Exhibit 10.43
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
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.
1.9 "Music Protection Technology" means the technology and/or any
derivative product or component thereof developed pursuant to the Joint
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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 Xxxx Xxxxxx Associates, Eclipse Corporation and
MediaMorphics mastering systems. The Parties intend that three LBR encoder
modules shall be developed no later than April 30, 2000, one being for the
Xxxx Xxxxxx Associates mastering system, one being for the Eclipse
Corporation mastering system, and one being for the MediaMorphics
mastering system. 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 profits, royalties, or other form of
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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 the United
States of America, Canada, Mexico, United Kingdom, France, Benelux,
Scandinavia, Germany, Spain, Italy, Korea and Japan, Australia, Argentina,
and Brazil 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.
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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 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 20 business 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
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digital signature portions thereof. The license granted in this Section
shall be royalty-free with respect to the CD and DVD signature portions of
the CD Technology and shall be royalty bearing with respect to all other
portions of the CD Technology, such royalty to be negotiated separately
between the Parties. Except for the licenses named in the marketing
agreements listed in Exhibit G, TTR shall, within seven (7) business days
of the closing of the Investment Date, notify all existing CD Technology
customers and prospective customers that, after sixty (60) days 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 sixty day
period and in any event agrees to remit to Macrovision 100% of any
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) has not been achieved on or before
September 30, 2000, then, beginning October 1, 2000 and for the
remaining term of
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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) three
of the five major music labels (Warner, Sony, BMG, EMI, Universal,
or any of their majority owned subsidiaries) have each manufactured
at least five million (5,000,000) music CDs which have been copy
protected using the Music Protection Technology, or (ii) one of the
five major music labels (Warner, Sony, BMG, EMI, Universal, or any
of their majority owned subsidiaries) has manufactured at least five
million (5,000,000) music CDs which have been copy protected using
the Music Protection Technology and an aggregate total of twenty
five million (25,000,000) (including such 5,000,000) 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 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
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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
12 US$1,000,000
24 US$ 375,000
27 US$ 375,000
30 US$ 375,000
33 US$ 375,000
36 US$ 562,500
39 US$ 562,500
42 US$ 562,500
45 US$ 562,500
48 US$ 843,750
51 US$ 843,750
54 US$ 843,750
57 US$ 843,750
60 US$ 843,750
63 US$ 843,750
66 US$ 843,750
69 US$ 843,750
72 US$ 843,750
75 US$ 843,750
78 US$ 843,750
81 US$ 843,750
84 US$ 843,750
87 US$ 843,750
90 US$ 843,750
93 US$ 843,750
96 US$ 843,750
99 US$ 843,750
102 US$ 843,750
105 US$ 843,750
108 US$ 843,750
111 US$ 843,750
114 US$ 843,750
117 US$ 843,750
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The first such Guaranteed Royalty payment in the amount of US$1,000,000 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 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 April 30, 2000, or if the
Commercial Launch is not achieved by September 30, 2000, 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$2 Million 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 five year period beginning January 1, 2000, and ending December 31,
2004, a royalty equal to five percent (5%) 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"). The
rights of Intercontinental Communications Xxxxxx 00, Xxx Xxx Xxxx Xxxxx
Xx, Xxxxxxx P.R.C. 100088 (aka "CICC") shall be honored by Macrovision
through October 15, 2001, or, if earlier, the end of the term of such
license. Notwithstanding the above, TTR and
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Macrovision will work cooperatively to transition CICC 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 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
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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 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 December 31, 2000, up to an aggregate maximum
reimbursement of US$1 Million. 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 US$1 Million in aggregate reimbursements, or January 31, 2001. The
first such reimbursement shall be paid by TTR to Macrovision on or before
February 28, 2000 with respect to reimbursable expenses incurred by Macrovision
during the months of January and February 2000. 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
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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 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 Xx. Xxxxxx Xxxxxxx for a period of one year
following the earlier of the termination of this Agreement or his
employment with XXX.
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0. Xxxx 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 (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
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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
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
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(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 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
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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 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.
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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.
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.
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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: Xxxx X. Xxxxxxx
---------------- -------------------
Title:CFO Title:Chairman and CEO
------------------------ ---------------------------
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