EXHIBIT 6.3
LESS-THAN-REAL-TIME MASTER LICENSE AGREEMENT
THIS LESS-THAN-REAL-TIME MASTER LICENSE AGREEMENT is dated for reference January
31st, 2000 (the "Effective Date") by and between MACROVISION CORPORATION, a
Delaware corporation, of 0000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, XXX,
facsimile (000) 000-0000 ("Macrovision"), E-VIDEO U.S.A., INC., a Nevada
corporation, of 8360 East Xxx xx Xxxxxxx, Xxxxxxxx X-000, Xxxxxxxxxx, Xxxxxxx
00000, XXX, facsimile (000) 000-0000 ("E-Video") and E-Video's parent company,
E-Video TV, Inc., a Delaware corporation ("E-Video TV").
RECITALS
WHEREAS Macrovision is the owner of all right, title and interest in and to
certain patents and inventions pertaining to a certain video copy protection
process as more particularly described in the attached Specifications.
AND WHEREAS E-Video wishes to procure an exclusive license to use Macrovision's
analog copy protection technology in the United States of America for the
Less-Than-Real-Time programming service operated by E-Video.
AND WHEREAS the parties entered into the Letter Agreement on or about the 16th
day of September, 1998, setting out the terms of the Option providing for
E-Video to become the exclusive licensee in the USA for Macrovision's analog
copy protection technology in the Less-Than-Real-Time domain, which Letter
Agreement set out the initial terms under which the license contemplated herein
would be agreed upon.
AND WHEREAS E-Video has provided written notice to Macrovision indicating its
intent to exercise the Option, and the parties now wish to more formally
document the exercise of the Option and the terms of the license agreement
provided for in the Letter Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the covenants and premises hereinafter set
out, and other good and valuable consideration, the parties agree as follows:
1. DEFINITIONS
In this Agreement, the following terms will have the meanings set out
below.
1.1 "AGREEMENT" means this agreement and all attachments hereto;
1.2 "COMMERCIAL LAUNCH" means the first month in which Usage Royalties
payable to Macrovision exceed $1,000.00;
1.3 "DEVICE" means a custom integrated circuit which will allow
application of the Process to the playback of E-Video Recordings,
which is to be incorporated into all E-Video Recorders, and which is
purchased by the manufacturer of E-Video Recorders from a component
supplier authorized by Macrovision to supply such integrated circuits;
1.4 "E-VIDEO RECORDER" means a recorder containing any magnetic hard disc
drive, solid-state memory, magnetic tape-based videocassette or
write/erase optical disk recorder proprietary to E-Video and
manufactured by or under license from E-Video which is capable of
recording E-Video Recordings, whether sold by or installed by E-Video
or other parties;
1.5 "E-VIDEO RECORDINGS" means recordings made of an E-Video Transmission;
1.6 "E-VIDEO TRANSMISSION" means the transmission in Less-Than-Real-Time
of a video signal containing pay-per-view theatrical (i.e. movie,
concert, sporting event, or pay-per-view packages) content for
reception and subsequent playback in real time;
1.7 "EXPANDED TERRITORY SUBLICENSE" means an addendum to this Agreement in
the form set out in Exhibit A, which, in prescribed circumstances,
E-Video will have the option to sign extending the Territory
sublicenses to countries outside the U.S.A. (as specified in each
individual Expanded Territory Sublicense) by payment to Macrovision of
an initial sub-license fee calculated per the Country Pricing Formula
shown in Exhibit D for each such country of $1,000 per 1,000,000
population in each such country and the execution of an Expanded
Territory Sublicense applicable to such countries, pursuant to Section
2.3;
1.8 "FIELD OF USE" means the application of the Technology to E-Video
Transmissions in the Less-Than-Real-Time domain. "Field of Use"
expressly excludes all other applications of the Technology and other
Macrovision-proprietary copy protection technologies, including
without limitation use of Macrovision's real-time and
less-than-real-time digital copy protection and watermarking
technologies, Macrovision's audio and software copy protection
technologies, HDTV, digital television, and all New Technologies.
Notwithstanding the foregoing, E-Video shall have the non-exclusive
right to utilize the Technology in the Field of Use by way of Internet
transmissions;
1.9 "IMPROVEMENT" means any improvements, modification, derivatives and/or
changes to or in the Process and/or Technology, whether patentable or
not, that are directly useful within E-Video Recorders or in E-Video
Recordings, and come within the scope of one or more of the Patents;
1.10 "INITIAL LICENSE FEE" means the initial license fee referred to in
Section 3.2 hereof;
1.11 "LESS-THAN-REAL-TIME" means any application in which video programs
are transmitted to an end user in significantly less time than the
program's normal running time, and recorded on a suitable medium, for
later viewing by the end user. To be considered a Less-Than-Real-Time
application, the time compression must exceed 3:1, e.g., a movie with
a running time of two hours would be transmitted in less than forty
minutes;
1.12 "LETTER AGREEMENT" means the letter agreement referred to in the
recitals hereto, which the parties entered into on or about September
16, 1998;
1.13 "NEW TECHNOLOGIES" means other copy protection technologies (but not
Improvements) proprietary to Macrovision for use in, without
limitation, e-commerce, web-based interactive TV, digital TV, HDTV,
automated banking, electronic business software applications, software
game applications, video and/or audio streaming, digital watermarking,
play control, disc authentication, digital-to-digital copy protection
solutions and other non-theatrical applications;
1.14 "OPTION" means the option granted to E-Video under the Letter
Agreement entitling E-Video to assume the license rights contemplated
herein;
1.15 "PATENTS" means method claims 1-13 of U.S. Patent No. 4,631,603,
claims 1-7 of U.S. Patent No. 4,577,216, and claims 1-8 of U.S. Patent
No. 4,819,098, foreign counterparts thereof having a first filing date
prior to April 14, 2007;
1.16 "PATENT TERRITORIES" means those countries set forth in Exhibit B
attached hereto in which Macrovision holds existing patents or has
applications for patents for the Process. If any Improvements are
patented in any territory not listed in Exhibit B, such territory
shall be added to Exhibit B upon application for such patent;
1.17 "PAY-PER-VIEW" means the transmission of a specific delivered video
program or package of related programs, for which additional viewer
payment(s) or separate fee(s) to receive transmission of such program
or package of programs are made, but excludes pay-TV subscription
plans;
1.18 "PROCESS" means Macrovision's processes of modifying a video signal by
the addition of a plurality of bipolar pulse pairs during selected
lines of the vertical blanking interval and by the addition of pulses
in the back porches of certain horizontal synchronizing pulses in the
region of the vertical blanking interval, and of pseudorandomly phase
modulating the color burst, which processes are the subject of the
Patents, as now existing and including any Improvements;
1.19 "RENEWAL TERM" means the five-year extension to the Term of this
Agreement that may be implemented by E-Video electing to renew this
Agreement in accordance with Section 12.2 of this Agreement;
1.20 "SPECIFICATIONS" means Attachments 1A, 1B, 2 and 3;
1.21 "TECHNOLOGY" means Macrovision's proprietary analog anti-copy
technology as more specifically described in the Patents and the
Specifications, necessary for E-Video to design, develop, manufacture
and or purchase E-Video Recorders;
1.22 "TERM" means an initial period of five (5) years from the date of
execution of this Agreement;
1.23 "TERRITORY" means the United States of America, and such additional
countries as may be added to the Territory by way of one or more
Expanded Territory Sublicenses as contemplated herein; and
1.24 "USAGE ROYALTY" means the payments due to Macrovision for use of the
Technology by E-Video, in accordance with Section 3.3 hereof.
2. LICENSE GRANT
2.1 Grant of License. Subject to the terms and conditions of this
------------------
Agreement, Macrovision hereby grants to E-Video, and E-Video hereby
accepts from Macrovision, the following indivisible, exclusive,
non-transferable rights and licenses under the Patents and the
Technology, including the right to sublicense in accordance with
Exhibit C herein, solely in the Field of Use, during the Term of this
Agreement:
2.1.1The right to lease, rent, sell or otherwise distribute E-Video
Recorders to E-Video Transmission service providers and
subscribers in the Territory;
2.1.2The right to acquire E-Video Devices solely from Macrovision
licensed suppliers thereof for the purpose of incorporating
Devices into E-Video Recorders in the Patent Territories, for
sale and/or distribution ; and
2.1.3The right to apply the Process in the Field of Use to E-Video
Transmissions in the Territory, subject to the limited use
license rights in Section 2.2 below.
2.2 Limited Use. E-Video acknowledges and agrees that:
-----------
2.2.1The rights of E-Video to use the Technology and apply the Process
are limited to the purposes set forth in Section 2.1 and that
nothing contained in this Agreement shall be deemed to grant
E-Video any additional rights to the Process and/or the
Technology;
2.2.2E-VIDEO SHALL NOT APPLY THE PROCESS TO ANY FORM OF NEW
TECHNOLOGY, VIDEOTAPE OR VIDEO DISK (OTHER THAN THE PLAYBACK OF
E-VIDEO RECORDINGS), REAL TIME PAY-TELEVISION, FREE BROADCAST
TELEVISION TRANSMISSIONS, OR ANY OTHER UNRESTRICTED TELEVISION
BROADCAST TRANSMISSION. E-VIDEO SHALL USE COMMERCIALLY REASONABLE
EFFORTS TO PREVENT ALL PERSONS OTHER THAN E-VIDEO AND ITS
AUTHORIZED LICENSEES FROM USING ANY E-VIDEO RECORDER TO APPLY THE
PROCESS TO E-VIDEO RECORDINGS AND TO USE COMMERCIALLY REASONABLE
EFFORTS TO PREVENT ALL PERSONS FROM USING ANY E-VIDEO RECORDER TO
APPLY THE PROCESS FOR ANY PURPOSE NOT AUTHORIZED BY SECTION 2.1
OF THIS AGREEMENT; AND
2.2.3All E-Video Recorders will contain a Device, and that each
Device and E-Video Recorder shall be designed and manufactured in
compliance with the Specifications.
2.3 Additional Countries. So long as E-Video has materially complied with
--------------------
all of the terms and conditions of this Agreement, and subject to the
restrictions set out below, E-Video shall have the option to enter
into one or more exclusive Expanded Territory Sublicenses by payment
(subject to a prior offer as contemplated in Section 2.4) to
Macrovision, upon thirty (30) days written notice to Macrovision, of
an initial license fees calculated per the Country Pricing Formula
shown in Exhibit D.
2.4 Right of First Refusal. If Macrovision receives a request from a third
----------------------
party to procure the rights described herein in any country other than
the US or a country for which E-Video has not entered into an Expanded
Territory Sublicense prior to such request, then Macrovision shall
offer such license to E-Video on similar terms and conditions to those
which Macrovision is prepared to enter into with such third party, and
shall be free to enter into such license with such third party if
E-Video does not execute an Expanded Territory Sublicense addendum to
this Agreement within thirty (30) days of Macrovision's written notice
to E-Video. In such cases, E-Video shall either accept or decline such
terms within fourteen (14) days of receiving written notice from
Macrovision. E-Video's failure to sign an Expanded Territory
Sublicense on such terms within the said fourteen (14) days for such
additional country or countries (and failure to pay for such license
within sixty (60) days of such written notice) shall be deemed to be a
decision on the part of E-Video to decline such Expanded Territory
Sublicense. Notwithstanding the foregoing,
Macrovision agrees not to actively solicit any offers from any third
parties for any such unexercised territories.
2.5 Conversion to Non-exclusive License. Any and all exclusive rights
-------------------------------------
granted pursuant to Section 2.4 shall convert, at the sole option of
Macrovision, to non-exclusive rights for that Expanded Territory
Sublicense upon the happening of any of the following:
2.5.1E-Video payments to Macrovision are less than the minimum amounts
set forth in Section 3; or
2.5.2E-Video fails to execute one or more system operator license
agreements for Less-Than-Real-Time applications of the
Technology, for a Tier 1 country, within twelve (12) months, for
a Tier 2 country, within fifteen (15) months, and, for a Tier 3
country, within eighteen (18) months of the execution of the
applicable Expanded Territory Sublicense. Tier 1, Tier 2 and Tier
3 countries are defined in Exhibit D.
2.6 Sublicense Rights. E-Video is hereby granted, subject to Exhibit C,
the exclusive right to sublicense the use of the Technology in the
Field of Use to system operators in the Territory and in any Expanded
Territories.
3. LICENSE FEES AND ROYALTIES
3.1 Option Exercised. The Option is deemed to have been exercised as of
-----------------
the Effective Date.
3.2 Initial License Fee. E-Video will pay to Macrovision the Initial
---------------------
License Fee of$400,000.00 thirty (30) days from the Effective Date.
The long form agreement must be executed prior to payment of fees
outstanding. The Initial License Fee will be applied on a monthly
basis toward the first twelve months' royalties hereunder, will be
non-refundable, and will not creditable on a carry-forward basis into
the subsequent year.
3.3 Usage Royalties. In addition to the Initial License Fee, E-Video will
---------------
pay to Macrovision Usage Royalties for the application of the
Technology to E-Video Transmission programming at the rate of 1% of
the gross pay-per-view transaction charge levied by the system
operator. Royalties shall be payable within thirty (30) days of the
end of each calendar quarter in which such revenues became payable and
shall be accompanied by reports reasonably satisfactory to Macrovision
that show the number of pay-per-view transactions during that period
and support the calculation of the Usage Royalty payment. If any real
time pay-per-view system operator licenses provided by Macrovision in
any Territory require fees less than 1% of the gross pay-per-view fees
payable, then Macrovision will immediately reduce the E-Video license
to an equal percentage for such system operator in that Territory.
3.4 Minimum Royalties. Beginning on the first anniversary of the Effective
-----------------
Date, and at each of the next three anniversaries thereafter, E-Video
shall pay to Macrovision a minimum annual Usage Royalty of $250,000 as
an advance against the following year's Usage Royalties on total
revenues from the E-video Transmission service in the United States of
America. Each such $250,000 minimum annual fee shall be applicable to
Usage Royalties incurred during the 12 months following such payment
date. The minimum annual royalty for countries comprising Expanded
Territory countries are set out in Exhibit D. There shall be no
carry-over of such minimum annual Usage Royalties from one year to the
next. E-Video will exercise any such Expanded Territory right within
two (2) years of the Effective, except with respect to Europe in which
case the time for
exercise of such Expanded Territory rights will be eighteen (18)
months from the Effective Date.
3.5 Minimum Gross Revenues. E-Video's exclusive rights under the license
----------------------
contemplated hereunder shall become non-exclusive if:
3.5.1The Commercial Launch in the U.S. has not occurred within twelve
(12) months of E-Video's execution of the Effective Date, or
3.5.2The E-video Transmission service does not generate in excess of
$250,000,000 in gross revenues in the U.S.A. in the fourth full
year of operation following the Commercial Launch.
3.6 Recorder Fees and Royalties. E-Video will pay, or require its
------------------------------
manufacturers to enter into agreements with Macrovision requiring them
to pay, to Macrovision, a standard set top decoder one-time license
fee ($75,000.00 as of the Effective Date) plus a per box license
royalty fee ($1.00 as of the Effective Date for each E-Video Recorder
manufactured by or for E-Video) within thirty (30) days after the
close of each calendar month in which such E-Video Recorder is
manufactured. If a set top manufacturer already has a Macrovision
license, it will not be required to take out another Macrovision
license, but it will be required to pay the $5,000 technical services
and test fee per Device.
4. E-VIDEO OBLIGATIONS
4.1 Specification of Copy Protection Technology in Receiver/Decoders.
----------------------------------
E-Video will specify that all E-Video Recorders incorporate the
Technology, and that all E-Video Recorder manufacturers sign license
agreements with Macrovision.
4.2 Usage of Technology. E-Video agrees to apply the Technology to all
--------------------
E-Video Transmissions, as contemplated in Section 2.2.2 herein.
4.3 Copy Protection Management Strategy. E-Video will design and implement
-----------------------------------
a Copy Protection Management Strategy (CPMS) in the E-video
Transmission transaction processing, conditional access, and billing
systems. E-Video acknowledges that it has or will receive a copy of
the CPMS requirements prior to commercial launch and understands that
it has the responsibility to properly implement CPMS in the E-video
Transmission systems.
4.4 Progress Reports. E-Video shall provide to Macrovision monthly status
----------------
reports related to the design, development, and deployment of the
E-video Transmission service, the contents of which will be mutually
agreeable between E-Video and Macrovision.
5. MACROVISION OBLIGATIONS
5.1 Technical Support. When requested, Macrovision will provide technical
-----------------
support and documentation reasonably necessary for E-Video to
implement the Technology within E-Video Recorders, and to utilize the
Technology in accordance with this Agreement. Macrovision technical
personnel will collaborate as reasonably required to assist E-Video
with the creation of a customized version of the CPMS software
architecture.
5.2 Improvements. Macrovision will apprise E-Video of any Improvements in
------------
the Process and the Technology and make such Improvements immediately
available
to E-Video at no additional charge. Macrovision agrees to reasonably
assist E-Video with respect to technical support concerning any
Improvements.
5.3 MACROVISION AGREES TO REASONABLY ASSIST E-VIDEO WITH ANY ASSESSMENT OR
TESTING OF THE TECHNOLOGY THAT PERTAINS TO APPROVAL OR CERTIFICATION
OF THE E-VIDEO SERVICE BY REGULATORY BODIES, UP TO A MAXIMUM OF ONE
HUNDRED (100) HOURS OF TECHNICAL SUPPORT AT NO CHARGE TO E-VIDEO.
6. QUALITY CONTROL & PRODUCT NOTICE
6.1 Quality Control Standards. E-Video shall employ or cause to be
---------------------------
employed such manufacturing and quality standards as shall be required
to manufacture E-Video Recorders capable of properly applying the
Process and in accordance with the Specifications. In addition, as and
when requested by Macrovision for the sole purpose of enabling
Macrovision to test and verify that the Process is being properly
applied by E-Video Recorders, E-Video shall furnish to Macrovision
random samples of the E-Video Recorders. Macrovision at any given time
may be in possession of a maximum of five E-Video Recorders for
testing which, with the exception of one E-Video Recorder, shall be
returned to E-Video on completion of such testing. Macrovision shall
exercise reasonable care and custody of such E-Video Recorders and
will make no commercial use of the E-Video Recorders at any time other
than for evaluation and demonstration. Macrovision shall not be liable
to E-Video in the event that in the course of conducting a quality
control test and verification pursuant to this Section 6 if there is
damage to any E-Video Recorder. Macrovision shall promptly reimburse
E-Video for the replacement cost of the damage to the E-Video
Recorder. E-Video will provide Macrovision without charge at least one
subscription to its E-Video Transmission service in each country in
which such services are provided, to enable Macrovision to
periodically test for CPMS compliance.
6.2 Product Notice. E-Video will place or cause to be placed on the back
---------------
or bottom of each E-Video Recorder in a readily viewable location,
silk-screened or placed on a non- removable exterior tag, a product
notice that shall read as follows: "U.S. patent numbers 4,631,603,
4,577,216, 4,819,098 and their foreign counterparts are licensed for
non-commercial limited pay-per-view uses only". In the printed
collateral material that accompanies the E-Video Recorder, the
following notice must be printed in an appropriate place in such
materials: "This product incorporates copyright protection technology
that is protected by U.S. and foreign patents and other intellectual
property rights. Use of this copyright protection technology must be
authorized by Macrovision, and is intended for home and other limited
pay-per-view uses only unless otherwise authorized by Macrovision.
Reverse engineering or disassembly is prohibited."
7. INDEMNITIES
7.1 Indemnification of E-Video. Macrovision will indemnify, defend and
---------------------------
hold harmless E-Video against any and all third party claims of
proprietary rights infringement which may be asserted against E-Video
on the grounds that E-Video's use of the Patents and/or Technology
infringes upon such third party's rights. Macrovision shall defend
against, control the defense of, and settle any action based upon any
such claims. Macrovision will bear all costs and expenses, including
reasonable attorney's fees, incurred in connection with the defense of
any such claims or as result of any settlement made or judgment
rendered on the basis of such claims. Macrovision's obligations under
this Subsection 6.1 shall arise only if E-Video
7.1.1Promptly notifies Macrovision in writing when such claim is made,
7.1.2 has complied with the material terms of this Agreement,
7.1.3furnishes such information and assistance as Macrovision may
reasonably request in connection with the defense, settlement or
compromise of such claim,
7.1.4does not enter into any settlement of any such claim without
Macrovision's prior written consent; and
7.1.5allows Macrovision to direct the defense of and/or handle such
suit, claim or proceeding.
7.2 Indemnification of Macrovision. Notwithstanding the foregoing,
---------------------------------
Macrovision shall not be liable to E-Video in any manner for any claim
described in Section 6.1 arising primarily from E-Video's modification
of the Technology and/or the Recorders or combination of same with
other technologies if such claim would have been avoided in the
absence of such combination or modification. In such instance, E-Video
shall defend, indemnify and hold harmless Macrovision from and against
any suit, claim proceeding or damages (including any court costs,
attorneys' fees, and related litigation expenses) suffered by
Macrovision arising out of or related to any circumstance described in
this Section 7.2. E-Video's obligations under this Section 7.2 shall
arise only if Macrovision:
7.2.1promptly notifies E-Video in writing of any such suit, claim or
proceeding,
7.2.2allows E-Video to direct the defense of and/or handle such suit,
claim or proceeding,
7.2.3furnishes such information and assistance as E-Video may
reasonably request in connection with the defense settlement or
compromise of such claim;
7.2.4does not enter into any settlement of the suit, claim or
proceeding without E-Video's prior written consent; and 7.2.5 has
complied with the material terms of this Agreement.
7.3 Alleged Infringement: Discontinuance of Use. If any legal action
----------------------
alleging proprietary rights infringement is commenced or any threat
thereof is made, against either party hereto or their customers or
suppliers with respect to the use of the Patents, Technology, and /or
in the manufacture and /or distribution of the E-Video Recorder by
E-Video pursuant to the terms of this Agreement, Macrovision shall
have the right, but not the obligation, to do any of the following:
7.3.1replace or modify the Technology at Macrovision's expense to
render it non-infringing, provided, however, that any replacement
and/or modification shall substantially meet the Specifications
or;
7.3.2require E-Video to discontinue its use of the Technology until
such action or threatened action is resolved to Macrovision's
satisfaction. If Macrovision requires E-Video to discontinue its
use of the Technology for any period, then during such period of
discontinued use, all payments due pursuant to Section 3.1 and
3.2 shall be deferred during such period of discontinued use. Any
deferral of fees due during this period does not apply to fees
owing prior to or after the discontinuance period; or
7.3.3procure for the benefit of E-Video at Macrovision's expense the
right or license to any technology alleged to have been
infringed.
7.4 E-Video Participation. E-Video shall have the right to participate in
---------------------
the defense of such action and any settlement negotiations concerning
a claim of patent or intellectual property infringement with regard to
the use by E-Video of the Process, Patents and/or Technology.
Macrovision shall not be responsible for any expenses incurred by
E-Video in such participation unless Macrovision requires E-Video to
participate in the expense of such action, in which case Macrovision
shall be responsible for E-Video's reasonable out-of-pocket expenses.
THE FOREGOING IS MACROVISION'S EXCLUSIVE OBLIGATION WITH RESPECT TO
CLAIMS OF INFRINGEMENT OF PROPRIETARY RIGHTS OF ANY KIND.
8. WARRANTIES
8.1 Macrovision Warranties. Macrovision represents and warrants to E-Video
----------------------
that:
8.1.1Macrovision owns all right, title and interest in and to the
Patents and the Technology, and that the Patents are valid and
enforceable;
8.1.2Macrovision is duly constituted and has the authority and is duly
authorized to enter into this Agreement and perform its
obligations hereunder;
8.1.3the entering into of this Agreement by Macrovision and the
performance by Macrovision of its obligations hereunder will not
result in a breach or otherwise violate the terms of any
agreements to which Macrovision is a party or is otherwise bound;
8.1.4no further patent, trade secret, copyright or other intellectual
property right is required (other than the license rights herein
granted) to lawfully entitle E-Video to apply the Technology in
the Territory through Recorders;
8.1.5to its knowledge there are no material outstanding claims of
infringement against Macrovision or its customers relating to the
Technology; and
8.1.6the Process when properly applied to a standard NTSC or PAL video
signal will cause a substantial reduction in the image quality of
a copy of such signal recorded on a videocassette when such
videocassette is played on most combinations of videocassette
recorders and television sets available as of the date of this
Agreement. If the Process shall fail to comply with the foregoing
warranty, E-Video shall have the right to require Macrovision to
attempt to correct the Process to cause it to perform in
accordance with the Specifications. If the Process does not
comply with the foregoing warranty as a result of a defect in the
E-Video Recorder or any component thereof or the improper
application of the Process by E-Video, Macrovision shall have no
warranty obligation to E-Video and shall be entitled to
reimbursement at its then current time and materials rates for
any corrective work Macrovision provides as to the Process and/or
the defective E-Video Recorder; and
8.1.7Macrovision is duly organized and existing under the applicable
laws of Delaware.
8.2 E-Video Warranties. E-Video represents and warrants to Macrovision
------------------
that:
8.2.1E-Video has the authority and is duly authorized to enter into
this Agreement and perform its obligations hereunder;
8.2.2the entering into of this Agreement by E-Video and the
performance by E-Video of its obligations hereunder will not
result in a breach or otherwise violate the terms of any
agreements to which E-Video is a party or is otherwise bound;
8.2.3E-Video is duly organized and existing under the applicable laws
of Nevada; and E-Video has the competence and expertise in the
marketplace to commercialize the Technology, in the Field of Use,
that would reasonably be expected of a company taking on the
responsibilities of E-Video under this Agreement
8.2.4No further patent, trade secret, copyright or other intellectual
property right is required (other than technologies currently
developed) to lawfully entitle E-Video to apply the Technology in
the Territory through E-Video Recorders;
9. LIMITATION OF LIABILITY
9.1 NEITHER MACROVISION NOR E-VIDEO WILL BE LIABLE TO EACH OTHER FOR ANY
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY NATURE OR KIND
WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR OTHER
ECONOMIC LOSS ARISING OUT OF THE USE OF THE PATENTS OR THE TECHNOLOGY
BY E-VIDEO OR THE MANUFACTURE AND DISTRIBUTION OF THE E-VIDEO RECORDER
BY E-VIDEO SO LONG AS SUCH USE IS IN ACCORDANCE WITH THE PROVISIONS OF
THIS AGREEMENT.
9.2 IN NO EVENT WILL MACROVISION'S LIABILITY IN CONNECTION WITH THE
PATENTS, THE TECHNOLOGY, THE PROCESS, THE DEVICE, THE E-VIDEO
RECORDERS, OR THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY DAMAGES
AND ANY COSTS FOR THE DEFENSE OF LICENSEE PURSUANT TO SUBSECTION 7.1,
EXCEED TWICE THE AMOUNT PAID BY E-VIDEO TO MACROVISION HEREUNDER.
THESE LIMITATIONS WILL APPLY TO ALL CAUSES OF ACTION IN THE AGGREGATE,
INCLUDING WITHOUT LIMITATION BREACH OF CONTRACT, BREACH OF WARRANTY,
MACROVISION'S NEGLIGENCE, STRICT LIABILITY, PROPRIETARY RIGHTS
INFRINGEMENT, MISREPRESENTATION AND OTHER TORTS, EXCEPT MACROVISION'S
INTENTIONAL MISCONDUCT OR GROSS NEGLIGENCE.
10. NEW TECHNOLOGY
New Technologies shall not be considered Technology or Improvements
hereunder. New Technologies may be made available to E-Video under a
separate agreement with terms and conditions to be negotiated by the
parties. E-Video acknowledges that Macrovision shall not be under any
obligation to license E-Video one or more New Technologies unless the
parties mutually agree upon fees, terms and conditions and execute a
separate agreement for such purpose.
11. OWNERSHIP INTEREST IN E-VIDEO
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, E-Video TV shall, within thirty (30) days following E-Video's
execution of this Agreement, grant Macrovision a 3% equity interest in its
common issued stock as of the Effective Date. The parties shall enter into
such documents and perform such other deeds and acts as are reasonably
necessary to
accomplish the intent of this provision, including industry-standard
anti-dilution terms and restrictions on corporate reorganizations. E-Video
TV shall ascertain not less than semi-annually that Macrovision's 3% equity
interest remains undiluted.
12. TERM AND TERMINATION
12.1 Term. This Agreement shall be effective as of the Effective Date and
----
will remain in effect for the Term, unless earlier terminated by
mutual consent or for material breach of this Agreement.
12.2 Renewal Option. So long as E-Video has materially complied with all of
--------------
the terms and conditions of this Agreement, E-Video shall have the
additional option, by providing Macrovision with written notice on or
before the fifty-fourth month of this Agreement (4.5 years), to renew
this Agreement, effective upon expiration of the initial Term, for the
Renewal Term on the same terms and conditions as described above,
other than with respect to fees. E-Video shall pay an additional
$350,000 to Macrovision prior to the expiration of the initial license
herein for the purpose of exercising the Renewal Term option. Such
renewed Agreement shall include all of the terms of the initial
Agreement, except that this Agreement shall be deemed to be amended
such that the requirement for the payment of minimum annual Usage
Royalties shall increase to the sum of $350,000 per year beginning on
the first anniversary of the Renewal Term and on each anniversary
thereafter.
12.3 Termination for Breach. In the event of a material breach by either
-----------------------
party in the performance of its duties, obligations or undertakings
under this Agreement, the other party will have the right to give
written notice to the breaching party advising such party of the
specific breach involved. If the breaching party will not have
remedied such breach within thirty (30) days after such notice, the
other party will have the right, in addition to any other rights and
remedies it may have, to terminate this Agreement immediately upon
written notice to the defaulting party.
13. GENERAL TERMS
13.1 Governing Law. This Agreement will be governed by and interpreted in
-------------
accordance with the laws of the State of California, as such laws are
applied to agreements between California residents entered into and to
be wholly performed within California.
13.2 Currency. All references to money in this Agreement refer to United
--------
States dollars.
13.3 Attorneys' Fees. In any dispute, litigation, or arbitration between
---------------
the parties arising out of or related to this Agreement, the
prevailing party therein shall be entitled to have its attorneys'
fees, reasonable expenses, related litigation costs and costs of suit
(if any) paid by the non-prevailing party.
13.4 Inspection of Records. Macrovision will have the right during the term
---------------------
of this Agreement and for one (1) year thereafter to have an
independent certified public accounting firm review or audit E-Video's
records for the purpose of certifying compliance with this Agreement
or any succeeding long form agreement. All audits will be at
Macrovision's expense and conducted during regular business hours, and
begun upon at least one (1) week's prior notice. Macrovision will
provide a copy of such audit to E-Video within five (5) days of
its receipt of the audit. If the audit reveals that any payments due
to Macrovision have been understated by more than five percent (5%),
then E-Video will reimburse Macrovision for the cost of the audit. Any
discrepancy in the amounts paid (including any understatement or
overstatement) will be corrected within ten (10) days of the written
notice of the official results of the audit being delivered by the
auditor.
13.5 Arbitration. Any dispute between the parties arising out of, or
------------
relating to, the validity, construction, interpretation or performance
of this Agreement that cannot be resolved amicably shall be submitted
to binding arbitration, to be held in San Francisco, California, USA,
in accordance with the rules of the American Arbitration Association.
Any such arbitration proceeding shall be conducted before an
arbitration panel composed of three (3) arbitrators; each party shall
designate one (1) arbitrator, and the two (2) arbitrators so
designated shall designate the third arbitrator. The decision and
award of the arbitrators shall (i) be in writing, (ii) state the
reasons therefor, (iii) be based solely on the terms and conditions of
this Agreement, as interpreted under the laws of the State of
California, USA, and (iv) shall be final and binding upon the parties.
The decision and award of the arbitrators in any such arbitration
proceeding may be enforced in any court of competent jurisdiction.
13.6 Rights Cumulative. Each and all of the various rights, powers and
------------------
remedies of the parties will be considered to be cumulative with and
in addition to any other rights, powers and remedies which such
parties may have at law or in equity in the event of breach of any of
the terms of this Agreement. The exercise or partial exercise of any
right, power or remedy will neither constitute the exclusive election
thereof nor the waiver of any other right, power or remedy available
to such party.
13.7 Notices. All notices, consents or demands of any kind which either
-------
party to the Agreement may be required or may desire to serve on the
other party in connection with this Agreement will be in writing, will
be deemed complete upon delivery and will be delivered by facsimile
with a confirming copy sent by mail, personal service or by registered
or certified mail, return receipt requested, deposited in the United
States mail with postage thereon fully prepaid, addressed to the party
at the address or facsimile number set forth in the initial paragraph
of this Agreement. Service of any such notice, consent or demand so
made by mail will be deemed complete on the date of actual delivery as
shown by the addressee's registry or certification receipt. Each party
hereto may from time-to-time, by notice in writing served upon the
other as aforesaid, designate a different mailing address or facsimile
number or a different person to which such notices or demands are
thereafter to be addressed or delivered.
13.8 Severability. If any of the provisions of this Agreement are held to
------------
be void or unenforceable, the parties agree that such determination
will not result in the nullity or unenforceability of the remaining
portions of this Agreement. The parties further agree to replace such
void or unenforceable provisions of this Agreement with valid and
enforceable provisions which will achieve, to the extent legally
permissible, the economic, business and other purposes of the void or
unenforceable provisions.
13.9 Counterparts. This Agreement may be executed in separate counterparts,
------------
and by facsimile, each of which will be deemed an original, and when
executed, separately or together, will constitute a single original
instrument, effective in the same manner as if the parties had
executed one and the same instrument.
13.10Entire Agreement. This Agreement is intended by the parties to be the
----------------
final expression of their agreement and constitutes and embodies the
entire
agreement and understanding between the parties hereto and constitutes
a complete and exclusive statement of the terms and conditions
thereof, and will supersede any and all prior correspondence,
conversations, negotiations, agreements or understandings relating to
the same subject matter. The Letter Agreement is expressly terminated
and superseded.
13.11Amendments. No change in, modification of or addition to the terms
---------
and conditions contained herein will be valid as between the parties
unless set forth in a writing which is signed by authorized
representatives of both the parties and which specifically states that
it constitutes an amendment to this Agreement.
13.12Waiver. No waiver of any term, provision, or condition of this
------
Agreement, whether by conduct or otherwise, in any one or more
instances, will be deemed to be, or be construed as, a further or
continuing waiver of that term, provision or condition or any other
term, provision or condition of this Agreement.
13.13Assignment. Neither party hereto will assign this Agreement or any
----------
rights or obligations hereunder to any party without the prior written
consent of the other party hereto, such consent not to be unreasonably
withheld. However, either party may assign this Agreement in total to
a successor in interest.
13.14Binding on Successors and Assigns. Subject to the restrictions of
-----------------------------------
Section 13.13 (Assignment), this Agreement and all of its terms,
conditions and covenants are intended to be fully effective and
binding, to the extent permitted by law, on the successors and
permitted assigns of the parties hereto.
13.15Captions. Captions are provided in this Agreement for convenience
--------
only and they form no part of this Agreement and are not to serve as a
basis for interpretation or construction of this Agreement, nor as
evidence of the intention of the parties hereto.
13.16Disclaimer of Agency. Nothing contained in this Agreement is intended
--------------------
or will be construed so as to constitute the parties to this Agreement
as partners or joint venturers or as agents of each other. Neither
party will have any express or implied right or authority to assume or
create any obligations on behalf of or in the name of the other party
or to bind the other party in any contract, agreement or undertaking
with any third party.
13.17Publicity. Macrovision and E-Video agree that from time-to-time it
---------
will be beneficial to both parties to issue press releases and other
public announcements concerning benefits arising from the manufacture
and sale of Products. Each party agrees to submit for mutual approval
any press release that involves the other party and the Technology,
such approval not to be unreasonably withheld. Macrovision may at any
time "line list" E-Video as an authorized Macrovision licensee.
Likewise, E-Video may publicly disclose that it is a
Macrovision-authorized licensee.
13.18Effectiveness. This Agreement shall be effective only when signed by
-------------
all parties.
13.19Ambiguities. Each party and its counsel have participated fully in
-----------
the review and revision of this agreement. Any rule of construction to
the effect that ambiguities are to be resolved against the drafting
party shall not apply in interpreting this agreement.
13.20Confidentiality. Any and all information of a confidential and/or
proprietary nature of either party ("Confidential Information")
as may be
disclosed and exchanged between the parties during the term of
this Letter Agreement (and marked so as to indicate its
confidentiality) shall be kept strictly confidential by each of
the parties. Neither party shall disclose any Confidential
Information of the other party to any third party (except for its
accounting, legal advisors and potential investors under a
non-disclosure agreement) without the prior written consent of
the party disclosing such Confidential Information (the
"Disclosing Party"). The foregoing shall not apply to information
disclosed by a Disclosing Party which:
13.20.1 is now publicly available, or becomes publicly available,
through no fault of the other party;
13.20.2 can be shown by written evidence to have been in the
possession of the other party prior to the time of disclosure by
the Disclosing Party;
13.20.3 becomes available to the other party, other than by breach of
confidentiality owed to the Disclosing Party; or
13.20.4 is required by law or ordered by competent government or
court.
13.21Excise Taxes. In the event that any sales tax, use tax, or other
-------------
excise tax is imposed upon Macrovision by any jurisdiction, with
respect to any transaction set forth herein, E-Video shall reimburse
to Macrovision one-half the amount of any and all such taxes paid by
Macrovision to the fullest extent permitted by law.
13.22Rights Cumulative. Each and all the various rights, powers and
------------------
remedies of the parties shall be considered to be cumulative with and
in addition to any other rights, powers and remedies which such
parties may have at law or in equity in the event of breach of any of
the terms of this Agreement. The exercise or partial exercise of any
right, power or remedy shall neither constitute the exclusive election
thereof nor the waiver of any other right, power or remedy available
to such party.
13.23Export Controls. E-Video will not export directly or indirectly the
----------------
Technology or any confidential information generated or disclosed by
Macrovision to any country for which the Government of the United
States or any agency thereof requires an export license or other
governmental approval at the time of export without first obtaining
such required license or approval.
13.24Force Majeure. If either party's performance of any of its obligations
-------------
hereunder is prevented, restricted or interfered with by reason of
fire, or other casualty or accident; strikes or labor disputes; war or
other violence; any law, order, proclamation, regulation, ordinance,
demand or requirement of any government agency; or any act or
condition whatsoever beyond its reasonable control, the non-performing
party upon giving prompt notice to the other party, both parties shall
be excused from such performance to the extent of such prevention,
restriction or interference; provided the non-performing party shall
use its best efforts to avoid or remove such causes of non-performance
and shall continue performance hereunder whenever such causes are
removed.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the Effective Date.
MACROVISION CORPORATION E-VIDEO U.S.A., INC.
By: /s/ Ian Halifax By: /s/ X. Xxxxxxx
-------------------- --------------------
(Signature) (Signature)
Name: Ian Halifax Name: Xxx Xxxxxxx
------------------ ------------------
(Please print) (Please print)
Title: CFO Title: President
----------------- -----------------
(Please print) (President)
Date: 14 March 2000 Date: 14 March 2000
------------------ ------------------
E-VIDEO TV, INC.
By: /s/ R. Dinning
---------------------
(Signature)
Name: Xxxxxx Xxxxxxx
-------------------
(Please print)
Title: CFO/Director
------------------
(Please print)
Date: March 14, 2000
-------------------
EXHIBIT A
EXPANDED TERRITORY SUBLICENSE
This EXPANDED TERRITORY SUBLICENSE is effective the ___ day of _________, 200__
by and between MACROVISION CORPORATION, a Delaware corporation, of 0000 Xxxxxxx
Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, XXX, facsimile (000) 000-0000
("Macrovision") and E-VIDEO U.S.A., INC., a Nevada corporation, of 8360 East Xxx
xx Xxxxxxx, Xxxxxxxx X-000, Xxxxxxxxxx, Xxxxxxx 00000, XXX, facsimile (480)
778-1498 ("E-Video").
Reference is made to that certain license agreement between Macrovision and
E-Video dated January 31st, 1999 pertaining to Macrovision's Less-Than-Real-Time
technology, as defined therein (the "Agreement").
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. The definition of "Territory" in the Agreement is hereby expanded to
include _______.
2. [License fee and royalty table for the expanded territory to be inserted
here.]
3. All other terms of the Agreement remain unchanged and are incorporated
herein by reference. The term of this Expanded Territory Sublicense will be
co-terminous with the Agreement. This Expanded Territory Sublicense will be
considered part of the Agreement, however a breach of the terms hereof will not
be considered a breach of the Agreement, and in such event Macrovision will be
entitled to terminate only this Expanded Territory Sublicense.
IN WITNESS WHEREOF, the parties have executed this Expanded Territory Sublicense
as of the date first written above.
MACROVISION CORPORATION E-VIDEO U.S.A., INC.
By: By:
------------------------------- -----------------------------------
(Signature) (Signature)
------------------------------- -----------------------------------
Name: Name:
------------------------------- -----------------------------------
(Please print) (Please print)
------------------------------- -----------------------------------
Title: Title:
------------------------------- -----------------------------------
(Please print) (Please print)
------------------------------- -----------------------------------
Date: Date:
------------------------------- -----------------------------------
EXHIBIT B
PATENT TERRITORIES
Australia
Austria
Belgium
Canada
China
France
Germany
Hong Kong
India
Ireland
Italy
Japan
Liechtenstein
Luxembourg
Mexico
Netherlands
New Zealand
Philippines
South Africa
South Korea
Spain
Sweden
Switzerland
Taiwan
Thailand
United Kingdom
United States
EXHIBIT C
SUBLICENSE RIGHTS, RESTRICTIONS AND OBLIGATIONS
E-Video shall enter into one or more system operator agreements substantially in
the form set out in Exhibit E, under the terms of Section 2.6 hereof.
The rights set out in Section 2.6 of this Agreement are subject to the following
restrictions and obligations:
E-VIDEO OBLIGATIONS
1. E-Video will not represent to any party that it represents Macrovision or
acts as Macrovision's agent with respect to any New Technologies, as defined
herein.
2. With respect to existing Macrovision licensees, or prospects which
Macrovision provides to E-Video, E-Video will not charge more and Macrovision
will receive not less than the licensee fees and royalties referred to in such
agreements; and with respect to prospective customers, E-Video will not charge
less than the 1% provided for in Macrovision's standard system operator
agreement. Any alteration to the license fees and royalties of such agreements
must be authorized in writing by Macrovision prior to the execution of any such
agreements by E-Video.
3. Less-Than-Real-Time customer prospects will not be required to utilize
E-Video Recorders manufactured by E-Video so long as the recorders used comply
with E-Video Recorder specifications as they relate to analog copy protection.
4. E-Video will test and certify all uses of the Technology in the Field of
Use that any E-Video licensee may make in their customer applications. E-Video
will insure that the Specifications are properly implemented before any set top
decoders utilizing the Technology are shipped, and before any transmission
implementing the Technology is activated.
5. E-Video will provide and maintain its own technical, legal, sales and
operational personnel in support of all sales, certification and system
activation activities. If E-Video requires assistance from Macrovision in this
regard, E-Video will pay for any such assistance exceeding forty (40) hours at
Macrovision's then-current technical support rates.
6. E-Video will immediately notify Macrovision upon commencing any
discussions pertaining to the Technology in the Field of Use with any MPA
studios, cable operators or DBS operators.
7. E-Video will immediately notify Macrovision of the commencement of any
discussions or negotiations with any party, who shall promptly be identified to
Macrovision, pertaining to the possibility of such party representing E-Video
for the purpose of licensing E-Video services with the Technology embedded
therein. E-Video will instruct any such agent or sales representative which it
retains that it is obligated, as is E-Video, to utilize the Macrovision approved
standard form system operator licensee documentation as set out in Exhibit E
when it is negotiating with E-Video customers, and that neither such agent or
sales representative nor E-Video is entitled to change any terms in such
documentation without Macrovision's prior written agreement.
8. E-Video will promptly notify Macrovision in writing of any product or
service enhancement which might have any effect on the use of the Technology,
and any such event will require re-certification by Macrovision to ascertain
that the Specifications are still met.
9. E-Video and Macrovision will promptly notify one another of any new
product or service offerings relating to the Technology or the E-Video service,
and any price changes pertaining to the licensing of any product or service with
the Technology embedded. For new sales, E-Video will provide to Macrovision a
copy of the E-Video sales contract or license agreement.
10. E-Video will attach a copy of the Specifications to each E-Video system
operator or manufacturing agreement pertaining to the Technology, provided that
E-Video shall ascertain beforehand that an appropriate non-disclosure agreement
has been entered into which adequately protects Macrovision's trade secret and
other proprietary rights therein.
11. E-Video will be responsible for complying with all DVB or related
standards, specifications and requirements for the licensing of the Technology
in the Field of Use into all Expanded Territories.
12. E-Video will not enter into any agreement, directly or indirectly, for
the manufacture, production, import, advertising, offering, acquisition, sale or
licensing of any products or services competitive to the Technology.
13. E-Video will make no representations or warranties as to the Technology
other than those contained in written materials made available by Macrovision,
other than as may be approved beforehand in writing by Macrovision.
MACROVISION OBLIGATIONS
1. Macrovision will attend meetings with potential E-Video customers as
reasonably requested. E-Video will provide reasonable advance notice of such
meetings as well as copies of all pertinent documentation and correspondence
with such customer.
2. Macrovision will provide up to forty (40) hours of technical support
(including one round-trip to a customer's site) per E-Video system operator
activation, as required to explain the Technology, configure operator software,
carry out system tests, and as otherwise required in Macrovision's reasonable
opinion. E-Video will pay Macrovision's then-current technical support rates
for any such support in excess thereof.
3. Macrovision will provide sales support, as reasonably requested,
including sales leads, prospective contacts and support which Macrovision
reasonably deems necessary in licensing negotiations.
4. Macrovision will provide one master copy, along with all subsequent
revisions thereof, of the Specifications for use with the license agreements
which E-Video will enter into hereunder.
5. Macrovision will immediately provide E-Video contact information
regarding any new real-time licenses and inquiries for Less Than Real Time
licenses. E-Video will not contact any such parties prior to giving Macrovision
reasonable advance notice of the intent to do so.
EXHIBIT D
MINIMUM USAGE ROYALTIES
TIER 1, 2 AND 3 COUNTRIES (AS REFERENCED IN SECTION 2.5.2)
Tier 1: U.S.A., U.K., France, Spain, Germany, Italy, and Japan
Tier 2 : Hong Kong and Australia
Tier 3: Rest of the world
COUNTRY PRICING FORMULA:
The minimum annual usage royalties payable in any country comprising an Expanded
Territory country hereunder will be the greater of:
(a) $1.00 per 1,000 of population
(b) the average of projected (or actual, if available) Pay TV spending (in
US dollars) in 2000, 2001, 2002 and 2003 times one one-hundredth of
one percent (.01%)
but in no event less than $25,000 per year nor more than $150,000.
The preceding formula excludes the following Expanded Territories, which have
been priced individually as follows:
U.K. (excluding Ireland) - $150,000
Japan - $150,000
France - $100,000
Germany - $100,000
Spain - $100,000
Australia - $75,000
South Korea - $50,000
