Exhibit 10.43
[** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN
PORTIONS OF THIS DOCUMENT]
ALLIANCE AGREEMENT
This Alliance Agreement (the "Agreement"), effective as of November 24,
1999 (the "Effective Date"), is entered into by and between MACROVISION
CORPORATION, a Delaware Corporation with its principal place of business at 0000
Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, XXX, together with its subsidiary
C-Dilla, Ltd., with offices at Woodley House, Crockhamwell Road, Woodley,
Reading, Berkshire, RGP 3JP, United Kingdom (collectively "Macrovision"); and
TTR TECHNOLOGIES, INC., a Delaware corporation with its administrative offices
at 0000 Xxxxxxxx, Xxx Xxxx, XX 00000, XXX, together with its subsidiary TTR
Technologies, Ltd., with offices at 0 Xxxxxxx Xxxxxx, Xxxx-Xxxx, 0000, Xxxxxx
(collectively "TTR").
RECITALS
A. Macrovision develops and markets content copy protection and rights
management technologies and products which are designed to prevent the illicit
duplication, reception or use of video and audio programs and computer software.
B. TTR has represented to Macrovision that TTR owns certain intellectual
property and technology, and has the expertise and experience required to
develop music copy protection technology.
C. TTR and Macrovision have entered into that certain Letter Agreement as of
November 24, 1999, pursuant to which they have agreed to enter into a long-form
agreement incorporating, inter-alia, the terms therein.
D. Consistent with the foregoing, Macrovision and TTR desire to enter into an
agreement under which the Parties will jointly develop such music copy
protection technology, and Macrovision will have, subject to the continuing
satisfaction of certain conditions hereinafter set forth, the exclusive right to
commercialize and market such technology for a period of time.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises set
forth below, the Parties agree as follows:
1. Definitions
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1.1 "Affiliate" means any entity controlling, controlled by, or under
common control with, a Party hereto.
1.2 "Field of Use" means technologies and products designed to prevent the
illicit duplication of audio programs (including the audio portion of music
videos, movies and other video or audio content) distributed on optical media
(including but not limited to CDs and DVDs), and technologies for Internet
digital rights management for audio applications.
1.3 "Intellectual Property Rights" means intellectual property or
proprietary rights, including but not limited to copyright rights, patent rights
(including patent applications and disclosures), rights of priority, and trade
secret rights, recognized in any jurisdiction in the world.
1.4 "Investment Date" means that date on which TTR receives the gross
proceeds of an equity investment in TTR made by Macrovision pursuant to the
Letter Agreement.
1.5 "Joint Development Project" means the development efforts by the
Parties to develop the Music Protection Technology pursuant to this Agreement.
1.6 "Joint Technology" means any and all software, hardware, technology,
know-how, algorithms, procedures, techniques, solutions, and work-arounds
developed or created jointly or individually in the course of and pursuant to
the Joint Development Project and prior to the Commercial Launch (as defined in
Section 5.1 (b) herein), whether or not based on Macrovision Technology or TTR
Technology. Joint Technology does not include the Macrovision Technology or TTR
Technology.
1.7 "Letter Agreement" means that certain Letter Agreement entered into by
TTR and Macrovision as of November 24, 1999.
1.8 "Macrovision Technology" means any and all software, hardware,
technology, know-how, algorithms, procedures, techniques, solutions, and
work-arounds, (i) owned by or licensed to Macrovision as of the Effective Date
and contributed by Macrovision to the development effort hereunder including,
without limitation, the technology specified on Exhibit B hereto, or (ii) which
can be shown by Macrovision by reasonable tangible evidence to have been
developed independently by Macrovision subsequent to the Commercial Launch
without the use or exploitation of the TTR Technology.
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1.9 "Music Protection Technology" means the technology and/or any
derivative product or component thereof developed pursuant to the Joint
Development Project within the Field of Use, which may be comprised of Joint
Technology, Macrovision Technology and TTR Technology.
1.10 "Net Revenues" means the gross revenues received by or on behalf of
Macrovision or any of its Affiliates from customers, distributors, or any
sublicensees of the Joint Technology and/or the Music Protection Technology,
reduced by discounts, returns and rebates, but not by cost of goods sold.
1.11 "Specification" means the agreed-upon functional specifications and
performance requirements for the Joint Development Project as set forth in
Exhibit A.
1.12 "TTR Technology" means any and all software, hardware, technology,
know-how, algorithms, procedures, techniques, solutions, and work-arounds (i)
owned by or licensed to TTR as of the Effective Date and contributed by TTR to
the development effort hereunder, including, without limitation, the technology
specified on Exhibit C hereto, or (ii) which can be shown by TTR by reasonable
tangible evidence to have been developed independently by TTR subsequent to the
Commercial Launch without the use or exploitation of the Macrovision Technology.
2. Development Effort
2.1 Joint Development Project. Each Party will exert commercially
reasonable efforts to jointly develop the Music Protection Technology in
accordance with the Specification. The Parties will work together to develop a
complete product specification as well as a completed product suitable for
Commercial Launch, including completely functional LBR encoder modules for the
[**] mastering systems. The Parties intend that [**] LBR encoder modules shall
be developed no later than [**], one being for the [**] TTR shall also perform
all ongoing technology development, enhancement, and 2nd level technical support
activities.
2.2 Expenses. Unless otherwise specified, each Party agrees to fully fund
and pay for the costs and expenses of the performance of its responsibilities
specified herein, including without limitation: (i) any and all salaries,
employee benefits and other overhead costs for its own employees and facilities
involved in the performance of this Agreement; (ii) any and all lodging, meal or
travel expenses of its own employees; (iii) any and all costs and expenses for
consultants whose use is not mutually agreed to in writing by both Parties; and
(iv) any and all taxes, charges or fees arising out of its sole obligations or
acts hereunder.
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2.3 Development Personnel. Each Party will dedicate sufficient personnel
with appropriate technical skills to the development effort to ensure that the
Music Protection Technology is developed in accordance with the Specification.
Without limiting the foregoing, TTR will assign the personnel resources set
forth in Exhibit D. All engineers and other staff which may be assigned by TTR
or Macrovision to develop the Music Protection Technology shall at all times be
employees or consultants of TTR or Macrovision, respectively. Each Party may, at
its option, employ the services of contractors or consultants to assist in the
development of the Music Protection Technology. Such Party will be held fully
responsible for and guarantee the work and activities of each of its
subcontractors, including but not limited to each subcontractor's compliance
with this Agreement.
2.4 Modification to Development Efforts. In the course of their
development efforts, the Parties may agree that the Specification may need to be
revised or modified. Any material modification to the Specification must be
pre-approved in writing by the Parties.
2.5 Technical Contacts. Each Party shall designate one primary and one
alternate technical contact (collectively, the "Technical Contacts") as the
primary individuals responsible for facilitating communication between the
Parties and for coordinating the development of the Music Protection Technology.
Each of TTR and Macrovision's initial Technical Contacts are set forth in
Exhibit D. The Technical Contacts will confer on a regular basis to assess the
status of the Joint Development Project with respect to the Milestones. The
Parties may change their own Technical Contacts at any time upon written notice
to the other Party.
3. Ownership
3.1 Macrovision Technology. The Macrovision Technology and all
Intellectual Property Rights therein are, and/or will remain, the sole and
exclusive property of Macrovision and its suppliers, if any.
3.2 TTR Technology. The TTR Technology, and all Intellectual Property
Rights therein are, and will remain, the sole and exclusive property of TTR and
its suppliers, if any.
3.3 Joint Technology. Macrovision and TTR shall be co-owners of the Joint
Technology and all Intellectual Property Rights therein, and each Party will
have an undivided, one-half interest in and to the Joint Technology and all
Intellectual Property Rights therein. Notwithstanding anything to the contrary
contained in the foregoing, neither TTR nor Macrovision shall use or otherwise
exploit the Joint Technology except as expressly provided hereunder. Except as
set forth explicitly herein (including without limitation Section 5.1 and 5.2
hereof), neither Party will be entitled to any accounting of
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profits, royalties, or other form of compensation with respect to any sale,
distribution, license or other exploitation by the other Party of the Joint
Technology. Notwithstanding the foregoing, during the term of this Agreement,
TTR will not transfer, license, distribute or disclose to any third party the
Joint Technology in the Field of Use, in whole or in part, or any products
incorporating such Joint Technology, in any manner. TTR and Macrovision shall
each retain the right to use or otherwise exploit the Joint Technology outside
of the Field of Use, however, TTR's right to use or otherwise exploit the Joint
Technology outside the Field of Use shall be subject to the terms of this
Agreement (including without limitation Section 4.5).
3.4 Patent Rights. Macrovision and TTR will file and prosecute, and shall
bear the expense of filing and prosecuting, at the minimum, in [**] any patents
on the Macrovision Technology or the TTR Technology, respectively, which the
Parties agree, are commercially important to protecting the intellectual
property rights of the Music Protection Technology. Except as prohibited by law,
the Parties shall jointly file, with respect to Joint Technology, such patent
and copyright applications and amendments thereof as the Parties agree are
useful to protect their joint interests in the Music Protection Technology, and
shall thereafter use commercially reasonable and diligent efforts to prosecute
and maintain in force such applications and any resultant patents and
copyrights. The costs and expenses (including attorneys' fees) incurred in the
filing, prosecution and maintenance of such patents and copyrights shall be
shared equally by the Parties. Macrovision will undertake the administrative
efforts required to give effect to this Section. As an additional right, either
Party, at its own expense, may file patent and copyright applications covering
the Music Protection Technology in those countries where the Parties do not
mutually agree to file such applications. All patent and copyright applications
for Joint Technology developed under this Agreement shall be filed in the name
of both Parties.
4. License Grants
4.1 Macrovision Technology. Macrovision hereby grants to TTR a
non-exclusive, non-transferable, royalty-free, worldwide license to use, copy,
modify, improve and create derivative works based on the Macrovision Technology
solely for the purposes of performing its obligations in connection with the
development of the Music Protection Technology. The license granted under this
Section shall not be construed so as to grant TTR any commercial rights to the
Macrovision Technology other than as expressly set out in this Agreement.
4.2 TTR Technology. Subject to the terms and conditions set forth herein,
TTR hereby grants to Macrovision an exclusive, royalty bearing, worldwide
license, within the Field of Use (a) to use, copy, modify and improve the Joint
Technology and the TTR Technology and create derivative works based thereon
solely in connection with the
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development of the Music Protection Technology, and (b) to make, have made,
sublicense and distribute the TTR Technology and any derivative works thereof
embodied in the Music Protection Technology. No right is being granted to
sublicense or distribute the TTR Technology (or components thereof) as
stand-alone products outside the Field of Use, except as otherwise expressly
provided in Section 4.4 of this Agreement. The Parties acknowledge that a copy
of the TTR Technology, as set out in Exhibit C hereof, has been delivered to
Macrovision. TTR will apprise Macrovision of any material improvements or
developments relating to the Music Protection Technology of which TTR becomes
aware within thirty (30) days of such improvement or development. TTR will not
deliver to Macrovision without Macrovision's prior written consent any
technology pertaining to MusicGuard which requires the payment of royalties to a
third party; alternatively, if TTR does deliver to Macrovision any such
royalty-bearing technology, payment of such royalties will be the responsibility
of TTR. Further, TTR will not deliver to Macrovision without Macrovision's prior
written consent any technology pertaining to DiscGuard which requires the
payment of royalties to a third party. The Parties expressly acknowledge that
DiscGuard includes a component known as Gearworks which is licensed by a third
party.
4.3 Trademark Licenses. TTR hereby grants Macrovision the exclusive right
to use the TTR trademark "MUSIC GUARD" ("TTR Xxxx") in marketing and
distributing the Music Protection Technology. Macrovision shall have the the
right, in its sole discretion, to market the Music Protection Technology or the
CD Technology (as defined in Section 4.4) under its trade names and trademarks
or under the TTR Xxxx.
4.4 TTR's Other Technology. Effective upon the Investment Date, TTR grants
Macrovision an exclusive, worldwide license (with the right to sublicense) to
(a) use, copy, modify, and create derivative works based on TTR's CD-ROM
software copy protection technology as further described in Exhibit F ("CD
Technology"), including but not limited to its CD and DVD signatures, encoder
modules and other technology; (b) incorporate the CD Technology (or components
thereof) into or bundle the CD Technology with Macrovision products; and (c)
market, sublicense and distribute the CD Technology alone or with or
incorporated in Macrovision bundled products. TTR shall, within [**] days
following the Investment Date, deliver to Macrovision all materials, notes,
plans, diagrams, schematics, source code, object code and technical
specifications related to the CD Technology, including but not limited to the
digital signature portions thereof. The license granted in this Section shall be
[**]. Except for the licenses named in the marketing agreements listed in
Exhibit G, TTR shall, within [**] of the closing of the Investment Date, notify
all existing CD Technology customers and prospective customers that, after [**]
of such notice, TTR will no longer license or support the CD Technology, and
that TTR encourages such customers to license Macrovision's Safe Disc Technology
(defined in Section 5.3) from Macrovision. TTR further agrees to work
cooperatively with Macrovision to encourage Sonopress and Nimbus to cease
offering or marketing the CD Technology within such [**] period and in any event
agrees to remit to Macrovision 100% of any
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revenues related to the CD Technology which TTR receives from Sonopress or
Nimbus subsequent to the Investment Date.
4.5 Other TTR Technologies. TTR grants to Macrovision an exclusive right
of first refusal, during the term of this Agreement, with respect to the
acquisition of all rights in or worldwide exclusive marketing and distribution
rights to: (i) the Music Protection Technology outside of the Field of Use
and/or (ii) any future packaged media copy protection or internet digital rights
management technologies developed by TTR which are applicable to music, music
video, video, software or data publishing products or markets. In addition, TTR
shall notify Macrovision of any bona-fide third party offers to purchase or
license any such technology, including the terms of such offer. If Macrovision
notifies TTR of its interest in such purchase or license under the terms of such
offer within ten (10) United States business days of Macrovision's receipt of
such notification, the Parties will negotiate in good faith a definitive
agreement for the purchase or license.
5. Royalties
5.1 Amounts.
(a) Royalty Rate. Except as provided below in this Section 5,
Macrovision or its Affiliates agree to pay to TTR thirty percent (30%) of the
Net Revenues received by Macrovision or its Affiliates from licenses of the
Music Protection Technology as a stand alone product to customers, distributors,
OEM partners or other third parties.
(b) Delayed Commercial Launch. In the event that the Commercial
Launch (as defined below) [**], then, beginning [**] and for the remaining term
of this Agreement, the royalty rate percentage payable by Macrovision to TTR as
described above shall be reduced to twenty five percent (25%) of Net Revenues.
"Commercial Launch" shall mean the date by which the first of the following two
events have occurred: (i) [**] major music labels [**] have each manufactured at
least [**] music CDs which have been copy protected using the Music Protection
Technology, or (ii) [**] major music labels [**] has manufactured at least [**]
music CDs which have been copy protected using the Music Protection Technology
and an aggregate total of [**] such copy-protected music CDs (including such
copy-protected music CDs manufactured by such major music label) have been
manufactured.
(c) Bundling. If Macrovision licenses the Music Protection
Technology as a portion of another product or service it offers to its
customers, distributors, OEM partners, or sublicensees, TTR will negotiate with
Macrovision in good faith the allocation of revenue to the Music Protection
Technology. Macrovision agrees that it shall not license the Music Protection
Technology as a portion of another product or service until the
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allocation of revenue to the Music Protection Technology has been mutually
agreed by Macrovision and TTR.
(d) Payment Terms. Macrovision agrees to pay to TTR the royalties
described in Section 5.1 on the last day of each calendar month during the term
of this Agreement with respect to cash receipts actually received in the
immediately preceding month. Each remittance to TTR hereunder shall be
accompanied by a written report, signed by an authorized officer of Macrovision,
setting forth in reasonable detail the basis for the determination of such
royalty then due to TTR, including the amount of gross revenues received by
Macrovision in respect of such preceding month.
5.2 Minimum Royalty
(a) Generally. In order to maintain exclusivity with respect to the
rights granted to Macrovision by TTR hereunder, Macrovision shall pay to TTR,
beginning twelve months following the Commercial Launch, a series of minimum
annual guaranteed royalty advances (each a "Guaranteed Royalty"), recoupable
dollar-for-dollar against royalties actually earned by TTR as its share of Net
Revenues generated from the Music Protection Technology subsequent to the
payment by Macrovision of each Guaranteed Royalty during the full term of this
Agreement. Macrovision shall pay such Guaranteed Royalties to TTR according to
the following schedule:
PAYMENT DUE DATE
(Expressed as the number of
calendar months following
Commercial Launch) PAYMENT AMOUNT
[**]
The first such Guaranteed Royalty payment in the amount of US [**] as provided
above shall not be reduced by royalties paid pursuant to Section 5.1 hereunder
during the first twelve months following Commercial Launch. Subsequent
Guaranteed Royalty payments shall not be reduced by royalties paid prior to the
payment of each such Guaranteed Royalty payment.
Notwithstanding the above, all Guaranteed Royalty payments shall be fully
creditable against all royalties payable by Macrovision to TTR as described in
Section 5.1 hereof during the term of this Agreement, which are incurred
subsequent to the payment of each such Guaranteed Royalty payment.
Except in the event of an early termination of this Agreement as described in
Section 8.2 or 8.3 hereof, all Guaranteed Royalty payments which have not
otherwise been paid to TTR
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as of December 31, 2009 shall be paid to TTR by Macrovision on or before
December 31, 2009.
In the event of an early termination of this Agreement as described in Section
8.2 or 8.3 hereof, all Guaranteed Royalty payments which are due but unpaid as
of the date of such early termination shall be payable by Macrovision to TTR and
all previously paid Guaranteed Royalty payments shall vest entirely in TTR.
(b) Waived Minimum Royalty. Notwithstanding the above, if the
Commercial Launch is achieved prior to [**], or if the Commercial Launch is not
achieved by [**], then all Guaranteed Royalty payments described in Section
5.2(a) shall be waived. In the event that the Guaranteed Royalty described in
Section 5.2(a) is waived as described in this Section and Macrovision shall not
have paid to TTR a minimum of US [**] in aggregate royalties as provided in
Section 5.1 by the second anniversary of the Commercial Launch, then, at
Macrovision's option: (i) Macrovision may pay TTR any shortfall in the minimum
royalty set forth in this paragraph within thirty days, or (ii)] Macrovision's
exclusive license hereunder shall revert to nonexclusive status.
5.3 Royalties for SafeDisc Technology. Macrovision shall pay to TTR, for
the [**] period beginning [**], and ending [**], a royalty equal to [**] of the
SafeDisc Net Revenues Macrovision receives from licenses of the SafeDisc
technology described in Exhibit E ("Safe Disc Technology") to customers,
distributors, or other third parties located in the People's Republic of China
("PRC"). [**] Notwithstanding the above, TTR and Macrovision will work
cooperatively to transition [**] to a SafeDisc license as soon as possible. For
purposes of this Section "SafeDisc Net Revenues" shall mean the gross revenues
received by or on behalf of Macrovision or any of its Affiliates from customers,
distributors, OEM partners or other sublicensees utilizing the SafeDisc
Technology in the PRC, reduced by discounts, returns and rebates but not by cost
of goods sold.
Macrovision will pay to TTR the royalties described in this Section 5.3 on
the last day of each calendar month during the term of this Agreement with
respect to cash receipts actually received in the immediately preceding month.
Each remittance to TTR hereunder shall be accompanied by a written report,
signed by an authorized officer of Macrovision, setting forth in reasonable
detail the basis for the determination of such royalty then due to TTR,
including the amount of gross revenues received by Macrovision in respect of
such immediate preceding month and reflecting a schedule of the customers and
amounts from whom such gross revenues were collected.
5.4 Reports. Macrovision agrees to provide reports to TTR on a quarterly
basis (for quarters ending March 31, June 30, September 30, and December 31 each
year during the term of this Agreement), setting forth the total number of music
CDs then manufactured to which Macrovision is aware that the Music Protection
Technology has
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been applied, each such report shall be delivered to TTR within 45 days
following the end of each such quarter after the Commercial Launch has occurred.
5.5 Audit. Each of TTR and Macrovision will have the right, no more than
once yearly, during the term of this Agreement and for one (1) year thereafter
to have an independent "Big 5" certified public accounting firm (i.e., Deloitte
and Touche, Xxxxxx Xxxxxxxx, Price Waterhouse Coopers, KPMG Peat Marwick, or
Ernst & Young) review or audit the other Party's relevant records for the
purpose of certifying compliance with this Agreement. All audits will be at the
auditing Party's expense and conducted during regular business hours, and begun
upon at least one (1) month's prior written notice. If any audit reveals a net
underpayment of more than one percent (1%), the audited Party shall immediately
pay such underpayment; if any audit reveals a net underpayment of more than five
percent (5%), the audited Party shall pay the costs of the audit and auditing
Party may conduct a follow up audit at any time upon thirty (30) days prior
written notice, not more often than quarterly, and the audited Party shall pay
interest on such underpayment at the prime rate then most recently published by
the largest bank in New York (in terms of Assets) plus one (1) point. Finally,
if three (3) audits in any three (3) year period reveal that an audited Party
under reported, for whatever reason, payments by more than fifteen percent
(15%), the auditing Party may terminate this Agreement upon ninety (90) days
prior written notice to the audited Party.
6. Sales and Marketing
6.1 Sales and Marketing. Macrovision shall, in its sole discretion,
determine the staffing and other resources to be allocated by Macrovision to
commercialize the Music Protection Technology; provided that Macrovision will
allocate commercially reasonable staffing and other resources to commercialize
the Music Protection Technology consistent with Macrovision's good faith
determination of the commercial potential of the Music Protection Technology.
Macrovision shall, in its sole discretion, determine the naming, branding, and
pricing for the Music Protection Technology, except that Macrovision agrees (i)
to mention in the text of all press releases related to the Music Protection
Technology that the Music Protection Technology has been developed jointly by
Macrovision and TTR, (ii) to mention in the advertising and related marketing
collateral materials that the Music Protection Technology has been developed
jointly by Macrovision and TTR, and (iii) not to license the Music Protection
Technology free of charge to customers, distributors, OEM partners, or other
sublicensees other than for promotional purposes. TTR agrees that Macrovision
shall, in its sole discretion, determine the degree of prominence afforded to
the mention of TTR described in subsection (i) and (ii) of this Section 6.1.
6.2 Cooperative Marketing and Development Payments. Subject to the terms
of this Agreement, TTR recognizes the unique one-time costs which will be
incurred by Macrovision to co-develop and launch the Music Protection Technology
into the commercial
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market and agrees to reimburse Macrovision for its staffing and other costs
related to development and testing, product management, sales, product
naming/branding, marketing, and promotional expenses incurred by Macrovision
with respect to the Music Protection Technology during the twelve month period
ending on [**], up to an aggregate maximum reimbursement of [**].
Reimbursements shall be paid by TTR to Macrovision on the last day of each month
with respect to reimbursable expenses (including direct overheads related to
such expenses) incurred by Macrovision in the prior month, based upon invoices
submitted by Macrovision to TTR for each such prior month, until the earlier of
the date on which TTR has paid to Macrovision [**] in aggregate reimbursements,
or [**]. The first such reimbursement shall be paid by TTR to
Macrovision on or before [**] with respect to reimbursable expenses incurred by
Macrovision during the months of [**] and [**]. Notwithstanding the above, no
such reimbursement shall be payable by TTR to Macrovision prior to the execution
of the Stock Purchase Agreement of even date herewith.
7. Confidentiality
7.1 Confidential Information. "Confidential Information" refers to: (i)
the Specification and any related documentation or technical or design
information related to the Music Protection Technology; (ii) the Macrovision
Technology, the TTR Technology, and any other business or technical information
of either of the Parties, including but not limited to any information relating
to such Party's product plans, designs, costs, product prices and names,
finances, marketing plans, business opportunities, personnel, research,
development or know-how designated by a Party as "confidential" or "proprietary"
or which, under the circumstances taken as a whole, would reasonably be deemed
to be confidential; and (iv) the terms and conditions of this Agreement.
7.2 Exclusions of Confidential Information. Notwithstanding the foregoing,
"Confidential Information" will not include information that: (i) is or becomes
generally known or available by publication, commercial use or otherwise through
no fault or breach of confidentiality undertakings of the receiving Party; (ii)
is known to the receiving Party at the time of disclosure without violation of
any confidentiality restriction, as demonstrated by prior tangible evidence, and
without any restriction on the receiving Party's further use or disclosure; or
(iii) is independently developed by the receiving Party, as demonstrated by
reasonable prior tangible evidence furnished by the receiving Party.
7.3 Use and Disclosure Restrictions. During the term of this Agreement and
for five (5) years after any termination or expiration of this Agreement, the
Parties shall refrain from using the other Party's Confidential Information
except as contemplated herein, and from disclosing such Confidential Information
to any third party except as is reasonably required in connection with the
exercise of its rights and obligations under this Agreement (and only subject to
binding use and disclosure restrictions at least as protective as those
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set forth herein executed in writing by such parties). However, a Party may
disclose Confidential Information of the other Party: (i) pursuant to the order
or requirement of a court, administrative agency, or other governmental body,
provided that the disclosing Party give reasonable notice to the other Party to
contest such order or requirement; and (ii) on a confidential basis to legal or
financial advisors or (iii) as otherwise required in connection with its
reporting requirements under Securities Exchange Act of 1934, as amended.
7.4 Employment of Other Party's Employees. Each Party and its Affiliates
agree that during the continuance of this Agreement and for a period of 18
months after its termination, in whole or in part, it will not hire or otherwise
contract the services of, whether directly or indirectly, an employee of the
other Party. Macrovision expressly agrees not to solicit the employment of nor
hire [**] for a period of one year following the earlier of the termination of
this Agreement or his employment with TTR.
8. Term and Termination
8.1 Term. This Agreement shall commence on the Effective Date and, unless
earlier terminated in accordance with this Section 8, will continue in effect
until December 31, 2009.
8.2 Termination at the Option of Either Party. Either of TTR or
Macrovision shall be entitled, upon furnishing five days' written notice to the
other, to terminate this Agreement (and the rights granted hereunder) if the
Investment Date does not occur, for any reason whatsoever, on or before January
31, 2000.
8.3 Termination for Cause. Either Party will have the right to terminate
this Agreement if: (i) the other Party materially breaches this Agreement and
fails to cure such breach within thirty (30) days after written notice thereof
from the other Party setting forth in reasonable detail the facts or
circumstances constituting the alleged breach; (ii) the other Party becomes the
subject of a voluntary petition in bankruptcy or any voluntary proceeding
relating to insolvency, receivership, liquidation, or composition for the
benefit of creditors; (iii) the other Party becomes the subject of an
involuntary petition in bankruptcy or any involuntary proceeding relating to
insolvency, receivership, liquidation, or composition for the benefit of
creditors, if such petition or proceeding is not dismissed within sixty (60)
days of filing, or (iv) in accordance with the provisions of Section 5.5.
8.4 Effect of Termination.
(a) Confidential Information. Upon any expiration or termination of
this Agreement, each Party shall promptly return to the other Party, and will
not take or use
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(except as permitted herein), all items of any nature that belong to such Party
and all records containing or relating to such Party's Confidential Information.
(b) Survival. The following provisions will survive termination of
this Agreement for any reason: Section 1 (Definitions), Section 3 (Ownership),
Section 7 (Confidentiality), Section 8.3 (Effect of Termination), Section 10
(Warranty Disclaimer), Section 11 (Indemnification), Section 12 (Limitation of
Liability), and Section 13 (General Provisions).
9. Representations and Warranties
9.1. By Macrovision. Macrovision represents and warrants that: (i)
Macrovision has not previously granted and/or will not grant any rights in the
Macrovision Technology to any third party which are inconsistent with the rights
granted herein; (ii) Macrovision has full power and authority to enter into this
Agreement, to carry out its obligations hereunder, and to grant the rights
herein granted; and (iii) C-Dilla is a wholly-owned subsidiary of Macrovision.
9.2. By TTR. TTR represents and warrants that: (i) the TTR Technology does
not infringe the intellectual property rights of any third party; (ii) TTR has
not previously granted and will not grant any rights in the TTR Technology to
any third party which are inconsistent with the rights granted or assigned
herein; and (iii) TTR has full power and authority to enter into this Agreement,
to carry out its obligations hereunder, and to grant the rights herein granted.
10. Warranty Disclaimer
EXCEPT AS PROVIDED IN SECTION 9 ABOVE, EACH PARTY EXPRESSLY DISCLAIMS ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND
NON-INFRINGEMENT.
11. Indemnification
Subject to Section 12.1, TTR will at its expense defend, indemnify, and
hold Macrovision harmless against all costs, expenses, liabilities, and damages
(including but not limited to reasonable attorneys; fees) paid out in settlement
of or resulting from a judgment awarded to a third party against Macrovision
resulting from any claim that the TTR Technology as supplied by TTR infringes or
misappropriates the Intellectual Property Rights of any third party or breaches
the representations and warranties contained in Section 9.2 above, provided that
Macrovision: (i) gives prompt written notice of any such claim; (ii) allows TTR
to direct the defense and settlement of the claim; and (iii) provides TTR with
the authority, information, and assistance reasonably necessary for the defense
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and settlement of the claim. Macrovision reserves the right to participate in
any such defense at its expense and in its sole discretion.
12. Limitation of Liability
12.1 Notwithstanding anything to the contrary contained in the foregoing,
TTR's total liability to Macrovision under this Agreement will be limited as
follows:
(a) for breach of the confidentiality provisions herein and/or
improper disclosure of Confidential Information, there will be no limitation on
TTR's liability;
(ii) for intentional breach of the representation set forth in
Section 9.2 hereof, there will be no limitation on TTR's liability;
(iii) for unintentional breach of the representation set forth in
Section 9.2 hereof, TTR's maximum liability to Macrovision will be capped at
four times the amount of fees paid by Macrovision to TTR;
(iv) for fraudulent misrepresentation, there will be no limitation
on TTR's liability; and
(v) for all other matters, TTR's maximum liability to Macrovision
will be capped at one million dollars (US $1,000,000.00).
12.2 Notwithstanding anything to the contrary contained in the foregoing,
in no event shall Macrovision's total liability to TTR under this Agreement
exceed $1,000,000, regardless of whether any remedy set forth herein fails of
its essential purpose.
12.3 In no event will either Party be liable for any form of special,
incidental, indirect, consequential, or punitive damages of any kind, whether or
not foreseeable (including, without limitation damages for loss of business
profits, business interruption, loss of business information, and the like),
whether based on breach of contract, tort (including negligence), product
liability, or otherwise, even if such Party has been advised of the possibility
of such damages.
13. General Provisions
13.1 Amendment. This Agreement may only be amended by a writing signed by
both Parties.
13.2 Arbitration. Any dispute, controversy or claim arising out of or
relating to the validity, construction, enforceability or performance of this
Agreement, including disputes relating to alleged breach or to termination of
this Agreement, shall be settled by final, binding arbitration in the manner
described in this Section. The arbitration shall be conducted pursuant to the
Commercial Arbitration Rules of the American Arbitration
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Association then in effect ("Rules"). Notwithstanding the Rules, the following
provisions shall apply to the arbitration hereunder:
(a) Arbitrators. The arbitration shall be conducted in San
Francisco, California by a panel of three (3) arbitrators (the "Panel"). Each
Party shall have the right to appoint one (1) member of the Panel, with the
third member to be mutually agreed by the Parties and, failing such agreement by
the Parties, by the two (2) Panel members appointed by the Parties or appointed
in accordance with the Rules. The arbitrators shall be persons in the industry
with experience in the matters in dispute.
(b) Proceedings. The Panel shall, in rendering its decision, apply
the law of the State of California, without regard to its conflict of laws
provisions, except that the interpretation of and enforcement of this Section
shall be governed by the U.S. Federal Arbitration Act. The fees of the Panel
shall be paid by the losing Party, which Party shall be designated by the Panel.
If the Panel is unable to designate a losing Party, it shall so state and the
fees shall be shared equally between the Parties.
(c) Injunctive Relief. Each Party agrees that any violation or
threat of violation by it or its employees of its obligations under this
Agreement will result in irreparable harm to the other for which damages would
not be an adequate remedy and, therefore, in addition to its rights and remedies
otherwise available at law, including without limitation the recovery of damages
for breach of such sections of this Agreement, the injured Party will be
entitled to seek immediate equitable relief, including both interim and
permanent injunctions, without the necessity of posting a bond or any other
undertaking, and to such other and further equitable relief as the court may
deem proper under the circumstances.
13.3 Assignment. TTR shall not assign its rights or delegate its
obligations hereunder without the express written consent of Macrovision , which
consent shall not be unreasonably withheld. Any assignment or delegation by TTR
in violation of this Section will be void. Subject to the foregoing, this
Agreement will benefit and bind the successors and permitted assigns of the
Parties. Notwithstanding the foregoing, (i) either of Macrovision or TTR may
assign this Agreement without the other's consent if such assignment arises out
of a corporate reorganization, or merger, acquisition of sale in which all or
substantially all of Macrovision's or TTR's stock or assets, as the case may be,
are transferred to the assignee, and (ii) Macrovision may assign this Agreement
without TTR's consent to any third party of Macrovision's choosing so long as
Macrovision can demonstrate to TTR using commercially reasonable criteria that
the assignee is at least as capable financially and operationally of fulfilling
Macrovision's obligations hereunder.
13.4 Compliance with Laws. The Parties shall comply with all laws and
regulations applicable to its activities under this Agreement in all material
respects. Without limiting the foregoing, the Parties shall: (i) comply with all
United States Department of Commerce
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and other United States export controls with respect to the subject matter
hereof; and (ii) not produce or distribute any software, products, or technical
data in any country where such production or distribution would be unlawful.
13.5 Entire Agreement. This Agreement, together with the Stock Purchase
Agreement of even date herewith, including all exhibits hereto, constitutes the
entire agreement between the Parties with respect to the subject matter hereof,
and supersedes and replaces all prior or contemporaneous communications,
negotiations, and agreements, written or oral (including the Letter Agreement)],
regarding such subject matter.
13.6 Governing Law. This Agreement will be governed by and construed in
accordance with the substantive laws of the United States and the State of
California, without regard to or application of provisions relating to choice of
law.
13.7 No Agency. The Parties to this Agreement are independent contractors,
and nothing in this Agreement will be construed as creating or implying an
agency, partnership, joint venture, or any other form of legal association
(other than as expressly set forth herein) between the Parties.
13.8 No Third Party Beneficiaries. No provisions of this Agreement,
express or implied, are intended or will be construed to confer any rights,
remedies or other benefits on any third party under or by reason of this
Agreement.
13.9 Notices. All notices required or permitted under this Agreement will
be in writing, will reference this Agreement and will be deemed given: (i) when
personally delivered, (ii) when sent by confirmed facsimile; (iii) five (5)
working days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (iv) one (1) working day after deposit
with a commercial overnight carrier, with written verification of receipt. All
communications will be sent to the addresses set forth on the signature page
hereof, or to such other address as may be designated by a Party by giving
written notice to the other Party pursuant to this Section.
13.10 Publicity. TTR and Macrovision will jointly issue a press release
announcing the existence of this Agreement and of the principal terms
thereunder. The timing and content of such press release will be mutually agreed
on by the Parties. Except as set forth above, neither TTR nor Macrovision shall
make any public announcement or press release regarding this Agreement or any
activities performed under this Agreement without the prior written consent of
the other. Notwithstanding the above, Macrovision may make public announcements
related to the development, adoption, or deployment of the Music Protection
Technology which is deems necessary or appropriate in its sole discretion.
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13.11 SEC Filings. TTR's disclosure of the existence of this Agreement and
the terms thereunder (as redacted by Macrovision) in accordance with its
obligation under the Securities Exchange Act of 1934, as amended, shall not be
deemed to be a violation of Section 13.10, so long as TTR has provided to
Macrovision beforehand a copy of the provisions which it proposes to release to
the Securities and Exchange Commission, has given good faith consideration to
any request by Macrovision to redact specific provisions from such disclosure
and has allowed Macrovision to have review rights in the SEC approval process.
13.12 Severability. If for any reason a court of competent jurisdiction
finds any provision or portion of this Agreement to be unenforceable, that
provision of the Agreement will be enforced to the maximum extent permissible so
as to effect the intent of the Parties, and the remainder of this Agreement will
continue in full force and effect.
13.13 Waiver. To be enforceable, a waiver must be in writing and signed by
the waiving Party.
13.14 Force Majeure. Neither Party will be liable under this Agreement for
non-performance caused by events or conditions beyond the Party's control, if
the Party makes reasonable efforts to perform.
13.15 Counterparts; Facsimile Execution. This Agreement may be executed in
counterparts and by the exchange of facsimile signed copies.
IN WITNESS WHEREOF, the duly authorized representatives of the Parties
have executed this Agreement as of the Effective Date.
Macrovision Corporation TTR Technologies, Inc.
By: /s/ Ian Halifax By: /s/ Xxxx X. Xxxxxxx
------------------------------- -----------------------------------
Printed Name: Ian Halifax Printed Name: Ian Halifax
Title: Chief Financial Officer Title: Chief Financial Officer
----------------------------- ----------------------------------
Exhibit A: Specification
Exhibit B: Macrovision Technology
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Exhibit 10.43
Exhibit C: TTR Technology
Exhibit D: Personnel
Exhibit E: SafeDisc Technology
Exhibit F: CD Technology
Exhibit G: Marketing Agreements
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EXHIBIT A
SPECIFICATION
The Technology shall include, but not be limited to, a process
specification, LBR encoder modules, manufacturing test modules, and quality
control modules. The Parties intend that the Technology meet the following
functional requirements:
(a) The quality of the protected disk, when played on [**] of the
worldwide installed base of CD players (red book and yellow book, including but
not limited to portable players with anti-shock capability), shall match the
quality of the original unprotected disk [**].
(b) The protected disk, when played on [**] of the installed base of CD
players (red book and yellow book, including but not limited to portable players
with anti-shock capability), shall match the original unprotected disk [**] and
otherwise perform in the same manner as the original unprotected disk.
(c) Copies of protected disks sourced from [**] the worldwide installed
base of CD-Readers as described in subsection (d) below shall be degraded, such
that the commercial entertainment value of the music has been eliminated, when
played on the worldwide installed base of CD players (red book and yellow book,
including but not limited to portable players with anti-shock capability) and
mini-disc players.
(d) The tracks recorded on a protected disc shall not be transferable
(directly or indirectly, except if the commercial value of the music is
eliminated during the transfer through the CD Reader - PC Data Interface) from
[**] of the worldwide installed base of CD-Readers onto the hard-drive of a PC
using file formats such as .wav or .bin, including but not limited to by using
software programs such as Goldenhawk CDR Win, Adaptec Easy CD Creator, and Nero.
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EXHIBIT B
MACROVISION TECHNOLOGY
[**]
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Exhibit 10.43
EXHIBIT C
TTR TECHNOLOGY
[**]
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EXHIBIT D
PERSONNEL
1. TTR PERSONNEL:
TTR will assign a sufficient number of technical personnel for a [**]
period beginning on the Effective Date of this Agreement, to develop, enhance,
and maintain the Music Protection technology. During the period beginning on the
Effective Date and ending [**], TTR agrees to cause [**] to be assigned on a
full time basis to develop, enhance, and maintain the Technology and to perform
such activities on a three quarter time [**] basis at [**]. TTR shall pay all
travel and lodging expenses related to [**] work in the UK during this period.
Macrovision agrees to designate at least [**] technical liaison to interact with
[**] and the other TTR personnel who are involved with the Music Protection
Technology. At Macrovision's option, up to [**] project status meetings may be
held at Macrovision's Sunnyvale, California office, and in each such case TTR
agrees to cause [**] to attend, and macrovision agrees to reimburse TTR for the
reasonable travel (coach class airfare) and lodging costs of [**] related to
each such meeting. Telephone conference calls will also be held weekly at
mutually agreed upon times.
TTR also will, upon request from macrovision, cause [**] to be present at
TTR's expense (except as described below) at Macrovision's Sunnyvale, CA USA
location, or at any other location in the USA, England (except for [**] will be
working on [**] basis as described above) or [**] as requested by Macrovision
for up to [**] beginning on the Effective Date and ending [**]. Macrovision
agrees to reimburse TTR for the reasonable travel (coach class airfare) and
lodging costs of [**] or other TTR personnel if they are requested by
Macrovision to travel to the USA.
2. Technical Contacts:
TTR: [**] (Alternate: [**])
Macrovision: [**] (Alternate: [**])
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EXHIBIT E
SAFEDISC TECHNOLOGY
Description:
[**]
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EXHIBIT F
CD TECHNOLOGY
The following description defines the CD Technology. The CD Technology consists
of the digital signature portion and the protection portion. The digital
signature portion is [**], and is more specifically described as
follows:
[**]
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EXHIBIT G
MARKETING AGREEMENTS
TTR granted exclusive production and marketing rights for DiscGuard to China
Intercontinental Communications Center for the People's Republic of China,
Taiwan, and Maco under and agreement dated October 15, 1988.
Sonopress Gmbh holds a non-exclusive license to manufacture and market DiscGuard
and related products in the world, except for the Peoples Republic in China
(PRC), under an agreement dated February 15, 1999.
Nimbus CD International Inc. holds a non-exclusive worldwide license to
manufacture and market DiscGuard and related products, under an agreement dated
November 24, 1997.
Warlock Records holds a non-exclusive worldwide license to use MusicGuard
protection for their music CDs, under an agreement dated September 2, 1999.
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