EXHIBIT 10.1
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DOCUMENT]
LETTER AGREEMENT
CONFIDENTIAL
This Letter Agreement, effective as of November 24, 1999 (the
"Effective Date") sets forth the essential elements of an agreement between
Macrovision Corporation, Delaware corporation having its principal place of
business at 0000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, XXX, facsimile
number x0 000 000-0000 together with its subsidiary C-Dilla, Ltd., with
offices at Woodley House, Crockhamwell Road, Woodley, Xxxxxxx, Xxxxxxxxx, XX0
0XX, Xxxxxx Xxxxxxx, facsimile number x00 000 000 0000, on the one part
(collectively "Macrovision"), and, on the other part, TTR Technologies, Inc.
a Delaware corporation having its principal place of business at 0000
Xxxxxxxx, Xxx Xxxx, XX 00000 and an operating subsidiary TTR Technologies,
Ltd. with offices at 0 Xxxxxxx Xxxxxx, Xxxx-Xxxx, 00000, Xxxxxx, facsimile
number 011-972-9-766-2394 ("collectively TTR"), related to (i) Macrovision's
intent to make a US$4 Million equity investment in TTR, (ii) the parties'
intent for Macrovision to market under exclusive license certain music CD
Copy Protection Technology to be jointly developed by TTR and Macrovision,
and (iii) TTR's intent to exclusively license the CD-Technology (as defined
in Section 11 below) to Macrovision.
1. MUSIC CD COPY PROTECTION PROJECT DESCRIPTION
TTR and Macrovision agree to jointly develop and market music copy protection
technology for optical media, including but not limited to copy protection
for CDs and DVDs (the "Technology") throughout the term of this Letter
Agreement. The Technology shall include, but not be limited to, a process
specification, LBR encoder modules, manufacturing test modules, and quality
control modules. The parties intend that the Technology meet the following
functional requirements:
a. The quality of the protected disk, when played on [*] of the
worldwide installed base of CD players (red book and yellow
book, including but not limited to portable players with
anti-shock capability), shall match the quality of the
original unprotected disk [*].
b. The protected disk, when played on [*] of the installed base
of CD players (red book and yellow book, including but not
limited to portable players with anti-shock capability), [*]
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and otherwise perform in the same manner as the original
unprotected disk.
c. Copies of protected disks sourced from at least [*]
of the worldwide installed base of CD-Readers as described in
subsection (d) below shall be degraded, such that the
commercial entertainment value of the music has been
eliminated, when played on the worldwide installed base of CD
players (red book and yellow book, including but not limited
to portable players with anti-shock capability) and mini-disc
players.
d. The tracks recorded on a protected disc shall not be
transferrable (directly or indirectly, except if the
commercial value of the music is eliminated during the
transfer through the CD Reader - PC Data Interface) from at
least [*] of the worldwide installed base of CD-Readers onto
the hard-drive of a PC using file formats such as .WAV or
.BIN, including but not limited to by using software programs
such as Goldenhawk CDRWin, Adaptec Easy CD Creator, and Nero.
2. PROJECT RESPONSIBILITIES OF TTR
TTR shall develop a complete product specification as well as a completed
product suitable for Commercial Launch (as defined below), including
completely functional LBR encoder modules for the DCA, Eclipse, and
Mediamorphics mastering systems. The parties intend that three LBR encoder
modules shall be developed no later than [*], 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.
3. PROJECT RESPONSIBILITIES OF MACROVISION
Macrovision shall perform all sales, marketing, installation, and replicator
liaison, and first level technical support activities. Macrovision shall have
the option in its sole discretion, in coordination with TTR, to contribute to
the development of LBR encoder modules and to perform ongoing technology
development and enhancements.
4. TECHNOLOGY DEVELOPMENT AND PROJECT MANAGEMENT
TTR agrees to assign a sufficient number of technical personnel for a [*]
year period beginning on the Effective Date of this Letter Agreement, to
develop, enhance, and maintain the Technology. During the period beginning on
the Effective Date and ending three months following the date on which the
"Commercial Launch" (as such term is defined in Section 7 below) has
occurred, TTR agrees to cause [*] to be
assigned on a full time basis to develop, enhance, and maintain the
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Technology and to perform such activities on a three quarter time (i.e.,
three weeks out of every four) basis at Macrovision's C-Dilla offices located
in Woodley, UK. TTR shall pay all travel and lodging expenses related to [*]
work in the UK during this period. Macrovision agrees to designate at least
one technical liaison to interact with [*] and the other TTR personnel who
are involved with the Technology. At Macrovision's option, up to three
project status meetings may be held at Macrovision's Sunnyvale, California
office, and in each such case TTR agrees to cause [*] to attend, and
Macrovision agrees to reimburse TTR for the reasonable travel (coach class
airfare) and lodging costs of [*] related to each such meeting. Telephone
conference calls will also be held weekly at mutually agreed upon times.
TTR also agrees to, upon request from Macrovision, cause [*] to be present at
TTR's expense (except as described below) at Macrovision's Sunnyvale, CA USA
location, or at any other location in the USA, England (except for Woodley,
UK where [*] will be working on a three quarter time basis as described
above) or Western Europe as requested by Macrovision for up to one week per
month beginning on the Effective Date and ending three months following the
date on which the "Commercial Launch" (as such term is defined in Section 7
below) has occurred. Macrovision agrees to reimburse TTR for the reasonable
travel (coach class airfare) and lodging costs of [*] or other TTR personnel
if they are requested by Macrovision to travel to the USA.
All engineers and other staff which may be assigned by TTR or Macrovision to
develop the Technology shall at all times be employees of TTR or Macrovision,
respectively. TTR and Macrovision may, at their option, individually employ
the services of contractors or consultants to assist in the development of
the Technology so long as such contractors or consultants are bound by
appropriate confidentiality agreements and have agreed to assign all right,
title and interest to their work product to TTR or Macrovision as
appropriate. TTR or Macrovision, as appropriate, shall be financially
responsible for the salaries, benefits, expenses, and equipment required by
their respective engineers, contractors, consultants, and other staff.
5. OWNERSHIP OF THE TECHNOLOGY
TM and Macrovision shall each individually own all right title and interest
to those portions of the Technology which can be shown to have been developed
independently by them. In addition, Macrovision acknowledges TTR's ownership
of the intellectual property comprising the CD-Technology, as defined in
Section 11 below. All other portions of the Technology shall be owned jointly
by TTR and Macrovision ("Jointly Owned Technology"). Each party agrees to
file and prosecute, and shall bear the expense of filing and prosecuting, at
least in the United States of America, Canada, Mexico, United Kingdom,
France, Benelux, Scandinavia, Germany, Spain, Italy, Korea
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and Japan, any patents on those portions of the Technology it owns as of the
Effective Date or which it independently develops subsequent to the Effective
Date and which are commercially important to protecting the intellectual
property rights underlying the Technology.
Except as prohibited by law, the parties shall jointly file, with respect to
Jointly Owned Technology, such patent and copyright applications and
amendments thereof as the parties agree are useful to protect their joint
interests in the Technology, and shall thereafter use commercially reasonable
diligence 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. As an
additional right, either party, at its own expense, may file patent and
copyright applications covering the Technology in those countries where the
parties do not mutually agree to file such applications. All patent and
copyright applications for Jointly Owned Technology developed under this
Letter Agreement shall be filed in the name of both parties.
6. LICENSE GRANT
Subject to the terms of this Letter Agreement, TTR grants to Macrovision,
during the full term of this Letter Agreement, an exclusive, worldwide,
royalty-bearing license, within the Field of Use (as defined below),
including the right to sublicense, to use all patent rights, software
algorithms, encoder modules, applicable trademarks and tradenames including
but not limited to MusicGuard, and other intellectual property owned by or
licensed to TTR, or developed by TTR, which is required to develop and
generate commercial benefit from the Technology. "Field of Use" shall mean
music (including music video) copy protection for optical media, including
but not limited to copy protection for CDs and DVDs, and for internet digital
rights management for music applications.
TTR will ensure, no less frequently than monthly, that Macrovision has a full
copy of the latest version of the Technology (including copies of all
pertinent notes, plans, diagrams, schematics, source code, object code and
technical specifications), it being understood that the intent of the parties
herein is to provide for Macrovision to be able to fully utilize the
Technology in the event of a dissolution or corporate reorganization of TTR
and/or in the event that [*] ceases to be in the employ of XXX.
0. LICENSE FEES
Except as provided below in this Section 7 Macrovision agrees to pay to TTR
thirty percent (30%) of the Net Revenues received by Macrovision from
customers, distributors, OEM partners, or other sublicensees of the
Technology. For purposes of this Letter Agreement, "Net Revenues" shall mean
gross revenues reduced by returns,
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distributor discounts, and rebates, but not reduced by cost of goods sold. In
the event that the "Commercial Launch" as defined herein has not been
achieved on or before [*], then, beginning [*] and for the remaining term of
this Letter Agreement, the percentage payable by Macrovision to TTR as
described above shall be reduced to twenty five percent (25%) of Net
Revenues. For purposes of this Letter Agreement, "Commercial Launch" shall
mean the date by which the first of the following two events have occurred:
(i) [*] of the [*] major music labels [*] have each manufactured at least [*]
Music CDs which have been copy protected using the Technology, or (ii) [*] of
the [*] major music labels [*] has manufactured at least [*] Music CDs which
have been copy protected using the Technology and an aggregate total of [*]
Music CDs (including Music CDs manufactured by such major music label) have
been manufactured. Macrovision intends to license the Technology as a
separate product or service, however, TTR agrees to negotiate with
Macrovision in good faith the allocation of revenue to the Technology in the
event Macrovision desires to license the Technology as a portion of another
product or service it offers to its customers, distributors, OEM partners, or
sublicensees. Macrovision agrees that it shall not license the Technology as
a portion of another product or service until the allocation of revenue to
the Technology has been mutually agreed by Macrovision and TTR
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 Letter Agreement) which indicate the total number of
Music CDs manufactured to which Macrovision is aware that the Technology has
been applied, each such report shall be delivered to TTR within 45 days
following the end of each such calendar quarter. The first such report shall
be delivered to TTR within 45 days following the end of the calendar quarter
in which the Commercial Launch has occurred. Macrovision agrees to pay to TTR
its share of Net Revenues from the Technology based upon actual cash receipts
received. Such payments shall be made to TTR on the last day of each calendar
month during the Term of this Letter Agreement with respect to cash receipts
received in the immediately preceding month.
8. MINIMUM FEES
In consideration for the exclusive license granted to Macrovision by TTR
hereunder, Macrovision shall pay to TTR, beginning twelve months following
the Commercial Launch of the Technology, a minimum annual guaranteed royalty
advance, recoupable against royalties actually earned by TTR as its share of
Net Revenues generated from the Technology, of [*], such annual guaranteed
royalty to be [*] in each ensuing year; i.e. [*] in the second year following
commercial launch,
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[*] in the third year, and [*] in the fourth year. In the fifth through ninth
years following Commercial Launch, such minimum guaranteed royalty would be
[*]. Failure to make any of these payments when due shall cause Macrovision's
exclusive license hereunder to revert to nonexclusive status. The initial [*]
minimum annual guaranteed royalty advance shall be paid by Macrovision to TTR
in one lump sum when due. Minimum annual guaranteed royalty advances for the
ensuing years shall be paid by Macrovision to TTR in [*] installments, the
first such installment of which shall be paid on the annual anniversary of
the Commercial Launch of the Technology.
Notwithstanding the above, if the Commercial Launch of the Technology is
achieved prior to [*], or if the Commercial Launch of the Technology is not
achieved by [*], then all minimum fees described in this Section 8 shall be
waived. In the event that the minimum fees described in this Section 8 are
waived as described in this Section 8 and Macrovision shall not have paid to
TTR a minimum of [*] in aggregate royalties or royalty advances, including
royalties paid under the terms of Section 7 above, by the second annual
anniversary following the Commercial Launch, then Macrovision's exclusive
license hereunder shall revert to nonexclusive status.
9. SALES, MARKETING, AND LICENSING OF THE TECHNOLOGY
Macrovision shall in its sole discretion determine the staffing and other
resources to be allocated by Macrovision to commercializing the Technology,
including but not limited to LBR encoder development or testing, product
management, sales, marketing and promotion of the Technology. However,
Macrovision agrees to allocate commercially reasonable staffing and other
resources to commercializing the Technology consistent with Macrovision's
good faith determination of the commercial potential of the Technology.
Macrovision shall in its sole discretion determine the naming, branding, and
pricing for the Technology, except that Macrovision agrees (i) to include
mention in the text of all press releases related to the Technology that the
Technology has been developed jointly by Macrovision and TTR, (ii) to include
mention in the small-type copyright/trademark sections of advertising and
related marketing collaterial materials that the Technology has been
developed jointly by Macrovision and TTR, and (iii) not to license the
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 subsections (i) and (ii) of this Section 9.
10. COOPERATIVE MARKETING AND DEVELOPMENT PAYMENTS
TTR recognizes the unique one-time costs which will be incurred by
Macrovision to co-develop and launch the Technology into the commercial
market and agrees to reimburse
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Macrovision for its staffing and other costs related to development and
testing, product management, sales, product naming/branding, marketing, and
promotion expenses incurred by Macrovision with respect to the Technology
during the [*]period ending [*], 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 [*] in aggregate reimbursements, or [*]. The first such
reimbursement shall be paid by TTR to Macrovision on or before [*] with
respect to reimbursable expenses incurred by Macrovision during the month of
[*]. Notwithstanding the above, no such reimbursements shall be payable by
TTR to Macrovision prior to the closing of Macrovision's US$4 Million
investment in, TTR as contemplated herein.
11. TTR'S EXISTING DISCGUARD CD-ROM SOFTWARE COPY PROTECTION TECHNOLOGY
TTR shall (i) grant to Macrovision, effective upon the closing of
Macrovision's US$4 Million investment in TTR as contemplated herein, an
exclusive, worldwide license, including the right to incorporate into other
Macrovision products and the right to sublicense, to all patents, software
algorithms, CD and DVD signatures, encoder modules, other technology,
DiscGuard and related tradenames, and other intellectual property related to
TTR's CD-ROM software copy protection technology ("CD Technology"), and (ii)
deliver to Macrovision all available documentation related to the
CD-Technology, including but not limited to the CD and DVD signature portions
thereof. Such license shall be [*] with respect to the CD and DVD signature
portions of the CD-Technology and shall be [*] with respect to all other
portions of the CD-Technology, such royalty to be negotiated separately
between the parties in the event that Macrovision desires to incorporate such
other portions of the CD-Technology into other Macrovision products,
including but not limited to products related to software, video, and data
publishing copy protection or internet digital rights management TTR shall,
within 5 business days of the closing of Macrovision's US$4 Million
investment in TTR as contemplated herein, notify all existing CD-Technology
customers and prospects in writing that it has made an agreement with
Macrovision to transition all TTR CD-Technology customers and prospects to
Macrovision's SafeDisc technology and that such a transition will be
implemented within the next [*] days and, further, that TTR's CD-Technology
will [*] for license following such [*] day period. TTR shall, within [*]
business days of the closing of Macrovision's US$4 Million investment in TTR
as contemplated herein, TTR will deliver to Macrovision all pertinent notes,
plans, diagrams, schematics, source code, object code and technical
specifications related to the CD and DVD signatures, it being understood
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that the intent of the parties herein is for Macrovision to be able to fully
utilize such signatures under the royalty free license described above.
Notwithstanding the above,
a. Macrovision shall pay to TTR, for the [*] period beginning [*]
and ending [*], a royalty equal to [*] percent of the Net
Revenues Macrovision generates from its SafeDisc technology from
customers, distributors, or sublicensees in the People's
Republic of China ("PRC"), and
b. The rights of the existing TTR CD-Technology licensee in the
PRC [*] shall be respected through October 15, 2001, the end of
the term of such license. Notwithstanding the above, TTR and
Macrovision will work cooperatively to transition [*] to a
SafeDisc license so that the CD-Technology can be withdrawn
from the PRC market as soon as possible.
12. MACROVISION `S RIGHT OF FIRST REFUSAL TO OTHER TTR TECHNOLOGIES
TTR shall grant to Macrovision an exclusive right of first refusal, during
the term of this Letter Agreement, with respect to (a) the right to purchase
or (b) the worldwide exclusive marketing rights related to (i) the Technology
outside of the Field of Use and (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. Terms and conditions related to such
Macrovision right of first refusal shall be equivalent to the terms and
conditions proposed to TTR by any bonafide third party, unless mutually
agreed otherwise by Macrovision and XXX.
00. EQUITY INVESTMENT BY MACROVISION IN TTR
Subject to (i) the satisfactory completion of Macrovision's due diligence
review by December 31, 1999, and (ii) the approval of both parties' Boards of
Directors, Macrovision and TTR agree as follows:
a. TTR shall grant to Macrovision the exclusive right, on or before
January 15, 2000, to invest the sum of US$4 Million in the
equity of TTR or in such other form as may be mutually
agreeable to Macrovision and TTR to allow Macrovision to
record the investment as an asset on Macrovision's. balance
sheet and to use the "cost method" of accounting for such
investment. The valuation for such investment shall be US$35
Million on a post money basis. Between the date of execution
of this Letter Agreement and the date of closing for the
contemplated US$4 Million investment, TTR agrees not to
solicit, initiate discussions with, or engage in further
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discussions with any other party relating to the purchase of a
material equity interest in TTR. TTR will conduct its business
in the usual manner and will consult with Macrovision on any
proposed material matters which are outside of the ordinary
course of its business. TTR shall allow Macrovision all
reasonable access to its books and records, as well as to its
professional advisors, for the purpose of enabling Macrovision
to quickly and conveniently conduct the due diligence reviews
contemplated herein.
b. Macrovision shall, on or before January 15, 2000
invest the sum of US$4 Million in the equity of TTR, or in
such other form as may be mutually agreeable to Macrovision
and TTR, to allow Macrovision to record the investment as an
asset on Macrovision's balance sheet and to use the "cost
method" of accounting for such investment. The valuation for
such investment shall be US$35 Million on a post money basis.
Notwithstanding the above, TTR agrees that Macrovision's
investment in TTR shall be contingent upon receipt by
Macrovision no later than January 10, 2000, of TTR financial
statements in accordance with United States Generally Accepted
Accounting Principles (Balance Sheet as of a date no earlier
than October 31, 1999, Statements of Income, Cash Flows, and
Stockholders' Equity or Deficit, for the year ending December
31, 1998 and the ten months ending October 31, 1999,
including, for each period, a full set of US GAAP-compliant
footnotes thereon), audited by the Israeli office or affiliate
of a "Big 5" public accounting firm (i.e., Deloitte and
Touche, KPMG Peat Marwick, Price WaterhouseCoopers, Xxxxxx
Xxxxxxxx, or Ernst and Young), such audited Balance Sheet
showing an excess of liabilities due within 18 months of the
date of the Balance Sheet over cash and cash equivalents of no
more than US$[*]. TTR agrees to bear all expenses
associated with such audit.
c. The following additional terms shall apply to Macrovision's
US$4 Million investment in TTR as described in this Section
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(i) Macrovision shall have the exclusive right of first
refusal, for the term of this Letter Agreement, with
respect to any third party offer from a party who may
propose to acquire a majority equity interest in TTR, to
acquire such majority equity interest. Terms and
conditions related to such Macrovision right of first
refusal shall be equivalent to the terms and conditions
proposed to TTR by any bonafide third party, unless
mutually agreed otherwise by Macrovision and TTR.
Macrovision shall also have the option, but not the
obligation, to participate pro rata in any future TTR
financing rounds to the extent such future financing
rounds are private financings (i.e., not public offerings
for which offering documents are filed with the
Securities and Exchange Commission) greater than US$[*].
(ii) The investment shall be structured in such a way that
Macrovision's outside auditors approve the "cost method"
of accounting for the investment.
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(iii) The investment documents shall include covenants and
other provisions which place the Technology and the
CD-Technology in an escrow status acceptable to
Macrovision such that Macrovision's rights in and to the
Technology survive any and all forms of possible TTR
corporate reorganizations or bankruptcy events, or claims
on such technologies which might otherwise be senior to
the claims of Macrovision and which may impair
Macrovision's exclusive licenses described herein.
(iv) Shares in TTR represented directly or indirectly by
Macrovision's $4 million investment in TTR as
contemplated herein shall be registered shares subject to
sale by Macrovision in a private or public market
transaction beginning 60 days after the closing of such
investment transaction.
(v) Macrovision shall be granted observer status on TTR's
board of directors, such observer status to include all
rights and privileges of board of directors members
except for voting privileges.
(vi) Employment agreements for the twelve months ending
December 31, 2000 reasonably satisfactory to Macrovision
shall be entered into between TTR and up to four key
employees of TTR, including but not limited to [*] and [*].
(vii) Certain current TTR employees shall be terminated as
mutually agreed by Macrovision and XXX.
00. CONFIDENTIALITY
This Letter Agreement is subject to the terms of the nondisclosure agreement
entered into by the parties on October 20, 1999. Except as provided in
Section 15 below, the existence of this Letter Agreement and all terms and
conditions of this Letter Agreement are confidential to TTR and Macrovision.
15. PUBLIC ANNOUNCEMENT
TTR and Macrovision agree that at a future date it will be desirable to issue
a mutually acceptable press release announcing the signing of this Letter
Agreement and announcing the development of the Technology. It is anticipated
that this public announcement will occur within 10 days following the closing
of Macrovision's US$4 Million investment in TTR as contemplated herein.
Notwithstanding the above, Macrovision acknowledges thatTTR may be required
to file form 8-K with the United States Securities and Exchange Commission
and that if TTR's counsel reasonably determines that TTR is required to file,
it shall not constitute a breach of this Letter Agreement. TTR agrees,
however, that Macrovision shall have the option to review and comment on such
8-K filing before it is filed, the intent being to minimize the inclusion of
detailed items in this Letter Agreement to that information
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specifically required by law or by SEC regulations. Macrovision agrees that,
no later than five business days following TTR's 8-K filing, Macrovision will
issue a press release announcing the signing of this Letter Agreement and the
development of the Technology, the content of such press release to be
determined by Macrovision in its sole discretion. Following the issuance of
such press release by Macrovision, Macrovision agrees that TTR may issue a
separate press release announcing the signing of this Letter Agreement and
the development of the Technology, the content of such press release to be
approved prior to issuance by Macrovision, such approval not to be
unreasonably withheld.
16. LONG FORM AGREEMENTS
Upon execution of this Letter Agreement by both parties, Macrovision and TTR
shall use their respective reasonable efforts to prepare and execute, on or
before January 15, 2000, such long-form agreements and related documentation
which incorporates the terms herein and incorporates such other terms and
conditions as TTR and Macrovision may deem reasonable or necessary to
accomplish the agreement set forth herein. Notwithstanding the foregoing,
this Letter Agreement when executed by Macrovision and TTR shall represent,
Subject to Section 20 hereof, a binding agreement between the parties which
reflects the essential terms related to the development and marketing of the
Technology, until such time as a long form agreement which supersedes this
Letter Agreement has been executed by the parties.
Each party, subject to the confidentiality provisions herein, shall make
available to the other party such financial, technological, and other
business information that such other party may reasonably request as part of
such other party's due diligence activities related to the preparation of
such long form agreement.
17. DISCLAIMER OF AGENCY
Nothing contained in this Letter Agreement is intended or will be construed
so as to constitute the parties to this Letter Agreement as partners 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.
18. CHOICE OF LAW
This Letter 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. 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 reasonable and actual attorneys' fees,
reasonable expenses, related litigation costs and costs of suit (if any) paid
by the non-prevailing party.
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Except for claims regarding ownership or infringement of the Technology, any
dispute between the parties arising out of, or relating to, the validity,
construction, interpretation or performance of this Letter 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. The parties to any such arbitration shall be entitled to
conduct such discovery as they would have been entitled to conduct had the
action been filed in the appropriate Federal or State court in San Francisco
County, California, USA.
19. AUDIT RIGHTS
Both parties will have the right during the term of this Letter Agreement and
for one (1) year thereafter to have an independent "Big 5" certified public
accounting firm (i.e., Deloitte and Touche, Xxxxxx Xxxxxxxx,
PriceWaterhouseCoopers, KPMG Peat Marwick, or Ernst & Young) review or audit
the other party's relevant records for the purpose of certifying compliance
with this Letter 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. Any discrepancy revealed by such audits
will be corrected within ten (10) days of the written notice of the official
results of the audit being delivered by the auditor.
20. TERM AND TERMINATION
The term of this Letter Agreement shall begin on the Effective Date and end
on December 31, 2009. Notwithstanding the above, this Letter Agreement may be
terminated earlier:
a. by either party upon five days' written notice if the investment
by Macrovision in TTR as contemplated herein is not closed
(i.e., funded) for any reason whatsoever by January 31, 2000;
or
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b. by either party upon thirty days written notice to the other
if the other party materially breaches this Letter Agreement
and such material breach is not cured within ninety days of
notice to cure such breach.
Notwithstanding anything to the contrary in this Letter Agreement, if this
Letter Agreement is terminated by TTR in accordance with Section 20 (a)
above, then each party shall immediately return to the other party all
technology and related materials of such other party and neither party shall
have any liability whatsoever to the other party, except with respect to
claim related to infringement of intellectual property rights.
21. EXPENSES
The parties shall each bear their own legal expenses and the expenses of
their professional advisors, including any brokerage fees, with respect to
the transactions contemplated herein.
22. ACCEPTANCE AND AGREEMENT
This Letter Agreement is accepted and agreed on behalf of Macrovision and TTR
by the signatures of their authorized representatives named below. This
Letter Agreement shall not be binding until executed by both Macrovision and
TTR. The parties agree that this Letter Agreement may be executed via
exchange of signed facsimile copies.
MACROVISION CORPORATION TTR TECHNOLOGIES, INC.
/s/ Xxxxxxx Xxxxxxx /s/ Xxxx Tockayer Nov. 24, 1999
----------------------------- ---------------------------------
Signature/Date Signature/Date
Xxxxxxx Xxxxxxx Xxxx Tockayer
----------------------------- ---------------------------------
Printed Name Printed Name
President/CEP Chairman
----------------------------- ---------------------------------
Title Title
13
