Software Marketing Licence and Development Agreement - C-Dilla Ltd. and Macrovision Corp.
DATED 19 FEBRUARY, 1998
____________________________
(1) C-DILLA LIMITED
- and -
(2) MACROVISION CORPORATION
___________________________________________________
SOFTWARE MARKETING LICENCE AND DEVELOPMENT AGREEMENT
___________________________________________________
Nabarro Nathanson
The Anchorage
34 Bridge Street
Reading
RG1 2LU
Tel: 0118 925 4603
Fax: 0118 950 5640
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Ref: RCB/C2963.6
CONTENTS
1. DEFINITIONS
2. APPOINTMENT AND LICENCE GRANT
3. TERM
4. LICENCE RESTRICTIONS
5. CUSTOMER LICENCES
6. INCOME AND ROYALTIES
7. RIGHT OF AUDIT
8. C-DILLA'S SALE OF PRODUCTS
9. MACROVISION OBLIGATIONS
10. COMPETING PRODUCTS
11. C-DILLA'S OBLIGATIONS
12. MINIMUM ROYALTY PAYMENTS
13. INTELLECTUAL PROPERTY RIGHTS INDEMNITY
14. ESCROW
15. CONFIDENTIALITY
16. TERMINATION
17. CONSEQUENCES OF TERMINATION
18. GENERAL
19. WARRANTIES
20. FUTURE CO-OPERATION
SCHEDULE A - THE PRODUCTS
SCHEDULE B - MINIMUM ROYALTY PAYMENTS (INITIAL TERM)
SCHEDULE C - MINIMUM ROYALTY PAYMENTS (EXTENDED TERM)
SCHEDULE D - TRAINING
SCHEDULE E - PERFORMANCE SPECIFICATION
APPENDIX 1 - CUSTOMER LICENCE AGREEMENT (REQUIRED PROVISIONS)
APPENDIX 2 - ESCROW AGREEMENT
APPENDIX 3 - REPORT
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THIS AGREEMENT IS MADE THE 19TH DAY OF FEBRUARY 1998 BY AND BETWEEN:
(1) C-DILLA LIMITED (Company number 2683202) whose registered office is at
Woodley House, Crockhamwell Road, Woodley, Reading, Berkshire RG5 3JP
("C-Dilla"); and
(2) MACROVISION CORPORATION whose registered office is at 1341 Orleans Drive
Sunnyvale CA 94089 ("Macrovision").
WHEREAS:
(A) C-Dilla is in the business of the development and distribution of secure
computer software products.
(B) Macrovision wishes to be appointed as a distributor of certain secure
computer software products developed by C-Dilla.
(C) C-Dilla is willing to appoint Macrovision as a distributor of the
software products set out below on the terms and subject to the
conditions set out in this Agreement.
THE PARTIES NOW AGREE AS FOLLOWS:
1. DEFINITIONS
In this Agreement the following terms shall have the meanings shown
1.1 "Additional Licence Fee" means a fee of five million US dollars
($5,000,000) (subject to reduction in
accordance with clause 3.4);
1.2 "Advance Payment" means the sum of six hundred and six
thousand and sixty pounds sterling
(L606,060);
1.3 "Agreement" means this Software Marketing Licence
and Development Agreement between
C-Dilla and Macrovision including the
schedules hereto;
1.4 "CD-Secure" means the product details of which are
set out in paragraph 2 of Schedule A,
and any upgrades, new releases and
enhancements thereof;
1.5 "C-Dilla's Market" means any market outside the [*];
1.6 "Product A" means the product details of which are
set out in paragraph 1 of Schedule A,
and any upgrades, new releases and
enhancements thereof;
1.7 "Customer" means customers and potential
customers of Macrovision for the
Products;
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1.8 "Customer Licence means the agreement(s) referred to in
Agreement" clause 5.2;
1.9 "DVD Consortium" means the group of ten consumer
electronic manufacturers who have
established the standards and
licensing mechanisms for the current
Digital Versatile Disc (DVD) format;
1.10 "DVD-ROM" means an optical disc for computer
software other than linear video
programmes;
1.11 "DVD-V" means a standalone audio/video
player/recorder for the digital
versatile disc for the application of
linear video programmes;
1.12 "Effective Date" means the date of signature of this
Agreement;
1.13 "Escrow Agreement" means the agreement referred to in
clause 14;
1.14 "Events of Default" means the events referred to in clause
16.2;
1.15 "Extended Term" means the extended term of five (5)
years from the end of the Initial Term
set out in clause 3.3;
1.16 "First Sale Date" means the date Macrovision concludes
its first licence of any Products in
the [*];
1.17 "Initial Support Period" means a period of six (6) months from
the Product Release Date;
1.18 "Initial Term" means the initial term of five (5)
years set out in clause 3.1;
1.19 "Intellectual Property any or all of the following (whether
Rights" written or unwritten) and all rights
in, arising out of, or associated
therewith anywhere in the world: (i)
all United Kingdom, international and
foreign patents and applications
therefor and all reissues, renewals
and extensions thereof; (ii) all
inventions (whether patentable or
not), invention disclosures,
discoveries, secret process,
improvements, trade secrets,
proprietary information, know how,
technology, technical data and
customer lists, and all documentation
relating to any of the foregoing;
(iii) all copyrights, copyright
registrations and applications
therefor; (iv) all industrial designs
and registrations and applications
therefor throughout the world; (v) all
trade names, logos, trademarks and
service marks;
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trademark and service mark
registrations and applications
therefor and all goodwill associated
therewith throughout the world; (vi)
all databases and data collections and
all rights therein throughout the
world; and (vii) all computer software
including all source code, object
code, firmware, development tools,
files, records and data,
specifications, all media on which any
of the foregoing is recorded, (viii)
any similar, corresponding or
equivalent rights to any of the
foregoing and (ix) all manuals,
instructions, catalogues and other
documentation related to any of the
foregoing
1.20 "Mixed Product A" means versions of Product A which also
incorporate one or more of C-Dilla's
other products;
1.21 [*] [*]
1.22 "NCC" means NCC Escrow International Limited
of Oxford House, Oxford Road,
Manchester M1 7ED, United Kingdom;
1.23 [*] [*]
1.24 [*] [*]
1.25 "Product Release Date" means the date Product A is released
from development for sale, as approved
by C-Dilla and Macrovision;
1.26 "Pure Product A" means versions of Product A which do
not incorporate any of C-Dilla's other
products;
1.27 [*] [*]:
(a) [*],
(b) [*],
(c) [*],
(d) [*]
(e) [*]
1.28 "Royalties" means the royalties set out in clause
6.2, or as increased under clause 3.4
or as otherwise agreed between the
parties;
1.29 "Sales Revenue" means invoiced sums for sales of
Products which have been invoiced and
supplied to Customers (whether or not
such invoices have been paid) less all
applicable taxes including, without
limitation, sales tax, value added
tax, duties, tariffs and other similar
taxes and after deduction of all
properly invoiced credit notes which
relate to such
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invoiced sums;
1.30 "Term" means the period of five (5) years
from the Effective Date set out in
clause 3.1, subject to extension in
accordance with clause 3.2, or earlier
termination in accordance with clause
16;
1.31 "Warranties" means the warranties, representations
and undertakings set out in clause 19
(references to a Warranty being to any
one of them);
1.32 "Year" means a period of twelve calendar
months commencing on the Product
Release Date, or the relevant
anniversary of the Product Release
Date.
1.33 "Disclosure Letter" means the letter of even date
addressed to Macrovision from Peter
Newman and C-Dilla.
2. APPOINTMENT AND LICENCE GRANT
2.1. PURE PRODUCT A
C-Dilla hereby grants to Macrovision, for the Term, a world-wide
exclusive licence to market Pure Product A in the [*].
2.2. [*]
2.2.1. [*];
2.2.2. [*]
2.2.3. [*];
in the [*].
2.3. ADDITIONAL PRODUCTS
C-Dilla agrees to grant to Macrovision first refusal on any new or
enhanced products produced by C-Dilla during the Term [*] upon the
same terms and conditions as contained in this Agreement or upon
such other terms and conditions as the parties may mutually agree,
for marketing within the [*], provided that:
2.3.1. Macrovision must exercise such right of refusal within a
reasonable period (being no longer than sixty (60) days)
from its offer by C-Dilla; and
2.3.2. Macrovision's rights to such products within the [*]
shall be exclusive.
2.3.3. [*].
2.4. MARKETING ACTIVITIES AND RIGHTS
Macrovision shall be entitled to:
2.4.1. licence the Products under its own name and to publish
its own advertising or promotional materials for such
licensing; and
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2.4.2. alter or modify the Products to enable it to exercise its
right under this sub-clause;
provided that (i) any trade mark to be applied to Product A (or to
any of the Products) shall be agreed and approved by the parties
prior to use, and (ii) Macrovision shall not remove any copyright
or other intellectual property right notices or other marks of
designation included in the Products by C-Dilla.
2.5. APPROVED TRADE MARKS
The parties agree that in respect of any agreed and approved trade
marks under clause 2.4 above, the trade mark(s) for:
2.5.1. Product A,
2.5.2. any jointly developed Products,
2.5.3. other Products as agreed by C-Dilla,
shall (subject to C-Dilla's agreement as regards 2.5.3) be owned
by the parties jointly, but with a licence to be granted from each
party to the other for the use and attribution thereof in relation
to the relevant Product(s) during the Term.
2.6. INCLUDED AND EXCLUDED COMPANIES
For the guidance of both parties in interpreting this Agreement,
the parties agree that:
2.6.1. a preliminary guideline [*] and within C-Dilla's Market
will be drafted within three (3) weeks of the Effective
Date;
2.6.2. this list shall be merely a beginning list and customers
may be added or deleted according to the process
developed under clause 2.6.1; and
2.6.3. if there is dispute as to whether a customer is within
the [*] or within C-Dilla's Market, this dispute shall be
dealt with in the first instance by escalation to the
Managing Director of C-Dilla and President of Macrovision.
2.7. DUAL MARKET CUSTOMERS
The parties further acknowledge that there may be instances where
a part of the activities of a customer (or an operating division
of a customer) fall within the [*], and a part of their activities
fall within C-Dilla's Market. In such cases, both parties shall
ensure that their future licences with such customers include
appropriate provisions to limit exploitation to the [*] (in the
case of Macrovision) or the C-Dilla Market (in the case of
C-Dilla).
3. TERM
3.1. INITIAL TERM
The Initial Term of this Agreement shall be five (5) years from
the Effective Date, (subject to termination under clause 16 below).
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3.2. OPTION TO EXTEND
Macrovision shall have the right, subject to clause 3.3,
exercisable at any time during the period of two (2) years from
the Product Release Date to extend the Term for a further period
of five (5) years commencing on the expiry of the Initial Term.
3.3. EXERCISE OF OPTION
The option set out in clause 3.2 above shall be exercisable by
Macrovision lodging with the secretary of C-Dilla at its
registered office a notice in writing together with payment of:
3.3.1. an option fee of one million US dollars (US$1,000,000);
and
3.3.2. the Additional Licence Fee (which however may be
satisfied in accordance with clause 3.4 below);
provided that if Macrovision does not achieve an income to C-Dilla
of ten million [*] in the fifth Year of the Agreement then under
the Extended Term of the Agreement the licences under clause 2.1
and 2.2 above shall[*].
3.4. ADDITIONAL LICENCE FEE
The Additional Licence Fee may be satisfied by means of a
temporary increase in the Royalty on Product A to [*] until the
amount of the Additional Licence Fee is paid (but providing, for
the avoidance of doubt, that if (i) the Agreement is terminated or
expires prior to payment of the full Additional Licence Fee, and
(ii) Macrovision have throughout the Term been paying an increased
Royalty of [*] on all Sales Revenue for Product A, then the
balance properly remaining shall not be payable and the Additional
Licence Fee shall be deemed to be reduced to an amount equal to
the increased Royalty paid for all relevant Sales Revenue).
4. LICENCE RESTRICTIONS
4.1. DECOMPILATION
Macrovision shall not decompile, reverse engineer, interrogate or
decode the Products to bypass or delete protection methods
provided for preventing unauthorised uses of the Products, to
derive from them any source code in any form whatsoever.
4.2. CONFIDENTIAL INFORMATION AND NEW PRODUCTS
Macrovision shall not use any of the confidential information of
C-Dilla contained in or derived from the Products to develop or
market any software which is substantially similar in its
expression to any part of the Products, save where:
4.2.1. such use is expressly permitted by C-Dilla pursuant to
clause 9.3; or
4.2.2. such confidential information is in the public domain
(other than by a breach by Macrovision of this clause);
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4.2.3. Macrovision can show by documentary evidence that such
information was in its possession or known to it by
being in its use or being recorded in its files or
computers or other recording media prior to receipt from
C-Dilla of such information;
4.2.4. Macrovision can show that such information has been
developed independently of any information disclosed to
it by C-Dilla.
5. CUSTOMER LICENCES
5.1. RIGHT TO SUB-LICENCE
Macrovision may grant sub-licences to use the Products to
Customers within the [*], for their use within the [*] (and with
the appropriate rights for Customers to sub-licence the Products
to a mastering house to enable mastering or replication on behalf
of the Customer).
5.2. CUSTOMER LICENCE AGREEMENTS
Prior to the first time Macrovision transfers a Product (or copy
or part thereof) to any Customer it shall first enter into an
agreement with that Customer which:
5.2.1. contains provisions with no greater liability on the part
of Macrovision than those set out in Appendix 1;
5.2.2. contains equivalent or greater protection for C-Dilla's
intellectual property rights (and other protections
required by C-Dilla) as are set out in Appendix 1, or as
otherwise agreed by C-Dilla;
provided that, subject to the above and to clause 5.3, Macrovision
shall have the right to determine the form of content of all such
Customer Licence Agreements.
5.3. FORM OF AGREEMENTS AND VARIATION
Macrovision shall, specifically:
5.3.1. consult with C-Dilla in developing a standard form of
Customer Licence Agreement for use with its Customers;
5.3.2. not enter into any Customer Licence Agreement which
includes provisions conflicting with the requirements of
clauses 5.2.1 and 5.2.2, except with the prior written
agreement of C-Dilla.
5.4. ENFORCEABILITY AND ENFORCEMENT OF CUSTOMER LICENCE AGREEMENTS
Macrovision shall use all reasonable endeavours to:
5.4.1. ensure that the terms of each such agreement are
enforceable (to the extent that they can be legally
enforced) in the jurisdiction to which the agreement is
subject, and/or where the relevant Customer is granted
rights;
5.4.2. enforce the terms of each such agreement, and notify
C-Dilla of any material breaches of which it becomes
aware.
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5.5. RIGHT TO APPOINT SUB-DISTRIBUTORS
Macrovision is free to appoint sub-distributors in relation to the
marketing of the Products provided that if any such
sub-distributors require application rights to the Products'
technology the prior written consent of C-Dilla shall be obtained
before such sub-distributors are appointed.
6. INCOME AND ROYALTIES
6.1. CUSTOMER PRICES AND CHANGES
Macrovision shall be entitled to determine for itself the level at
which it shall charge Customers for Customer licences and
Customers' use of the Products, provided that:
6.1.1. it shall set such prices and charges in good faith in
order to maximise the long term revenue to be derived
from the Products;
6.1.2. it shall not cross-discount any prices or charges for
Products in order to increase its revenue for other
products at the expense of revenue for the Products.
6.2. ROYALTIES
C-Dilla shall be entitled, by way of royalty, to a payment of:
6.2.1. [*] (subject to variation pursuant to clauses [*]) of all
Sales Revenue relating to the Products (excluding any
authentication component of DVD-V);
6.2.2. [*] of all Sales Revenue received by Macrovision (net of
any third party royalties) relating to any authentication
component of DVD-V which is marketed by Macrovision
whether or not the technology for the same is developed
by C-Dilla and whether or not Macrovision exercises a
right of first refusal for the same under clause 2.3;
provided that where licensing sales are made within the United
Kingdom or European Union, Macrovision shall additionally pay any
Value Added Tax due on the same.
6.3. RECORDS OF INCOME
Macrovision shall maintain a complete, accurate and up-to-date
record of all Sales Revenue relating to the Products and
Customers' use of the Products, including:
6.3.1. a record of the names and addresses of all Customers from
whom Sales Revenue is received or due to be received;
6.3.2. a record for each Customer of the use of Products in
respect of which the Sales Revenue is received or due to
be received,
6.3.3. such other records and books of account as are normally
kept by any
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competent and prudent business, to be of sufficient
quality and detail as to permit the ascertainment and
validation of any royalty payment due from Macrovision to
C-Dilla under the terms of this Agreement.
6.4. MONTHLY SUBMISSION OF RECORDS
Within fifteen (15) days of the end of each calendar month
Macrovision shall submit to C-Dilla a monthly report properly
identifying all Customers from whom Sales Revenue for Products has
been invoiced for the preceding month (whether or not such
invoices have been paid), and details of the Sales Revenue for
each Customer.
6.5. INVOICING AND PAYMENT
Immediately upon Macrovision's submission of records pursuant to
clause 6.4:
6.5.1. C-Dilla shall be entitled to invoice Macrovision for the
Royalties due for the preceding month, in accordance with
clause 6.2;
6.5.2. Macrovision shall pay such invoice (by wire transfer in
US dollars in accordance with C-Dilla's reasonable
instructions) within fifteen (15) days of receipt of the
invoice.
6.6. SURCHARGE
If Macrovision is in delay in (i) submitting records pursuant to
clause 6.4, or (ii) making payment pursuant to clause 6.5, C-Dilla
shall be entitled to:
6.6.1. in the case of delay
under clause 6.4 - an immediate right to invoice
Macrovision for an interim
payment equal to the amount
of Royalties for the last
calendar month for which
records have been submitted
pursuant to clause 6.4;
6.6.2. in the case of late
payment under clause 6.5 - interest on the outstanding
(past due) payment at the
rate of eighteen per cent
(18%) per annum.
6.7. ADVANCE PAYMENT REDUCTION
Pending repayment in full to Macrovision of the Advance Payment,
Macrovision shall pay a reduced Royalty to C-Dilla pursuant to
clause 6.2.1 of [*] of the Sales Revenue, with the remaining [*]
of such normal royalty being set off against the Advance Payment
subject to clause 3.4.
7. RIGHT OF AUDIT
7.1. INSPECTION AND AUDIT
Either party shall have the right at any reasonable time during
normal business
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hours, upon giving not less than 5 Business Days written notice,
to require an independent chartered accountant of its appointment
to:
7.1.1. inspect and audit the accounts and records of the party
(held in the case of Macrovision pursuant to clause 6.3
above and in the case of C-Dilla pursuant to clause 8.3
below);
7.1.2. enter upon the other party's premises or any premises
controlled by the other party in order to inspect and
audit such accounts and records which are relevant to
verifying and determining the calculation of payments due
to the auditing party under this Agreement (subject to
any reasonable undertaking of confidentiality as the
other party may reasonably require of the independent
accountant and the auditing party in respect of such
inspection).
7.2. AUDIT - ANCILLARY PROVISIONS
In relation to clause 7.1, such audit shall be at the auditing
party's expense, and shall be conducted not more than once during
each Year of the Term, except that if any audit indicates the
presence of significant book-keeping errors or insufficient
reporting to the auditing party of more than five per cent (5%),
then:
7.2.1. the cost of the audit shall be at expense of the party
being audited;
7.2.2. additional audits may be carried out quarterly during the
relevant Year (and further audits if the additional or
further audits also indicate errors or under-reporting of
more than five per cent (5%) ).
7.3. UNDECLARED SALES REVENUE
If the auditing party's inspection and audit under clause 7.1
reveals that Sales Revenue in any month has been under-reported,
then:
7.3.1. the Royalties on such Sales Revenue shall immediately
become payable by the party being audited; and
7.3.2. if the Sales Revenue for such month has been
under-reported by more than five per cent (5%), then the
party being audited shall pay Royalties on such
un-reported Sales Revenue at a rate of five per cent (5%)
above the rate which would otherwise be due. (this
provision being without prejudice to C-Dilla's rights to
charge interest on such un-reported income at the rate
set out in clause 6.6.2 from the date when C-Dilla would
have been entitled to invoice for the same).
8. C-DILLA'S SALE OF PRODUCTS
8.1. SALE OUTSIDE THE [*]
When C-Dilla licenses Product A to customers in C-Dilla's Market,
it agrees that:-
8.1.1 it shall pay to Macrovision the sums set out in clause 8.2
below on all Sales Revenue received in respect of such
licenses;
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8.1.2 it shall set such prices and charges in good faith in
order to maximise the long term revenue to be derived
from the Products;
8.1.3 it shall not cross-discount any prices or charges for
Pure Product A or Mixed Product A in order to increase
its revenue for other products nor shall it
cross-discount any prices or charges for other products
at the expense of revenue for the Products;
except subsequent to:
(i) Macrovision's election to market any competing product to
Product A; or
(ii) Macrovision election not to continue to market Product A.
8.2. REVERSE ROYALTIES
C-Dilla shall pay to Macrovision:
8.2.1. on licences of Pure Product A [*] of its Sales
Revenue from the
same;
8.2.2. on licences of Mixed Product A [*] of its Sales
Revenue from the
same.
8.3. RECORDS OF INCOME
C-Dilla shall maintain a complete, accurate and up-to-date record
of all Sales
Revenue relating to Product A and Mixed Product A and Customers'
use of Product A and Mixed Product A including:
8.3.1. a record of the names and addresses of all Customers from
whom Sales Revenue is received or due to be received;
8.3.2. a record for each Customer of the use of Product A for
which Sales Revenue is received or due to be received,
8.3.3. such other records and books of account as are normally
kept by any competent and prudent business, to be of
sufficient quality and detail as to permit the
ascertainment and validation of any royalty payment due
from C-Dilla to Macrovision under the terms of this
Agreement.
8.4. MONTHLY SUBMISSION OF RECORDS
Within fifteen (15) days of the end of each calendar month C-Dilla
shall submit to Macrovision a monthly report properly identifying
all Customers from whom Sales Revenue for Product A has been
invoiced for the preceding month (whether or not such invoices
have been paid), and details of the Sales Revenue for each
Customer.
8.5. INVOICING AND PAYMENT
Immediately upon C-Dilla's submission of records pursuant to
clause 8.4:
8.5.1. Macrovision shall be entitled to invoice C-Dilla for the
Royalties due for the
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preceding month, in accordance with clause 8.2;
8.5.2. C-Dilla shall pay such invoice (by wire transfer in US
Dollars (calculated at the exchange rate applicable on
the earlier of the date payment is due and the date of
actual payment in accordance with Macrovision's
reasonable instructions) within fifteen (15) days of
receipt of the invoice.
8.6. SURCHARGE
If C-Dilla is in delay in (i) submitting records pursuant to
clause 8.4, or (ii) making payment pursuant to clause 8.5,
Macrovision shall be entitled to:
8.6.1. in the case of delay
under clause 8.4 - an immediate right to invoice
C-Dilla for an interim
payment equal to the amount
of Royalties for the last
calendar month for which
records have been submitted
pursuant to clause 8.4;
8.6.2. in the case of late
payment under clause
8.5 - interest on the outstanding
(past due) payment at the
rate of eighteen per cent
(18%) per annum.
9. MACROVISION OBLIGATIONS (PERFORMANCE GUARANTEES)
9.1. STAFF
Macrovision shall, within the periods specified below and for the
remainder of the Term, provide the staff set out below, dedicated
to the sale and marketing of the Products:
within sixty (60) days from
the Effective Date - one full time Vice President
and administrative support
staff;
9.2. MARKETING
Macrovision shall, within one hundred and twenty (120) days from
the Effective Date, produce and provide to C-Dilla a marketing
plan detailing the 1998 and 1999 budget for marketing collateral,
advertising, direct mail, trade shows, PR etc.
9.3. PRODUCT A PROMOTION IN DVD PLAYERS
Macrovision agrees (subject to compliance by C-Dilla with the
provisions by clause 11.2) to:-
9.3.1. include and promote the adapted Product A technology, or
a mutually agreed alternative, in its current digital
copy protection / authentication solution to the Data
Hiding Sub Group ("DHSG") of the DVD
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Consortium's Copy Protection Working Group ("CPTWG"); and
9.3.2. use all reasonable efforts to win the CPTWG bid process
and be selected as the industry standard.
9.4. OBLIGATIONS AND PRODUCT INFRINGEMENT/NON-PERFORMANCE
C-Dilla acknowledges that in the event of:
9.4.1. the institution of legal proceedings alleging the
infringement of the intellectual property rights of any
third party by Product A and, in addition, delivery of an
opinion by independent legal counsel (appointed by
agreement between the parties, or in default of agreement
by application of either party to the President of the
Law Society of England and Wales, with the costs of such
counsel to be split between the parties) that, in such
counsel's opinion, the claim is one of merit and there is
a substantial likelihood of Product A being found to
infringe; or
9.4.2. Product A failing to perform substantially in accordance
with the Performance Specification set out in Schedule E;
then, subject to clause 9.5, there shall be the following
consequences -
(i) [*]
(ii) [*]. For the avoidance of doubt Macrovision shall retain
an exclusive licence pursuant to Clause 2.2; and
(iii) subject to clause 9.6 C-Dilla's obligations under clause 8
shall cease.
9.5. CURE PERIOD
C-Dilla shall have a period of sixty five (65) days from the
delivery of counsel's opinion pursuant to clause 9.4.1, or
determination of non-performance pursuant to clause 9.4.2 to
remedy the infringement or non-performance and if it is able to
remedy the same within such period, then the consequences set out
in clause 9.4 shall not occur.
9.6 REPLACEMENT PRODUCT
In the event that C-Dilla is unable to remedy the infringement or
non-performance within the cure period set out in clause 9.5, then
notwithstanding the provisions of clause 9.4 C-Dilla shall
continue to use its reasonable endeavours to develop a replacement
product to Product A which shall be offered to Macrovision
pursuant to clause 2.3. In the event that Macrovision accepts the
replacement product C-Dilla shall (from the date of such
acceptance) become bound by the provisions of clause 8 in relation
to such replacement product.
10. COMPETING PRODUCTS
10.1. PRODUCT A - FIRST TWO YEARS
During the period of [*] years from the Product Release Date,
Macrovision shall not promote, market or exploit any product or
products which are competitive with Product A.
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10.2. OTHER PRODUCTS
If Macrovision wishes to promote, market or exploit any product or
products which are competitive with any of the Products other than
Product A, (and with Product A after the first two (2) years from
the Product Release Date) then:
10.2.1. Macrovision shall give C-Dilla not less than [*] written
notice of its intention so to do;
10.2.2. at the end of such notice period it shall (subject to
clause 10.2.3) be entitled to promote or market such
products;
10.2.3. (subject to clause 10.2.4) at the end of such period its
rights in (and licence from C-Dilla relating to) the
Products with which the products are competing shall
immediately be terminated (but without prejudice to its
exclusive rights in the other Products);
10.2.4. if the product which Macrovision wishes to promote or
market is a product competing with Product A, then upon
the expiry of such notice the licence granted pursuant to
clause 2.1 shall cease and the licence granted pursuant
to clause 2.2 shall revert to a non-exclusive basis in
relation to all other Products
10.2.5. clause 10.3 shall have effect.
10.3. ASSIGNMENT OF RIGHTS TO C-DILLA
Immediately on the termination of Macrovision's rights in relation
to any Products under clause 10.2.3 (and on termination under
clause 16.2 by C-Dilla)
10.3.1. Macrovision shall provide to C-Dilla details of all
licences concluded in respect of all such Products,
details of all Customers and prospective Customers with
whom it has negotiated the licence of such Products;
10.3.2. assign to C-Dilla its rights under such licences,
including without limitation the right to future income
(or, at Macrovision's reasonable request, procure the
novation of such licences but not of any additional
obligations, to C-Dilla).
10.4. OWNERSHIP AND DEVELOPMENTS
The parties agree that Macrovision shall not, during the Term or
for a period of twelve months thereafter, itself develop any
products which are competitive with the Products, but that:-
10.4.1 in the event that Macrovision develops improvements to or
replacements for any of the technologies covered by this
Agreement where such improvements or replacements were
developed without reliance on any of C-Dilla's
confidential information then such improvements or
replacements shall:-
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(i) be immediately communicated to C-Dilla;
(ii) be wholly owned by Macrovision; and
(iii) licensed to C-Dilla under reasonable terms to be
negotiated
however, Macrovision may not engage in independent
commercialisation of the same unless C-Dilla terminates
the exclusive licence;
10.4.2 in the event that Macrovision and C-Dilla jointly develop
improvements to or replacements for any of the
technologies covered by this Agreement where such
improvements or replacements were developed without
reliance on any of C-Dilla's confidential information
then such improvements or replacements shall:-
(i) be jointly owned by Macrovision and C-Dilla; and
(ii) be licensed by each party to the other under
reasonable terms to be negotiated.
however, Macrovision may not engage in independent
commercialisation of the same unless C-Dilla terminates
the exclusive licence.
10.4.3 in the event that Macrovision develops improvements or
replacements for any of the technologies covered by this
Agreement where such improvements or replacements
resulted from confidential information imparted to
Macrovision by C-Dilla (with consent to use for
development) then such improvements or replacements
shall:-
(i) be immediately communicated to C-Dilla;
(ii) be jointly owned by Macrovision and C-Dilla; and
(iii) be licensed by each party to the other free of
royalties.
however, Macrovision may not engage in independent
commercialisation of the same unless C-Dilla terminates the
exclusive licence.
11. C-DILLA'S OBLIGATIONS (PERFORMANCE GUARANTEES)
11.1. RESEARCH AND DEVELOPMENT SUPPORT
C-Dilla shall during the Term provide reasonably adequate research
and development support to the Products [*]), being not less than
[*] per Year on Product A during the Term.
11.2. [*]:
11.2.1. [*];
11.2.2. [*].
11.3. [*].
11.4. SUPPORT AND TRAINING DURING INITIAL SUPPORT PERIOD
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C-Dilla agrees for the Initial Support Period to provide:
11.4.1. training for Macrovision's customer support staff in
accordance with Schedule E;
11.4.2. first line support of Macrovision's Customers.
11.5. SUPPORT AND TRAINING AFTER INITIAL SUPPORT PERIOD
After the Initial Support Period C-Dilla may provide training and
support at its then current full charges.
11.6. SECOND LINE SUPPORT
C-Dilla shall during the Term provide free-of-charge second line
customer support at its Reading office during its normal working
hours.
11.7. OTHER INFORMATION
C-Dilla shall during the Term:
11.7.1. provide all information and documents reasonably
requested by Macrovision in relation to the Products;
11.7.2. notify Macrovision of any changes in law and regulations
relating to the sale of the Products of which it becomes
aware, and of any breach of the same of which it becomes
aware; and
11.7.3. inform Macrovision of any material changes in the market
for the Products and of competing products and the
activities of C-Dilla or C-Dilla's competitors of which
it becomes aware, so far as is reasonably practicable.
11.8. FAILURE RATE TESTING
C-Dilla agrees to use all reasonable efforts and carry out
reasonable testing required to achieve a [*] failure rate for
Product A and to meet the Product Release Date within [*] of the
Effective Date provided that Macrovision also agrees to provide
all reasonable assistance in running trials, pilots and beta
testing procedures during the market introduction phase of Product
A
11.9 ADDITIONAL
The parties agree that:
11.9.1 [*];
11.9.2 [*].
12. MINIMUM ROYALTY PAYMENTS
12.1. TARGETS FOR INITIAL TERM
Macrovision agrees that if the Royalties paid by Macrovision to
C-Dilla do not reach the minimum levels set out in Schedule B
during the Years set out in Schedule B, the licence granted to
Macrovision shall become a non-exclusive
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licence in respect of all Products.
12.2. TARGETS FOR EXTENDED TERM
If the Term is extended in accordance with clause 3.2, Macrovision
agrees that if the Royalties paid by Macrovision to C-Dilla do not
reach the minimum levels set out in Schedule C during the Years
referred to in Schedule C, the licence granted to Macrovision
shall become a non-exclusive licence in respect of all Products.
13. INTELLECTUAL PROPERTY RIGHTS INDEMNITY
13.1 INDEMNIFICATION
Provided that Macrovision complies with the provisions of clause
13.2, C-Dilla shall indemnify Macrovision (which for the purpose
of this clause 13 shall include its agents, officers, directors,
employees, servants, shareholders, customers and the like) and
shall keep Macrovision fully and effectively indemnified against
(subject to clause 13.7) any and all losses, claims, damages,
costs, charges, expenses, liabilities, demands, proceedings and
actions which Macrovision may sustain or incur or which may be
brought or established against Macrovision by any person which in
any case arise by reason of the use or possession of any of the
Products in accordance with this Agreement infringing:
13.1.1 any Intellectual Property Rights (excluding patents) of
any third party;
13.1.2 any patent rights of any third party which are as
follows: patent rights in countries where Customers are
permitted to use the Products in accordance with Customer
Licence Agreements; and patent rights in countries where
Macrovision has given C-Dilla notice in accordance with
clause 13.9.
13.2 NOTIFICATION
Each party shall notify the other immediately if it becomes aware
of any claim of infringement as referred to in clause 13.1.
13.3 CO-OPERATION
Macrovision shall:
13.3.1 notify C-Dilla immediately that it becomes aware of any
claim of infringement of any patent right against
Macrovision relating to the Products; and
13.3.2 co-operate fully with C-Dilla and permit C-Dilla to
defend or settle the claim on behalf of Macrovision
subject to:-
(i) C-Dilla taking action within a reasonable period
from notification;
(ii) consulting Macrovision prior to such settlement
and where such settlement affects Macrovision
obtaining Macrovision's prior approval to the same;
(iii) taking into account any reasonable requirements of
Macrovision;
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and
(iv) Macrovision's right under clause 13.4.
13.4 MACROVISION'S RIGHT TO DEFEND
If Macrovision reasonably believes that C-Dilla is not properly or
effectively defending any claim as referred to under clause 13.3.2
above, then Macrovision shall be entitled to take over the defence
or settlement of such claim on its own behalf provided that:
13.4.1 the costs of defending such claim (and amount of any
settlement) shall be borne exclusively by Macrovision;
13.4.2 Macrovision shall (where any settlement affects C-Dilla)
consult with C-Dilla prior to any settlement and shall
take into account any reasonable requirements of C-Dilla;
13.4.3 Macrovision shall not make any statement or take any
action which shall prejudice any other claim, proceedings
or action to which C-Dilla may be or may subsequently be
a party (whether on its own behalf or otherwise).
13.5 RIGHT TO REMEDY
If -
(i) a claim is made in respect of infringement by the Products
of the intellectual property rights of any third party, and
(ii) in the opinion of independent legal counsel (appointed by
agreement between the parties, or in default of agreement by
application of either party to the President of the Law
Society of England and Wales) the claim is one of merit and
there is a reasonable likelihood that a Product is likely to
determined to constitute an infringement of a third party's
intellectual property rights, then C-Dilla shall have the
right to take the following actions:
13.5.1 procure for Macrovision and its Customers the right to
continued use and possession of the Products; or
13.5.2 replace or modify the Products (without materially
detracting from their overall performance) to make them
non-infringing, and compensate Macrovision for all fair
and reasonable costs incurred by Macrovision directly as
a result of introducing such modified or replaced
Products;
provided that in the case of Product A, Macrovision shall also
have the right (if the conditions set out above are met) to
require C-Dilla to use all reasonable efforts to take such actions.
13.6 EXCEPTIONS
The indemnity set out in clause 13.2 shall not apply:
13.6.1 to any infringement which is due to Macrovision's
alteration of the Products;
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13.6.2 to any infringement which is due to Macrovision's
continued use of a version of any of the Products which
has been replaced by a non-infringing version or
replacement pursuant to clause 13.5.2 in circumstances
where C-Dilla has notified Macrovision of such
replacement; or
13.6.3 where Macrovision exercises its right to take over or
retain control of any action pursuant to clause 13.3.2.
13.7 CONSEQUENTIAL LOSSES
Except in the case of fraudulent or wilful concealment of any
patent infringement by C-Dilla, C-Dilla's liability and the extent
of its indemnity under this clause 13 shall be limited solely to
direct losses incurred by Macrovision, and C-Dilla shall have no
liability (except in the case of fraudulent or wilful concealment
of any patent infringement) for (i) loss of profits, (ii) loss of
contracts or revenue, or (iii) indirect or consequential losses,
howsoever arising.
13.8 ENTIRE LIABILITY
The provisions of this clause 13 state the entire liability of
C-Dilla to Macrovision for infringement of any Intellectual
Property Rights of any third party due to the use of any of the
Products in accordance with this Agreement.
13.9 INSURANCE NOTIFICATION
Macrovision agrees to keep C-Dilla informed of the countries in
which it licenses Customers to use the Products, and in which
Products are permitted to be used or otherwise likely to be used,
with reasonable notice so that C-Dilla may be able to review and
extend its patent infringement indemnity insurance in advance of
such use.
14. ESCROW
14.1 AGREEMENT
Within forty (40) days of the Effective Date the parties shall
enter into an escrow agreement with the NCC in respect of the
Products, on the same terms as are contained in the Escrow
Agreement attached as Appendix 2.
14.2 COMPLIANCE WITH AGREEMENT
C-Dilla agrees that it shall deposit the source code to the
Products (and other materials as required under the Escrow
Agreement) in accordance with the Escrow Agreement, and shall
otherwise comply with the terms of the Escrow Agreement.
15. CONFIDENTIALITY
15.1 Macrovision expressly recognises and acknowledges that the
Products contain confidential information and trade secrets which
are the property of C-Dilla and C-Dilla expressly recognises and
acknowledges that in performing the terms of this Agreement it may
obtain confidential information and trade secrets of Macrovision
(in each case "Confidential Information") and each party therefore
acknowledges that during the continuance of this Agreement or
thereafter:-
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15.1.1 it shall not disclose or communicate any of the
Confidential Information of the other party to any third
party (including to any parent company or subsidiary of
Macrovision or C-Dilla (as the case may be);
15.1.2 it shall disclose or communicate Confidential Information
of the other party to any of its employees only to the
extent that they need to know the same for the purpose of
each party fulfilling its obligations or exercising its
rights under this Agreement.
15.2 The above restrictions shall not apply:-
15.2.1 to information which is required to be disclosed by
Macrovision to Customers for the purpose of their making
use of the Products (to the extent that it is so
required);
15.2.2 to information which is in the public domain (other than
due to a breach by either party of this clause);
15.2.3 to information which the receiving party can show by
documentary evidence was in its possession prior to
receipt from the other party;
15.2.4 to information which the receiving party can demonstrate
was developed by it independently of any information
disclosed to it by the other party;
15.2.5 to any disclosure of information to which the disclosing
party gives its express written consent;
15.2.6 to any development to which the provisions of clause 10.4
apply;
15.2.7 where disclosure is ordered by a Court or any stock
exchange or governmental authority or other regulatory
body;
15.2.8 to auditors attorneys and other professional advisers
whose province it is to know the same; and
15.2.9 to announcements statements or communications to the
press agreed by the other party.
16. TERMINATION
This Agreement may be terminated:
16.1 immediately by either party if the other commits any material
breach of clauses 4, 9.1, 10.1, 10.2, 11,13 and 15 of this
Agreement and which, in the case of a breach capable of being
remedied, shall not have been remedied within twenty eight (28)
days of a written request to remedy the same; and
16.2 immediately by either party if:
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16.2.1 the other shall convene a meeting of its creditors or if
a proposal shall be made for a voluntary arrangement
within Part I of the Insolvency Act 1986 or a proposal
for any other composition scheme or arrangement with (or
assignment for the benefit of) its creditors: or
16.2.2 the other party is insolvent it or shall be unable to pay
its debts within the meaning of section 123 of the
Insolvency Act 1986; or
16.2.3 a trustee, receiver, administrative receiver,
administrator, liquidator or similar officer is appointed
in respect of all or any part of the business or assets
of the other party; or
16.2.4 a petition is presented or a meeting is convened for the
purpose of considering a resolution or other steps are
taken for the winding up of the other party or for the
making of an administration order (otherwise than for the
purpose of an amalgamation or reconstruction); or
16.2.5 anything analogous to any of the foregoing under the law
of any jurisdiction occurs in relation to that other
party;
17. CONSEQUENCES OF TERMINATION
17.1 EXISTING RIGHTS AND REMEDIES
Any termination of this Agreement for whatever reason shall be
without prejudice to any other rights or remedies a party may be
entitled to hereunder or at law and shall not affect any accrued
rights or liabilities of either party nor the coming into or
continuance in force of any provision which is expressly or by
implication intended to come into or continue in force on or after
such termination.
17.2 ADVANCE PAYMENT
Upon termination by C-Dilla, or termination under clause 16.1 and
16.2 the [*] from the date of termination.
17.3 CUSTOMER RECORDS
Upon termination of this Agreement for whatever reason,
Macrovision shall assign to C-Dilla (or procure for the assignment
to C-Dilla) its rights under the Customer Licence Agreements,
including [*].
17.4 TRADE MARK
Upon termination of this Agreement for whatever reason,
Macrovision shall at no cost assign absolutely its co-ownership of
any of the trade marks referred to in clause 2.5 to C-Dilla (other
than in relation to trade marks which are dealt with under clause
10.4), and undertakes to execute (at C-Dilla's costs) any
documents and do any acts which may be reasonably required to
effect such assignment.
18. GENERAL
18.1 OWNERSHIP
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The parties acknowledge that:-
(i) title to and ownership of all intellectual property rights
in any Products solely developed by C-Dilla remains with
C-Dilla and Macrovision acquires no title or ownership in
any of them or any products developed from them and no
interest in them other than the licences granted under this
Agreement;
(ii) title to and ownership of all intellectual property rights
in any products solely developed by Macrovision remains with
Macrovision and C-Dilla acquires no title or ownership in
any of them or any products developed from them and no
interest in them; and
(iii) title to and ownership of all intellectual property rights
in any products jointly developed by C-Dilla and Macrovision
shall be jointly owned.
(but subject to the overriding provisions of clause 10.4)
18.2 SUB-CONTRACTING AND ASSIGNMENT
Except as permitted under clause 5.5, Macrovision shall not assign
or sub-contract any of its rights or obligations under this
Agreement without C-Dilla's prior written consent.
18.3 RELATIONSHIP
Nothing in this Agreement shall create a partnership or the
relationship of employer and employee between the parties. Except
as expressly provided in this Agreement neither party shall enter
into or have authority to enter into any engagement or make any
representation or warranty on behalf of or pledge the credit of or
otherwise bind or oblige the other party.
18.4 WAIVER
Failure or neglect by either party to enforce at any time any of
the provisions of this Agreement shall not be construed nor shall
be deemed to be a waiver of that party's rights under this
Agreement nor in any way affect the validity of the whole or any
part of this Agreement nor prejudice that party's rights to take
subsequent action.
18.5 SEVERABILITY
If any provision of this Agreement is held by any court or any
other competent authority to be invalid or unenforceable, in whole
or in part, the other provisions of this Agreement, and the
remainder of the affected provision shall continue to be valid.
18.6 RESTRICTIVE TRADE PRACTICES ACT AND COMPETITION LAW
Both parties shall co-operate in making any amendments to this
Agreement which may be required in order to ensure the
enforceability of any provisions, or in substituting equivalent
provisions therefor.
18.7 EC SOFTWARE DIRECTIVE
18.7.1 In this clause "the Directive" means the Directive of the
Council for the European Communities of 14 May 1991 on
the legal protection of computer programs.
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18.7.2 If any provision of this Agreement which limits or
defines the rights of Macrovision in relation to the
Products would (but for this clause) be rendered void by
the Directive, the provision shall be deemed to include
exceptions to the limitations and extensions of the
rights granted, to the extent necessary (but no further)
to avoid the provisions being null and void.
18.8 HEADINGS
The headings to the clauses and sub-clauses to this Agreement are
included for convenience only and shall not affect the
construction or interpretation of this Agreement.
18.9 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement of the parties and
supersedes all prior agreements, understandings and negotiations.
18.10 LAW
This Assignment shall be governed by and construed in accordance
with the laws of England and the parties hereby submit to the
exclusive jurisdiction of the English courts.
18.11 EXPORT CONTROL
18.11.1 C-Dilla agree that it shall apply for and shall use all
reasonable endeavours to obtain and maintain an Open
Individual Export Licence from the Department of Trade
and Industry (or any future equivalent thereof) to enable
export of the Products to the USA and to such other
countries as Macrovision may request and shall comply
with all terms of such Licence;
18.11.2 Macrovision agrees that it shall be its responsibility to
ensure compliance with any export control regulations
imposed by the Department of Commerce in the USA and in
any other country in relation to the Products, and to
obtain all consents that may be required under such
regulations.
18.12 COUNTERPARTS
This Agreement may be entered into in any number of counterparts
and by the parties to it on separate counterparts, each of which
when so executed and delivered shall be an original.
19. WARRANTIES
19.1 C-Dilla hereby warrants, represents and undertakes to Macrovision
in the following terms:-
19.1.1 the entering into by C-Dilla of this Software Marketing
Licence and Development Agreement shall not infringe any
licences or rights granted to[*]. pursuant to the
agreements entered into with them by C-Dilla, copies of
which have been disclosed to Macrovision, or any other
licences entered into with or rights granted by C-Dilla
and any third parties.
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19.1.2 in performing the terms of this Agreement Macrovision
shall not be infringing:
19.1.2.1 [*];
19.1.2.2 any patent published or published application
published prior to June 1997 of which C-Dilla
should have reasonably been aware;
19.1.2.3 any patent published or published application
published after June 1997 of which C-Dilla is
aware.
For the purpose of this clause a published application
means any application for which the specification has
been published.
19.1.3 [*];
19.1.4 except as disclosed in the Disclosure Letter C-Dilla is
not engaged either on its own account or vicariously in
any suit, action, litigation, arbitration tribunal
proceedings or any governmental or official investigation
or inquiry and no such suit, action, litigation,
arbitration tribunal proceedings or investigation or
inquiry or other dispute are pending or threatened by or
against the Company;
19.1.5 the findings in relation to the performance of Product A
contained in the Report attached as Appendix 3 are
accurately recorded in that Report.
19.2 In the event of any breach of the Warranties referred to above
Macrovision shall (without restricting the rights or ability of
Macrovision to claim damages or indemnity on any basis available
to it in respect of such breach) be entitled to forthwith
terminate this Agreement and C-Dilla shall further on demand (and
notwithstanding the provisions of clause 17.2) pay to Macrovision
the remaining unpaid balance of the Advance Payment and
Macrovision shall have no further liability to C-Dilla pursuant to
the terms of this Agreement.
20. FUTURE CO-OPERATION
The Parties agree that so long as exclusivity has been maintained by
Macrovision at the completion of the Extended Term both parties will use
all best endeavours to enter into an agreement for a further 5 year term
based upon the same principles that have been agreed for the extended
Term which are no less favourable.
IN WITNESS whereof the parties by their duly authorised representatives
have executed this Agreement the day and year set out at the top of page
1 of this Agreement
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EXECUTED (but not delivered until )
the date hereof) as a DEED by )
C-DILLA LIMITED )
acting by
Director: ....................................
Director/Secretary: .............................
EXECUTED (but not delivered until )
the date hereof) as a DEED by )
MACROVISION LIMITED )
acting by
Director: ....................................
Director/Secretary: .............................
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