Exhibit 3(1)
DYNAMIC DIGITAL DEPTH USA INC
- and -
VIDEO APPLICATIONS INC
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MEMORANDUM OF UNDERSTANDING
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8th June 1999
Solomon Brothers
Solicitors
Level 40
Exchange Plaza
2 The Esplanade
PERTH WA 6000
Tel: 9221 5888
Fax: 9221 5955
Ref: PFF/
THIS AGREEMENT is made the day of June 1999
BETWEEN
DYNAMIC DIGITAL DEPTH USA INC a company incorporated under the laws of Delaware
and having its main office and place of business at MGM Plaza, 2450 Broadway,
Suite 550, Santa Monica, California, 90404 (hereinafter referred to as "DDD
USA") of the first part
- - and -
VIDEO APPLICATIONS INC a company incorporated in __________ and having its main
office and place of business at 14791 Myford Road, Tustin, California, 92780
(hereinafter referred to as "VAI") of the second part
WHEREAS
A. DDD USA holds license rights from Dynamic Digital Depth Australia Pty
Ltd in relation to technology which is under development by Dynamic
Digital Depth Research Pty Ltd comprising techniques, hardware and
software for both real time and non-realtime reprocessing of film and
video stock from 2D to 3D ("the Technology").
B. The rights held by DDD USA in relation to the Technology include the
rights to intellectual property comprised in or related to the
Technology, including without limitation patents, patent applications,
data, designs, techniques, concepts, test results, drawings, know-how,
software, algorithms and trade and other secrets relating to the
design, development, use, operation and production of the Technology
("the Intellectual Property").
C. Those parts of the Intellectual Property as are not in the public
domain comprise confidential proprietary information of DDD USA.
D. VAI is a research development and production company currently involved
in producing and staging Corporate Promotional Events and Broadcast and
Interactive Theatrical Events including with the use of VAI's
proprietary electronic projection equipment, ("the VAI Business").
2.
E. VAI wishes to investigate the feasibility of commercializing the
Technology, or parts of it, as part of the VAI Business with a view to
entering into an agreement with DDD USA for an ongoing license to
utilize the Technology and the Intellectual Property in the course of
the VAI Business, a joint venture agreement or other commercial
agreement relating to the Technology ("the Commercial Agreement") and
to this end VAI wishes to:
(i) obtain access to relevant parts of the Confidential
Information with respect to the Technology;
(ii) engage in an investigation, during a period of up to 120 days,
unless extended per paragraph 3, into the feasibility of
application of the Technology in the VAI Business (the "Due
Diligence").
(iii) obtain the assistance of DDD USA with respect to the Due
Diligence including to make available to VAI in confidence the
software and hardware comprised in the Technology as it is
developed and becomes available.
G. DDD USA has agreed, subject to the terms herein, to assist VAI, in the
manner specified herein with respect to the Due Diligence.
3.
THEREFORE IT IS AGREED THAT:
1. The recitals hereto are made a part of this agreement.
2. DEFINITIONS
2.1 "Confidential Information" means:
2.1.1 any information disclosed by DDD to VAI pursuant to
this agreement not being in the public domain at the
time of disclosure and which is in written, graphic,
machine readable, or other tangible form and is
marked "confidential", "proprietary" or in some other
manner to indicate that it has been disclosed in
confidence;
2.1.2 oral information disclosed by DDD to VAI pursuant to
this agreement, provided that such information is not
in the public domain at the time of disclosure and is
designated as confidential at the time of disclosure
and is reduced to writing by DDD within 60 days of
its oral disclosure and such writing is marked in a
manner to indicate its confidential nature and
delivered to VAI;
2.1.3 all other information relating to the Technology
arising for the first time from the Due Diligence,
including test results.
2.2 2.2.1 However, information disclosed by DDD hereunder
shall not be Confidential Information if VAI
demonstrates that such information is:
(a) already known to VAI at the time of receipt
from DDD;
(b) already public at the time of receipt or
thereafter becomes public through no breach
of this Agreement by VAI;
(c) obtained by VAI from a third party, which
third party, by disclosing the information
to VAI, did not breach an obligation of
confidentiality incurred vis-a-vis DDD;
4.
(d) disclosed by DDD itself to a third party
without restriction on disclosure.
2.2.2 Exclusivity shall be granted to VAI in North America
for the duration of this agreement and subject to the
terms of this agreement in the following areas of
business:
(a) "Corporate Promotional Events" which means
business theater presentations, conventions,
trade show exhibits, point of purchase
displays, sales training, technical
training, product demonstrations, product
promotion, motivation, annual meetings.
(b) "Broadcast and Interactive Theatrical
Events" which means live and pre-recorded
sporting events, music concerts and
interactive video games displayed on theater
screens using digital or electronic
projectors.
2.3 "DDD" means the Dynamic Digital Depth group of companies.
2.4 Notwithstanding the foregoing the exclusivity granted above to
VAI excludes:
2.4.1
70 mm, 65mm and 35mm film and HD video or HD
CGI or any combination of the foregoing and
which is intended for the following
applications and venues:
2.4.1.1 edutainment motion simulators
2.4.1.2 theme parks
2.4.1.3 destination theaters
2.4.1.4 museum theaters
2.4.1.5 expositions
2.4.1.6 worlds fairs
2.4.2 Sub- HD video, sub-HD CGI, sub-HD ride films
and sub-HD simulators, as applied to
applications and venues in clause 2.4.1.
5.
2.4.3 Products for broadcast transmission,
excluding closed circuit.
2.4.4 Interactive entertainment software (eg
arcade and consumer video game
applications).
2.4.5 Consumer pre-recorded media,
2.4.6 Products for retail motion picture
theatrical distribution.
2.5 "2D" means images viewable in two dimensions.
2.6 "3D" means images viewable in three dimensions.
6.
CO-OPERATION AND NEGOTIATION
3. During the period of 120 days unless extended as set forth below
commencing to run from the date of execution of this agreement ("the
Term") and in consideration of receipt by DDD USA of the Fee specified
in clause 14.1 DDD USA will in co-operation with VAI assist with the
Due Diligence in the manner specified in clauses 4 to 6 herein and will
not enter into negotiations with other parties in the areas of business
set out in clause 2.2.2. At VAI's sole option, said Term shall be
extended for 60 days in exchange for the payment of the Extension Fee
as set forth in paragraph 14.2.
4. DDD USA undertakes to supply to VAI ONE (1) of each item of software
and hardware comprised in the Technology as and when each such item has
been developed by DDD to a stage that DDD USA considers it, or them
together, suitable for prototype release for evaluation purposes ("the
Prototype Components").
5. The Prototype Components will be delivered by DDD USA to VAI at VAI's
premises in Tustin, CA at VAI's expense with respect to freight and
insurance. DDD USA shall notify VAI immediately any Prototype
Components are ready for delivery and it shall be the responsibility of
VAI to pay the shipping company the freight charge, or to reimburse DDD
USA for same, and to insure the Prototype Components to their full
value as specified by DDD USA.
6. DDD USA will supply to VAI in confidence an operating manual for the
Prototype Components.
7. Ownership of the hardware and software comprised in the Prototype
Components and all Intellectual Property Rights comprised in or related
to the hardware and software comprising the Prototype Components shall
upon delivery to VAI remain the property of DDD USA.
8. VAI shall upon request from time to time make available to DDD USA full
access to all results of the Evaluation Program as they pertain to the
Technology. For the avoidance of doubt, it is agreed that VAI shall be
under no obligation to give to DDD USA access to any information
pertaining to any VAI componentry or equipment with which the Prototype
Components are tested or used.
7.
9. Upon expiration of the Term then unless a Commercial Agreement has by
then been executed by DDD USA and VAI and provides to the contrary, VAI
shall at its expense deliver up to DDD USA at DDD USA's premises in
Santa Monica, California all Confidential Information in whatever
medium it is recorded and all Prototype Components.
10. DDD USA and VAI will during the Term negotiate in good faith with a
view to concluding a Commercial Agreement. It is expressly agreed that
neither DDD USA nor VAI is under any obligation to enter into a
Commercial Agreement but VAI shall have the first right of refusal to
enter into a Commercial Agreement with DDD for a period of 60 days
following the expiration of this memorandum of understanding.
11. VAI will during the Term use its best endeavors to develop for
submission to DDD USA business plans for the commercial application of
the Technology within each area comprised in Corporate Promotional
Events.
12. VAI will during the Term allow DDD reasonable access, free of charge,
to use VAI's projection and screening facilities.
13. DDD USA and VAI will during the Term use best endeavors to agree a
basis for the parties to cooperate in funding and producing some high
quality presentation material, for the joint use of DDD and VAI for
promotional purposes, showcasing the features and benefits of the
Technology (the "Presentation Material").
14. REMUNERATION
14.1 A payment of US$xxxxxxx (the "Fee") payable to DDD USA by VAI
on execution of this Agreement.
14.2 An optional extension fee of US$xxxxxxx (the "Extension Fee")
for an additional 60 days payable to DDD USA by VAI as set
forth in paragraph 3.
8.
14.3 All funds advanced are to be credited against future license
fees. Payment of the Fee by VAI to DDD USA will be by way of
telegraphic transfer to DDD USA's bank account as follows:
Dynamic Digital Depth USA Inc
xxxxxxxxxxxxxxxxxxx
Account No. xxxxxxxxxxxxxxxxxx
15. CONFIDENTIALITY AND LIMITATION ON USE
To the extent that VAI is provided with:
15.1 access to the Confidential Information;
15.2 permission to engage in the Due Diligence;
15.3 access to the Prototype Components;
VAI acknowledges that:
15.4 the access and permission is provided solely for the purpose
of the Due Diligence;
15.5 no right to manufacture or sell the Technology, the
Confidential Information, and any product arising wholly or
partly directly or indirectly therefrom, is conferred upon VAI
by this Agreement;
15.6 no right to use the Prototype Components and the Intellectual
Property other than for the purposes of the in-house
confidential Due Diligence by VAI; and
15.7 VAI must only use the Confidential Information and the
Prototype Components for the purpose of the Due Diligence;
9.
15.8 disclosure by VAI of the Confidential Information and any
aspect of the technology involved in the Technology to any
third party may only occur with the prior written consent of
DDD USA;
15.9 demonstration by VAI to its customers and potential customers
of Presentation Material created or modified using the
Technology may occur provided that no disclosure of
Confidential Information is thereby made and provided further
that the prior written consent of DDD USA is obtained.
15.10 VAI shall sign a DDD Confidentiality Agreement.
16. Upon termination of this agreement the obligations imposed upon VAI by
this Agreement to respect and protect the confidentiality of the
Confidential Information shall survive termination and remain in full
force and effect.
17. ACKNOWLEDGMENTS AND WARRANTIES
17.1 Except as set forth in this Clause 17, THERE ARE NO
WARRANTIES, EXPRESS OR IMPLIED BY OPERATION OF LAW OR
OTHERWISE, WITH RESPECT TO THE TECHNOLOGIES, INCLUDING BUT NOT
LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
17.1 The Prototype Components to be made available by DDD USA to
VAI pursuant to this Agreement are intended for prototype
engineering evaluation only and will not have been subjected
to production release processes. While DDD USA shall take
reasonable care in producing the Prototype Components no
warranty as to fitness for VAI's purposes is given by, or
imposed upon, DDD USA;
17.2 DDD USA is not liable for any damages in connection with the
provision to VAI of the Prototype Components including without
limitation any loss of profit, loss of use, loss of goodwill,
work stoppage, equipment failure or malfunction, interruption
of business, direct, indirect, special, exemplary, incidental
or consequential damages in connection therewith or
10.
relating to or arising out of the Evaluation.
17.4 DDD USA warrants that each of the patents and patent
applications listed in the schedule is an asset of DDD in good
standing and, where appropriate, enforceable.
17.5 Except as otherwise disclosed in writing to VAI, DDD USA
warrants and represents that to the best of its knowledge:
17.5.1 the Technology is unique; and
17.5.2 no process or product currently exists or is in
development that has cost effective performance and
quality equivalent to or better than that of the
Technology.
18. MISCELLANEOUS
18.1 No right created by this agreement is waived unless the waiver
is in writing by the party granting the waiver.
18.2 This Agreement shall be construed in accordance with and
governed by the laws of the State of California, as if
entirely performed therein and without reference to its
conflict of law provisions.
18.3 Any amendments to this agreement must be made in writing and
signed by both parties.
18.4 The terms of this agreement, specify the entire understanding
between the parties.
18.5 The interests and rights of either party in and to this
agreement cannot be assigned without the prior written consent
of the other party.
11.
SCHEDULE
PATENTS & PATENT APPLICATIONS
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APPLICATION NUMBERS INVENTION NAME STATUS PRIORITY DATE
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PCT WO 94/25899 3D Stereoscopic Display Unit Registered - USA 4 May 1993
Registered - Australia
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Singapore
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PCT/AU95/00843 Head Tracking Unit Pending PCT 13 Dec 1994
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PCT/AU97/00353 Video Display System (Multiviewer) Pending PCT 4 June 1996
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PCT/AU96/00820 Dynamic Depth Cueing (DDC) Pending PCT 22 Dec 1995
US 102,247 (2D to 3D Conversion - Offline - 3D
Camera - 2D Compatible 3D Transmission)
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PCT/AU98/00716 Image Processing Method & Apparatus (2D Pending PCT 2 Sept 1997
to 3D Conversion Realtime) (DDC Layers)
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PCT/AU98/01005 DDC / 2 Pending PCT 2 Dec 1997
Improvements to PCT/AU96/00820
Improvements to PCT/AU98/00716
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PCT/AU98/00969 Eye Tracking Apparatus Pending PCT 21 Nov 1997
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PO4567 Panorama Sidefield Dimensional Image Suspended
System (3D Camera Adaptor)
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PCT/AU/00028 Method & Apparatus for Producing Pending PCT 22 Jan 1997
Stereoscopic Images (3D Glasses)
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PO6373 Multiple Viewer Video Display System (2D Suspended
Multiviewer)
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PP7275 Teleconferencing System Provisional Dec 1998
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12.
IN WITNESS HEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT ON THE DAY
AND YEAR FIRST HEREINBEFORE MENTIONED.
SIGNED on behalf of
DYNAMIC DIGITAL DEPTH USA INC by
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being duly authorised by the
Company to do so
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SIGNED on behalf of
VIDEO APPLICATIONS INC by
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being duly authorised by the
Company to do so
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13.