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
▇▇▇ 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 ▇▇▇ 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
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇
If to the Distributor:
3D Television, Co., LTD.
8-15-17-602, Nishi-Shinjuku ▇▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇, ▇▇▇-▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇ ▇▇▇▇, CEO
DISTRIBUTOR:
3D TELEVISION, CO., LTD.
By:
----------------------------------
▇▇. ▇▇▇▇▇▇▇▇ 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.
Wholesale Price Per Unit $93.60 (Maximum)
The Minimum Royalties is as follows:
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
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. ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------
J. ▇▇▇▇▇▇▇ ▇▇▇▇, CEO
3D TELEVISION CO., LTD.
By: /s/ Hisatake Togoe, President & CEO
----------------------------------------
Hisatake Togoe, President & CEO
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