mean the liquid-crystal shutter
glasses and synchronizing drivers owned by C3D.
2. License.
2.1 Exhibition. C3D hereby grants to Affiliate and Affiliate
hereby accepts, subject to the terms and conditions herein, a non-exclusive
license to exhibit the C-3D Service on a subscription basis to Affiliate's
Subscribers over the facilities of the System. Affiliate may include
additional cable television systems by written amendment to Schedule A
hereto, provided that C3D consents in writing in advance of any such
addition. Affiliate shall exhibit the C-3D Service continuously during the
term of this Agreement.
2.2 Prohibitions. Unless otherwise expressly agreed to by C3D in
writing, this license does not grant to Affiliate the right to exhibit,
authorize, or permit the exhibition of the C-3D Service to any cable system
or SMATV system (satellite master antenna television system) not set forth in
Schedule A hereto; upon any breach of this prohibition, C3D shall have the
right to enjoin any exhibition or exploitation of the C-3D Service; to
suspend the transmission of the C- 3D Service; to terminate this Agreement
and/or declare this Agreement breached; to declare all amounts owed to C3D
immediately due and payable; and to exercise all rights and remedies on
account of such breach, including, without limitation, the right to recover
damages.
3. Term.
3.1 The term of this Agreement and the rights granted to Affiliate
hereunder shall be for a period of five (5) years from the date first
appearing above (the "Initial Term"). The Initial Term of this Agreement
shall expire on the same date for all of Affiliate's Systems listed in
Schedule A hereto regardless of when any individual system launches the C-3D
Service hereunder. The termination of this Agreement shall not: (a) abrogate
Affiliate's obligation to pay to C3D the sums set forth herein; (b) impair or
affect C3D's rights of withdrawal, audit or indemnification; or (c) abrogate,
impair or affect any warranty, representation, indemnity or undertaking on
the part of each party hereunder.
3.2 It is anticipated that the C-3D Service shall become available
to Subscribers in Mesa, Arizona on or before January 15, 2000. If the C-3D
Service is successful in the sole opinion of Affiliate, then Affiliate shall
expand the C-3D Service throughout its other Systems.
3.3 Affiliate may terminate this Agreement at any time during the
first year of its term, upon thirty days' written notice to C3D.
4. License Fees and Report.
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4.1 In consideration of the rights herein granted to Affiliate,
Affiliate shall pay C3D the license fees ("License Fees") set forth in
Schedule B hereto. Affiliate shall remit to C3D within thirty (30) days of
the end of each month all License Fees due for such month. Together with each
such payment of such amounts, Licensee shall deliver to C3D a monthly
statement in the form of Schedule C attached hereto. All payments and
statements hereunder shall be made to C3D at its address set forth above. All
amounts not paid within said thirty (30) day period shall accrue interest at
the maximum legal rate or 1 1/2 percent per month, whichever is less, until
received. Acceptance of any payment by C3D after its due date shall not
constitute a waiver of C3D's right to any accrued interest, or any other
right which C3D might otherwise have.
4.2 On no less than one hundred eighty (180) days' prior written
notice to Affiliate ("Amended Fee Structure Notice") C3D shall have the right
to adjust, from time to time during the term of this Agreement, the rates set
forth in Schedule B hereto with respect to License Fees on the date
("Effective Date") specified in the Amended Fee Structure Notice, if the
rates become unreasonable compared with the standard of the industry at that
time. In such event, Affiliate may, by written notice at least ninety (90)
days prior to the Effective Date, terminate this Agreement as of the
Effective Date; provided, however, that such termination by Affiliate shall
not take effect and shall be of no force or effect if C3D withdraws the
increase by written notice to Affiliate no later than fifteen (15) days prior
to the Effective Date.
4.3 In the event of a dispute between Affiliate and C3D as to any
amounts properly due from Affiliate to C3D, Affiliate shall pay that portion
of the amounts not in dispute in accordance with the terms of Paragraph 4.1
above and before or at the time of payment, shall notify C3D in writing of
the grounds for disputing the remaining unpaid balance. Interest shall not
accrue on such balance for a period of fourteen (14) days during which the
parties shall use reasonable efforts to negotiate a settlement.
4.4 In connection with any interruption or other failure in the
transmission, reception, or distribution of the C-3D Service which
interruption or failure could reasonably have been prevented by C3D,
Affiliate shall have recourse and a remedy against C3D only if Affiliate
shall have given its affected Subscribers a credit or rebate as a result of
such interruption or failure, in which case the sole and exclusive remedy of
Affiliate against C3D shall be a credit for no more than the amount of the
License Fee which would have been payable by Affiliate to C3D for the
Event(s) ordered if there had been no such interruption or failure. C3D shall
not, under the foregoing or any other circumstances, be liable for
incidental, consequential or special damages, including, without limitation,
loss of profits or revenues, damage to or loss of personal property or the
claim of any Subscriber.
4.5 Within ninety (90) days following the end of each of
Affiliate's fiscal years, during any portion of which this Agreement is in
effect, Affiliate shall furnish to C3D a letter addressed to C3D signed by
Affiliate's Chief Operating Officer or Chief Financial Officer which attests
to the completeness and accuracy of all reports and statements supplied to
C3D. Affiliate's obligation to
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supply such letters shall continue after the termination of this Agreement,
until C3D receives the required letter with respect to the last fiscal year
during any portion of which this Agreement is in effect.
4.6 Affiliate shall keep and maintain, at Affiliate's principal
place of business, complete and accurate books and records relating to this
Agreement in accordance with generally accepted accounting principles. During
the term of this Agreement and for two (2) years thereafter, C3D shall have
the right, at its expense, for its representatives, accountants, or
designated agents, at Affiliate's principal place of business, during regular
business hours, to audit and examine Affiliate's books and records for the
purpose of verifying and confirming the accuracy of the statements delivered
to C3D by Affiliate and the amount of the License Fees paid or payable under
this Agreement and to make photocopies of relevant excerpts of any such books
and records. The exercise by C3D of any right to audit or examine at any time
or the acceptance by C3D of any statement or payment shall be without
prejudice to any other rights or remedies available to C3D and shall not bar
C3D from thereafter disputing the accuracy of any such payment or statement
and Affiliate shall remain fully liable for any balance due under the terms
of this Agreement. If any audit discloses an underpayment of five percent
(5%) or more with respect to the amount of License Fees set forth on any of
Affiliate's statements, Affiliate agrees to pay all costs and expenses
incurred by C3D for such audit, and to re-compute and make immediate payment
of the actual License Fees due, and to pay any reasonable attorney fees
incurred by C3D in connection with such License Fees or the collection
thereof. Neither C3D's acceptance of any information, nor inspection nor
audit shall prevent C3D from later disputing the accuracy or completeness of
any payments made or of information supplied by Affiliate.
4.7 The suggested price for the service is $9.99 per month per
Subscriber who either requires no Viewing Devices, or who requires one
Viewing Kit, and an additional $5.99 per month per Subscriber who requires a
second Viewing Kit. A "Viewing Kit" is one (1) synchronizing driver and two
(2) pair of wireless liquid crystal shutter glasses. Affiliate may charge
whatever price it desires, but if the prices charged exceed the suggested
prices, the excess shall be divided 50% to C3D and 50% to Affiliate. If the
prices charged exceed $19.99 per month for one Viewing Kit, or $34.99 per
month for two Viewing Kits, that additional excess shall be divided 70% to
C3D and 30% to Affiliate. New Subscribers may acquire the service for free
through the end of February, 2000; for one year thereafter, any new
Subscriber shall receive one month of the C-3D Service for free.
Notwithstanding any other provision of this Agreement, Affiliate will not
begin to charge any subscription fees until March 1, 2000. Thereafter,
Affiliate will remit 100% of any subscription fees collected for the first
three (3) paying months for each Subscriber to C3D, to help defray the cost
of the Viewing Devices.
5. Transmission and Distribution
5.1 Affiliate shall be solely responsible for the reception of the
video and audio signals of the C-3D Service to the headend or other receiving
device of the System(s) and for the
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transmission therefrom to its Subscribers. Affiliate shall employ adequate
security systems to prevent theft, pirating, copying, duplication, or
unauthorized exhibition of the C-3D Service, and shall ensure that the C-3D
Service is made available only to Subscribers. Affiliate shall continuously
maintain transmission quality for the C-3D Service equivalent to the best
transmission quality of other programming transmitted by Affiliate.
5.2 C3D shall furnish Affiliate with one CLI IRD decoder per
downlinking headend at no cost to Affiliate. If Affiliate requires a digital
feed, then C3D shall make one available.
5.3 Affiliate shall exhibit and shall require each System to
exhibit the C-3D Service in its entirety, without any interruptions,
including all titles, credits, and copyright notices.
6. Advertising and Promotional Materials
6.1 Affiliate shall use its reasonable best efforts to promote the
C-3D Service to the Subscribers of each System, with the aim of maximizing
the number of Subscribers to the C-3D Service, and the total revenue from the
C-3D Service.
6.2 For each month during the term of this Agreement, not later
then thirty (30) days prior to the exhibition of the C-3D Service for such
month, C3D shall make available to Affiliate such trailers and other
publicity materials as C3D may have available (the "Promotional Materials")
to be used for advertising and publicizing the C-3D Service for such month.
Affiliate shall have the right, at its sole cost and expense, to make copies
of the Promotional Materials solely for use by each System.
6.3 Affiliate shall not use the name, image, or likeness of any
character, person or entity appearing in or connected with the production of
any Event included in the C-3D Service separate and apart from the
advertising and promotion of the C-3D Service, and no name, image or likeness
shall be used by Affiliate so as to constitute an endorsement or testimonial,
express or implied, of any party, product, service or commercial venture.
Affiliate acknowledges that its right to use the names, images, or likenesses
of person or entities appearing in or connected with the production of any
Event is subject to various limitations and restrictions contained in
contracts with third parties. Following the exhibition of the C-3D Service in
any month during the term of this Agreement, Affiliate shall not use,
transmit, exhibit, circulate or otherwise publish any Promotional Materials
provided by C3D for such month.
6.4 In all advertising and publicity issued by Affiliate for the
C-3D Service, Affiliate shall comply with all instructions from C3D,
regarding advertising, or contained in any promotion package provided by C3D.
6.5 The parties understand and agree that the implementation of
this Agreement will necessitate that the staff and employees, servants and
agents of each party shall make themselves
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and the necessary equipment, sites and locations available upon reasonable
notice to the staff, employees, servants and agents of the other party at all
reasonable times during the term of this Agreement.
7. Viewing Devices.
7.1 C3D shall furnish Affiliate with a number of serially-numbered
liquid-crystal shutter glasses and synchronizing drivers, as described in
Exhibit "D". Affiliate shall cause one or more of Affiliate's employees to
personally deliver and install the Viewing Devices at each Subscriber's
address, in order to instruct the Subscriber on the proper methods of care
and use, to be certain that the Viewing Devices are functioning for the
Subscriber, and to obtain a receipt and agreement from the Subscriber as
described below. Affiliate's employee shall furnish to each subscriber at the
time of installation written materials prepared by C3D describing proper
methods of care and use. If a Subscriber has trouble with a Viewing Device,
and it is not merely a drained battery, the Viewing Device shall be replaced
by Affiliate, and the trouble unit mailed to C3D at the address above,
attention "Repairs and Warranty Claims".
7.2 Affiliate shall obtain from each Subscriber at the time of
installation a signed, written receipt and agreement prepared by C3D whereby
the Subscriber agrees:
(a) to be liable for the replacement cost of the Viewing
Devices if they are stolen, destroyed, or abused, and to return the Viewing
Devices in good condition, ordinary wear and tear excepted, at the
termination of that Subscriber's subscription;
(b) that there shall be no credit against the monthly
subscription rates for any time during which the Viewing Devices are
unavailable to the Subscriber due to theft or other casualty, or if they do
not function due to a dead battery or due to abuse or misuse; and
(c) that if Subscriber becomes liable for the replacement
cost of the Viewing Devices, that such amount will be added to Subscriber's
account with Affiliate, and if Subscriber fails to pay such amount to
Affiliate within ninety (90) days, Affiliate shall terminate all cable
service to such Subscriber until such amount is paid; and
(d) to pay a $30.00 deposit per Viewing Kit to Affiliate.
7.3 Affiliate shall be responsible to C3D only for those Viewing
Devices which Affiliate has physical custody of. Once each Viewing Device is
installed with a Subscriber and the signed written agreement is delivered to
C3D, Affiliate's responsibility for that Viewing Device is relieved, until
such time as a Subscriber returns a Viewing Device to Affiliate. Within
thirty (30) days thereafter, Affiliate shall return such Viewing Device to
C3D. Upon the termination of a Subscriber's subscription, Affiliate shall
inspect the returned Viewing Devices and refund the deposit to Subscriber,
mail the Viewing Devices back to C3D, and deduct from the License Fees next
owing to C3D an amount equal to the deposit refunded.
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8. WARRANTIES AND INDEMNIFICATION
8.1 C-3D warrants and represents that: (a) it has the power and
authority to enter into this Agreement and to fully perform its obligations
hereunder; (b) the material contained in the C-3D Service and in the
Promotional Materials supplied to Affiliate hereunder will not violate any
copyright, right of privacy or publicity or literary or dramatic right of any
person; provided, however, that such warranties and representations by C3D
are only as broad as and coextensive with those provided to C3D by C3D's
program suppliers.
8.2 Affiliate warrants and represents that: (a) Affiliate has the
power and authority to enter into this Agreement and to fully perform its
obligations hereunder; (b) Affiliate has obtained, and shall maintain in full
force and effect during the term of this Agreement, such federal and state,
local and/or private authorizations as are necessary to operate each System
in the Territory and to retransmit the C-3D Service pursuant to this
Agreement; (c) Affiliate will immediately notify C3D in the event that
Affiliate loses, or becomes aware of circumstances that it may lose, any
necessary authorizations, (d) any material contained in promotional material
developed by Affiliate will not violate any copyright, right of privacy or
publicity or literary or dramatic right of any person; and (e) Affiliate
Shall not use, and shall require each System not to use any Programming for
any unlawful purpose or for any purpose not permitted hereunder.
8.3 Affiliate shall indemnify, defend and hold harmless C3D, its
parent, subsidiaries and affiliated companies and their respective officers,
directors, employees, agents and shareholders from and against any and all
claims, losses or damages, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) (collectively "Claims") relating to
or arising out of any breach or alleged breach of any of the representations,
warranties, agreements, covenants or obligations made by Affiliate pursuant
to this Agreement.
8.4 C3D shall indemnity, defend and hold harmless Affiliate, its
parent, subsidiaries and affiliated companies and their respective officers,
directors, employees, agents and shareholders from and against any and all
Claims relating to or arising out of any breach or alleged breach of any of
the representations, warranties, agreements, covenants or obligations made by
C3D pursuant to this Agreement.
8.5 Each party seeking indemnity hereunder (the "Indemnified
Party") agrees to give prompt notice to the other party (the "Indemnifying
Party") of any circumstances which may give rise to a Claim under this
Paragraph 8 as soon as the Indemnified Party knows of such circumstances:
provided, however, that the failure to give such notice shall not relieve the
Indemnifying Party of its obligation to indemnify the Indemnified Party under
this Paragraph 8 except to the extent that such failure increases the
Indemnified Party's liability hereunder. The Indemnifying Party shall have
the right to participate in, and, with the consent of the Indemnified Party,
which consent shall not be unreasonably withheld, to control the contest and
defense of any Claim by a third party as to which notice is given by the
Indemnified Party under this Paragraph 8 at its own cost and expense,
including the cost and expense of attorneys' fees in connection with such
contest and defense. The Indemnified Party shall not settle or compromise any
such Claim
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without the prior written consent of the Indemnifying Party. If the
Indemnified Party settles or compromises any such Claim without the
Indemnifying Party's prior written consent, the Indemnifying Party shall be
relieved of its obligations to indemnify the Indemnified Party under this
Paragraph 8 with respect to such Claim.
9. SERVICE MARKS. Affiliate acknowledges that the name and mark
"C-3D" and any other service marks and any logos and variations used to
identify the C-3D Service are the exclusive property of C3D and that
Affiliate has not and shall not acquire any proprietary rights thereto by
reason of this Agreement. Materials used by Affiliate may refer to "C-3D " or
the C-3D Service and other names, marks and logos of C3D only if it is clear
that the names, marks and logos used are service marks for the C-3D Service
which Affiliate distributes. Such use shall be in accordance with any further
instructions that may be issued by C3D from time to time, Affiliate shall
promptly make available to C3D, at its request, all original promotional or
advertising material that uses the aforesaid names, marks or logos in
publicizing the C-3D Service and shall keep copies of all such original
material, Affiliate shall not publish or disseminate any material which
violates any restrictions imposed by C3D or C3D's program suppliers and
disclosed by Affiliate by C3D.
10. TERMINATION. Either party may terminate this Agreement by
giving the other party at least thirty (30) days prior written notice, in the
event that the other party has made any material misrepresentation herein or
materially breaches any of its obligations hereunder, including, without
limitation, the obligation to make all payments when due and payable, and
such material misrepresentation or breach (which shall be specified in such
notice) is not or cannot be cured within thirty (30) days of receipt of such
notice. The right of either party to terminate this Agreement in any such
case shall be in addition to any other remedies such party may have.
11. FORCE MAJEURE. In the event Affiliate is prevented from
exhibiting the C-3D Service, or C3D is prevented from transmitting the C-3D
Service, by reason of any act of God, fire, strike, boycott, transportation
failure, satellite interruption or other occurrence beyond the reasonable
control of the party whose performance is prevented, neither party shall be
responsible to the other for any damages, costs, expenses or loss of profits
thereby. C3D shall have the right to terminate this Agreement upon written
notice to Affiliate if, by reason of this paragraph, Affiliate is prevented
from exhibiting the C-3D Service for more than ninety (90) consecutive days
if both parties cannot arrive at a mutually agreeable solution for an
extension.
12. MISCELLANEOUS.
12.1 Affiliate and its employees and agents shall maintain, in
confidence, the terms and conditions of this Agreement, as well as all data,
summaries, reports and information of all kind, whether oral or written,
acquired, devised or developed in any manner by or from C3D personnel or
C3D's files, and have not and will not reveal the same to any persons not
employed by C3D except: (a) at the written direction of C3D; (b) to the
extent necessary to comply with law or a valid order of a court of competent
jurisdiction, in which event Affiliate shall so notify C3D as
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promptly as practicable (and, if possible, prior to making any disclosure)
and shall in all cases seek Confidential treatment of such information; (c)
as part of its normal reporting or review procedure to its parent company,
auditors and its attorneys, provided such parent company, auditors and
attorneys agree to be bound by the provisions of this paragraph; or (d) in
order to enforce its rights pursuant to this Agreement.
12.2 Neither this Agreement nor any rights or obligations hereunder
may be assigned by Affiliate without the prior written consent of C3D, which
consent shall not be unreasonably withheld. Such assignment shall not relieve
Affiliate of its obligations incurred prior to the date of any such
assignment hereunder. Any purported assignment without such consent shall be
null and void and not enforceable against C3D. This Agreement and the rights
and obligations of the parties hereunder shall be binding upon and shall
inure to the benefit of C3D and Affiliate and their respective legal
representatives, successors in interest and permitted assigns.
12.3 Any waiver by either party of any breach of any term or
condition hereof shall be effective only if in writing and such writing shall
not be deemed to be a waiver of any subsequent or other breach, term or
condition of this Agreement.
12.4 Notwithstanding anything to the contrary contained herein, if
Affiliate fails to fully and timely perform any material obligation or any
covenant hereunder, including, without limitation, Affiliate's failure to
timely fulfill any of its payment obligations hereunder, or if Affiliate
becomes insolvent, or if a petition under any bankruptcy shall be filed by or
against Affiliate. (which petition, if filed against Affiliate, shall not
have been dismissed within thirty (30) days thereafter); or if Affiliate
takes advantage of any applicable insolvency or any other like statute, or
executes a general assignment for the benefit of creditors; or if a receiver,
liquidator or trustee (or equivalent under any applicable statute) is
appointed for the assets or affairs of Affiliate, than upon the occurrence of
any of the foregoing. C3D may exercise any or all of the following options,
none of which shall be a waiver of the other or of any other rights or
remedies which C3D may have at law, in equity or otherwise: (a) C3D may
terminate this Agreement by giving prior written notice of termination to
Affiliate; (b) C3D may cease licensing the C-3D Service to Affiliate: and/or
(c) C3D may suspend the transmission of the C-3D Service to Affiliate and/or
the right to transmit the C-3D Service by Affiliate until such default is
ended or remedied. If C3D exercises any or all of the foregoing options, C3D
shall be entitled to declare all unpaid and payable amounts to C3D
immediately due and payable and to recover from Affiliate all payments past
due from Affiliate to C3D hereunder, together with interest at the rate of 1
1/2 percent per month or the legal maximum, whichever is less, plus all
attorneys' fees, costs and expenses, including collection agency fees,
incurred by C3D to enforce the provisions hereof. Notwithstanding anything to
the contrary contained herein, no termination of this Agreement for any
reason shall relieve or discharge, or be deemed or construed as relieving or
discharging, Affiliate from any duty, obligation or liability hereunder which
accrued as of the date of such termination (including, without limitation,
the obligation to pay any amounts payable hereunder and to furnish a
statement with respect to any such payment which accrued as of such date of
termination).
12.5 With respect to the subject matter of this Agreement, this
Agreement and the schedules hereto: (a) set forth the entire Agreement
between the parties and any parties who have
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in the past or who are now representing either of the parties, and (b)
supersede all prior understandings and communications between the parties,
oral or written. Each of the parties acknowledges and represents that this
Agreement is entered into after full investigation and that neither party is
relying upon any statement or representation made by the other which is not
specifically set forth in this Agreement. Each of the, parties acknowledges
that it shall have no right to rely upon any amendment, promise,
modification, statement or representation made or occurring subsequent to the
execution of this Agreement, unless such amendment, promise, modification,
statement or representation is expressly set forth in a written instrument
signed by a duly authorized representative of the other and dated subsequent
to the date of the execution and delivery of this Agreement.
12.6 The provisions of this Agreement are not intended to be for
the benefit of any third party, whether Subscribers or otherwise, and no
third party (including, without limitation, any Subscriber) shall be deemed
to have any privity of contract with either of the parties hereto by virtue
of this Agreement or the delivery of the C-3D Service.
12.7 Any dispute between the parties regarding this Agreement shall
be governed by and construed in accordance with the laws of the State of
California without reference to conflicts of laws provisions.
12.8 Nothing in this Agreement shall be deemed to create a
relationship of joint venture, principal-agent or partnership between the
parties, and neither shall hold itself out in its advertising or in any other
manner that would indicate any such relationship between the parties.
12.9 C3D shall not be liable for, and Affiliate shall pay and
forever hold C3D harmless from, any and all sales, use, excise, income,
franchise, corporate and similar taxes (including, without limitation, any
fees payable to local or state franchising authorities) and other charges
which are or may be imposed upon or assessed against Affiliate or any System
and/or which are based upon or measured by revenues derived by Affiliate from
the exploitation of the rights granted to Affiliate pursuant to this
Agreement (including, without limitation. any tax or charge based upon any
goods or services furnished to Affiliate by C3D which goods or services are
then passed on to Affiliate's Subscribers).
12.10 All licenses, rights and interests in, to and with respect to
the C-3D Service and Viewing Devices not specifically granted to Affiliate
shall be and are specifically and entirely reserved to C3D. The licenses,
rights and interests granted to Affiliate herein are non-exclusive, and
accordingly, they may be fully exploited and utilized by C3D, without regard
to the extent to which any such rights may be competitive with Affiliate or
the licenses, rights and interests granted hereunder.
12.11 Paragraph headings used herein are for convenience only and
shall not be deemed to define, limit or construe the contents of any
provision of this Agreement.
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12.12 Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of the prohibition without invalidating the
remaining provisions herein. Any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the date and year first above written.
Chequemate International, Inc.
d/b/a C-3D Digital
By:
-----------------------------------
J. Michael Heil, CEO
CableAmerica Corporation
By:
-----------------------------------
William G. Jackson, CEO
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SCHEDULE A
AFFILIATE- SYSTEM (S)
SYSTEM NAME
ADDRESS
AREA(S) SERVED
3D TELEVISION SERVICE LAUNCH DATE
TELEPHONE NUMBER
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SCHEDULE B
LICENSE FEES
In accordance with the terms and conditions as set forth in Section 4.1 of
the Affiliate Agreement, C3D will receive the following compensation from
Affiliate:
1. All subscription fees for the first three (3) paying months for each
new Subscriber; thereafter, $5.50 per Subscriber per month for each
Subscriber with his or her own glasses and driver(s), or one (1) Viewing Kit;
$8.00 per Subscriber per month for each Subscriber with two (2) Viewing Kits;
plus C3D's percentage of any excess as described in Section 4.7 of this
Agreement. The number of subscribers shall be determined as of the first day
of each month.
2. Any funds collected from any Subscriber either as a deposit, or for
loss of Viewing Systems, under Section 7 of this Agreement.
3. All compensation paid to C3D from Affiliate shall be paid in US
funds as described in Section 4 of this Agreement.
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SCHEDULE C
SYSTEM REPORT
Number of Subscribers at beginning of month:
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SCHEDULE D
VIEWING SYSTEMS
New Glasses - replacement cost $25.00 each, plus shipping.
Serial numbers:
New Synchronizing Drivers - replacement cost $20.00 each, plus shipping.
Serial numbers:
Refurbished Glasses - replacement cost $15.00 each, plus shipping.
Serial numbers:
Refurbished Synchronizing Drivers - replacement cost $15.00 each, plus
shipping.
Serial numbers:
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EXHIBIT 10.3
C-3D DIGITAL
AFFILIATION AGREEMENT
AGREEMENT made this 31st day of December, 1999, by and between
Chequemate International, Inc., a Utah corporation, d/b/a C3D Television,
with its principal place of business located at 330 Washington Blvd., Suite
507, Marina del Rey, CA 90292, ("C3D") and Telepro Communications, Inc., a
Washington corporation, with its principal place of business located at 13500
N.E. 20TH ST., SUITE 11, BELLEVUE, WA 98005 ("AFFILIATE"). (425) 957-4730
WHEREAS, Affiliate distributes television networks; and
WHEREAS, C3D desires to make available to Affiliate the programming
known as the "C-3D Service" for retransmission to Affiliate's subscribers,
and to provide certain other related services upon the terms and conditions
set forth herein; and
WHEREAS, Affiliate desires to make available to its subscribers the
C-3D Service;
NOW THEREFORE, it is mutually agreed as follows:
1. Definitions. The following terms shall have the meanings set
forth below when used in this Agreement:
1.1 "Programming" shall mean a motion picture,
pre-recorded program, live production, or other event transmitted on the C-3D
Service;
1.2 "C-3D Service" shall mean the single channel satellite
delivered stereoscopic video entertainment programming service, presently
transmitted on GE 3, transponder 8;
1.3 "Subscriber" shall mean a private residential dwelling
unit (whether an apartment, house, mobile home, condominium unit, or rentable
guest room in a hotel, motel, inn, or lodge), the resident(s) of which have
agreed to purchase access to programming from Affiliate;
1.4 "Subscription Basis" shall mean the access to
Programming chosen by a Subscriber over the facilities of a System for
television viewing, for which access Subscriber is obligated to pay a monthly
fee to Affiliate;
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1.5 "System" shall mean each cable television system
described in Schedule "A" hereto; and
1.6 "Viewing Device" shall mean the liquid-crystal shutter
glasses and synchronizing drivers owned by C3D.
2. License.
2.1 Exhibition. C3D hereby grants to Affiliate and Affiliate
hereby accepts, subject to the terms and conditions herein, a non-exclusive
license to exhibit the C-3D Service on a subscription basis to Affiliate's
Subscribers over the facilities of the System. Affiliate may include
additional cable television systems by written amendment to Schedule A
hereto, provided that C3D consents in writing in advance of any such
addition. Affiliate shall exhibit the C-3D Service continuously during the
term of this Agreement.
2.2 Prohibitions. Unless otherwise expressly agreed to by C3D in
writing, this license does not grant to Affiliate the right to exhibit,
authorize, or permit the exhibition of the C-3D Service to any cable system
or SMATV system (satellite master antenna television system) not set forth in
Schedule A hereto; upon any breach of this prohibition, C3D shall have the
right to enjoin any exhibition or exploitation of the C-3D Service; to
suspend the transmission of the C-3D Service; to terminate this Agreement
and/or declare this Agreement breached; to declare all amounts owed to C3D
immediately due and payable; and to exercise all rights and remedies on
account of such breach, including, without limitation, the right to recover
damages.
3. Term.
3.1 The term of this Agreement and the rights granted to Affiliate
hereunder shall be for a period of SIX (6) MONTHS from the date first
appearing above (the "Initial Term"). The Initial Term of this Agreement
shall expire on the same date for all of Affiliate's Systems listed in
Schedule A hereto regardless of when any individual system launches the C-3D
Service hereunder. The termination of this Agreement shall not: (a) abrogate
Affiliate's obligation to pay to C3D the sums set forth herein; (b) impair or
affect C3D's rights of withdrawal, audit or indemnification; or (c) abrogate,
impair or affect any warranty, representation, indemnity or undertaking on
the part of each party hereunder.
3.2 It is anticipated that the C-3D Service shall become available
to Subscribers in San Bernardino, California on or before FEBRUARY 1, 2000.
If the C-3D Service is successful in the sole opinion of Affiliate, then
Affiliate shall expand the C-3D Service throughout its other Systems, AND
THIS AGREEMENT SHALL RENEW FOR A FIVE YEAR PERIOD.
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3.3 Affiliate may terminate this Agreement at any time during the
first year of its term, upon thirty days' written notice to C3D.
4. License Fees and Report.
4.1 In consideration of the rights herein granted to Affiliate,
Affiliate shall pay C3D the license fees ("License Fees") set forth in
Schedule B hereto. Affiliate shall remit to C3D within thirty (30) days of
the end of each month all License Fees due for such month. Together with each
such payment of such amounts, Licensee shall deliver to C3D a monthly
statement in the form of Schedule C attached hereto. All payments and
statements hereunder shall be made to C3D at its address set forth above. All
amounts not paid within said thirty (30) day period shall accrue interest at
the maximum legal rate or 1 1/2 percent per month, whichever is less, until
received. Acceptance of any payment by C3D after its due date shall not
constitute a waiver of C3D's right to any accrued interest, or any other
right which C3D might otherwise have.
4.2 On no less than one hundred eighty (180) days' prior written
notice to Affiliate ("Amended Fee Structure Notice") C3D shall have the right
to adjust, from time to time during the term of this Agreement, the rates set
forth in Schedule B hereto with respect to License Fees on the date
("Effective Date") specified in the Amended Fee Structure Notice, if the
rates become unreasonable compared with the standard of the industry at that
time. In such event, Affiliate may, by written notice at least ninety (90)
days prior to the Effective Date, terminate this Agreement as of the
Effective Date; provided, however, that such termination by Affiliate shall
not take effect and shall be of no force or effect if C3D withdraws the
increase by written notice to Affiliate no later than fifteen (15) days prior
to the Effective Date.
4.3 In the event of a dispute between Affiliate and C3D as to any
amounts properly due from Affiliate to C3D, Affiliate shall pay that portion
of the amounts not in dispute in accordance with the terms of Paragraph 4.1
above and before or at the time of payment, shall notify C3D in writing of
the grounds for disputing the remaining unpaid balance. Interest shall not
accrue on such balance UNTIL ANY OUTSTANDING ISSUES ARE RESOLVED.
4.4 In connection with any interruption or other failure in the
transmission, reception, or distribution of the C-3D Service which
interruption or failure could reasonably have been prevented by C3D,
Affiliate shall have recourse and a remedy against C3D only if Affiliate
shall have given its affected Subscribers a credit or rebate as a result of
such interruption or failure, in which case the sole and exclusive remedy of
Affiliate against C3D shall be a credit for no more than the amount of the
License Fee which would have been payable by Affiliate to C3D for the
Event(s) ordered if there had been no such interruption or failure. C3D shall
not, under the foregoing or any other circumstances, be liable for
incidental, consequential or special damages, including, without limitation,
loss of profits or revenues, damage to or loss of personal property or the
claim of any Subscriber.
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4.5 Within ninety (90) days following the end of each of
Affiliate's fiscal years, during any portion of which this Agreement is in
effect, Affiliate shall furnish to C3D a letter addressed to C3D signed by
Affiliate's Chief Operating Officer or Chief Financial Officer which attests
to the completeness and accuracy of all reports and statements supplied to
C3D. Affiliate's obligation to supply such letters shall continue after the
termination of this Agreement, until C3D receives the required letter with
respect to the last fiscal year during any portion of which this Agreement is
in effect.
4.6 Affiliate shall keep and maintain, at Affiliate's principal
place of business, complete and accurate books and records relating to this
Agreement in accordance with generally accepted accounting principles. During
the term of this Agreement and for two (2) years thereafter, C3D shall have
the right, at its expense, for its representatives, accountants, or
designated agents, at Affiliate's principal place of business, during regular
business hours, to audit and examine Affiliate's books and records for the
purpose of verifying and confirming the accuracy of the statements delivered
to C3D by Affiliate and the amount of the License Fees paid or payable under
this Agreement and to make photocopies of relevant excerpts of any such books
and records. The exercise by C3D of any right to audit or examine at any time
or the acceptance by C3D of any statement or payment shall be without
prejudice to any other rights or remedies available to C3D and shall not bar
C3D from thereafter disputing the accuracy of any such payment or statement
and Affiliate shall remain fully liable for any balance due under the terms
of this Agreement. If any audit discloses an underpayment of five percent
(5%) or more with respect to the amount of License Fees set forth on any of
Affiliate's statements, Affiliate agrees to pay all costs and expenses
incurred by C3D for such audit, and to re-compute and make immediate payment
of the actual License Fees due, and to pay any reasonable attorney fees
incurred by C3D in connection with such License Fees or the collection
thereof. Neither C3D's acceptance of any information, nor inspection nor
audit shall prevent C3D from later disputing the accuracy or completeness of
any payments made or of information supplied by Affiliate.
4.7 The suggested price for the service is $9.99 per month per
Subscriber who either requires no Viewing Devices, or who requires one
Viewing Kit, and an additional $5.99 per month per Subscriber who requires a
second Viewing Kit. A "Viewing Kit" is one (1) synchronizing driver and two
(2) pair of wireless liquid crystal shutter glasses. Affiliate may charge
whatever price it desires, but if the prices charged exceed the suggested
prices, THE LICENSE FEES SHALL BE RENEGOTIATED. New Subscribers may acquire
the service for free through the end of February, 2000; for one year
thereafter, any new Subscriber shall receive one month of the C-3D Service
for free. Notwithstanding any other provision of this Agreement, Affiliate
will not begin to charge any subscription fees until March 1, 2000. BOTH
PARTIES WILL SHARE IN REVENUES FROM THE OUTSET.
5. Transmission and Distribution
5.1 Affiliate shall be solely responsible for the reception of the
video and audio signals of the C-3D Service to the headend or other receiving
device of the System(s) and for the transmission therefrom to its
Subscribers. Affiliate shall employ adequate security systems to prevent
theft, pirating, copying, duplication, or unauthorized exhibition of the C-3D
Service, and
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shall ensure that the C-3D Service is made available only to Subscribers.
Affiliate shall continuously maintain transmission quality for the C-3D
Service equivalent to the best transmission quality of other programming
transmitted by Affiliate.
5.2 C3D shall furnish Affiliate with one CLI IRD decoder per
downlinking headend at no cost to Affiliate. If Affiliate requires a digital
feed, then C3D shall make one available.
5.3 Affiliate shall exhibit and shall require each System to
exhibit the C-3D Service in its entirety, without any interruptions,
including all titles, credits, and copyright notices.
6. Advertising and Promotional Materials
6.1 Affiliate shall use its reasonable best efforts to promote the
C-3D Service to the Subscribers of each System, with the aim of maximizing
the number of Subscribers to the C-3D Service, and the total revenue from the
C-3D Service. C3D WILL TAKE THE LEAD IN MARKETING AND AFFILIATE WILL HAVE THE
OPTION TO PARTICIPATE IN C3D'S MARKETING EFFORTS.
6.2 For each month during the term of this Agreement, not later
then thirty (30) days prior to the exhibition of the C-3D Service for such
month, C3D shall make available to Affiliate such trailers and other
publicity materials as C3D may have available (the "Promotional Materials")
to be used for advertising and publicizing the C-3D Service for such month.
Affiliate shall have the right, at its sole cost and expense, to make copies
of the Promotional Materials solely for use by each System.
6.3 Affiliate shall not use the name, image, or likeness of any
character, person or entity appearing in or connected with the production of
any Event included in the C-3D Service separate and apart from the
advertising and promotion of the C-3D Service, and no name, image or likeness
shall be used by Affiliate so as to constitute an endorsement or testimonial,
express or implied, of any party, product, service or commercial venture.
Affiliate acknowledges that its right to use the names, images, or likenesses
of person or entities appearing in or connected with the production of any
Event is subject to various limitations and restrictions contained in
contracts with third parties. Following the exhibition of the C-3D Service in
any month during the term of this Agreement, Affiliate shall not use,
transmit, exhibit, circulate or otherwise publish any Promotional Materials
provided by C3D for such month.
6.4 In all advertising and publicity issued by Affiliate for the
C-3D Service, Affiliate shall comply with all instructions from C3D,
regarding advertising, or contained in any promotion package provided by C3D.
6.5 The parties understand and agree that the implementation of
this Agreement will necessitate that the staff and employees, servants and
agents of each party shall make themselves
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and the necessary equipment, sites and locations available upon reasonable
notice to the staff, employees, servants and agents of the other party at all
reasonable times during the term of this Agreement.
7. Viewing Devices.
7.1 C3D shall furnish Affiliate with a number of serially-numbered
liquid-crystal shutter glasses and synchronizing drivers, as described in
Exhibit "D". Affiliate shall cause one or more of Affiliate's employees to
personally deliver and install the Viewing Devices at each Subscriber's
address, in order to instruct the Subscriber on the proper methods of care
and use, to be certain that the Viewing Devices are functioning for the
Subscriber, and to obtain a receipt and agreement from the Subscriber as
described below. Affiliate's employee shall furnish to each subscriber at the
time of installation written materials prepared by C3D describing proper
methods of care and use. If a Subscriber has trouble with a Viewing Device,
and it is not merely a drained battery, the Viewing Device shall be replaced
by Affiliate, and the trouble unit mailed to C3D at the address above,
attention "Repairs and Warranty Claims".
7.2 Affiliate shall obtain from each Subscriber at the time of
installation a signed, written receipt and agreement prepared by C3D whereby
the Subscriber agrees:
(a) to be liable for the replacement cost of the Viewing
Devices if they are stolen, destroyed, or abused, and to return the Viewing
Devices in good condition, ordinary wear and tear excepted, at the
termination of that Subscriber's subscription;
(b) that there shall be no credit against the monthly
subscription rates for any time during which the Viewing Devices are
unavailable to the Subscriber due to theft or other casualty, or if they do
not function due to a dead battery or due to abuse or misuse; and
(c) that if Subscriber becomes liable for the replacement
cost of the Viewing Devices, that such amount will be added to Subscriber's
account with Affiliate, and if Subscriber fails to pay such amount to
Affiliate within ninety (90) days, Affiliate shall STOP PROVIDING THE C3D
SERVICE to such Subscriber, AND USE ITS BEST EFFORTS TO COLLECT SUCH AMOUNTS,
until such amount is paid; and
(d) to pay a $30.00 deposit per Viewing Kit to Affiliate.
7.3 Affiliate shall be responsible to C3D only for those Viewing
Devices which Affiliate has physical custody of. Once each Viewing Device is
installed with a Subscriber and the signed written agreement is delivered to
C3D, Affiliate's responsibility for that Viewing Device is relieved, until
such time as a Subscriber returns a Viewing Device to Affiliate. Within
thirty (30) days thereafter, Affiliate shall return such Viewing Device to
C3D. Upon the termination of a Subscriber's subscription, Affiliate shall
refund the deposit to Subscriber, and mail the Viewing Devices back to C3D.
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8. WARRANTIES AND INDEMNIFICATION
8.1 C-3D warrants and represents that: (a) it has the power and
authority to enter into this Agreement and to fully perform its obligations
hereunder; (b) the material contained in the C-3D Service and in the
Promotional Materials supplied to Affiliate hereunder will not violate any
copyright, right of privacy or publicity or literary or dramatic right of any
person; provided, however, that such warranties and representations by C3D
are only as broad as and coextensive with those provided to C3D by C3D 's
program suppliers.
8.2 Affiliate warrants and represents that: (a) Affiliate has the
power and authority to enter into this Agreement and to fully perform its
obligations hereunder; (b) Affiliate has obtained, and shall maintain in full
force and effect during the term of this Agreement, such federal and state,
local and/or private authorizations as are necessary to operate each System
in the Territory and to retransmit the C-3D Service pursuant to this
Agreement; (c) Affiliate will immediately notify C3D in the event that
Affiliate loses, or becomes aware of circumstances that it may lose, any
necessary authorizations, (d) any material contained in promotional material
developed by Affiliate will not violate any copyright, right of privacy or
publicity or literary or dramatic right of any person; and (e) Affiliate
Shall not use, and shall require each System not to use any Programming for
any unlawful purpose or for any purpose not permitted hereunder.
8.3 Affiliate shall indemnify, defend and hold harmless C3D, its
parent, subsidiaries and affiliated companies and their respective officers,
directors, employees, agents and shareholders from and against any and all
claims, losses or damages, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) (collectively "Claims") relating to
or arising out of any breach or alleged breach of any of the representations,
warranties, agreements, covenants or obligations made by Affiliate pursuant
to this Agreement.
8.4 C3D shall indemnity, defend and hold harmless Affiliate, its
parent, subsidiaries and affiliated companies and their respective officers,
directors, employees, agents and shareholders from and against any and all
Claims relating to or arising out of any breach or alleged breach of any of
the representations, warranties, agreements, covenants or obligations made by
C3D pursuant to this Agreement.
8.5 Each party seeking indemnity hereunder (the "Indemnified
Party") agrees to give prompt notice to the other party (the "Indemnifying
Party") of any circumstances which may give rise to a Claim under this
Paragraph 8 as soon as the Indemnified Party knows of such circumstances:
provided, however, that the failure to give such notice shall not relieve the
Indemnifying Party of its obligation to indemnify the Indemnified Party under
this Paragraph 8 except to the extent that such failure increases the
Indemnified Party's liability hereunder. The Indemnifying Party shall have
the right to participate in, and, with the consent of the Indemnified Party,
which consent shall not be unreasonably withheld, to control the contest and
defense of any Claim by a third party as to which notice is given by the
Indemnified Party under this Paragraph 8 at its own cost and expense,
including the cost and expense of attorneys' fees in connection with such
contest and defense. The Indemnified Party shall not settle or compromise any
such Claim without the prior written consent of the Indemnifying Party. If
the Indemnified Party settles or
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compromises any such Claim without the Indemnifying Party's prior written
consent, the Indemnifying Party shall be relieved of its obligations to
indemnify the Indemnified Party under this Paragraph 8 with respect to such
Claim.
9. SERVICE MARKS. Affiliate acknowledges that the name and mark
"C-3D" and any other service marks and any logos and variations used to
identify the C-3D Service are the exclusive property of C3D and that
Affiliate has not and shall not acquire any proprietary rights thereto by
reason of this Agreement. Materials used by Affiliate may refer to "C-3D " or
the C-3D Service and other names, marks and logos of C3D only if it is clear
that the names, marks and logos used are service marks for the C-3D Service
which Affiliate distributes. Such use shall be in accordance with any further
instructions that may be issued by C3D from time to time, Affiliate shall
promptly make available to C3D, at its request, all original promotional or
advertising material that uses the aforesaid names, marks or logos in
publicizing the C-3D Service and shall keep copies of all such original
material, Affiliate shall not publish or disseminate any material which
violates any restrictions imposed by C3D or C3D's program suppliers and
disclosed by Affiliate by C3D.
10. TERMINATION. Either party may terminate this Agreement by
giving the other party at least thirty (30) days prior written notice, in the
event that the other party has made any material misrepresentation herein or
materially breaches any of its obligations hereunder, including, without
limitation, the obligation to make all payments when due and payable, and
such material misrepresentation or breach (which shall be specified in such
notice) is not or cannot be cured within thirty (30) days of receipt of such
notice. The right of either party to terminate this Agreement in any such
case shall be in addition to any other remedies such party may have.
11. FORCE MAJEURE. In the event Affiliate is prevented from
exhibiting the C-3D Service, or C3D is prevented from transmitting the C-3D
Service, by reason of any act of God, fire, strike, boycott, transportation
failure, satellite interruption or other occurrence beyond the reasonable
control of the party whose performance is prevented, neither party shall be
responsible to the other for any damages, costs, expenses or loss of profits
thereby. C3D shall have the right to terminate this Agreement upon written
notice to Affiliate if, by reason of this paragraph, Affiliate is prevented
from exhibiting the C-3D Service for more than ninety (90) consecutive days
if both parties cannot arrive at a mutually agreeable solution for an
extension.
12. MISCELLANEOUS.
12.1 Affiliate and its employees and agents shall maintain, in
confidence, the terms and conditions of this Agreement, as well as all data,
summaries, reports and information of all kind, whether oral or written,
acquired, devised or developed in any manner by or from C3D personnel or
C3D's files, and have not and will not reveal the same to any persons not
employed by C3D except: (a) at the written direction of C3D; (b) to the
extent necessary to comply with law or a valid order of a court of competent
jurisdiction, in which event Affiliate shall so notify C3D as promptly as
practicable (and, if possible, prior to making any disclosure) and shall in
all cases seek Confidential treatment of such information; (c) as part of its
normal reporting or review procedure to its parent company, auditors and its
attorneys, provided such parent company, auditors and
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attorneys agree to be bound by the provisions of this paragraph; or (d) in
order to enforce its rights pursuant to this Agreement.
12.2 Neither this Agreement nor any rights or obligations hereunder
may be assigned by Affiliate without the prior written consent of C3D, which
consent shall not be unreasonably withheld. Such assignment shall not relieve
Affiliate of its obligations incurred prior to the date of any such
assignment hereunder. Any purported assignment without such consent shall be
null and void and not enforceable against C3D. This Agreement and the rights
and obligations of the parties hereunder shall be binding upon and shall
inure to the benefit of C3D and Affiliate and their respective legal
representatives, successors in interest and permitted assigns.
12.3 Any waiver by either party of any breach of any term or
condition hereof shall be effective only if in writing and such writing shall
not be deemed to be a waiver of any subsequent or other breach, term or
condition of this Agreement.
12.4 Notwithstanding anything to the contrary contained herein, if
Affiliate fails to fully and timely perform any material obligation or any
covenant hereunder, including, without limitation, Affiliate's failure to
timely fulfill any of its payment obligations hereunder, or if Affiliate
becomes insolvent, or if a petition under any bankruptcy shall be filed by or
against Affiliate. (which petition, if filed against Affiliate, shall not
have been dismissed within thirty (30) days thereafter); or if Affiliate
takes advantage of any applicable insolvency or any other like statute, or
executes a general assignment for the benefit of creditors; or if a receiver,
liquidator or trustee (or equivalent under any applicable statute) is
appointed for the assets or affairs of Affiliate, than upon the occurrence of
any of the foregoing. C3D may exercise any or all of the following options,
none of which shall be a waiver of the other or of any other rights or
remedies which C3D may have at law, in equity or otherwise: (a) C3D may
terminate this Agreement by giving prior written notice of termination to
Affiliate; (b) C3D may cease licensing the C-3D Service to Affiliate: and/or
(c) C3D may suspend the transmission of the C-3D Service to Affiliate and/or
the right to transmit the C-3D Service by Affiliate until such default is
ended or remedied. If C3D exercises any or all of the foregoing options, C3D
shall be entitled to declare all unpaid and payable amounts to C3D
immediately due and payable and to recover from Affiliate all payments past
due from Affiliate to C3D hereunder, together with interest at the rate of 1
1/2 percent per month or the legal maximum, whichever is less, plus all
attorneys' fees, costs and expenses, including collection agency fees,
incurred by C3D to enforce the provisions hereof. Notwithstanding anything to
the contrary contained herein, no termination of this Agreement for any
reason shall relieve or discharge, or be deemed or construed as relieving or
discharging, Affiliate from any duty, obligation or liability hereunder which
accrued as of the date of such termination (including, without limitation,
the obligation to pay any amounts payable hereunder and to furnish a
statement with respect to any such payment which accrued as of such date of
termination).
12.5 With respect to the subject matter of this Agreement, this
Agreement and the schedules hereto: (a) set forth the entire Agreement
between the parties and any parties who have in the past or who are now
representing either of the parties, and (b) supersede all prior
understandings and communications between the parties, oral or written. Each
of the parties
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acknowledges and represents that this Agreement is entered into after full
investigation and that neither party is relying upon any statement or
representation made by the other which is not specifically set forth in this
Agreement. Each of the, parties acknowledges that it shall have no right to
rely upon any amendment, promise, modification, statement or representation
made or occurring subsequent to the execution of this Agreement, unless such
amendment, promise, modification, statement or representation is expressly
set forth in a written instrument signed by a duly authorized representative
of the other and dated subsequent to the date of the execution and delivery
of this Agreement.
12.6 The provisions of this Agreement are not intended to be for
the benefit of any third party, whether Subscribers or otherwise, and no
third party (including, without limitation, any Subscriber) shall be deemed
to have any privity of contract with either of the parties hereto by virtue
of this Agreement or the delivery of the C-3D Service.
12.7 Any dispute between the parties regarding this Agreement shall
be governed by and construed in accordance with the laws of the State of
California without reference to conflicts of laws provisions.
12.8 Nothing in this Agreement shall be deemed to create a
relationship of joint venture, principal-agent or partnership between the
parties, and neither shall hold itself out in its advertising or in any other
manner that would indicate any such relationship between the parties.
12.9 C3D shall not be liable for, and Affiliate shall pay and
forever hold C3D harmless from, any and all sales, use, excise, income,
franchise, corporate and similar taxes (including, without limitation, any
fees payable to local or state franchising authorities) and other charges
which are or may be imposed upon or assessed against Affiliate or any System
and/or which are based upon or measured by revenues derived by Affiliate from
the exploitation of the rights granted to Affiliate pursuant to this
Agreement (including, without limitation. any tax or charge based upon any
goods or services furnished to Affiliate by C3D which goods or services are
then passed on to Affiliate's Subscribers).
12.10 All licenses, rights and interests in, to and with respect to
the C-3D Service and Viewing Devices not specifically granted to Affiliate
shall be and are specifically and entirely reserved to C3D. The licenses,
rights and interests granted to Affiliate herein are non-exclusive, and
accordingly, they may be fully exploited and utilized by C3D, without regard
to the extent to which any such rights may be competitive with Affiliate or
the licenses, rights and interests granted hereunder.
12.11 Paragraph headings used herein are for convenience only and
shall not be deemed to define, limit or construe the contents of any
provision of this Agreement.
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12.12 Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of the prohibition without invalidating the
remaining provisions herein. Any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the date and year first above written.
Chequemate International, Inc.
d/b/a C-3D Digital
By: /s/ Fernando Gomez
---------------------------------------------------
Fernando Gomez, VP for Affiliate Relations
Telepro Communications, Inc.
By: /s/ Mike Hassan
-----------------------------------------------------
Mike Hassan, COO
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SCHEDULE A
AFFILIATE- SYSTEM (S)
SYSTEM NAME
ADDRESS
AREA(S) SERVED
3D TELEVISION SERVICE LAUNCH DATE
TELEPHONE NUMBER
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SCHEDULE B
LICENSE FEES
In accordance with the terms and conditions as set forth in Section 4.1 of
the Affiliate Agreement, C3D will receive the following compensation from
Affiliate:
1. Fifty percent of all subscription fees, such fees not to exceed $14.99
per month for each new Subscriber. The number of subscribers shall be
determined as of the FIFTEENTH (15TH) day of each month.2. Any funds
collected from any Subscriber for loss of Viewing Systems, under Section 7 of
this Agreement.
3. All compensation paid to C3D from Affiliate shall be paid in US funds as
described in Section 4 of this Agreement.
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SCHEDULE C
SYSTEM REPORT
Number of Subscribers on FIFTEENTH DAY of month:
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SCHEDULE D
VIEWING SYSTEMS
New Glasses - replacement cost $25.00 each, OR AS AGREED, plus shipping.
Serial numbers:
New Synchronizing Drivers - replacement cost $20.00 each, OR AS AGREED, plus
shipping.
Serial numbers:
Refurbished Glasses - replacement cost $15.00 each, OR AS AGREED, plus shipping.
Serial numbers:
Refurbished Synchronizing Drivers - replacement cost $15.00 each, OR AS
AGREED, plus shipping.
Serial numbers:
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EXHIBIT 10.4
TECHNOLOGY LICENSING AGREEMENT
THIS AGREEMENT ("The Agreement") is made this _____ day of December,
1999, by and between Chequemate International, Inc., a corporation organized
and existing under the laws of the State of Utah, one of the United States of
America, d/b/a C3D Digital, Inc., ("Licensor"), having its principal place of
business at 330 Washington Boulevard, Suite 507, Marina del Rey, California
90292, and Iehab Hawatmeh, an individual residing at 12008 South Bluffview
Drive, Sandy, Utah 84092, ("Licensee").
WHEREAS, Licensor is the owner of certain intellectual property and
technology (the "Know-how") relating to the conversion of two dimensional
imagery to pseudo-stereoscopic imagery, as incorporated in a consumer product
known as a "Realeyes" unit, previously manufactured by Circuit Technology
Corporation, and
WHEREAS, Licensee desires to obtain a nonexclusive license to use
the Know-how, and Licensor desires to grant this license to Licensee on terms
and conditions acceptable to the parties; and
WHEREAS, the quality of the goods manufactured by the Licensee
pursuant to this Agreement and the maintenance of the Know-how in confidence
are material conditions of this Agreement and Licensor's grant of the license
contained in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and intending to be legally bound hereby, Licensor and Licensee agree
as follows:
1 GRANT OF RIGHTS. Licensor grants Licensee the nonexclusive license to
manufacture, use, and sell Realeyes units, using and incorporating the
Know-how, subject to the terms and conditions set forth in this Agreement.
Nothing in this Agreement should be construed to prohibit the granting of
other or similar licenses to any person or entity, or to prohibit the
Licensor from manufacturing, using, or selling products incorporating the
Know-how. In the event that Licensor develops or discovers modifications to
or improvement in the technology embodied in the Know-how that it deems in
its sole discretion to be useful to the Licensee's use of the rights granted
by this Paragraph 1 (the "Improvements"), Licensor must promptly disclose the
Improvements to Licensee in writing and offer a license to use the
Improvements upon the terms and conditions set forth in this Agreement.
2 GRANT-BACK TO LICENSOR. Licensee grants to Licensor a nonexclusive
royalty-free license to use any modification of or improvement to, any
technology used by Licensee pursuant to this Agreement and promptly to
disclose all such modifications and improvements to Licensor.
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3 WARRANTIES BY LICENSOR. Licensor warrants and represents that it is the
sole owner of the intellectual property, and that the practice of the art
disclosed in the intellectual property will not constitute an infringement of
the rights of any third party. Licensor indemnifies Licensee against and
holds Licensee harmless from any loss, damage, or claim, including reasonable
attorney fees, arising from or relating to any breach of the warranties
contained in this Paragraph 3. Licensor reserves the right to control the
defense of any resulting suit or claim, including without limitation the
right to choose counsel and to settle and dispose of the suit or claim as it
deems appropriate in its sole discretion.
4 ROYALTIES. As and for full consideration for the rights granted in this
Agreement, Licensee will pay to the Licensor the following:
a. Initial Payment. Licensee will pay to Licensor One Hundred
Twenty Five Thousand Dollars ($125,000.00) upon execution of
this Agreement.
b. Additional Royalties. Licensee will pay to Licensor on the
first day of each month during any term of this Agreement a
sum equal to $3.00 for each Realeyes unit sold by Licensee
during the preceding month.
c. Access to Records. Licensee will maintain records of (1) the
manufacture, lease, sale or other disposition of all goods
and articles manufactured pursuant to this Agreement. These
records must be accurately maintained and conform to all
generally accepted accounting standards. Licensee will permit
access by Licensor to all these records during normal
business hours. In the event that Licensor discovers that the
records have not been maintained or are not accurate or that
Licensee has failed to make any payment of any royalties
required by the Agreement as shown by the records, Licensee
shall reimburse Licensor for the cost of reviewing the
records, including reimbursement of all reasonable accountant
and attorney fees.
5 SUB-LICENSE. Licensee may not grant any sub-license of any of the rights
granted by this Agreement without the prior written permission of Licensor.
6 CONFIDENTIALITY. Licensee acknowledges and agrees that all Know-how and
other manufacturing, sales, marketing, technical, and other information
disclosed to it by Licensor is confidential and proprietary to Licensor (the
"Confidential Information") and acknowledges that the unauthorized disclosure
of any of the Confidential Information will result in immediate and
irreparable competitive injury to Licensor. Licensee may disclose the
Confidential Information only to those of its employees to whom such
disclosure is necessary to permit the manufacture, use, and sale of the
products which incorporate the Know-how and may not disclose any of the
Confidential Information to any other person or entity without the prior
written approval of Licensor.
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7 QUALITY. All goods manufactured, sold, or otherwise disposed of by
Licensee pursuant to this Agreement must meet reasonable quality standards as
imposed by Licensor. Licensee will permit Licensor access to its
manufacturing facilities during normal working hours for the purpose of
ensuring that Licensee's manufacturing practices conform to the requirements
of this Paragraph 7.
8 NON-COMPETITION. Licensee may not during any term of this Agreement
engage in the manufacture, use, or sale of any goods or articles that compete
with or have a similar use or application as the goods manufactured pursuant
to this Agreement.
9 TECHNICAL ASSISTANCE. Licensor will provide, at Licensee's sole expense,
sufficient technical assistance to enable Licensee to manufacture the
products incorporating the Know-how.
10 INFRINGEMENT. In the event that Licensee becomes aware of any act that
may constitute an infringement of any right granted by this Agreement,
Licensee must promptly notify Licensor of that act. Thereafter, Licensee
will, at Licensor's expense, assist Licensor in the prosecution of any claim
or action arising from or relating to that act, provided that Licensee must
bear all attorney fees and expenses incurred as a result of Licensee's use of
counsel other than or in addition to counsel retained by Licensor.
11 TERM AND TERMINATION. The term of this License shall be perpetual,
unless Licensee materially breaches any of his obligations hereunder, and
fails to cure such breach within thirty days of written notice thereof. In
the event that a material breach remains uncured after such thirty day
period, this License shall be terminated.
12 ARBITRATION. All disputes arising from or relating to this Agreement or
its breach are to be finally decided by arbitration conducted under the rules
of the American Arbitration Association, governing commercial disputes.
13 ASSIGNMENT. Licensee may not assign this Agreement or any right granted
herein without the prior written consent of Licensor.
14 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between Licensor and Licensee with regard to its subject matter, and no
prior, simultaneous, or collateral promises or representations not expressly
contained in this Agreement are of any force or effect.
15 TAXES, EXPENSES, COMPLIANCE WITH LAW. Licensee will pay and discharge or
cause to be paid and discharged as and when they become due all taxes,
levies, assessments, governmental charges, fines and penalties of whatsoever
nature lawfully imposed in connection with its activities under this
Agreement and any income derived from this Agreement.
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16 APPLICABLE LAW. This Agreement is governed by and construed under the
laws of the State of California, applicable to contracts executed or
performed in California.
19 BOARD OF DIRECTORS APPROVAL. This Agreement is subject to the approval
of the Licensor's Board of Directors, which approval shall be promptly sought
by the officer whose signature appears below.
CHEQUEMATE INTERNATIONAL, INC.
By:
------------------------------
J. Michael Heil, CEO
- ----------------------------------
Iehab Hawatmeh
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EXHIBIT 10.5
LICENSE AGREEMENT
This License Agreement ("The Agreement") is entered into this _____ day of
November, 1999, by and between Chequemate International, Inc., a Utah
corporation, d/b/a C3D Digital, Inc., ("C3D"), having its principal place of
business at 330 Washington Boulevard, Suite 507, Marina del Rey, CA 90292,
and Academy Entertainment, Inc., a New Jersey corporation, ("Academy") having
its principal place of business at 59 Westminster Avenue, Bergenfield, New
Jersey 07621.
ARTICLE I
GRANT OF RIGHTS
1.1 Programs. Academy shall furnish to C3D all feature films,
documentaries, cartoons, and short subjects ("Programs") available in
Academy's film library. See Schedule A, Master Tapes Available, bearing the
name, MLR Films International.
1.2 Grant. Academy hereby grants to C3D the perpetual, irrevocable,
non-exclusive, worldwide right to the use of the Programs, for use with their
proprietary 3D technology, or any other 3D technology, including still images
from the Programs, to incorporate some or all of the Programs as part of its
database, to use, copy, display, perform, modify, distribute and otherwise
exploit the Programs in any 3D medium by any means now known or hereafter
devised, to use the Programs for marketing and advertising in connection with
the Programs and to edit the Programs as desired in connection therewith.
1.3 Delivery. Upon C3D's written request, Academy shall deliver to C3D as
soon as is practicable, at C3D's expense, one (1) copy of each of the
Programs requested by C3D to the location designated by C3D in such request
("the Master Copies"). Academy shall be under no obligation to fulfill
requests for Master Copies if new information is discovered of a possible
copyright infringement or potential technical problems. Academy shall replace
any rejected titles with similar themes on a best efforts basis. All Master
Copies shall be sent in Beta SP (metal) NTSC format via UPS, or when
requested, overnight, via Federal Express.
ARTICLE II
PAYMENT
2.1 Payment for Copies. C3D shall pay Academy in advance $100.00 per hour
for each Master Copy ordered pursuant to section 1.3 above. The cost of the
tape is included in the $100.00 per hour, but not the cost of shipping.
2.2 Payment for Rights. C3D shall compensate Academy with restricted common
stock (Rule 144 stock) in C3D, with an aggregate value of $250,000.00 as
follows: C3D shall issue
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$90,000.00 worth of unregistered common stock to Academy upon board approval,
with the number of shares determined by the average trading value over the
five (5) trading days prior to issuance; and another $80,000.00 worth of
unregistered common stock to Academy six months later, with the number of
shares determined by the average trading value over the prior six months; and
the final $80,000.00 worth of unregistered common stock to Academy six months
after that, with the number of shares determined by the average trading value
over those prior six months. Academy shall have standard piggyback and
registration rights.
2.3 Taxes. All taxes, whether Federal, State, Dominion, Provincial, or
Local, and whether Sales or Use or Personal Property, Payroll, Excise, or
other tax, governmental fee, or duty, arising from this Agreement or the
transactions contemplated by this Agreement, shall be the sole responsibility
of Academy.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Academy represents and warrants that (I) it has the right, power, and
authority to enter into this Agreement and fully perform its obligations
hereunder; (II) the making of this Agreement does not violate any agreement
between it and any other person or entity; (III) to the best of Academy's
knowledge, the Programs are in the public domain or are unregistered
according to the U.S. Copyright Office; (IV) there are no outstanding
obligations or commitments of any kind pertaining to or involving the
Programs; (V) neither the Programs nor their copying and distribution as
contemplated herein will infringe upon any common law or statutory copyright
or other state or federal regulations or contravene the rights of any third
party; (VI) the Programs do not violate any rights of privacy; and (VII) all
rights and licenses necessary to grant the rights as set forth herein and to
copy and distribute the Programs as described herein have been obtained.
ARTICLE IV
INDEMNIFICATION
4.1 Indemnity. Academy hereby agrees to indemnify, defend, and hold C3D,
its directors, officers, shareholders, employees, agents, successors and
assigns harmless from any and all claims, causes of action, demands, damages,
losses, costs, obligations, recoveries and deficiencies (including attorney
fees and costs) which arise from or relate in any manner in whole or in part
to any of the representations and warranties of Academy contained in this
Agreement or any failure by Academy to perform or comply with any covenant
contained in this Agreement.
4.2 Procedure. C3D shall notify Academy in writing of any claims for which
it seeks indemnification under section 4.1 above, and shall give Academy the
exclusive authority to defend or settle such claim (it being understood that
C3D may participate with counsel of its own choosing at its own expense),
and, at Academy's expense, give Academy reasonable information
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and assistance to settle and/or defend any such claim. Academy shall not have
the right to settle any claim in a manner which is prejudicial to the
interest of C3D without C3D's prior written consent.
ARTICLE V
GENERAL PROVISIONS
5.1 Governing Law. The rights and obligations of the parties under this
Agreement shall be governed by and construed under the laws of California,
without regard to California's conflict of laws provisions.
5.2 Jurisdiction; Venue. All disputes arising from this Agreement shall be
subject to the exclusive jurisdiction and venue of the state and federal
courts located in Los Angeles County, California, and the parties consent to
the exclusive and personal jurisdiction of these courts.
5.3 Entire Agreement. This Agreement constitutes the complete and exclusive
understanding and agreement of the parties regarding the subject matter
hereof and supersedes any and all prior or contemporaneous understandings,
agreements, communications or advertising or course of conduct with respect
to the subject matter hereof.
5.4 Board of Directors Approval. This Agreement is subject to the approval
of the respective Boards of Directors of the parties hereto, which approval
shall be promptly sought by the officers whose signatures appear below.
Academy Entertainment, Inc. Chequemate International, Inc.
By: By:
------------------------------ -------------------------------
Alan Miller, President J. Michael Heil, CEO
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EXHIBIT 10.6
EXCLUSIVE DISTRIBUTION AGREEMENT
THIS EXCLUSIVE DISTRIBUTION AGREEMENT (the "Agreement") is dated this 25th,
day of April, 1999, between C-3D Digital, Inc., a Utah corporation (the
"Vendor"), and 3D TELEVISION, CO., LTD., a Japan corporation (the
"Distributor").
PRELIMINARY STATEMENTS
A. The Vendor manufactures a variety of 3D Imaging products and
other related products.
B. The Vendor desires to expand its marketing activities and is
willing to appoint the distributor as its distributor on the terms and
conditions set forth herein, in consideration of the Exclusive Distribution
Agreement to, among other things, use its best efforts to market and promote
the sale of the Vendor's products.
NOW THEREFORE, in consideration of the mutual covenants and
conditions set forth herein, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
do hereby agree as follows:
ARTICLE 1
APPOINTMENT AS DISTRIBUTOR
Section 1. APPOINTMENT AS A DISTRIBUTOR. Subject to the terms and
conditions set forth in this Agreement, the Vendor hereby appoints the
Distributor for the term of this Agreement, and the Distributor hereby
accepts the appointment, as the Vendor's distributor for the sale,
distribution and servicing of the Products (as defined below) in the
Territory (as defined below).
Section 1.2 PRODUCT(S). This Agreement applies to the,
sublicensing of 2D to 3D process (as defined below), C-3D Digital Imaging
system and accessories, manufactured or distributed by the Vendor
(collectively, the "Product(s)"). The definition of Products shall include
private labels of the products.
(i) REPRESENTATIONS AND WARRANTIES OF THE PRODUCT(S). Vendor
represents and warrants to Distributor that it has full legal power
to grant the rights to distributor as set forth in Section 1.2 of
this Agreement; that it has not made, and covenants that it will not
make, any commitment to others inconsistent with such grants; that
it is not aware of any third party that holds from or under Vendor
from granting to Distributor all exclusive rights possessed by
Vendor to use, lease, sell, and otherwise dispose of any Product(s);
and that the Vendor
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owns all of such Licensed Technology free and clear of any and all
liens, claims, royalty, interest, or encumbrances of any nature
whatsoever. Vendor further represents and warrants that all Vendor
personnel who have participated in research activities related to
Licensed Product(s) have assigned Vendor personnel who have
participated in such activity are or shall be placed under a legal
obligation to assign, all proprietary and ownership rights in and to
the Product(s) and the know-how and any Patent Rights respecting the
same to the Vendor, which rights, by virtue of this Agreement shall be
subject to the rights of Distributor as set forth herein.
Section 1.3 INDEPENDENT CONTRACTOR. The Distributor is appointed
by the Vendor only for the purposes and to the extent set forth in this
Agreement and its relationship to the Vendor shall be that of an independent
contractor and neither the Distributor nor any of its employees, agents or
affiliates shall be or be deemed to be an employee, partner or agent of the
Vendor and nothing contained herein shall be construed to create a
partnership, joint venture or any other relationship between the parties
hereto other than for the limited purposes set forth herein. Neither party
shall have the power or authority to assume or create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
party or to bind the other in any manner or thing whatsoever.
Section 1.4 SALES AND PURCHASES. During the term of this
Agreement, the Vendor will sell and deliver to the Distributor, and the
Distributor will purchase from the Vendor, the Products at the prices and
subject to the terms, conditions, and limitations provided in this Agreement.
Section 1.5 TERRITORY. The Distributor shall have the exclusive
right to market the Products throughout Japan (the "Territory"). The Vendor
agrees not to sell the Products to entities or individuals residing in
Distributor's territory other than the Distributor. The Vendor shall forward
to the Distributor all inquiries and orders received by the Vendor concerning
sales and/or marketing of the Products and reorders from customers who
purchased a Product from the Distributor.
Section 1.6 USE OF THE VENDOR'S TRADEMARKS/TRADE NAMES. The Vendor
hereby authorizes the Distributor to use the Vendors trademarks and trade
names during the term of this Agreement. Furthermore, the Vendor hereby
authorizes the Distributor to attach a mailing label with the Distributors
name, address and telephone number on the Products and the literature. The
Vendor will leave reasonable space on its literature and Products for its
Distributor to attach its mailing label.
Section 1.7 CORPORATE STATUS: AUTHORIZATION. As a material
inducement to the Distributor to enter into this Agreement and to consummate
the transactions contemplated hereby, the Vendor represents and warrants as
follows: (i) the Vendor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Utah. (ii) the Vendor has all
requisite corporate power to execute and deliver this Agreement and subject
to the fulfillment or waiver (to the extent legally permitted) of conditions
precedent to the Vendor's obligations hereunder to carry out its obligations
hereunder. (iii) the execution and delivery of this Agreement and the due
consummation of the Vendor of the transactions contemplated hereby have been
duly and validly
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authorized by all necessary corporate action on the part of the Vendor. This
Agreement constitutes (and each document and instrument contemplated by this
Agreement to be delivered by the Vendor, when executed and delivered in
accordance with the provisions hereof, will constitute) a valid and legally
binding obligation of the Vendor enforceable in accordance with its terms.
ARTICLE II
DISTRIBUTOR'S OBLIGATIONS
Section 2.1 SALES. The Distributor shall take all reasonable
efforts to aggressively promote and obtain the sale and distribution of, and
to stimulate interest in, the Products in the Territory. In consideration
thereof, the Vendor hereby agrees not to authorize or permit any other
distributor to sell the Products in the Territory during the Term of the
Agreement.
Section 2.2 MINIMUM ROYALTIES: EXCLUSIVITY. The Vendor and the
Distributor will agree to set Minimum royalties for each product. If
Distributor fails to sell at least the number of units which is described in
the Minimum Royalties for each product. Vendor shall have the right, upon
ninety days written notice to Distributor, to convert the license granted
hereunder to a non-exclusive license and to grant non-exclusive license to
the Licensed Technology and Improvements to others, unless within such ninety
days Distributor pays to Vendor royalties pursuant to the Royalty Schedule in
an amount that would have been required if the minimum number of units of
Licensed Product(s) had been sold through the date of said notice from Vendor.
Vendor guarantees to Distributor the availability of product, parts, service
and supplies in order not to prohibit Distributor from meeting its sales
quota.
Section 2.3 LITIGATION. Distributor shall have the first right to
sue any party for any unfair trade practices involving the Licensed
Technologies or Improvements or any infringement of any patent licensed
hereunder, at its own expense in the name of Vendor, if necessary, and Vendor
agrees to join in such suit to execute any necessary papers for such suit. If
Distributor fails within a reasonable time to sue any person for any unfair
trade practices or infringement, Vendor shall have the right to file and
maintain, at its own expense, such suit; however, nothing in this agreement
shall obligate Distributor to assume any responsibility or liability
respecting any action possible action for any unfair trade practices or
infringement.
ARTICLE III
THE VENDOR'S OBLIGATIONS
Section 3.1 SPECIFIC DUTIES. In order to carry out its
responsibilities, the Vendor agrees to undertake at its expense to:
(i) take all measures reasonably necessary to support the
Distributor's
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promotion and sale of the Products in the Territory;
(ii) provide the Distributor at cost commercial catalogs, leaflets,
and other printed documentation for distribution to the Distributors
customers;
(iii) assist the Distributor to prepare such other catalogs, leaflets,
and printed documentation as the parties agree is desirable for the
marketing of the Products in the Territory;
(iv) provide training, literature, photographs and other support
materials in connection with the Distributor's marketing program for
the Products.
Section 3.2 TRADEMARKS, TRADE NAMES AND PATENTS. The Vendor
represents and warrants that it is the owner of the trademarks and trade
names utilized with the Products and such trademarks and trade names do not
and will not infringe on any valid United States or International trademark
or trade name. The Vendor shall be responsible for registering the trademarks
and trade names for the Products in the locations where the Distributor
markets the Products. The Vendor represents and warrants that the Products do
not and will not infringe any valid United States or International patent,
insured, with respect to the Products sold to the Distributor hereunder.
Section 3.3 INSURANCE. The Vendor agrees that, so long as the
Distributor continues to purchase Products from the Vendor, the Vendor shall
maintain in full force and effect product liability insurance, with a
Vendor's endorsement naming the Distributor as an additional insured.
Satisfactory evidence of such insurance shall be delivered to the Distributor
on or before the date the Distributor receives its first shipment of Products
and within 30 days prior to each renewal date of such insurance. Such
insurance shall not be subject to cancellation or modification during the
term of this Agreement without 30 days prior written notice to the
Distributor from the insurer.
Section 3.4 INDEMNIFICATION. The Vendor agrees to defend,
indemnify and hold harmless the Distributor from, against and in respect of
any and all demands, claims, actions or causes of action, losses,
liabilities, damages, assessments, deficiencies, taxes, costs and expenses,
including without limitation, interest, penalties and reasonable attorneys'
fees and expenses, asserted against, imposed upon or paid, incurred or
suffered by the Distributor as a result of, arising from, in connection with
or incident to any breach or inaccuracy of any representation or warranty of
Vendor in this Agreement or breach of any covenant or agreement of the Vendor
contained in this Agreement.
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ARTICLE IV
CONDITIONS OF SALE
Section 4.1 ORDERS. The Distributor shall submit orders in
writing to the Vendor for purchase of the Products by the Distributor.
Section 4.2 SHIPMENT. The Vendor shall keep the Distributor
informed of any backlogs in Product production. At the time an order is
place, the Vendor agrees to advise the Distributor in writing of the
estimated date that it will ship the order. If the Vendor fails to ship an
order within one week of such estimated shipment date, the Distributor shall
have the option, upon written notice to the Vendor, of canceling the order.
Upon written consent of the Distributor, Vendor will ship orders directly to
any location without additional charges. All products will be pre-packed in
individual plain white shipping boxes and will include instructions and
pertinent literature. No reorder forms shall be placed by the Vendor in such
shipping boxes.
Section 4.3 PAYMENT. All orders shipped to Japan are to be
secured by an "Irrevocable Letter of Credit", except described in the
agreement for each products.
Section 4.4 RETURN. The Distributor and its customers may return
Products for credit with the prior written consent of the Vendor, and the
Distributor shall have the option of either receiving a credit against
outstanding invoices or future orders and receiving a refund if there are no
outstanding invoices.
Section 4.5 CANCELLATION OF ORDERS. The distributor shall have
the option of canceling prior to the shipment any order accepted by the
Vendor.
ARTICLE V
PRICING POLICIES
Section 5.1 PRICES. The Vendor agrees to sell its Products to the
Distributor in accordance with the terms set forth in the price list in a
subsequent agreement. When and if the Vendor offers Products for sale, the
prices for which are not set forth in the price list, the Vendor and the
Distributor agree to update the list to include the prices of such Products.
The Distributor shall be responsible for the payment of any applicable sales,
use and excise taxes.
Section 5.2 RETAIL PRICES. The parties acknowledge that the
Distributor may establish its own prices to the public and is not required to
follow any suggested retail list prices.
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ARTICLE VI
Section 6.1 DEFECTIVE MERCHANDISE. Vendors shall provide to
Distributor a one (1) year warranty on all equipment sold to Distributor. The
first ninety (90) days will be a full parts and labor warranty on all
equipment and parts sold to Distributor and a remaining nine (9) month
warranty on all parts and equipment, excluding labor costs.
ARTICLE VII
TERM AND TERMINATION
Section 7.1 TERM OF APPOINTMENT. Subject to the termination
provisions of this Article VI, the Vendors appointment of the Distributor
shall be for a term of 5 years beginning on the date of this Agreement and
ending at midnight on March 31st, 2004 (the "Term of Agreement"). Thereafter,
the Distributor shall have the option to extend this Agreement for an
additional two (2) year term (the "Renewal Option"). The Distributor shall
exercise the Renewal Option by providing the vendor with written notice of
its intention to do so not less than sixty (60) days prior to the expiration
of the initial term hereof.
Section 7.2 TERMINATION. Notwithstanding the provisions of Section
7.1, this Agreement may be terminated prior to the expiration of the initial
term or any renewal term as follows:
(i) by mutual written consent of the parties hereto; or
(ii) by written notice to a party hereto if such party shall fail in
any respect to comply with the terms, covenants and conditions of this
Agreement to be complied with by it and shall fail to remedy such
failure within 30 days after receipt of written notices thereof from
the other party hereto; PROVIDED, HOWEVER, that, if such default cannot
by its nature be cured within 30 days, then the defaulting party shall
be given a reasonable opportunity to cure the same.
Section 7.3 SURVIVAL. All sublicenses granted hereunder shall
inure to the benefit of the Vendor and Vendor shall become the licensor with
respect to the same. Such sublicenses shall continue according to the terms
thereof and Vendor shall be entitled to all consideration and royalty from
the sublicense therein. Distributor shall make assignment of such sublicenses
and execute all documents necessary and proper to substitute Vendor as the
licensor therein. In accordance to Section 7.1 it is understood that GGS Co.,
LTD. and GGS Hawaii are not a considered Sublicensees.
Section 7.4 SALE OF THE DISTRIBUTOR'S INVENTORY TO THE VENDOR ON
TERMINATION. Within six months after the expiration or termination of this
Agreement, irrespective of the reason therefore, the Distributor shall have
the option of causing the Vendor to repurchase from the Distributor all
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Products owned by the Distributor but not sold by it at the date of such
termination. The Vendor shall, within 120 days after receipt of notice from
the Distributor, repurchase from the Distributor all of such unsold Products.
Such repurchase shall be made at a price for each Product equal to the
purchase price for such Product paid by the Distributor to the Vendor. Units
repurchased by the Vendor shall be delivered C.O.D. (net of any outstanding
invoices) by the Distributor to the Vendor's office no later than 30 days
after the receipt of the Vendor's repurchase order.
Section 7.5 RETURNED MATERIALS. Distributor shall return, deliver,
and assign to Vendor within 90 days, all written records containing know-how,
notebooks, reports, data, application for approval, approval and all
writings, including magnetically recorded writings or legible and readable
copies thereof which relate to or describe the manufacture, use, sale, or
characteristics of Licensed Product(s) and Processes and/or Licensed
Technology which are in its possession, custody or control.
ARTICLE VIII
REGULATORY APPROVALS
Section 8.1 REGULATORY APPROVAL IN JURISDICTIONS OTHER THAN THE
UNITED STATES. Prior to the Distributors sale of any Product in any
jurisdiction other than the United States, the Distributor warrants that it
shall have received all requisite governmental approvals to sell such Product
in such jurisdiction and that the sales, literature, brochures, packaging and
instruction material for such Product shall comply with all applicable laws
and regulation of such jurisdiction.
Section 8.2 UNITED STATES REGULATORY APPROVAL. Prior to the
Distributor's sale of any products in the United States the Vendor warrants
that it shall have received all requisite governmental approvals to sell such
Product in the United States and that the sales literature, brochures,
packaging and instruction material for such Product shall comply with all
applicable laws and regulations.
ARTICLE IX
MISCELLANEOUS
Section 9.1 NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
given or made if in writing and delivered personally, or sent by registered
or certified mail (postage prepaid, return receipt request "3D Television
Co., LTD.) To the parties at the following addresses:
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If to the Vendor:
C-3D Digital, Inc.
American Plaza II
57 West 200 South, Suite 350
Salt Lake City, Utah 84101
Attention: J. Michael Heil
If to the Distributor:
3D Television, Co., LTD.
8-15-17-602, Nishi-Shinjuku Shinjuku-ku
Tokyo, 160-0023 Japan
Attention: Mr. Hisatake Togoe
or at such other addresses as shall be furnished by the parties by like
notice, and such notice or communication shall be deemed to have been given
or made as of the date so delivered or sent.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 ASSIGNMENT OF AGREEMENT. This Agreement is not
assignable by either Distributor or Vendor, except in connection with the
assignment of substantially all of the business and assets associated therein
to an entity which is legally qualified to carry on such business and effect
the provisions of the Agreement and without the written consent of the other
party, which consent shall not be unreasonably withheld. Upon assignment in
accordance with the foregoing, this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
Section 10.2 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and supersedes all other agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.
Section 10.3 AMENDMENT. No term or provision of this Agreement may
be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by all parties, "accept as otherwise expressly
provided herein".
Section 10.4 WAIVER OF ACTION. Distributor waives any claim or
right of action arising out of or respecting the Agreement against the offers
and the members of the board of directors of Vendor respecting actions taken
in their capacity as directors.
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Section 10.5 DESCRIPTIVE HEADINGS. The headings of the various
sections herein are for convenience of reference only and shall not define,
limit or otherwise affect any of the terms or provisions hereof.
Section 10.6 APPLICABLE LAW VENUE. This Agreement shall be
governed by and construed in accordance with the laws of the State of Utah
without reference to conflicts of laws provisions. Any dispute arising
hereunder shall be adjudicated in Salt Lake County, Utah.
Section 10.7 SEVERABILITY. The invalidity of any one or more of
the words, phrases, sentences, clauses or sections contained in this
Agreement shall not affect the enforceability of the remaining portions of
this Agreement or any part thereof, all of which are inserted conditionally
on their being valid in law, and, in the event that any one or more of the
words, phrases, sentences, clauses or sections contained in this Agreement
shall be declared invalid, this Agreement shall be construed as if such
invalid word or words, phrase or phrases, sentence or sentences, clause or
clauses, or section or sections had not been inserted. If such invalidity is
caused by length of time or size of area, or both, the otherwise invalid
provision will be considered to be reduced to a period or area that would
cure such invalidity.
Section 10.8 WAIVER AND REMEDIES. No course of dealing and no
delay on the part of any party hereto in exercising any right, power, or
remedy conferred by this Agreement shall operate as a waiver thereof or
otherwise prejudice such party's rights, powers or remedies conferred by this
Agreement shall precluded any other or further exercise thereof or the
exercise of any other right, power, or remedy.
Section 10.9 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and each of which shall be deemed an original.
Section 10.10 ATTORNEYS' FEES. In the event of any litigation
arising out of or relating to this Agreement, the unsuccessful party in such
litigation shall pay to the successful party all costs and expenses incurred
therein by the successful party, including, without limitation, reasonable
attorneys' fees, including costs and attorneys' fees for all appellate and
bankruptcy proceedings, which costs, expenses and fees shall be included in
and made a part of any judgement or award rendered in such litigation.
Section 10.11 GGS HAWAII, INC. Notwithstanding anything else
contained in this Agreement to the contrary, Vendor/C-3D and
Distributor/Affiliate hereby authorize and appoint GGS Hawaii, Inc. to
oversee and assist the parties hereto with compliance and adherence to the
various requirements of the Agreements as they relate to the language,
geography, customs, barriers or the like with respect to the Territory. For
the purpose hereof, GGS Hawaii, Inc. shall not be deemed to be an assignee or
Sublicensee of Distributor/Affiliate.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year above written.
VENDOR:
C-3D DIGITAL, INC.
By:
----------------------------------
J. Michael Heil, CEO
DISTRIBUTOR:
3D TELEVISION, CO., LTD.
By:
----------------------------------
Mr. Hisatake Togoe, President & CEO
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MINIMUM ROYALTIES
AND
PRICING SCHEDULE
(CONFIDENTIAL)
This is the Minimum Royalties and Pricing Schedule that is referred
to in the Exclusive Distributor Agreement (the "Agreement") dated effective
this 25th day of April, 1999, between C-3D DIGITAL, INC., a Utah corporation
(the "Vendor") and 3D TELEVISION, CO., LTD. a Japan corporation, that appears
therein and herein as "Vendor".
For and in consideration of the Agreement, the Vendor shall pay the
Distributor, at the times and in the manner more particularly set forth in
such Agreement, a wholesale price per unit of C-3D DIGITAL 200 sold and
delivered to 3D Television Co., LTD. The price shall change to the price that
is a cost plus 20% basis.
<TABLE>
<S> <C>
Wholesale Price Per Unit $93.60 (Maximum)
</TABLE>
The Minimum Royalties is as follows:
<TABLE>
<S> <C>
Until the end of May, 1999 50 Units
Until the end of June, 1999 2,000 Units
Until the end of September, 1999 5,000 Units
Until the end of December, 1999 5,000 Units
Until the end of March, 2000 5,000 Units
</TABLE>
The Distributor will execute the bank transfer for the first 50
units until May 24 and the Irrevocable Letter of Credits of payments for the
consecutive orders, June 30, 1999, December 31, 1999 and March 31st.
Vendor will sell all additional equipment to Distributor on a cost
plus 20% basis for each complete Unit purchased by Distributor. Distributor
will have access to Vendors costs with a prior 30 day written notice. Vendors
actual cost will include all manufacturing, shipping, packaging,
distribution, license and sales. Component pricing will be forthcoming in a
subsequent agreement.
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Dated as of the effective date of the Agreement
C-3D DIGITAL, INC.
By: /s/ J. Michael Heil
--------------------------------------
J. Michael Heil, CEO
3D TELEVISION CO., LTD.
By: /s/ Hisatake Togoe, President & CEO
----------------------------------------
Hisatake Togoe, President & CEO
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EXHIBIT 10.7
C-3D DIGITAL, INC.
AFFILIATION AGREEMENT
AGREEMENT made as of April 25th, 1999 by and between C-3D Digital,
Inc. a Utah corporation with offices at 57 West 200 South, Suite 350, Salt
Lake City, Utah 84101 ("C-3D") and 3D Television Co., LTD. a Japan
corporation with offices at 8-15-17-602, Nishi-Shinjuku, Shinjuku-ku, Tokyo,
Japan ("Affiliate").
WHEREAS, Affiliate distributes television networks in Japan; and
WHEREAS, C-3D desires to make available to Affiliate the
programming services known as the "C-3D Service" for retransmission to
Affiliate's subscribers, and to provide certain other related services upon
the terms and conditions set forth herein; and
WHEREAS, Affiliate desires to make available to its subscribers the
C-3D Premium Television Network;
NOW, THEREFORE, it is mutually agreed as follows:
1. DEFINITIONS. The following terms shall have the meanings set
forth below when used in this Agreement.
1.1 "EVENT" shall mean a motion picture, pre-recorded
film, program, production or other event transmitted on the C-3D
Service.
1.2 "GROSS REVENUES" shall mean the sum of all charges for
Events, whether or not collected by Affiliate, paid or payable by each
"Subscriber" (defined below) for the privilege of viewing each
exhibition of an Event (or package of Events) exhibited by the "System"
(defined below without reduction or offset of any kind.
1.3 "PAY-PER-VIEW BASIS" shall mean the exhibition of one (1)
Event chosen by a Subscriber over the facilities of a System for
televison viewing for which exhibition the Subscriber is required to
pay an individual, per Event, per exhibition fee or a "Subscription
Basis" (defined below).
1.4 "C-3D SERVICE" shall mean the single channel satellite
delivered entertainment programming service currently featuring one (1)
Event (and, if time permits - 5 various interstitial programming every
ninety (90) minutes, twenty-four (24) hours per day, seven (7)
days per week.
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1.5 "SUBSCRIBER" shall mean a private residential home or
other dwelling unit (including a private residential apartment,
condominium, mobile home, house or rentable guest room in a hotel,
motel, inn or lodge), the residents of which have ordered an Event(s)
for viewing on a Pay-Per-Block Basis or on a Subscription Basis.
1.6 "SUBSCRIPTION BASIS" shall mean the exhibition of Events
chosen by a Subscriber over the facilities of a System for television
viewing on a monthly basis for which exhibitions the Subscriber is
required to pay a package fee.
1.7 "SYSTEM" shall mean each Direct to Home ("DTH") satellite
television system and cable television system in the Territory (defined
below).
1.8 "TERRITORY" shall mean Japan, its territories and
possessions.
2. LICENSE.
2.1 EXHIBITION C-3D hereby grants to Affiliate and
Affiliate hereby accepts, subject to the terms and conditions herein, a
limited, exclusive license to exhibit the C-3D Service on a Pay-Per-View
Basis, a Pay-Per-Block Basis and on a subscription basis to Affiliate
Subscribers over the facilities of the System(s). Affiliate may include
additional DTH satellite systems and cable television systems by written
amendment to Schedule A hereto, provided that C-3D consents in writing in
advance to all such additions. Affiliate shall exhibit the C-3D Service on a
24 hour 7 days a week basis during the terms of this Agreement.
2.2 PROHIBITIONS. Unless otherwise expressly agreed to by
C-3D in writing, this license does not grant to Affiliate the right
to duplicate or copy an Event by any means whatsoever, or to
exhibit, authorize or permit the exhibition of the C-3D Service (a)
to any cable of DTH satellite television system not set forth in
Schedule A hereto; (b) other than on a Pay-Per-View Basis, a
Pay-Per-Block Basis and on a Subscription Basis (c) on any channel
which makes commercial advertising or promotional time available to
third parties; (d) in any location with is not a private residential
home or other dwelling unit, including, without limitation, places
where an admission fee is charged, places of public access or
accommodation, bars, lounges, restaurants, lobbies or hallways, or
(e) in, or to transmit the Event for reception in: (i) any
commercial establishment or other non-residential building (such as
a bar, restaurant or fraternal organization); (ii) any public
gathering area in an otherwise residential building (such as an
apartment house lobby, a ballroom or a public ward in a hospital or
nursing home); or (iii) any other public place or any place where an
admission fee is charged. Affiliate shall not have or exercise any
rights whatsoever with respect to an Event other than those
specifically licensed to Affiliate herein. Upon any breach of this,
Paragraph 2, C-3D shall have all of its rights and remedies at law
and in equity, including, without limitation, the right to enjoy any
exhibition or exploitation of the C-3D Service; suspend the
transmission of the C-3D Service; terminate this Agreement and/or
declare this
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Agreement breached, declare all amounts payable hereunder, and exercise
all rights and remedies on account of such breach, including, without
limitation, the right to recover damages caused C-3D in connection with
such breach.
3. TERM OF LICENSE. The term of this Agreement and the rights granted
to Affiliate hereunder shall be for a period of five (5) years from the
date first above written (the "Initial Term"). The Initial Term of this
Agreement shall expire on the same date for all of the Affiliate's
Systems listed in Schedule A hereto regardless of when any individual
System launches the C-3D Service hereunder. The termination of this
Agreement shall not: (a) abrogate Affiliate's obligation to pay C-3D
the sums set forth herein; (b) impair or affect C- 3D's rights of
withdrawal, audit or indemnification; or (c) abrogate, impair or affect
any warranty, representation, indemnity or undertaking on the part of
each party hereunder. It is understood that the Term of License will
not be applicable to GGS Hawaii, Inc. and GGS Co., Inc.
4. LICENSE FEES AND REPORT.
4.1 In consideration of the rights herein granted to
Affiliate, Affiliate shall pay C-3D the license fees ("License
Fees") set forth in Schedule B hereto. Affiliate shall remit to C-3D
within thirty (30) days of the end of each month all License Fees
due for such month. Together with each payment of such amounts,
Licensee shall deliver to C-3D a monthly statement in the form of
Exhibit A attached hereto. All payments and statements hereunder
shall be made to C-3D at its address herein above set forth. All
amounts due and unpaid shall thereafter accrue interest at the rate
of one and one-half percent (1-1/2%) per month, OR the maximum
lawful rate compounded monthly, whichever is less, from the due date
until payment is received. Acceptance of any payment by C-3D after
its due date shall not constitute a waiver by C-3D of any of its
rights hereunder.
4.2 On no less than one hundred eighty (180) days prior
written notice to Affiliate ("Amended Fee Structure Notice") C-3D shall
have the right to adjust, from time to time during the terms of this
Agreement, the rates set forth in Schedule B hereto with respect to
License Fees on the date ("Effective Date") specified in the Amended
Fee Structure Notice, if the rates become unreasonable compared with
the standard of the industry at that time. In such event, Affiliate
may, by written notice at least ninety (90) days prior to the Effective
Date, terminate this Agreement as of the Effective Date; provided,
however, that such termination by Affiliate shall not take effect and
shall be of no force or effect if C-3D withdraws the increase by
written notice to Affiliate no later than fifteen (15) days prior to
the Effective Date.
4.3 In the event of a dispute between Affiliate and C-3D
as to any amount properly due from Affiliate to C-3D, Affiliate
shall pay that portion of the amounts not in dispute in accordance
with the terms of Paragraph 4.1 above and before or at the time of
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payment, shall notify C-3D of the grounds for disputing the remaining
unpaid balance. Interest shall not accrue on such balance for a period
of fourteen (14) days during which the parties shall use their
reasonable best efforts to negotiate a settlement.
4.4 In connection with any interruption or other failure in
the transmission, reception or distribution of the C-3D Service which
interruption or failure could reasonably have been prevented by C-3D,
Affiliate shall have recourse and a remedy against C-3D only if
Affiliate shall have given its affected Subscribers a credit or rebate
as a result of such interruption or failure, in which case the sole and
exclusive remedy of Affiliate against C-3D shall be a credit for no
more than the amount of the License Fee which would have been payable
by Affiliate to under the foregoing or any other circumstances, be
liable for incidental, consequential or special damages, including,
without limitation, loss of profits or revenues, damage to or loss of
personal property or claim of any Subscriber.
4.5 Within ninety (90) days following the end of each of the
Affiliate's fiscal years during any portion of which this Agreement is
in effect, Affiliate shall furnish to C-3D a letter addressed to C-3D
signed by Affiliate's Chief Operating Officer or Chief Financial
Officer which attests to the completeness and accuracy of all reports
and statements supplied to C-3D. Affiliate's obligation to supply such
letter shall continue after the termination of this Agreement, until
C-3D receives the required letter with respect to the last fiscal year
during any portion of which this Agreement is in effect.
4.6 Affiliate shall keep and maintain, at Affiliate's
principal place of business complete and accurate books and records
relating to this Agreement in accordance with generally accepted
accounting principles. During the term of this Agreement and for two
(2) years hereafter, at C-3D's expense, C-3D by its representative,
accountants and/or designated agents shall have the right, at
Affiliate's office and during regular business hours, to audit and
check Licensee's books and records for the purpose of verifying and
confirming the accuracy of the statements delivered to C-3D by
Affiliate and the amount of the License Fees paid or payable under this
Agreement and to make copies of relevant excerpts of any such books and
records. The exercise by C-3D of any right to check or to audit at any
time or the acceptance by C-3D of any statement or payment shall be
without prejudice to any other rights or remedies available to C-3D and
shall not bar C-3D from thereafter disputing the accuracy of any such
payment or statement and Affiliate shall remain fully liable for any
balance due under the terms of this Agreement. If any audit discloses
an underpayment of five (5.0%) percent or more with respect to the
amount of License Fees set forth on any of Affiliate's statements.
Affiliate agrees, in addition to re- computing and making immediate
payment of the License Fees based on the true items, together with
interest thereon at one hundred and ten (110%) percent of the prime
rate announced from time to time by Citibank (the "Prime Rate"), to pay
all costs and expenses incurred by C-3D for such audit, checking an
attorney's fees incurred by C-3D in
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connection therewith or with the enforcing the collection thereof.
Neither C-3D's acceptance of any information, or inspection or audit of
Affiliate's records or accounts, will prevent C-3D from later disputing
the accuracy or completeness of any payments made or of information
supplied by Affiliate.
5. TRANSMISSION AND DISTRIBUTION
5.1 Affiliate shall be solely responsible for the
reception of the video and audio signals of the C-3D Service from
the satellite used by C-3D to the headend or other receiving device
of the System(s) and for the transmission therefrom to its
Subscribers. Affiliate shall employ adequate security systems to
prevent theft, pirating, copying, duplication or unauthorized
exhibition of the C-3D Service, and shall ensure that the C-3D
Service is made available only to Subscribers. Affiliate shall
continuously maintain transmission quality of the C-3D Service at
least equivalent to the best transmission quality of other
programming transmitted by Sky Perfect TV.
5.2 C-3D will transmit the C-3D Premium Network to Japan on a
mutually acceptable digital platform. The cost of the transmission will
be the responsibility of 3D Television of Japan. However, C-3D will
discount its subscription fees by 50% until 50% of the transmission
cost is offset by C-3D.
5.3 All C-3D Service programming decisions shall be at the
sole discretion of C-3D, including the selection, substitution or
withdrawal of any scheduled Events or portions thereof. Affiliate shall
exhibit and shall require each system to exhibit the C-3D Service in
its entirety, without any interruptions, including all titles, credits
and copyright notices and shall not cut, alter, modify, add to, delete
from or revise the C-3D Service. If transmission cost exceeds that of
video distribution and playback costs then C-3D will provide videos to
Affiliate to play on their own video platform.
6. ADVERTISING AND PROMOTIONAL MATERIALS.
6.1 Affiliate shall use its reasonable best efforts to
promote the C-3D Service to the subscribers of each System, with the
aim of maximizing the number of C-3D Service Subscribers and the
rate at which they purchase the C-3D Service.
6.2 For each month of the term of this agreement, no later
than thirty (30) days prior to the exhibition of the C-3D Service for
such month, C-3D shall make available to Affiliate such trailers and
other publicly materials as C-3D may have available (the "Promotional
Materials") to be used for advertising and publicity of the C-3D
Service for such month. Affiliate shall have the right, at its sole
cost and expense, to make copies of the Promotional Materials solely
for use by each System.
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6.3 Affiliate shall not use the name, image or likeness of
any character, person or entity appearing in or connected with the
production of any Event included in the C-3D Service separate and
apart from the advertising and promotion of the C-3D Service, and no
name, image or likeness shall be used by Affiliate so as to
constitute an endorsement or testimonial, express or implied, of any
party, product, service or commercial venture, Affiliate
acknowledges that its fight to use the names, images, likeness of
persons or entities appearing in or connected with the production of
any Event is subject to various limitations and restrictions
contained in contracts with third parties. Following the exhibition
of the C-3D Service in any month during the term of this Agreement,
Affiliate shall not use, transmit, exhibit, circulate or otherwise
publish any Promotional Materials provided by C-3D for such month.
6.4 In all advertising and publicity issued by Affiliate for
the C-3D Service, Affiliate shall comply with all instructions of C-3D
regarding advertising or contained in any promotion package provided by
C-3D.
6.5 The parties understand and agree that the implementation
of this Agreement will necessitate that the staff and employees,
servants and agents of each party shall make themselves and the
necessary equipment, sites and locations available upon reasonable
notice to the staff, employees, servants and agents of the other party
at all times from the date of the signing of this Agreement until its
termination. The parties further agree to afford all reasonable
cooperation to each other towards the proper implementation of this
Agreement so long as it remains in force and effect.
7. TAPING AND PHYSICAL MATERIAL.
7.1 Affiliate shall have the right upon notification to C-3D,
to tape the satellite transmission of Events for playback on a "stand
alone" basis by Systems provided that: (a) Affiliate shall bear all
costs and expenses associated with the taping of each such Event, (b)
all rights, title and interest in the visual and audio elements of such
Event contained in such tapes shall, at all times, remain the property
of Affiliate subject only to Affiliates's right to make use of such
tapes in accordance with the terms of this Agreement; and (c) Affiliate
assumes all responsibility as to the quality of such tapes.
7.2 At the end of each month during the term of this
Agreement, Affiliate shall return to C-3D all Promotional Materials
referred to in Paragraph 6 above. In addition, Affiliate shall erase or
destroy any tapes made in accordance with paragraph 7.1 above and shall
promptly furnish C-3D with an affidavit to that effect sworn to by a
duly authorized officer of Affiliate (the "Certificate"). The ownership
of such tapes from the time of transferal of the visual and audio
elements of each Event shall remain with C-3D until such time as
Affiliate erases or destroys such tapes and C-3D is in receipt of the
Certificate.
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7.3 Affiliate shall employ adequate security systems to
prevent the loss, theft, pirating, copying, unauthorized duplication or
unauthorized exhibition of such tapes and materials furnished by C-3D,
and shall carry fire and theft insurance covering the loss of any such
materials.
7.4 Affiliate shall remain liable in all respects regarding
the loss, theft or unauthorized duplication of C-3D's materials in
Affiliate's possession. In the event of loss, Affiliate will deliver to
C-3D an affidavit sworn to by a duly authorized officer of Affiliate
setting forth in detail the circumstances relating to such loss within
seventy-two (72) hours after such loss has been discovered.
7.5 Affiliate shall not, by any act, or any failure to act,
suffer or permit lien, charge, pledge, mortgage or encumbrance to
attach to this C-3D Service ro the physical materials relating to any
Event.
8. WARRANTIES AND INDEMNIFICATION.
8.1 C-3D warrants and represents that: (a) it has the power
and authority to enter into this Agreement and to fully perform its
obligations hereunder; (b) the material contained in the C-3D Service
and in the Promotional Materials supplied to Affiliate hereunder will
not violate any copyright, right of privacy or publicity or literary or
dramatic right of any person; provided, however, that such warranties
and representations by C-3D are only as broad as and coextensive with
those provided to C-3D by C-3D's program suppliers.
8.2 Affiliate warrants and represents that: (a) Affiliate has
the power and authority to enter into this Agreement and to fully
perform its obligations hereunder; (b) Affiliate has obtained, and
shall maintain in full force and effect during the term of this
Agreement, such federal and state, local and/or private authorizations
as necessary to operate each system in the Territory and to retransmit
the C-3D Service pursuant to this Agreement; (c) Affiliate will
immediately notify C-3D in the event that Affiliate loses, or becomes
aware of circumstances that it may lose, any necessary authorizations;
(d) any material contained in promotional material developed by
Affiliate will not violate any copyright, right of privacy or publicity
or literary or dramatic right of any person; and (3) Affiliate shall
not use, and shall require each System not to use any Event for any
unlawful purpose or for any purpose not permitted hereunder.
8.3 Affiliate shall indemnify, defend and hold harmless C-3D,
its parent, subsidiaries and affiliated companies and their respective
officers, directors, employees, agents and shareholders from and
against any and all claims, losses or damages, costs and expenses
(including, without limitation, reasonable attorneys' fees and
expenses) (collectively "Claims") relating to or arising our of any
breach or alleged breach of any of
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the representations, warranties, agreement, covenants or obligations
made by Affiliate pursuant to this Agreement.
8.4 C-3D shall indemnify, defend and hold harmless Affiliate,
its parent, subsidiaries and affiliated companies and their respective
officer, directors, employees, agents and shareholders from and against
any and all Claims relating to or arising our of any breach or alleged
breach of any of the representations, warranties, agreements, covenants
or obligations made by C-3D pursuant to this Agreement.
8.5 Each party seeking indemnity hereunder (the "Indemnified
Party") agrees to give prompt notice to the other party (the
"Idemnifying Party") of any circumstances which may give rise to a
Claim under this Paragraph 8 as soon as the indemnified Party knows of
such circumstances: provided, however, that the failure to give such
notice shall not relieve the indemnifying party of its obligation to
indemnify the Indemnified party under this Paragraph 8 except to the
extent that such failure increases the Indemnified Party's liability
hereunder. The Indemnifying Party shall have the right to participate
in, and, with the consent of the Indemnified Party, which consent shall
not be unreasonably withheld, to control the contest and defense of any
claim by a third party as to which notice is given by the Indemnified
Party under this Paragraph 8 at its own cost and expense, including the
cost and expense of attorneys' fees in connection with such contest and
defense. The Indemnified Party shall not settle or compromise any such
Claim without the prior written consent of the Indemnifying Party. If
the Indemnified Party settles or compromises any such Claim without the
Indemnifying Party's prior written consent, the Indemnifying Party
shall be relieved of its obligations to indemnify the Indemnified Party
under this Paragraph 8 with respect to such Claim.
9. SERVICE MARKS.
Affiliate acknowledges that the name and mark "C-3D" and any
other service marks and any logos and variations used to identify the
C-3D Service are the exclusive property of C-3D, and that Affiliate has
not and shall not acquire any proprietary rights thereto by reason of
this Agreement. Materials used by Affiliate may refer to "C-3D" or the
C-3D Service and other names, marks and logos of C-3D only if it is
clear that the names, marks and logos used are service marks for the
C-3D Service which Affiliate distributes. Such use shall be in
accordance with any further instructions that may be issued by C-3D
from time to time. Affiliate shall promptly make available to C-3D, at
it requires, all original promotional or advertising material that uses
the aforesaid names, marks or logos in publicizing the C-3D Service and
shall keep copies of all such original material, Affiliate shall not
publish or disseminate any material which violates any restrictions
imposed by C-3D or C-3D's program suppliers and disclosed by Affiliate
by C-3D.
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10. TERMINATION.
10.1 Either party may terminate this Agreement by giving the
other party at least ninety (90) days prior written notice, in the
event that the other party has made any material misrepresentation
herein or materially breaches any of its obligations hereunder,
including, without limitation, the obligation to make all payments when
due and payable, and such material misrepresentation or beach (which
shall be specified in such notice) is not or cannot be cured within
sixty (60) days or receipt of such notice. The right of either party to
terminate this Agreement in any such case shall be in addition to any
other remedies such party may have.
10.2 Affiliate may terminate this Agreement with respect to a
particular System as a result of a change by C-3D in the satellite
transmitting the C-3D Service signal to another communications
satellite ("Satellite Switch") only if: (a) no other signal received by
the System's earth station(s) prior to the Satellite Switch is
scheduled to be transmitted by the satellite newly designated to carry
the C-3D Service signal; and (b) as a result of the Satellite Switch,
the System is required to obtain and install one or more additional
earth stations for the sole purpose of receiving the C-3D Service
signal. Under these conditions, Affiliate shall have the right within
ten (10) days (or such lesser time as the circumstances may require) of
receipt of notice from C-3D of a proposed Satellite Switch to notify
C-3D in writing of Affiliate's intention to terminate this Agreement
with respect to such system as of the effective date of the Satellite
Switch.
10.3 During the term of this Agreement, with respect to each
System listed in Schedule A (as amended from time to time), Affiliate
covenants that it shall promptly notify C-3D in writing of any
reduction below fifty (50%) percent in Affiliate's ownership of any
such system. Upon receipt of such notice, C-3D may, at its option,
advise Affiliate and such system in writing that, effective of the date
of such change, such System shall no longer be subject to this
Agreement and shall immediately cease the distribution of the C-3D
Service in such System. The distribution of the C-3D Service in such
system shall be covered by a separate Affiliation Agreement. The
provisions of this paragraph shall be in addition to any other rights
or remedies that C-3D may have.
11. FORCE MAJEURE. In the event Affiliate is prevented from
exhibiting the C-3D Service, or C-3D is prevented from transmitting
the C-3D Service, by reason of any act of God, fire, strike,
boycott, transportation failure, satellite interruption or other
occurrence beyond the reasonable control of the party whose
performance is prevented, neither party shall be responsible to the
other for nay damages, costs, expenses or loss of profit's thereby.
C-3D shall have the right to terminate this Agreement upon written
notice to Affiliate if, by reason of this paragraph, Affiliate is
prevented from exhibiting the C-3D Service for more than two (2)
consecutive weeks.
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12. MISCELLANEOUS.
12.1 Affiliate and its employees and agents shall
maintain, in confidence, the terms and conditions of this Agreement,
as well as all data, summaries, reports and information of all
kinds, whether oral or written, acquired, devised or developed in
any manner by or from C-3D personnel or C-3D's files, and have not
and will not reveal the same to any persons not employed by C-3D
except: (a) at the written direction of C-3D; (b) to the extent
necessary to comply with law or a valid order of a court of
competent jurisdiction, in which event Affiliate shall so notify
C-3D as promptly as practicable (and, if possible, prior to making
any disclosure) and shall in all cases seek confidential treatment
of such information; (c) as part of its normal reporting or review
procedure to its parent company, auditors and its attorneys,
provided such parent company, auditors and attorneys agree to be
bound by the provisions of this paragraph; or (d) in order to
enforce its rights pursuant to this Agreement.
12.2 Neither this Agreement nor any rights or obligations
hereunder may be assigned by Affiliate without the prior written
consent of C-3D, which consent shall not be unreasonably withheld. Such
assignment shall not relieve Affiliate of its obligations incurred
prior to the date of any such assignment hereunder. Any purported
assignment without such consent shall be null and void and not
enforceable against C-3D. This Agreement and the rights and obligations
of the parties hereunder shall be binding upon and shall inure to the
benefit of C-3D and Affiliate and their respective legal
representative, successors in interest and permitted assigns.
12.3 Any waiver by either party of any breach of any term or
condition hereof shall be effective only if in writing and such writing
shall not be deemed to be a waiver of any subsequent or other breach,
term or condition of this Agreement.
12.4 Notwithstanding anything to the contrary contained
herein, if Affiliate fails to fully and timely perform any material
obligation or any covenant hereunder, including, without limitation,
Affiliate's failure to timely fulfill any of its payment obligations
hereunder, or if Affiliate becomes insolvent, or if a petition under
any bankruptcy shall be filed by or against Affiliate (which petition,
if filed against Affiliate, or if Affiliate shall not have been
dismissed within thirty (30) days thereafter); or if Affiliate takes
advantage of any applicable insolvency or any other like statute, or
executes a general assignment for the benefit of creditors; or if a
receiver, liquidator or trustee (or equivalent under any applicable
statute) is appointed for the assets or affairs of Affiliate, than upon
the occurrence of any of the foregoing. C-3D may exercise any or all of
the following options, none of which shall be a waiver of the other or
of any other rights or remedies which C-3D may have at law, in equity
or otherwise: (a) C-3D may terminate this Agreement by giving prior
written notice of termination to Affiliate; (b) C-3D may cease
licensing the C-3D Service to Affiliate; and/or (c) C-3D may suspend
the transmission of
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the C-3D Service to Affiliate and/or the right to transmit the C-3D
Service by Affiliate until such default is ended or remedied. If C-3D
exercised any or all of the foregoing options, C-3D shall be entitled
to declare all unpaid and payable amounts to C-3D immediately due and
payable and to recover from Affiliate all payment past due from
Affiliate to C-3D hereunder, together with interest at the prime Rate,
plus all attorneys' fees, costs and expenses, including collection
agency fees, incurred by C-3D to enforce the provisions hereof.
Notwithstanding anything to the contrary contained herein, no
termination of this Agreement for any reason shall relieve or
discharge, or be deemed or construed as relieving or discharging,
Affiliate from any duty, obligation or liability hereunder which
accrued as of the date of such termination (including, without
limitation, the obligation to pay any amounts payable hereunder and to
furnish a statement with respect to any such payment which accrued as
of such date of termination).
12.5 Affiliate and C-3D acknowledge that the licenses for
Events have been separately negotiated and individually priced, that
C-3D did not directly or indirectly condition the granting of the
license of any one or more of the Events upon the licensing of any
other Event, and that the inclusion of any such Events in one agreement
was merely for the convenience of the parties.
12.6 With respect to the subject matter of this Agreement,
this Agreement and the schedules hereto: (a) set forth the entire
Agreement between the parties and any parties who have in the past or
who are now representing either of the parties, and (b) supersede all
prior understandings and communications between the parties, oral or
written. Each of the parties acknowledges and represents that this
Agreement is entered into after full investigation and that neither
party is relying upon any statement or representation made by the other
which is not specifically set forth in this Agreement. Each of the
parties acknowledges that it shall have no right to rely upon any
amendment, promise, modification, statement or representation made or
occurring subsequent to the execution of this Agreement, unless such
amendment, promise, modification, statement or representation is
expressly set forth in a written instrument signed by a duly authorized
representative of the other and dated subsequent to the date of the
execution and delivery of this Agreement.
12.7 The provisions of this Agreement are not intended to be
for the benefit of any third party, whether Subscribers or otherwise,
and no third party (including, without limitation, any Subscriber)
shall be deemed to have any privity of contract with either of the
parties hereto by virtue of this Agreement or the delivery of the C-3D
Service.
12.8 This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with
the laws of the State of Utah applicable to contracts entered into and
fully performed therein. Affiliate hereby: (a) agrees that any
litigation, action or proceeding arising out of or relating to this
Agreement
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be instituted in a state or federal court in the City of Salt lake City
and the State of Utah; (b) waives any objection which Affiliate might
have now or hereafter to the venue of any such litigation, action or
proceeding; (c) irrevocably submits to the jurisdiction of any such
court in any such litigation, action or proceeding; and (d) hereby
waives any claim or defense of inconvenient forum. For all purposes of
this Agreement, Affiliate hereby submits to the venue and jurisdiction
of the Courts in the State of Utah (Federal and State), irrevocably
consents to personal jurisdiction by such courts, and further agrees
that service of process of Affiliate may be affected pursuant to
Paragraph 12.10 below.
12.9 Nothing in this Agreement shall be deemed to create a
relationship of joint venture, principal-agent or partnership between
the parties, and neither shall hold itself out in its advertising or in
any other manner that would indicate any such relationship between
the parties.
12.10 Any notice, requires, demand, consent, waiver or other
communication which either party may wish to serve or may be required
to serve on the other party hereunder shall be in writing and shall be
served by personal delivery, by facsimile, by prepaid recognized
overnight air express delivery, by prepaid certified mail, return
receipt requested or by prepaid telegraph at the above stated addresses
of Affiliate and C-3D. Any notice to C-3D shall be sent to the
attention of the Chief Executive Officer, and Vice president, Sales and
Marketing. Any notice to Affiliate shall be sent to the attention of
Chief Executive Officer and Vice President. All notices shall be deemed
received, the same business day transmitted if sent by facsimile as
evidenced by a copy of the facsimile and the "answer back" thereto
indicating the date and time of transmission thereof to the receiving
party); the same business day delivered is personally delivered to the
party to whom addressed three (3) business days after the same is
deposited, postage paid in the United States Postal Service; or one (1)
business day after the same is delivered to the telegraph service or to
the air express company. Either party may from time to time change its
address for the purpose of notice by giving like notice in accordance
with this paragraph.
12.11 C-3D shall not be liable for, and Affiliate shall pay
and forever hold C-3D harmless from, any and all sales, use, excise,
income, franchise, corporate and similar taxes (including, without
limitation, any fees payable to local or state franchising authorities)
and other charges which are or may be imposed upon or assessed against
Affiliate or any System and/or which are based upon or measured by
revenues derived by Affiliate from the exploitation of the rights
granted to Affiliate pursuant to this Agreement (including, without
limitation, any tax or charge based upon any goods or services
furnished to Affiliate by C-3D which goods or services are then passed
on to Affiliate's Subscribers).
12.12 All license, rights and interests in, to and with
respect to Events and the C-3D Service and means of exhibition not
specifically granted to Affiliate shall be and are
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specifically and entirely reserved to C-3D. The license, rights and
interests granted to Affiliate herein are exclusive, and accordingly,
they may be fully exploited and utilized by C-3D, without regard to the
extent to which any such rights may be competitive with Affiliate or
the license, rights and interests granted hereunder.
12.13 Paragraph headings used herein are for convenience only
and shall not be deemed to define, limit or construe the contents of
any provision of this Agreement.
12.14 Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of the prohibition without invalidating the
remaining provisions herein. Any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date and year first above written.
C-3D Digital, Inc.
By:
----------------------------------------
J. Michael Heil, CEO
3D Television Co., LTD.
By: /s/ Hisatake Togoe
-----------------------------------------
Mr. Hisatake Togoe, President & CEO
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SCHEDULE A
AFFILIATE-SYSTEM(S)
SYSTEM NAME
ADDRESS
AREA(S) SERVED
3D TELEVISION SERVICE LAUNCH DATE
TELEPHONE NUMBER
LAUNCH DATE
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SCHEDULE B
LICENSE FEES
In accordance with the terms and conditions as set forth in Section 4.1 of
the Affiliate Agreement, C-3D will receive the following compensation from
Affiliate.
1. 10% of the net amount of revenue Affiliate collects from subscriptions
to the Network or $1.70 per subscriber per month, whichever is greater.
The new amount of fees is the amount of which is on a Pay-Per-View
Basis, Pay-Per-Block Basis and on a Subscription Basis minus the
transmission charges to DTH or cable television systems (usually 30% of
the fees which are collected from subscriptions).
2. All compensation paid to C-3D from Affiliate shall be paid in US funds
as described in Section 4 of this Agreement.
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EXHIBIT 10.8
BUNDLE AGREEMENT
This Agreement is entered into this ____ day of April. 1999 by and between
Strata, Inc. ("STRATA"), located at 567 South Valley View Drive., St. George.
Utah 84770 USA and Eskape Labs ("Company").
1. Background. Strata develops, manufactures. distributes, and
publishes certain computer software products.
2. Distribution Rights and Obligations.
2.1 Strata hereby appoints Company as a non-exclusive OEM distributor of
STRATA'S software programs as more fully described in Exhibit A ("Products")
and grants Company the right to license, market and distribute such Products
solely bundled with Company's products in the territory described in exhibit
B ('Territory"). Company shall use best efforts to promote the sale of the
Products solely within the Territory and shall not directly or indirectly
solicit sales to customers outside the Territory. Company must notify Strata
in writing before appointing a sub-distributor of the Products.
2.2 Each Product licensed, distributed or marketed by Company shall be
subject to STRATA'S then current License Agreement contained in or on the
computer package (the "License Agreement") the most recent copy being
attached hereto in Exhibit C.
2.3 Company shall maintain a staff capable of fulfilling the sales
objectives jointly agreed upon by STRATA and the Company and shall use its
best efforts to keep each other fully advised of all relevant information
relating to this Agreement. Company agrees to perform the additional duties
and responsibilities set forth on Exhibit D. STRATA and Company will jointly
agree from time to time on advertising programs and other forms of promotion
in the Territory.
2.4 Nothing in this Agreement shall prevent STRATA from selling Products
direct or indirectly in the Territory without any obligation to the Company.
2.5 The Company understands that the Products to be licensed hereunder
may require a validated export license from the United States Department of
Commerce and STRATA shall not be required to ship any Product outside of the
United States unless and until all such required licenses are obtained. The
Company agrees to assist STRATA to obtain any such required license by
supplying appropriate documentation or information requested by STRATA. The
Company agrees to comply with U.S Export Administration Regulations as in
effect from time to time and to obtain all necessary governmental approvals
and licenses to import the Products into the Territory.
3. Purchase Price, Terms. Delivery and Title
3.1 Orders. All Products used. distributed and marketed by Company
shall be ordered and purchased from STRATA. All orders for STRATA products
received from Company shall be subject to acceptance by STRATA and shall be
solely governed by the terms and conditions of
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this Agreement. STRATA shall have no liability with respect to orders which
are not accepted. Orders by Company for Products shall be submitted to STRATA
at 567 South Valley View Dr. St. George, UT 84770. or faxed to STRATA,
435-628-9756. All deliveries of Products will be subjects to STRATA'S
availability schedules. Company shall make every effort to consolidate orders
together with all attendant documents required.
3.2 Prices. Prices for the Products purchased by the Company shall be
as set forth in Exhibit A, and shall remain in effect for the term of this
agreement.. Such prices are exclusive of freight changes, export and import
duties, sales, use and similar taxes and insurance premiums, all of which
shall be paid by the Company.
3.3 STRATA may at its sole discretion (a) require Company to pay for
orders in advance of shipping or (b) require Company, at Company's expense,
to post a letter of credit (in form and substance reasonably satisfactory to
STRATA) securing payment of the price of Products to be shipped in the future
or (c) provide terms of net 30 days from the date of shipment for customers,
all in U.S. dollars.
3.4 Shipment. Shipment of all Products shall be F.O.B. STRATA'S point
of shipment. Company shall pay all shipping and related expenses, including
ail excise, sales, occupation, use or similar taxes, duties, levies, charges
or subcharges applicable to Products, their sale or use. whether now in
effect or hereafter imposed for Products. STRATA will select the mode of the
shipment and the carrier.
4. Maintenance and Support.
4.1 Company will be authorized to return items, provided the Company
will first request and receive authorization from STRATA PRIOR TO DOING SO.
Authorization by STRATA will not be unreasonably withheld. STRATA product
will be accepted for replacement or credit only if such return is made in
accordance with STRATA'S Current procedures as published to Company from time
to time.
5. Proprietary Information.
5.1 No proprietary information disclosed by either party to the other in
connection with this Agreement shall by disclosed to any person or entity
other than the recipient party's employees directly involved with the
recipient party's use of such information who are bound by written agreement
to protect the confidentiality of such information, and such information
shall otherwise be protected by the recipient party from the disclosure to
others with the same degree of care accorded to its own similar proprietary
information. Information will not be subject to this provision if it is or
becomes a matter of public knowledge without the fault of the recipient
party, if it was a matter of written record in the recipient party from a
third party person under circumstances permitting its unrestricted disclosure
by the recipient party. Upon termination or expiration of (his Agreement,
each party shall promptly deliver to the other all proprietary information of
the other party in the possession or control of such party and all copies
thereof. The obligations under this Section shall continue for both parties
for a period of seven years after delivery by STRATA to Company of the last
Products under this Agreement.
6. Strata Software License.
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6.1 Title. Notwithstanding the references in this Agreement to the
"purchase" of Products by Company, the parties intend and agree that the
Software licensed by STRATA to Company is not being sold by STRATA or
purchased by Company. STRATA (or its licensors) shall at all times retain
title to the Software.
6.2 Grant of License to Distribute Software. STRATA hereby grants to
the Company a nontransferable, non-exclusive right and license to distribute
to customers the right use the Products, in object code form only. only
pursuant to STRATA'S Then current standard form of License Agreement or a
substantially similar written agreement approved by STRATA. The termination
of this Agreement shall not affect licenses previously granted by Company.
Company shall not have the right to disassemble, decompile or otherwise
reverse engineer the Products.
6.3 Protection of Products. The Products may nor he copied or modified,
in whole or in part, without the prior written consent of STRATA. The Company
shall not remove or obscure any copyright, patent, trademark, trade secret or
similar notice affixed to any Product and shall reproduce and affix such
notice on any copies or modifications of the Products permitted by STRATA.
Under no circumstances will the source code for the Product be disclosed by
the Company. The Company shall take appropriate action, by instruction,
agreement or otherwise, with respect to any persons permitted access to the
Products in order to enable the Company to satisfy its obligations hereunder.
6.4 Duplication of Products. Subject to terms and conditions of this
Agreement. Strata hereby grants to Company a limited, internal, non-
exclusive, non-transferable, nonassignable license during the term of this
agreement to duplicate the Product as listed in Exhibit A. in Object Code
format, on CD-ROM. Company shall use its best efforts, at its expense, to
perform the duplication of the Product under the same strict security
measures to duplicate its own products.
7. Term and Termination.
7.1 The term of this Agreement shall be for one year on the date first
set forth above. Thereafter, the term of this Agreement shall he renewed only
upon written mutual consent.
7.2 Agreement and all rights granted hereunder shall be terminated for
any of the following reasons: (a) cither party provides the other party 90
days' prior written notice of termination: or (b) at the option of STRATA,
effective immediately upon written notice to Company, if Company either (i)
fails to comply with any provision of this Agreement, (ii) becomes insolvent
or unable to pay its debts as they mature, (iii) makes an assignment for the
benefit of creditors, or (iv) files a petition, or is the subject of a
petition filed under any foreign bankruptcy act or the United Stales
Bankruptcy Act.
7.3 STRATA and Company agree that upon expiration or termination of this
Agreement, neither party shall be liable to the other for any damages or
expenditures, loss of profits of any kind or nature sustained or arising out
of, such termination. The expiration or termination of this Agreement shall
not however. relieve or release either party from making payments which may
be owing to either party under the terms of this Agreement.
8. Warranty.
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8.1 Warranty. STRATA warrants to Company that Products will be free
from defect in material and workmanship for a period of 90 days from the day
of shipment. STRATA shall have no warrant or other liability for any part of
component of any STRATA Product not manufactured by it. STRATA does not
warrant that use of the Products will be uninterrupted or error-free.
Products covered by warranty shall be returned to STRATA in accordance with
STRATA'S return requirements in effect from time to time.
8.2 Nonwarranty Charges. If STRATA determines that the Products for
which the Company has requested warranty service are not eligible for
warranty service, the Company will pay or reimburse STRATA for all reasonable
costs of investigating and responding to such request at STRATA'S then
prevailing time and materials rates. If STRATA provides repair services or
replacement parts that are not covered by the warrant provided in this
Section, the Company will pay STRATA at STRATA'S then prevailing time and
materials rates,
8.3 Exceptions. STRATA shall have no obligations under this Agreement
to make repairs or replacements which are required by normal wear and tear,
or which result, in whole or in part, from catastrophe, fault or negligence,
or from improper or unauthorized use or repair of the Products, or use of the
Products in a manner for which they were not designed, or by causes external
to the Products such as, but not limited to, power or air conditioning
failure.
8.5 THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9. Exclusion of Damages.
9.1 NEITHER STRATA NOR ITS LICENSORS, NOR COMPANY. SHALL BE LIABLE
FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES, INCLUDING BUT
NOT LIMITED TO DAMAGES ARISING FROM CLAIMS OR LOST DATA OR LOST PROFITS,
ARISING FROM THIS AGREEMENT, THE USE OR SALE OF THE PRODUCTS, OR ANY DEFECT,
FAILURE, NONCONFORMITY OR MALFUNCTION, WHETHER SUCH CLAIM OR SUCH DAMAGE IS
BASED UPON WARRANTY, CONTRACT, TORT OR OTHERWISE.
10. Limitation on Liability.
10.1 UNDER NO CIRCUMSTANCES SHALL STRATA OR ITS LICENSORS BE LIABLE TO
COMPANY FOR AN AMOUNT GREATER THAN PAYMENTS MADE TO STRATA BY THE COMPANY
PURSUANT TO THIS AGREEMENT IN RESPECT OF THE PARTICULAR PRODUCT GIVING RISE
TO THE LIABILITY, REGARDLESS OF THE THEORY OF LIABILITY.
11. Miscellaneous.
11.1 Status of Parties. The relationship of the panics under this
Agreement shall be and at all
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times remain one of independent contractors. Company is not an employee,
agent or legal representative of STRATA and shall have no authority to assume
or create obligations on STRATA'S behalf with respect to the Products or
otherwise.
11.2 Force Majeure. STRATA shall not he liable for any delays in filling
orders caused by strikes, lockouts or other labor disputes, acts of war.
fires, floods, accidents or delays in the delivery of raw materials, parts of
completed merchandise, acts of God or any other cause beyond STRATA's control.
11.3 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Utah without regard to conflict of
laws rules that would cause the laws of any other jurisdiction to apply. The
parties agree that the exclusive venue of all suits of actions brought in
connection with this Agreement shall be the courts in and of The State of
Utah. and each of the parties submits to the exclusive jurisdiction of such
courts. Nothing contained in this paragraph shall prevent either party from
seeking equitable relief such as an injunction or attachment of assets in
such jurisdiction as may be appropriate.
11.4 Entire Agreement. This Agreement with corresponding Exhibits
constitutes the entire agreement between Company and STRATA and supersedes
all other Agreements, verbal or written between the parties. No modification
of this Agreement shall be binding unless made in writing and incorporated as
a part hereof by reference.
11.5 Modification. No modification, amendment or waiver or the
provisions of this Agreement shall be effective unless in writing
specifically referring hereto and signed by both parties.
11.6 Assignability and Binding Effect. Company shall not assign its
rights or delegate the performance of its obligations hereunder without the
prior written consent of STRATA. Subject to the provision of the preceding
sentence, alt the terms of this Agreement shall be binding upon and shall
inure to the benefit of the parties and their legal Representatives. heirs,
successors and assigns. STRATA may assign this Agreement to any of its
corporate affiliates.
11.7 Confidentiality of Terms of Agreement. The parties agree not to
disclose to any third party the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date set forth below.
BELKIN COMPONENTS STRATA, INC.
BY: BY:
----------------------------- -------------------------------
NAME: NAME:
--------------------------- -----------------------------
TITLE: TITLE:
-------------------------- ----------------------------
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EXHIBIT A
PRODUCTS AND
PRICE LIST
PRODUCT - VIDEOSHOP 4.5 (FULL PRODUCT)
STRATA will provide:
- - One master CD ROM with VideoShop (Full Product version) to be
duplicated by Belkin Components
- - VideoShop brochure and registration supplied electronically
- - Logo artwork for VideoShop and STRATA trademarks
- - Product and STRATA artwork
ROYALTY FEE IS $4.10 PER UNIT DISTRIBUTED BY BELKIN COMPONENTS, SUBJECT TO
THE FOLLOWING PROVISION; IF THE NUMBER OF UNITS DISTRIBUTED IN THE CALENDAR
QUARTER EXCEEDS 15,000 UNITS, THE ROYALTY FEE IS $3.90 PER UNIT FOR ALL UNITS
DISTRIBUTED IN THE CALENDAR QUARTER.
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EXHIBIT B
TERRITORY
COMPANY'S TERRITORY SHALL CONSIST OF THE FOLLOWING:
Worldwide
According to the national boundaries and territories and possessions
thereof as declared by the Security Counsel of the United Nations as existing
on the date of this agreement.
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EXHIBIT C
SOFTWARE END-USER LIMITED LICENSE AGREEMENT AND LIMITED WARRANTY VIDEOSHOP
LIMITED USE LICENSE
Strata, Inc. (', STRATA", " Licenser" ) grants you, the end user (" Licensee"
), as the party taking a license, the right to use the STRATA VideoShop
software (" the software" ) on a single computer unit at a single location.
You must obtain a supplementary license from Strata. Inc. before using the
Software in connection with systems or multiple central processing units.
Please contact Strata, Inc. at the address indicated in this license for
further information.
LIMITED WARRANTY AND DISCLAIMER OF LIABILITY Strata, Inc. warrants that the
STRATA VideoShop documentation (" the Documentation" ) and the media on which
the Software is furnished will be free from defects in materials and
workmanship under normal use for a period of one (1 ) vear from the date of
the original purchase. If a defect appears during the warranty period, return
the diskette or Documentation pages to the place you obtained them, with a
photocopy of your original diskette label and your receipt, and you will
receive a free replacement, or at Strata, Inc's option, refund of your
purchase pace. EXCEPT AS TO THE MEDIA, THE SOFTWARE IS LICENSED " AS IS"
WITHOUT WARRANTY OF ANY ICIND, EITHER EXPRESSED OR IMPLIED.
IN NO EVENT SHALL STRATA, INC. BE RESPONSIBLE FOR AN INDIRECT. SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR SIMILAR DAMAGES OR LOST DATA OR PROFITS TO YOU
OR ANY OTHER PERSON OR ENTITY REGARDLESS OF THE LEGAL THEORY, EVEN IF STRATA,
INC. HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. SOME STATES DO NOT
ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY TO YOU OR ANY RELATED THIRD
PARTY FOR ACTUAL DAMAGES FOR ANY CAUSE WHATSOEVER WILL BE LIMITED TO THE
AMOUNT THAT YOU PAID STRATA, INC. FOR THE SOFtWARE.
TITLE
This license is not a sale of the Software or any copy. Strata, Inc. retains
title and ownership of the Software and ail copies, regardless of the fomm or
media on or in which the original or any copy may exist.
UPDATED POLICY
In order to be able to obtain updates of the Software, you must complete and
return to Strata, Inc. the enclosed Registration Card. However, Strata Inc.
is under no obligation to make an updates and the procedures to obtain such
updates. All updates provided to you shall be deemed part of the Software and
the use of such updates shall be governed by this License.
RESTRICTIONS ON COPYING
You may transfer the STRATA VideoShop Software in machine-readable form
solely for backup purposes provided that you include the Strata, Inc.
copyright nonce on the backup copy. You may not copy, or encourage or allow
copying of, Software or Documentation.
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RESTRICTIONS OFF TRANSFERS
You may transfer the Strata Software into the memory of a single computer,
but you may not electronically transfer the Software from one computer to
another. You may not modify, reverse engineer, decompose, create other works
from, or disassemble the Software. You may not copy, modify, adapt or create
other works based upon the Documentation. You may not transfer, convert,
rent, sub-license, or otherwise distribute the Software or Documentation, or
any rights in them, to any person or entity.
TERM
This License is effective until terminated. You may temminate the License at
any time by resuming the Software and ail Documentation to Strata, Inc. and
by removing the Software from memory of any computer into which the Software
has been transferred. This License shall terminate automatically if you fail
to comply with any term or condition. Upon temmination, you must return
Licenser, at your own expense, the Software and Documentation and any copies
whether or not the copy was authorized hereunder.
GOVERNMENTAL END USERS
For the Department of Detense: Use, duplicanon or disclosure by the Govemment
is subject to restrictions as set forth in subparagraph (c)(l)(ii) of the
Rights in Technical Data and Computer Software clause at DEARS 252.227703.
The Contractor/Manu&cturer is:
Strata, Inc.
2 West St. George Blvd.
St. George, Utah 84770
For Civilian Agencies of the United States Government: Use, reproduction or
disclosure is subject to restrictions set forth in subparagraphs (a) through
(d) of the Commercial Computer Software-Restricted Rights clause at 52.227-19
and the limitations set forth in Strata, Inc's standard commercial License
agreement for the Software. This Software was a enveloped at private expense,
is exciting computing software and no part of it was developed with
government funds, and is a trade secret of Strata, Inc. The Software is
proprietary data, all rights of which are reserved under the copyright laws
of the United States.
If this Software was acquired under a GSAA Exhibit: Use, duplicanon or
disclosure shall be in accordance with the applicable GSA Exhibit contract.
The Govemment has agreed to refrain from changing or removing any insignia or
lettering from the Software or the Documentation that is provided and from
producing copies of manuals or media (except for backup purposes and in
accordance with the terms of this License.)
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GENERAL
You must fill out and return the Registration Card to be eligible for
customer support and service. Should you have any questions concerning this
License Agreement, please write to:
Strata, Inc.
2 West St. George Blvd.
St. George, Utah 84770
CHOICE OF LAW
This Agreement will be governed by the laws in force in the State of Utah
excluding the application of its conflicts of law rules.
APPLE DISCLAIMER AND WARRANTY REGARDING HYPERCARD, INSTALLER
SYSTEM STRATA'S LICENSER APPLE COMPUTER, INC. ("APPLE"), MAKES NO WARRANTIES,
EXPRESSED OR IMPLIED INCLUDING WITHOUT LIMITATION OF IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PROPOSE, REGARDING THE SOFTWARE.
APPLE DOES NOT WARRANT, GUARANTEE OR MAKE ANY REPRESENTATIONS REGARDING THE
USE OR THE RESULTS OF THE USE OF THE SOFTWARE IN TERMS OF ITS CORRECTNESS,
ACCURACY, RELIABILITY, CORRECTNESS, OR OTHERWISE. THE ENTIRE RISK AS TO THE
RESULT AND PERFORMANCE OF THE SOFTWARE IS ASSUMED BY YOU. THE EXCLUSION OF
IMPLIED WARRANTIES IS NOT PERMITTED BY SOME STATES. THE ABOVE EXCLUSION MAY
NOT APPLY TO YOU.
IN NO EVENT WILL APPLE, AND THEIR DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS,
COLLECTIVELY APPLE, BE LIABLE TO YOU FOR ANY CONSEQUENTIAL, INCIDENTAL, OR
INDIRECT DAMAGES INCLUDING DAMAGES OR LOSS OF BUSINESS PROFITS, BUSINESS
INTERRUPTION, LOSS OF BUSINESS INFORMATION AND THE LIKE, ARISING OUT OF THE
USE OR INABILITY TO USE THE SOFTWARE EVEN IF APPLE HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. BECAUSE SOME STATES DO NOT ALLOW THE EXCLUSION
OR LIMITATION OF LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES, THE ABOVE
LIMITATIONS MAY NOT APPLY TO YOU. APPLE'S LIABILITY TO YOU FOR ACTUAL DAMAGES
FROM ANY CAUSE WHATSOEVER, AND REGARDLESS OF THE FORM OF ACTION (WHETHER IN
CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY OR OTHERWISE, WILL
BE LIMITED TO 550.
Copyright @ 1995, Strata. Inc. and its licensers. All rights reserved.
First edition: July 1996
Strata, Inc.
2 West St. George Blvd.
St. George, Utah 84770
STRATA VIDEOSHOP DOCUMENTATION
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STRATA management welcomes your comments and suggestions on any materials
that we have finished. Your input will help us improve the quality of future
documentation and products or services to you in the future. We value our
customers and we are therefore committed to be with you in the long run to
meet your needs. Please send any communications regarding STRATA VideoShop or
Documentation to our address: STRATA Videoshop Product Manager. Thank you.
112
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EXHIBIT 10.9
BUNDLE AGREEMENT
This Agreement is entered into this 29th day of April. 1999 by and between
Strata, Inc. ("STRATA"), located at 567 South Valley View Drive., St. George.
Utah 84770 USA and Interex Incorporated ("Company").
1. Background. Strata develops, manufactures. distributes, and publishes
certain computer software products.
2. Distribution Rights and Obligations.
2.1 Strata hereby appoints Company as a non-exclusive OEM distributor of
STRATA'S software programs as more fully described in Exhibit A
("Products") and grants Company the right to license, market and
distribute such Products solely bundled with Company's products in the
territory described in exhibit B ("Territory"). Company shall use best
efforts to promote the sale of the Products solely within the Territory
and shall not directly or indirectly solicit sales to customers outside
the Territory. Company must notify Strata in writing before appointing
a sub-distributor of the Products.
2.2 Each Product licensed, distributed or marketed by Company shall be
subject to STRATA'S then current License Agreement contained in or on
the computer package (the "License Agreement") the most recent copy
being attached hereto in Exhibit C.
2.3 Company shall maintain a staff capable of fulfilling the sales
objectives jointly agreed upon by STRATA and the Company and shall use
its best efforts to keep each other fully advised of all relevant
information relating to this Agreement. Company agrees to perform the
additional duties and responsibilities set forth on Exhibit D. STRATA
and Company will jointly agree from time to time on advertising
programs and other forms of promotion in the Territory.
2.4 Nothing in this Agreement shall prevent STRATA from selling Products
direct or indirectly in the Territory without any obligation to the
Company.
2.5 The Company understands that the Products to be licensed hereunder may
require a validated export license from the United States Department of
Commerce and STRATA shall not be required to ship any Product outside
of the United States unless and until all such required licenses are
obtained. The Company agrees to assist STRATA to obtain any such
required license by supplying appropriate documentation or information
requested by STRATA. The Company agrees to comply with U.S Export
Administration
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Regulations as in effect from time to time and to obtain all necessary
governmental approvals and licenses to import the Products into the
Territory.
3. PURCHASE PRICE, TERMS. DELIVERY AND TITLE
3.1 ORDERS. All Products used. distributed and marketed by Company
shall be ordered and purchased from STRATA. All orders for STRATA
products received from Company shall be subject to acceptance by
STRATA and shall be solely governed by the terms and conditions of
this Agreement. STRATA shall have no liability with respect to
orders which are not accepted. Orders by Company for Products shall
be submitted to STRATA at 567 South Valley View Dr. St. George, UT
84770. or faxed to STRATA, 435-628-9756. All deliveries of Products
will be subjects to STRATA'S availability schedules. Company shall
make every effort to consolidate orders together with all attendant
documents required.
3.2 PRICES. Prices for the Products purchased by the Company shall be as
set forth in Exhibit A, and shall remain in effect for the term of this
agreement.. Such prices are exclusive of freight changes, export and
import duties, sales, use and similar taxes and insurance premiums, all
of which shall be paid by the Company.
3.3 STRATA may at its sole discretion (a) require Company to pay for orders
in advance of shipping or (b) require Company, at Company's expense, to
post a letter of credit (in form and substance reasonably satisfactory
to STRATA) securing payment of the price of Products to be shipped in
the future or (c) provide terms of net 30 days from the date of
shipment for customers, all in U.S. dollars.
3.4 SHIPMENT. Shipment of all Products shall be F.O.B. STRATA'S point of
shipment. Company shall pay all shipping and related expenses,
including ail excise, sales, occupation, use or similar taxes, duties,
levies, charges or subcharges applicable to Products, their sale or
use. whether now in effect or hereafter imposed for Products. STRATA
will select the mode of the shipment and the carrier.
4. MAINTENANCE AND SUPPORT.
4.1 Company will be authorized to return items, provided the Company will
first request and receive authorization from STRATA PRIOR TO DOING SO.
Authorization by STRATA will not be unreasonably withheld. STRATA
product will be accepted for replacement or credit only if such return
is made in accordance with STRATA'S Current procedures as published
to Company from time to time.
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5. PROPRIETARY INFORMATION.
5.1 No proprietary information disclosed by either party to the other in
connection with this Agreement shall by disclosed to any person or
entity other than the recipient party's employees directly involved
with the recipient party's use of such information who are bound by
written agreement to protect the confidentiality of such information,
and such information shall otherwise be protected by the recipient
party from the disclosure to others with the same degree of care
accorded to its own similar proprietary information. Information will
not be subject to this provision if it is or becomes a matter of public
knowledge without the fault of the recipient party, if it was a matter
of written record in the recipient party from a third party person
under circumstances permitting its unrestricted disclosure by the
recipient party. Upon termination or expiration of (his Agreement, each
party shall promptly deliver to the other all proprietary information
of the other party in the possession or control of such party and all
copies thereof. The obligations under this Section shall continue for
both partics for a period of seven years after delivery by STRATA to
Company of the last Products under this Agreement.
6. STRATA SOFTWARE LICENSE.
6.1 TITLE. Notwithstanding the references in this Agreement to the
"purchase" of Products by Company, the parties intend and agree that
the Software licensed by STRATA to Company is not being sold by STRATA
or purchased by Company. STRATA (or its licensors) shall at all times
retain title to the Software.
6.2 GRANT OF LICENSE TO DISTRIBUTE SOFTWARE. STRATA hereby grants to the
Company a nontransferable, non-exclusive right and license to
distribute to customers the right use the Products, in object code form
only. only pursuant to STRATA'S Then current standard form of License
Agreement or a substantially similar written agreement approved by
STRATA. The termination of this Agreement shall not affect licenses
previously granted by Company. Company shall not have the right to
disassemble, decompile or otherwise reverse engineer the Products.
6.3 PROTECTION OF PRODUCTS. The Products may nor he copied or modified, in
whole or in part, without the prior written consent of STRATA. The
Company shall not remove or obscure any copyright, patent, trademark,
trade secret or similar notice affixed to any Product and shall
reproduce and affix such notice on any copies or modifications of the
Products permitted by STRATA. Under no circumstances will the source
code for the Product be disclosed by the Company. The Company shall
take appropriate action, by instruction, agreement or otherwise, with
respect to any persons permitted access to the Products in order to
enable the Company to satisfy its obligations hereunder.
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6.4 DUPLICATION OF PRODUCTS. Subject to terms and conditions of this
Agreement. Strata hereby grants to Company a limited, internal,
non-exclusive, non-transferable, nonassignable license during the
term of this agreement to duplicate the Product as listed in
Exhibit A. in Object Code format, on CD-ROM. Company shall use its
best efforts, at its expense, to perform the duplication of the
Product under the same strict security measures to duplicate its
own products.
7. TERM AND TERMINATION.
7.1 The term of this Agreement shall be for one year on the date first set
forth above. Thereafter, the term of this Agreement shall he renewed
only upon written mutual consent.
7.2 Agreement and all rights granted hereunder shall be terminated for any
of the following reasons: (a) cither party provides the other party 90
days' prior written notice of termination: or (b) at the option of
STRATA, effective immediately upon written notice to Company, if
Company either (i) fails to comply with any provision of this
Agreement, (ii) becomes insolvent or unable to pay its debts as they
mature, (iii) makes an assignment for the benefit of creditors, or (iv)
files a petition, or is the subject of a petition filed under any
foreign bankruptcy act or the United Stales Bankruptcy Act..
7.3 STRATA and Company agree that upon expiration or termination of this
Agreement, neither party shall be liable to the other for any damages
or expenditures, loss of profits of any kind or nature sustained or
arising out of, such termination. The expiration or termination of this
Agreement shall not however. relieve or release either party from
making payments which may be owing to either party under the terms of
this Agreement.
8. WARRANTY.
8.1 WARRANTY. STRATA warrants to Company that Products will be free from
defect in material and workmanship for a period of 90 days from the day
of shipment. STRATA shall have no warrant or other liability for any
part of component of any STRATA Product not manufactured by it. STRATA
does not warrant that use of the Products will be uninterrupted or
error-free. Products covered by warranty shall be returned to STRATA in
accordance with STRATA'S return requirements in effect from time to
time.
8.2 NONWARRANTY CHARGES. If STRATA determines that the Products for which
the Company has requested warranty service are not eligible for
warranty service, the Company will pay or reimburse STRATA for all
reasonable costs of investigating and responding to such request at
STRATA'S then prevailing time and materials rates. If STRATA provides
repair services or replacement parts that are not covered by the
warrant provided in this
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Section, the Company will pay STRATA at STRATA'S then prevailing time
and materials rates,
8.3 EXCEPTIONS. STRATA shall have no obligations under this Agreement to
make repairs or replacements which are required by normal wear and
tear, or which result, in whole or in part, from catastrophe, fault or
negligence, or from improper or unauthorized use or repair of the
Products, or use of the Products in a manner for which they were not
designed, or by causes external to the Products such as, but not
limited to, power or air conditioning failure.
8.4 THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING, BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9. EXCLUSION OF DAMAGES.
9.1 NEITHER STRATA NOR ITS LICENSORS, NOR COMPANY. SHALL BE LIABLE
FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT OR INCIDENTAL
DAMAGES, INCLUDING BUT NOT LIMITED TO DAMAGES ARISING FROM
CLAIMS OR LOST DATA OR LOST PROFITS, ARISING FROM THIS
AGREEMENT, THE USE OR SALE OF THE PRODUCTS, OR ANY DEFECT,
FAILURE, NONCONFORMITY OR MALFUNCTION, WHETHER SUCH CLAIM
OR SUCH DAMAGE IS BASED UPON WARRANTY, CONTRACT, TORT OR
OTHERWISE.
10. LIMITATION ON LIABILITY.
10.1 UNDER NO CIRCUMSTANCES SHALL STRATA OR ITS LICENSORS BE LIABLE TO
COMPANY FOR AN AMOUNT GREATER THAN PAYMENTS MADE TO STRATA BY THE
COMPANY PURSUANT TO THIS AGREEMENT IN RESPECT OF THE PARTICULAR PRODUCT
GIVING RISE TO THE LIABILITY, REGARDLESS OF THE THEORY OF LIABILITY.
11. MISCELLANEOUS.
11.1 STATUS OF PARTIES. The relationship of the panics under this Agreement
shall be and at all times remain one of independent contractors.
Company is not an employee, agent or legal representative of STRATA and
shall have no authority to assume or create obligations on STRATA'S
behalf with respect to the Products or otherwise.
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11.2 FORCE MAJEURE. STRATA shall not he liable for any delays in filling
orders caused by strikes, lockouts or other labor disputes, acts of
war. fires, floods, accidents or delays in the delivery of raw
materials, parts of completed merchandise, acts of God or any other
cause beyond STRATA's control.
11.3 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Utah without regard to
conflict of laws rules that would cause the laws of any other
jurisdiction to apply. The parties agree that the exclusive venue of
all suits of actions brought in connection with this Agreement shall be
the courts in and of The State of Utah. and each of the parties submits
to the exclusive jurisdiction of such courts. Nothing contained in this
paragraph shall prevent either party from seeking equitable relief such
as an injunction or attachment of assets in such jurisdiction as may be
appropriate.
11.4 ENTIRE AGREEMENT. This Agreement with corresponding Exhibits
constitutes the entire agreement between Company and STRATA and
supersedes all other Agreements, verbal or written between the
parties. No modification of this Agreement shall be binding unless
made in writing and incorporated as a part hereof by reference.
11.5 MODIFICATION. No modification, amendment or waiver or the
provisions of this Agreement shall be effective unless in writing
specifically referring hereto and signed by both parties.
11.6 ASSIGNABILITY AND BINDING EFFECT. Company shall not assign its rights
or delegate the performance of its obligations hereunder without the
prior written consent of STRATA. Subject to the provision of the
preceding sentence, alt the terms of this Agreement shall be binding
upon and shall inure to the benefit of the parties and their legal
Representatives. heirs, successors and assigns. STRATA may assign this
Agreement to any of its corporate affiliates.
11.7 CONFIDENTIALITY OF TERMS OF AGREEMENT. The parties agree not to
disclose to any third party the terms of this Agreement.
INTEREX STRATA, INC.
BY: /s/ Jack Kolk BY: /s/ Dennis Derrick
------------------------------ ---------------------------
NAME: Jack Kolk NAME: Dennis Derrick
---------------------------- ------------------------
TITLE: VP of and Interex TITLE: Vice President
--------------------------- -----------------------
EXHIBIT A
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PRODUCTS AND
PRICE LIST
PRODUCT - VIDEOSHOP 4.5 (FULL PRODUCT)
STRATA will provide:
- - One master CD ROM with VideoShop (Full Product version) to be
duplicated by Belkin Components
- - VideoShop brochure and registration supplied electronically
- - Logo artwork for VideoShop and STRATA trademarks
- - Product and STRATA artwork
ROYALTY FEE IS $4.10 PER UNIT DISTRIBUTED BY BELKIN COMPONENTS, SUBJECT TO
THE FOLLOWING PROVISION; IF THE NUMBER OF UNITS DISTRIBUTED IN THE CALENDAR
QUARTER EXCEEDS 15,000 UNITS, THE ROYALTY FEE IS $3.90 PER UNIT FOR ALL UNITS
DISTRIBUTED IN THE CALENDAR QUARTER.
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EXHIBIT B
TERRITORY
COMPANY'S TERRITORY SHALL CONSIST OF THE FOLLOWING:
Worldwide
According to the national boundaries and territories and possessions
thereof as declared by the Security Counsel of the United Nations as existing
on the date of this agreement.
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EXHIBIT C
SOFTWARE END-USER LIMITED LICENSE AGREEMENT AND LIMITED WARRANTY VIDEOSHOP
LIMITED USE LICENSE
Strata, Inc. (', STRATA", "Licenser" ) grants you, the end user ("Licensee"),
as the party taking a license, the right to use the STRATA VideoShop
software ("the software") on a single computer unit at a single location.
You must obtain a supplementary license from Strata. Inc. before using the
Software in connection with systems or multiple central processing units.
Please contact Strata, Inc. at the address indicated in this license for
further information.
LIMITED WARRANTY AND DISCLAIMER OF LIABILITY Strata, Inc. warrants that the
STRATA VideoShop documentation ("the Documentation") and the media on which
the Software is furnished will be free from defects in materials and
workmanship under normal use for a period of one (1) year from the date of
the original purchase. If a defect appears during the warranty period, return
the diskette or Documentation pages to the place you obtained them, with a
photocopy of your original diskette label and your receipt, and you will
receive a free replacement, or at Strata, Inc's option, refund of your
purchase pace. EXCEPT AS TO THE MEDIA, THE SOFTWARE IS LICENSED "AS IS"
WITHOUT WARRANTY OF ANY ICIND, EITHER EXPRESSED OR IMPLIED.
IN NO EVENT SHALL STRATA, INC. BE RESPONSIBLE FOR AN INDIRECT. SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR SIMILAR DAMAGES OR LOST DATA OR PROFITS TO YOU
OR ANY OTHER PERSON OR ENTITY REGARDLESS OF THE LEGAL THEORY, EVEN IF STRATA,
INC. HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. SOME STATES DO NOT
ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY TO YOU OR ANY RELATED THIRD
PARTY FOR ACTUAL DAMAGES FOR ANY CAUSE WHATSOEVER WILL BE LIMITED TO THE
AMOUNT THAT YOU PAID STRATA, INC. FOR THE SOFTWARE.
TITLE
This license is not a sale of the Software or any copy. Strata, Inc. retains
title and ownership of the Software and ail copies, regardless of the fomm or
media on or in which the original or any copy may exist.
UPDATED POLICY
In order to be able to obtain updates of the Software, you must complete and
return to Strata, Inc. the enclosed Registration Card. However, Strata Inc.
is under no obligation to make an updates and the procedures to obtain such
updates. All updates provided to you shall be deemed part of the Software and
the use of such updates shall be governed by this License.
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RESTRICTIONS ON COPYING
You may transfer the STRATA VideoShop Software in machine-readable fomm
solely for backup purposes provided that you include the Strata, Inc.
copyright nonce on the backup copy. You may not copy, or encourage or allow
copying of, Software or Documentation.
RESTRICTIONS ON TRANSFERS
You may transfer the Strata Software into the memory of a single computer,
but you may not electronically transfer the Software from one computer to
another. You may not modify, reverse engineer, decompose, create other works
from, or disassemble the Software. You may not copy, modify, adapt or create
other works based upon the Documentation. You may not transfer, convert,
rent, sub-license, or otherwise distribute the Software or Documentation, or
any rights in them, to any person or entity.
TERM
This License is effective until terminated. You may temminate the License at
any time by resuming the Software and ail Documentation to Strata, Inc. and
by removing the Software from memory of any computer into which the Software
has been transferred. This License shall terminate automatically if you fail
to comply with any term or condition. Upon temmination, you must return
Licenser, at your own expense, the Software and Documentation and any copies
whether or not the copy was authorized hereunder.
GOVERNMENTAL END USERS
For the Department of Defense: Use, duplication or disclosure by the
Government is subject to restrictions as set forth in subparagraph (c)(l)(ii)
of the Rights in Technical Data and Computer Software clause at DEARS
252.227703. The Contractor/Manufacturer is:
Strata, Inc.
2 West St. George Blvd.
St. George, Utah 84770
For Civilian Agencies of the United States Government: Use, reproduction or
disclosure is subject to restrictions set forth in subparagraphs (a) through
(d) of the Commercial Computer Software-Restricted Rights clause at 52.227-19
and the limitations set forth in Strata, Inc's standard commercial License
agreement for the Software. This Software was a enveloped at private expense,
is exciting computing software and no part of it was developed with
government funds, and is a trade secret of Strata, Inc. The Software is
proprietary data, all rights of which are reserved under the copyright laws
of the United States.
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If this Software was acquired under a GSAA Exhibit: Use, duplication or
disclosure shall be in accordance with the applicable GSA Exhibit contract.
The Government has agreed to refrain from changing or removing any insignia
or lettering from the Software or the Documentation that is provided and from
producing copies of manuals or media (except for backup purposes and in
accordance with the terms of this License.)
GENERAL
You must fill out and return the Registration Card to be eligible for
customer support and service. Should you have any questions concerning this
License Agreement, please write to:
Strata, Inc.
2 West St. George Blvd.
St. George, Utah 84770
CHOICE OF LAW
This Agreement will be governed by the laws in force in the State of Utah
excluding the application of its conflicts of law rules.
APPLE DISCLAIMER AND WARRANTY REGARDING HYPERCARD, INSTALLER
SYSTEM STRATA's LICENSER APPLE COMPUTER, INC. ("APPLE"), MAKES NO WARRANTIES,
EXPRESSED OR IMPLIED INCLUDING WITHOUT LIMITATION OF IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PROPOSE, REGARDING THE SOFTWARE.
APPLE DOES NOT WARRANT, GUARANTEE OR MAKE ANY REPRESENTATIONS REGARDING THE
USE OR THE RESULTS OF THE USE O THE SOFTWARE IN TERMS OF ITS CORRECTNESS,
ACCURACY, RELIABILITY, CORRECTNESS, OR OTHERWISE. THE ENTIRE RISK AS TO THE
RESULT AND PERFORMANCE OF THE SOFTWARE IS ASSUMED BY YOU. THE EXCLUSION OF
IMPLIED WARRANTIES IS NOT PERMITTED BY SOME STATES. THE ABOVE EXCLUSION MAY
NOT APPLY TO YOU.
IN NO EVENT WILL APPLE, AND THEIR DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS,
COLLECTIVELY APPLE, BE LIABLE TO YOU FOR.A~NY CONSEQUENTIAL, INCIDENTAL, OR
INDIRECT DAMAGES INCLUDING DAMAGES OR LOSS OF BUSINESS PROFITS, BUSfNESS
INTERRUPTION, LOSS OF BUSINESS INFORMATION AND THE LIKE, ARISING OUT OF THE
USE OR INABILITY TO USE THE SOFTWARE EVEN IF APPLE HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. BECAUSE SOME STATES DO NOT ALLOW THE EXCLUSION
OR LIMITATION F LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES. THE ABOVE
LIMITATIONS MA NOT APPLY TO YOU. APPLE'S LIABILITY TO YOU FOR ACTUAL DA&PAGES
FROM AN CAUSE WHATSOEVER, AND REGARDLESS OF THE FORM OF
123
<PAGE>
ACTION (WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY
OR OTHERWISE, WILL BE LIMITED TO 550.
Copyright @ 1995, Strata. Inc. and its licensers. All rights reserved.
First edition: July 1996
Strata, Inc.
2 West St. George Blvd.
St. George, Utah 84770
STRATA VIDEOSHOP DOCUMENTATION
STRATA management welcomes your comments and suggestions on any materials
that we have famished. Your input will help us improve the quality of future
documentation and products or services to you I the future. We value our
customers an we are therefore committed to be with you in the long run to
meet your needs. Please send any communications regarding STRATA VideoShop or
Documentation to our address: STRATA Videoshop Product Manager. Thank you.
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EXHIBIT D
COMPANY DUTIES AND RESPONSIBILITIES
Quarterly reports shall be made to STRATA covering the following items:
SALES:
QUARTERLY FORECAST:
AVERAGE CURRENT INVENTORY:
DESCRIPTION OF BUNDLE BY PRODUCTS:
CUSTOMER FEEDBACK (E.G. REACTION TO PRODUCTS):
COMPETITION:
PROMOTION ACTIVITIES:
Advertisements:
Trade Shows:
Press Relations:
Dealer Tours:
Special Presentations:
Telemarketing:
Direct Marketing:
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EXHIBIT 10.10
BUNDLE AGREEMENT
This Agreement is entered into this 3rd day of August, 1999 by and between
Strata Inc.("STRATA"), located at 567 South Valley View Drive., St. George,
Utah 84770 USA and Belkin Components (a California corporation), located at
501 W. Walnut St., Compton, CA 90220 USA.
1. BACKGROUND. Strata develops, manufactures, distributes, and publishes
certain computer software products.
2. DISTRIBUTION RIGHTS AND OBLIGATIONS.
2.1 Strata hereby grants Belkin Components a non-exclusive license to
distribute, and to use STRATA trademarks to market and distribute
STRATA's proprietary software programs as more fully described in
EXHIBIT A ("Products"), and grants Belkin Components the right to
license, market and distribute such Products solely bundled with
Belkin Components' products in the territory described in EXHIBIT B
("Territory" ). Belkin Components shall use best efforts to promote
the sale of the Products solely within the Territory and shall not
directly or indirectly solicit sales to customers outside the
Territory. Belkin Components must notify and agree with Strata in
writing before appointing a sub-distributor of the Products.
2.2 Each Product licensed, distributed or marketed by Belkin Components
shall be subject to STRATA's then current License Agreement contained
in or on the computer package (the " License Agreement" ) the most
recent copy being attached hereto in EXHIBIT C. Belkin Components shall
include correct copyright (and trademark) notices on all material
referencing STRATA or its trademarks and shall not repackage or alter
the packaging of any STRATA Product(s).
2.3 Belkin Components shall maintain a staff capable of fulfilling the
sales objectives jointly agreed upon by STRATA and 13elkin Components
and shall use its best efforts to keep each other fully advised of all
relevant information relating to this Agreement. STRATA and Belkin
Components will jointly agree from time to time on advertising programs
and other forms of promotion in the Territory. Programs and promotions
will have to be agreed in writing and signed for by both parties.
2.4 Nothing in this Agreement shall prevent STRATA from selling Products
direct or indirectly in the Territory without any obligation to Belkin
Components.
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<PAGE>
2.5 Belkin Components understands that the Products to be licensed
hereunder may require a validated export license from the United States
Department of Commerce and STRATA shall not be required to ship any
Product outside of the United States unless and until all such required
licenses are obtained. Belkin Components agrees to assist STRATA to
obtain any such required license by supplying appropriate documentation
or information requested by STRATA. Belkin Components agrees to comply
with U.S. Export Administration Regulations as in effect from time to
time and to obtain all necessary governmental approvals and licenses to
import the Products into the Territory.
3. MAINTENANCE AND SUPPORT.
STRATA shall provide 30 days free support to Belkin Components from the date
of first delivery to Belkin Components. STRATA will continue to provide
standard support for STRATA products to Belkin Components, train Belkin
Components as trainer, support Belkin Components as supporter. Belkin
Components is responsible for first line support to parties downstream from
Belkin Components, including end users. Belkin Components will be responsible
for providing support for STRATA products and Integrated products to its
distributors and end users.
4. PROPRIETARY INFORMATION.
4.1 No proprietary information disclosed by either party to the other in
connection with this Agreement shall by disclosed to any person or
entity other than the recipient party's employees directly involved
with the recipient party's use of such information who are bound by
written agreement to protect the confidentiality of such information,
and such information shall otherwise be protected by the recipient
party from the disclosure to others with the same degree of care
accorded to its own similar proprietary information. Information will
not be subject to this provision if it is or becomes a matter of public
knowledge without the fault of the recipient party, if it was a matter
of written record in the recipient party from a third party person
under circumstances permitting its unrestricted disclosure by the
recipient party. Upon termination or expiration of this Agreement, each
party shall promptly deliver to the other all proprietary information
of the other party in the possession or control of such party and all
copies thereof The obligations under this Section shall continue for
both parties for a period of seven years after delivery by STRATA to
Company of the last Products under this Agreement.
5. TERMS OF PAYMENT
5.1 Belkin Components will pay STRATA a royalty fee for each Belkin
Components product distributed and bundled with STRATA Products or any
person authorized by Belkin Components to do so, in any manner,
adjusted for all returns, exchanges, and defective products. Such
Royalty fees are set forth in Exhibit A. Royalty payments shall be due
45 days following the end of each calendar quarter.
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<PAGE>
5.2 With each payment, Belkin Components will submit a report listing the
Belkin Components products bundled with STRATA Products and the number
of units distributed in the preceding calendar quarter, upon which
royalty is calculated.
6. STRATA SOFTWARE LICENSE.
6.1 TITLE. Notwithstanding the references in this Agreement to the
"purchase" of Products by Belkin Components, the parties intend and
agree that the Software licensed by STRATA to Belkin Components is not
being sold by STRATA purchased by Belkin Components. STRATA (or its
licensers) shall at all times retain title to the Software.
6.2 GRANT OF LICENSE TO DISTRIBUTE SOFTWARE. STRATA hereby grants to
Belkin Components a non-transferable, non-exclusive right and
license to distribute to customers the right use the Products, in
object code form only, only pursuant to STRATA's then current
standard form of License Agreement or a substantially similar
written agreement approved by STRATA. The termination of this
Agreement shall not affect licenses previously granted by Belkin
Components. Bellcin Components shall not have the right to
disassemble, decompile or otherwise reverse engineer the Products.
6.3 PROTECTION OF PRODUCTS. The Products may not be copied or modified, in
whole or in part, without the prior written consent of STRATA. BeLkin
Components shall not remove or obscure any copyright, patent,
trademark, trade secret or similar notice affixed to any Product and
shall reproduce and affix such notice on any copies or modifications of
the Products permitted by STRATA. Under no circumstances will the
source code for the Product be disclosed by Belkin Components. Belkin
Components shall take appropriate action, by instruction, agreement or
otherwise, with respect to any persons permitted access to the Products
in order to enable Belkin Components to satisfy its obligations
hereunder.
6.4 DUPLICATION OF PRODUCTS. Subject to terms and conditions of this
Agreement, Strata hereby grants to Belkin Components a limited,
internal, non-exclusive, nontransferable, non-assignable license during
the term of this agreement to duplicate the Product as listed in
Exhibit A, in Object Code format, on CD-ROM. Belkin Components shall
use its best efforts, at its expense, to perform the duplication of the
Product under the same strict security measures to duplicate its own
products.
7. TERM AND TERMINATION.
7.1 The term of this Agreement shall be for one year on the date first set
forth above. Thereafter, the term of this Agreement shall be renewed
only upon written mutual consent.
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<PAGE>
7.2 The Agreement and all rights granted hereunder shall be terminated for
any of the following reasons: (a) either party provides the other party
90 days' prior written notice of termination; or (b) at the option of
STRATA, effective immediately upon written notice to Bellcin
Components, if Bellcin Components either (i) fails to comply with any
provision of this Agreement, (ii) becomes insolvent or unable to pay
its debts as they mature, (iii) makes an assignment for the benefit of
creditors, or (iv) files a petition, or is the subject of a petition
filed, under any foreign bankruptcy act or the United States Bankruptcy
Act.
7.3 STRATA and Belkin Components agree that upon expiration or termination
of this agreement, neither party shall be liable to the other for any
damages or expenditures, loss of profits of any kind or nature
sustained or arising out of, such termination. The expiration or
termination of this Agreement shall not however, relieve or release
either party form making payments which may be owing to either party
under the terms of this Agreement.
8. WARRANTY
8.1 WARRANTV. STRATA warrants to Belkin Components that Products will be
free from defect in material and workmanship for a period of 90 days
from the day of shipment. STRATA shall have no warrant or other
liability for any part of component of any STRATA Product not
manufactured by it. STRATA does not warrant that use of the Products
will be uninterrupted or error-free. Products covered by warranty shall
be returned to STRATA in accordance with STRATA's return requirements
in effect from time to time.
8.2 NONWARRANTV CHARGES. If STRATA determines that the Products for which
Belkin Components has requested warranty service are not eligible for
warranty service, Belkin Components will pay or reimburse STRATA for
all reasonable costs of investigating and responding to such request at
STRATA's then prevailing time and materials rates. If STRATA provide
repair services or replacement parts that are not covered by the
warrant provided in this Section, Belkin Components will pay STRATA at
STRATA's then prevailing time and materials rates.
8.3 EXCEPTIONS. STRATA shall have no obligations under this Agreement to
make repairs or replacements which are required by normal wear and
tear, or which result, in whole or in part, from catastrophe, fault or
negligence, or from improper or unauthorized use or repair of the
Products, or use of the Products in a manner for which they were not
designed, or by causes external to the Products such as, but not
limited to, power or air conditioning failure.
129
<PAGE>
8.4 THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING&, BUT NOT LIMITED TO, THE IMPLIED WARRANTEES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9. EXCLUSION OF DAMAGES.
9.1 NEITHER STRATA NOR ITS LICENSORS, NOR BELKIN COMPONENTS, SHALL BE
LIABLE FOR ANY SPECIAL, CONSEQUENTLY\L, INDIRECT OR INCIDENTAL DAMAGES,
INCLUDING BUT NOT LIMITED TO DAMAGES ARISING FROM CLAIMS OR LOST DATA
OR LOST PROFITS, ARISING FROM THIS AGREEMENT, THE USE OR SALE OF THE
PRODUCTS, OR ANY DEFECT, FAILURE, NONCONFORMITY OR MALFUNCTION, WHETHER
SUCH CLAIM OR SUCH DAMAGE IS BASED UPON WARRANTY, CONTRACT, OR
OTHERWISE.
10. LIMITATION ON LIABILITY.
10.1 UNDER NO CIRCUMSTANCES SHALL STRATA OR ITS LICENSORS BE LIABLE TO
BELKIN COMPONENTS FOR AN AMOUNT GREATER THAN PAYMENTS MADE TO STRATA BY
BELKIN COMPONENTS PURSUANT TO THIS AGREEMENT IN RESPECTS OF THE
PARTICULAR PRODUCT GIVING RISE TO THE LIABILITY, REGARDLESS OF THE
THEORY OF LIABILITY.
11. MISCELLANEOUS.
11.1 STATUS OF PARTIES. The relationship of the parties under this
Agreement shall be and at all times resins one of independent
contractors. BeLkin Components is not an employee, agent or legal
representative of STRATA and shall have no authority to assume or
create obligations on STRATA's behalf with respect to the Products
or otherwise.
11.2 FORCE MANURE. STRATA shall not be liable for any delays in filling
orders caused by strikes, lockouts or other labor disputes, acts of
war, fires, floods, accidents, or delays in the delivery of raw
materials, parts of completed merchandise, acts of God or any other
cause beyond STRATA's control.
11.3 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Utah without regard to
conflict of laws rules that would cause the laws of any other
jurisdiction to apply. The parties agree that the exclusive venue of
all suits of actions brought in connection with this Agreement shall be
the courts in and of The State of Utah, and each of the parties submits
to the exclusive jurisdiction of such courts. Nothing contained in this
paragraph shall prevent either party from seeking
130
<PAGE>
equitable relief such as an injunction or attachment of assets in such
jurisdiction as may be appropriate.
11.4 ENTIRE AGREEMENT. This Agreement with corresponding Exhibits
constitutes the entire agreement between Belkin Components and STRATA
and supersedes all other Agreements, verbal or written between the
parties. No modification of this Agreement shall be binding unless made
in writing and incorporated as a part hereof by reference.
11.5 MODIFICATION. No modification, amendment or waiver or the
provisions of this Agreement shall be effective unless in writing
specifically referring hereto and signed by both parties.
11.6 ASSIGNABILITV AND BINDING EFFECT. Belkin Components shall not assign
its rights or delegate the performance of its obligations hereunder
without the prior written consent of STRATA. Subject to the provision
ofthe preceding sentence, all the terms of this Agreement shall be
binding upon and shall inure to the benefit of the parties and their
legal representatives, heirs, successors and assigns. STRATA may assign
this Agreement to any of its corporate affiliates.
11.7 CONFIDENTIALITY OF TERMS OF AGREEMENT. The parties agree not to
disclose to any third party the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date set forth below.
BELKIN COMPONENTS STRATA, INC.
BY: /s/ Eric Tong BY: /s/ J. Allen Feary
--------------------------------- -----------------------------
NAME: Eric Tong NAME: Allen Feary
------------------------------- ----------------------------
TITLE: Director of Marketing TITLE: Sales Manager
------------------------------ ---------------------------
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<PAGE>
EXHIBIT A
PRODUCTS AND
PRICE LIST
PRODUCT - VIDEOSHOP 4.5 (FULL PRODUCT)
STRATA will provide:
- - One master CD ROM with VideoShop (Full Product version) to be duplicated
by Belkin Components
- - VideoShop brochure and registration supplied electronically
- - Logo artwork for VideoShop and STRATA trademarks
- - Product and STRATA artwork
ROYALTY FEE IS $4.10 PER UNIT DISTRIBUTED BY BELKIN COMPONENTS, SUBJECT TO
THE FOLLOWING PROVISION; IF THE NUMBER OF UNITS DISTRIBUTED IN THE CALENDAR
QUARTER EXCEEDS 15,000 UNITS, THE ROYALTY FEE IS $3.90 PER UNIT FOR ALL UNITS
DISTRIBUTED IN THE CALENDAR QUARTER.
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EXHIBIT B
TERRITORY
COMPANY'S TERRITORY SHALL CONSIST OF THE FOLLOWING:
Worldwide
According to the national boundaries and territories and possessions
thereof as declared by the Security Counsel of the United Nations as existing
on the date of this agreement.
133
<PAGE>
EXHIBIT C
SOFTWARE END-USER LIMITED LICENSE AGREEMENT AND LIMITED WARRANTY VIDEOSHOP
LIMITED USE LICENSE
Strata, Inc. (', STRATA", "Licenser") grants you, the end user ("Licensee"),
as the party taking a license, the right to use the STRATA VideoShop
software (" the software" ) on a single computer unit at a single location.
You must obtain a supplementary license from Strata. Inc. before using the
Software in connection with systems or multiple central processing units.
Please contact Strata, Inc. at the address indicated in this license for
further information.
LIMITED WARRANTY AND DISCLAIMER OF LIABILITY Strata, Inc. warrants that the
STRATA VideoShop documentation (" the Documentation" ) and the media on which
the Software is furnished will be free from defects in materials and
workmanship under normal use for a period of one (1 ) vear from the date of
the original purchase. If a defect appears during the warranty period, return
the diskette or Documentation pages to the place you obtained them, with a
photocopy of your original diskette label and your receipt, and you will
receive a free replacement, or at Strata, Inc's option, refund of your
purchase pace. EXCEPT AS TO THE MEDIA, THE SOFTWARE IS LICENSED " AS IS"
WITHOUT WARRANTY OF ANY ICIND, EITHER EXPRESSED OR IMPLIED.
IN NO EVENT SHALL STRATA, INC. BE RESPONSIBLE FOR AN INDIRECT. SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR SIMILAR DAMAGES OR LOST DATA OR PROFITS TO YOU
OR ANY OTHER PERSON OR ENTITY REGARDLESS OF THE LEGAL THEORY, EVEN IF STRATA,
INC. HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. SOME STATES DO NOT
ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY TO YOU OR ANY RELATED THIRD
PARTY FOR ACTUAL DAMAGES FOR ANY CAUSE WHATSOEVER WILL BE LIMITED TO THE
AMOUNT THAT YOU PAID STRATA, INC. FOR THE SOFtWARE.
TITLE
This license is not a sale of the Software or any copy. Strata, Inc. retains
title and ownership of the Software and ail copies, regardless of the fomm or
media on or in which the original or any copy may exist.
UPDATED POLICY
In order to be able to obtain updates of the Sottware, you must complete and
return to Strata, Inc. the enclosed Registration Card. However, Strata Inc.
is under no obligation to make an updates and the procedures to obtain such
updates. All updates provided to you shall be deemed part of the Software and
the use of such updates shall be governed by this License.
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<PAGE>
RESTRJCTIONS ON COPYING
You may transfer the STRATA VideoShop Software in machine-readable fomm
solely for backup purposes provided that you include the Strata, Inc.
copyright nonce on the backup copy. You may not copy, or encourage or allow
copying of, Software or Documentation.
RESTRICTIONS OFF TRANSFERS
You may transfer the Strata Software into the memory of a single computer,
but you may not electronically transfer the Software from one computer to
another. You may not modify, reverse engineer, decompose, create other works
from, or disassemble the Software. You may not copy, modify, adapt or create
other works based upon the Documentation. You may not transfer, convert,
rent, sub-license, or otherwise distribute the Software or Documentation, or
any rights in them, to any person or entity.
TERM
This License is effective until terminated. You may temminate the License at
any time by resuming the Software and ail Documentation to Strata, Inc. and
by removing the Software from memory of any computer into which the Software
has been transferred. This License shall terminate automatically if you fail
to comply with any term or condition. Upon temmination, you must return
Licenser, at your own expense, the Software and Documentation and any copies
whether or not the copy was authorized hereunder.
GOVERNMENTAL END USERS
For the Department of Detense: Use, duplicanon or disclosure by the Govemment
is subject to restrictions as set forth in subparagraph (c)(l)(ii) of the
Rights in Technical Data and Computer Software clause at DEARS 252.227703.
The Contractor/Manu&cturer is:
Strata, Inc.
2 West St. George Blvd.
St. George, Utah 84770
For Civilian Agencies of the United States Government: Use, reproduction or
disclosure is subject to restrictions set t'orth in subparagraphs (a) through
(d) of the Commercial Computer Software-Restricted Rights clause at 52.227-19
and the limitations set forth in Strata, Inc's standard commercial License
agreement for the Software. This Software was a enveloped at private expense,
is exciting computing software and no part of it was developed with
government funds, and is a trade secret of Strata, Inc. The Software is
proprietary data, all rights of which are reserved under the copyright laws
of the United States.
135
<PAGE>
If this Software was acquired under a GSAA Exhibit: Use, duplicanon or
disclosure shall be in accordance with the applicable GSA Exhibit contract.
The Govemment has agreed to refrain from changing or removing any insignia or
lettering from the Software or the Documentation that is provided and from
producing copies of manuals or media (except for backup purposes and in
accordance with the terms of this License.)
GENERAL
You must fill out and return the Registration Card to be eligible for
customer support and service. Should you have any questions concerning this
License Agreement, please write to:
Strata, Inc.
2 West St. George Blvd.
St. George, Utah 84770
CHOICE OF LAW
This Agreement will be governed by the laws in force in the State e of'Jtah
excluding the application ot its conflicts ot'law rules.
APPLE DISCLAIMER.A~ND WARRANTY REGARDFNG HYPERCARD, INSTALLER
SYSTEM STRATA's LICENSER APPLE COMPUTER, INC. ("APPLE"), MAKES NO WARRANTIES,
EXPRESSED OR IMPLIED INCLUDING WITHOUT LIMITATION OF IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PROPOSE, REGARDING THE SOFTWARE.
APPLE DOES NOT WARRANT, GUARANTEE OR MAKE ANY REPRESENTATIONS REGARDfNG THE
USE OR THE RESULTS OF THE USE O THE SOFTWARE IN TERMS OF ITS CORRECTNESS,
ACCURACY, RELIABILITY, CORRECTNESS, OR OTHERWISE. THE ENTIRE RISK AS TO THE
RESULT AND PERFORMANCE OF THE SOFTWARE IS ASSUMED BY YOU. THE EXCLUSION OF
IMPLIED WARRANTIES IS NOT PERMITTED BY SOME STATES. THE ABOVE EXCLUSION MAY
NOT APPLY TO YOU.
IN NO EVENT WILL APPLE, AND THEIR DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS,
COLLECTIVELY APPLE, BE LIABLE TO YOU FOR.A~NY CONSEQUENTIAL, INCIDENTAL, OR
INDIRECT DAMAGES INCLUDING DAMAGES OR LOSS OF BUSINESS PROFITS, BUSfNESS
INTERRUPTION, LOSS OF BUSINESS INFORMATION AND THE LIKE, ARISING OUT OF THE
USE OR INABILITY TO USE THE SOFTWARE EVEN IF APPLE HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. BECAUSE SOME STATES DO NOT ALLOW THE EXCLUSION
OR LIMITATION F LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES. THE ABOVE
LIMITATIONS MA NOT APPLY TO YOU. APPLE'S LIABILITY TO YOU FOR ACTUAL DA&PAGES
FROM AN CAUSE WHATSOEVER, AND REGARDLESS OF THE FORM OF
136
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ACTION (WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY
OR OTHERWISE, WILL BE LIMITED TO 550.
Copyright @ 1995, Strata. Inc. and its licensers. All rights reserved.
First edition: July 1996
Strata, Inc.
2 West St. George Blvd.
St. George, Utah 84770
STRATA VIDEOSHOP DOCUMENTATION
STRATA management welcomes your comments and suggestions on any materials
that we have famished. Your input will help us improve the quality of future
documentation and products or services to you I the future. We value our
customers an we are therefore committed to be with you in the long run to
meet your needs. Please send any communications regarding STRATA VideoShop or
Documentation to our address: STRATA Videoshop Product Manager. Thank you.
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EXHIBIT 10.11
BUNDLE AGREEMENT
This Agreement is entered into this 1st day of June 1999 by and between
Strata, Inc. ("STRATA"), located at 567 South Valley View Drive., St. George.
Utah 84770 USA and Aurora Design ("Company").
1. Background. Strata develops, manufactures. distributes, and
publishes certain computer software products.
2. Distribution Rights and Obligations.
2.1 Strata hereby appoints Company as a non-exclusive OEM distributor of
STRATA'S software programs as more fully described in Exhibit A ("Products")
and grants Company the right to license, market and distribute such Products
solely bundled with Company's products in the territory described in exhibit
B ('Territory"). Company shall use best efforts to promote the sale of the
Products solely within the Territory and shall not directly or indirectly
solicit sales to customers outside the Territory. Company must notify Strata
in writing before appointing a sub-distributor of the Products.
2.2 Each Product licensed, distributed or marketed by Company shall be
subject to STRATA'S then current License Agreement contained in or on the
computer package (the "License Agreement") the most recent copy being
attached hereto in Exhibit C.
2.3 Company shall maintain a staff capable of fulfilling the sales
objectives jointly agreed upon by STRATA and the Company and shall use its
best efforts to keep each other fully advised of all relevant information
relating to this Agreement. Company agrees to perform the additional duties
and responsibilities set forth on Exhibit D. STRATA and Company will jointly
agree from time to time on advertising programs and other forms of promotion
in the Territory.
2.4 Nothing in this Agreement shall prevent STRATA from selling Products
direct or indirectly in the Territory without any obligation to the Company.
2.5 The Company understands that the Products to be licensed hereunder may
require a validated export license from the United States Department of
Commerce and STRATA shall not be required to ship any Product outside of the
United States unless and until all such required licenses are obtained. The
Company agrees to assist STRATA to obtain any such required license by
supplying appropriate documentation or information requested by STRATA. The
Company agrees to comply with U.S Export Administration Regulations as in
effect from time to time and to obtain all necessary governmental approvals
and licenses to import the Products into the Territory.
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3. Purchase Price, Terms. Delivery and Title
3.1 Orders. All Products used. distributed and marketed by Company shall
be ordered and purchased from STRATA. All orders for STRATA products received
from Company shall be subject to acceptance by STRATA and shall be solely
governed by the terms and conditions of this Agreement. STRATA shall have no
liability with respect to orders which are not accepted. Orders by Company
for Products shall be submitted to STRATA at 567 South Valley View Dr. St.
George, UT 84770. or faxed to STRATA, 435-628-9756. All deliveries of
Products will be subjects to STRATA'S availability schedules. Company shall
make every effort to consolidate orders together with all attendant documents
required.
3.2 Prices. Prices for the Products purchased by the Company shall be as
set forth in Exhibit A, and shall remain in effect for the term of this
agreement.. Such prices are exclusive of freight changes, export and import
duties, sales, use and similar taxes and insurance premiums, all of which
shall be paid by the Company.
3.3 STRATA may at its sole discretion (a) require Company to pay for
orders in advance of shipping or (b) require Company, at Company's expense,
to post a letter of credit (in form and substance reasonably satisfactory to
STRATA) securing payment of the price of Products to be shipped in the future
or (c) provide terms of net 30 days from the date of shipment for customers,
all in U.S. dollars.
3.4 Shipment. Shipment of all Products shall be F.O.B. STRATA'S point of
shipment. Company shall pay all shipping and related expenses, including ail
excise, sales, occupation, use or similar taxes, duties, levies, charges or
subcharges applicable to Products, their sale or use. whether now in effect
or hereafter imposed for Products. STRATA will select the mode of the
shipment and the carrier.
4. Maintenance and Support.
4.1 Company will be authorized to return items, provided the Company will
first request and receive authorization from STRATA PRIOR TO DOING SO.
Authorization by STRATA will not be unreasonably withheld. STRATA product
will be accepted for replacement or credit only if such return is made in
accordance with STRATA'S Current procedures as published to Company from time
to time.
5. Proprietary Information.
5.1 No proprietary information disclosed by either party to the other in
connection with this Agreement shall by disclosed to any person or entity
other than the recipient party's employees directly involved with the
recipient party's use of such information who are bound by written agreement
to protect the confidentiality of such information, and such information
shall otherwise
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be protected by the recipient party from the disclosure to others with the
same degree of care accorded to its own similar proprietary information.
Information will not be subject to this provision if it is or becomes a
matter of public knowledge without the fault of the recipient party, if it
was a matter of written record in the recipient party from a third party
person under circumstances permitting its unrestricted disclosure by the
recipient party. Upon termination or expiration of (his Agreement, each party
shall promptly deliver to the other all proprietary information of the other
party in the possession or control of such party and all copies thereof. The
obligations under this Section shall continue for both partics for a period
of seven years after delivery by STRATA to Company of the last Products under
this Agreement.
6. Strata Software License.
6.1 Title. Notwithstanding the references in this Agreement to the
"purchase" of Products by Company, the partics intend and agree that the
Software licensed by STRATA to Company is not being sold by STRATA or
purchased by Company. STRATA (or its licensors) shall at all times retain
title to the Software.
6.2 Grant of License to Distribute Software. STRATA hereby grants to the
Company a nontransferable, non-exclusive right and license to distribute to
customers the right use the Products, in object code form only. only pursuant
to STRATA'S Then current standard form of License Agreement or a
substantially similar written agreement approved by STRATA. The termination
of this Agreement shall not affect licenses previously granted by Company.
Company shall not have the right to disassemble, decompile or otherwise
reverse engineer the Products.
6.3 Protection of Products. The Products may nor he copied or modified,
in whole or in part, without the prior written consent of STRATA. The Company
shall not remove or obscure any copyright, patent, trademark, trade secret or
similar notice affixed to any Product and shall reproduce and affix such
notice on any copies or modifications of the Products permitted by STRATA.
Under no circumstances will the source code for the Product be disclosed by
the Company. The Company shall take appropriate action, by instruction,
agreement or otherwise, with respect to any persons permitted access to the
Products in order to enable the Company to satisfy its obligations hereunder.
6.4 Duplication of Products. Subject to terms and conditions of this
Agreement. Strata hereby grants to Company a limited, internal, non-
exclusive, non-transferable, nonassignable license during the term of this
agreement to duplicate the Product as listed in Exhibit A. in Object Code
format, on CD-ROM. Company shall use its best efforts, at its expense, to
perform the duplication of the Product under the same strict security
measures to duplicate its own products.
7. Term and Termination.
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7.1 The term of this Agreement shall be for one year on the date first set
forth above. Thereafter, the term of this Agreement shall he renewed only
upon written mutual consent.
7.2 Agreement and all rights granted hereunder shall be terminated for any
of the following reasons: (a) cither party provides the other party 90 days'
prior written notice of termination: or (b) at the option of STRATA,
effective immediately upon written notice to Company, if Company either (i)
fails to comply with any provision of this Agreement, (ii) becomes insolvent
or unable to pay its debts as they mature, (iii) makes an assignment for the
benefit of creditors, or (iv) files a petition, or is the subject of a
petition filed under any foreign bankruptcy act or the United Stales
Bankruptcy Act..
7.3 STRATA and Company agree that upon expiration or termination of this
Agreement, neither party shall be liable to the other for any damages or
expenditures, loss of profits of any kind or nature sustained or arising out
of, such termination. The expiration or termination of this Agreement shall
not however. relieve or release either party from making payments which may
be owing to either party under the terms of this Agreement.
8. Warranty.
8.1 Warranty. STRATA warrants to Company that Products will be free from
defect in material and workmanship for a period of 90 days from the day of
shipment. STRATA shall have no warrant or other liability for any part of
component of any STRATA Product not manufactured by it. STRATA does not
warrant that use of the Products will be uninterrupted or error-free.
Products covered by warranty shall be returned to STRATA in accordance with
STRATA'S return requirements in effect from time to time.
8.2 Nonwarranty Charges. If STRATA determines that the Products for which
the Company has requested warranty service are not eligible for warranty
service, the Company will pay or reimburse STRATA for all reasonable costs of
investigating and responding to such request at STRATA'S then prevailing time
and materials rates. If STRATA provides repair services or replacement parts
that are not covered by the warrant provided in this Section, the Company
will pay STRATA at STRATA'S then prevailing time and materials rates,
8.3 Exceptions. STRATA shall have no obligations under this Agreement to
make repairs or replacements which are required by normal wear and tear, or
which result, in whole or in part, from catastrophe, fault or negligence, or
from improper or unauthorized use or repair of the Products, or use of the
Products in a manner for which they were not designed, or by causes external
to the Products such as, but not limited to, power or air conditioning
failure.
8.4 THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING, BUT NOT LIMITED TO THE IMPLIED
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WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9. Exclusion of Damages.
9.1 NEITHER STRATA NOR ITS LICENSORS, NOR COMPANY. SHALL BE LIABLE FOR ANY
SPECIAL, CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES, INCLUDING BUT NOT
LIMITED TO DAMAGES ARISING FROM CLAIMS OR LOST DATA OR LOST PROFITS, ARISING
FROM THIS AGREEMENT, THE USE OR SALE OF THE PRODUCTS, OR ANY DEFECT, FAILURE,
NONCONFORMITY OR MALFUNCTION, WHETHER SUCH CLAIM OR SUCH DAMAGE IS BASED UPON
WARRANTY, CONTRACT, TORT OR OTHERWISE.
10. Limitation on Liability.
10.1 UNDER NO CIRCUMSTANCES SHALL STRATA OR ITS LICENSORS BE LIABLE TO
COMPANY FOR AN AMOUNT GREATER THAN PAYMENTS MADE TO STRATA BY THE COMPANY
PURSUANT TO THIS AGREEMENT IN RESPECT OF THE PARTICULAR PRODUCT GIVING RISE
TO THE LIABILITY, REGARDLESS OF THE THEORY OF LIABILITY.
II. Miscellaneous.
11.1 Status of Parties. The relationship of the panics under this
Agreement shall be and at all times remain one of independent contractors.
Company is not an employee, agent or legal representative of STRATA and shall
have no authority to assume or create obligations on STRATA'S behalf with
respect to the Products or otherwise.
11.2 Force Majeure. STRATA shall not he liable for any delays in filling
orders caused by strikes, lockouts or other labor disputes, acts of war.
fires, floods, accidents or delays in the delivery of raw materials, parts of
completed merchandise, acts of God or any other cause beyond STRATA's control.
11.3 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Utah without regard to conflict of
laws rules that would cause the laws of any other jurisdiction to apply. The
partics agree that the exclusive venue of all suits of actions brought in
connection with this Agreement shall be the courts in and of The State of
Utah. and each of the parties submits to the exclusive jurisdiction of such
courts. Nothing contained in this paragraph shall prevent either party from
seeking equitable relief such as an injunction or attachment of assets in
such jurisdiction as may be appropriate.
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11.4 Entire Agreement. This Agreement with corresponding Exhibits
constitutes the entire agreement between Company and STRATA and supersedes
all other Agreements, verbal or written between the parties. No modification
of this Agreement shall be binding unless made in writing and incorporated as
a part hereof by reference.
11.5 Modification. No modification, amendment or waiver or the provisions
of this Agreement shall be effective unless in writing specifically referring
hereto and signed by both parties.
11.6 Assignability and Binding Effect. Company shall not assign its rights
or delegate the performance of its obligations hereunder without the prior
written consent of STRATA. Subject to the provision of the preceding
sentence, alt the terms of this Agreement shall be binding upon and shall
inure to the benefit of the parties and their legal Representatives. heirs,
successors and assigns. STRATA may assign this Agreement to any of its
corporate affiliates.
11.7 Confidentiality of Terms of Agreement. The parties agree not to
disclose to any third party the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date set forth below.
AURORA DESIGN STRATA, INC.
BY: /s/ Timothy McMahon BY: /s/ Dennis Derrick
------------------------------- ------------------------------
NAME: Timothy McMahon NAME: Dennis Derrick
----------------------------- -----------------------------
TITLE: President TITLE: Vice President
---------------------------- ----------------------------
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EXHIBIT A
PRODUCTS AND
PRICE LIST
The Company prices for the purposes of this Agreement shall be determined by
application of discounts from STRATA's published prices, which may be changed
from time to time at the sole discretion of STRATA.
PRODUCT - VideoShop OEM CD (English) and Registration Card
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
UNITS PURCHASED PER QUARTER PRICE - US DOLLARS
- --------------------------------------------------------------------------------
<S> <C>
From 1 - 500 Quarterly Units $8.60
- --------------------------------------------------------------------------------
From 501 - 1000 Quarterly Units $8.40
- --------------------------------------------------------------------------------
From 1,001 - 2,500 Quarterly Units $8.00
- --------------------------------------------------------------------------------
From 2, 501 - 5,000 + Quarterly Units $7.50
- --------------------------------------------------------------------------------
</TABLE>
Initial order of 25 units of the product
Following units will be ordered in increments of 50
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EXHIBIT B
TERRITORY
COMPANY'S TERRITORY SHALL CONSIST OF THE FOLLOWING:
North America
Europe
Africa
Latin America (Compromising Mexico, all Central American Nations and all
nations of the South American Continent).
Asia excluding Japan
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EXHIBIT C
SOFTWARE END-USER LIMITED LICENSE AGREEMENT AND LIMITED WARRANTY VIDEOSHOP
LIMITED USE LICENSE
Strata, Inc. (', STRATA", " Licenser" ) grants you, the end user (" Licensee"
), as the party taking a license, the right to use the STRATA VideoShop
software (" the software" ) on a single computer unit at a single location.
You must obtain a supplementary license from Strata. Inc. before using the
Software in connection with systems or multiple central processing units.
Please contact Strata, Inc. at the address indicated in this license for
further information.
LIMITED WARRANTY AND DISCLAIMER OF LIABILITY Strata, Inc. warrants that the
STRATA VideoShop documentation (" the Documentation" ) and the media on which
the Software is furnished will be free from defects in materials and
workmanship under normal use for a period of one (1 ) vear from the date of
the original purchase. If a defect appears during the warranty period, return
the diskette or Documentation pages to the place you obtained them, with a
photocopy of your original diskette label and your receipt, and you will
receive a free replacement, or at Strata, Inc's option, refund of your
purchase pace. EXCEPT AS TO THE MEDIA, THE SOFTWARE IS LICENSED " AS IS"
WITHOUT WARRANTY OF ANY ICIND, EITHER EXPRESSED OR IMPLIED.
IN NO EVENT SHALL STRATA, INC. BE RESPONSIBLE FOR AN INDIRECT. SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR SIMILAR DAMAGES OR LOST DATA OR PROFITS TO YOU
OR ANY OTHER PERSON OR ENTITY REGARDLESS OF THE LEGAL THEORY, EVEN IF STRATA,
INC. HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. SOME STATES DO NOT
ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY TO YOU OR ANY RELATED THIRD
PARTY FOR ACTUAL DAMAGES FOR ANY CAUSE WHATSOEVER WILL BE LIMITED TO THE
AMOUNT THAT YOU PAID STRATA, INC. FOR THE SOFtWARE.
TITLE
This license is not a sale of the Software or any copy. Strata, Inc. retains
title and ownership of the Software and ail copies, regardless of the fomm or
media on or in which the original or any copy may exist.
UPDATED POLICY
In order to be able to obtain updates of the Sottware, you must complete and
return to Strata, Inc. the enclosed Registration Card. However, Strata Inc.
is under no obligation to make an updates and the procedures to obtain such
updates. All updates provided to you shall be deemed part of the Software and
the use of such updates shall be governed by this License.
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RESTRICTIONS ON COPYING
You may transfer the STRATA VideoShop Software in machine-readable form
solely for backup purposes provided that you include the Strata, Inc.
copyright nonce on the backup copy. You may not copy, or encourage or allow
copying of, Software or Documentation.
RESTRICTIONS OFF TRANSFERS
You may transfer the Strata Software into the memory of a single computer,
but you may not electronically transfer the Software from one computer to
another. You may not modify, reverse engineer, decompose, create other works
from, or disassemble the Software. You may not copy, modify, adapt or create
other works based upon the Documentation. You may not transfer, convert,
rent, sub-license, or otherwise distribute the Software or Documentation, or
any rights in them, to any person or entity.
TERM
This License is effective until terminated. You may temminate the License at
any time by resuming the Software and ail Documentation to Strata, Inc. and
by removing the Software from memory of any computer into which the Software
has been transferred. This License shall terminate automatically if you fail
to comply with any term or condition. Upon temmination, you must return
Licenser, at your own expense, the Software and Documentation and any copies
whether or not the copy was authorized hereunder.
GOVERNMENTAL END USERS
For the Department of Detense: Use, duplicanon or disclosure by the Govemment
is subject to restrictions as set forth in subparagraph (c)(l)(ii) of the
Rights in Technical Data and Computer Software clause at DEARS 252.227703.
The Contractor/Manu&cturer is:
Strata, Inc.
2 West St. George Blvd.
St. George, Utah 84770
For Civilian Agencies of the United States Government: Use, reproduction or
disclosure is subject to restrictions set t'orth in subparagraphs (a) through
(d) of the Commercial Computer Software-Restricted Rights clause at 52.227-19
and the limitations set forth in Strata, Inc's standard commercial License
agreement for the Software. This Software was a enveloped at private expense,
is exciting computing software and no part of it was developed with
government funds, and is a trade secret of Strata, Inc. The Software is
proprietary data, all rights of which are reserved under the copyright laws
of the United States.
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If this Software was acquired under a GSAA Exhibit: Use, duplicanon or
disclosure shall be in accordance with the applicable GSA Exhibit contract.
The Govemment has agreed to refrain from changing or removing any insignia or
lettering from the Software or the Documentation that is provided and from
producing copies of manuals or media (except for backup purposes and in
accordance with the terms of this License.)
GENERAL
You must fill out and return the Registration Card to be eligible for
customer support and service. Should you have any questions concerning this
License Agreement, please write to:
Strata, Inc.
2 West St. George Blvd.
St. George, Utah 84770
CHOICE OF LAW
This Agreement will be governed by the laws in force in the State of Utah
excluding the application of its conflicts of law rules.
APPLE DISCLAIMER AND WARRANTY REGARDING HYPERCARD, INSTALLER SYSTEM STRATA's
LICENSER APPLE COMPUTER, INC. ("APPLE"), MAKES NO WARRANTIES, EXPRESSED OR
IMPLIED INCLUDING WITHOUT LIMITATION OF IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PROPOSE, REGARDING THE SOFTWARE. APPLE DOES NOT
WARRANT, GUARANTEE OR MAKE ANY REPRESENTATIONS REGARDING THE USE OR THE
RESULTS OF THE USE O THE SOFTWARE IN TERMS OF ITS CORRECTNESS, ACCURACY,
RELIABILITY, CORRECTNESS, OR OTHERWISE. THE ENTIRE RISK AS TO THE RESULT AND
PERFORMANCE OF THE SOFTWARE IS ASSUMED BY YOU. THE EXCLUSION OF IMPLIED
WARRANTIES IS NOT PERMITTED BY SOME STATES. THE ABOVE EXCLUSION MAY NOT APPLY
TO YOU.
IN NO EVENT WILL APPLE, AND THEIR DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS,
COLLECTIVELY APPLE, BE LIABLE TO YOU FOR.A~NY CONSEQUENTIAL, INCIDENTAL, OR
INDIRECT DAMAGES INCLUDING DAMAGES OR LOSS OF BUSINESS PROFITS, BUSfNESS
INTERRUPTION, LOSS OF BUSINESS INFORMATION AND THE LIKE, ARISING OUT OF THE
USE OR INABILITY TO USE THE SOFTWARE EVEN IF APPLE HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. BECAUSE SOME STATES DO NOT ALLOW THE EXCLUSION
OR LIMITATION F LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES. THE ABOVE
LIMITATIONS MA NOT APPLY TO YOU. APPLE'S LIABILITY TO YOU FOR ACTUAL DA&PAGES
FROM AN CAUSE WHATSOEVER, AND REGARDLESS OF THE FORM OF
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ACTION (WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY
OR OTHERWISE, WILL BE LIMITED TO 550.
Copyright @ 1995, Strata. Inc. and its licensers. All rights reserved.
First edition: July 1996
Strata, Inc.
2 West St. George Blvd.
St. George, Utah 84770
STRATA VIDEOSHOP DOCUMENTATION
STRATA management welcomes your comments and suggestions on any materials
that we have famished. Your input will help us improve the quality of future
documentation and products or services to you I the future. We value our
customers an we are therefore committed to be with you in the long run to
meet your needs. Please send any communications regarding STRATA VideoShop or
Documentation to our address: STRATA Videoshop Product Manager. Thank you.
149
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EXHIBIT D
COMPANY DUTIES AND RESPONSIBILITIES
Quarterly reports shall be made to STRATA covering the following items:
SALES:
QUARTERLY FORECAST:
AVERAGE CURRENT INVENTORY:
DESCRIPTION OF BUNDLE BY PRODUCTS:
CUSTOMER FEEDBACK (E.G. REACTION TO PRODUCTS):
COMPETITION:
PROMOTION ACTIVITIES:
Advertisements:
Trade Shows:
Press Relations:
Dealer Tours:
Special Presentations:
Telemarketing:
Direct Marketing:
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EXHIBIT 10.13
THIS OPTION AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION
IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH
ACT.
STOCK OPTION
This Option, dated as of January ___, 2000, is issued to
Blaine Harris for good and valuable consideration, receipt of which is hereby
acknowledged, by Chequemate International Inc., a Utah corporation doing
business as C-3D Digital, Inc. (the "Company").
1. GRANT OF OPTION. Subject to the terms and conditions
hereinafter set forth, there is hereby granted to the holder of this Option a
stock option to purchase from the Company Forty-Nine Thousand (49,000) fully
paid and non-assessable shares of Common Stock of the Company (as adjusted
pursuant to Sections 8 and 9 hereof, the "Shares") for the option price
specified in Section 2 below. In no event shall the Option be exercised
within six (6) months of the grant hereof.
2. OPTION PRICE. The option price for the Shares is $1.52
per share. Such price shall be subject to adjustment pursuant to Sections 8
and 9 hereof (such price, as adjusted from time to time, is herein referred
to as the "Option Price").
3. EXERCISE PERIOD. This Option is exercisable at any
time, or from time to time, on or after six months from the date hereof, and
shall remain so exercisable until and including the 31st day of December,
2000.
4. METHOD OF EXERCISE. While this Option remains
outstanding and exercisable in accordance with Section 3 above, the holder
may exercise, in whole or in part, at any time or from time to time, the
purchase rights evidenced hereby. Such exercise shall be effected by:
(a) the delivery of a duly executed Exercise Notice to
the Secretary of the Company at its principal offices; and
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(b) the payment to the Company of an amount equal to
the aggregate Option Price for the number of Shares being purchased.
5. CERTIFICATES FOR SHARES. Upon the exercise of the
purchase rights evidenced by this Option, one or more certificates for the
number of Shares so purchased shall be issued as promptly as practicable
thereafter, and in any event within fourteen (14) days of the delivery of the
Exercise Notice.
6. SURRENDER OF OPTION CERTIFICATE. Upon the expiration
of this Option pursuant to Section 3 or upon the exercise of this Option in
full, the holder shall surrender this Option to the Company.
7. RESERVATION OF SHARES. The Company covenants that it
will at all times keep available such number of authorized shares of its
common stock, free from all preemptive rights with respect thereto, which
will be sufficient to permit the exercise of this Option for the full number
of Shares specified herein. The Company further covenants that such Shares,
when issued pursuant to the exercise of this Option, will, upon issuance, be
duly and validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issuance thereof.
8. MERGER OF THE COMPANY. In case of any merger of the
Company, then, as a condition of such merger, lawful provision shall be made,
and duly executed documents evidencing the same from the Company or its
successor shall be delivered to the holder of this Option, so that the holder
of this Option shall have the right at any time prior to the expiration of
this Option to purchase, at a total price equal to that payable upon the
exercise of this Option, the kind and number of shares of stock and other
securities and property receivable in connection with such merger by a holder
of the same number of shares of Common Stock as were purchasable by the
holder of this Option immediately prior to such merger. In any such case,
appropriate provisions shall be made with respect to the rights and interests
of the holder of this Option so that the provisions hereof shall thereafter
be applicable with respect to any shares of stock or other securities and
property deliverable upon exercise hereof, and appropriate adjustments shall
be made to the Option Price per share payable hereunder, provided the
aggregate Option Price shall remain the same. The existence of the Option
granted hereunder shall not effect in any way the right or power of the
Company or its shareholders to make or authorize any or all adjustments,
recapitalization, reorganizations or other changes in the Company's capital
structure or its business or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stocks ahead of
or affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
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9. ADJUSTMENT OF OPTION PRICE AND NUMBER OF SHARES. The
number and kind of securities subject to purchase upon exercise of this
Option and the payment of the Option Price shall be subject to adjustment
from time to time as follows:
(a) SUBDIVISION, COMBINATIONS AND OTHER ISSUANCES. If
the Company shall at any time prior to the expiration of this Option
subdivide its Common Stock, by stock split or otherwise, or combine its
Common Stock, or issue without consideration to the Company for such
issuance, additional shares of its Common Stock or securities convertible
into or exercisable for Common Stock, by a reverse stock split or otherwise,
the number of Shares issuable on the exercise of this Option shall forthwith
be proportionately increased in the case of a subdivision or issuance without
consideration, or proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to the Option Price payable per
share, but the aggregate Option Price payable for the total number of Shares
purchasable under this Option (as adjusted) shall remain the same. Any
adjustment under this Section becomes effective at the close of business on
the date the subdivision or combination becomes effective, or as of the
record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
(b) RECLASSIFICATION, REORGANIZATION AND
CONSOLIDATION. In case of any reclassification, merger, consolidation,
capital reorganization or change in the Common Stock of the Company (other
than an event described in Section 9(a) above), then, as a condition of such
reclassification, reorganization or change, lawful provision shall be made,
and duly executed documents evidencing the same from the Company or its
successor shall be delivered to the holder of this Option, so that the holder
of this Option shall have the right at any time prior to the expiration of
this Option to purchase, at a total price equal to that payable upon the
exercise of this Option, the kind and amount of shares of stock and other
securities and property receivable in connection with such reclassification,
merger, consolidation, reorganization or change by a holder of the same
number of shares of Common Stock as were purchasable by the holder of this
Option immediately prior to such reclassification, merger, consolidation,
reorganization or change. In any such case, appropriate provisions shall be
made with respect to the rights and interest of the holder of this Option so
that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the Option Price per
share payable hereunder, provided the aggregate Option Price shall remain the
same.
(c) NOTICE OF ADJUSTMENT. Upon the happening of any
event adjusting the Option Price or number of shares issuable upon exercise
of this Option, the Company shall forthwith give written notice thereof to
the holder of this Option stating the adjusted Option Price and the adjusted
number of shares of Common Stock or other securities
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purchasable hereunder resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which that
calculation is based.
10. PRE-EXERCISE RIGHTS. Prior to exercise of this
Option, the holder shall not be entitled to any rights of a shareholder with
respect to the Shares, including (without limitation) the right to vote such
Shares, receive dividends or other distributions thereon, exercise preemptive
rights or be notified of shareholder meetings, and such holder shall not be
entitled to any notice or other communication concerning the business or
affairs of the Company.
11. TRANSFERABILITY, RESTRICTED SECURITIES. The Option
shall be assignable by the holder. The holder understands that this Option
and the Shares purchasable hereunder constitute "restricted securities" under
the federal securities laws inasmuch as they are, or will be, acquired from
the Company in transactions not involving a public offering and accordingly
may not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933 or an applicable
exemption from registration. In this connection, the holder acknowledges that
Rule 144 of the Securities and Exchange Commission is not now, and may not in
the future be, available for resales of the Shares purchased hereunder. The
holder further acknowledges that the Shares and any other securities issued
upon exercise of this Option shall bear a legend substantially in the form of
the legend appearing on the face hereof.
12. CERTIFICATION OF INVESTMENT PURPOSE. Unless a current
registration statement under the Securities Act of 1933 shall be in effect
with respect to the securities to be issued upon exercise of this Option, the
holder hereof, by accepting this Option, covenants and agrees that, at the
time of exercise hereof, such holder will deliver to the Company a written
letter or certification that the securities acquired by the holder upon
exercise hereof are for the account of the holder and are acquired for
investment purposes only and that such securities are not acquired with a
view to, or for sale in connection with, any public distribution thereof.
13. LOST, STOLEN, MUTILATED OR DESTROYED OPTION. If this
Option is lost, stolen, mutilated or destroyed, the Company shall, upon
receipt of a reasonable agreement to indemnify the Company, and, in the case
of a mutilated option, upon the surrender thereof, issue in the name
requested a new option of like tenor as the option so lost, stolen, mutilated
or destroyed.
14. SUCCESSORS AND ASSIGNS. The terms and provisions of
this Option shall inure to the benefit of, and be binding upon, the Company
and the holders hereof and their respective successors and assigns.
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15. GOVERNING LAW. This Option shall be governed by and
construed under the laws of the State of Utah as applied to agreements among
Utah residents entered into and to be performed entirely within Utah.
16. NOTICES. Any notice or request for instruction given
in connection with this Option shall be in writing and shall be delivered in
person or by certified mail as follows:
If to the Company: C-3D Digital, Inc.
57 West 200 South, Suite 350
Salt Lake City, Utah 84101
If to the
Option holder: Blaine Harris
1222 East Golf Course Circle
Bountiful, Utah 84010
IN WITNESS WHEREOF, this Stock Option has been executed and
delivered as of the date first written above.
C-3D Digital, Inc.
By /s/ J. Michael Heil
----------------------------------
Name: J. Michael Heil
-------------------------------
Title: CEO
------------------------------
Acknowledged and agreed to:
- ---------------------------------------
Blaine Harris
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EXHIBIT 10.14
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT (the "Agreement") is made this 12th day of November,
1999, by and between BonnieJean C. Tippetts, a Utah resident ("Advisor") and
C-3D Digital, Inc., a Utah corporation with its offices located in Salt Lake
City, Utah (the "Company").
WHEREAS, Advisor and Advisors's Personnel (as defined below) have experience
in evaluating and effecting mergers and acquisitions, advising corporate
management, and in performing general administrative duties for publicly-held
companies and development stage investment ventures; and
WHEREAS, the Company desires to retain the Advisor to advise and assist the
Company in its development on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Company and
Advisor agree as follows:
1. ENGAGEMENT
The Company hereby retains Advisor, effective as of the date hereof
(the "Effective Date") and continuing until termination, as provided
herein, to assist the Company in its effecting the purchase of
businesses and assets relative to its business and growth strategy,
general business consulting, introductions of the Company to persons or
companies that may have an interest in the technology of the Company,
including but not limited to computer and Internet related operations,
motion picture and television companies and consultants and others that
may assist the Company in its plans and future development (the
"Services"). The Services are to be provided on a "best efforts" basis
directly by Advisor and through others employed or retained and under
the direction of Advisor ("Advisor's Personnel"); PROVIDED, HOWEVER,
that the Services shall expressly exclude all legal advice, accounting
services or other services which require licenses or certification
which Advisor may not have.
2. TERM
This agreement shall have an initial term of one (1) year (the "Primary
Term"), commencing with the Effective Date. At the conclusion of the
Primary Term this Agreement will be extended on an annual basis (the
"Extension Period") by mutual agreement of the parties.
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3. TIME AND EFFORT OF ADVISOR
Advisor shall allocate time and Advisor's Personnel as it deems
necessary to provide the Services. The particular amount of time may
vary from day to day or week to week. Except as otherwise agreed,
Advisor's monthly statement identifying, in general, tasks performed
for the Company shall be conclusive evidence that the Services have
been performed. Additionally, in the absence of willful misfeasance,
bad faith, negligence or reckless disregard for the obligations or
duties hereunder by Advisor, neither Advisor nor Advisor's Personnel
shall be liable to the Company or any of its shareholders for any act
or omission in the course of or connected with rendering the Services,
including but not limited to losses that may be sustained in any
corporate act in any subsequent Business Opportunity (as defined
herein) undertaken by the Company as a result of advice provided by
Advisor or Advisors's Personnel.
4. COMPENSATION
The Company agrees to pay Advisor a single one-time fee for the
Services ("Advisory Fee") by way of the delivery by the Company of One
Hundred Thousand (100,000) shares of the Company's common stock,
registered pursuant to a Form S-8, without restrictions. Such shares
shall be delivered upon the filing date of the Form S-8 registration
date, which shall be within 10 days of the date of the execution of
this Agreement. All shares transferred are considered fully earned and
non-assessable as of the date of delivery.
5. OTHER SERVICES
If the Company (i) enters into a merger or (ii) exchanges securities
with, or (iii) purchases the assets or enters into a joint venture
with, or (iv) makes an investment in a company introduced by Advisor (a
"Business Opportunity"), the Company agrees to pay Advisor a fee equal
to ten percent (10%) of the value of each Business Opportunity
introduced by Advisor and acquired or otherwise participated in by the
Company (collectively referred to herein, in each instance, as the
"Transaction Fee"). Except as provided in Section 6 below, the
Transaction Fee shall be payable immediately following the closing of
each such transaction, in cash or in shares of the Company's common
stock or in kind, if an acquisition is made at the Company's option. A
Transaction Fee will not be paid except for the specific actions
enumerated in this Section 5.
6. REGISTRATION RIGHTS FOR TRANSACTION FEE SHARES
The Company may, at its sale election, choose to issue shares of its
common stock to satisfy a Transaction Fee. The Company agrees that any
shares issued to satisfy a Transaction Fee shall be benefitted by the
registration rights of this Section 6. If, after
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issuing shares to the Advisor to satisfy a Transaction Fee, the Company
proposes to register any of its stock under the Securities Act of 1933
(the "Act") in connection with the public offering of such securities
solely for cash (other than a registration relating solely to the sale
of securities to participants in a Company stock plan, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration
statement covering the sale of the Transaction Fee Shares) the Company
shall, at such time, promptly give the Advisor written notice of such
registration. Upon the written request of the Advisor given within
fifteen (15) days after mailing of such notice by the Company, the
Company shall, subject to the provisions of this section, use its
reasonable efforts to cause to be registered under the Act all of the
Transaction Fee Shares that the Advisor has requested to be registered.
In connection with any registrations in which the Transaction Fee
Shares have a right to be included pursuant to this section, and which
involve an underwriting of securities being issued by the Company, the
Company shall not be required to include any of the Transaction Fee
Shares in such underwriting unless the Advisor accepts the terms of the
underwriting as agreed upon between the Company and the underwriters
selected by it. It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this section that the
Advisor shall furnish to the Company such information regarding
herself, the Transaction Fee Shares held by her, and the intended
method of disposition of such securities as shall be required to effect
the registration of her shares.
7. COSTS AND EXPENSES
All third party and out-of-pocket expenses incurred by Advisor in the
performance of the Services shall be paid by the Company, or Advisor
shall be reimbursed if paid by Advisor on behalf of the Company, within
ten (10) days of the receipt of written notice by Advisor, provided
that the Company must approve in advance all such expenses in excess of
$100 per month.
8. PLACE OF SERVICES
The Services provided by Advisor or Advisor's Personnel hereunder will
be performed at Advisor's offices except as otherwise mutually agreed
by Advisor and the Company.
9. INDEPENDENT CONTRACTOR
Advisor and Advisor's Personnel will act as independent contractors in
the performance of the duties under this Agreement. Accordingly,
Advisor will be responsible for payment of all federal, state, and
local taxes on compensation paid under this agreement, including
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income and social security taxes, unemployment insurance, and any other
taxes due relative to Advisor's Personnel, and any and all business
license fees as may be required. This Agreement neither expressly NOR
impliedly creates a relationship of principal and agent, or employee
and employer, between Advisor's Personnel and the Company. Neither
Advisor nor Advisor's Personnel are authorized to enter into any
agreements on behalf of the Company. The Company expressly retains the
right to approve, in its sole discretion and to make all final
decisions with respect to effecting, a transaction on any Business
Opportunity.
10. REJECTED ASSET OPPORTUNITY OR BUSINESS OPPORTUNITY
If, during the Primary Term of this Agreement or any Extension Period,
the Company elects not to proceed to acquire, participate or invest in
any Business Opportunity identified and/or selected by Advisor,
notwithstanding the time and expense the Company may have incurred
reviewing such transaction, such Business Opportunity shall revert back
to and become proprietary to Advisor, and Advisor shall be entitled to
acquire or broker the sale or investment in such rejected Business
Opportunity for its own account, or submit such assets or Business
Opportunity elsewhere. In such event, Advisor shall be entitled to any
and all profits or fees resulting from Advisor's purchase, referral or
placement of any such rejected Business Opportunity, or the Company's
subsequent purchase or financing with such Business Opportunity in
circumvention of Advisor.
11. NO AGENCY EXPRESS OR IMPLIED
This Agreement neither expressly nor impliedly creates a relationship
of principal and agent between the Company and Advisor, or employee and
employer as between Advisor's Personnel and the Company.
12. TERMINATION
The Company and Advisor may terminate this Agreement prior to the
expiration of the Primary Term upon thirty (30) days written notice
with mutual written consent. Failing to have mutual consent, without
prejudice to any other remedy to which the terminating party may be
entitled, if any, either party may terminate this agreement with thirty
(30) days written notice under the following conditions:
(A) BY THE COMPANY.
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(i) If during the Primary Term of this Agreement or any
Extension Period, Advisor is unable to provide the
Services as set forth herein for thirty (30)
consecutive business days because of illness,
accident, or other incapacity of Advisor's Personnel;
or,
(ii) If Advisor willfully breaches or neglects the duties
required to be performed hereunder; or,
(B) BY ADVISOR.
(i) If the Company breaches this Agreement of fails to
make any payments or provide information required
hereunder; or,
(ii) If the Company ceases business or, other than in an
Initial Merger, sells a controlling interest to a
third party, or agrees to a consolidation or merger
of itself with or into another corporation, or enters
into such a transaction outside of the scope of this
Agreement, or sells substantially all of its assets
to another corporation, entity or individual outside
of the scope of this Agreement; or,
(iii) If the Company, subsequent to the execution hereof,
has a receiver appointed for its business or assets,
or otherwise becomes insolvent or unable to timely
satisfy its obligations in the ordinary course of its
business, including but not limited to the obligation
to pay the Transaction Fee, or the Advisory Fee; or,
(vi) If the Company, subsequent to the execution hereof,
institutes, makes a general assignment for the
benefit of creditors, has instituted against it any
bankruptcy proceeding for reorganization or
rearrangement of its financial affairs, files a
petition in a court of bankruptcy, or is adjudicated
a bankrupt; or,
(v) If any of the disclosures made herein or subsequent
hereto by the Company to Advisor are determined to be
materially false or misleading.
In the event Advisor elects to terminate without cause or this
Agreement is terminated prior to the expiration of the Primary Term or
any Extension Period by mutual written agreement, or by the Company for
the reasons set forth in A(i) and (ii) above, the Company shall only be
responsible to pay Advisor for un-reimbursed expenses and (during
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the Primary Term) the Advisory Fee accrued up to and including the
effective date of termination. If this Agreement is terminated by the
Company for any other reason, or by Advisor for reasons set forth in
B(i) through (v) above, Advisor shall be entitled to any outstanding
unpaid portion of reimbursable expenses, if any, and the balance of the
Advisory Fee.
13. INDEMNIFICATION
Subject to the provisions herein, the Company and Advisor agree to
indemnify, defend and hold each other harmless from and against all
demands, claims, actions, losses, damages, liabilities, costs and
expenses, including without limitation, interest, penalties and
attorneys' fees and expenses asserted against or imposed or incurred by
either party by reason of or resulting from any action or a breach of
any representation, warranty, covenant, condition, or agreement of the
other party to this Agreement.
14. REMEDIES
Advisor and the Company acknowledge that in the event of a breach of
this Agreement by either party, money damages would be inadequate and
the non-breaching party would have no adequate remedy at law.
Accordingly, in the event of any controversy concerning the rights or
obligations under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a degree of specific performance.
Such remedy, however, shall be cumulative and nonexclusive and shall be
in addition to any other remedy to which the parties may be entitled.
15. MISCELLANEOUS
(A) SUBSEQUENT EVENTS. Advisor and the Company each agree to
notify the other party if, subsequent to the date of this
Agreement, either party incurs obligations which would
compromise its efforts and obligations under this Agreement.
(B) AMENDMENT. This Agreement may be amended or modified at any
time and in any manner only by an instrument in writing
executed by the parties hereto.
(C) FURTHER ACTIONS AND ASSURANCES. At any time and from time to
time, each party agrees, at its or their expense, to take
actions and to execute and deliver documents as may be
reasonably necessary to effectuate the purposes of this
Agreement.
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(D) WAIVER. Any failure of any party to this Agreement to comply
with any of its obligations, agreements, or conditions
hereunder may be waived in writing by the party to whom such
compliance is owed. The failure of any party to this Agreement
to enforce at any time any of the provisions of this Agreement
shall in no way be construed to be a waiver of any such
provision or a waiver of the right of such party thereafter to
enforce each and every such provision. No waiver of any breach
of or noncompliance with this Agreement shall be held to be a
waiver of any other subsequent breach or noncompliance.
(E) ASSIGNMENT. Neither this Agreement nor any right created by
it shall be assignable by either party without prior written
consent of the other.
(F) NOTICES. Any notice or other communication required or
permitted by this Agreement must be in writing and shall be
deemed to be properly given when delivered in person to an
officer of the other party, when deposited in the United
States mails for transmittal by certified or registered mail,
postage prepaid, or when deposited with a public telegraph
company for transmittal, or when sent by facsimile
transmission charges prepared, provided that the communication
is addressed:
(i) In the case of the Company:
C-3D Digital, Inc.
330 Washington Boulevard, Suite 507
Marina del Rey, California 90292
Telephone: (310) 305-3659
Telefax: (310) 305-1455
Attention: J. Michael Heil
(ii) In the case of the Advisor:
Bonnie Jean C. Tippetts
268 West 400 South
Salt Lake City, Utah 84101
Telephone: (801) 575-8073
Telefax: (801) 575-8092
or to such other person or address designated in writing by the Company
or Advisor to receive notice.
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(G) HEADINGS. The section and subsection headings in this
Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(H) GOVERNING LAW. This Agreement was negotiated and is being
contracted for in Utah, and shall be governed by the laws of
the State of Utah, and the United States of America,
notwithstanding any conflict-of-law provision to the contrary.
(I) BINDING EFFECT. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their
respective heirs, administrator, executors,
successors, and assigns.
(J) ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties hereto and supercedes any and
all prior agreements, arrangements, or understandings
between the parties relating to the subject matter of this
Agreement. No oral understandings, statements, promises, or
inducements contrary to the terms of this Agreement exists.
No representations, warranties, covenants, or conditions,
express or implied, other than as set forth herein, have
been made by any party.
(K) SEVERABILITY. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in
full force and effect.
(L) COUNTERPARTS. A facsimile, telecopy, or other reproduction of
this Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument, by one or more parties hereto and such executed
copy may be delivered by facsimile or similar instantaneous
electronic transmission device pursuant to which the signature
of, or on behalf of, such party can be seen. In this event,
such execution and delivery shall be considered valid, binding
and effective for all purposes. At the request of any party
hereto, all parties agree to execute an original of this
Agreement as well as any facsimile, telecopy or other
reproduction hereof.
(M) TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement and of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date above written.
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The "Company" "Advisor"
C-3D Digital, Inc. BonnieJean C. Tippetts
A Utah Corporation A Utah Resident
By: By: /s/ BonnieJean C. Tippetts
------------------------------- --------------------------------
Name: Name: BonnieJean C. Tippetts
Title: Title:
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EXHIBIT 10.15
WARNER BROS.
DOMESTIC PAY-TV
CABLE & NETWORK FEATURES
1325 Avenue of the Americas
New York, New York 10019
212 506-4355
Fax: 212 506-4385
E-mail: [email protected]
January 20, 2000
Mr. Joanne Hedgcock
Manager - Programming Operations
Hotel Movie Network
1545 N. McQueen, Suite 4
Gilbert, AZ 85233
Dear Joanne:
The following, are the major points of an Agreement between Warner Bros.
Domestic Pay-TV, Cable and Network Features (WB) and Hotel Movie Network
(HMN). HMN, a subsidiary of C-3D Digital, is a distributor of motion pictures
and other product to the hotel industry. HMN serves approximately 7,800 rooms
(as of 1/20/2000) in venous locations throughout the United States and
Canada; approximately 2,800 rooms are VOD-enabled, the remaining 5,000 rooms
offer scheduled PPV movies.
1. Term: One (1) year (February 1, 2000 - January 31, 2001.
2. Titles: HMN agrees to schedule all titles (other than subtitled films
and documentaries distributed to the Hotel pay-per-view marketplace by WB
with a domestic box office of more than $10 million (as repotted in the
issue of Weekly Variety' published immediately preceding a given feature's
release date to the hotel marketplace). Title(s) with box office of less
than $10 million (and/or subtitled nines or documentaries) will be
negotiated individually.
3. License Fees: HMN will remit to WB an Advance Guarantee for every
licensed title prior to release of master tapes. The Total License Fee will
be calculated as the total number of Buys from HMN serviced hotel rooms
multiplied by the greater of the following percentage of the
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gross ticket price (i.e. the retail price charged to the guest) or S3.66
minimum, fee per buy. The Advance Guarantee shall be subtracted from the
Total License Fee, but in no case shall WB receive less than the Advance
Guarantee amount. A "buy. shall be defined as any successful transmission
of the Titles, including all employee views and promotional giveaways,
License fees for titles with box office less than $10 million (indoor
subtitled films or documentaries) will be negotiated individually.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
DOMESTIC ADVANCE MONTH MONTH MONTH MONTH ROOMBASE /MIN.
BOX OFFICE GUARANTEE 1 2 3 4 LICENSE PERIOD
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Over $100 million $2,000 50% 50% 50% 49% 100% - Three Months
- ------------------------------------------------------------------------------------------------------------------
$50 - $99.9 million $1,500 50% 50% 50% 48.5% 100% - Three Months
- ------------------------------------------------------------------------------------------------------------------
$10 - $49.9 million $1,000 50% 50% 48.5% 46% 100% - Two Months
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
4. Availability Dates. Titles will be made available no later than 6 months
after the month of wide theatrical release, with the exception of those
delayed for Academy Award consideration. (Titles later than 6 months
after theatrical, with the exception of Academy Award delayed pictures,
will be negotiated separately.) Only two (2) Academy Award titles will
be included during the one (1) year Term.
5. Payment Terms: Advance Guarantees shall be paid no later than the 1st of
the month preceding the availability month. All additional payments
shall be made not later than forty-five (45) days after the month of
exhibition. HMN shall deliver to We a detailed statement (due fifteen
(15) days following the month in which WB product is exhibited) setting
forth: the total amounts due with respect to each picture for that month
including gross revenue (and applicable retail rates charged), the total
number of HMN serviced properties, the total number of rooms, and a buy
rate summary for each picture (which includes number of title rentals
and respective percentage of total rentals).
6. Marketing: HMN mill utilize the marketing materials made available by
WB. WB will make materials available in a timely fashion. HMN may
promote any title 30 days in advance of availability to the public; 60
days in advance to the trade, Concurrent with placement in hotels, HMN
shall provide WB with copies of room cards, guides, and any other
promotional material (i.e. on-air promotions, Preview channel tapes,
etc.) whereby HMN utilizes WB marketing materials.
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7. Materials: Tapes (including Masters) and other duplication materials
will be delivered to HMN at HMN's cost Promotional materials (i.e. press
kits, color artwork, etc.) will be made available at WB's cost. HMN will
request from WB a broadcast quality dub of the Master (in the
appropriate font) not easier than 60 days in advance of the availability
period commencement date.
8. Editing: Titles may not be edited in any way.
9. Time-Compression: WB may deliver time-compressed versions for time slot
considerations. The decision to time-compress will rest solely with WB.
10. Erasure: Immediately following the end of the license period for each
respective picture, all tapes will be degaussed (and appropriate
certificates forwarded to WB) unless WB requests that tapes be resumed
to WB.
11. System/Security: Movies will be delivered via VOD and/or Scheduled
systems. Both systems operate with videotape materials. The picture
quality and security of the overall system must meet with the approval
of WB. If at any time WB is not satisfied with the quality of the signal
or the Security of the system, WE] shall have the right to terminate the
agreement.
12. Audit Rights: See Exhibit "A"
If the foregoing meets with your understanding, please sign below in the
space set forth.
Yours sincerely,
/s/ Christine W. Labrecque
------------------------------------
Christine W. Labrecque
Vice President, PPV & VOD
ACCEPTED AND AGREED:
/s/ Joanne Hedgcock /s/ Paul D.H. LaBarre
- ------------------------------------- ------------------------------------
Joanne Hedgcock Paul D.H. LaBarre
Manager - Programming Operations VP of Television Operations
Hotel Movie Network Hotel Movie Network
cc: J. Calman
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EXHIBIT "A"
ACCOUNTING PROVISIONS
The following provisions shall be applicable to the payment of Warner's
license fee and the audit of the books and records of Licensee:
(a) Warner shall have the right, upon reasonable written notice and
during normal business hours, to audit, check and copy ("Audit') the
books and records of Licensee (and/or its affiliated hotels
("Affiliates") in the event that the Agreement to which this Exhibit is
attached provides for Affiliates) relating to licensee's service and
the computation, collection and remittance of license fees to Warner.
Such books and records shall be maintained at the principal executive
offices of Licensee and/or Affiliate at all times throughout the Tarns
and any renewal and for three years thereafter. Such right to audit
shall not be exercised more frequently than once in any calendar year
(except for follow up audit if material differences found) and shall be
limited to statements rendered to Warner within three (3) years of the
commencement of the Audit, provided, however, that Warner shall have
the right to exercise its right to Audit an Affiliate notwithstanding
that Licensee may have recently completed an Audit. The exercise by
Warner or any right to check or to audit at any time(s) or the
acceptance try Warner of any statement or payment shall be without
prejudice to any of the rights or remedies of Warner and shall not bar
Warner from thereafter disputing the accuracy of such payment or
statement and Licensee and/or its Affiliates shall remain fully liable
for any balance due under the terms of this Agreement.'
(b) Any and all amounts which are not paid to Warner (whether such amounts
are payments provided for in the agreement to which this Exhibit is attached
or such amounts were determined to be due on an audit) at the time and in the
manner specified in the Agreement shall accrue interest at a rate of one and
one-half (11/2%) percent per month (pro-rated on a daily basis).
(c) Warner shall have the right to review all audits of Affiliates performed
by Licensee. Only Warner shall have the right to negotiate or settle with
Licensee or an Affiliate for any amount less than 100% of 'tine amount
determined by an audit.
O Warner shall be paid for any successful transmission of the Programs,
including all employee views and promotional giveaways.
(e) If collections are performed by a third panty, reporting must be by:
(i) Title
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(ii) Channel (if applicable).
(iii) Distinguish buys by different retail prices
(iv) Number of buys even if zero.
(v) Exhibition periods
(vi) Accounts Receivable balances, including uncollected amounts.
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EXHIBIT 10.16
AGREEMENT
This agreement (the "Agreement"), dated as of February 8, 2000, by
and between Trimark Pictures, Inc. ("Trimark") and Chequemate International,
Inc., a Utah corporation, d/b/a C3D Television, ("Company"), shall set forth
the terms and conditions, with reference to the following:
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree to license up to fifty
(50) pictures ("Pictures") to Company for a license period of thirty (30)
months as of the date this agreement is signed by Trimark as follows:
4. TRIMARK DELIVERY.
Upon execution of this Agreement, Trimark shall make delivery to
Company, by way of lab access letters, the first one (1) Picture "master".
Once the first master has been digitized and the items set forth in paragraph
2.b. and 2.c. have been delivered to Trimark, then, Trimark shall provide
Company with access to an additional one (1) master, and this process may
continue until the earlier of Trimark's termination of this Agreement or
until Trimark has delivered to Company a total of fifty (50) Picture masters
from Trimark's library. Selection of the Pictures shall be at Trimark's sole
discretion, and Trimark may substitute alternative pictures for any of the
previously delivered Pictures upon sixty (60) days' written notice.
5. COMPANY DIGITIZATION SERVICES
At Company's sole cost and expense, Company shall digitize the Pictures
as follows:
a. In the 3D format for Company and Trimark's use;
b. In the 2D format for Trimark's exclusive use (fully
authored per the specifications set forth by Trimark,
herein attached and incorporated as Exhibit "A"); and
c. In a format suitable for streaming with Windows Media
Player, per Trimark's specifications herein attached and
incorporated as Exhibit "B".
d. Company shall perform the digitization of one-half of the
Pictures within six (6) months of the signing of this
Agreement.
6. DISTRIBUTION OF 3D PRODUCT
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a. Trimark may, in its sole discretion, on a title by title
basis, distribute Company's 3D formatted versions of
Trimark's Pictures coupled together with Trimark's DVD
format releases (or with any other format releases). In
such event, Company shall be solely responsible for paying
any costs which Trimark incurs as a result of adding the
3D version on such formats, and Company shall be entitled
to ten percent (10%) of the net profits arising from the
sale of such DVDs (if any).
b. Trimark may, in its sole discretion, on a title by title
basis, solely distribute Company's 3D formatted versions
of Trimark's Pictures as Trimark DVD format releases (or
as any other format releases). In such event, Company
shall be solely responsible for paying any costs which
Trimark incurs solely as a result of using the 3D version
in such format, and Company shall be entitled to fifty
percent (50%) of the net profits arising from the sale in
such format (if any).
c. Company shall distribute the Pictures in 3D form on
Company's 3D "cable" channel (such Pictures shall not in
any form, be distributed or delivered over the internet or
over any other delivery system). Company shall pay to
Trimark, on a quarterly basis, ten percent (10%) of
Company's gross subscriber income from Trimark Picture's
pro-rata share of air time on Company's 3D network
distribution. Company shall supply pairs of 3D glasses to
Company's cable customers. Other than the right to
distribute the 3D product on Company's 3D network, Company
shall have no right (and shall have no right to grant to
any third party) to distribute or otherwise exploit any
Picture (or portion thereof).
d. Subject to third-party contractual restrictions, Company
shall have the right to create trailers of the Pictures in
the 3D format, such trailers not to exceed 2 minutes in
length. Company shall only have the right to exhibit such
trailers on Company's 3D cable channel, but only after
receiving Trimark's written approval of the subject
trailers.
<TABLE>
<CAPTION>
Example $$
<S> <C>
Subscriber count 1,000,000
Revenue per subscriber $5.50
Total $5,500,000
Gross revenue share 10% $550,000
Trimark net revenue @ 20% of grid $110,000
</TABLE>
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7. LICENSE FEE
As a license fee for the rights granted to Company hereunder, upon
execution of this Agreement, Company shall issue to Trimark 100,000 shares of
Company's restricted common stock. Company hereby agrees to register such
stock, so as to make it free-trading, and to initiate the registration
process immediately upon execution of this Agreement.
8. ASSIGNMENT
Trimark may grant, assign or sublicense any or all of its rights under
this Agreement to any third party. Company shall not assign this Agreement or
any of Company's rights or obligations herein except upon Trimark's prior
written consent. Any purported assignment in violation of this paragraph
shall be null and void and of no effect.
9. ADDITIONAL DOCUMENTS
Company shall execute such additional documents as may be necessary or
desirable for Trimark to exploit and enforce its rights hereunder. In the
event that Company shall fail to deliver any such additional documents
requested by Trimark, Company hereby irrevocably appoints Trimark to execute
any such additional documents as Company's attorney-in-fact, such power being
coupled with an interest.
10. REMEDIES / INDEMNIFICATION
Company hereby acknowledges that the services Company is to perform
hereunder are of a unique, unusual, extraordinary and intellectual character
involving high skill and giving them peculiar value, the loss of which cannot
be reasonably or adequately compensated by damages in an action at law, and
that a breach of this Agreement by Company shall cause Trimark irreparable
injury and damage. Company therefore expressly agrees that Trimark shall be
entitled to seek injunctive and other equitable relief to prevent a breach by
Company of this Agreement or any part hereof or to secure its enforcement.
Resort to such equitable relief shall not be considered a waiver of any other
rights or remedies which Trimark may have hereunder, at law, in equity, or
otherwise. It is expressly agreed and understood that in no event shall
Company be entitled to terminate or rescind this Agreement, or to obtain
injunctive relief with respect to the exercise by Trimark of the rights
granted hereunder, it being understood that Company's sole remedy shall be an
action at law for damages.
Company shall indemnify, defend, and hold harmless Trimark, its parent,
subsidiaries, affiliates, assignees, licensees, sublicensees, distributors,
sub-distributors and dealers, and the directors, officers, agents,
consultants and representatives of the foregoing (the "Trimark Indemnitees"),
from all claims, costs, liabilities, obligations, judgments or damages
(including
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reasonable attorneys' fees), arising out of or for the purpose of avoiding
any suit, claim, proceeding or demand or the settlement thereof, which may be
brought against any of the Trimark Indemnitees by reason of the breach or
alleged breach of any of the warranties, representations or obligations made
by Company herein.
11. MISCELLANEOUS
a. This Agreement cancels and supersedes all prior agreements and
understandings between the parties relating to the subject matter hereof, and
contains all terms, conditions and promises of the parties hereto in the
premises, and no modification of any provision hereof shall be valid or
binding unless in writing.
b. No officer, employee or representative of Trimark has any authority
to make any representation or promise not contained in this Agreement, and
Company expressly agrees that Company has not executed this Agreement in
reliance on any such representation or promise.
c. Any license(s) granted hereunder shall immediately revert back to
Trimark in the event of Company's bankruptcy, assignment for the benefit of
creditors, or appointment of a receiver in behalf of Company.
d. All other terms and conditions of this Agreement shall be in
accordance with commonly-practiced industry standards.
9. GOVERNING LAW; CAPTIONS, ETC.
This Agreement shall be construed in accordance with the laws of the
state of California applicable to agreements which are executed and fully
performed within such state.
The captions used in connection with the sections, paragraphs, and
subparagraphs of this Agreement are used only for purposes of reference and
shall not be deemed to govern, limit, modify, or in any manner affect the
scope, meaning or intent of the provisions of this Agreement or any part
thereof, nor shall such captions be given any legal effect.
If any action or proceeding commences in any court in the state of
California for the purpose of enforcing this Agreement or any rights granted
herein or any order or decree predicated thereon, any summons, order to show
cause, writ, judgment, decree or other process, issued by such court, may be
served on Company at the address indicated in the Agreement or personally
without the state of California, and when so served, Company shall be subject
to the jurisdiction of such court as though the same had been served within
the state of California.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
first written above.
TRIMARK PICTURES, INC. COMPANY
/s/ Cami Winikoff /s/ J. Michael Heil
------------------------------ --------------------------------
Signature Signature
Cami Winikoff J. Michael Heil
------------------------------ --------------------------------
Print Name Print Name
Executive Vice President CEO
------------------------------ --------------------------------
Title Title
2/8/00 2/8/00
------------------------------ --------------------------------
Date Date
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EXHIBIT 10.17
EXCLUSIVE SOFTWARE LICENSING AGREEMENT
(JAPAN)
THIS AGREEMENT is made this 17th day of June, 1999 ("EFFECTIVE
DATE") between C3D Digital, (hereinafter "C3D Digital"), a Utah, U.S.A.
corporation, whose principal place of business is 57 West 200 South #350,
Salt Lake City, Ut, and Software Too Corporation (hereinafter "LICENSEE"), a
business entity incorporated pursuant to the laws of the country of Japan, as
follows:
WHEREAS, C3D DIGITAL and LICENSEE desire to enter into an agreement
for the supply and license of certain computer software in the country of
Japan;
NOW, THEREFORE, C3D DIGITAL hereby appoints LICENSEE as an exclusive
Licensee within the country of Japan and all of its legal subdivisions,
territories and possessions according to the boundaries accepted by the
United Nations. The license of the Products hereunder shall be governed only
by the terms and conditions of this Agreement.
1. DEFINITIONS
1.1 Products
For purposes of this Agreement, Products and defined as any
software products offered for sale by C3D DIGITAL as specifically set
forth in the addendum attached hereto as "C3D DIGITAL PRODUCTS LICENSE
LIST", Addendum A and as modified from time to time by C3D DIGITAL. It
is intended that the LICENSEE shall have the right to sell all of the
Products.
1.2 Localization
"Localization" is defined as translation of the English language
version of the document software of the Products into the Japanese
language.
1.3 Territory
"The Territory" is defined as the country of Japan and all of its
possessions and territories as acknowledged by the United Nations.
1.4 Computer Program
"Computer Program" is defined as any instruction or plurality of
instructions for controlling the operation of a CPU.
1.5 Customers
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"Customers" are defined as third party customers of LICENSEE who
purchase and/or receive license for the Products for their own internal
use or for resale or sublicense in accordance with the terms and
conditions herein.
1.6 End Users
"End Users" are defined as third party customers of LICENSEE or
LICENSEE's Customers who purchase and/or receive license for the
Products for their own internal use only.
2. ROYALTY STRUCTURE GOVERNING THE LICENSE
The royalty structure governing the sale of the products shall be
governed by the addendum entitled "ROYALTY STRUCTURE", Addendum B attached
hereto and incorporated by reference.
3. APPOINTMENT
3.1 LICENSEE'S Obligations
LICENSEE shall perform in accordance with the terms and conditions set
forth in " LICENSEE'S DUTIES AND OBLIGATIONS", Addendum C attached
hereto and incorporated herein by reference.
4. ROYALTY PAYMENT
All payments made during the term of this Agreement, or during any renewal
terms, shall be made by LICENSEE to C3D DIGITAL based on the addendem
entitled "ROYALTY STRUCTURE", Addendum B attached hereto and incorporated by
reference via wire transfer to C3D DIGITAL'S bank account at the following
designation:
C3D DIGITAL
KeyBank National Association
Salt Lake City, Ut 84115
Routing Number 124000 737
Account Number 440580045092
C3D DIGITAL shall be deemed to have been paid at such time as payment is
irrevocably credited to its bank account.
The price of the Products shall be quoted and fixed in Japanese Yen.
Payment for the price of the Products shall be made in U.S. Dollar which
shall be equivalent to the price of the Products quoted in Japanese Yen at
the date of the delivery of the Products.
Exchange rate for above payment shall be the selling rate of the US Dollars
quoted by Tokyo Mitsubishi Bank at the date of the Royalty report.
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5. Force Majure
Neither party shall be liable for any damages or penalties for delay in
delivery or for failure to give notice of delay when such delay is due to the
elements, acts of God, acts of civil or military authority, fires or floods,
epidemics, quarantine restrictions, war (within the legal borders and/or
international water limits of the Nation(s) in which either Party to this
Agreement is required under the terms of this Agreement to specifically
perform), riots, strikes, lock-outs, or other labor disputes, delays in
transportation, delays in delivery by vendors and any changes in
specifications which are requested by LICENSEE and agreed to by C3D DIGITAL
or any other causes, without limitation, which are beyond the reasonable
control of the delayed party. The delivery date shall be considered extended
by a period of time equal to the time lost as a result of any delay which is
excusable under this clause; provided, however, that such extension shall in
no event exceed one month and in the event the extension period exceeds one
month, LICENSEE may cancel the applicable individual contract.
(s) RIGHT TO USE THE PRODUCTS
Right to Use The Products
Subject to the terms and conditions of this Agreement, C3D DIGITAL
hereby grants to LICENSEE the exclusive right to sell, distribute, and
use the Products.
6.2 Right to Grant C3D DIGITAL sublicenses to Customers
6.2.1 Subject to the terms and conditions of this Agreement,
LICENSEE shall facilitate the grant of sublicenses on C3D
DIGITAL's behalf to its Customers to use the Software, subject
to the terms set out herein.
(vii) REPORTS AND RECORDS
1. Required Records
LICENSEE shall keep full, clear and accurate records
with respect to all copies of the Products sold.
7.1.2 LICENSEE shall furnish to C3D DIGITAL within ten (10)
days after the end of each month, a statement setting out
sales, inventory levels and any such other material
transactions. If there were not transactions during that
month, that fact be shown on the report.
7.2.2 Right to Audit
C3D DIGITAL shall have the right, during LICENSEE'S normal
business hours, to have an independent account verify the
records of LICENSEE regarding the supply of Products that are
reasonably necessary to verify the accuracy of reports issued
from Section 7.1.2. The account shall
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maintain the confidence of such information except to provide
C3D DIGITAL with a confirmation of the accuracy of LICENSEE's
calculations, or a description of the deviations therefrom.
8. WARRANTY
8.1 Software Warranty
8.1.1 C3D DIGITAL warrants that it owns and has the right to
distribute the Products and grant LICENSEE the right to sell
the Products on C3D DIGITAL'S behalf.
8.1.2 C3D DIGITAL warrants that the software will conform to
the agreed specifications and be free from defects in for a
period of one hundred fifty (150) days from the Date of
Delivery, or until the time when 90 days have passed from the
date on which the Products are or software is delivered to the
End Users, whichever is shorter. C3D DIGITAL's only liability
under this warranty shall be to repair or replace any such
defects.
8.2 General
8.2.1 The above warranties are for the benefit of and shall
apply only to LICENSEE.
8.2.2 C3D DIGITAL's warranties shall not apply to any defects
of the Products, which have has been subjected to accident,
neglect, misuse, abuse, vandalism, negligence in
transportation or handling, failure of electrical power, air
conditioning, humidity control, causes other than ordinary
use, or causes beyond C3D DIGITAL's control, or if the
Products was not properly maintained by LICENSEE during the
warranty period; provided, however that C3D DIGITAL shall have
duty to prove the above for its exemption from the warranty
obligation.
8.2.3 There shall be no warranty or liability for any
Products which has been modified by LICENSEE without C3D
DIGITAL'Ss prior written approval.
8.2.4 The Products outside the scope of these warranties will
be furnished at C3D DIGITAL's then current standard charges.
8.2.5 C3D DIGITAL shall have full and free access to the
Products at LICENSEE's site, subject to the approval of
LICENSEE, which shall not be unreasonably withheld.
8.3 Exclusion of Liability
There are no warranties, conditions, guarantees or representations as
to merchantability or fitness for a particular purpose or other
warranties, conditions, guarantees or representations, whether express
or implied, oral or in writing, except as expressly stated herein.
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9. LIMITATION OF LIABILITY
9.1 LICENSEE's Failure
In no event will C3D DIGITAL be liable for any loss or damage caused by
LICENSEE's failure to perform LICENSEE'S responsibilities.
9.2. Consequential Loss
C3D DIGITAL shall not, in any event, be liable for any indirect,
special, emotional or consequential damages, however arising
(including, but not limited to loss of anticipated profits) in
connection with or arising out of the furnishing, functioning or use of
the Products or any item and shall not be liable for any other damages
except as provided in this Agreement.
9.3 Time
Except in respect of the liability of C3D DIGITAL for personal injury,
no action, regardless of form, arising out of the transactions under
this Agreement may be brought by LICENSEE more than two (2) years after
the cause of the action has accrued.
10. GEOGRAPHIC LIMITATIONS AND COMPETITIVE PRODUCT RESTRICTION
For the duration of this Agreement, LICENSEE agrees that, unless otherwise
specifically authorized in writing by C3D DIGITAL, it will not solicit the
sale, license, or supply the Products, maintain an office or branch for that
purpose, or hold stocks, directly or indirectly sell or inventory the
Products outside the Territory.
11. INDEMNIFICATION
Except as provided in this Agreement, either party agrees to indemnify and
hold harmless the other party, its agents, employees, successors and assigns
from and against any and all liabilities, losses, damages, claims, suits and
expenses, including legal expenses (including but not limited to attorney's
fees), of whatsoever kind and nature imposed on, incurred by, or asserted
against the other party, its agents, employees, successors and assigns
relating to or arising out of the possession, use, selection, delivery,
purchase, lease or operation of the Products, or any failure on the part of
the first party to perform or comply with the terms of this Agreement.
12. PATENTS AND COPYRIGHTS
12.1 Defense and Indemnification
Subject to the conditions of this clause, C3D DIGITAL agrees that it
will defend LICENSEE, at C3D DIGITAL's cost and expense, and will
indemnify and hold harmless LICENSEE, from and against all suits,
claims, losses, damages and expenses arising from any actual
infringement of any patent, trademark, or copyright, based upon the as
a result of import, sale or use of any Products purchased hereunder.
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12.2 Further Representation
C3D DIGITAL further represents that as of the date of this Agreement,
no suits, claims or proceedings have been made or instituted against
C3D DIGITAL alleging that C3D DIGITAL has violated any patent,
trademark, copyright, registered design, trade secret or other
proprietary right of any third party in relation to the Products.
12.3 Notice and Defense
LICENSEE shall give C3D DIGITAL prompt written notice of any such claim
or action upon LICENSEE becoming aware of same. In addition, LICENSEE
shall, at C3D DIGITAL's cost, provide all reasonable assistance in C3D
DIGITAL's defense or settlement efforts and C3D DIGITAL shall have the
sole authority to defend or settle such claim.
12.4 Limitation of Liability
C3D DIGITAL shall not be liable for any alleged infringement of patent
or copyright if such infringement is based upon the use of the Products
in combination with other equipment, software, products, or devices not
furnished by C3D DIGITAL if such claim would have been avoided but for
the modification or combination.
12.5 Entire Warranty
The foregoing states the entire warranty and liability of C3D DIGITAL
with respect to any alleged or actual patent, trademark, or copyright
infringement.
13. DESIGN CHANGES
Subject to Clause 4.3, C3D DIGITAL reserves the right to make substitutions
and modifications in the specifications of Products to be supplied hereunder.
C3D DIGITAL assumes no obligation to modify or change any Products previously
delivered, or to supply new Products in accordance with earlier
specifications.
14. DOCUMENTATION
Standard documentation will be supplied by C3D DIGITAL in accordance with C3D
DIGITAL'S Documentation Policy in effect as of the date an Order is accepted
by C3D DIGITAL.
Additional documentation is available under C3D DIGITAL'Ss prevailing terms,
conditions and prices.
15. TERM AND TERMINATION
15.1 Term
This Agreement shall commence upon Effective Date, which shall be the
day of signing of the agreement. Thereafter, this Agreement shall
remain in effect for a period of two years from the Effective Date.
This Agreement may be extended upon written approval of the parties for
one (1) year. Each such extension shall require written approval.
15.2 Termination
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Either party may terminate this Agreement at any time by notice in
writing to the other party, if the other party commits an
irremediable breach of this Agreement, persistently repeats a
remediable breach, or commits any remediable breach and fails to
remedy it within thirty (30) days after receipt of notice of the
breach. LICENSEE shall be deemed to be in breach if it fails to
advertise, provide reasonable and adequate technical support or if
it is supporting or selling a directly competitive product. If the
other party shall commit an act of bankruptcy, to, or be put into
liquidation or receivership, pass a resolution for its winding up
(otherwise than for the purpose of amalgamation or reconstruction),
or make any assignment for the benefit of its creditors, then the
other party may terminate this Agreement forthwith upon notice.
15.3 Other Remedies
Termination of this Agreement shall be in addition to any other
remedies which either party may have under this Agreement or otherwise.
15.4 Results of Termination by C3D DIGITAL
15.4.1 In the event that termination is properly effected by
C3D DIGITAL under the terms and conditions of this Agreement,
no residual rights, except as set forth below, shall remain
with LICENSEE hereunder, who shall accordingly be obliged to
return to C3D DIGITAL, at LICENSEE's sole cost and expense
whatever C3D DIGITAL may request in respect of the Products
supplied to LICENSEE hereunder, provided that LICENSEE may
sell or dispose of any Products to any third party after such
expiration or the termination hereof. On return of the
Products, C3D DIGITAL shall repay to the LICENSEE the amounts
paid in respect of such Products provided they are new unused
and in the same condition as when they left C3D DIGITAL's
premises.
15.4.2 Upon LICENSEE's default in the payment of monies
due in addition to other remedies which may be available,
C3D DIGITAL shall be authorized to suspend all deliveries
and to cancel any pending individual contract orders, and
shall render all pending invoices immediately payable.
15.5 Expiration of Agreement
In the event that this Agreement shall expire and LICENSEE is in full
compliance with all its terms and conditions, LICENSEE shall be
permitted to continue selling, on C3D DIGITAL'S behalf, its remaining
inventory of Products, on a non-exclusive basis, upon the terms and
conditions of this Agreement for a term of six (6) months from the date
of expiration. The expiration of this Agreement shall not give rise to
the payment of any indemnity whatsoever by either party to the other.
In this connection, LICENSEE expressly waives any indemnity for loss of
clientele, investments not fully amortized, any employee's termination
indemnities and all advertising and media costs.
15.6 No Release
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Any expiration and/or termination of this Agreement shall not alter the
rights, duties and obligations of the parties pursuant to the terms and
conditions of this Agreement, or for any orders accepted by C3D
DIGITAL individual contracts entered into prior to the date of such
expiration and/or termination.
16. RIGHTS AND CONFIDENTIALITY
16.1 The Products
LICENSEE agrees that title and ownership to the Products and
proprietary rights therein, and any modifications or upgrades thereof
whether made by C3D DIGITAL or LICENSEE, shall remain exclusively
with C3D DIGITAL.
16.2 Proprietary Information
LICENSEE agrees that all plans, drawings, specifications, and other
information supplied by C3D DIGITAL to LICENSEE, or derived therefrom,
including the Products and all information relating to them ("the
Confidential Information") except for the ones which are already known
to LICENSEE at the time of disclosure or the ones which are provided by
any third party, shall remain the property of C3D DIGITAL. LICENSEE
agrees to use its best efforts (which in any event shall not be less
than the efforts LICENSEE takes to ensure the confidentiality of its
own proprietary and other confidential information) to keep any and all
of the Confidential Information secret and confidential, and shall not
copy or publish or disclose it to others, or authorize its employees or
agents or anyone else to copy, publish or disclose it to others, except
as provided in this Agreement, or with C3D DIGITAL's written approval,
and shall return such Confidential Information to C3D DIGITAL at its
request.
16.3 Duties upon Termination
Except as provided for herein, upon termination of the License herein
granted, LICENSEE shall deliver to C3D DIGITAL all material furnished
by C3D DIGITAL pertaining to the Confidential Information and shall
not thereafter make any use of it whatsoever.
17. ASSIGNMENT AND SUBCONTRACTING
17.1 Assignment by LICENSEE
This Agreement is personal to LICENSEE, and LICENSEE may not assign or
transfer any of its rights or obligations under this Agreement without
the prior written consent of C3D DIGITAL.
17.2 Assignment by C3D DIGITAL
C3D DIGITAL may delegate the performance of any of its obligations
hereunder to any corporation which controls, is controlled or is under
common control with C3D DIGITAL; provided that C3D DIGITAL shall remain
liable for performance of the obligations so delegated. In addition,
C3D DIGITAL may assign its rights to payments due and owing to it
hereunder.
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18. NOTICE REQUIREMENT
18.1 Notice to the Bank of Japan
The parties acknowledge and agree that LICENSEE shall notify the Bank
of Japan, if it deems the same necessary, pursuant to the Foreign
Exchange and Foreign Trade Control Law.
18.2 Notice to the Fair Trade Commission
The parties further acknowledge and agree that LICENSEE, if LICENSEE
deems it necessary, shall report the conclusion of the Agreement to the
Fair Trade Commission within thirty (30) days after the execution
thereof.
18.3 Preparation and Submission of Required Notices
LICENSEE shall prepare the notifications and reports mentioned in the
prior paragraph. C3D DIGITAL shall cooperate with and assist LICENSEE
by furnishing all information needed therefor. C3D DIGITAL or its
agents shall have the right fully participate in all aspects of the
procedures for preparing such notifications and reports, and shall be
allowed to examine all documents prior to their submission to the
appropriate authorities.
18.4 Notice to C3D DIGITAL
LICENSEE shall furnish copies to C3D DIGITAL of satisfactory evidence
of the government notifications and reports made by it pursuant to this
Article.
19. GENERAL TERMS AND CONDITIONS
19.1 No Waiver
Failure by C3D DIGITAL the party hereto to enforce at any time or for
any period of time the provisions of this Agreement shall not be
construed as a waiver of such provisions, and shall in no way affect
C3D DIGITAL's right to later enforce such provision.
19.2 Severability
If any part of this Agreement is determined by any court or tribunal of
competent jurisdiction to be wholly or partially unenforceable for any
reason, such unenforceability shall not affect the remaining parts of
this Agreement.
19.3 Remedies
All rights and remedies conferred under this Agreement or by any other
instrument or law shall be cumulative and may be exercised singularly
or concurrently.
19.4 Independent Third Party
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LICENSEE is not and will not hold itself out as the representative,
agent, commission-sales agent, servant or employee of C3D DIGITAL for
any purpose. This Agreement creates no relationship of joint venture,
partnership, limited partnership, or agency between the parties, and
the parties hereby acknowledge that no other facts or relations exist
that would create any such relationship between them. Neither party has
any right or authority to assume or to crease any obligation or
responsibility on behalf of the other party except as may from time to
time be provided by written instrument signed by both parties.
19.5 Headings
The headings contained in this Agreement are for convenience only and
shall not affect the interpretation or meaning of this Agreement.
19.6 Survival
Notwithstanding the expiration or termination of this Agreement or any
renewal period hereof, it is acknowledged and agreed that those rights
and obligations which by their nature are intended to survive such
expiration or earlier termination shall survive.
19.7 Entire Agreement
This Agreement constitutes the entire agreement between the parties and
supersedes all prior agreements, understandings and negotiations with
respect to the subject matter thereof. This Agreement may not be
changed or modified except by a written instrument duly executed by
each of the parties hereto.
19.8 Law, Jurisdiction, Arbitration
19.8.1 Governing Law
The formation, validity, construction and performance are
governed by statutory, decision or other laws of the State of
Utah, United States of America, as of the date hereof.
19.8.2 Arbitration
All disputes, controversies or differences which may arise
between the parties hereto, out of or in relation to or in
connection with this Agreement, or for any breach hereof,
shall be settled by arbitration in Salt Lake City, Utah,
U.S.A.
The "appointing authority" provided for in said rule shall
be the American Arbitration Association. The prevailing
party in any such arbitration shall be entitled to an award
of costs and attorneys' fees.
1 Jurisdiction
In the event litigation shall, for any reason, ensue between
the parties in connection with this Agreement, the exclusive
forum and jurisdiction shall be the U.S. Federal District
Court of Utah, Salt Lake City, Utah, U.S.A..
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20. NOTICES
All notices required or desired to be given hereunder shall be in writing and
if not personally delivered, be sent by telex or facsimile (with a copy by
ordinary mail) or by registered or recorded delivery. If faxed or personally
delivered, notices shall be deemed to have been given on the day when
personally delivered or faxed, addressed to the other party at the address
for service specified herein, provided that 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. If mailed by registered or
certified mail, notices shall be deemed to have been given when received
unless otherwise specifically stated.
Mail To: C3D Digital, Inc.
Attn: Dennis Derrick
567 South Valley View Drive
St. George, Utah 84770
Mail To: Software Too
Attn:
LICENSEE acknowledges that it has read and agrees to the terms and conditions
contained in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized representatives as of the date set forth
below.
DATED this 17th day of June, 1999.
/s/ Dennis Derrick
- -------------------------------------------
Dennis Derrick, Vice President
3D.COM (A subsidiary of C-3D Digital, Inc.)
SOFTWARE TOO CORP.
/s/
- ---------------------
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Addendum A
C3D DIGITAL PRODUCTS LIST
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Addendum B
ROYALTY STRUCTURE
LICENSEE shall compensate C3D DIGITAL as follows:
I. ROYALTY:
LICENSEE agrees to guarantee $96,000 a month for six months from the signing
of this agreement. Any sales above $96,000 shall go to pay down the current
inventory credit outlined in Addendum D. C3D DIGITAL shall receive royalty
payments based on the following: 10,000 minimum payment. Any sales above the
minimum payments shall go to pay down the current inventory credit.
A. General License
Thirty percent (30%) of the Japan list price (Yen) on localized and English
language version sold through channels (i.e., stores and middlemen).
B. Sales to Educational Institutions
Thirty Five percent (35%) of the Japan list price (Yen) on localized and
English language version sold to accredited academic institutions.
C. Direct Sales to End Users
Thirty Five percent (35%) of the Japan list price (Yen) on localized and
English language version sold to End Users.
D. Market Development Fund
An additional Five percent (5%) shall be made available 2 years or until this
fund pays $150,000.
II. BUNDLING:
The parties recognize that circumstances may arise in which either LICENSEE
or C3D DIGITAL may choose to bundle the Products with other software, or C3D
DIGITAL may choose to bundle the Product with third-party hardware Products.
It is agreed that, in such event, the discounts to be paid to LICENSEE C3D
DIGITAL will be determined on a case-by-case basis. The parties acknowledge
that each such bundling arrangement may differ sufficiently that a standard
discount cannot be set in this Agreement. Accordingly, the parties agree to
negotiate in a good faith and commercially reasonable manner to determine the
appropriate discount amount.
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Addendum C
LICENSEE'S DUTIES AND OBLIGATIONS OUTLINES
1. Maintain adequate experienced personnel and facilities, as follows: .
2. Use best efforts to promote supply of products within the Territory,
as follows: .
3. Provide technical support, as follows:
__First call support level, like installation instruction, etc.
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Addendum D
INVENTORY CREDIT
C3D Digital agrees to grant LICENSEE a credit of $945,042.26 for the returned
inventory units stocked as of March 31, 1999 at LICENSEE's warehouse. The
list of returned units is attached as Attachement 1.
The credit shall be paid down with the royalty amounts that exceed the
monthly guarantees as defined in Addendum B.
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EXHIBIT 10.18
BE, INCORPORATED.
BEDEPOT ON-LINE ORDER AND DISTRIBUTION AGREEMENT
This BeDepot On-Line Order and Distribution Agreement (the
"Agreement") is made as of May 17, 1999 between Be, Incorporated, a
California corporation, having a place of business at 800 El Camino Real,
Suite 400, Menlo Park, CA 94025 ("Be, Inc."), and Strata , a Utah
corporation, having a place of business at 567 South Valley View Drive, Suite
202, St. George, Utah 84770 ("Developer").
In consideration of the mutual promises contained in this Agreement,
the parties agree as follows:
1. DEFINITIONS. THE FOLLOWING TERMS SHALL HAVE A DEFINED MEANING AS USED
IN THIS AGREEMENT:
1 "END USER" means a licensee of computer products who acquires
such products for personal or ordinary business usage and not for further
distribution or resale.
2 "END USER AGREEMENT" means Developer's applicable on-line
electronic end user license agreement accompanying each Product, including
the PackageBuilder license provided by Be, Inc. as incorporated by the
Developer into the Developer's electronic agreement, in the format provided
in Section 4.2 of this Agreement.
3 "PRICE LIST" means Developer's suggested retail price list for
the Products as set forth in EXHIBIT A ("Price List"), as amended from time
to time upon notice by Developer to Be, Inc.
4 "PRODUCTS" means physical merchandise; including books and
clothing, and Developer's software products (in object code form only)
("Software Products"); including commercial, free, trial, demonstration, and
update versions; together with supporting End User documentation
("Documentation"), all as identified in the Price List.
5 "BEDEPOT WEBSITE" means the Internet site located at
http://www.bedepot.com or any alternative or successor site designated by Be,
Inc. from time to time.
6 "LAUNCH/RELEASE/UPDATE" means the initial public availability of
a product through the BeDepot Internet web site. This includes all versions
of Products including launches of completely new Products, releases of new
versions of existing Products, and minor updates or fixes to existing
Products.
2. RIGHTS OF BE, INC.
1 LICENSE GRANT TO BE, INC. During the term of this Agreement and
subject to the terms and conditions set forth therein, Developer hereby
grants Be, Inc. a nonexclusive, worldwide, royalty-free, irrevocable,
fully-paid up license to:
Reproduce, and have reproduced, publicly display, publicly
perform and, solely as a means to aid in the
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electronic delivery of the Products, modify the Products identified
in the Price List.
Distribute, or have distributed, electronically or otherwise,
the Products, either on a stand-alone basis or bundled with other
Products or products of other Be, Inc. developers, to End Users who
order the Products from the BeDepot Website.
Use, in accordance with Developer's reasonable policies
regarding advertising and trademark usage as established from time
to time and provided to Be, Inc., Developer's trademarks, trade
names, and logos (collectively, the "Trademarks") in Be, Inc.'s
distribution, advertising and promotion of the Products on the
BeDepot Website. Be, Inc. agrees that it shall not use any other
trademark, word, letter, design or mark (i) in combination with the
Trademarks in a manner that would create a combination mark or (ii)
that is confusingly similar to the Trademarks; provided, however,
that Be, Inc. may use the Trademarks with other marks or names if
such other marks or names are sufficiently separated from the
Trademarks and sufficiently distinctive to avoid the consumer
impression that such other marks or their owners are associated with
Developer. Be, Inc. agrees not to register any Developer trademarks.
Be, Inc. agrees to cooperate with Developer in facilitating
Developer's monitoring and control of the nature and quality of such
products and services, and to supply Developer with specimens of use
of the Trademarks upon request.
Use the Products for demonstration and testing purposes
subject to the terms and conditions of the applicable End User
Agreement.
2 Restrictions
Ownership of Proprietary Rights. Be, Inc. acknowledges that
any Software Product and its sequence, structure and organization is
proprietary to Developer and that Developer retains exclusive
ownership of the Trademarks and any Software Product. Be, Inc. will
take all reasonable measures to protect Developer's proprietary
rights in any Software Products. Except as provided herein, Be,
Inc. is not
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granted any rights to patents, copyrights, trade secrets, trade
names, trademarks (whether registered or unregistered), or any other
rights, franchises or licenses with respect to any Products.
Restrictions on Copying and Reverse Engineering. Be, Inc.
agrees not to reproduce, copy, modify, translate, disassemble,
reverse engineer or otherwise attempt, or permit others to attempt,
to discover the source code of the Software Products, in whole or in
part. However, Developer acknowledges and agrees that while Be,
Inc. will use commercially reasonable efforts to preserve the
proprietary rights of the Software Products, Be, Inc. cannot make
any warranties regarding the protection of the Software Products
during and after the electronic download thereof from the BeDepot
Website. Be, Inc. will have no liability for any unauthorized use
of the Software Products by any End User.
3 PRODUCT DELIVERY. Developer agrees that Be, Inc. shall receive
each new commercial Product (i.e. the initial release of a Product as well as
major or minor updates and trial or demonstration versions of any Product) no
later than 48 hours after such Product is made generally available by
Developer.
3. DELIVERY OF PRODUCTS AND OTHER MATERIALS.
1 PRODUCTS FOR DISTRIBUTION VIA DOWNLOAD FROM BEDEPOT. Within ten
(10) days after the Effective Date of this agreement, Developer shall deliver
to Be, Inc. the current version(s) of the Product(s) on the Price List
(Exhibit A) that are to be distributed via electronic download from Be,
Inc.'s web site, BeDepot, and the applicable End User Agreement for such
Products. With regard to the initial delivery, deliveries of new Products and
upgrades, and delivery of the End User Agreement, Developer will provide Be,
Inc. with a copy of the Product through electronic mail or via a file
transfer protocol agreed to by Be. Inc. prior to delivery of each Product.
2 PHYSICAL DISTRIBUTION THROUGH ALOM TECHNOLOGIES. Developer is
responsible for establishing and maintaining an inventory relationship
(including payment of all associated fees) with ALOM Technologies ("ALOM").
Within ten (10) days after the Effective Date of this Agreement, Developer
agrees to deliver to ALOM an initial delivery of all Products that are to be
ordered by End Users via BeDepot but that are to be physically distributed by
ALOM. Developer will at all times use its best efforts, consistent with
prudent business practice, to maintain a representative inventory of Products
and upgrades in reasonably sufficient quantities to provide adequate and
timely delivery to End Users. Developer agrees that title of the Product, but
not the risk of loss, shall pass to Be, Inc. upon commencement of order
fulfillment by ALOM Technologies. Developer also agrees that Be, Inc.
reserves the right to return title of Product to Developer in case of damage
during shipment, return by End User, or at it's sole discretion.
3 OTHER MATERIALS. Developer will provide Be, Inc. with the
materials necessary to create a web page on the BeDepot web site as specified
in Section 6 of this Agreement ("Joint Marketing"), as well as any
information Be, Inc. will need to conform to California laws regarding
disclosure of information in relation to the sale of Developer's Product(s).
Developer will provide these materials on CD-ROM or through electronic mail
or via a file transfer protocol agreed to by Be. Inc. with
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reasonably adequate lead times to allow Be, Inc. to format and post such
materials on the BeDepot web site prior to the date Developer's Products are
to be made available for purchase. With regard to the initial delivery of all
new Products and upgrades for any method of distribution, Developer will
provide Be, Inc. with (i) a copy of the Product on CD-ROM or through
electronic mail or via a file transfer protocol agreed to by Be. Inc. prior
to delivery of each Product, (ii) Product specification information in HTML
format, or in another mutually agreeable computer readable form that can be
reproduced by Be, Inc., and (iii) Additional electronic copy of the End-user
license agreement separate from the Product in text (.txt) format, or in
another mutually agreeable computer readable form that can be reproduced by
Be, Inc.
4. SALE TERMS AND PAYMENT.
1 ORDERS AND PAYMENT BY END-USERS. Be, Inc. shall accept orders
for Products from End Users through the BeDepot Website. Be, Inc. also
reserves the right at its sole discretion to accept orders for Products from
End Users through telephone, facsimile, postal mail, or electronic mail. In
the case of physical delivery, Be, Inc. reserves the right to stop taking
orders for a product if the inventory for that product is depleted; Be, Inc.
has no obligation to take back orders. Be, Inc. reserves the right to charge
additional fees to customers for services involved in the sale of the
product, such as shipping, tax, miscellaneous processing fees, etc.
2 END USER AGREEMENTS. Developer will include in the Product's
start-up routine a mechanism, such as a click-through procedure, whereby the
End User must again affirmatively assent to the End User Agreement. The terms
and conditions of such End User Agreement shall in no way conflict with the
terms as set forth in this Agreement. In addition, Developer will include in
its End User Agreement a provision substantially similar to the following
paragraph, authorizing the use of the End User's copy of Software Valet to
obtain upgrades, patches or any other form of software update automatically
using the End User's computer and connection to the Internet.
"The Software is designed for use with the Be Incorporated
Software Valet product which automatically provides
application and registration information to and obtains
upgrades, patches and updates for the Software from the
BeDepot world wide web site using your computer and connection
to the Internet. In light of such design, you hereby
acknowledge and authorize the aforementioned use when
installing and using the Software."
Be, Inc. shall have no responsibility for preparing any End User
Agreements on Developer's behalf.
3 PRICE AND PAYMENT. Developer agrees that the Products will be
offered to End Users at prices set by Be, Inc. in its sole discretion. In
consideration for the grant of the license to distribute the Products
hereunder, Be, Inc. shall pay Developer the price listed on the Price List
for each copy of the Product sold to End Users through the BeDepot Website.
Developer, at its option, may occasionally provide Products to Be, Inc. at
prices that are lower than the prices set forth on the Price List for limited
times in connection with Developer promotions and bundles. If Be, Inc. agrees
to participate in such promotions, for the duration of such promotions or
bundles, Be, Inc. agrees to offer Developer's Product(s) to End Users at
prices that reflect the promotional discounts Be has received. If Developer
and Be, Inc. agree to change the price listed on the Price List for any
reason, a Price List Amendment form must be submitted in writing and signed
by both Developer and Be, Inc.
Developer agrees to offer its Product(s) to Be, Inc. at a price that
is at least as low as the lowest price Developer charges other resellers.
Developer agrees that it will not sell any Product to End Users at a price
that is lower than the price then charged for the same Product on the BeDepot
Website.
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4 PRODUCT AVAILABILITY. New products shall be deemed "Products"
when Developer adds them, and Be agrees to have them added, to the Price
List. Developer has the right to discontinue the distribution or availability
of any Product upon sixty (60) days prior written notice to Be, Inc.
5 TAXES AND DUTIES. Be, Inc. shall be responsible for any federal
or local sales, use, excise, or similar tax other than those based on
Developer's net income (collectively the "Taxes") and any penalties or
interest associated with any of the Taxes, imposed by any governmental
authority with respect to any payment received or made by Be, Inc. under this
Agreement or any Product to be delivered by Be, Inc. to End Users under this
Agreement. Notwithstanding the foregoing, BeDepot is not responsible for any
customs fees or Value Added Taxes. Developer will provide Be, Inc. with all
reasonably requested assistance in order for Be, Inc. to comply with its Tax
obligations hereunder; provided, however, that upon Developer's request, Be,
Inc. agrees to sign an appropriate confidentiality agreement preserving the
proprietary nature of any such information.
6 PAYMENT TERMS. Be, Inc. shall send payment to Developer within
thirty (30) days after the end of each month for all Product sales for which
Be, Inc. has received payment in such month, less the amount returned to End
Users based on Product refunds allowable under this Section 4 of the
Agreement in that month or any previous month. Be, Inc. will send payment via
the U.S. Postal Service. Any fees incurred from the use of any mutually
agreed upon alternative delivery method will be charged to Developer.
7 REFUND POLICY FOR PRODUCTS DELIVERED ELECTRONICALLY. Be, Inc.
will provide End Users with a thirty (30) day money-back guarantee policy for
each Product designated by Developer. End Users shall be entitled to receive
a refund of the Product purchase price within thirty (30) days after
downloading the Product notwithstanding that the Product is not functionally
defective or otherwise fails to qualify for warranty service under the
applicable End User Agreement. Developer agrees that Be, Inc. shall receive
credit for any Product returns through the adjustment of the monthly Be, Inc.
payment to Developer for the period during which the Product returns occur.
Be, Inc. shall have no obligation to refund to Developer any of the
transaction costs it collects from the sale of Products which are
subsequently returned by End Users either in connection with the thirty (30)
day money-back guarantee or a provision of the Developer's End User Agreement.
8 REFUND POLICY FOR PRODUCTS DELIVERED PHYSICALLY. Be, Inc. will
provide the same thirty (30) day money-back guarantee for Products delivered
physically as is offered in Section 4.7 of this Agreement. Developer agrees
that Be, Inc. shall be credited for any Product returns through adjustment of
the monthly Be, Inc. payment to Developer for the period during which the
Product returns occur. Be, Inc. reserves the right to dispose of or return to
Developer, at Developer's option, returned Product(s), regardless of
condition. Be, Inc. reserves the right, but is not obligated, to charge
Developer for costs related to returns of their products, whether such
returns are in connection with the thirty (30) day money-back guarantee or a
provision of the Developer's End User Agreement. Be, Inc. shall have no
obligation to refund to Developer any of the transaction costs it collects
from the sale of Products which are subsequently returned by End Users either
in connection with the thirty (30) day money-back guarantee or any provision
of the Developer's End User Agreement.
5. BE, INC. OBLIGATIONS.
1 END USER REGISTRATION. End Users will have the option to
register their use of a Product with Be, Inc. via a designated registration
service (i.e. SoftwareValet or any substitute service designated by Be, Inc.)
("Registration Service") and information related solely to the End User's
purchase of the Products that is received by Be, Inc. from such registration
will be forwarded to Developer, if such End User has authorized Be, Inc.'s
disclosure of such information to Developer. End Users that elect to register
will be required to provide, at a minimum, their name and e-mail address and
at their option, address, company name and facsimile number.
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2 END USER INFORMATION. Be, Inc. and, if such End User so agrees,
Developer, each have rights to the information gathered through the
designated registration service. Developer does not have rights to, nor will
it receive, information provided by the End User for sale transaction
administration, or information in connection with any purchase other than
that of the Products. Be, Inc. does not guarantee the accuracy of the
information collected during registration and forwarded to Developer.
3 RECORDS AND REPORTS. Be, Inc. shall provide Developer a monthly
report of Product distributions that include the amounts paid to Developer
and the prices charged by Be, Inc. Such report shall be provided with the
monthly payment from Be, Inc. to Developer. Be, Inc. agrees to maintain
complete, clear and accurate records of Product distributions. Not more than
once in any twelve (12) month period, Be, Inc. shall permit an independent
auditor designated by Developer and reasonably approved by Be, Inc. to
inspect records pertaining to the Products and any other materials provided
to Be, Inc. by Developer to ensure compliance by Be, Inc. with its
obligations to Developer. Any such inspection and audit shall be conducted
during regular business hours and in such a manner as not to interfere unduly
with normal business activities of Be, Inc.
4 PRODUCT MAINTENANCE AND SUPPORT. Be, Inc. will provide End Users
with the relevant support contact information from EXHIBIT B ("Contact
Information") in order that End Users may obtain maintenance and support
directly from Developers. Be, Inc. shall have no obligation to provide any
maintenance or support to any End User except in the case of minor updates
and bug fixes which may be delivered to End Users by Internet download. This
Agreement must be in effect at the time an End User requests any such update
or bug fix. Any additional Be, Inc. services shall also be subject to an
additional fee to be agreed upon between Be, Inc. and Developer.
5 PRODUCT LAUNCHES/RELEASES/UPGRADES. Developer is allowed a total
of three (3) free Launches, Releases, or Upgrades in any three (3) month
period for any Product Developer has on the Price List. Developer agrees to
pay Be, Inc. two hundred and fifty dollars ($250) for each additional Launch,
Release or Upgrade of a Product on the Price List.
6 WEBSITE AVAILABILITY. Be, Inc. intends to make Products
available on the BeDepot Website seven (7) days a week, twenty-four (24)
hours a day, except for scheduled maintenance and required repairs, and
except for any loss or interruption of service due to causes beyond the
control of Be, Inc. or which is not reasonably foreseeable by Be, Inc.,
including but not limited to, interruption or failure of telecommunication or
transmission links. However, occasional website downtime should be
anticipated and Be, Inc. does not warrant that the BeDepot Website will be
functioning or available at all times.
7 ORDER SUPPORT. Be, Inc. will provide technical support to End
Users and prospective End Users during the downloading and installation
process Monday through Friday, 9:00 a.m. to 5:00 p.m., Pacific Time. Be, Inc.
shall have the right to allow an End User to download a product more than
once if Be, Inc. determines that the first download was not completed
successfully. Be, Inc. will provide End Users with the contact information
for the Complaint Assistance Unit of the Division of Consumer Services of the
Department of Consumer Affairs of the State of California in the event they
have any questions or concerns regarding the services provided by the BeDepot
Website.
6. JOINT MARKETING. For each Product distributed by Be, Inc. hereunder, Be,
Inc. will provide a web page on the BeDepot Website with a product
description, a screenshot from the Product, a hyperlink to Developer's
website and contact information for the Developer. These items shall be
provided by Developer to Be, Inc. in the format designated in Section 3 of
this Agreement ("Delivery of Products and Other Materials to Be, Inc.").
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Developer agrees to identify Be, Inc. and the BeDepot Website as an
authorized distributor of the Products in all press releases related to the
Products to the extent that Developer identifies its other distributors in
press releases. Developer agrees to include a hyperlink from the Developer's
web site to the BeDepot Website. Furthermore, Be, Inc. may identify Developer
and its Products, including use of Developer's trademarks, in all its press
releases promoting the BeDepot Website and Be, Inc.'s business.
Be, Inc. reserves the right to remove or modify any images or text
it deems obscene, libelous, inappropriate or otherwise unsuitable for
commercial use and distribution.
7. TERM. The term of this Agreement shall commence as of the date of this
Agreement and continue for one (1) year from the Effective Date. Thereafter,
this Agreement shall renew automatically for successive one (1) year periods
unless a party provides written notice to the other of nonrenewal at least
sixty (60) days prior to the end of the then current term.
8. WARRANTIES.
1 PRODUCT. Developer warrants the Products to End Users only
pursuant to the terms and conditions of the End User Agreement or warranty
card and no warranty is extended to Be, Inc. except as provided in this
Agreement. The currently applicable End User warranty terms are set forth in
the End User Agreement and are subject to change from time to time in
Developer's discretion. Developer agrees to provide Be, Inc. with written
notice of any change in the End User Agreement and a copy of the new
agreement in the format specified in Section 3 in order that Be, Inc. may
display the new End User Agreement to End Users on the BeDepot Website. Be,
Inc. will display the new End User Agreement, and its terms will become
effective against users, thirty (30) days after Be, Inc. receives the new
Agreement in the specified format.
2 PACKAGEBUILDER LICENSE: Developer represents and warrants that
(i) each Product has been developed with Be, Inc.'s PackageBuilder product
("PackageBuilder") pursuant to Be, Inc.'s electronic license agreement (the
"PackageBuilder License") and (ii) Developer has read and agrees to the terms
and conditions of the PackageBuilder License.
3 CONTENT. Developer warrants that the Product(s) and marketing
materials it submits to Be, Inc.: (a) shall not infringe any third party's
copyright, patent, trademark, trade secret or other proprietary rights or
rights of publicity or privacy; (b) shall not violate any law, statute,
ordinance or regulation (including without limitation the laws and
regulations governing export control, unfair competition, anti-discrimination
or false advertising); (c) shall not be defamatory, trade libelous,
unlawfully threatening or unlawfully harassing; (d) shall not be obscene,
pornographic or indecent or contain child pornography; and (e) shall not
contain any viruses, trojan horses, worms, time bombs, cancelbots or other
computer programming routines that are intended to damage, detrimentally
interfere with, surreptitiously intercept or expropriate any system, data or
personal information.
4 NO OTHER OBLIGATIONS. Be, Inc. will have no other warranty or
maintenance obligations other than as expressly set forth in this Agreement
unless it has entered into a written agreement therefor with Developer.
5 LIMITATIONS AND DISCLAIMER OF WARRANTIES AND CONDITIONS. EXCEPT
FOR THE EXPRESS WARRANTIES AND CONDITIONS SET FORTH ABOVE, NEITHER PARTY
MAKES ANY OTHER WARRANTIES OR CONDITIONS RELATING TO THE PRODUCTS OR SERVICES
PROVIDED HEREUNDER, EXPRESS OR IMPLIED AND EXPRESSLY EXCLUDES ANY WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY. NO
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PERSON IS AUTHORIZED TO MAKE ANY OTHER WARRANTY, CONDITION OR REPRESENTATION
CONCERNING THE PERFORMANCE OF THE PRODUCT OTHER THAN AS PROVIDED IN THIS
SECTION 8 ("Warranty") AND IN THE END USER AGREEMENT. BE, INC. SHALL MAKE NO
OTHER WARRANTY OR CONDITION, EXPRESS OR IMPLIED, ON BEHALF OF DEVELOPER.
9. INDEMNITY.
1 DEVELOPER INDEMNITY. Developer shall defend and indemnify Be,
Inc. against any claim, suit or proceeding (including reasonable attorneys'
fees) arising from product liability claims or alleging that a Product or any
marketing materials infringe a patent, copyright, trademark or trade secret.
The foregoing obligation is subject to Be, Inc. (i) giving Developer prompt
written notice of any such claim; (ii) allowing Developer to control the
defense and settlement of such claim; (iii) not entering into any settlement
or compromise of such claim without Developer's prior written consent; and
(iv) providing all assistance reasonably requested by Developer in the
defense or settlement of such claim, at Developer's expense. Upon notice of
an alleged infringement or if in Developer's opinion such a claim is likely,
Developer shall have the right, at its option, to obtain for Be, Inc. the
continuing right to distribute the Product, substitute other non-infringing
computer software with similar operating capabilities or modify the Product
so that it is no longer infringing. In the event that none of the above
options are reasonably available in Developer's opinion, Be, Inc.'s sole and
exclusive remedy shall be to terminate this Agreement.
2 BE, INC. INDEMNITY. Be, Inc. shall be responsible for any
claims, warranties or representations made by Be, Inc. or Be, Inc.'s
employees or agents which differ from the warranty provided by Developer in
its End User Agreement. The foregoing obligation is subject to Developer (i)
giving Be, Inc. prompt written notice of any such claim; (ii) allowing Be,
Inc. to control the defense and settlement of such claim; (iii) not entering
into any settlement or compromise of such claim without Be, Inc.'s prior
written consent; and (iv) providing all assistance reasonably requested by
Be, Inc. in the defense or settlement of such claim. The foregoing sets forth
Developer's sole and exclusive remedy for any such claim.
10. TERMINATION.
1 WITH CAUSE. Either party may terminate this Agreement upon
thirty (30) days written notice of a material breach of this Agreement by the
other party if such breach is not cured within such thirty (30) day period.
2 FOR CONVENIENCE. Either party may terminate this Agreement for
convenience upon sixty (60) days written notice to the other party.
3 RIGHTS UPON TERMINATION. After notice of termination but prior
to the effective termination date, Be, Inc. shall be entitled to accept
orders for Products from End Users and fulfill such orders notwithstanding
that the fulfillment of and payment for such orders may extend beyond the
effective termination date. Each party shall be entitled to all payments
provided for under this Agreement for such orders. Be, Inc. shall pay all
amounts due to Developer within ninety (90) days after the effective
termination date.
4 SURVIVAL. The following provisions survive expiration or
termination of this Agreement: 2.2 ("Restrictions"), 4 ("Terms"), 8
("Warranty "), 9 ("Indemnity"), 10.3 ("Rights upon Termination"), 11
("Consequential Damages Waiver"), 12 ("Limitation of Liability") and 13
("Miscellaneous").
11. CONSEQUENTIAL DAMAGES WAIVER. NEITHER PARTY WILL BE LIABLE FOR ANY
LOSS OF USE, INTERRUPTION OF BUSINESS, OR ANY EXEMPLARY, SPECIAL, INCIDENTAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING LOST PROFITS)
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REGARDLESS OF THE FORM OF ACTION WHETHER IN CONTRACT, TORT (INCLUDING
NEGLIGENCE) AND STRICT PRODUCT LIABILITY OR OTHERWISE, EVEN IF A PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
12. LIMITATION OF LIABILITY. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS
AGREEMENT, EACH PARTY'S AGGREGATE LIABILITY TO THE OTHER UNDER THIS AGREEMENT
SHALL BE LIMITED TO THE AMOUNT EQUAL TO THE TOTAL PAYMENTS MADE BY BE, INC.
TO DEVELOPER IN THE TWELVE (12) MONTHS PRIOR TO THE DATE A CLAIM FIRST
ARISES. BE, INC. SHALL HAVE NO LIABILITY FOR ANY PERFORMANCE OR FAILURE OF
THE BEDEPOT WEBSITE TO PERFORM OR FUNCTION AT ANY GIVEN TIME.
13. MISCELLANEOUS.
1 NOTICES. Any notices permitted or required under this Agreement
shall be in writing, and shall be delivered in person or by certified or
registered mail, return receipt requested, and shall be deemed given upon
personal delivery or five (5) days after deposit in the mail. In the event a
Developer has any concerns about the services offered by the BeDepot Website
which are not addressed by Be, Inc., Developer may contact the Complaint
Assistance Unit of the Division of Consumer Services of the Department of
Consumer Affairs of the State of California.
2 ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written approval of the other party, which approval will
not be unreasonably withheld. A change in the persons or entities who control
fifty percent (50%) or more of the equity securities or voting interest of a
party through a reorganization, merger, consolidation or reincorporation or a
sale of all or substantially all of the assets of a party shall not be
considered an assignment for which prior written approval is required.
3 WAIVER. The waiver by either party of a breach of any provisions
contained herein shall be in writing and shall in no way be construed as a
waiver of any succeeding breach of such provision or the waiver of the
provision itself.
4 SEVERABILITY. In the event that any provision of this Agreement
is determined to be unenforceable or invalid under any applicable law or be
so held by applicable court decision, such unenforceability or invalidity
shall not render this Agreement unenforceable or invalid as a whole, and, in
such event, such provision shall be changed and interpreted so as to best
accomplish the objectives of such provision within the limits of applicable
law or applicable court decisions.
5 CONTROLLING LAW. This Agreement shall be governed in all
respects by the laws of the State of California and the United States of
America as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. The United
Nations Convention on the International Sale of Goods is hereby expressly
excluded from application to this Agreement. All disputes arising under this
Agreement may be brought in Superior Court of the State of California in
Santa Clara County or the Federal District Court of San Jose and the parties
hereby submit to the non-exclusive jurisdiction of such courts.
6 NO AGENCY. Nothing contained herein shall be construed as
creating any agency, partnership, or other form of joint enterprise between
the parties.
7 EXPORT. Developer acknowledges that the laws and regulations of
the United States may restrict the export and re-export of certain
commodities and technical data of United
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States origin. Developer represents and warrants that none of the Products
are subject to any United States or foreign restrictions on export or
re-export and Be, Inc.'s distribution of the Products as contemplated by this
Agreement does not require any United States or foreign licenses or permits.
To the extent that any such permits or licenses are required, Developer
agrees to give prompt advance notice thereof to Be, Inc. and obtain such
permits and licenses at Developer's sole cost and expense. Be, Inc. agrees to
provide all reasonably requested assistance to Developer, at Developer's sole
cost and expense, to obtain such permits and licenses.
8 COUNTERPARTS. This Agreement may be signed in two counterparts
which together shall form a single agreement as if both parties had executed
the same document.
9 ENTIRE AGREEMENT. This Agreement (including all attached
Exhibits) completely and exclusively states the Agreement of the parties
regarding its subject matter. It supersedes, and its terms govern, all prior
or contemporaneous proposals, agreements or other communications between the
parties, oral or written, regarding such subject matter. This Agreement shall
not be modified except by a subsequently dated written amendment signed on
behalf of Developer and Be, Inc. by their duly authorized representatives.
10 WARRANTY. Each party warrants that it has full power and
authority to enter into and perform this Agreement, and the person signing
this Agreement on each party's behalf has been duly authorized and empowered
to enter into this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
written above.
BE, INCORPORATED DEVELOPER
Signed: /s/ J.R. Graham Signed: /s/ Dennis Derrick
------------------------------- ----------------------------
Name: J.R. Graham Name: Dennis Derrick
Title: Sales and Marketing Title: Vice President
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EXHIBIT A
Price List
<TABLE>
<CAPTION>
Product Name Type Delivery SRP BeDepot Cost
- ----------------------------- ------------------ ----------------- --------------- -----------------------
<S> <C> <C> <C> <C>
</TABLE>
NOTES:
Product Name - The defining name of the product. (I.E. Software products
should have name and version numbers, clothing should have name, color,
style and size)
Type - Should be one of the following three: 1) Software 2) Book 3)
Merchandise
Delivery - Should be one of the following two: 1) Electronic (I.E. Internet
download of software only) 2) Physical (I.E. Ship through the mail)
SRP - The suggested retail price for the particular version of the Product
determined by the Developer. The suggested retail price for the electronic
delivery version (I.E. Internet download) of a software Product is typically
10% to 20% less than the box version.
BeDepot Cost - This is the amount that Be, Inc. will pay Developer for each
copy of Product distributed.
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EXHIBIT B
Contact Information
Developer Company Name: Strata
--------------------------------------
Developer Mailing Address: 567 South Valley View Drive
Suite 202
St. George, UT 84770
--------------------------------------
Developer Company Phone: 435-628-5218
--------------------------------------
Developer Company Facsimile: 435-628-9756
--------------------------------------
Marketing Contact Name: Dennis Derrick
--------------------------------------
Marketing Contact Phone: 435-628-5218 ext 5205
--------------------------------------
Marketing Contact E-Mail: [email protected]
--------------------------------------
Technical Contact Name: Gary Bringhurst
--------------------------------------
Technical Contact Phone: 435-628-5218 ext 5244
--------------------------------------
Technical Contact E-Mail: [email protected]
--------------------------------------
Website URL: http://www.strata3d.com
--------------------------------------
Customer Support E-mail (required): [email protected]
--------------------------------------
435 435-628-9751
--------------------------------------
Toll-Free Customer Support Phone:
--------------------------------------
Customer Support Fax: 435-628-9756
--------------------------------------
BE, INC. CONTACT INFORMATION
Be, Incorporated
800 El Camino Real, Suite 400
Menlo Park, CA 94025
Ph: (650) 462-4100
Fax: (650) 462-4129
BeDepot Contact: Paula Draper
Ph: (650) 462-4184
Fax: (650) 462-4129
E-Mail: [email protected]
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EXHIBIT 10.19
DEVELOPMENT AND DISTRIBUTION AGREEMENT
THIS DEVELOPMENT AND DISTRIBUTION AGREEMENT ("Agreement") is
made and entered into as of May ___, 1999 ("Effective Date") by and between
BE INCORPORATED, a California Corporation with its principal offices at 800
El Camino Real, Suite 400, Menlo Park, California 94025, U.S.A. ("Be"), and
STRATA _______, a _______ Corporation with its principal offices at 2 West
Street, St. George, Utah 84770, U.S.A. ("Strata").
WHEREAS, Be has developed the Be digital media operating system
known as BeOS-Registered Trademark- ("BeOS"); and
WHEREAS, Strata has developed the Strata 3-D modeling,
rendering and animation software application known as StudioPro and the
Strata video editing software application known as VideoShop (collectively,
the "Strata Products"); and
WHEREAS, Be and Strata desire to work together as set forth in
this Agreement to modify the Strata Products so as to port them to run on
BeOS (the "Modified Products") and for Strata then to market, distribute,
maintain and support the Modified Products.
WHEREAS, concurrently with the execution of this Agreement, Be
and Strata are entering into Be's standard BeDepot Online Distribution
Agreement (the "Distribution Agreement") pursuant to which Be will sell
copies of the Modified Products for BeOS to end users;
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein, the parties hereby agree as follows:
1. DEVELOPMENT EFFORT
1.1 DESCRIPTION OF THE DEVELOPMENT EFFORT. Subject to the terms
and conditions of this Agreement, Be will, with the assistance of Strata,
perform development and engineering services to port the Strata Products to
BeOS (the "Services") as more fully described in the statement of work
attached as EXHIBIT A hereto ("Statement of Work"). Such Statement of Work
may be amended or modified by supplementary work orders agreed to by both
parties hereto and attached to the Statement of Work, and thereafter the
Services will be deemed to include the services described in such
supplementary work orders.
1.2 BE'S DEVELOPMENT OBLIGATIONS. Be will use commercially
reasonable efforts to meet the schedules and time of performance for the
Services as set forth in the Statement of Work. The manner and means used by
Be to perform the Services are in the sole discretion and control of Be
subject to the provisions below.
(a) Be will provide requisite engineering personnel and
such other development resources as may be required to perform and complete
its portion of the Services in accordance with the terms and conditions of
this Agreement/schedule set forth in the Statement of Work.
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(b) Be will make available to Strata one (1)
BeOS-compatible Intel Pentium based development environment for use in
testing and development assistance.
(c) Be will provide basic QA and matrix testing of the
Modified Products.
(d) Be will deliver to Strata the Modified Products as set
forth on the Statement of Work, along with the information, materials, and
technology that constitutes the modifications made to the Strata Products
that make up the Modified Products.
1.3 STRATA'S DEVELOPMENT ASSISTANCE OBLIGATIONS.
(a) Strata will designate a lead developer technical
support engineer that will provide commercially reasonable priority support
to Be for the duration of the Services; provided however, that Be
acknowledges and agrees to use its own commercially reasonable efforts to
provide the Services with minimal requests for Strata assistance. Strata will
participate in the final testing/QA of the Modified Products as more fully
described in EXHIBIT A, and will use its best efforts to provide adequate and
useful feedback to Be during the porting effort to ensure the Modified
Products will meet Strata's functional specifications in the acceptance stage
of this Agreement.
(b) Strata will provide at least three (3) days of
training to an engineer to be designated by Be for each of the Strata
Products.
(c) Strata will develop product documentation, help files
and examples, including any BeOS specific versions or addenda for the
Modified Products in the languages stated in the Statement of Work and in
accordance with the schedule set forth in the Statement of Work.
(d) Strata agrees to provide Be with the Strata Products
(including all related source code, libraries, object files and other
necessary components in machine readable formats), along with such other
information, materials, and technology owned or controlled by Strata as Be
reasonably requires to meet its obligations as set forth in this Agreement
("Strata Licensed Technology"). In connection with Be's porting effort
described herein, Strata hereby grants to Be, during the period whereby Be is
providing the Services, a royalty-free, non-exclusive, license to use,
reproduce, modify, create derivative works from, and otherwise practice the
Strata Licensed Technology under all Strata IP Rights (as defined in Section
5) covering such Strata Licensed Technology, to allow Be to complete the
Services described herein. Strata hereby agrees that Be may sublicense the
foregoing rights to and fulfill its obligations under Section 1.2 above
through a contractor; provided that such contractor must first be approved by
Strata (which approval may not be unreasonably withheld or delayed) and such
contractor executes a non-disclosure agreement including provisions at least
as protective of Strata's Confidential Information as those set forth herein.
As between the parties, Strata will retain all ownership rights in and to the
Strata Licensed Technology, and Be will gain no rights in or to the Strata
Licensed Technology except for the license set forth above.
2. DELIVERABLES AND ACCEPTANCE
2.1 DELIVERY. In performing the Services, Be shall design and
develop those software programs, interfaces and other deliverables
("Deliverables") as required in the Statement of Work. Be shall use
commercially reasonable efforts to ensure that the Deliverables are completed
and delivered to Strata in accordance with the schedule
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set forth in the Statement of Work and that such Deliverables conform to the
specifications set forth in EXHIBIT B hereto ("Specifications") in all
material respects.
2.2 ACCEPTANCE. Within 10 days of receiving a Deliverable, Strata
shall determine whether such Deliverable conforms to the Specifications. If
Strata reasonably determines that such Deliverables do not conform to the
Specifications in all material respects, Strata shall promptly notify Be in
writing that such Deliverables are not accepted and specifically setting
forth the non-conformity(ies). The parties shall then mutually determine the
corrective action required to bring the Deliverable into conformance with the
Specifications, and additional testing on previously non-conforming
Deliverables shall be completed as determined by the parties.
3. REPRODUCTION, PACKAGING AND MARKETING
3.1 BE MARKETING AND PROMOTION OBLIGATIONS. Be will promote the
Modified Products, at no charge to Strata, through various efforts, including
(i) Web-based marketing, (ii) allowance of Strata's participation in Be
booths at appropriate and mutually agreed upon trade shows and demonstrations
at Be developer conferences, (iii) provision of disk space for Strata
demonstrations on BeOS demonstration CDs, with approval by Be at its sole
discretion, (iv) access to Be user lists, through third party bonded mailing
houses, for direct mailings promoting the Modified Products; (v) allowance of
Strata's participation, as determined by Be, in Be's public relations
efforts, and (vi) introductions of Strata to appropriate Be OEMs.
3.2 STRATA REPRODUCTION AND MARKETING OBLIGATIONS. Upon acceptance
of the Modified Products by Strata, Strata will reproduce, package, promote
and market the Modified Products to end users. Strata agrees to promote and
market the Modified Products with at least as much effort as Strata promotes
and markets the Windows and Macintosh versions of the Strata Products.
3.3 EXECUTION OF BEDEPOT AGREEMENT. Upon acceptance of the
Modified Products by Strata, Strata shall enter into a BeDepot sales
agreement with Be substantially in accordance with the form attached hereto
as EXHIBIT C.
3.4 ANNOUNCEMENT. Be and Strata will work together to announce,
pursuant to a mutually agreed upon press release, the development efforts
hereunder. In no instance will Strata otherwise disclose the terms of this
Agreement except as required to Strata's accountants and legal counsel.
4. CONSIDERATION AND EXPENSES
4.1 RECOUPMENT OF DEVELOPMENT COSTS. Until such time as Be has
fully recouped the all costs incurred by Be, including but not limited to
engineering costs, towards its development obligations hereunder or until Be
has received $110,000 from Strata under this Section 4.1, whichever is
earlier, Strata shall pay to Be fifty percent (50%) of revenue received by
Strata from distribution or license for use of the Modified Products, less
reasonable costs and allowances, including product packaging, taxes and
returns.
4.2 RECORDS, REPORTS AND AUDITS. Strata shall maintain a complete,
clear, accurate record of, and provide such record with each recoupment
payment to Be: (a) the number, list price, revenue received by Be and the
recoupment amount due to Be for each copy of the Modified Products
distributed or licensed for use during the quarter, and (b) any other
information which may be required to determine whether Strata is paying the
correct recoupment
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<PAGE>
amount hereunder. To ensure compliance with the terms of this Agreement, Be
shall have the right to conduct an inspection and audit of all the relevant
accounting and sales books and records of Strata during regular business
hours at Strata's offices with 15 days' prior written notice and in such a
manner as not to interfere with Strata's normal business activities. In no
event shall audits be made hereunder more frequently than every twelve (12)
months.
4.3 NO OTHER FEES. Except as stated in Section 4.1, each party
acknowledges and agrees that it shall not be entitled to any other monetary
fees from the other party for the performance of its obligations hereunder or
delivery of the Deliverables provided hereunder.
4.4 EXPENSES. Each party agrees that it shall be solely
responsible for all its own expenses, including but not limited to actual
travel and out-of-pocket expenses, incurred in connection with the
performance of its obligations hereunder.
4.5 TAXES. Strata shall be responsible for payment of all taxes or
charges, except for any taxes based solely on Be's net income, incurred or
assessed on the transfer of technology hereunder.
5. INTELLECTUAL PROPERTY RIGHTS
5.1 As used herein, the term "IP Rights" means recognized
protectable intellectual property, including: patents and applications,
copyrights, trademarks, trade secrets, mask works, industrial design rights,
know-how, methodologies, and any and all other legal rights protecting
intangible proprietary information. Examples of inventions, innovations, and
developments that may contain protectable IP Rights include: formulas,
algorithms, methods, processes, databases, computer networks and their parts,
computer languages, scripts, computer programs and their documentation,
encoding techniques, articles, writings, works of authorship, and
improvements.
5.2 In connection with the performance of the Services or other
obligations hereunder, each party will exercise and utilize certain of its
own IP Rights. Except as otherwise set forth herein, neither this Agreement,
nor the provision of Services hereunder, will give either Be or Strata any
ownership interest in or rights to the existing IP Rights of the other party.
Except as otherwise set forth herein, all IP Rights that are owned or
controlled by a party at the commencement of this Agreement shall remain
under the ownership or control of such party throughout the term of this
Agreement and thereafter.
5.3 As between the parties and subject to Section 5.4, Strata will
retain sole ownership of all rights to any and all Innovations, whether or
not jointly conceived, and IP Rights arising therefrom, that are intended, in
the application thereof, to be incorporated into the Modified Products. To
perfect ownership of Strata IP Rights, Be agrees to and hereby does assign to
Strata all rights Be may have in those Innovations to be owned by Strata as
provided in this Section 5.3, and at Strata's request and expense Be will
assist and cooperate with Strata in all reasonable respects, and execute all
documents and, subject to reasonable availability, give testimony and take
all further acts reasonably necessary to acquire, transfer, maintain, and
enforce such Strata IP Rights.
5.4 As between the parties, Be will retain sole ownership of all
rights to all Innovations, whether or not jointly conceived, and all IP
Rights arising therefrom, that consist of generic software objects,
programming code, interfaces or drivers intended to be integrated with or
incorporated in BeOS to run the Modified Products, or which are generally
applicable to software applications ported to BeOS (hereinafter, the "Be
Licensed Modifications"). In
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light of Be's ownership in the Be Licensed Modifications and provided that
Strata continues to comply with the terms and conditions of this Agreement,
Be hereby grants to Strata a royalty-free, non-exclusive, license to use,
reproduce and distribute (including through multiple tiers) and otherwise
practice the Be Licensed Modifications under all Be IP Rights (as defined in
Section 5.1) covering such Be Licensed Modifications.
5.5 Subject to each party's compliance with the confidentiality
provisions of this Agreement, nothing in this Agreement will restrict or
limit either party from engaging in similar software development arrangements
with any other entity in any industry, both during and after the term of this
Agreement.
6. MAINTENANCE, SUPPORT AND WARRANTIES
6.1 MAINTENANCE AND SUPPORT OBLIGATIONS. Strata will be solely
responsible for all, and, except as otherwise expressly set forth in this
Agreement, Be will have no obligation to provide any, maintenance or support
services to Strata or any of Strata's distributors, resellers or customers
with respect to the Deliverables or the Modified Products. Further, Strata
agrees that it will not refer any of its representatives, distributors,
resellers or customers to Be for any help with any questions or problems
relating to the Deliverables or the Modified Products, unless Be has
expressly authorized Strata in writing to do so. Strata will maintain and
update the Modified Products so as to keep them current at all times with its
Windows and Macintosh counterparts.
6.2 WARRANTIES; DISCLAIMERS. Strata hereby represents and
warrants that the Strata Products will not infringe any IP Rights of any
third party. Both parties represent and warrant that it has full right and
power to enter into and fulfill this Agreement without the consent of any
third party. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, ALL DELIVERABLES
ARE PROVIDED TO THE OTHER PARTY ON AN "AS IS" BASIS AND WITHOUT ANY WARRANTY
OF ANY KIND. NEITHER PARTY WARRANTS THAT USE OF THE DELIVERABLES WILL BE
ERROR- FREE, SECURE OR UNINTERRUPTED. EACH PARTY AND ITS SUPPLIERS DISCLAIM
ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND
NON-INFRINGEMENT OF THIRD PARTY RIGHTS.
7. INDEMNIFICATION.
7.1 BY BE. Be will indemnify, defend and hold harmless Strata, its
officers, directors, employees, sublicensees, assignees, customers and agents
from any and all claims, losses, liabilities, damages, expenses and costs
(including attorneys' fees and court costs) which result from a breach or
alleged breach of any representation or warranty set forth in Section 6 of
this Agreement (a "Claim"), provided that Strata gives Be written notice of
any such Claim and Be has the right to participate in the defense of any such
Claim at its expense.
7.2 BY STRATA. Strata will indemnify, defend and hold harmless Be,
its officers, directors, employees, sublicensees, assignees, customers and
agents from any and all claims, losses, liabilities, damages, expenses and
costs (including attorneys' fees and court costs) which result from a breach
or alleged breach of any representation or warranty set forth in Section 6 of
this Agreement (a "Claim"), provided that Be gives Strata written notice of
any such Claim and Strata has the right to participate in the defense of any
such Claim at its expense.
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8. TERM AND TERMINATION
8.1 This Agreement will commence on the Effective Date and, unless
terminated earlier pursuant to the terms of this Agreement, shall continue
for so long as Strata continues to market and distribute the Windows and/or
Macintosh versions of the Strata Products. (the "Term").
8.2 This Agreement may be terminated by either party upon thirty
(30) days' prior written notice if the other party materially breaches any
term hereof and the breaching party fails to cure such breach within the
30-day period.
8.3 Each party's rights and obligations under Sections 4, 5, 7, 8,
9, 10 and 11 of the Agreement will survive termination or expiration of the
Agreement. Within thirty (30) days after termination of this Agreement for
any reason, each party will return or destroy, at the direction of the other
party, such other party's Confidential Information.
9. LIMITATIONS ON LIABILITY.
EXCEPT IN ANY INSTANCE OF A PARTY'S BREACH OF SECTION 7 OR 10, IN NO OTHER
EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR LOSS OF PROFITS,
INTERRUPTION OF BUSINESS OR ANY OTHER SPECIAL, CONSEQUENTIAL, INCIDENTAL,
INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES, HOWEVER CAUSED, WHETHER FOR BREACH
OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE,
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
10. CONFIDENTIALITY AND NON-USE
10.1 By virtue of this Agreement, each party hereto may disclose to
the other party information that is confidential or otherwise proprietary.
10.2 Subject to the exceptions listed below, a party's
"Confidential Information" will be defined as written, electronic, oral or
other form of information disclosed by the party to the other party under
this Agreement and clearly marked or otherwise clearly designated as
"confidential" or the equivalent. Oral information is deemed "Confidential
Information" if identified as such in writing by the disclosing party within
30 days following disclosure However, a party's Confidential Information will
not include any information that: (a) is or becomes a part of the public
domain through no wrongful act or omission of the other party; or (b) was in
the other party's lawful possession prior to the disclosure and had not been
obtained by the other party either directly or indirectly from the disclosing
party; or (c) is lawfully disclosed to the other party by a third party
without restriction on disclosure; or (d) is independently developed by the
other party by employees or agents without reference to the party's
Confidential Information.
10.3 Each party agrees, for the term of this Agreement and five (5)
years after its expiration or termination, to hold the other party's
Confidential Information in strict confidence, not to disclose such
Confidential Information to third parties not authorized by the disclosing
party to receive such Confidential Information, and not to use such
Confidential Information for any purpose except as expressly permitted
hereunder. Each party agrees to take reasonable steps to protect the other
party's Confidential Information to ensure that such Confidential Information
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is not disclosed, distributed or used in violation of the provisions of this
Agreement. The foregoing prohibition on disclosure of Confidential
Information will not apply to the extent certain Confidential Information is
required to be disclosed by the receiving party as a matter of law or by
order of a court, provided that the receiving party uses reasonable efforts
to provide the disclosing party with prior notice of such obligation to
disclose and reasonably assists in obtaining a protective order therefor.
10.4 As used herein, the term "Residuals" means information in
non-tangible form that is inadvertently retained by persons who have had
access, as authorized in this Agreement, to the other party's technology,
including ideas, concepts, know-how or techniques contained therein.
"Residuals" shall not include ideas, concepts, know-how or techniques which
such persons know or should have reason to believe were acquired from access
to such other party's technology. Each party acknowledges and agrees that,
notwithstanding anything to the contrary in Section 10.3 or elsewhere in this
Agreement, it and its employees may utilize for any lawful purpose any
Residuals in connection with the performance of the obligations under this
Agreement or access to the other party's Confidential Information.
11. GENERAL
11.1 INDEPENDENT CONTRACTOR. Each party hereto is an independent
contractor to the other party, and nothing contained in this Agreement will
be construed to create or imply a joint venture, partnership, principal-agent
or employment relationship between the parties. Neither party may take any
action or permit any action to be taken on its behalf which purports to be
done in the name of or on behalf of the other party and neither party will
have any power or authority to bind the other party to assume or create any
obligation or responsibility express or implied on the other party's behalf
or in its name.
11.2 NOTICES. All notices, consents, waivers, and other
communications intended to have legal effect under this Agreement must be in
writing, must be delivered to the other party at the address set forth at the
top of this Agreement by personal delivery, certified mail (postage
pre-paid), or a nationally recognized overnight courier, and will be
effective upon receipt (or when delivery is refused). Each party may change
its address for receipt of notices by giving notice of the new address to the
other party.
11.3 INJUNCTIVE RELIEF. It is understood and agreed that,
notwithstanding any other provision of this Agreement, any material breach of
this Agreement will cause irreparable damage for which recovery of money
damages would be inadequate, and that the non-breaching party will therefore
be entitled to seek timely injunctive relief to protect such party's rights
under this Agreement in addition to any and all remedies available at law.
11.4 FORCE MAJEURE. Neither party shall be liable for any loss,
damage, or penalty arising from delay due to causes beyond its reasonable
control. Such delay shall be excused during the continuance of such delay and
the period of performance shall be extended to such extent as necessary to
allow the party to perform after the cause of such delay has ceased.
11.5 EXPORT ADMINISTRATION. If any Deliverables are for use
outside the U.S.A., each party agrees to comply fully with all relevant
regulations of the U.S. Department of Commerce and with the U.S. Export
Administration Act to assure that such are not exported, directly or
indirectly, by such party in violation of United
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States Law and to comply fully with any other regulations or laws relating to
such export or import into another country.
11.6 GOVERNING LAW AND VENUE. This Agreement will be governed by
and interpreted in accordance with the laws of the State of California as
such laws apply to contracts made between California residents to be
performed entirely within California. Any suit, action or proceeding arising
from or relating to this Agreement must be brought in a federal court in the
Northern District of California or in state court in Santa Clara County,
California, and each party irrevocably consents to the jurisdiction and venue
of any such court in any such suit, action or proceeding.
11.7 WAIVER. The failure of either party to require performance by
the other party of any provision of this Agreement will not affect the full
right to require such performance at any time thereafter; nor will the waiver
by either party of a breach of any provision of this Agreement be taken or
held to be a waiver of the provision itself as to any other breaches thereof.
11.8 SEVERABILITY. If any provision of this Agreement is
unenforceable or invalid under any applicable law or is so held by applicable
court decision, such unenforceability or invalidity will not render this
Agreement unenforceable or invalid as a whole, and such provision will be
changed and interpreted so as to best accomplish the objectives of such
unenforceable or invalid provision within the limits of applicable law or
applicable court decisions.
11.9 ASSIGNMENT. Neither this Agreement nor any rights or
obligations of either party under this Agreement may be assigned in whole or
in part without the prior written consent of the other party except in an
instance whereby such party assigns this entire Agreement in connection with
a merger or sale of all or substantially all of its business or assets. Any
attempted assignment in violation of the preceding sentence will be void.
This Agreement will bind and inure to the benefit of the respective
successors and permitted assigns of the parties.
11.10 FULL POWER. Each party warrants that it has full power to
enter into and perform this Agreement, and the person signing this Agreement
on such party's behalf has been duly authorized and empowered to enter into
this Agreement by their respective Board of Directors.
11.11 CONSTRUCTION. The section headings appearing in this
Agreement are inserted only as a matter of convenience and in no way define,
limit, construe, or describe the scope or extent of such section or in any
way affect this Agreement. Unless otherwise expressly stated, when used in
this Agreement the word "including" means "including but not limited to."
11.12 ENTIRE AGREEMENT AND AMENDMENT. This Agreement together with
the Exhibits completely and exclusively states the agreement of the parties
regarding its subject matter. It supersedes, and its terms govern, all prior
understandings, agreements, or other communications between the parties, oral
or written, regarding such subject matter. This Agreement may be executed in
counterparts and may be amended only in a document signed by both parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the Effective Date.
STRATA, INC: BE INCORPORATED:
By: By:
---------------------------- -----------------------------
Name: Name:
-------------------------- ---------------------------
Title: Title:
------------------------- --------------------------
Date: Date:
-------------------------- ---------------------------
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EXHIBIT A
STATEMENT OF WORK
DATED:
--------------------
INITIALED:
PROJECT
Development of versions of the Strata Products StudioPro and VideoShop ported
to BeOS.
STRATA LICENSED TECHNOLOGY
StudioPro
VideoShop
SCHEDULE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
DELIVERABLE SCHEDULED DELIVERY DATE
- -----------------------------------------------------------------------------------------------------
<S> <C>
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
TESTING/QA PROCEDURES
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EXHIBIT B
SPECIFICATIONS
[to be attached]
212
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EXHIBIT C
BEDEPOT SALES AGREEMENT
[to be attached]
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EXHIBIT 10.20
STRATEGIC PROCUREMENT AGREEMENT
between
C-3D Digital, Inc.
21601 Devonshire Street, Suite 320
Chatsworth, CA 91311
USA
-subsequently referred to as C-3D-
and
i-O Display Systems, LLC
1370 Willow Road
Menio Park, CA 94025
USA
-subsequently referred to as IOD-
is the following Supplier Agreement to be agreed:
PREAMBLE
IOD is the leading manufacturer and supplier of head mounted personal
displays, stereo 3D products and certain patented product components such as
optics, miniature imagers and electronics.
C-3D is a stereoscopic 3D television and internet entertainment business that
has skills in 3D entertainment content creation, 2D to 3D content conversion,
broadcast and internet presentation.
In order to secure a reliable and continuous supply of 3D stereoscopic
viewing systems, C-3D wished to enter into a Strategic Procurement Agreement
with IOD.
1 PURPOSE OF AGREEMENT
(1) IOD sells to C-3D, as a result of individual Deliveries On Call,
products, whose exact description and specifications are determined in Part 1
of the Product Descriptions and in the Quality Assurance Agreement (Part 1)
between IOD and C-3D, its service providers and/or buyers.
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(2) All procedures and actions in the business relationship between C-3D and
IOD, in particular offers, orders and deliveries, are subject to the
conditions of this Strategic Procurement Agreement, beginning with the date
of signature by both parties.
(3) The parties may adjust or alter Part 1 of the Product Arrangements from
time to time, in particular if C-3D's requirements change due to technical
progress or the market situation.
(4) IOD assures explicitly, that the delivered Agreement Products correspond
exactly to the agreed specifications in Part 1 of the Product Arrangements
and the Quality Assurance Agreement.
(5) This agreement substantiates no commitment from C-3D to accept or pay for
individual deliveries or Agreement Products. A commitment for C-3D to take
delivery of Agreement Products exists only for binding orders confirmed by
IOD according to Section 2, paragraph 2. A forecast made by C-3D ("Forecast")
is in any case not binding.
(6) IOD will include various reference dates on all documents as required by
C-3D, in particular on confirmations of order, delivery notes and invoices.
2 DELIVERY CONDITIONS, AGREEMENT CONCLUSION
(1) The respective terms of delivery, prices, payment policies and other
delivery arrangements are, as with the responsibility for liability, defined
in Part 2 of the Product Arrangements.
(2) A Agreement conclusion with respect to any individual Delivery On Call is
effected by C-3D giving an order and written confirmation of the order by IOD
within the space of four (4) workdays.
3 TURN-KEY
Turnkey Agreements are defined as Agreements where IOD buys and inventories
the required materials and manufacturers the final product for C-3D. For
turnkey Agreements, Agreement Products shall comply with the specifications
attached and incorporated into this Agreement by this reference.
4 DELIVERY DATES, DEFAULT OF DELIVERY
(1) IOD will undertake to deliver any individual Delivery On Call at the
therein named date and to the therein named place. The bringing forward of
delivery dates within the framework of the availability of Agreement Products
in buffer stock according to Section 7 is possible at all times. Further
details about the delivery dates are contained in Part 3 of the Product
Arrangement.
(2) IOD is obliged to instruct C-3D promptly in writing about any possible
delivery problems. Any existing claims by C-3D due to default in delivery
remain exempt.
(3) In the case of necessary adjustments of the quantities ordered and
appointed times, so is the agreed Flex model according to Part 3 of the
Product Arrangements valid.
(4) IOD is not liable for delivery delays caused by civil disturbance due to
events which make delivery impossible for IOD, in particular fire, floods or
other natural phenomena, national prohibitions or other official measures,
walkouts or lockouts, or other Acts of God.
5 AGREEMENTUAL PENALTY
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None
6 PASSING OF TITLE
On pick-up of the Agreement Products from the place named in the individual
Delivery On Call or, in case no place is named, from the IOD in Menlo Park,
California, so transfers the title of the Agreement Products unconditionally
and exclusively to C-3D.
7 BUFFER STOCK
(1) IOD is obliged to maintain a minimum stock level of Agreement Products
for special requirements C-3D may have, in particular rapid demand and
replacement deliveries in case of warranty. This stock-level is determined by
the quantities named in the Forecast for the duration of (2) weeks and will
be exchanged for new Agreement Products by IOD on a rotation system as agreed
by IOD and C-3D in writing. Provided however that C-3D shall committed to
purchase the buffer stock of all Product at the end of the product life or
upon cancellation of this Agreement by C-3D by means other than Section 31
Extraordinary Termination.
(2) the reduction of this buffer stock occurs in accordance with the first-in
first-out method. In addition, the Flex model according to Part 3 of the
Product Arrangements applies.
(3) IOD is obliged to promptly completely replenish the buffer stock whenever
it is accessed.
8 PARTICULAR REQUIREMENTS, TECHNICAL CHANGES
(1) Should the Agreement Products be subject to any particular requirements,
especially with respect to storage, transport, operation and handling (e.g. ESD
safety measures), so must these be fulfilled by IOD and C-3D is to be informed
punctually in writing by IOD before the respective delivery.
(2) IOD gives C-3D its assurance to inform C-3D promptly about all technical
or other problems concerning the Agreement Products, in particular about
problems due to function errors, also then if C-3D is not directly affected.
9 QUALITY CONTROL, RECEIVING INSPECTION
(1) IOD is responsible for the implementation of all necessary quality
controls. C-3D shall only be required to complete an inspection of products
to ensure packaging is in tact and the product functions, on a timely basis
and report any quality issues to IOD promptly.
(2) IOD is under obligation only to deliver Agreement Products which have
been examined and determined to be fully functional, either by itself or any
prior suppliers.
10 WARRANTY
(1) IOD gives a warranty on all Agreement Products for drawing exactness and
for defects, which occur as a result of material deficiencies and/or
defective production or processing. A warranty case also comes
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into effect in the case of deviations from the specification laid down in
Part 1 of the Product Arrangements and/or the Quality Assurance Agreement
according to Part 1.
(2) The period of warranty for the Agreement Products is stated in Part 2 of
the Product Arrangements. C-3D will reprimand defects in writing.
(3) In the case of warranty C-3D is entitled to demand, at C-3D's
discretion, either substitute delivery of faultless Agreement Products or
improvement or to return the faulty Agreement products in return for a credit
note to the original purchase price.
(4) WARRANTY AND DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTY CONTAINED IN THE
ORDER TERMS, IOD MAKES NO REPRESENTATION OF WARRANTY, EXPRESS OR IMPLIED
(INCLUDING IMPLIED WARRANTIES OR MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE) CONCERNING ANY PRODUCT. ALL OTHER GUARANTEES, WARRANTIES, CONDITIONS
AND REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, WHETHER ARISING UNDER ANY
STATUTE, LAW, COMMERCIAL USAGE OR OTHERWISE, ARE HEREBY EXCLUDED.
SELLER MAKES NO WARRANTY THAT THE GOODS WILL NOT INFRINGE ANY CLAIMS OF ANY
UNITED STATES OR FOREIGN PATENTS OR COPYRIGHTS. SELLER WILL NOT INDEMNIFY
BUYER OR ITS CUSTOMERS FOR ANY CLAIMS BROUGHT AGAINST BUYER OR ITS CUSTOMERS
FOR INFRINGEMENT OF ANY SUCH PATENTS OR COPYRIGHTS.
(5) C-3D ACKNOWLEDGES AND AGREES THAT IOD'S SOLE RESPONSIBILITY IN THE CASE
OF BREACH OF THE FOREGOING WARRANTY SHALL BE FOR IOD, AT IOD'S ELECTION, TO
REPAIR OR PROVIDE A REPLACEMENT FOR THE PRODUCT OR THE PORTION OF THE PRODUCT
WITH RESPECT TO WHICH SUCH WARRANTY IS BREACHED OR TO RETURN ALL PAYMENTS
MADE WITH RESPECT TO SUCH PRODUCT OR PORTION THEREOF. IN NO EVENT , INCLUDING
BREACH OR NON-FULFILLMENT OF THE FOREGOING LIMITED REMEDY, SHALL IOD BE
LIABLE FOR LOSS OF PROFITS OR INDIRECT, INCIDENTAL, CONSEQUENTIAL OR SPECIAL
DAMAGES OR ANY KIND.
11 PRINCIPLE OR SERIAL DEFECTS
(1) A principle or serial defect is present, if more than 3% of the
Agreement Products have defects with the same origin, or have the same
deviations from the arranged specifications.
(2) IOD is under obligation to supply C-3D with a detailed analysis of the
causes of the principle or serial defects within one week after receipt of
samples.
12 QUALITY OF THE FIRST SERIES
Does not apply.
13 TYPE SUPPORT/REPAIR/SPARE PARTS
IOD supports C-3D in the removal of defects which are no longer covered by
the warranty period; in particular IOD is under obligation, after the
warranty period has expired, and on C-3D's request, to repair
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defective Agreement Products, or if necessary to deliver replacement
components or replacement products. All costs associated this section 13
shall be borne by C-3D. This commitment ends two (2) years after the last
delivery of Agreement Products, if at all technically possible.
14 CONSISTENT PRODUCTION PROCEDURE
IOD maintains during the Agreement duration a consistent production procedure
with consistent materials. An intended change in production procedure or
materials, for whatever reason, must be relayed to C-3D punctually before the
intended commencement of the changed production. The change is only permitted
if C-3D has given its written consent.
15 QUALITY ASSURANCE
IOD is under obligation to follow exactly the DPPM recommendations according
to the Quality Requirements aims outlined in Part 1 of the Product
Arrangements.
16 DOCUMENTATION, NECESSARY DOCUMENTS
IOD supplies C-3D with existing documents and other necessary documents
concerning the Agreement Products, in English, to a sufficient extent and
free of charge.
17 WORK PRODUCT OWNERSHIP
Any copyrightable works, ideas, discoveries, inventions, patents, products,
or other information related to products or process (collectively, the "Work
Product") developed in part or in whole by IOD in connection with the
Services or Agreement Products shall be in the exclusive property of IOD.
18 PACKAGING, WASTE DISPOSAL
(1) IOD is under obligation to deliver the Agreement Products exclusively in
environmentally-friendly and recyclable packaging, to take back these as well
as defective Agreement Products on C-3D's request, and to dispose of them
according to the relevant regulations in force.
19 LIABILITY
C-3D is not liable to IOD for indirect and/or consequential damages,
immaterial of any legal basis, in particular not for lost profits and lost
interest, unless a case of premeditation or gross negligence applies.
IOD is not liable to C-3D for indirect and/or consequential damages,
immaterial of any legal basis, in particular not for lost profits and lost
interest, unless a case of premeditation or gross negligence applies.
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20 INSURANCE
(1) C-3D is under obligation to carry out all insurance at its own expense,
in particular third-party insurance, which covers all damages which C-3D may
incur as the result of distribution of Agreement Products, in particular as a
result of callback liabilities, liability in tort and product liability as
well as expanded product liability for financial loss due to possible defects
of Agreement Products.
(2) C-3D is under obligation to maintain this insurance during the whole
Agreement period.
(3) C-3D furnishes IOD with a record of the signing of the corresponding
insurance promptly upon availability of the respective insurance policy and
will promptly instruct IOD if changes arise, with respect to the insurance,
which results in the insurance cover no longer being sufficient. On demand
IOD can, at all times, inspect the relevant documents.
21 YEAR 2000-COMPATIBILITY
(1) IOD assures that its products are "Year 2000-compatible", that is to
say, no conflicts and problems with the Agreement Products will occur either
due to changing from the year 1999 to the year 2000 and afterwards, or to
recognizing the year 2000 as a leap year.
(2) The parties agree that non-compliance with this demand represents a
warranty case according to a Section 10.
22 PRICE ADJUSTMENTS, MOST FAVORED NATION
(1) IOD assures that prices and conditions offered to C-3D for the Agreement
Products are at least as favorable as the best prices and conditions granted
by IOD to another buyer for the same or comparable products at like volumes.
Should any other buyer of IOD be granted more favorable conditions or more
favorable prices for the same or comparable products than C-3D, so is IOD
under obligation to grant C-3D unsolicited such conditions and prices,
backdated to the time at which the other buyer was first granted the more
favorable prices or conditions. The appropriate credit notes are to be issued
at the end of each quarter. Should C-3D not be in the position to set off
these credit notes against current payments, IOD will refund C-3D the credit
note sum within fourteen days of the date of the credit note.
23 TRANSFERS AND ASSIGNMENTS
IOD is not entitled to transfer rights and/or duties out of this Agreement to
a third party without the previous written consent of C-3D.
24 QUALITY ASSURANCE/NON-DISCLOSURE AGREEMENT
The parties are under obligation, if not already taken place, to complete a
Non-disclosure Agreement, which are, or will be, integral parts of this
Agreement in the form of Exhibit 1.
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25 COUNTERBALANCING
C-3D is not permitted to any rights of retention or other recoupments as well
as assertion of any loan rights against IOD.
26 PAYMENTS
C-3D promises to IOD the prompt and full repayment of all sums now or
hereinafter due IOD from C-3D. Further, C-3D agrees to remain fully bound on
this obligation notwithstanding any extension, forbearance, waiver, release,
or discharge of the debt or substitution waiver or release of any collateral
or security for the debt.
If any invoice is not paid when due, interest will be added to any payable on
all overdue amounts at eighteen (18%) percent per annum, or the maximum
percentage allowed under applicable laws, whichever is less. The accrual of
payment of interest does not authorize C-3D to defer payment of any
indebtedness beyond the credit terms stated herein. If C-3D should fail to
make any payments, the IOD at its option may treat C-3D's failure to pay as a
material breach of this Agreement, and may terminate this Agreement and/or
seek legal or equitable remedies.
The holder of legal title to property which IOD provides Services for is
hereby notified that IOD holds a lien on said property for such Services and
may retain possession of the same until the charges are paid. In the event
the charges are not paid, the lienholder has the right to sell as much of the
personal property as necessary to satisfy the lien, costs of sale, storage
and interest.
Payment terms are 33% prepay at time of order, 33% COD, and 33% net 30 days
from the date of the invoice. IOD reserves the right to change all terms to
prepay if C-3D is delinquent on any payment.
27 TAXES
C-3D agrees to pay all USA taxes and duties including federal, state, and
municipal, that arise as a result of the sale of the Services and/or Goods
described herein, excluding IOD's income taxes.
28 IOD'S TERMS OF SALE AND DELIVERY
IOD's Terms of Sale and Delivery of do not apply to this Strategic
Procurement Agreement and all related individual Deliveries On Call. This
also applies if IOD refers to its Terms during the course of correspondence
resulting out of this Strategic Procurement Agreement.
29 USE OF IOD'S NAME AND LOGO, LICENSES
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(1) C-3D may not use IOD's name, trademarks and/or logo in its
advertisements or marketing efforts without the prior written approval of
IOD.
(2) Except as expressly set forth herein, no license is granted to Customer
under any intellectual property rights of IOD, including, but not limited to,
patents, trademarks, copyrights, or trade secret rights, either expressly, by
implication, estoppel or otherwise. The relationship of the parties under
this Agreement is that of the independent Agreementors, and neither party is
an employee, agent, partner or joint venturer of the other.
30 COMPETITION
(1) IOD and C-3D, as well as any connected companies, are not in direct
competition at the point of time when the Agreement is signed, i.e. the
product portfolios of IOD or C-3D do not contain any similar or identical
products.
(2) Should C-3D plan to enter into direct competition with IOD with its
products in contradiction to the previous business relationship, especially
by taking over another company or in the case of being taken over itself by
another company, or if this is to be foreseen, so must C-3D inform IOD of
these plans punctually.
(3) Should this regulation be violated, so has IOD the right to
extraordinary termination as laid down in Section 31.
31 TERM
(1) This Strategic Procurement Agreement is valid for an indefinite period
of time. It begins upon joint ratification and ends when it is terminated by
one of the Agreement parties in written form with a limit of notice of three
(3) months to the end of the half-year.
(2) On termination of this Strategic Procurement Agreement by IOD, C-3D will
decide whether to take delivery of Agreement Products already ordered by
Delivery On Call. Should this not be the case. C-3D is under no commitment to
pay for the outstanding Deliveries On Call or to bear any other costs.
(3) On termination of this Agreement by C-3D, the commitment to deliver and
to accept Agreement Products already ordered on Delivery On Call is not
affected.
32 EXTRAORDINARY TERMINATION
(1) C-3D can effect an extraordinary termination of this Strategic
Procurement Agreement for an important reason, as well as for the particular
reasons explicitly named in this Agreement. An important reason would be in
particular a breach of Agreement duties by IOD, its insolvency, the opening
of bankruptcy proceedings, as well as a change in the company or partner
structure of IOD.
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(2) In the case of an extraordinary termination C-3D decides whether it
still accepts Agreement Products ordered by individual Deliveries On Call.
Should this not be the case C-3D is not committed to pay for remaining
Deliveries On Call or to bear any other costs.
(3) IOD can effect an extraordinary termination of this Strategic
Procurement Agreement for an important reason, as well as for the particular
reasons explicitly named in this Agreement. An important reason would be in
particular a breach of Agreement duties by C-3D, late or delayed payments,
its insolvency, the opening of bankruptcy proceedings, as well as a change in
the company or partner structure of C-3D.
(4) In the case of an extraordinary termination IOD decides whether it still
delivers Agreement Products ordered by individual Deliveries On Call. Should
this not be the case IOD is not committed to ship remaining Deliveries On
Call or to bear any other costs.
(5) An extraordinary termination by IOD or C-3D takes place in writing and
without notice.
33 FURTHER VALIDATION OF REGULATIONS
The provisions of this Agreement remain correspondingly further valid after
its termination as far as necessary and legal.
34 WRITTEN REQUIREMENTS
This Agreement, its Exhibits and Parts of the Product Arrangements represent
the entire Agreement between the parties and supersedes all former
discussions, Arrangements and Agreements between them. Amendments and
alterations to this Agreement including this clause must be in writing. No
party can refer to an actual practice deviating from this Agreement so long
as the discrepancy is not recorded in writing and both signed by duly
authorized officers.
35 SEVERABILITY
If any term of this agreement is or becomes invalid, illegal or unenforceable
for any reason, such invalidity, illegality or unenforceabilty shall not
affect the remaining terms of this agreement. Such provision shall be
enforced to the fullest extent permitted by applicable law or there shall be
substituted for any such invalid, illegal or unenforceable provision on a
suitable provision which, as far as is legally possible, comes nearest to
that which the parties intended when concluding this agreement. The same
applies in the case of a regulation loophole.
36 WAIVER
The failure of either party to enforce any provision of this Agreement shall
not be construed as a waiver or limitation of that party's right to
subsequently enforce and compel strict compliance with every provision of
this Agreement.
37 GENDER/TENSE
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Whenever required by the content hereof, the singular shall be deemed to
include the plural and the plural shall be deemed to include the singular,
and the masculine, feminine and neutral genders shall be deemed to include
the others.
38 INDIVIDUAL/PARTNERSHIP AUTHORITY
Any individual signing this Agreement on behalf of another individual,
corporation, or partnership represents and warrants that he or she has full
authority to do so.
39 INDEPENDENT ADVICE OF COUNSEL
The parties hereto, and each of them, represent and declare that in executing
this Agreement, they rely solely upon their own judgment, belief and
knowledge, and the advice and recommendations of their own
independently-selected counsel. Further, the parties hereto, and each of
them, represent that they have had sufficient opportunity to consult with
independent counsel about the terms and conditions of this Agreement prior to
executing this Agreement.
40 VOLUNTARY AGREEMENT
The parties hereto, and each of them, further represent and declare that they
carefully read this Agreement and know the contents thereof and that they
signed the same freely and voluntarily.
41 APPLICABLE LAW, PLACE OF EXECUTION AND PLACE OF JURISDICTION
(1) Exclusively the laws of the State of California, without reference to
its conflict of laws principles, apply to this Agreement.
(2) The place of execution for delivery is the one named by C-3D in each
Delivery On Call. Should no place of reception be named, so is the place of
execution, just as for all payments, the Head Office of IOD in Menlo Park.
(3) The place of jurisdiction is Menlo Park, California.
42 DISPUTE RESOLUTION
In the event any dispute or controversy arising out of or relating to this
Agreement, the parties agree to exercise their best efforts to resolve the
dispute as soon as possible. The parties shall, without delay, continue to
perform their respective obligations under this Agreement which are not
affected by the dispute. To invoke the dispute resolution process set forth
in this paragraph, the invoking party shall give to the other party written
notice of its decision to do so, including a description of the issues
subject to the dispute and a proposed resolution thereof. Designated
representatives of both parties shall attempt to resolve the dispute within
five (5) working days after such notice. If those designated representatives
cannot resolve the dispute, the parties shall meet at a mutually agreeable
location and describe the dispute and their respective proposals for
resolution to the President of Buyer and President of Seller, who shall act
in good
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faith to resolve the dispute. If the dispute is not resolved within thirty
(30) calendar days after such meeting, the dispute shall be submitted to
binding arbitration in accordance with the Arbitration provision of this
Agreement.
43 ARBITRATION
Any controversies or disputes arising out of or relating to this Agreement
shall be resolved by binding arbitration in accordance with the then current
Commercial Arbitration Rules of the American Arbitration Association.
Notwithstanding the foregoing, either party may seek provision process in
good faith. The parties shall endeavor to select a mutually acceptable
arbitrator knowledgeable about issues relating to the subject matter of this
Agreement within ten (10) days of notice of commencement of arbitration. In
the event the parties are unable to agree to such a selection, each party
will select an arbitrator and the arbitrators in turn shall select a third
person who shall serve as sole arbitrator. The arbitration shall take place
in San Mateo County, California, or at a location mutually agreed upon by the
parties.
All documents, materials, and information in the possession of each party
that are in any way relevant to the claim(s) or dispute(s) shall be made
available to the other party for review and copying no later than thirty (30)
days after the notice of arbitration is served. Any document not timely
produced shall be excluded from evidence at the arbitration excepting only
for the purposes of impeachment.
Subject to the provisions in paragraph 19, the arbitrator shall not have the
authority, power, or right to alter, change, amend, modify, add, or subtract
from any provision of this Agreement or to award punitive damages. The
arbitrator shall have the power to issue mandatory orders and restraining
orders in connection with the arbitration. The award rendered by the
arbitrator shall be final and binding on the parties, and judgment may be
entered thereon in any court having jurisdiction. The agreement to
arbitration shall be specifically enforceable under the prevailing
arbitration law.
44 EXHIBITS
Exhibit 1: Non-disclosure Agreement
All exhibits are fundamental constituents of this Agreement. The Exhibits may
be amended or altered. Further Exhibits will also be deemed to be constituent
parts of this Agreement upon ratification by both parties. In the case of
contradictions between this Agreement and an Exhibit, the provisions of the
Agreement shall prevail, as long as these have not been expressly altered in
the relevant Exhibit.
45 PRODUCT ARRANGEMENTS
Part 1: Agreement Products, specifications
Part 2: Delivery conditions, prices, payment procedures, liability
Part 3: Delivery dates, Flex model
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All parts of Product Arrangements will be ratified by both parties for each
Agreement Product as part of this Agreement. The Product Arrangements may be
extended or altered as required. In cases of contradiction between this
Agreement and a Part of Product Agreement, the terms of the Agreement take
precedence, as long as these have not been expressly altered in the relevant
Product Agreement.
Agreed:
i-O Display Systems, LLC C-3D Digital, Inc.
(being duly authorized (being duly authorized
on behalf of the on behalf of the
party to execute this party to execute this
Agreement) Agreement)
9/17/99 9/17/99
- ---------------------------------- -----------------------------------
(Place and Date) (Place and Date)
/s/ Jeff Fergason /s/ J. Michael Heil
- ---------------------------------- -----------------------------------
Signature: Signature:
Name: Jeff Fergason Name: J. Michael Heil
Position: President Position: C.E.O.
- ---------------------------------- -----------------------------------
Signature: Signature:
Name: Name:
Position: Position:
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PART 1 OF THE PRODUCT ARRANGEMENTS - PRODUCT SPECIFICATIONS
STRATEGIC PROCUREMENT AGREEMENT DATED 09-01-99
BETWEEN I-O DISPLAY SYSTEMS, LLC
AND C-3D DIGITAL, INC.
(SUPERSEDES ALL FORMER PART 1S
OF THE PRODUCT ARRANGEMENTS
RELATED TO THE
BELOW MENTIONED PRODUCT).
1. PRODUCT SPECIFICATION
- - IOD Part No.: TBA
- - Supplier Part No.: TBA
- - Part Description: i-3d Wireless Shutter Glasses TV Viewing System
(includes 2 pairs of wireless eyewear, TV transmitter, 4 ft' RCA male to
male video cable, i-3d consumer package).
Both parties agree to the attached and product specification and QA plan
number _________________. Future changes have to be made in written form and
shall be deemed as agreed if it is signed by both parties.
Agreed:
i-O Display Systems, LLC C-3D Digital, Inc.
(being duly authorized (being duly authorized
on behalf of the on behalf of the
party to execute this party to execute this
Agreement) Agreement)
9/17/99 9/17/99
- ---------------------------------- -----------------------------------
(Place and Date) (Place and Date)
/s/ Jeff Fergason /s/ J. Michael Heil
- ---------------------------------- -----------------------------------
Signature: Signature:
Name: Jeff Fergason Name: J. Michael Heil
Position: President Position: C.E.O.
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PART 2 OF THE PRODUCT ARRANGEMENTS - PURCHASING
STRATEGIC PROCUREMENT AGREEMENT DATED 09-01-99
BETWEEN I-O DISPLAY SYSTEMS, LLC
AND C-3D DIGITAL, INC.
(SUPERSEDES ALL FORMER PART 2S
OF THE PRODUCT ARRANGEMENTS
RELATED TO THE
BELOW MENTIONED PRODUCT).
1. PRICE SCHEDULE
The following price includes two i-3d wireless eyewear, one standard i-3d IR
transmitter and consumer package, FOB Menlo Park.
<TABLE>
<CAPTION>
Monthly System
Quantity Price Eyewear Trans Package
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1K $102.00 $70.00 $30.00 $2.00
5K $ 88.00 $64.00 $22.00 $2.00
10K $ 82.00 $62.00 $19.00 $1.00
100K $ 65.00 $48.00 $16.00 $1.00
</TABLE>
- - C3D shall provide packaging sleeve artwork to IOD.
The first 1,500 systems shall include the H3D TV transmitter. After the first
1500 systems, the i-3d transmitter will be substituted for the H3D
transmitter.
To support C-3D's start-up while larger volume customers are in development,
IOD shall forward price all deliveries to assume a 10K per month volume
during the first six months of the Agreement. After six months, IOD and C3D
shall meet to review pricing based on actual demand.
2. TERMS OF DELIVERY
The terms of delivery are FOB Menlo Park.
The actual leadtime for the product is 4 weeks.
C-3D shall manage transportation of all Product.
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Agreed:
i-O Display Systems, LLC
------------------------------------
(being duly authorized (being duly authorized
on behalf of the on behalf of the
party to execute this party to execute this
Agreement) Agreement)
- ---------------------------------- -----------------------------------
(Place and Date) (Place and Date)
- ---------------------------------- -----------------------------------
Signature: Signature:
Name: Name:
Position: Position:
- ---------------------------------- -----------------------------------
Signature: Signature:
Name: Name:
Position: Position:
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PART 3 OF THE PRODUCT ARRANGEMENTS - DELIVERY DATES, FLEX MODEL
STRATEGIC PROCUREMENT AGREEMENT DATED 09-01-99
BETWEEN I-O DISPLAY SYSTEMS, LLC
AND C-3D DIGITAL, INC.
(SUPERSEDES ALL FORMER PART 3S
OF THE PRODUCT ARRANGEMENTS
RELATED TO THE
BELOW MENTIONED PRODUCT).
1. PURCHASING ORDERS
C-3D will purchase products only by issuing purchase orders to IOD signed by
C-3D's President or Vice President. The Purchase orders shall be blanket
purchase orders and shall be subject to cancellation in whole or in part
consistent with the scheduling provisions below. IOD will send written
confirmation of orders within 4 working days with all C-3D references (see
item 4). If IOD fails to return the acknowledgment either electronically or
by return fax, IOD will be deemed to have accepted any order which conforms
with the terms of this agreement. No additional or different provisions
proposed by C-3D shall apply unless expressly agreed to in writing by IOD.
IOD hereby gives notice of its objection to any additional or different terms.
The first purchase order for a minimum of the first 1,500 systems.
2. ORDER - AND FORECAST SHEET
C-3D will provide at the beginning of every week a twelve (12) week rolling
forecast sheet to the supplier in a form consistent to the attached. IOD
shall complete the columns numbered (6) "Finished Goods Inventory" and (7)
"Expected Run Rate". The supplier shall return the completed form sheet
latest by Tuesday after receipt.
3. DELIVERIES
Forecast Delivery Dates and actual Shipment Release Dates shall be
communicated to IOD via a weekly Hub Spreadsheet. IOD is authorized to make
shipments only on dates highlighted in green for the week. The ship dates on
the Hub Spreadsheet are always considered as pick-up dates of the products in
Menlo Park at the IOD factory.
IOD shall submit "Delivery Advice Notes" to C-3D immediately (same day) after
hand over of the products to the forwarder.
4. PAPERWORK
229
<PAGE>
C-3D shall include following reference data on all documents:
- - Purchase Order No.
- - IOD Part Number
- - Quantity
- - Price
- - Pick-up-date
Besides those items, on each Delivery Advice Note has to be written:
- - Forwarder
- - Tracking No.
5. FLEXIBILITY AGREEMENT
Changes to delivery dates and quantities may only be made by C-3D's
authorized purchasing representatives. C-3D may, without cost or liability,
issue change requests for product quantities and schedule dates in accordance
with below mentioned models. Written confirmation shall be sent by IOD to
C-3D within two (2) work days after receipt of change request.
Each Monday, C-3D shall provide IOD with a Hub Spreadsheet for each product
and ship-to location. The hub spreadsheet shall include:
12. A product consumption forecast. This is a forecast only and not a
purchase commitment. Purchase commitments are only made by C-3D in
the form of a Purchase Order signed by C-3D's President or Vice
President.
13. A "Minimum End of Life Quantity". This number represents C-3D
absolute maximum commitment to accept future product or components
from future product. (The Minimum End of Life quantity should
always be a number that is less than the actual open purchase order
quantity. If the actual open purchase order quantity is less than
the "Minimum End of Life Quantity" on the hub spreadsheet, C-3D's
actual commitment will be the lesser of the two.)
14. Max. IOD Finished Goods Inventory: This number represents the
target finished goods inventory and the absolute maximum finished
goods inventory IOD should have in stock ready for shipment. IOD
should continue to build finished goods inventory until the "Max.
IOD finished Goods Inventory" number is reached.
NOTE: C-3D SHALL BE OBLIGATED TO PURCHASE ANY RAW MATERIALS IOD HAS
ON HAND AT DIRECT IOD COST UP TO THE TOTAL MATERIALS ALREADY
PURCHASED BY IOD DEDICATED ONLY TO THE ASSEMBLY OF THE "MINIMUM END
OF LIFE" QUANTITY LESS "MAX. IOD FINISHED GOODS INVENTORY" QUANTITY.
230
<PAGE>
Agreed:
i-O Display Systems, LLC
-----------------------------------
(being duly authorized (being duly authorized
on behalf of the on behalf of the
party to execute this party to execute this
Agreement) Agreement)
- ---------------------------------- -----------------------------------
(Place and Date) (Place and Date)
- ---------------------------------- -----------------------------------
Signature: Signature:
Name: Name:
Position: Position:
- ---------------------------------- -----------------------------------
Signature: Signature:
Name: Name:
Position: Position:
231
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 327,418
<SECURITIES> 0
<RECEIVABLES> 1,015,269
<ALLOWANCES> 100,000
<INVENTORY> 2,116,531
<CURRENT-ASSETS> 3,624,652
<PP&E> 1,000,719
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,584,441
<CURRENT-LIABILITIES> 3,454,967
<BONDS> 0
0
0
<COMMON> 2,456
<OTHER-SE> 1,877,018
<TOTAL-LIABILITY-AND-EQUITY> 8,584,441
<SALES> 2,644,478
<TOTAL-REVENUES> 2,644,478
<CGS> 2,653,873
<TOTAL-COSTS> 6,709,758
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 283,269
<INCOME-PRETAX> (6,990,687)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,990,687)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
